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EXHIBIT 10.1
SHARE PURCHASE AGREEMENT
BY AND AMONG
QUIKSILVER, INC.
QUIKSILVER AUSTRALIA PTY LTD
QUIKSILVER INTERNATIONAL PTY LTD
AND
SHAREHOLDERS OF QUIKSILVER INTERNATIONAL PTY LTD
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SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT ("Agreement") is made and entered into
as of this ___ day of July, 2000 by and among Quiksilver, Inc., a Delaware
corporation ("Parent"), Quiksilver Australia Pty Ltd, ACN 091 136 195, a
Victoria corporation ("Buyer"), Quiksilver International Pty Ltd, ACN 005 575
548, a Victoria corporation (the "Company"), the shareholders of the Company
listed on the signature pages of this Agreement (the "Participating
Shareholders"), and ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ Pty Ltd (collectively, the
"Other Responsible Persons"). For purposes of this Agreement, the terms set
forth in Exhibit 1 shall have the meanings specified or referred to therein.
R E C I T A L S
A. Each of the Participating Shareholders owns issued ordinary shares
of the Company (the "Shares").
B. Buyer desires to purchase all of the Shares owned by the
Participating Shareholders, and the Participating Shareholders desire to sell
such shares, on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and agreements contained herein, the parties hereto agree as follows.
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale. Subject to the terms and conditions set
forth in this Agreement, each of the Participating Shareholders hereby sells to
Buyer, and the Buyer hereby purchases from such Participating Shareholder, that
number of Shares held by such Participating Shareholder as identified on Exhibit
A attached hereto across from such Participating Shareholder's name on Exhibit A
in consideration for their share of the Purchase Price.
Section 1.2 Purchase Price. The Purchase Price payable to each of the
Participating Shareholders for the purchase and sale of the Shares shall be the
aggregate of the three installments calculated in accordance with Section 1.3
and paid to each Participating Shareholder as set forth in Section 1.4.
Section 1.3 Calculation of Installments. The three installments payable to
each Participating Shareholder for the Shares are calculated as follows:
(a) First Installment: A x AUD27,011,879.
(b) Second Installment: A x 2.0223 (B + C).
(c) Third Installment: A x (0.216675) D + 1.805625 (E + F)).
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Where:
A is the Participating Shareholder's Participating Percentage;
B is the Computed Net Income for Year One;
C is the Computed Net Income for Year Two;
D is the Computed Net Income for Year Three;
E is the Computed Net Income for Year Four; and
F is the Computed Net Income for Year Five.
Section 1.4 Annual Calculation of Computed Net Income. At the end of each
year referred to above in Section 1.3, the Buyer will calculate the amount of
Computed Net Income for that year and the Buyer will advise each Participating
Shareholder of the amount of Computed Net Income and the basis of its
calculation. The Participating Shareholders, either jointly or severally, may
request that the amount and the calculation be verified by an internationally
recognized accountant, proposed by them and subject to the approval of Buyer in
its sole and absolute discretion. The decision of such accountant of the correct
amount of Computed Net Income for that year will be binding on all parties. The
Participating Shareholders, jointly and severally, shall pay all costs and
expenses with respect to such accountant.
Section 1.5 Installment Payment Dates. The three installments determined
under Section 1.3 shall be paid to the Participating Shareholders on the
following dates:
(a) First Installment. At Closing.
(b) Second Installment. Within 90 days from the end of Year 2.
(c) Third Installment. Within 90 days from the end of Year 5.
Section 1.6 Currency. In determining Computed Net Income and the Purchase
Price, the currency used will be the Australian dollar; provided however if the
domicile of the Company changes after the Closing the currency used will be the
United States dollar.
Section 1.7 Closing. The closing of the transactions contemplated by this
Agreement ("Closing") shall take place at such location, time and date as the
parties may fix ("Closing Date").
Section 1.8 Deliveries. At the Closing:
(a) The Company and the Participating Shareholders hereby deliver to
Buyer:
(i) certificates representing the Shares being sold by the
Participating Shareholders under this Agreement;
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(ii) instruments of transfer of the Shares in favor of the Buyer
or its nominee which have been duly executed by the respective Participating
Shareholders and are in registrable form;
(iii) the written resignations of each director, secretary and
public officer of the Company and the Subsidiaries, which resignations must
acknowledge that they take effect without any entitlement to compensation (for
loss of office or otherwise) as a result;
(iv) all other documents and records of the Company and Pavilion
requested by the Buyer;
(v) a copy of the MSP Agreement signed by all of the Minority
Shareholders; and
(vi) documentation evidencing that the Company owns all of the
issued ordinary shares of Pavilion.
(b) Buyer will deliver to each Participating Shareholder by wire
transfer or by bank cashier's or certified check the amount equal to the
consideration to be paid to such Participating Shareholder under Section 1.3(a);
(c) An executed employment agreement between the Company and ▇▇▇▇
▇▇▇▇▇ in substantially the form of Exhibit B.
(d) An executed employment agreement between the Company and ▇▇▇▇ ▇▇▇
in substantially the form of Exhibit C.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
THE RESPONSIBLE PERSONS
Except as set forth in the attached Schedules (which lists exceptions to
the following representations and warranties and also contains matters required
to be disclosed pursuant to this Article II, each of which corresponds to the
numbered sections contained in this Article II), each of the Responsible Persons
jointly and severally represent and warrant to Parent and Buyer as follows:
Section 2.1 Incorporation and Capitalization. The Company was incorporated
in Victoria, Australia on 16 July, 1979. The Company has issued 4,441,000 fully
paid ordinary shares (the "Shares"). The Shares are held by the Shareholders as
set forth in Exhibit A attached hereto.
Section 2.2 Corporate Status and Authority; Enforceability.
(a) The Company is a corporation duly incorporated and validly
existing under the laws of Victoria, Australia, and it has the full power and
authority to own its properties and to carry on the business presently being
conducted by it. The Company has provided to Buyer true and correct copies of
the currently effective charter documents of the Company,
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together with all effective amendments to the same as of the date hereof. The
Company is qualified or licensed as a foreign corporation to do business in each
jurisdiction requiring such licensure or qualification.
(b) The Company has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement, and all corporate action of the
Company necessary for such execution, delivery and performance has been duly and
validly taken as required by law or under its charter documents. This Agreement
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms against the Company, subject to any necessary
stamping or registration.
Section 2.3 Subsidiaries.
(a) Except for Pavilion and except as set forth in Schedule 2.1(b),
the Company does not own, nor has agreed to purchase, any ordinary shares or
equity interest in any other corporation, business, joint venture or entity.
Pavilion is a corporation duly incorporated and validly existing under the laws
of Victoria and has the full power and authority to own its properties and to
carry on the business presently being conducted by it. The Company has provided
to Buyer true and correct copies of the currently effective charter documents of
Pavilion, together with all effective amendments as of the date hereof.
(b) Pavilion has issued 1,000 fully paid ordinary shares, and such
shares are owned of record and beneficially by the Company. Except as set forth
in Schedule 2.1(b), all of the issued ordinary shares of Pavilion are subject to
no liens, encumbrances or rights of others, and there are no outstanding
options, warranties, or other rights in existence to purchase any shares or
other securities of Pavilion.
(c) There is no agreement, arrangement or understanding to which the
Company, Pavilion or a Shareholder is a party which gives a right to any person
upon a change in the management or control of or ownership of any shares in the
Company or Pavilion.
Section 2.4 Capitalization. Schedule 2.1(a) sets forth the authorized and
issued ordinary shares of the Company. All of the Shares have been duly
authorized and validly issued. Except as set forth in Schedule 2.1(a), there are
no outstanding options, warrants, or other rights in existence to purchase from
the Company any ordinary shares or other securities of the Company.
Section 2.5 Financial Statements. The Company has furnished Buyer, as
Schedule 2.5(a), true copies of (i) the financial statements of each of the
Company and Pavilion as of and for the fiscal years ended June 30, 1997, 1998
and 1999, and for the nine-month period ended March 31, 2000 (the "Financial
Statements"). Except as set forth in Schedule 2.5(b), the Financial Statements
(i) are complete and correct in all material respects, (ii) have been based upon
the information contained in the books and records of the Company or Pavilion,
as the case may be, (iii) fairly present the financial condition and results of
operations as of and for the period referred to therein, and (iv) have been
prepared in accordance with generally accepted accounting principles ("GAAP") in
Australia for the period indicated (except that the Financial
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Statements for the nine-month period ended March 31, 2000 do not contain all
footnotes required by GAAP and are subject to normal year-end audit adjustments
that in the aggregate will not be material).
Section 2.6 Absence of Certain Changes or Events. Except as set forth in
Schedule 2.6, including without limitation the declaration of dividends and
transfer of assets described in Schedule 2.21, since March 31, 2000 there has
not occurred:
(a) Any material adverse change, or development which could result in
a material adverse change, in the business, operations, assets, financial
condition or results of operations of the Company or Pavilion;
(b) Any damage, destruction, or other casualty loss to any property of
the Company or Pavilion whether covered by insurance or not which in the
aggregate exceeds AUD200,000, or any strike, work stoppage or slow-down or other
labor dispute;
(c) Any issuance of any shares of ordinary shares, preferences shares
or other security of the Company or Pavilion;
(d) Any declaration, setting aside or payment of any dividend or other
distribution with respect to any stock of the Company or Pavilion, any
redemptions of any stock of the Company or Pavilion, or the issuance of any
additional shares of, or options or rights to purchase any stock of the Company
or Pavilion;
(e) Any creation of a mortgage, pledge, lien, or other encumbrance or
security interest affecting any of the assets of the Company or Pavilion;
(f) Any sale, assignment, transfer, or other disposition of any
tangible or intangible asset of the Company or Pavilion having a fair market
value or net book value of more than AUD80,000 per asset or AUD200,000 in the
aggregate;
(g) Any amendment, termination, or waiver of any debt, claim or
statutory, contractual or property right of substantial value (which, if
quantifiable, shall mean a value in excess of AUD80,000) belonging to or held by
the Company or Pavilion;
(h) Except for regular increases in accordance with past practices and
in the ordinary course of business, any increase in the remuneration payable or
to become payable by the Company or Pavilion to any of their officers,
directors, employees, agents or consultants;
(i) Any change in accounting methods or practices or any revaluations
of any of the assets or liabilities of the Company or Pavilion;
(j) Any discharge or satisfaction of any liens or encumbrances or any
payment of any obligations or liabilities (absolute or contingent) of the
Company or Pavilion in excess of AUD80,000, other than obligations or
liabilities paid in the ordinary course of business;
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(k) Any creation of any indebtedness, obligation or liability
(including any guarantee, contractual indemnification or undertaking to answer
for the debts or defaults of another) of the Company or Pavilion in excess of
AUD80,000 except for those arising out of the ordinary course of business;
(l) Any extension of credit on account to or acceptance of a note
receivable by the Company or Pavilion other than in the ordinary course of
business; or any extension of credit to or acceptance of a note from any person
or any entity who or which has another account or note with the Company or
Pavilion which is 120 days or more past due, except for those arising out of the
ordinary course of business or except as agreed upon in writing by the Buyer;
(m) Any transaction with or payment to the directors, officers or
employees of the Company or Pavilion, except (i) bona fide service transactions
negotiated on an arm's length basis in the ordinary course of business or (ii)
transactions in the ordinary course of business; or
(n) Any change in any retirement or pension plan for the benefit of
any officer, director, employee or consultant of the Company or Pavilion.
Section 2.7 Absence of Undisclosed Liabilities or Commitments. As of the
date hereof, to the best knowledge of each of the Responsible Persons, neither
the Company nor Pavilion has any material debts, liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent, or otherwise,
not shown and adequately provided for in the Financial Statements.
Section 2.8 Title to Property.
(a) Each of the Company and Pavilion has good and marketable title to
all of its property and assets, free from mortgages, pledges, liens,
encumbrances or any other charges of any kind except as listed in Schedule
2.8(a).
(b) Except as set forth on Schedule 2.8(b), neither the Company nor
Pavilion owns any real property.
(c) Schedule 2.8(c) lists all personal property owned by the Company
or Pavilion.
(d) Schedule 2.8(d) lists all leases or agreements under which either
the Company or Pavilion is lessee of, or holds or operates any property, real or
personal, owned by any other party and all leases or agreements under which it
is lessor of, or permits any third party to hold or operate any property, real
or personal. The leases listed in Schedule 2.8(d) are in full force and effect,
and the Company or Pavilion, as applicable, holds a valid and existing leasehold
interest under each such lease for the term set forth in Schedule 2.8(d). The
Shareholders have delivered to Buyer complete and accurate copies of each of the
leases set out in Schedule 2.8(d), and none of the leases have been modified in
any material respect. Neither the Company nor Pavilion is in default in any
material respect, and no circumstances exist which could result in such default,
under any of such leases.
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(e) All documents which are necessary to establish the title of the
Company and Pavilion to their respective assets are in the possession or under
the control of the Company or Pavilion, as applicable, and all have been duly
stamped.
Section 2.9 Banking Facilities. Schedule 2.9 contains a true and complete
list of:
(a) Each bank, savings and loan or similar financial institution in
which the Company or Pavilion has an account or safety deposit box and the
numbers of the accounts or safety deposit boxes maintained by the Company or
Pavilion thereat; and
(b) The names of all persons authorized to draw on each such account
or to have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) of any such person
with respect thereto.
Section 2.10 Pending or Threatened Actions. Except as set forth in Schedule
2.10, there is no action, suit or proceeding with respect to which the Company
or Pavilion is a party (either as a plaintiff or defendant) pending before any
court or governmental agency, authority or body or arbitrator; and to the best
knowledge of each of the Responsible Persons there is no action, suit or
proceeding threatened against the Company or Pavilion.
Section 2.11 Contracts and Commitments.
(a) Schedule 2.11(a) contains a true and complete list of (i) all
license agreements to which either the Company or Pavilion is a party, together
with all material amendments thereto; (ii) all other material contracts and
documents relevant to the Company's business as a licensor of intellectual
property, together with all material amendments thereto; and (iii) all
sponsorship contracts and other material contracts of Pavilion, together with
all material amendments thereto.
(b) Except as set forth in Schedule 2.11(b), neither the Company nor
Pavilion is a party to any: (i) agreement or indenture relating to the borrowing
of money or to mortgaging, pledging or otherwise placing a lien on any of the
assets of the Company or Pavilion other than as disclosed in Schedule 2.8(a);
(ii) guaranty of any obligation for borrowed money or otherwise, other than
endorsements made for collection; (iii) contract which prohibits the Company or
Pavilion from freely engaging in business anywhere in the world; (iv) contract,
agreement or understanding with any Shareholder, officer, director or employee
(other than for employment on customary terms) of the Company or Pavilion; or
(v) other agreement material to the business of the Company or Pavilion or other
agreement not entered into in the ordinary course of business.
(c) Buyer has been supplied with a true and correct copy of all
agreements which are referred to in either Schedule 2.11(a) or Schedule 2.11(b),
together with all material amendments, waivers or other changes thereto. The
Company and Pavilion are not and, to the best knowledge of each of the
Responsible Persons, no other party to any material agreement referred to in
either Schedule 2.11(a) or Schedule 2.11(b) is, in default with respect to any
material term or condition thereof, nor has any event occurred which through the
passage of time or the giving of notice, or both, would constitute a default
thereunder or would cause the acceleration of any obligation of any party
thereto.
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Section 2.12 Intellectual Property.
(a) In this Section 2.12, "Intellectual Property" means any and all
intellectual property rights, whether registered or unregistered, including
rights in or to or arising under copyright, inventions, trademarks, trade names,
brand names, designs, trade secrets, know how, confidential information,
goodwill and reputation.
(b) Schedule 2.12(b) sets forth an accurate and complete description
of all trademarks, service marks, trade names, brands and copyrights of each of
the Company and Pavilion which are registered or issued or for which
registration or issuance is pending with any governmental entity specifying as
to each such item, as applicable, the jurisdiction(s) by or in which such
trademark, service ▇▇▇▇ or copyright has been issued or registered or in which
an application for such issuance or registration has been filed or proposed,
including the registration or application number.
(c) To the best knowledge of each of the Responsible Persons, each of
the registrations and applications set out in Schedule 2.12(b) is valid and
current as of the date of this Agreement.
(d) Each of the Company and Pavilion owns full right title and
interest in and to the Intellectual Property listed in Schedule 2.12(b), free
and clear of all mortgages, liens, pledges, charges or encumbrances of any kind
or character or claims thereto, except as set forth in Schedule 2.12(d). To the
best knowledge of each of the Responsible Persons, there has been no
unauthorized use, infringement or misappropriation of any Intellectual Property
of either the Company or Pavilion, except to the extent disclosed in Schedule
2.10.
(e) Except to the extent disclosed in Schedule 2.10, to the best
knowledge of each of the Responsible Persons, the operations of each of the
Company and Pavilion, the use or exercise by it of its Intellectual Property,
trademarks, trade names, brand names, applications, licenses and advertising or
other literature, do not involve infringement of any proprietary right or
Intellectual Property of a third party, and no claims have been made or
proceedings issued by any third party against the Company or Pavilion concerning
the validity of the Intellectual Property listed in Schedule 2.12(b).
Section 2.13 All Consents, Permits, Waivers and Approvals Have Been
Obtained.
(a) Except as set forth in Schedule 2.13, the execution, delivery and
performance of this Agreement and the sale of Shares to Buyer hereunder do not
require the consent, license, permit, waiver, approval, authorization or other
action of, by or with respect to any nongovernmental or governmental person or
entity.
(b) No Participating Shareholder is, in relation to the Shares, and
the Company is not, a party to any contract, agreement, arrangement or
understanding which is in breach of any applicable trade practices legislation
nor does any Participating Shareholder (in relation to the Shares) or the
Company engage in any conduct or practice which is in breach of that
legislation.
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(c) Each of the Company and Pavilion holds and has fully paid all fees
for all licenses, permits or authorizations required or desirable for the
conduct of all aspects of its business, except where the failure to so hold or
pay such fees would not have a material adverse effect on the operations or
financial condition of either the Company or Pavilion.
(d) To the best knowledge of each of the Responsible Persons, all of
the licenses, permits and authorizations referred to in Section 2.13(c) have
been fully complied with and are in full force.
(e) To the best knowledge of each of the Responsible Persons, there
are no facts or circumstances involving the Company, Pavilion or their
respective affairs which are likely to result in the revocation of or variation
in any material respect of any material license, permit or authorization held by
either of them.
(f) No material license, permit or authorization held by either the
Company or Pavilion would be adversely affected by, or liable to be terminated,
revoked or varied in any material respect by reason of, a change in the
ownership of it.
Section 2.14 Taxes. Except as disclosed in Schedule 2.14:
(a) Within the times and in the manner prescribed by law, the Company
and Pavilion have filed all tax returns, including, without limitation, all
income, corporate, local and sales tax returns, required to be filed with
respect to any governing body having jurisdiction to levy taxes upon them, such
as Australia, the United States of America, any other country, and any
provinces, states and local authority of the foregoing.
(b) All tax returns filed by each of the Company and Pavilion for all
periods constitute complete and accurate representations of its tax liabilities
for such periods and accurately set forth all items (to the extent required to
be included or reflected in such returns) relevant to the its future tax
liabilities, including cost, cost base or value of or expenditure on its
properties and assets.
(c) Neither the Company nor Pavilion has been the subject of any
waiver or extension of any applicable statute of limitations relating to the
assessment of taxes.
(d) No amended tax assessments have been made (and in the case of
taxes payable without an original assessment, no original assessment has been
made) against either the Company or Pavilion, nor are any examinations of the
tax affairs of either the Company or Pavilion currently in progress nor, to the
best knowledge of each of the Responsible Persons, is any such examination
threatened.
(e) Schedule 2.14(e) sets forth the amount necessary to pay all taxes
of the Company and Pavilion for the fiscal year ended June 30, 2000, which has
not been reflected in the provisions for taxes in the Balance Sheets of the
Company or Pavilion as of March 31, 2000 contained in the Financial Statements.
(f) Except for this Agreement and documents or transactions
contemplated by this Agreement, all taxes payable have been duly paid and
sufficiently stamped and upstamped
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with respect to every document or transaction to which the Company or Pavilion
is or has been a party, or by which the Company or Pavilion derives, has derived
or will derive a substantial benefit.
(g) All notices required to be given, or elections required to be
made, in support of any tax position adopted or relied upon by either the
Company or Pavilion has been duly given or made and (if so required) duly
lodged, and all information required to be given or to be retained under any
relevant tax legislation has been given or is currently held (as the case may
be) by the Company (or Pavilion, as applicable) including any written elections
required to be lodged or held (as the case may be) to support positions referred
to in this Section 2.14(g).
(h) There are no outstanding disputes or questions or demands between
any tax authority (whether in Australia, any State of Australia or elsewhere)
and either the Company or Pavilion.
(i) Each of the Company and Pavilion has complied with the provisions
of Part IIIAA of the Income Tax Assessment ▇▇▇ ▇▇▇▇ and has maintained records
of franking debits and franking credits which are sufficient for the purposes of
that legislation.
(j) All accumulated losses and capital losses disclosed in the books
of account and tax records of each of the Company and Pavilion are (subject only
to satisfying the requirements of subdivision 165E of the Income Tax Assessment
▇▇▇ ▇▇▇▇ in respect of the changes in ownership summarized under this
Agreement), allowable to the Company (or Pavilion, as applicable) as deductions
or "net capital losses" as the case may be.
(k) The values attributable to assets of the Company and Pavilion in
their financial statements are not different from the values of the Assets for
Tax purposes.
(l) No dividend has been paid by either the Company or Pavilion in
respect of which the "required franking amount" has exceeded the "franked
amount" of the dividend, or which has been franked in excess of the required
franking amount so as to result in the Company (or Pavilion, as applicable)
being liable, or potentially liable, to pay "franking deficit tax". All franking
credits (if applicable) of the Company as shown in its accounts are fully
available for use by them.
(m) The share capital account of either the Company or Pavilion is not
"tainted" within the meaning of section 160ARDM of the Income Tax Assessment ▇▇▇
▇▇▇▇.
(n) Neither the Company nor Pavilion has acted otherwise, in relation
to any transaction, than in accordance with applicable advance opinions, private
binding rulings or public rulings issued by the Commissioner of Taxation.
(o) Each of the Company and Pavilion has deducted all of the tax
required to be deducted from any payments made by it including (but not limited
to) interest, royalties, remuneration payable to employees or contractors or
payment to a non-resident, and where necessary each of the Company and Pavilion
has paid over to the relevant authority all such tax deducted or collected in
accordance with all relevant requirements.
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(p) Neither the Company nor Pavilion has any branch or permanent
establishment (as defined in any relevant Double Taxation Agreement with the
country of its incorporation) and is not registered to carry on business outside
its jurisdiction of incorporation.
(q) There is no contract agreement or arrangement requiring the
Company or Pavilion to make taxable supplies having a value for GST (as defined
in Section 5.4) purposes of more than AUD10,000 in total which does not contain
a provision enabling the Company or Pavilion as supplier to recover from the
other party to the contract agreement or arrangement the amount of any goods and
services tax for a supply under that contract agreement or arrangement.
Section 2.15 Labor Contracts and Employment Warranty Undertakings.
(a) Schedule 2.15 identifies (i) each collective bargaining agreement
and other labor agreement to which the Company or Pavilion is a party or by
which it is bound; (ii) each employment, profit sharing, deferred compensation,
bonus, stock option, stock purchase, pension, retainer, consulting, retirement,
health, welfare, commissions, or incentive plan or contract to which the Company
or Pavilion is a party, or by which it is or may be bound; and (iii) each plan
and agreement under which, in addition to salary and wages, employment related
benefits (including, but not limited to, vacation plans or programs, sick leave
plans or programs, dental or medical plans or programs, insurance and
hospitalization) are afforded to employees of the Company or Pavilion. All of
these contracts, agreements and arrangements are in full force and effect. The
Company and Pavilion are not and, to the best knowledge of the Responsible
Persons, no other party to any such agreement, plan, program or contract is, in
default with respect to any material term or condition thereof, nor has any
event occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder or would cause the acceleration of
any obligation of any party thereto. Each of the Company and Pavilion have
complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those relating to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by appropriate governmental authorities.
(b) Except as set forth in Schedule 2.15:
(i) No unfair labor practice complaint is pending against the
Company or Pavilion before any governmental agency, no labor strike or other
labor trouble affecting the Company or Pavilion is pending, and no labor related
grievance is pending against the Company or Pavilion.
(ii) No labor union organization or representation question is
pending respecting the employees of the Company or Pavilion, no such question
has been raised within the three year period prior to the date of this
Agreement, and each of the Company and Pavilion is in compliance with its
obligations in respect of worker representation.
Section 2.16 Insurance. Schedule 2.16 attached hereto lists each insurance
policy maintained by each of the Company and Pavilion with respect to its
properties, assets or business operations. All of such insurance policies are in
full force and effect, are adequate for the
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Company's and Pavilion's needs, and neither the Company nor Pavilion is in
material default with respect to its obligations under any of such insurance
policies.
Section 2.17 Compliance with Applicable Laws. To the best knowledge of each
of the Responsible Persons, the conduct of business by the Company and Pavilion
does not violate any material laws, statutes, ordinances, rules, regulations,
decrees, orders, permits or other similar items in force on the date hereof, nor
has the Company or Pavilion received any notice of any such violation and no
Responsible Person has any reason to believe any such violations have occurred.
Section 2.18 Agreement Not a Breach of Other Instruments. Except as set
forth in Schedule 2.18, the execution, delivery and performance of this
Agreement and the sale of the Shares hereunder do not conflict with or cause a
breach of any of the terms, provisions or conditions of the charter documents of
the Company or Pavilion or, to the best knowledge of each Responsible Person,
any statute, regulation or court or administrative order or process, or any
agreement or instrument to or by which the Company or Pavilion is a party or is
bound.
Section 2.19 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of the Responsible Persons or the Company or Pavilion.
Section 2.20 Interested Transactions. Except as set forth in Schedule 2.20,
no Shareholder nor any associates of a Shareholder (i.e., any spouse or child of
any Shareholder or any firm, corporation, association or business enterprise in
which a Shareholder or any such relative participates as a director, officer,
employee, agent, Shareholder, partner or joint venturer or has any financial
interest) has any financial interest in any firm, corporation, association or
business enterprise which competes with, is a licensee, supplier or customer of,
or is engaged in any business of the kind being conducted by the Company or
Pavilion. Except as stated on Schedule 2.20, no Shareholder (nor any associates
of a Shareholder) has any financial interest in any contract with, commitment or
obligation of or to, or claim against the Company or Pavilion. Neither the
Company nor Pavilion has any loans or advances outstanding to any Shareholder or
any associates of a Shareholder or to any director, officer or employee.
Section 2.21 Transfer of Certain Assets. Prior to the Closing Date, the
Company has transferred or otherwise distributed or liquidated the assets listed
on Schedule 2.21. On the date of this Agreement, the ratio of the Company's
current assets to its current liabilities is at least 1.2 to 1.0.
Section 2.22 Environmental Matters.
(a) Unless otherwise defined in this Agreement, capitalized terms used
in this Section 2.22 shall be defined as set forth on Schedule 2.22.
(b) To the best knowledge of each of the Responsible Persons, the
Company has complied with all Environmental Laws relating to the property listed
on Schedule 2.8(b) (the "Property").
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(c) No process, operation or activity involving Pollutants,
Contaminants or Waste (or the storage or disposal of any of them):
(i) Is conducted on the Property; or
(ii) To the best knowledge of each Responsible Person, has ever
been conducted on the Property.
(d) All equipment for the control, reduction or improvement of
Pollution which any Environmental Law requires any person to have or use in
connection with the conduct of the Company's business is located on the
Property.
(e) The Property is not Contaminated.
(f) The Property is not, and to the best knowledge of each of the
Responsible Persons has never been, a source of Pollution.
(g) The Company has not received any Environmental Notice in relation
to the Property.
Section 2.23 Disclosure. To the best knowledge of each of the Responsible
Persons, the information relating to and concerning the Company and Pavilion
contained in this Agreement, any Schedule hereto or in any other certificate,
instrument or other document given by the Company in connection with this
Agreement (including each representation and warranty contained herein or
therein) is true, correct and complete and contains no untrue statement of
material fact or omits or will omit to state material facts necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARTICIPATING SHAREHOLDERS
Section 3.1 Participating Shareholders. Each Participating Shareholder
represents and warrants to Buyer as follows:
(a) Title to Shares. Such Participating Shareholder is the owner of
the number of Shares indicated on Exhibit A attached hereto across from such
Participating Shareholder's name. No other person or entity has any right,
title, or interest, beneficially or of record, in or to the Shares owned by such
Participating Shareholder, other than beneficiaries of a trust of which a
Participating Shareholder is a trustee, and such Shares are free and clear of
any claims, liens, encumbrances, security agreements, equities, options,
charges, or restrictions, and can be delivered and surrendered to Buyer pursuant
hereto without obtaining the consent or approval of any other person or
governmental authority. Upon the transfer and delivery of such Shares to Buyer
in accordance with this Agreement and payment therefor, Buyer will become the
owner and holder of all of such Shares free and clear of all liens,
encumbrances, pledges, claims, charges and restrictions on transfer.
(b) Authority. This Agreement constitutes the legal, valid, and
binding obligation of such Participating Shareholder enforceable in accordance
with its terms. The
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consummation of the transactions contemplated by this Agreement and fulfillment
of the terms hereof will not breach any of the terms and provisions of, or
constitute a default by such Participating Shareholder under, any agreement or
instrument to which such Participating Shareholder is a party or by which such
Participating Shareholder is bound, or any statute, ruling, decree, judgment,
order or regulation of any governmental authority having jurisdiction over such
Participating Shareholder or such Participating Shareholder's property; and no
consent, approval, authorization or order of any court or governmental agency or
body is required for the consummation by such Participating Shareholder of the
transactions on such Participating Shareholder's part contemplated hereby.
Section 3.2 Additional Representations and Warranties of Green and Law.
▇▇▇▇ ▇. ▇▇▇▇▇ hereby represents and warrants to Buyer that the representations
and warranties of Dovali Pty Ltd under Section 3.1 are true and correct. ▇▇▇▇ ▇.
Law hereby represents and warrants to Buyer that the representations and
warranties of Alimoc Pty Ltd under Section 3.1 are true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Except as set forth in the attached Schedule (which lists exceptions
to the following representations and warranties and also contains matters
required to be disclosed pursuant to this Article IV, each of which corresponds
to the numbered sections contained in this Article IV), Parent and Buyer jointly
and severally represent and warrant to the Company and the Participating
Shareholders as follows:
Section 4.1 Organization; Qualification. Each of Parent and Buyer (a) is a
corporation duly organized and validly existing under the laws of its
jurisdiction of incorporation; (b) has the corporate power and authority to
carry on its business as now conducted; (c) has delivered to the Company
complete and correct copies of its charter documents as currently in effect; and
(d) is qualified to do business in each jurisdiction in which the property
owned, leased or operated by it or the business conducted by it makes such
qualification necessary.
Section 4.2 Authority. Each of Parent and Buyer has full corporate power
and authority to execute and deliver this Agreement, and to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement, and all corporate action of it necessary for such execution, delivery
and performance has been duly and validly taken as required by law or under its
charter documents. This Agreement constitutes the legal, valid and binding
obligation of Parent and Buyer enforceable in accordance with its terms against
them. The execution and delivery of this Agreement by Parent and Buyer do not,
and the performance and consummation by them of the transactions contemplated by
this Agreement, will not (a) conflict with, constitute or result in a breach or
violation of, or default under, any of the terms, conditions or provisions of
any material note, bond, mortgage, indenture, lease, license, agreement,
contract or other instrument or obligation to which they are a party or by which
any of their respective assets or properties are bound; (b) violate any
judgment, order, injunction, decree, statute, rule, or regulation applicable to
them or any of their respective assets or properties; (c) contravene, violate or
be impermissible under their charter documents; or
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(d) permit any party to terminate any lease, contract, agreement or other
instrument to which they are a party or to accelerate the maturity of any of
their indebtedness.
Section 4.3 No Consents. Except as contemplated by this Agreement, neither
the execution of this Agreement by Parent and Buyer, nor the consummation of the
transactions contemplated hereby, require the consent or approval of, or
declaration, filing or registration with, any governmental authority.
Section 4.4 No Broker or Finder. Neither Parent nor Buyer has had
discussions with, negotiated with, been represented by or employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees to any individual or entity in connection with this Agreement or any of the
transactions contemplated hereby.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.1 Announcements. The notices to the general public and the press
relating to the transactions contemplated by this Agreement shall be made only
at such time and in such manner as may be mutually agreed upon by Buyer and the
Company; provided, however, that any party shall be entitled to make a public
announcement about such transactions if, in the opinion of its counsel, such
announcement is required to comply with any applicable law, rule or regulation.
Information provided by either party to third parties whose assistance and
cooperation may, in the judgment of such informing party, be required to the
successful consummation of the transactions contemplated by this Agreement, and
information provided by either party to its employees with respect to such
transactions, shall not be construed as a general notice, release, statement or
communication within the meaning or intent of this section.
Section 5.2 Guaranty of Buyer's Obligations. Parent hereby guarantees all
of the obligations of Buyer under this Agreement and any agreement attached
hereto as an exhibit.
Section 5.3 Parent Management. The Participating Shareholders acknowledge
that they have agreed to sell their Shares to Buyer under the terms of this
Agreement in substantial part because of the Participating Shareholders' belief
that Parent's current management has the ability and vision to continue the
profitability of the Company, thereby increasing the value of the payments to be
made to the Participating Shareholders under Section 1.3. Accordingly, Parent
hereby agrees to use its reasonable efforts to provide for the continuity of
Parent's current management until the end of Year 5.
Section 5.4 Goods and Services Tax.
(a) If a payment to satisfy a claim or a right to claim under or in
connection with this Agreement (for example, for a breach of any warranty, or
for indemnity or for reimbursement of any expense) gives rise to a liability to
pay goods and services tax ("GST"), the payer must pay, and indemnify the payee
against, the amount of that GST.
(b) If a party has a claim under or in connection with this Agreement
for a cost on which that party must bear GST, the claim is for the cost plus all
GST (except any GST for which that party is entitled to an input tax credit).
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(c) If a party has a claim under or in connection with this Agreement
whose amount depends on actual or estimated revenue or which is for a loss of
revenue, revenue must be calculated without including any amount received or
receivable as reimbursement for GST (whether that amount is separate or included
as part of a larger amount).
Section 5.5 Directors' Meetings at Closing. At Closing the Shareholders
shall procure that a duly convened meeting of the directors of the Company and
Pavilion is held at which it is resolved:
(a) In the case of the Company, that each of the transfers of the
Shares be approved for registration (subject only to the payment of stamp duty)
and that, upon registration, the appropriate share certificate be issued in the
name of the Buyer or its nominees;
(b) To appoint as directors, secretary and public officer, with effect
from the end of the meeting, the persons nominated in writing by the Buyer;
(c) To accept the resignation of the existing directors, secretary and
public officer with effect from the end of the meeting;
(d) To revoke all existing authorities to operate bank accounts and to
approve new authorities in favor of the persons previously nominated by the
Buyer; and
(e) To transfer such other business as the Buyer may reasonably
require.
Section 5.6 Stamp Duty. The Participating Shareholders, jointly and
severally, shall be responsible for and pay fifty percent (50%) of, and the
Buyer shall be responsible for and pay fifty percent (50%) of, the stamp duty
resulting from this Agreement and the transactions contemplated hereunder.
Section 5.7 Security Interest. The parties acknowledge that, under loan
agreements between Parent and its lenders, such lenders have certain rights to
use the shares of the Company to be acquired hereunder and under the MSP
Agreement by Buyer (the "QII Shares") as security for such lenders' loans to
Parent. However, Buyer agrees that if Parent's lenders no longer have any rights
to use the QII Shares as security for their loans to Parent, Buyer shall grant
to the Participating Shareholders a security interest in the QII Shares to
secure the Buyer's obligations under the third installment described in Section
1.3(c); provided, however, in no event, shall Buyer be obligated to grant a
security interest to the Participating Shareholder in more than sixty-five (65%)
of the QII Shares.
ARTICLE VI
GENERAL PROVISIONS
Section 6.1 Notices. All notices, demands, requests, consents, approvals or
other communications (collectively "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and will be deemed to have been duly given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered or
certified mail, return receipt requested, or (c) when received by the addressee,
if sent by mail,
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registered or certified (return receipt requested), in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other
addresses and facsimile numbers as a party may designate by notice to the other
parties):
If to Parent or Buyer: Quiksilver, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With Copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇ (▇) ▇▇▇▇-▇▇▇▇
Facsimile: ▇▇ (▇) ▇▇▇▇-▇▇▇▇
If to the Company: Quiksilver International Pty Ltd
Quiksilver Drive
Torquay Victoria
Australia 3228
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone: ▇▇ (▇) ▇▇▇▇-▇▇▇▇
Facsimile: ▇▇ (▇) ▇▇▇▇-▇▇▇▇
With Copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ 3001
Attention: ▇▇▇▇▇▇ Nettlefold
Telephone: ▇▇ (▇) ▇▇▇-▇▇▇▇
Facsimile: ▇▇ (▇) ▇▇▇-▇▇▇▇
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If to Participating
Shareholders: At the address and facsimile for each of
the Participating Shareholders shown on
their signature page.
Section 6.2 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument.
Section 6.3 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
New York.
Section 6.4 Entire Agreement. The terms of this Agreement are intended by
the parties as a final expression of their agreement with respect to such terms
as are included in this Agreement and may not be contradicted by evidence of any
prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial proceeding,
if any, involving this Agreement.
Section 6.5 Dispute Resolution. The parties agree that all disputes arising
under this Agreement will be settled by binding arbitration in the following
manner:
(a) If the party bringing a dispute to arbitration under this
Agreement (the "Complainant") is the Company or any of the Participating
Shareholders, the services and rules of the American Arbitration Association
will be used and the arbitration will be held in the United States. Three
arbitrators will be used with one arbitrator being selected by the Complainant,
one being selected by the party responding to the Complainant (the
"Respondent"), and the third being selected by agreement of the two.
(b) If the Complainant is Parent or Buyer, the arbitration shall be
held in the state of Victoria, Australia, in accordance with the Commercial
Arbitration Act of 1984 (Victoria). Three arbitrators will be used with one
arbitrator being selected by the Complainant, one being selected by the
Respondent, and the third selected by the Chairperson for the time being of the
Chapter of the Institute of Arbitrators Australia in Victoria. The parties agree
that they may be represented in arbitration proceedings by a legal practitioner.
Section 6.6 Exhibits and Schedules. Each of the Exhibits and Schedules
referred to herein and attached hereto is an integral part of this Agreement and
is incorporated herein by this reference.
Section 6.7 Further Assurances. The parties agree to do such further acts
and things and to execute and deliver such additional agreements and instruments
as the other party may reasonably require to consummate, evidence, or confirm
the agreements contained herein in the manner contemplated hereby. In addition,
at the request of Buyer, each Responsible Person shall furnish the Buyer with
any documents or records relating to the Company or Pavilion in the possession
or control of such Responsible Person.
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Section 6.8 Successors and Assigns. This Agreement and the provisions
hereof shall be binding upon and inure to the benefit of each of the parties and
their respective successors and assigns.
Section 6.9 Legal Fees. In the event any action in law or equity,
arbitration or other proceeding is brought for the enforcement of this Agreement
or in connection with any of the provisions of this Agreement, the prevailing
party or parties shall be entitled to its legal fees on a solicitor/client basis
and other costs reasonably incurred in such action or proceeding.
Section 6.10 Equitable Remedies. In addition to legal remedies, to the
extent allowed pursuant to this Agreement or by law, in recognition of the fact
that remedies at law may not be sufficient, the parties hereto (and their
successors) shall be entitled to equitable remedies including, without
limitation, specific performance and injunction.
Section 6.11 Expenses. Each party hereto shall pay its own expenses
incident to the negotiation and preparation of this Agreement and all other
documents necessary or appropriate to consummate the transactions contemplated
hereby, and shall bear its own costs and expenses incurred in closing and
carrying out the transactions contemplated by this Agreement, including any
broker's or finder's fees and the expenses of its representatives.
Section 6.12 Amendment. This Agreement may be amended or modified in whole
or in part at any time prior to the Closing Date by an agreement in writing
among Buyer, the Company, the Participating Shareholders and the Other
Responsible Persons.
Section 6.13 Opportunity to Consult Counsel. Each Participating Shareholder
acknowledges that such Participating Shareholder has had full and adequate
opportunity to have this Agreement reviewed by such Participating Shareholder's
independent counsel and to discuss this Agreement with such counsel.
[Remainder of this page intentionally left blank]
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The parties to this Agreement have executed this Agreement upon the
day and year first set forth above.
"PARENT"
QUIKSILVER, INC., a Delaware corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"BUYER"
QUIKSILVER AUSTRALIA PTY LTD, a Victoria corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"COMPANY"
QUIKSILVER INTERNATIONAL PTY LTD, a Victoria corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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"PARTICIPATING SHAREHOLDERS"
DOVALI PTY LTD:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
Fax No:
-------------------------------
ALIMOC PTY LTD:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
Fax No:
-------------------------------
----------------------------------------
▇▇▇▇ ▇. Law
----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. Law
Address:
-------------------------------
-------------------------------
-------------------------------
Fax No:
-------------------------------
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"OTHER RESPONSIBLE PERSONS"
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Fax No: ▇▇ (▇) ▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ PTY LTD:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
Fax No:
-------------------------------
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SCHEDULE 1
DEFINITIONS
For purposes of the foregoing Agreement, the following definitions shall
apply:
"Adjusted Expenses" shall mean, with respect to any fiscal year, the lesser
of (i) the actual expenses incurred by the Company in its operations (exclusive
of Company Income Taxes) for such fiscal year, and (ii) 35% of the Royalty
Income for such fiscal year.
"Affiliate" means, with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person.
"Australian Company Tax Rate" shall mean the relevant rate of income tax
payable from time to time by corporations under the Income Tax Rates ▇▇▇ ▇▇▇▇.
"Buyer" shall have the meaning set forth in the Preamble.
"Closing" means the consummation of the transaction contemplated by this
Agreement. The time "Closing Date" and place of the Closing are set forth in
Section 1.5.
"Company" shall have the meaning set forth in the Preamble.
"Company Income Taxes" shall mean, with respect to any fiscal year, the
product equal to (i) the Royalty Income for such fiscal year less the Adjusted
Expenses for such fiscal year, times (ii) the Australian Company Tax Rate for
such fiscal year.
"Computed Net Income" shall mean, with respect to any fiscal year of the
Company, the greater of (i) the amount equal to Royalty Income, less Adjusted
Expenses, less Company Income Taxes or (ii) AUD5,000,000.
"Minority Shareholders" shall mean the Persons listed on Exhibit A attached
hereto under the heading "Minority Shareholders."
"MSP Agreement" shall mean the Minority Shareholder Purchase Agreement of
even date herewith by and among Parent, Buyer and the Minority Shareholders in
the form attached hereto as Exhibit D.
"Participating Percentage" means, with respect to each Participating
Shareholder, the percentage determined by dividing (i) the number of Shares held
by such Participating Shareholder on the Closing Date by (ii) the aggregate
number of Shares held by all Participating Shareholders on the Closing Date.
"Participating Shareholders" means the Persons listed on Exhibit A attached
hereto under the heading "Participating Shareholders."
"Pavilion" shall mean Pavilion Productions Pty Ltd, a Victoria corporation.
25
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization.
"Purchase Price" shall have the meaning set forth in Section 1.2.
"Responsible Persons" means ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Pty Ltd, and the
Participating Shareholders.
"Royalty Income" shall mean the product equal to (i) the actual net sales
of the Company's products in the Company's licensed territories for the
applicable fiscal year ending June 30 multiplied by (ii) the royalty rates in
effect as of the date of this Agreement in the territory in question (and for
which purpose the amending agreement dated December 1, 1998 between the Company
and Ug Manufacturing Co Pty Ltd and the amending agreement dated December 1,
1998 between the Company and Quiksilver Japan K.K. shall be disregarded) and
converted into AUD; provided that if a territory does not have a royalty rate as
of the date of this Agreement, the actual royalty rate at the relevant time will
be used.
"Shareholders" shall mean collectively the Participating Shareholders and
the Minority Shareholders.
"Shares" means the issued ordinary shares of the Company.
"Year One" shall mean the Company's fiscal year ending June 30, 2001.
"Year Two" shall mean the Company's fiscal year ending June 30, 2002.
"Year Three" shall mean the Company's fiscal year ending June 30, 2003.
"Year Four" shall mean the Company's fiscal year ending June 30, 2004.
"Year Five" shall mean the Company's fiscal year ending June 30, 2005.
In addition, where quantifiable, the term "material" shall mean AUD100,000
per event and AUD400,000 in the aggregate.
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SCHEDULE 2.22
For the purposes of Section 2.22 of the Agreement, the following
definitions shall apply:
"CONTAMINANT" means any substance or thing the presence or effect of
which on land will make that land Contaminated.
"CONTAMINATED" means in respect of land:
(i) that the land is affected or degraded by the presence of any
substance (including without limitation any Dangerous Good, Hazardous Material,
asbestos or any Waste); and
(ii) having regard to the use of the land (or of any other land in
its vicinity), the substance creates, or may create, a risk of harm to the
Environment.
"DANGEROUS GOOD" has the same meaning as in the most recent edition of
the Australian Code for the Transport of Dangerous Goods by Road and Rail.
"ENVIRONMENT" means all components of the earth, including:
(i) land, air and water;
(ii) the atmosphere and any part or layer of it;
(iii) flora and fauna;
(iv) any organic or inorganic matter;
(v) any living organism (including humans);
(vi) any human made or modified structure or area;
(vii) the aesthetic characteristics of the earth or any of its
components, including their respective appearance, sound, odor, taste or
texture; and
(viii) ecosystems with any combinations of any of the above.
"ENVIRONMENTAL LAW" means any law:
(i) relating to the storage, handling or transportation of Waste,
Dangerous Goods or Hazardous Material; or
(ii) relating to occupational health and safety; or
(iii) which has as one of its purposes or effects the protection
of the Environment.
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"ENVIRONMENTAL NOTICE" means in relation to any land any direction,
order, demand or other requirement from any governmental agency to take any
action or refrain from taking any action in respect of the land or its use in
connection with any Environmental Law.
"HAZARDOUS MATERIAL" means material which, because it is toxic,
corrosive, flammable, explosive or infectious or possesses some other
characteristic, is dangerous or potentially dangerous to the Environment when:
(i) stored or handled; or
(ii) any part of the Environment is exposed to, or affected by,
the material.
"POLLUTANT" means any substance which constitutes Pollution.
"POLLUTION" means any of the following:
(i) air pollution, within the meaning of the Clean Air Act 1961
(NSW);
(ii) water pollution, within the meaning of the Clean ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ (NSW);
(iii) contaminated premises, within the meaning of the
Environmentally Hazardous Chemicals Act, 1985 (NSW);
(iv) offensive noise, within the meaning of the Noise Control Act,
1975 (NSW); and
(v) the disposal of Waste in a manner which ▇▇▇▇▇, or is likely to
harm, the Environment.
"WASTE" means any discarded, rejected, unwanted, surplus or abandoned
substance, whether or not:
(vi) that act has occurred intentionally;
(vii) that substance has a value or use;
(viii) the substance is intended or capable of being used for
sale, recycling, reprocessing, recovery or purification.
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LIST OF EXHIBITS
Exhibit A - Shareholders and Ownership Percentages
Exhibit B - Employment Agreement
o ▇▇▇▇ ▇▇▇▇▇
o Five year term
Exhibit C - Employment Agreement
o ▇▇▇▇ ▇▇▇
o Five year term
Exhibit D - Minority Shareholder Purchase Agreement
29
EXHIBIT A
SHAREHOLDERS AND OWNERSHIP PERCENTAGES
Participating Shareholders No. of Shares Ownership Percentage
-------------------------- ------------- --------------------
Dovali Pty Ltd 2,183,751 49.17%
Alimoc Pty Ltd 1,501,058 33.80
▇▇▇▇▇▇▇▇▇ ▇. and ▇▇▇▇ ▇. Law 164,317 3.70
--------- -----
Subtotal 3,849,126 86.67%
Minority Shareholders
Propaton Pty Ltd 164,317 3.70
▇▇▇▇ ▇▇▇▇▇ Pty Ltd 133,333 3.00
Sea Note Pty Ltd 57,733 1.30
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 35,528 0.80
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ 35,528 0.80
▇▇▇▇▇▇ ▇▇▇▇ 35,528 0.80
Brothers ▇▇▇▇▇▇▇ Pty Ltd 33,307 0.75
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 27,764 0.63
Alligator Pty Ltd 22,205 0.50
▇▇▇▇▇ ▇▇▇▇▇▇ Pty Ltd 22,205 0.50
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 13,323 0.30
Ocalim Pty Ltd 11,103 0.25
--------- ------
Subtotal 591,874 13.33%
--------- ------
Total 4,441,000 100.00%
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A-1