OPTION AGREEMENT
BY AND AMONG
SPIRE INTERNATIONAL CORP.,
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY LTD,
KILAT HOLDINGS PTY. LIMITED,
AND
ENG ▇▇▇ AND ▇▇▇▇ ▇▇▇, INDIVIDUALLY
SEPTEMBER 10, 1996
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "AGREEMENT") is entered into in Orem, Utah,
effective as of the 10th day of September, 1996 (the "EFFECTIVE DATE"), by
and among Spire International Corp., a Utah corporation (the "BUYER"),
Australian Software Innovations (Services) Pty. Ltd ACN ▇▇▇-▇▇▇-▇▇▇, a
limited company organized under the laws of Australia (the "SELLER"), Kilat
Holdings Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized under the
laws of Australia ("KILAT") and Eng ▇▇▇ and ▇▇▇▇ ▇▇▇ (collectively, the
"SHAREHOLDERS"), individually.
RECITALS
A. Buyer, Seller and Eng ▇▇▇ have reached certain understandings with
respect to the acquisition by Buyer of an option to purchase certain assets of
Seller on the terms and subject to the conditions set forth therein.
B. Eng ▇▇▇ is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital stock
of Kilat.
C. Buyer desires to acquire, and Seller desires to grant to Buyer, an
option (the "OPTION") to purchase all of Seller's right, title and interest in
and to the Assets, as defined in ARTICLE 9 (the "ACQUISITION") on the terms and
subject to the conditions set forth herein. All capitalized terms used herein
without definition shall have the meanings set forth in ARTICLE 9.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, Buyer, Seller, Kilat and the Shareholders hereby agree as
follows:
ARTICLE 1
GRANT OF OPTION; ADDITIONAL AGREEMENTS; CLOSING
1.1 GRANT OF OPTION. Subject to the terms and conditions of this
Agreement, Seller hereby grants the Option to Buyer and its nominee,
Centerpost, to be effective as of the Effective Date. Seller acknowledges
and agrees that Buyer, in its discretion, may elect to transfer and assign
its rights hereunder to Centerpost, and Centerpost shall be entitled to
exercise
2
all of the rights and privileges and obtain all of the benefits to
which Buyer shall be entitled pursuant to the terms of this Agreement.
1.2 ADDITIONAL UNDERSTANDINGS. In connection with the grant of the
Option, Seller, Kilat and each of the Shareholders shall, from the date of
this Agreement until exercise by Buyer of the Option or the expiration of the
Option Term, afford Buyer's employees, auditors, legal counsel and other
authorized representatives reasonable access to the properties, records and
personnel of Seller in order to inspect, investigate and audit the Assets and
the operations and business of Seller. Buyer agrees to conduct any such
inspection, investigation or audit in a reasonable manner, during regular
business hours, so as not to disrupt the normal functioning of Seller's
business. Seller, Kilat and the Shareholders agree to cooperate fully with
Buyer and to make Seller's books and records, the Assets and the employees of
Seller available to Buyer as reasonably required by Buyer in order for Buyer
to complete its due diligence in a timely fashion.
1.3 OPTION CONSIDERATION. As consideration (the "OPTION CONSIDERATION")
for Seller's grant of the Option, Buyer shall, at or prior to the Option
Closing:
(a) Subject to the provisions of SECTION 1.7, pay to Seller the
option purchase price (the "OPTION PURCHASE PAYMENT") of One Hundred Thirty
Thousand Dollars ($130,000); and
(b) Buyer shall arrange for a lender (the "LENDER") to provide to
Seller a commercial credit facility (the "FACILITY") in the principal amount
of Two Hundred Thousand Dollars ($200,000) on terms mutually acceptable to
Buyer, Seller and Lender. In Buyer's sole discretion, the Lender shall be
either (1) Buyer or (2) a commercial lending institution. In the event Buyer
elects to act as the Lender, Seller shall execute and deliver to Buyer at the
Option Closing a promissory note substantially in the form of EXHIBIT B, as
determined by Buyer in its reasonable discretion, together with a Fixed
Charge substantially in the form of EXHIBIT C, as determined by Buyer in its
reasonable discretion, and such additional documents determined necessary by
Buyer in its reasonable discretion. Seller shall use the proceeds of the
Facility solely for purposes mutually approved by Buyer and Seller in
advance. All amounts advanced (the "LOAN") to Seller by the Lender under the
Facility shall be secured by a pledge by Seller in favor of the Lender of all
of Seller's right, title and interest in and to the Intellectual Property of
ASI, including, without limitation, the intellectual property described on
EXHIBIT D.
1.4 OPTION CLOSING. Upon satisfaction or waiver of the conditions to
closing contained in ARTICLE 4 and ARTICLE 5 hereof, the parties hereto agree
to close the grant of the Option (the "OPTION CLOSING") on the terms set
forth in this Agreement. The Option Closing shall take place at Orem, Utah,
or such other place as may be agreed to by the parties, on the date agreed to
by the parties, but in all events on or before September 10, 1996. It is the
intent of the parties to consummate the Option Closing contemporaneously the
execution of this Agreement. The parties agree to use their good faith and
reasonable efforts to close the grant
3
of the Option as soon as possible and to cooperate fully with each other to
complete the Option Closing.
1.5 OPTION CLOSING DELIVERIES.
(a) Prior to or at the Option Closing, Seller shall deliver to
Buyer:
(i) If Buyer is the Lender, executed counterparts of the
applicable Loan Documents, or, if Buyer is not the Lender, copies of the
executed Loan Documents, as applicable;
(ii) Complete and accurate Disclosure Schedules;
(iii) Such other documents, including certificates of
independent legal advice and appropriate statutory declarations, as may be
required by this Agreement, or reasonably requested by Buyer to carry out the
transactions contemplated hereby, including, without limitation, declarations
in the form attached hereto as EXHIBIT E; and
(iv) Evidence, in form and substance acceptable to Buyer in its
reasonable discretion, of Seller's compliance with the requirements of
SECTION 1.7.
(b) Prior to or at the Option Closing, Buyer shall deliver to
Seller:
(i) In immediately available funds, the amount of the Option
Purchase Payment, subject to the provisions of SECTION 1.7;
(ii) If Buyer is the Lender, the amount of the initial advance
of the proceeds of the Loan requested by Seller and approved by Buyer
pursuant to the Facility, not to exceed Two Hundred Thousand Dollars
($200,000) in immediately available funds, and executed counterparts of the
applicable Loan Documents; and
(iii) Such other documents, including certificates of
independent legal advice and appropriate statutory declarations, as may be
required by this Agreement, or as reasonably requested by Seller to carry out
the transactions contemplated hereby.
1.6 EXERCISE OF OPTION.
(a) The Option shall be exercisable at any time, in Buyer's sole
discretion, during the period commencing on the Effective Date and continuing
for a period of one year thereafter (the "OPTION TERM").
(b) In the event Buyer elects to exercise the Option, Buyer shall
deliver to Seller and the Shareholders notice (the "EXERCISE NOTICE") of its
intention to exercise the Option;
4
provided, however, that in such event Buyer shall deliver the Exercise Notice
to Seller and the Shareholders not less than sixty (60) days prior to the
expiration of the Option Term.
(c) Within sixty (60) days following the date of the Exercise
Notice, Buyer, Seller, Kilat and the Shareholders shall execute the following
definitive acquisition agreements pursuant to which Buyer, Seller, Kilat and
the Shareholders shall consummate the Acquisition:
(i) an asset acquisition agreement providing for the
acquisition by Buyer of all of the Assets (excluding only the
Intellectual Property Assets)(the "ASSET PURCHASE AGREEMENT" ),
substantially in the form of EXHIBIT F;
(ii) an intellectual property purchase agreement providing for
the acquisition of all of the Intellectual Property Assets (the
"INTELLECTUAL PROPERTY PURCHASE AGREEMENT"), substantially in the form of
EXHIBIT G; and
(iii) a deed of restraint of trade (the "DEED OF RESTRAINT
OF TRADE"), substantially in the form of EXHIBIT H, pursuant to which the
Shareholders shall undertake the covenants set forth therein in partial
consideration for the payment by Buyer of the Exercise Price.
Among other things, the Purchase Agreements shall provide for the acquisition
by Buyer of all or any lesser portion of the Assets as Buyer desires, in its
discretion, to purchase from Seller, at purchase price (the "EXERCISE PRICE")
to be paid by Buyer in the amount of One Million Four Hundred Five Thousand
Dollars ($1,405,000), payable at the closing of the Acquisition, subject to
the amount of the Exercise Price Adjustment. The Exercise Price shall be
paid in the form of cash in the amount of One Million Fifty Five Thousand
Dollars ($1,055,000) and Eighty Seven Thousand Five Hundred (87,500) shares
of Spire Common Stock; PROVIDED, HOWEVER, that (i) the amount of the cash
portion of the Exercise Price shall be adjusted to reflect the amount of the
Exercise Price Adjustment and (ii) the number of shares of Spire Common Stock
to be delivered by Buyer to Seller pursuant to this Section 1.6(c) shall not
be adjusted for any change in the value of the Spire Common Stock after the
Effective Date. The Purchase Agreements shall credit the full amount of the
Option Purchase Payment against Buyer's obligation to pay the Exercise Price.
(d) If Buyer exercises the Option and acquires the Assets, Buyer
shall assume only those Liabilities of Seller set forth on EXHIBIT A,
including, without limitation, the obligations of Seller under the promissory
note described in SECTION 1.3(b), unless the Liabilities of Seller to be
assumed by Buyer are subsequently adjusted by the mutual written agreement of
Buyer and Seller, which agreement Buyer may withhold in its absolute
discretion.
(e) If Buyer does not elect to exercise the Option, this Agreement
shall not convey to Buyer any interest in the Assets or the business of Seller,
except as expressly set forth in the promissory note and the Fixed Charge
described in SECTION 1.3(b).
5
1.7 PAYMENT OF TAXES; STAMP DUTY. Seller shall pay any and all Taxes
payable to Governmental Authorities of the Commonwealth of Australia or any
political subdivision thereof which are related in any manner to the
execution of this Agreement, the grant and exercise of the Option or the
execution and performance of the Purchase Agreements, including, without
limitation, the full amount of any stamp duty payable to Governmental
Authorities of the Commonwealth of Australia or any political subdivision
thereof. Seller, Kilat and each of the Shareholders shall jointly and
severally indemnify, defend and hold Buyer harmless from any and all Tax
liabilities associated with the execution of this Agreement, the grant and
exercise of the Option and the execution and performance of the Purchase
Agreements. To facilitate Seller's performance of the obligations set forth
in this SECTION 1.7, at the Option Closing Buyer shall withhold from the
Option Purchase Payment an amount equal to Four Thousand Australian Dollars
(AUS$4,000), representing the estimated amount of Taxes payable in connection
with the execution of this Agreement, the grant and exercise of the Option
and the execution and performance of the Purchase Agreements. The amount so
withheld by Buyer shall be paid to the law firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Kitamura,
to be held in trust by such law firm and released solely for the purpose of
fulfilling Seller's Tax obligations under the terms of this SECTION 1.7.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER, KILAT
AND THE SHAREHOLDERS
Except as otherwise indicated, Seller, Kilat and each of the Shareholders
jointly and severally represent and warrant to Buyer that the following
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Effective Date:
2.1 AUTHORITY. Seller, Kilat and each of the Shareholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver this Agreement, to perform his, her or its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Seller, Kilat and each of the
Shareholders, and this Agreement constitutes the legal, valid and binding
agreement of Seller, Kilat and each of the Shareholders enforceable against
Seller, Kilat and each of the Shareholders in accordance with its terms except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF SELLER AND KILAT.
Seller is a limited company duly organized, validly existing and in good
standing under the laws of Australia and has full power and authority to
carry on its business as now being conducted, to own and operate its
properties and assets, and to perform all its obligations under the
Contracts. Kilat is a limited company duly organized, validly existing and
in good standing under the laws of Australia and has full power and authority
to carry on its business and to perform all its obligations under this
Agreement.
6
2.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Disclosure Schedules, neither the execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby, nor the compliance
by Seller and Kilat with any of the provisions thereof will, as of the
Closing Date, (i) conflict with or violate any provision of the Memorandum
and Articles of Association or other charter or governing documents of Seller
or Kilat respectively, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, contract, agreement, commitment,
bond, mortgage, indenture, license, lease, pledge agreement or other
instrument or obligation to which Seller or Kilat is a party or by which
Seller or Kilat or any of their respective properties or assets may be bound,
including, without limitation, any other agreement with respect to the sale
by Seller of any of its properties or assets, (iii) to the best knowledge of
Seller, Kilat and the Shareholders, violate or conflict with any provision of
any Legal Requirement binding upon Seller or Kilat respectively, or (iv) to
the best knowledge of Seller, Kilat and the Shareholders, result in, or
require, the creation or imposition of, any Encumbrance upon or with respect
to any properties of Seller or Kilat, including, without limitation, the
Assets, or impair the ability of Seller, Kilat or the Shareholders to carry
out their respective obligations under this Agreement.
2.4 BOOKS AND RECORDS. The books of account and other business records
of Seller regarding the Assets and the business and operations of Seller have
all been made available to Buyer and such books and records are complete and
correct with regard to the matters which are the subject of this Agreement.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Other than the Liabilities
created pursuant to the Facility and except as and to the extent fully
disclosed in writing to Buyer in the Disclosure Schedules, as of the
Effective Date, Seller will have no Liabilities, including, without
limitation, any Liabilities resulting from failure to comply with any Legal
Requirement applicable to Seller, its business or operations or the Assets
due or to become due and whether incurred in respect of or measured by the
income or sales of Seller for any period or arising out of any transactions
entered into, or any state of facts existing, on or before the Effective Date
which could, as of or after the Effective Date, materially adversely affect
Seller's business or operations or the Assets, give rise to an Encumbrance
against the Assets or materially adversely affect Seller's ability to carry
out the transactions contemplated by this Agreement.
2.6 CONTRACTS. Except as set forth on the Disclosure Schedules or as
otherwise described in this Agreement:
(a) Complete and accurate copies, including all amendments, of all
contracts and agreements to which Seller is a party or by which its business or
operation or the Assets may be materially affected (collectively, the
"CONTRACTS") have been delivered to Buyer.
(b) All of the Contracts are in full force and effect and are valid
and enforceable in accordance with their terms, there are no material defaults
thereunder or breaches
7
thereof, and no condition exists or event has occurred
which, with notice or lapse of time or both, would constitute a default
thereunder.
(c) Seller has the right to assign its rights and obligations
under the Contracts to Buyer, and such assignment will not result in a
default, breach or right of termination thereunder.
2.7 PERSONAL PROPERTY.
(a) Seller has disclosed to Buyer all the Assets owned by Seller,
including all rights under the Contracts.
(b) There is no asset, property, right or interest of any nature
whatsoever necessary to or currently utilized in the operation of Seller's
business which is not included in the Assets and has not been disclosed to
Buyer in the Disclosure Schedules.
(c) Set forth in the Disclosure Schedules is a complete and
accurate description of all obligations or commitments of Seller with respect
to any asset of any nature whatsoever that is used in whole or in part for
the personal use or benefit of any shareholder, officer, director or employee
of Seller or any Affiliate thereof.
2.8 TITLE TO ASSETS AND RELATED MATTERS. Except as fully and accurately
disclosed in the Disclosure Schedules, Seller owns all of the Assets free and
clear of all Encumbrances and the claims or rights of any other party, except
for such Encumbrances created pursuant to the Facility. Seller has the power,
authority and right to sell the Assets to Buyer free and clear of any
Encumbrances, except for such Encumbrances created pursuant to the Facility.
2.9 INTELLECTUAL PROPERTY. Except as set forth in the Disclosure
Schedules:
(a) All of the Intellectual Property necessary to or currently
utilized in Seller's business is owned by Seller free and clear of all
Encumbrances, and is not subject to any license, royalty or other agreement,
and Seller has not granted any license or agreed to pay any royalty in
respect of any Intellectual Property necessary to or currently utilized in
Seller's business, except for that license granted pursuant to a License
Agreement between Seller and Spire Technologies, Inc. dated as of July 1,
1996;
(b) None of the Intellectual Property necessary to or currently
utilized in Seller's business has been or is the subject of any pending or
threatened Proceeding or claim of infringement;
(c) No license or royalty agreement to which Seller is a party or by
which any of the Intellectual Property necessary to or currently utilized in
Seller's business is or could be materially affected is in breach or default by
any party thereto or the subject of any notice of termination given or
threatened;
8
(d) To the best knowledge of Seller and each of the Shareholders,
the products manufactured or sold by Seller and any process, method, part,
design, material or other Intellectual Property they employ, and the
marketing and use by Seller of any such product, service or other
Intellectual Property, do not infringe any Intellectual Property or
confidential or proprietary rights of another, and Seller has not received
any notice contesting its right to use any Intellectual Property; and
(e) Seller owns or possesses adequate rights in perpetuity in and to
all Intellectual Property necessary to conduct its business as presently
conducted.
2.10 COMPLIANCE WITH LAWS. Seller is in compliance with all Legal
Requirements applicable to the ownership of the Assets and the operation of
its business where the failure so to comply would have a material adverse
effect on Seller's ability to carry out its obligations under this Agreement
or the ability of Buyer to carry on the business operations related to the
Assets after the Acquisition, and the Seller does not have any basis to
expect, nor has it received, any Order, notice, or other communication from
any Governmental Authority of any alleged, actual, or potential violation
and/or failure to comply with any such Legal Requirement, except as disclosed
on the Disclosure Schedules.
2.11 LITIGATION. Except as set forth in the Disclosure Schedules, (i)
neither Seller, Kilat nor either of the Shareholders is subject to any Order
in which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Assets, the operation of Seller's business or the
matters covered by this Agreement which would prevent, delay or make illegal
the transactions contemplated by this Agreement, (ii) there are no
Proceedings pending or threatened against, involving, affecting or relating
to Seller, Kilat or either of the Shareholders, the operation of Seller's
business or to Sellers ownership, operation or use of the Assets before any
arbitrator or Governmental Authority, and (iii) to the best knowledge of
Seller and each of the Shareholders, there exist no facts to serve as a basis
for the institution of any Proceeding against Seller, Kilat, either of the
Shareholders or any of the Assets which would prohibit or adversely affect
the Assets or the ability of Seller, Kilat or the Shareholders to carry out
their respective obligations under this Agreement.
2.12 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Seller in
connection with this Agreement or the transactions contemplated hereby, and
no Person, including Seller, Kilat or either of the Shareholders, is or will
be entitled to any broker's or finder's fee or any other commission or
similar fee or expense, directly or indirectly, in connection with this
Agreement, the Purchase Agreements or the transactions contemplated hereby or
thereby.
2.13 BANKRUPTCY. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or
9
proceeding has been commenced or threatened against
Seller by any creditor, claimant, governmental authority or any other person.
2.14 LABOR MATTERS. Except as set forth in the Disclosure Schedules,
(a) Seller has made all payments to its employees required by any
Legal Requirement or any Employee Benefit Plan;
(b) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
threatened, any Proceeding against Seller under any Legal Requirement governing
the conditions of Seller's employment of its employees, or any basis or ground
for any such claim;
(c) Seller has not been a party to any collective bargaining
agreement or other labor contract affecting the employees of Seller;
(d) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
existing or threatened, any strike, slowdown, picketing, work stoppage, labor
arbitration or proceeding in respect of the grievance of any employee, an
application or complaint filed by an employee or union with any Governmental
Authority, or organizational activity or labor dispute against or affecting
the business of Seller; and
(e) Seller has complied with all its obligations under all
relevant superannuation legislation and has made all contributions required
to be made in respect of its employees for their period of employment up to
and including the Effective Date. Seller has established reserves and
accruals (each of which is reflected on Seller's balance sheet attached
hereto as EXHIBIT A) in amounts sufficient to satisfy all superannuation
obligations in respect of its employees for their period of employment up to
and including the Effective Date.
2.15 DISCLOSURE. No representation or warranty of Seller, Kilat or the
Shareholders contained in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to Seller, Kilat or
either of the Shareholders which has specific application to Seller (other
than general economic or industry conditions) and which materially and
adversely affects or, so far as Seller, Kilat or either of the Shareholders
can reasonably foresee, materially threatens, the Assets or the ability of
Seller, Kilat or the Shareholders to carry out their respective obligations
under this Agreement, which has not been set forth in this Agreement or in
the Disclosure Schedules.
2.16 TAX MATTERS. With respect to Taxes, including, without limitation,
Taxes imposed by the Income Tax Assessment Act of 1936 of the Commonwealth of
Australia (the "TAX ACT") and any other Australian national, state or
territorial law or regulation:
10
(a) Seller has lodged, or will lodge, at or before the correct
time all Tax Returns required by law to be lodged on or before the Effective
Date and all such Tax Returns have been, or will be, as the case may be,
fully and accurately completed;
(b) Seller has made, to the Commissioner of Taxation or the
appropriate Governmental Authority a full and true disclosure of all material
facts necessary for the proper assessment of Seller and each deduction,
rebate or credit claimed in those Tax Returns has been properly claimed and
is duly allowable;
(c) All other necessary information, documents and notices in
respect of Tax have been properly and duly submitted by Seller to all
relevant Governmental Authorities in respect of Tax for all periods up to the
Effective Date and will continue to be properly and duly submitted up to the
later of the expiration of the Option Term and the execution of the Purchase
Agreement, and there is no unresolved dispute with any of those authorities
nor is any such dispute foreshadowed or contemplated;
(d) All Taxes which have been assessed or imposed or are lawfully
assessable upon or are payable by Seller and which are due and payable or
which may become due and payable subsequent to but are referable to the
period ending on the Effective Date have been paid by Seller or adequate
provisions has been made for them in Seller's accounts and such provisions
have been fully disclosed to Buyer; and
(e) All obligations imposed on Seller under all laws relating to
Tax have been complied with and, without limiting the generality of the
foregoing, all amounts of income tax and medicare levy required by law to be
deducted by Seller from salary or wages of Seller's employees (including,
without limitation, Seller's directors and officers) and from prescribed
payments as defined in Section 2321YHA(1) of the Tax Act and all amounts of
withholding tax have been duly deducted and where payable to the relevant
axing authority have been duly paid.
2.17 INSURANCE. The assets of Seller (including, without limitation,
the Assets) are adequately insured by respect of the risks to which they are
subject (including loss or damage by disease, fire, theft, storm and tempest)
in such amounts as accord with sound business principles and such policies of
insurance will not expire earlier than the later of the expiration of the
Option Term and the execution of the Purchase Agreements. Seller is
adequately insured against public liability in such amounts as accord with
sound business principles and such policies of insurance will not expire
prior to the later of the expiration of the Option Term and the execution of
the Purchase Agreements. Seller is adequately insured against workers'
compensation liability and has complied with all respects with the
legislation relating to workers' compensation in all jurisdictions where
relevant. All premiums in respect of the insurance coverages referred to in
this Agreement will have been paid prior to the Effective Date, Seller has
complied with all the conditions of the associated policies and has not made
any false or misleading statement or done or omitted to do anything which
would entitle the insurers to avoid the policies or refuse to meet any claim
thereunder in full other than as disclosed by Seller to Buyer in writing
prior to the Effective Date. There is no fact or matter of which Seller,
Kilat
11
or the Shareholders is aware which could lead to Seller's insurance
policies being vitiated or repudiated and neither Seller, Kilat nor the
Shareholders will permit any such policies to lapse prior to the later of the
expiration of the Option Term and the execution of the Purchase Agreements,
nor will Seller, Kilat or the Shareholders do or fail to do anything which
will render any of Seller's insurance policies void or voidable prior to the
later of the expiration of the Option Term and the execution of the Purchase
Agreements.
2.18 TRADE PRACTICES. There is no agreement, arrangement or activity
whether by commission or omission in which Seller has been or will be
concerned which infringes or which has been or which is required to be
authorized under the Australian Trade Practices Act of 1974 of the
Commonwealth of Australia or any other anti-trust legislation in relation to
the Assets, including, without limitation, any Australian national, state or
territorial law or regulation.
2.19 ENVIRONMENTAL LIABILITIES. There are no Environmental Liabilities
(as defined below) affecting any of Seller's business premises. There are no
factors affecting any of Seller's business premises which are likely within
the next twelve months to give rise to any Environmental Liability. For the
purposes of this clause, the term "ENVIRONMENTAL LAW" means any planning,
environmental, health, toxic, hazardous substances, dangerous goods,
waste/disposal or pollution laws, regulations, orders, notices, ordinances or
requirements, and the term "ENVIRONMENTAL LIABILITY" means any obligation,
expense, penalty or fine under an Environmental Law which could be imposed on
any occupier in possession of Seller's business premises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Kilat and the Shareholders as
follows:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full power and authority to purchase the Assets and to
carry on its intended business therewith.
3.2 AUTHORITY. Buyer has full power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes the legal,
valid and binding agreement of Buyer enforceable against Buyer in accordance
with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting creditor's rights generally.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration
with, no notice to and no Governmental Authorization, consent or approval of
any Governmental Authority, creditor or other person in a contractual
relationship with Buyer is necessary in connection with
12
Buyer's execution and delivery of this Agreement, the performance of its
obligations hereunder or the consummation of the transactions contemplated
hereby or thereby. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the compliance by
Buyer with any of the provisions hereof will, as of the Effective Date, (i)
result in a material violation or breach of, or constitute (with or without
due notice or lapse of time or both) a material default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of the Buyer's Articles of Incorporation or Bylaws,
or of any note, contract, agreement, commitment, bond, mortgage, indenture,
license, lease, pledge agreement or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or assets may be
bound, or (ii) violate or conflict with any provision of any Legal
Requirement binding upon Buyer.
3.4 BANKRUPTCY. Buyer has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or proceeding has been commenced or threatened against
Buyer by any creditor, claimant, governmental authority or any other person.
3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Buyer in
connection with this Agreement or the transactions contemplated hereby, and
no Person, including Buyer, is or will be entitled to any broker's or
finder's fee or any other commission or similar fee or expense, directly or
indirectly, in connection with this Agreement, the Purchase Agreements, the
Loan Documents or the transactions contemplated hereby or thereby.
ARTICLE 4
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement are subject to fulfillment of the following conditions, any one
or more of which may be waived in whole or in part by Buyer in the manner
provided for herein.
4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Seller, Kilat and the Shareholders
contained in this Agreement are true, correct and complete in all material
respects as of the Effective Date.
4.2 COMPLIANCE WITH AGREEMENT. Seller, Kilat and each of the
Shareholders shall have performed and complied with all obligations,
agreements, covenants and conditions required by this Agreement to be
performed or complied with by them on or before the Effective Date,
including, without limitation, making all the deliveries required by
SECTION 1.5.
13
4.3 AUTHORIZATION; THIRD-PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with the execution and delivery of this Agreement by Seller,
Kilat and the Shareholders, the performance of their respective obligations
hereunder, or the consummation of the transactions contemplated hereby shall
have been made or obtained. All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement by Seller and Kilat,
and the consummation by Seller and Kilat of the transactions contemplated by
this Agreement shall have been duly and validly taken, Seller shall have full
right and power to sell the Assets (except as may be limited pursuant to the
Facility) and Seller and Kilat shall have full right and power to perform
their respective obligations upon the terms provided in this Agreement. On
or prior to the Effective Date, Seller, Kilat and the Shareholders shall have
furnished to the Buyer evidence of the foregoing filings, notices, consents,
stipulations and assignments.
4.4 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the
transactions contemplated by this Agreement shall have been satisfactory in
all reasonable respects to Buyer and its counsel.
ARTICLE 5
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER, KILAT AND THE SHAREHOLDERS
The obligations of Seller, Kilat and the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the fulfillment of
the following conditions, any one or more of which may be waived in whole or
in part by the Seller, Kilat or the Shareholders in the manner provided for
herein.
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Buyer contained in this Agreement shall be
true, correct and complete in all material respects as of the Effective Date.
5.2 BUYER'S PERFORMANCE; COMPLIANCE WITH AGREEMENT. Buyer shall have
performed and complied with all obligations, agreements, covenants and
conditions required by this Agreement to be performed or complied with by
Buyer on or before the Effective Date, including without limitation making
all the deliveries required by SECTION 1.5.
5.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with Buyer's execution and delivery of this Agreement, the
performance of its obligations hereunder, or the consummation of the
transactions contemplated hereby shall have been made or obtained. All
corporate action necessary to authorize the execution, delivery and
performance of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated by this Agreement shall have been
14
duly and validly taken. Buyer shall have furnished to Seller, Kilat and the
Shareholders evidence of the foregoing filings, notices, consents and
actions, if requested.
5.4 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the
transactions contemplated by this Agreement shall have been satisfactory in
all reasonable respects to Seller, Kilat and the Shareholders and their
counsel.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution and performance of this Agreement
and the transactions contemplated hereby, including without limitation all
fees and expenses of agents, business brokers, legal counsel, accountants,
tax and financial advisors and other facilitators and advisors.
6.2 CONFIDENTIALITY.
(a) NON-DISCLOSURE AND USE. Each of Buyer, Seller, Kilat and the
Shareholders acknowledges that, in connection with the transactions
contemplated by this Agreement, each has become or may become privy to the
technical, marketing and other proprietary information of another party,
including, without limitation, information, material, documents and data
related to such other party, to the business activities of such other party
and/or to its customers, trade secrets and other proprietary information
(collectively, the "PROPRIETARY INFORMATION"). Each agrees (i) to take at
all times all reasonably necessary steps to safeguard the confidentiality of
any Proprietary Information; (ii) not to disclose, reveal, make accessible or
make available to any third Person any Proprietary Information; and (iii) not
to use any Proprietary Information for such party's own benefit or for any
other Person's benefit; PROVIDED, HOWEVER, that Buyer, Seller, Kilat or the
Shareholders may disclose (A) Proprietary Information which at the time of
the disclosure is part of the public knowledge and readily accessible to such
third party and (B) Proprietary Information which is required by law to be
disclosed.
(b) RETURN. Buyer, Seller, Kilat and the Shareholders agree that
if the Option is not exercised, each of them will, upon the expiration of the
Option Term, return to the other parties hereto any and all material
containing or reflecting Proprietary Information.
(c) REMEDIES. Each of Buyer, Seller, Kilat and the Shareholders
acknowledges and agrees that any breach of the terms of this SECTION 6.2
would result in irreparable injury and damage to the injured party for which
such party would have no adequate remedy at law; each of Buyer, Seller, Kilat
and the Shareholders therefore also acknowledges and agrees that in the event
of such breach or any threat of breach, the injured or threatened
15
party shall be entitled, in addition to any other remedies to which such
party may be entitled at law or in equity, to an immediate injunction and
restraining order to prevent such breach and/or threatened breach by the
breaching or threatening party and/or any and all persons and/or entities
acting for and/or with such breaching or threatening party, without having to
provide a bond or other security or to prove actual damages.
6.3 OPERATION OF BUSINESS.
(a) Seller shall remain in possession of Seller's business and
assets during the period from the Effective Date until the execution of the
Purchase Agreements.
(b) Neither Seller, Kilat nor either of the Shareholders will
engage in any practice, take any action or enter into any transaction outside
the Ordinary Course of Business with respect to the Assets or the operation
of Seller's business from the date of this Agreement until the expiration of
the Option Term or, if Buyer exercises the Option, until the consummation of
the transactions described in the Purchase Agreements. Without in any manner
limiting the foregoing, Seller, Kilat and the Shareholders covenant and agree
that during such period,
(i) the aggregate monthly remuneration (including, without
limitation, all salary, distributions, dividends, bonuses, deferred
compensation, automobile lease expense, superannuation payments and other
payments) paid to or for the benefit of Kilat and the Shareholders and all
Affiliates of Kilat and the Shareholders shall not exceed Sixteen Thousand
Six Hundred Sixty Seven Australian Dollars (Aus$16,667), and
(ii) except as set forth in the Disclosure Schedules, Seller will
not, and Kilat and the Shareholders will not permit Seller to, make any
payment or incur any obligation with respect to any asset of any nature
whatsoever that is used in whole or in part for the personal use or benefit
of any shareholder, officer, director or employee of Seller or any
Affiliate thereof.
Seller, Kilat and the Shareholders will use their best efforts to preserve the
Assets and the goodwill and value of Seller's business, to comply with all laws
applicable to the Assets and Seller's business and to maintain good working
relationships with lessors, licensors, suppliers, customers and employees. In
addition, Seller will not sell or contract to sell any interest in Seller or
lease, license, transfer, pledge, mortgage, hypothecate or otherwise dispose of
any of the Assets.
(c) Seller will not, and Kilat and the Shareholders will not
permit Seller to, do any act or thing or suffer or permit any omission which
would make any policy of insurance of Seller written with respect to the
Assets void or voidable or do anything that would mean that any existing
insurance policy of Seller is not materially in full force and effect during
the period from the Effective Date until the later of the expiration of the
Option Term and the consummation of the transactions described in the
Purchase Agreements.
16
6.4 PUBLICITY. The parties hereto agree, subject to the provisions of
SECTION 6.2, to advise and confer with each other, to the maximum extent
possible, regarding and prior to the issuance of any reports, statements,
releases, public announcements or similar publicity with respect to this
Agreement or the transactions contemplated hereby; PROVIDED, HOWEVER, that any
of the parties may make such announcements, give such notices and provide such
information to Governmental Authorities, employees, creditors, affiliates and
the public as its counsel may advise is legally required.
6.5 EXCLUSIVITY. From and after the date of this Agreement until the
expiration of the Option Term:
(a) Neither Seller nor any of its officers, directors, stockholders
or agents (including, without limitation, Kilat and the Shareholders) shall
directly or indirectly:
(i) Enter into any transaction with any party other than Buyer
relative to any disposition of the Assets or Seller's business or operations or
any part thereof; or
(ii) Solicit or encourage submission of inquiries, proposals or
offers from any other party relative to potential disposition of the Assets or
Seller's business or operations or any part thereof; or
(iii) Provide further information to any party other than
Buyer relating to any possible disposition of the Assets or Seller's business
or operations or any part thereof.
(b) Seller, Kilat and the Shareholders agree that if Seller, Kilat
or either of the Shareholders receives an offer or proposal relating to the
possible disposition of the Assets or Seller's business or operations or any
part thereof, Seller, Kilat and the Shareholders will immediately notify
Buyer of such offer or proposal, the identity of the party making the offer
or proposal and the specific terms of the offer or proposal.
6.6 COOPERATION. Each of Kilat and the Shareholders agrees to cause
Seller to take, or to refrain from taking, all actions necessary to fulfill
Seller's covenants and obligations under this Agreement.
6.7 RESTRAINT OF TRADE. Seller, Kilat and the Shareholders each
acknowledges the receipt of valuable consideration from Buyer. In
consideration of that valuable consideration and to protect the goodwill
associated with the Assets, each of Seller, Kilat, the Shareholders and their
respective Affiliates agree to be bound by the following restrictions:
(a) For the purpose of SECTION 6.7. "engaged or involved in"
includes direct or indirect involvement as a principal, agent, partner,
employee, shareholder, unitholder, director, trustee, beneficiary, manager,
consultant, adviser or financier;
17
(b) During the term of this Agreement none of them will be engaged
or involved in any capacity in any business or activity which is the same as
or similar to the business of Seller in the Commonwealth of Australia;
(c) Without in any manner limiting the provisions of SECTION
6.7(B), if the Option is exercised,
(i) for a period of twelve months from the date of execution of
the Purchase Agreements;
(ii) for a period of twelve months from the first anniversary of
the date of execution of the Purchase Agreements; and
(iii) for a period of twelve months from the second
anniversary of the date of execution of the Purchase Agreements,
none of them will, be engaged or involved in any capacity in any business or
activity which is the same as or similar to the business of Buyer, as successor
to Seller in relation to the Assets, in the Commonwealth of Australia.
(d) If any of the prohibitions or restrictions contained in this
section are judged by any court to go beyond what is reasonable in the
circumstances, but would be reasonable and necessary if any activity were
deleted or a period or area were reduced, then the prohibitions or restrictions
will apply with that activity deleted or period or area reduced by the minimum
amount determined necessary by the relevant court.
(e) Each of the prohibitions and restrictions in this section has
effect as a separate and several prohibition or restriction and is to be
enforced accordingly.
(f) Notwithstanding any of the other provisions of this section,
Seller, Kilat, the Shareholders and their respective Affiliates may hold in
aggregate up to, but not more than, ten percent of the capital stock of a
public company, the shares of which are quoted in Australian Stock Exchange
Limited, even though that company carried on any of the activities referred
to in this clause.
(g) Seller, Kilat and the Shareholders each acknowledge that all the
prohibitions and restrictions contained in this clause are reasonable in these
circumstances and warrant that
(i) they have received independent legal advice with respect to
this clause;
(ii) they consider such prohibitions and restrictions to go no
further than reasonably necessary to protect the goodwill associated with
the Assets; and
18
(iii) damages would not be an adequate remedy to protect the
goodwill associated with the Assets.
ARTICLE 7
INDEMNIFICATION AND LIMITATION
7.1 INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS. Subject to the
limitation set forth in SECTION 7.4, Seller, Kilat and each of the
Shareholders, jointly and severally, unconditionally, absolutely and
irrevocably agree to and shall defend, indemnify and hold harmless Buyer, and
each of Buyer's officers, directors, employees, counsel, successors, assigns,
and legal representatives (Buyer and such persons are collectively referred
to as the "BUYER'S INDEMNIFIED PERSONS") from and against, and shall
reimburse Buyer's Indemnified Persons for, each and every Loss paid, imposed
on or incurred by Buyer's Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of any inaccuracy in any
representation or warranty of Seller, Kilat or the Shareholders under this
Agreement, the Loan Documents or any agreement, certificate or document
delivered by Seller, Kilat or the Shareholders pursuant hereto in any
respect, or any breach or nonfulfillment of any covenant, agreement or other
obligation of Seller, Kilat or the Shareholders under this Agreement, the
Loan Documents or any agreement, certificate or document to be delivered by
Seller, Kilat or the Shareholders pursuant hereto (including, without
limitation, Seller's obligation to pay Taxes required pursuant to SECTION
1.7). With respect to matters not involving Proceedings brought or asserted
by third parties against Buyer's Indemnified Persons, within thirty (30) days
after notification from Buyer's Indemnified Persons supported by reasonable
documentation setting forth the nature of the circumstances entitling Buyer's
Indemnified Persons to indemnity hereunder, Seller, Kilat and the
Shareholders shall, at no cost or expense to Buyer's Indemnified Persons,
diligently commence resolution of such matters in a manner reasonably
acceptable to Buyer's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Seller,
Kilat and the Shareholders, Seller, Kilat and the Shareholders shall promptly
pay the amount so claimed. If litigation or any other Proceeding is commenced
or threatened, the provisions of SECTION 7.3 shall control over the
immediately preceding sentence. Buyer shall be entitled to offset against
any amounts owed by Buyer to Seller, Kilat or the Shareholders under this
Agreement any amounts owed by Seller, Kilat or the Shareholders,
respectively, to Buyer hereunder.
7.2 INDEMNIFICATION BY BUYER. Buyer unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Seller,
Kilat, the Shareholders and the successors, assigns, heirs and legal and
personal representatives of Seller, Kilat and the Shareholders (Seller,
Kilat, the Shareholders and such persons are collectively referred to as the
"SELLER'S INDEMNIFIED PERSONS") from and against, and shall reimburse
Seller's Indemnified Persons for, each and every Loss paid, imposed on or
incurred by Seller's Indemnified Persons, directly or indirectly, relating
to, resulting from or arising out of any inaccuracy in any representation or
warranty of Buyer under this Agreement, the Loan Documents or any
19
agreement, certificate or other document delivered or to be delivered by
Buyer pursuant hereto in any respect, or any breach or nonfulfillment of any
covenant, agreement or other obligation of Buyer under this Agreement, the
Loan Documents or any agreement, certificate or document to be delivered by
Buyer pursuant hereto. With respect to matters not involving Proceedings
brought or asserted by third parties against Seller's Indemnified Persons,
within thirty (30) days after notification from Seller's Indemnified Persons
supported by reasonable documentation setting forth the nature of the
circumstances entitling Seller's Indemnified Persons to indemnity hereunder,
the Buyer, at no cost or expense to Seller's Indemnified Persons, shall
diligently commence resolution of such matters in a manner reasonably
acceptable to Seller's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Buyer, Buyer
shall promptly pay the amount so claimed. If litigation or any other
Proceeding is commenced or threatened, the provisions of SECTION 7.3 shall
control over the immediately preceding sentence.
7.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any Proceeding shall
be brought or asserted against a party entitled to indemnification pursuant
to SECTIONS 7.1 or 7.2, or any successor thereto (the "INDEMNIFIED PERSON")
in respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "INDEMNIFYING PERSON"), the
Indemnified Person shall give prompt written notice of such Proceeding to the
Indemnifying Person who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Person and
the payment of all expenses; provided, that any delay or failure to so notify
the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure. In no event shall any Indemnified Person be
required to make any expenditure or bring any cause of action to enforce the
Indemnifying Person's obligations and liability under and pursuant to the
indemnification obligations set forth in this Article. In addition, actual
or threatened action by a Governmental Authority or other Person is not a
condition or prerequisite to the Indemnifying Person's obligations under this
Article. The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing Proceedings and to participate in the defense
thereof, but the reasonable fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless the Indemnified Person shall in good
faith determine that there exist actual or potential conflicts of interest
which make representation by the same counsel inappropriate. The Indemnified
Person's right to participate in the defense or response to any Proceeding
should not be deemed to limit or otherwise modify its rights and obligations
under this Article. In the event that the Indemnifying Person, within
fifteen (15) days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of the
Indemnifying Person, subject to the right of the Indemnifying Person to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the Indemnified Person at any time prior to the settlement, compromise or
final determination thereof. If the Indemnifying Person assumes the defense
of any Proceeding, the Indemnified Person shall, reasonably and in good
faith, assist and cooperate in the defense thereof. Anything in this Article
to the contrary notwithstanding, the Indemnifying Person shall not, without
the Indemnified Person's prior
20
written consent, settle or compromise any Proceeding or consent to the entry
of any judgment with respect to any Proceeding for anything other than money
damages paid by the Indemnifying Person. The Indemnifying Person may,
without the Indemnified Person's prior written consent, settle or compromise
any such Proceeding or consent to entry of any judgment with respect to any
such Proceeding that requires solely the payment of money damages by the
Indemnifying Person and that includes as an unconditional term thereof the
release by the claimant or the plaintiff of the Indemnified Person from all
liability in respect of such Proceeding.
7.4 LIMITATION OF LIABILITY. Notwithstanding any other provision of
this Agreement, Buyer agrees that the maximum monetary amount for which the
Shareholders shall be liable to Buyer's Indemnified Persons in connection
with the provisions of this Agreement shall be limited to the aggregate
amount of One Million Eight Hundred Thousand Dollars ($1,800,000); PROVIDED,
HOWEVER, that the foregoing limitation on the liability of the Shareholders
shall not apply to, and each of the Shareholders shall be jointly and
severally liable to Buyer's Indemnified Persons, and any of them, for the
aggregate amount of actual damages resulting from:
(a) any representation made by Seller, Kilat or either of the
Shareholders which any of Seller, Kilat or either of the Shareholders knows
is false or misleading at the Effective Date, or
(b) any fraudulent conduct of Seller, Kilat or either of the
Shareholders.
Furthermore, each of Seller, Kilat and the Shareholders acknowledges and agrees
that the foregoing limitation of liability shall not in any manner limit the
liability of Seller and Kilat for any reason whatsoever.
7.5 GUARANTEE.
(a) Kilat and each of the Shareholders gives the indemnity set
forth in SECTION 7.1 and the guarantee set forth in this SECTION 7.5 in
consideration of Buyer's agreement to enter into this Agreement. Kilat and
each of the Shareholders acknowledges the receipt of valuable consideration
from Buyer for the agreement of Kilat and the Shareholders to incur
obligations and give rights under such indemnity and guarantee.
(b) Kilat and each of the Shareholders unconditionally and
irrevocably guarantees to Buyer the due and punctual performance and
observance by Seller of its obligations under this Agreement including,
without limitation, any obligation to pay money.
(c) Kilat and each of the Shareholders waive any right it, he or
she have of first requiring Buyer to commence proceedings or enforce any
other right against Seller or any other person before claiming under such
indemnity and guarantee.
21
(d) This guarantee and the foregoing indemnity are continuing
security obligations and are not discharged by any one payment. Such guarantee
and indemnity do not merge on completion.
(e) The liabilities of Kilat and each of the Shareholders under
such guarantee and indemnity are as a guarantor, indemnifier and principal
debtor and the rights of Buyer under such guarantee and indemnity are not
affect by anything which might otherwise affect them at law or in equity
including, but not limited, one or more of the following:
(i) Buyer granting time or other indulgence to, compounding or
compromising with or releasing Seller, or any other guarantor;
(ii) acquiescence, delay, acts, omissions or mistakes on the
part of Buyer;
(iii) any novation of a right of Buyer;
(iv) any variation of this Agreement, or any agreement entered
into in performance of it; or
(v) the invalidity or unenforceability of an obligation or
liability of a person other than the relevant guarantor (being Kilat or
one of the Shareholders).
(f) Kilat and each of the Shareholders may not, without the consent
of Buyer:
(i) raise a set-off or counterclaim available to it or Seller
against Buyer in reduction of it's liability under such guarantee and
indemnity;
(ii) claim to be entitled by way of contribution, indemnity,
subrogation, marshaling or otherwise to the benefit of any security or
guarantee held by Buyer in connection with this Agreement; or
(iii) prove in competition with Buyer, if a liquidator,
provisional liquidator, receiver, official manager or trustee in bankruptcy
is appointed in respect of Seller or Seller is otherwise unable to pay its
debts when they fall due,
until all money payable to Buyer in connection with this Agreement is paid.
(g) If a claim that a payment or transfer to Buyer in connection
with this Agreement is void or voidable (including, but not limited to, a
claim under laws relating to liquidation, insolvency or protection of
creditors) is upheld, conceded or compromised, then Buyer is entitled
immediately as against Kilat and each Shareholder to the rights to which it
would have been entitled under such guarantee and indemnity if the payment or
transfer had not occurred.
22
(h) Kilat and each of the Shareholders agree to pay or reimburse
Buyer on demand for its costs, charges and expenses in making, enforcing and
doing anything in connection with such guarantee and indemnity including,
without limitation, legal costs and expenses on a full indemnity basis. Any
amounts paid to Buyer by Kilat or one of the Shareholders must be applied first
against payment of costs, charges and expenses under this SECTION 7.5(H), then
against other obligations under such guarantee and indemnity.
(i) Kilat and each of the Shareholders acknowledges having been
given a copy of this Agreement and having had full opportunity to consider its
provisions before entering into such guarantee and indemnity.
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any investigation made at any time by or on behalf of the
parties hereto, all of the representations and warranties of the parties shall
survive the consummation of the transactions contemplated by this Agreement
(even if the other party knew or had reason to know of any misrepresentation or
breach of any warranty at the time of the Option Closing) and all of the
covenants of the parties shall survive the Option Closing, including but not
limited to the obligations of the parties set forth in SECTION 6.2 and the
indemnification obligations of the parties hereto. In addition, the covenants
and obligations set forth in SECTION 6.2 shall survive the termination of this
Agreement.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement of
the parties hereto.
8.3 WAIVER; CONSENTS. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Any failure of a party to
comply with any obligation, covenant, agreement or condition herein may be
waived by each party affected thereby only by a written instrument signed by
the party granting such waiver. No waiver, or failure to insist upon strict
compliance, by any party of any condition or any breach of any obligation,
term, covenant, representation, warranty or agreement contained in this
Agreement, in any one or more instances, shall be construed to be a waiver
of, or estoppel with respect to, any other condition or any other breach of
the same or any other obligation, term, covenant, representation, warranty or
agreement. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver.
8.4 FURTHER ASSURANCES; COOPERATION. The parties hereto agree (i) to
furnish upon request to each other such further information, (ii) to execute
and deliver to each other such other documents, and (iii) to do such other
acts and things, all as another party hereto may at
23
any time reasonably request, including before, at and after the Closing, for
the purpose of carrying out the intent of this Agreement and the documents
referred to herein.
8.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when (i) delivered
personally, (ii) sent by telecopier (with receipt confirmed), or (iii) received
by the addressee, if sent by Express Mail, Federal Express or other express
delivery service (receipt requested) or (iv) three business days after being
sent by registered or certified mail, return receipt requested, in each case to
the other party at the following addresses and telecopier numbers (or to such
other address or telecopier number for a party as shall be specified by like
notice; provided that notices of a change of address or telecopier number shall
be effective only upon receipt thereof):
if to Seller, to:
Australian Software Innovations (Services) Pty Ltd
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Eng ▇▇▇, Managing Director
telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Kilat or the Shareholders, to:
Eng ▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Buyer, to:
Spire International Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Bench, President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, Parr, Waddoups, ▇▇▇▇▇ & Gee
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
24
8.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
Buyer may, in its discretion, assign its rights, interest and obligations
hereunder to any Person without the prior consent of any other party hereto.
Neither Seller, Kilat nor either of the Shareholders may assign any of their
respective rights, interests or obligations hereunder without the prior
written consent of the Buyer. This Agreement is not intended to and shall
not confer upon any person other than the parties any rights or remedies
hereunder or with respect hereto.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New South Wales, Australia applicable to contracts
made and to be performed wholly therein.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
8.9 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Unless otherwise provided, all references
in this Agreement to articles and sections refer to the corresponding
articles and sections of this Agreement. All words used herein shall be
construed to be of such gender or number as the circumstances require.
Unless otherwise specifically noted, the words "herein," "hereof," "hereby,"
"hereinabove," "hereinbelow," "hereunder," and words of similar import, refer
to this Agreement as a whole and not to any particular article, section,
clause or other subdivision hereof. Whenever the term "including" or a
similar term is used in this Agreement, it shall be read as if it were
written "including by way of example only and without in any way limiting the
generality of the clause or concept to which reference is made." This
Agreement shall be construed as though all parties had drafted it.
8.10 ENTIRE AGREEMENT. This Agreement, including the Exhibits and the
documents, instruments and schedules referred to herein, embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
8.11 ATTORNEYS' FEES. In the event a Proceeding is brought by any party
under this Agreement to enforce or construe any of its terms, the party that
prevails by enforcing this Agreement shall be entitled to recover, in addition
to all other amounts and relief, its reasonable costs and attorneys' fees
incurred in connection with such Proceeding.
8.12 TIME OF ESSENCE. With regard to all time periods set forth or
referred to in this Agreement, time is of the essence.
25
8.13 SEVERABILITY. If any part of this Agreement is or becomes legally
ineffective, invalid or unenforceable in any jurisdiction, the effectiveness,
validity or enforceability of this Agreement in any other jurisdiction, or the
remainder of it in that jurisdiction, will not be affected.
8.14 JOINT AND SEVERAL. In this Agreement:
(a) any agreement, covenant, obligation, representation or warranty
on the part of two or more persons binds them jointly and severally; and
(b) any agreement, covenant, obligation, representation or warranty
in favor of two or more persons is for the benefit of them jointly and
severally.
ARTICLE 9
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified or referred to below when used in this Agreement. Any
reference or citation to a law, statute or regulation shall be deemed to
include any amendments to that law, statute or regulation and judicial and
administrative interpretations of it.
9.1 "ACQUISITION" shall have the meaning set forth in SECTION 1.1.
9.2 "AFFILIATE" means, with respect to any specified Person, each other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such specified Person (whether a general or limited
partner), each officer, director or general partner of such specified Person,
and each other Person who is the beneficial owner of five percent (5%) or more
of any class of the voting securities of such specified Person or five percent
(5%) or more in market value of the outstanding securities of such Person. For
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of all or any part of the management and policies
of a specified Person, whether through the ownership of voting securities, by
contract or otherwise.
9.3 "AGREEMENT" means this Option Agreement, including the Exhibits
hereto, which are hereby incorporated herein.
9.4 "ASSET PURCHASE AGREEMENT" shall have the meaning set forth in
SECTION 1.6.
9.5 "ASSETS" means all of the tangible and intangible assets of Seller
identified on EXHIBIT A, compiled from Seller's balance sheet dated April 30,
1996, also attached hereto as EXHIBIT A, and including, without limitation, the
following:
(a) all of Seller's cash, accounts, investments, securities,
commercial paper, notes receivable and accounts receivable;.
26
(b) all of Seller's fixed assets and tangible personal property,
wherever located, including, without limitation, all inventory and removable
fixtures;
(c) all of Seller's Intellectual Property and other intangible
assets; and
(d) all of Seller's contracts, customer and supplier lists,
marketing and promotional materials, marketing agreements, supply and service
agreements and other personal property rights;
together with all additions to and proceeds of the foregoing items (both cash
and noncash additions and proceeds) received by or for the benefit of Seller,
Kilat or the Shareholders after the Effective Date; PROVIDED, HOWEVER, that
the Assets shall expressly exclude (i) the amount of Five Hundred Fifty
Thousand Dollars ($550,000) paid by Buyer to Seller, constituting a license
fee pursuant to the terms of an Exclusive License and Technical Assistance
Agreement, (ii) the amount of the Option Purchase Payment, (iii) all amounts
paid by Buyer to Seller in payment of the Exercise Price, (iv) loans
receivable or payable in the aggregate amount of Five Hundred Thirty Four
Thousand One Hundred Forty Two and 63/100 Australian Dollars (AUS
$534,142.63) with any associated party of the Shareholders, including,
without limitation, Shareholders, Kilat, Northside Software Services Pty Ltd
(ACN: 003 258 817) and Southern Cross Executive Helicopters Pty Ltd (ACN: 064
785 977), and (v) loans receivable or payable in the aggregate amount of
Twenty Six Thousand Seven Hundred Forty Eight Australian Dollars
(AUS$26,748.92) with Software Innovations Limited (a company incorporated
under the laws of the United Kingdom).
9.6 "BUYER" means Spire International Corp., a Utah corporation, or any
successor, transferee or assignee thereof.
9.7 "BUYER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.1.
9.8 "CENTERPOST" mean Centerpost Innovations Pty Limited, ACN
▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia.
9.9 "CONTRACTS" shall have the meaning set forth in SECTION 2.6.
9.10 "DEED OF RESTRAINT OF TRADE" shall have the meaning set forth in
SECTION 1.6.
9.11 "DISCLOSURE SCHEDULES" means the disclosure schedules prepared and
delivered by Seller and the Shareholders to Buyer and accepted by Buyer prior
to the Option Closing. The Disclosure Schedules shall contain all
information necessary to make the representations and warranties set forth in
ARTICLE 2 true and correct.
9.12 "DOLLARS" or "$" means United States dollars, except as expressly
indicated otherwise.
27
9.13 "EFFECTIVE DATE" means the effective date of this Agreement, as set
forth in the opening paragraph hereof.
9.14 "EMPLOYEE BENEFIT PLAN" means any stock option, stock right, profit
sharing, thrift-savings, simplified employee pension plan, deferred
compensation plan, severance pay, golden parachute, cafeteria plan, flexible
compensation plan, life insurance, medical, dental, disability, welfare,
superannuation or vacation plans or any other similar plan or arrangement of
any kind or character.
9.15 "ENCUMBRANCE" means any lien, pledge, hypothecation, charge,
mortgage, deed of trust, security interest, encumbrance, equity, trust,
equitable interest, claim, easement, right-of-way, servitude, right of
possession, lease tenancy, license, encroachment, burden, intrusion,
covenant, infringement, interference, proxy, option, right of first refusal,
community property interest; or legend, defect, impediment, exception,
condition, restriction, reservation, limitation, impairment, imperfection of
title; or restriction on or condition to the voting of any security,
restriction on the transfer of any security or other asset, restriction on
the receipt of any income derived from any security or other asset, and
restriction on the possession, use, exercise or transfer of any other
attribute of ownership, whether based on or arising from common law,
constitutional provision, statute or contract.
9.16 "ENTITY" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
company, joint venture, joint stock association, estate, trust, cooperative,
foundation, union, syndicate, league, consortium, coalition, committee,
society, firm, company or other enterprise, association, organization or
entity of any nature, other than a Governmental Authority.
9.17 "EXERCISE NOTICE" shall have the meaning set forth in SECTION 1.6(B).
9.18 "EXERCISE PRICE" shall have the meaning set forth in SECTION 1.6(C).
9.19 "EXERCISE PRICE ADJUSTMENT" shall mean an amount equal to the
profit or loss of the business of Seller (after payment or accrual of all
Taxes and appropriate reserves) for the period from April 30, 1996 through
October 31, 1996, calculated in a manner consistent with generally accepted
accounting principles, as approved by Buyer in its reasonable discretion. If
the Exercise Price Adjustment is a positive amount, the amount of the
Exercise Price shall be increased by such amount. If the Exercise Price
Adjustment is a negative amount, the amount of the Exercise Price shall be
decreased by such amount.
9.20 "FACILITY" shall have the meaning set forth in SECTION 1.3(B).
9.21 "GOVERNMENTAL AUTHORITY" means any Australian national, state,
territorial or local governmental authority or semi-governmental authority,
any foreign governmental authority, the United States of America, any State
of the United States, any local authority and any political subdivision of
any of the foregoing, any multi-national organization or body, any
28
agency, department, commission, board, bureau, court or other authority
thereof, or any quasi-governmental or private body exercising, or purporting
to exercise, any executive, legislative, judicial, administrative, police,
regulatory or taxing authority or power of any nature.
9.22 "GOVERNMENTAL AUTHORIZATION" means any permit (including without
limitation any Environmental Permit), license, franchise, approval,
certificate, consent, ratification, permission, confirmation, endorsement,
waiver, certification, registration, transfer, qualification or other
authorization issued, granted, given or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Legal
Requirement.
9.23 "INTELLECTUAL PROPERTY" means any and all trademarks, tradenames,
service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing),
technology, trade secrets, inventions, know-how, names, logos, artwork,
designs, discoveries, computer programs, software products and related source
code and documentation, processes, and all other intangible assets,
properties and rights.
9.24 "INTELLECTUAL PROPERTY ASSETS" shall mean all Intellectual Property
of Seller, including, without limitation, all Intellectual Property necessary
to or currently utilized in Seller's business.
9.25 "INTELLECTUAL PROPERTY PURCHASE AGREEMENT" shall have the meaning set
forth in SECTION 1.6.
9.26 "KILAT" means Kilat Holding Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia.
9.27 "KNOWLEDGE" or "KNOWN" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving or who has at any time served as an
officer, director, member, manager, trustee, or shareholder of such Entity (or
in any similar capacity) has, or at any time had, knowledge of such fact or
other matter.
9.28 "LEGAL REQUIREMENT" means any law (including without limitation any
Environmental Laws), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
9.29 "LENDER" shall have the meaning set forth in SECTION 1.3(b).
9.30 "LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability),
29
regardless of whether such debt, obligation, duty or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles.
9.31 "LOAN" shall have the meaning set forth in SECTION 1.3(b).
9.32 "LOAN DOCUMENTS" means all documents executed in connection with the
establishment and maintenance of the Facility and any security interest
associated therewith, including, without limitation, the promissory note and
[FIXED CHARGE] described in SECTION 1.3(b).
9.33 "LOSS" means any loss, damage, injury, harm, detriment, decline in
value, lost opportunity, Liability, exposure, claim, demand, cost of any
Proceeding, settlement, judgment, award, punitive damage award, fine,
penalty, Tax, fee, charge, cost or expense (including, without limitation,
costs of attempting to avoid or in opposing the imposition thereof, interest,
penalties, costs of preparation and investigation, and the fees,
disbursements and expenses of attorneys, accountants and other professional
advisors).
9.34 "OPTION" shall have the meaning set forth in RECITAL C.
9.35 "OPTION CLOSING" shall have the meaning set forth in SECTION 1.4.
9.36 "OPTION CONSIDERATION" shall have the meaning set forth in
SECTION 1.3.
9.37 "OPTION PURCHASE PAYMENT" shall have the meaning set forth in
SECTION 1.3(a).
9.38 "OPTION TERM" shall have the meaning set forth in SECTION 1.6(a).
9.39 "ORDER" means any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, consent
decree, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
9.40 "ORDINARY COURSE OF BUSINESS" means an action taken by a Person if:
(a) such action is recurring in nature, is consistent with the past
practices of such Person and is taken in the ordinary course of the normal day-
to-day operations of such Person;
(b) the aggregate monetary amount associated with such action (or
any series of related actions) is less than Twenty Five Thousand Dollars
($25,000), unless prior to taking such action, Seller obtains from Buyer
written consent to the taking of such action; and
30
(c) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other persons that are
in the same line of business as such Person.
9.41 "PERSON" means any individual, Entity or Governmental Authority.
9.42 "PROCEEDING" means any action, suit, litigation, arbitration,
lawsuit, claim, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination,
investigation, challenge, controversy or dispute commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Authority or any arbitrator.
9.43 "PROPRIETARY INFORMATION" shall have the meaning set forth in
SECTION 6.2.
9.44 "PURCHASE AGREEMENTS" shall refer collectively to the Asset Purchase
Agreement, the Intellectual Property Purchase Agreement and the Deed of
Restraint of Trade.
9.45 "SELLER" means Australian Software Innovations (Services) Pty. Ltd
ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia.
9.46 "SELLER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.2.
9.47 "SHAREHOLDERS" refers collectively to Eng ▇▇▇ and ▇▇▇▇ ▇▇▇, in their
individual capacities.
9.48 "SPIRE COMMON STOCK" shall mean the Common Stock, $.25 par value, of
Buyer.
9.49 "TAX" means any federal, national, state, territorial, local or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, environmental, customs duties,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, fringe benefits, or other tax or assessment of any
nature whatsoever, including, without limitation, any customs duty, municipal
rates, stamp duties and all other charges and levies which may be imposed by
a Governmental Authority (including any interest, penalties and additions
thereto that may arise in connection therewith), whether disputed or not.
9.50 "TAX RETURNS" means any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
31
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
"BUYER:"
SPIRE INTERNATIONAL CORP., a Utah corporation
By: ____________________________________
Its: _____________________________________
"SELLER:"
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
_________________________________ ____________________________________
Signature of Director Signature of Director/Secretary
_________________________________ ____________________________________
Print Name Print Name
_________________________________ ____________________________________
Office Held Office Held
"KILAT:"
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
_________________________________ ____________________________________
Signature of Director Signature of Director/Secretary
_________________________________ ____________________________________
Print Name Print Name
_________________________________ ____________________________________
Office Held Office Held
"SHAREHOLDERS:"
_________________________________ ____________________________________
Eng ▇▇▇, individually ▇▇▇▇ ▇▇▇, individually
32
EXHIBIT A
TO
OPTION AGREEMENT
DESCRIPTION OF ASSETS (INCLUDING SELLER'S BALANCE SHEET DATED APRIL 30, 1996)
Attached
AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LTD
Reconciliation for "Purchase Price Adjustment" under Option Agreement
A.S.I.S. - BALANCE SHEET AS AT 30TH APRIL 1996
Items
Exempt subject to
Items Reconciliation
----------- --------------
ASSETS
Cash on Hand 302.00 302.00
Trade Receivables 125,299.46 125,299.46
Less Unearned Income
in Debtors (36,631.73) (36,631.73)
Sundry Debtors
(Reimbursements
due from Spire) 1,597.40 1,597.40
Loans to Associated
Parties 262,364.71 262,364.71
Term Deposit-Bank 3,000.00 3,000.00
Rental Bond/Deposit 840.00 840.00
Loans due from
S.1 (UK) 26,748.92 26,748.92
Loans to Related
Companies 271,777.92 271,777.92
Plant & Equipment
(at cost) 356,896.82 356,896.82
Less Accumulated
Depreciation (145,492.00) (145,492.00)
Motor Vehicles 237,055.00 237,055.00
Less Accumulated
Depreciation (79,130.00) 157,925.00 (79,130.00)
------------ ---------- -----------
1,024,628.50 560,891.55 463,736.95
LIABILITIES
Bank Overdraft 2,616.30 2,616.30
Trade Creditors 36,229.08 36,229.08
Hire Purchase-Current 76,618.86 76,618.86
PAYE taxes & Super'n 17,141.62 17,141.62
Provision-Staff Leave 13,515.00 13,515.00
Provision-Income Tax (1,157.81) (1,157.81)
Accrual for Unearned Income 123,198.19 123,198.19
Hire Purchase Creditors-N/C 194,729.12 194,729.12
------------ ---------- -----------
462,890.36 0.00 462,890.36
NET ASSETS 561,738.14 560,891.55 846.59
------------ ---------- -----------
------------ ---------- -----------
Notes:
1. Purchase Price Adjustment shall be calculated from the above Net Asset
position of $846.59 by:
(a) adjusting for any after tax profits or (losses) derived up to
31st October 96
(b) adjusting for any movements in the above "Exempt items" accounts
through to the exercise closing date (from this point on ▇▇▇'▇ personal
drawings are limited under the option agreement)
(c) adjusting for any dividend payments made by the company to its
shareholders
2. The above items are not necessarily those subject to actual transfer on
exercise of the option agreement but are just used for purposes of the
reconciliation of the "Purchase Price Adjustment". A further schedule will
be prepared detailing which assets of ASI are subject to transfer and what
liabilities attach to those assets (including items both on and off the
balance sheet & accounts).
AUSTRALIAN SOFTWARE INNOVATIONS SERVICES PTY LTD
A.C.N. 050 053 355
BALANCE SHEET
AS AT 30 APRIL, 1996
1996 1995
$ $
CURRENT ASSETS
Cash Note 2 302.00 252.00
Receivables Note 3 352,629.84 426,934.55
Other Note 4 3,840.00 -.
---------- ----------
Total current assets 356,771.84 427,186.55
NON CURRENT ASSETS
Receivables Note 3 271,777.92 177,266.55
Property, plant & equipment Note 5 369,329.82 346,311.00
---------- ----------
Total non-current assets 641,107.74 523,577.55
TOTAL ASSETS 997,879.58 950,764.10
CURRENT LIABILITIES
Creditors and borrowings Note 6 132,605.86 199,887.35
Provisions Note 7 12,357.19 5,000.00
Other Note 8 96,449.27 121,614.46
---------- ----------
Total current liabilities 241,412.32 326,501.81
NON CURRENT LIABILITIES
Creditors and borrowings Note 6 194,729.12 210,635.19
---------- ----------
Total non-current liabilities 194,729.12 210,635.19
Total liabilities 436,141.44 537,137.00
NET ASSETS 561,738.14 413,627.10
---------- ----------
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 2.00 2.00
Retained profits 561,736.14 413,625.10
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 561,738.14 413,627.10
---------- ----------
---------- ----------
------------------------------------------------------------------------------
Unaudited. To be read in conjunction with the Accountants Disclaimer.
EXHIBIT B
TO
OPTION AGREEMENT
FORM OF PROMISSORY NOTE
U.S. $ 200,000 Dated: November 4, 1996
FOR VALUE RECEIVED, the undersigned, AUSTRALIAN SOFTWARE INNOVATIONS
(SERVICES) PTY LTD. a limited company organized under the laws of Australia
("BORROWER"), promises to pay to SPIRE INTERNATIONAL CORP., a Utah
corporation ("LENDER"), or order, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, or such other place as Lender may designate, in lawful money of the
United States of America, the principal sum of Two Hundred Thousand Dollars
($200,000), or, if less, the aggregate unpaid principal amount of all
advances made by Lender to Borrower in accordance with the provisions of this
Note and an Option Agreement of even date herewith executed by Borrower and
Lender, among other parties (the "OPTION AGREEMENT"), together with interest
from the dates set forth herein on the unpaid principal, payable at the times
and in the manner set forth below.
1. This Note is made by Borrower pursuant to the terms of the Option
Agreement and all amounts advanced by Lender to Borrower pursuant to the Option
Agreement shall be repaid in accordance herewith.
2. Subject to the provisions of Paragraph 5, interest shall accrue on
the unpaid principal balance outstanding under this Note from time to time at
the rate of Eighteen Percent (18%) per annum.
3. Principal and interest which is provided for in the preceding
Paragraph shall be paid in full on August 10, 1997 (the "MATURITY DATE"). On
the Maturity Date, the entire then-remaining unpaid principal balance of
principal, accrued interest and all other fees and charges required by this
Note shall be due and payable in full. Interest shall accrue based upon a
year of 360 days.
4. This Note may be prepaid in full or in part at any time without the
consent of Lender. Each payment under this Note shall be applied first to
late charges, second to interest, and any balance shall be applied to
reduction of unpaid principal.
5. (a) Notwithstanding the provisions of Paragraph 2, if the payment
described in Paragraph 3 is paid in full on or before the Maturity Date and
no "Event of Default" (as such term is defined in that certain Fixed Charge
of even date herewith executed by Borrower in favor of Lender (the "Fixed
Charge") has occurred, interest payable on this Note shall accrue
on the principal balance outstanding under this Note from time to time at the
rate of Eight Percent (8%) per annum.
(b) If an Event of Default occurs prior to Borrower's payment in
full of all amounts owing under this Note or the amounts described in
Paragraph 3 are not paid in full on or before the Maturity Date, the entire
unpaid principal balance, together with all accrued but unpaid interest and
all fees and charges required by this Note, shall, at the option of the
holder hereof, at once become due and payable without notice (time being of
the essence hereof). Failure to exercise such option shall not constitute a
waiver of the right to exercise the same in the event of any subsequent
default, event or circumstance giving rise to such right of acceleration.
6. Notwithstanding any other provision contained in this Note or in
any agreement, document or instrument related to the transaction of which
this Note is a part: (a) the rates of interest and charges and the payments
provided for herein and therein shall in no event exceed the rates and
charges and the payments which result in interest being charged at a rate
equalling the maximum allowed by law; and (b) if, for any reason whatsoever,
the holder hereof ever receives as interest (or as a charge in the nature of
interest) in connection with the transaction of which this Note is a part an
amount which would result in interest being charged at a rate exceeding the
maximum allowed by law, such amount or portion thereof as would otherwise be
excessive interest shall automatically be applied toward reduction of the
unpaid principal balance then outstanding hereunder and not toward payment of
interest (or toward payment of a charge in the nature of interest).
7. In the event that (a) any payment under this Note is not made at
the time and in the manner required, or (b) the holder hereof exercises its
right to accelerate the maturity of the obligations hereunder, the
undersigned agrees to pay any and all costs and expenses (regardless of the
particular nature thereof and whether incurred before or after the initiation
of suit or before or after judgment) which may be incurred by the holder
hereof in connection with the enforcement of any of its rights under this
Note, including, without limitation, court costs and attorneys' fees.
8. The undersigned, sureties, guarantors and endorsers hereof
severally waive presentment for payment, demand, protest and notice of
dishonor of this Note, and consent to any and all extensions of time,
renewals, waivers or modifications that may be granted by the holder hereof
with respect to the payment or other provisions of this Note, and to the
release of any security, or any part thereof, with or without substitution.
9. This Note is made and given pursuant to the terms of the Option
Agreement and is secured by, and entitled to the benefits of, the Fixed Charge.
10. This Note shall be governed by and construed in accordance with the
laws of the New South Wales, Australia without reference to choice of law rules.
"BORROWER"
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY
LTD, ACN ▇▇▇-▇▇▇-▇▇▇,
a limited company organized under the laws of Australia
By: ______________________________________________________
Its: ______________________________________________________
EXHIBIT C
TO
OPTION AGREEMENT
FORM OF FIXED CHARGE
[Not Filed Herewith]
EXHIBIT D
TO
OPTION AGREEMENT
INTELLECTUAL PROPERTY
[Not Filed Herewith]
EXHIBIT E
TO
OPTION AGREEMENT
FORM OF STATUTORY DECLARATION
[Not Filed Herewith]
EXHIBIT F
TO
OPTION AGREEMENT
FORM OF ASSET PURCHASE AGREEMENT
[Attached]
ASSET PURCHASE AGREEMENT
BY AND AMONG
SENTO TECHNICAL INNOVATION CORPORATION,
KILAT HOLDINGS PTY. LIMITED,
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY LTD,
AND
ENG ▇▇▇ AND ▇▇▇▇ ▇▇▇, INDIVIDUALLY
________________, 199__
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into in
Orem, Utah effective as of the ____ day of ________________, 199__, by and
among Sento Technical Innovations Corporation, a Utah corporation (the
"BUYER"), Australian Software Innovations (Services) Pty. Ltd ACN
▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia (the
"SELLER"), Kilat Holdings Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited company
organized under the laws of Australia ("KILAT"), and Eng ▇▇▇ and ▇▇▇▇ ▇▇▇
(collectively, the "SHAREHOLDERS"), individually.
RECITALS
1. Pursuant to an Option Agreement (the "OPTION AGREEMENT") dated
as of the 10th day of September, 1996 between Buyer, Seller, Kilat and the
Shareholders, Seller granted to Buyer and its nominee, Centerpost, an option
(the "OPTION") to purchase the Assets and the Intellectual Property Assets,
Kilat and the Shareholders agreed to facilitate Buyer's purchase of Assets
and Seller, Kilat and the Shareholders agreed to execute the Deed of
Restraint of Trade.
A. Eng ▇▇▇ is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital
stock of Kilat.
B. Buyer has elected pursuant to Section 1.6 of the Option Agreement to
exercise the Option with respect to the Assets and the Intellectual Property
Assets.
C. Buyer desires to purchase the Assets and the Intellectual Property
Assets from Seller, and Seller is obligated pursuant to the Option Agreement to
sell the Assets and the Intellectual Property Assets to Buyer, in accordance
with the terms and conditions of the Option Agreement. All capitalized terms
used herein without definition shall have the meanings set forth in ARTICLE 9.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, Buyer, Seller, Kilat and the Shareholders hereby agree as
follows:
ARTICLE 1
SALE OF ASSETS; ADDITIONAL AGREEMENTS; CLOSING
1.1 ACQUISITION. Subject to the terms and conditions of the Transaction
Agreements, at the Closing, Seller shall sell, transfer and deliver to Buyer,
and Buyer shall purchase, all of Seller's right, title and interest in and to
the Assets and the Intellectual Property Assets (the "ACQUISITION").
1.2 ADDITIONAL UNDERSTANDINGS. In connection with the Acquisition, the
parties hereto agree as follows:
(a) Buyer will not, pursuant to this Agreement, acquire any
property of Seller other than the Assets except as specifically set forth in
this Agreement or the Intellectual Property Assets to be acquired by Buyer
from Seller pursuant to the terms of the Intellectual Property Purchase
Agreement; nor will Buyer assume or be bound by any contract or agreement
other than the Contracts and the Deed of Restraint of Trade (PROVIDED,
HOWEVER, that Buyer shall not assume any obligation of Seller thereunder);
nor will Buyer assume any other debt, claim, Liability, Tax, judgment or
obligation whatsoever of Seller except for those obligations under the
Contracts to be performed after the Closing Date. Except as set forth on
EXHIBIT B, Buyer will not recognize or assume any obligations of Seller to
employees of Seller or any collective bargaining agreements between Seller
and any labor organizations. Except as set forth on EXHIBIT B, Buyer will
not assume or be obligated to pay any debts, obligations, responsibilities,
Liabilities, claims, damages, judgments or settlements arising from any such
labor contracts or agreements or any other employment-related matter
involving Seller.
(b) In connection with the Acquisition, Seller, Kilat and each of
the Shareholders shall, from the date of this Agreement until the Closing
Date, afford Buyer's employees, auditors, legal counsel and other authorized
representatives reasonable access to the properties, records and personnel of
Seller in order to inspect, investigate and audit the Assets, the
Intellectual Property Assets and the operations and business of Seller.
Buyer agrees to conduct any such inspection, investigation or audit in a
reasonable manner, during regular business hours, so as not to disrupt the
normal functioning of Seller's business. Seller, Kilat and the Shareholders
agree to cooperate fully with Buyer and to make Seller's books and records,
the Assets, the Intellectual Property Assets and the employees of Seller
available to Buyer as reasonably required by Buyer in order for Buyer to
complete its due diligence in a timely fashion.
(c) The parties agree to allocate those portions of the Purchase
Price attributable to various components of the Assets for all purposes
(including accounting and tax purposes) in accordance with the allocation
schedule (the "ALLOCATION SCHEDULE") set forth on EXHIBIT C.
(d) Except as set forth on EXHIBIT B, Buyer will not have any
obligation for, and the parties specifically understand and acknowledge that
Buyer will not be assuming any responsibility for or liability under any
Employee Benefit Plan of Seller. Except as set forth on EXHIBIT B, Buyer
does not and shall not recognize or assume any Liability with respect to any
Employee Benefit Plan of Seller, nor shall the inclusion by Buyer, or an
Affiliate of Buyer, of a former employee of Seller in an Employee Benefit
Plan of Buyer or an Affiliate of Buyer, be
2
deemed to constitute the adoption or continuation by Buyer of any Employee
Benefit Plan of Seller except as set forth on EXHIBIT B.
(e) Seller, Kilat and the Shareholders covenant and agree that they
will do all acts and execute or cause Seller to execute all such documents as
are necessary to cause the name of Seller to be changed as of the Closing Date
to a name that does not include the words "Australian Software Innovations" or
the acronym "ASI" or any similar name and will on or before the Closing Date
deliver to Buyer appropriate signed notices to the Australian Securities
Commission having such effect and all other materials reasonably requested by
Buyer in connection therewith, together with all filing fees payable in respect
of lodging such notices. Seller, Kilat and the Shareholders consent to Buyer
causing a company controlled by Buyer or its Affiliates to change its name to
Australian Software Innovations Pty Limited on or after the Closing Date.
(f) Pursuant to the Option Agreement, Buyer has elected to acquire,
as part of the Acquisition, the rights of Seller under the Contracts. In
connection with Buyer's acquisition of Seller's rights under the Contracts,
Buyer agrees to assume all of Seller's obligations under the Contracts which
arise on or after the Closing Date.
1.3 PURCHASE PRICE. The price to be paid by Buyer for the purchase of
the Assets (the "PURCHASE PRICE") shall be Seven Hundred Fifty Thousand
Dollars ($750,000).
1.4 PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price shall be
made by Buyer to Seller as follows:
(a) Seller acknowledges the receipt of cash in the amount of One
Hundred Thirty Thousand Dollars ($130,000) (the "OPTION PURCHASE PAYMENT")
paid by Buyer in conjunction with the execution and delivery of the Option
Agreement. At the Closing, Seller shall credit the full amount of the Option
Purchase Payment against Buyer's payment of the Purchase Price.
(b) At the Closing, Buyer shall pay to Seller Two Hundred Seventy
Thousand Dollars ($270,000), in the form of cash, certified funds or wire
transferred funds, with the transfer of such funds to be initiated by Buyer
within twenty-four hours of the Closing; provided, however, that such amount
shall be adjusted by an amount equal to the Exercise Price Adjustment pursuant
to SECTION 1.6 of this Agreement.
(c) At the Closing, Buyer shall issue and deliver to Seller Eighty
Seven Thousand Five Hundred (87,500) shares of Sento Common Stock; provided,
however, that if at any time prior to the Closing the Company effects a
reclassification, change, subdivision or combination of the Sento Common Stock
or pays to the holders of Sento Common Stock a dividend payable in shares of
Sento Common Stock, the number os shares of Sento Common Stock to be issued and
delivered to Seller pursuant to this SECTION 1.4(B) shall be adjusted
proportionately.
1.5 CLOSING. Upon satisfaction or waiver of the conditions to Closing
contained in ARTICLE 4 and ARTICLE 5 hereof, the parties hereto agree to close
the Acquisition contemporaneously with the consummation of the transactions
described in the Intellectual
3
Property Purchase Agreement and the Deed of Restraint of Trade (the
"CLOSING"). The Closing shall take place at the principal offices of Buyer,
or such other place as may be agreed to by the parties, on the date agreed to
by the parties, but in all events on or before thirty (30) days from the date
hereof. It is the intent of the parties to consummate the Closing as soon as
possible after the execution of this Agreement. The parties agree to use
their good faith and reasonable efforts to close the Acquisition as soon as
possible and to cooperate fully with each other to complete the Closing.
1.6 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver to Buyer:
(i) A ▇▇▇▇ of Sale transferring the Assets to Buyer, free and
clear of all Encumbrances except as expressly assumed by Buyer and described on
EXHIBIT B;
(ii) An Assignment Agreement assigning to Buyer the Contracts,
free and clear of all Encumbrances except as expressly assumed by Buyer and
described on EXHIBIT B;
(iii) Titles to all titled properties constituting part of
the Assets being transferred by Seller to Buyer, such titles duly executed for
transfer to Buyer, free and clear of all Encumbrances except as expressly
assumed by Buyer and described on EXHIBIT B;
(iv) Complete and accurate Disclosure Schedules;
(v) An executed subscription agreement, substantially in the
form of EXHIBIT D, acceptable to Buyer in its discretion;
(vi) An executed registration rights agreement, substantially in
the form of EXHIBIT E, acceptable to Buyer in its discretion;
(vii) An executed employment agreement, substantially in the
form of EXHIBIT F, acceptable to Buyer in its discretion;
(viii) An executed Intellectual Property Purchase Agreement,
substantially in the form of EXHIBIT G, acceptable to Buyer in its discretion;
(ix) An executed Deed of Restraint of Trade, substantially in
the form of EXHIBIT H, acceptable to Buyer in its discretion;
(x) Such other documents, including certificates of
independent legal advice and appropriate statutory declarations, as may be
required by the Transaction Agreements, or the Intellectual Property Purchase
Agreement or reasonably requested by Buyer to carry out the transactions
contemplated hereby or thereby; and
(xi) Possession of the Assets.
(b) At the Closing, Buyer shall deliver to Seller:
4
(i) Subject to the Purchase Price Adjustment, the amount of
Three Hundred Seventy Thousand Dollars ($370,000) in the form of cash,
certified funds or wire transferred funds, with the transfer of such funds to
be initiated by Buyer within twenty-four hours of the Closing;
(ii) Certificates evidencing Eighty Seven Thousand Five Hundred
(87,500) shares of Sento Common Stock (or such other amount as shall be
determined pursuant to SECTION 1.4(c)
(iii) An executed subscription agreement, substantially in
the form of EXHIBIT D, acceptable to Buyer in its discretion;
(iv) An executed registration rights agreement, substantially in
the form of EXHIBIT E, acceptable to Buyer in its discretion;
(v) An executed employment agreement, substantially in the form
of EXHIBIT F, acceptable to Buyer in its discretion;
(vi) An executed Intellectual Property Purchase Agreement,
substantially in the form of EXHIBIT G, acceptable to Buyer in its discretion;
(vii) An executed Deed of Restraint of Trade, substantially
in the form of EXHIBIT H, acceptable to Buyer in its discretion;
(viii) An Assignment Agreement accepting assignment to Buyer
of all Seller's rights under the Contracts and assuming the obligations arising
under the Contracts to be performed after the Closing Date; and
(ix) Such other documents, including officers' certificates, as
may be required by the Transaction Agreements, or as reasonably requested by
Seller to carry out the transactions contemplated hereby.
1.7 PAYMENT OF TAXES; STAMP DATA. Seller shall pay any and all Taxes
payable to Governmental Authorities of the Commonwealth of Australia or any
political subdivision thereof which are related in any manner to the grant
and exercise of the Option or the execution and performance of the
Transaction Agreements, including, without limitation, the full amount of any
stamp duty payable to Governmental Authorities of the Commonwealth of
Australia or any political subdivision thereof. Seller, Kilat and each of
the Shareholders shall jointly and severally indemnify, defend and hold
harmless Buyer from any and all Tax liabilities associated with the grant and
exercise of the Option and the execution and performance of the Transaction
Agreements. To facilitate Seller's performance of the obligations set forth
in this SECTION 1.7, at the Closing Buyer shall withhold from the Purchase
Price an amount equal to _______________ Australian Dollars (AUS
$__________), representing the estimated amount of Taxes payable in
connection with the execution and performance of the Transaction Agreements.
The amount so withheld by Buyer shall be paid to ____________________ to be
held in trust by ______________ and released solely for the purpose of
fulfilling Seller's Tax obligations under the terms of this SECTION 1.7.
5
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER,
KILAT AND THE SHAREHOLDERS
Except as otherwise indicated, Seller, Kilat and each of the Shareholders
jointly and severally represent and warrant to Buyer that the following
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date:
2.1 AUTHORITY. Seller, Kilat and each of the Shareholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver the Transaction Agreements, as applicable, to perform his, her or its
obligations thereunder and to consummate the transactions contemplated thereby.
This Agreement has been, and each of the Transaction Agreements will be, when
executed, duly and validly executed and delivered by Seller, Kilat and each
of the Shareholders, and each of the Transaction Agreements, as applicable,
constitutes, or will, when executed, constitute, the legal, valid and binding
agreement of Seller, Kilat and each of the Shareholders, enforceable against
Seller, Kilat and each of the Shareholders in accordance with its terms
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF SELLER AND KILAT.
Seller is a limited company duly organized, validly existing and in good
standing under the laws of Australia and has full power and authority to
carry on its business as now being conducted, to own and operate its
properties and assets, and to perform all its obligations under the
Transaction Agreements and the Contracts. Kilat is a limited company duly
organized, validly existing and in good standing under the laws of Australia
and has full power and authority to carry on its business as now being
conducted, to own and operate its properties and assets, and to perform all
its obligations under the Transaction Agreements.
2.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Disclosure Schedules, neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor
the compliance by Seller and Kilat with any of the provisions thereof will,
as of the Closing Date, (I) conflict with or violate any provision of the
Memorandum and Articles of Association or other charter or governing
documents of Seller or Kilat, respectively, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
contract, agreement, commitment, bond, mortgage, indenture, license, lease,
pledge agreement or other instrument or obligation to which Seller or Kilat
is a party or by which Seller or Kilat or any of their respective properties
or assets may be bound, including, without limitation, any other agreement
with respect to the sale by Seller of any of its properties or assets, (iii)
to the best knowledge of Seller, Kilat and the Shareholders, violate or
conflict with any provision of any Legal Requirement binding upon Seller or
Kilat, or (iv) to the best knowledge of Seller, Kilat and the Shareholders,
result in, or require, the creation or imposition of, any Encumbrance upon or
with respect to any properties of Seller or Kilat, including, without
limitation, the Assets or
6
the Intellectual Property Assets, or impair the ability of Seller, Kilat or
the Shareholders to carry out their respective obligations under the
Transaction Agreements.
2.4 BOOKS AND RECORDS. The books of account and other business records
of Seller regarding the Assets and the business and operations of Seller have
all been made available to Buyer and such books and records are complete and
correct with regard to the matters which are the subject of the Transaction
Agreements.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
fully disclosed in writing to Buyer in the Disclosure Schedules, as of the
Closing Date, Seller will have no Liabilities, including, without limitation,
any Liabilities resulting from failure to comply with any Legal Requirement
applicable to Seller, its business or operations, the Assets or the
Intellectual Property Assets due or to become due and whether incurred in
respect of or measured by the income or sales of Seller for any period or
arising out of any transactions entered into, or any state of facts existing,
on or before the Closing Date which could, as of or after the Closing Date,
materially adversely affect Seller's business or operations, the Assets or
the Intellectual Property Assets, give rise to an Encumbrance against the
Assets or the Intellectual Property Assets or materially adversely affect
Seller's ability to carry out the transactions contemplated by the
Transaction Agreements.
2.6 ABSENCE OF CHANGES. Between the date of this Agreement and the
Closing Date, there will not have been (I) any material adverse change, or any
event, condition or contingency that is likely to result in a material adverse
change in the condition of Seller's business or operations, the Assets or the
Intellectual Property Assets; (ii) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting Seller's
business or operations, the Assets or the Intellectual Property Assets; (iii)
any termination or receipt of notice of termination of one or more of the
Contracts; (iv) any dispute or any other occurrence, event or condition of any
character, which reasonably could be anticipated to give rise to a legal or
administrative action or to a material adverse change affecting the Assets or
the Intellectual Property Assets or Seller's ability to carry out its
obligations hereunder; or (v) any agreement to do any of the foregoing.
2.7 CONTRACTS. Except as set forth on the Disclosure Schedules or as
otherwise described in this Agreement:
(a) Complete and accurate copies, including all amendments, of the
Contracts have been delivered to Buyer.
(b) All of the Contracts are in full force and effect and are valid
and enforceable in accordance with their terms, there are no material defaults
thereunder or breaches thereof, and no condition exists or event has occurred
which, with notice or lapse of time or both, would constitute a default
thereunder.
(c) Seller has the right to assign its rights and obligations
under the Contracts to Buyer, and such assignment will not result in a
default, breach or right of termination thereunder.
7
(d) Set forth in the Disclosure Schedules is a complete and
accurate description of all obligations or commitments of Seller with respect
to any asset of any nature whatsoever that is used in whole or in part for
the personal use or benefit of any shareholder, officer, director or employee
of Seller or any Affiliate thereof.
2.8 PERSONAL PROPERTY.
(a) Except as set forth in the Disclosure Schedules, there is no
asset, property, right or interest of any nature whatsoever necessary to or
currently utilized in the operation of Seller's business which is not
included in the Assets or the Intellectual Property Assets and Buyer has been
given, pursuant to the Option, an opportunity to acquire all of such assets,
properties, rights and interests.
(b) Seller has made available to the Buyer true, correct and
complete copies of all material contracts, agreements, mortgages, leases and
commitments relating to or affecting any interest in the Assets or the
Intellectual Property Assets.
(c) Other than the Contracts, there are no agreements, whether
verbal or written, affecting any of the Assets or the Intellectual Property
Assets which have not been disclosed in writing to Buyer. Other than the
Contracts or as authorized by Buyer in writing prior to the Closing, all such
agreements affecting the Assets or the Intellectual Property Assets will be
terminated prior to or at the Closing.
2.9 TITLE TO ASSETS AND RELATED MATTERS. Seller owns all of the Assets
and Intellectual Property Assets free and clear of all Encumbrances and the
claims or rights of any other party. Seller has the power, authority and
right to sell the Assets and Intellectual Property Assets to Buyer free and
clear of any Encumbrances.
2.10 COMPLIANCE WITH LAWS. Seller is in compliance with all Legal
Requirements applicable to the ownership of the Assets and the Intellectual
Property Assets and the operation of its business where the failure so to
comply would have a material adverse effect on Seller's ability to carry out
its obligations under the Transaction Agreements, or the ability of Buyer to
carry on the business operations related to the Assets or the Intellectual
Property Assets after the Closing, and Seller does not have any basis to
expect, nor has it received, any Order, notice, or other communication from
any Governmental Authority of any alleged, actual, or potential violation
and/or failure to comply with any such Legal Requirement, except as disclosed
on the Disclosure Schedules.
2.11 LITIGATION. Except as set forth in the Disclosure Schedules, (i)
neither Seller, Kilat nor either of the Shareholders is subject to any Order
in which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Assets or the Intellectual Property Assets, the
operation of Seller's business or the matters covered by the Transaction
Agreements which would prevent, delay, or make illegal the transactions
contemplated by the Transaction Agreements, (ii) there are no Proceedings
pending or threatened against, involving, affecting, or relating to Seller,
Kilat or either of the Shareholders, the operation of Seller's business or to
Seller's ownership, operation or use of the Assets or the Intellectual
Property Assets before any arbitrator or Governmental Authority, and (iii) to
the best knowledge of Seller, Kilat and each of the Shareholders, there exist
no facts to serve as a basis for the
8
institution of any Proceeding against Seller, Kilat, either of the
Shareholders or any of the Assets or Intellectual Property Assets which would
prohibit or adversely affect the Assets or the Intellectual Property Assets
or the ability of Seller, Kilat or the Shareholders to carry out their
respective obligations under the Transaction Agreements.
2.12 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Seller in
connection with the Transaction Agreements or the transactions contemplated
hereby, and no Person, including Seller, Kilat or either of the Shareholders,
is or will be entitled to any broker's or finder's fee or any other
commission or similar fee or expense, directly or indirectly, in connection
with the Transaction Agreements or the transactions contemplated thereby.
2.13 BANKRUPTCY. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or proceeding has been commenced or threatened against
Seller by any creditor, claimant, Governmental Authority or any other person.
2.14 LABOR MATTERS. Except as set forth in the Disclosure Schedules,
(a) Seller has made all payments to its employees required by any
Legal Requirement or any Employee Benefit Plans;
(b) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
threatened, any Proceeding against Seller under any Legal Requirement governing
the conditions of Seller's employment of its employees, or any basis or ground
for any such claim;
(c) Seller has not been a party to any collective bargaining
agreement or other labor contract affecting the employees of Seller;
(d) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
existing or threatened, any strike, slowdown, picketing, work stoppage, labor
arbitration or proceeding in respect of the grievance of any employee, an
application or complaint filed by an employee or union with any Governmental
Authority, or organizational activity or labor dispute against or affecting
the business of Seller; and
(e) Seller has complied with all its obligations under all
relevant superannuation legislation and has made all contributions required
to be made in respect of its employees for their period of employment up to
and including the Closing Date. Seller has established reserves and accruals
(each of which is accurately set forth in the Disclosure Schedules) in
amounts sufficient to satisfy all superannuation obligations in respect of
its employees for their period of employment up to and including the Closing
Date.
9
2.15 DISCLOSURE. No representation or warranty of Seller, Kilat or the
Shareholders contained in this Agreement, the Exhibits hereto, or any other
Transaction Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to Seller, Kilat or either of the
Shareholders which has specific application to Seller (other than general
economic or industry conditions) and which materially and adversely affects
or, so far as Seller, Kilat or either of the Shareholders can reasonably
foresee, materially threatens, the Assets, the Intellectual Property Assets
or the ability of Seller, Kilat or the Shareholders to carry out their
respective obligations under the Transaction Agreements, which has not been
set forth in this Agreement or in the Disclosure Schedules.
2.16 TAX MATTERS. With respect to Taxes, including, without limitation,
Taxes imposed by the Income Tax Assessment Act of 1936 of the Commonwealth of
Australia (the "TAX ACT") and any other Australian national, state or
territorial law or regulation:
(a) Seller has lodged, or will lodge, at or before the correct time all
Tax Returns required by law to be lodged on or before the Closing Date and
all such Tax Returns have been, or will be, as the case may be, fully and
accurately completed;
(b) Seller has made, to the Commissioner of Taxation or the appropriate
Governmental Authority a full and true disclosure of all material facts
necessary for the proper assessment of Seller and each deduction, rebate or
credit claimed in those Tax Returns has been properly claimed and is duly
allowable;
(c) All other necessary information, documents and notices in respect
of Tax have been properly and duly submitted by Seller to all relevant
Governmental Authorities in respect of Tax for all periods up to the Closing
Date and will continue to be properly and duly submitted up to the Closing
Date and there is no unresolved dispute with any of those authorities nor is
any such dispute foreshadowed or contemplated;
(d) All Taxes which have been assessed or imposed or are lawfully
assessable upon or are payable by Seller and which are due and payable or
which may become due and payable subsequent to but are referable to the
period ending on the Closing Date have been paid by Seller or adequate
provisions has been made for them in Seller's accounts and such provisions
have been fully disclosed to Buyer; and
(e) All obligations imposed on Seller under all laws relating to Tax
have been complied with and, without limiting the generality of the
foregoing, all amounts of income tax and medicare levy required by law to be
deducted by Seller from salary or wages of Seller's employees (including,
without limitation, Seller's directors and officers) and from prescribed
payments and all amounts of withholding tax have been duly deducted and where
payable to the relevant taxing authority have been duly paid.
2.17 INSURANCE. The assets of Seller (including, without limitation,
the Assets and the Intellectual Property Assets) are adequately insured by
respect of the risks to which they are subject (including loss or damage by
disease, fire, theft, storm and tempest) in such amounts as accord with sound
business principles and such policies will not expire earlier than the
Closing
10
Date. Seller is adequately insured against public liability in such amounts
as accord with sound business principles and such policies will not expire
prior to the Closing Date. Seller is adequately insured against workers'
compensation liability and has complied with all respects with the
legislation relating to workers' compensation in all jurisdictions where
relevant. All premiums in respect of the insurance coverage referred to in
this Agreement will have been paid prior to the Closing Date, Seller has
complied with all the conditions of the associated policies and has not made
any false or misleading statement or done or omitted to do anything which
would entitle the insurers to avoid the policies or refuse to meet any claim
thereunder in full other than as disclosed by Seller to Buyer in writing
prior to the Closing Date. There is no fact or matter of which Seller, Kilat
or the Shareholders is aware which could lead to Seller's insurance policies
being vitiated or repudiated and neither Seller, Kilat nor the Shareholders
will permit any such policies to lapse prior to the Closing Date, nor will
Seller, Kilat or the Shareholders do or fail to do anything which will render
any of Seller's insurance policies void or voidable prior to the Closing
Date.
2.18 TRADE PRACTICES. There is no agreement, arrangement or activity
whether by commission or omission in which Seller has been or will be concerned
which infringes or which has been or which is required to be authorized under
the Trade Practices Act of 1974 of the Commonwealth of Australia or any other
anti-trust legislation in relation to the Assets or the Intellectual Property
Assets, including, without limitation, any Australian national, state or
territorial law or regulation.
2.19 ENVIRONMENTAL LIABILITIES. There are no Environmental Liabilities
(as defined below) affecting any of Seller's business premises. There are no
factors affecting any of Seller's business premises which are likely within
the next twelve months to give rise to any Environmental Liability. For the
purposes of this clause, the term "ENVIRONMENTAL LAW" means any planning,
environmental, health, toxic, hazardous substances, dangerous goods,
waste/disposal or pollution laws, regulations, orders, notices, ordinances or
requirements, and the term "ENVIRONMENTAL LIABILITY" means any obligation,
expense, penalty or fine under an Environmental Law which could be imposed on
any occupier in possession of Seller's business premises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Kilat and the Shareholders as
follows:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full power and authority to purchase the Assets and the
Intellectual Property Assets and to carry on its intended business therewith.
3.2 AUTHORITY. Buyer has full power and authority to execute and
deliver the Transaction Agreements, to perform its obligations thereunder,
and to consummate the transactions contemplated thereby. This Agreement has
been, and each of Transaction Agreements will be, when executed, duly and
validly executed and delivered by Buyer and each of the Transaction
Agreements constitutes, as applicable, constitutes, or will, when executed,
11
constitute, the legal, valid, and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws affecting creditor's rights generally.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration
with, no notice to and no Governmental Authorization, consent or approval of
any Governmental Authority, creditor or other person in a contractual
relationship with Buyer is necessary in connection with Buyer's execution and
delivery of the Transaction Agreements, the performance of its obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby. Neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor
the compliance by Buyer with any of the provisions thereof will, as of the
Closing Date, (i) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of the Buyer's Articles of Incorporation or Bylaws,
or of any note, contract, agreement, commitment, bond, mortgage, indenture,
license, lease, pledge agreement or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or assets may be
bound, or (ii) violate or conflict with any provision of any Legal
Requirement binding upon Buyer.
3.4 BANKRUPTCY. Buyer has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or proceeding has been commenced or threatened against
Buyer by any creditor, claimant, governmental authority or any other person.
3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Buyer in
connection with the Transaction Agreements or the transactions contemplated
thereby, and no Person, including Buyer, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee or expense,
directly or indirectly, in connection with the Transaction Agreements or the
transactions contemplated thereby.
ARTICLE 4
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
the Transaction Agreements at the Closing are subject to fulfillment of the
following conditions, any one or more of which may be waived in whole or in
part by Buyer in the manner provided for herein.
4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Seller, Kilat and the Shareholders contained in the
Transaction Agreements, including the Exhibits thereto, are true, correct and
complete in all material respects as of the Closing Date.
12
4.2 PERFORMANCE; COMPLIANCE WITH AGREEMENT. Seller, Kilat and each of
the Shareholders shall have performed and complied with all obligations,
agreements, covenants and conditions required by the Transaction Agreements
to be performed or complied with by them on or before the Closing Date,
including without limitation making all the deliveries required by
SECTION 1.6.
4.3 AUTHORIZATION; THIRD-PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with the execution and delivery of the Transaction Agreements
by Seller, Kilat and the Shareholders, the performance of their respective
obligations hereunder and thereunder, or the consummation of the transactions
contemplated hereby and thereby shall have been made or obtained. All
corporate actions necessary to authorize the execution, delivery and
performance of the Transaction Agreements by Seller and Kilat, and the
consummation by Seller and Kilat of the transactions contemplated by the
Transaction Agreements shall have been duly and validly taken, and Seller and
Kilat shall have full right and power to sell the Assets and the Intellectual
Property Assets and to perform their respective obligations upon the terms
provided in the Transaction Agreements. On or prior to the Closing Date,
Seller, Kilat and the Shareholders shall have furnished to the Buyer evidence
of the foregoing filings, notices, consents, stipulations and assignments.
4.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of this
Agreement through the Closing Date, there shall not have been any material
adverse change in the Assets or the Intellectual Property Assets, and none of
the events described in SECTION 2.6 shall have occurred.
4.5 COMPLETION OF BUYER'S INVESTIGATION. Buyer shall have completed,
to its sole satisfaction and at its expense, an investigation into the
condition of the Assets and the Intellectual Property Assets and the business
and operations of Seller. If Buyer is not satisfied with any matter revealed
during its investigation, or with any matter set forth on the Disclosure
Schedules, Buyer shall have the right to terminate this Agreement if notice
of termination is given to the Seller, Kilat and the Shareholders prior to
the Closing.
4.6 GOOD TITLE TO BUYER. Seller shall have conveyed the Assets and the
Intellectual Property Assets to Buyer, free and clear of all Encumbrances.
4.7 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the
transactions contemplated by the Transaction Agreements shall have been
satisfactory in all reasonable respects to Buyer and its counsel.
13
ARTICLE 5
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER, KILAT AND THE SHAREHOLDERS
The obligations of Seller, Kilat and the Shareholders to consummate the
transactions contemplated by the Transaction Agreements at the Closing are
subject to the fulfillment of the following conditions, any one or more of
which may be waived in whole or in part by Seller, Kilat or the Shareholders
in the manner provided for herein.
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Buyer contained in the Transaction Agreements shall be true,
correct and complete in all material respects as of the Closing Date.
5.2 BUYER'S PERFORMANCE; COMPLIANCE WITH AGREEMENT. Buyer shall have
performed and complied with all obligations, agreements, covenants and
conditions required by the Transaction Agreements to be performed or complied
with by Buyer on or before the Closing Date, including without limitation
making all the deliveries required by SECTION 1.6.
5.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with Buyer's execution and delivery of the Transaction
Agreements, the performance of its obligations thereunder, or the
consummation of the transactions contemplated thereby shall have been made or
obtained. All corporate action necessary to authorize the execution,
delivery and performance the Transaction Agreements by Buyer and the
consummation by Buyer of the transactions contemplated by the Transaction
Agreements shall have been duly and validly taken, and Buyer shall have full
right and power to purchase the Assets and the Intellectual Property Assets
and to perform its obligations upon the terms provided in the Transaction
Agreements. Buyer shall have furnished to Seller, Kilat and the Shareholders
evidence of the foregoing consents and actions, if requested.
5.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing Date, there will not have been any material adverse change, or
any event, condition or contingency that results in a material adverse change
affecting the ability of Buyer to carry out its obligations under the
Transaction Agreements.
5.5 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the transactions
contemplated by the Transaction Agreements shall have been satisfactory in all
reasonable respects to Seller, Kilat and the Shareholders and their counsel.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation,
14
execution and performance of the Transaction Agreements and the transactions
contemplated hereby, including without limitation all fees and expenses of
agents, business brokers, legal counsel, accountants, tax and financial
advisors and other facilitators and advisors.
6.2 CONFIDENTIALITY.
(a) NON-DISCLOSURE AND USE. Each of Buyer, Seller, Kilat and the
Shareholders acknowledges that, in connection with the transactions
contemplated by the Option Agreement and the Transaction Agreements, each has
become or may become privy to the technical, marketing and other proprietary
information of another party, including, without limitation, information,
material, documents and data related to such other party, to the business
activities of such other party and/or to its customers, trade secrets and
other proprietary information (collectively, the "PROPRIETARY INFORMATION").
Each agrees (i) to take at all times all reasonably necessary steps to
safeguard the confidentiality of any Proprietary Information; (ii) not to
disclose, reveal, make accessible or make available to any third Person any
Proprietary Information; and (iii) not to use any Proprietary Information for
such party's own benefit or for any other Person's benefit; PROVIDED,
HOWEVER, that Buyer, Seller, Kilat or the Shareholders may disclose (A)
Proprietary Information which at the time of the disclosure is part of the
public knowledge and readily accessible to such third party and (B)
Proprietary Information which is required by law to be disclosed.
(b) RETURN. Buyer, Seller, Kilat and the Shareholders agree that if
the Acquisition is not consummated, each of them will return to the other
parties hereto any and all material containing or reflecting Proprietary
Information.
(c) REMEDIES. Each of Buyer, Seller, Kilat and the Shareholders
acknowledges and agrees that any breach of the terms of this SECTION 6.2
would result in irreparable injury and damage to the injured party for which
such party would have no adequate remedy at law; each of Buyer, Seller, Kilat
and the Shareholders therefore also acknowledges and agrees that in the event
of such breach or any threat of breach, the injured or threatened party shall
be entitled, in addition to any other remedies to which such party may be
entitled at law or in equity, to an immediate injunction and restraining
order to prevent such breach and/or threatened breach by the breaching or
threatening party and/or any and all persons and/or entities acting for
and/or with such breaching or threatening party, without having to provide a
bond or other security or to prove actual damages.
6.3 OPERATION OF BUSINESS. Neither Seller, Kilat nor either of the
Shareholders will engage in any practice, take any action or enter into any
transaction outside the Ordinary Course of Business with respect to the
Assets, the Intellectual Property Assets or the operation of Seller's
business from the date of this Agreement until the Closing Date without the
prior written consent of Buyer. Without in any manner limiting the
foregoing, Seller, Kilat and the Shareholders covenant and agree that during
such period,
(i) the aggregate monthly remuneration (including, without
limitation, all salary, distributions, dividends, bonuses, deferred
compensation, automobile lease expense, superannuation payments and other
payments) paid to or for the benefit of Kilat and the Shareholders and all
Affiliates of Kilat and the Shareholders shall not exceed Sixteen Thousand
Six Hundred Sixty Seven Australian Dollars (AUS $16,667), and
15
(ii) Except as set forth in the Disclosure Schedules, Seller will
not, and Kilat and the Shareholders will not permit Seller to, make any
payment or incur any obligation with respect to any asset of any nature
whatsoever that is used in whole or in part for the personal use or benefit
of any shareholder, officer, director or employee of Seller or any
Affiliate thereof.
Seller, Kilat and the Shareholders will use their best commercially reasonable
efforts to preserve the Assets, the Intellectual Property Assets and the
goodwill and value of Seller's business, to comply with all laws applicable to
the Assets, the Intellectual Property Assets and Seller's business and to
maintain good working relationships with lessors, licensors, suppliers,
customers and employees. In addition, Seller will not sell or contract to sell
any interest in Seller or lease, license, transfer, pledge, mortgage,
hypothecate or otherwise dispose of any of the Assets or the Intellectual
Property Assets and Kilat and the Shareholders will not permit Seller to take
any such action. Seller will not, and Kilat and the Shareholders will not
permit Seller to, do any act or thing or suffer or permit any omission which
would make any policy of insurance of Seller written with respect to the Assets
or the Intellectual Property Assets void or voidable or do anything that would
mean that any existing insurance policy of Seller is not materially in full
force and effect at all times prior to the Closing Date.
6.4 PUBLICITY. The parties hereto agree, subject to the provisions of
SECTION 6.2, to advise and confer with each other, to the maximum extent
possible, regarding and prior to the issuance of any reports, statements,
releases, public announcements or similar publicity with respect to this
Agreement or the transactions contemplated hereby; PROVIDED, HOWEVER, that any
of the parties may make such announcements, give such notices and provide such
information to Governmental Authorities, employees, creditors, affiliates and
the public as its counsel may advise is legally required.
6.5 EXCLUSIVITY. From and after the date of this Agreement until the
Closing:
(a) Neither Seller nor any of its officers, directors, stockholders
or agents (including, without limitation, Kilat and the Shareholders) shall
directly or indirectly:
(i) Enter into any transaction with any party other than Buyer
relative to any disposition of the Assets, the Intellectual Property Assets or
Seller's business or operations or any part thereof; or
(ii) Solicit or encourage submission of inquiries, proposals
or offers from any other party relative to potential disposition of the
Assets, the Intellectual Property Assets or Seller's business or operations
or any part thereof; or
(iii) Provide further information to any party other than
Buyer relating to any possible disposition of the Assets, the Intellectual
Property Assets or Seller's business or operations or any part thereof.
(b) Seller, Kilat and the Shareholders agree that if Seller, Kilat
or either of the Shareholders receives an offer or proposal relating to the
possible disposition of the Assets, the Intellectual Property Assets or
Seller's business or operations or any part thereof, Seller,
16
Kilat and the Shareholders will immediately notify Buyer of such offer or
proposal, the identity of the party making the offer or proposal and the
specific terms of the offer or proposal.
6.6 COOPERATION. Kilat and each of the Shareholders agrees to cause
Seller to take, or to refrain from taking, all actions necessary to fulfill
Seller's covenants and obligations under the Transaction Agreements.
ARTICLE 7
INDEMNIFICATION AND LIMITATION
7.1 INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS. Subject to the
limitations set forth in SECTION 7.4, Seller, Kilat and each of the
Shareholders, jointly and severally, unconditionally, absolutely and
irrevocably agree to and shall defend, indemnify and hold harmless Buyer, and
each of Buyer's officers, directors, employees, counsel, successors, assigns,
and legal representatives (Buyer and such persons are collectively referred
to as the "BUYER'S INDEMNIFIED PERSONS") from and against, and shall
reimburse Buyer's Indemnified Persons for, each and every Loss paid, imposed
on or incurred by Buyer's Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of any inaccuracy in any
representation or warranty of Seller, Kilat or the Shareholders under the
Option Agreement, the Transaction Agreements or the Exhibits thereto or any
agreement, certificate or document delivered by Seller, Kilat or the
Shareholders pursuant hereto in any respect, or any breach or nonfulfillment
of any covenant, agreement or other obligation of Seller, Kilat or the
Shareholders under the Option Agreement, the Transaction Agreements or the
Exhibits thereto or any agreement, certificate or document to be delivered by
Seller, Kilat or the Shareholders pursuant hereto (including, without
limitation, Seller's obligation to pay Taxes pursuant to SECTION 1.7). With
respect to matters not involving Proceedings brought or asserted by third
parties against Buyer's Indemnified Persons, within thirty (30) days after
notification from Buyer's Indemnified Persons supported by reasonable
documentation setting forth the nature of the circumstances entitling Buyer's
Indemnified Persons to indemnity hereunder, Seller, Kilat and the
Shareholders shall, at no cost or expense to Buyer's Indemnified Persons,
diligently commence resolution of such matters in a manner reasonably
acceptable to Buyer's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Seller,
Kilat and the Shareholders, Seller, Kilat and the Shareholders shall promptly
pay the amount so claimed. If litigation or any other Proceeding is
commenced or threatened, the provisions of SECTION 7.3 shall control over the
immediately preceding sentence. Buyer shall be entitled to offset against
any amounts owed by Buyer to Seller, Kilat or the Shareholders under any
Transaction Agreement any amounts owed by Seller, Kilat or the Shareholders,
respectively, to Buyer hereunder.
7.2 INDEMNIFICATION BY BUYER. Buyer unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Seller,
Kilat, the Shareholders and the successors, assigns, heirs and legal and
personal representatives of Seller, Kilat and the Shareholders (Seller,
Kilat, the Shareholders and such persons are collectively referred to as the
"SELLER'S INDEMNIFIED PERSONS") from and against, and shall reimburse
Seller's Indemnified Persons for, each and every Loss paid, imposed on or
incurred by Seller's Indemnified Persons, directly or indirectly, relating
to, resulting from or arising out of any inaccuracy in any
17
representation or warranty of Buyer under the Option Agreement, the
Transaction Agreements or the Exhibits thereto or any agreement, certificate
or other document delivered or to be delivered by Buyer pursuant hereto in
any respect, or any breach or nonfulfillment of any covenant, agreement or
other obligation of Buyer under the Option Agreement, the Transaction
Agreements, the Exhibits thereto or any agreement, certificate or document to
be delivered by Buyer pursuant hereto. With respect to matters not involving
Proceedings brought or asserted by third parties against Seller's Indemnified
Persons, within thirty (30) days after notification from Seller's Indemnified
Persons supported by reasonable documentation setting forth the nature of the
circumstances entitling Seller's Indemnified Persons to indemnity hereunder,
the Buyer, at no cost or expense to Seller's Indemnified Persons, shall
diligently commence resolution of such matters in a manner reasonably
acceptable to Seller's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Buyer, Buyer
shall promptly pay the amount so claimed. If litigation or any other
Proceeding is commenced or threatened, the provisions of SECTION 7.3 shall
control over the immediately preceding sentence.
7.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any Proceeding shall
be brought or asserted against a party entitled to indemnification pursuant
to SECTIONS 7.1 or 7.2, or any successor thereto (the "INDEMNIFIED PERSON")
in respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "INDEMNIFYING PERSON"), the
Indemnified Person shall give prompt written notice of such Proceeding to the
Indemnifying Person who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Person and
the payment of all expenses; provided, that any delay or failure to so notify
the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure. In no event shall any Indemnified Person be
required to make any expenditure or bring any cause of action to enforce the
Indemnifying Person's obligations and liability under and pursuant to the
indemnification obligations set forth in this Article. In addition, actual
or threatened action by a Governmental Authority or other Person is not a
condition or prerequisite to the Indemnifying Person's obligations under this
Article. The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing Proceedings and to participate in the defense
thereof, but the reasonable fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless the Indemnified Person shall in good
faith determine that there exist actual or potential conflicts of interest
which make representation by the same counsel inappropriate. The Indemnified
Person's right to participate in the defense or response to any Proceeding
should not be deemed to limit or otherwise modify its rights and obligations
under this Article. In the event that the Indemnifying Person, within
fifteen (15) days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of the
Indemnifying Person, subject to the right of the Indemnifying Person to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the Indemnified Person at any time prior to the settlement, compromise or
final determination thereof. If the Indemnifying Person assumes the defense
of any Proceeding, the Indemnified Person shall, reasonably and in good
faith, assist and cooperate in the defense thereof. Anything in this Article
to the contrary notwithstanding, the Indemnifying Person shall not, without
the Indemnified Person's prior written consent, settle or compromise any
Proceeding or consent to the entry of any judgment with respect to any
Proceeding for anything other than money damages paid by the Indemnifying
18
Person. The Indemnifying Person may, without the Indemnified Person's prior
written consent, settle or compromise any such Proceeding or consent to entry
of any judgment with respect to any such Proceeding that requires solely the
payment of money damages by the Indemnifying Person and that includes as an
unconditional term thereof the release by the claimant or the plaintiff of
the Indemnified Person from all liability in respect of such Proceeding.
7.4 LIMITATION OF LIABILITY. Notwithstanding the foregoing provisions
of this ARTICLE 7, Buyer agrees that the maximum monetary amount for which
the Shareholders shall be liable to Buyer's Indemnified Persons in connection
with the provisions of the Transaction Agreements, shall be limited to the
aggregate amount of One Million Eight Hundred Thousand Dollars ($1,800,000);
PROVIDED, HOWEVER, that the foregoing limitation on the liability of the
Shareholders shall not apply to, and each of the Shareholders shall be
jointly and severally liable to Buyer's Indemnified Persons, and any of them,
for the aggregate amount of actual damages resulting from:
(a) any representation made by Seller, Kilat or either of the
Shareholders which any of Seller, Kilat or either of the Shareholders knows
or has reason to know is false or misleading at the Closing Date, or
(b) any fraudulent conduct of Seller, Kilat or either of the
Shareholders.
Furthermore, each of Seller, Kilat and the Shareholders acknowledges and agrees
that the foregoing limitation of liability shall not in any manner limit the
liability of Seller and Kilat for any reason whatsoever.
7.5 GUARANTEE.
(a) Kilat and each of the Shareholders gives the indemnity set forth
in SECTION 7.1 and the guarantee set forth in this SECTION 7.5 in consideration
of Buyer's agreement to enter into the Transaction Agreements. Kilat and each
of the Shareholders acknowledges the receipt of valuable consideration from
Buyer for the agreement of Kilat and the Shareholders to incur obligations and
give rights under such indemnity and guarantee.
(b) Kilat and each of the Shareholders unconditionally and
irrevocably guarantees to Buyer the due and punctual performance and
observance by Seller of its obligations under the Transaction Agreements
including, without limitation, any obligation to pay money.
(c) Kilat and each of the Shareholders waive any right it, he or
she have of first requiring Buyer to commence proceedings or enforce any
other right against Seller or any other person before claiming under such
indemnity and guarantee.
(d) This guarantee and the foregoing indemnity are continuing
security obligations and are not discharged by any one payment. Such guarantee
and indemnity do not merge on completion.
(e) The liabilities of Kilat and each of the Shareholders under
such guarantee and indemnity are as a guarantor, indemnifier and principal
debtor and the rights of Buyer under
19
such guarantee and indemnity are not affect by anything which might otherwise
affect them at law or in equity including, but not limited, one or more of
the following:
(i) Buyer granting time or other indulgence to, compounding or
compromising with or releasing Seller, or any other guarantor;
(ii) acquiescence, delay, acts, omissions or mistakes on the part
of Buyer;
(iii) any novation of a right of Buyer;
(iv) any variation of the Transaction Agreements, or any
agreement entered into in performance thereof; or
(v) the invalidity or unenforceability of an obligation or
liability of a person other than the relevant guarantor (being Kilat or one
of the Shareholders).
(f) Kilat and each of the Shareholders may not, without the consent
of Buyer:
(i) raise a set-off or counterclaim available to it or Seller
against Buyer in reduction of it's liability under such guarantee and
indemnity;
(ii) claim to be entitled by way of contribution, indemnity,
subrogation, marshaling or otherwise to the benefit of any security or
guarantee held by Buyer in connection with the Transaction Agreements; or
(iii) prove in competition with Buyer, if a liquidator,
provisional liquidator, receiver, official manager or trustee in bankruptcy
is appointed in respect of Seller or Seller is otherwise unable to pay its
debts when they fall due, until all money payable to Buyer in connection
with the Transaction Agreements is paid.
(g) If a claim that a payment or transfer to Buyer in connection
with the Transaction Agreements is void or voidable (including, but not
limited to, a claim under laws relating to liquidation, insolvency or
protection of creditors) is upheld, conceded or compromised, then Buyer is
entitled immediately as against Kilat and each Shareholder to the rights to
which it would have been entitled under such guarantee and indemnity if the
payment or transfer had not occurred.
(h) Kilat and each of the Shareholders agree to pay or reimburse
Buyer on demand for its costs, charges and expenses in making, enforcing and
doing anything in connection with such guarantee and indemnity including,
without limitation, legal costs and expenses on a full indemnity basis. Any
amounts paid to Buyer by Kilat or one of the Shareholders must be applied
first against payment of costs, charges and expenses under this SECTION
7.5(h), then against other obligations under such guarantee and indemnity.
(i) Kilat and each of the Shareholders acknowledges having been
given a copy of this Agreement and having had full opportunity to consider
its provisions before entering into such guarantee and indemnity.
20
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any investigation made at any time by or on behalf of the
parties hereto, all of the representations and warranties of the parties shall
survive the Closing of the transactions contemplated by the Transaction
Agreements (even if the other party knew or had reason to know of any
misrepresentation or breach of any warranty at the time of the Closing) and all
of the covenants of the parties shall survive the Closing, including but not
limited to the obligations of the parties set forth in SECTION 6.2 and the
indemnification obligations of the parties hereto. In addition, the covenants
and obligations set forth in SECTION 6.2 shall survive the termination of this
Agreement.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
terminated, rescinded or supplemented only by written agreement of the parties
hereto.
8.3 WAIVER; CONSENTS. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Any failure of a party to
comply with any obligation, covenant, agreement or condition herein may be
waived by each party affected thereby only by a written instrument signed by
the party granting such waiver. No waiver, or failure to insist upon strict
compliance, by any party of any condition or any breach of any obligation,
term, covenant, representation, warranty or agreement contained in this
Agreement, in any one or more instances, shall be construed to be a waiver
of, or estoppel with respect to, any other condition or any other breach of
the same or any other obligation, term, covenant, representation, warranty or
agreement. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver.
8.4 FURTHER ASSURANCES; COOPERATION. The parties hereto agree (I) to
furnish upon request to each other such further information, (ii) to execute
and deliver to each other such other documents, and (iii) to do such other
acts and things, all as another party hereto may at any time reasonably
request, including before, at and after the Closing, for the purpose of
carrying out the intent of the Transaction Agreements and the documents
referred to therein.
8.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when (I) delivered
personally, (ii) sent by telecopier (with receipt confirmed), or (iii)
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested) or (iv) three business days
after being sent by registered or certified mail, return receipt requested,
in each case to the other party at the following addresses and telecopier
numbers (or to such other address or telecopier number for a party as shall
be specified by like notice; provided that notices of a change of address or
telecopier number shall be effective only upon receipt thereof):
21
if to Seller, to:
Australian Software Innovations (Services) Pty Ltd
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Eng ▇▇▇, Managing Director
Telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Kilat or the Shareholders, to:
Eng ▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Buyer, to:
Sento Technical Innovations Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Bench, President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, Parr, Waddoups, ▇▇▇▇▇ & Gee
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
8.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
Buyer may, in its discretion, assign its rights, interests and obligations
hereunder to any Person without the prior consent of any other party hereto.
Neither Seller, Kilat nor either of the Shareholders may assign any of their
respective rights, interests or obligations hereunder without the prior
written consent of Buyer. This Agreement is not intended to and shall not
confer upon any person other than the parties any rights or remedies
hereunder or with respect hereto.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New South Wales, Australia applicable to contracts
made and to be performed wholly therein.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
23
8.9 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Unless otherwise provided, all references
in this Agreement to articles and sections refer to the corresponding
articles and sections of this Agreement. All words used herein shall be
construed to be of such gender or number as the circumstances require.
Unless otherwise specifically noted, the words "herein," "hereof," "hereby,"
"hereinabove," "hereinbelow," "hereunder," and words of similar import, refer
to this Agreement as a whole and not to any particular article, section,
clause or other subdivision hereof. Whenever the term "including" or a
similar term is used in this Agreement, it shall be read as if it were
written "including by way of example only and without in any way limiting the
generality of the clause or concept to which reference is made." This
Agreement shall be construed as though all parties had drafted it.
8.10 ENTIRE AGREEMENT. This Agreement and the Transaction Agreements,
including the Exhibits and the documents, instruments and schedules referred
to herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, representations, warranties, covenants, or
undertakings other than those expressly set forth or referred to herein and
in the Transaction Agreements. The Transaction Agreements supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
8.11 ATTORNEYS' FEES. In the event a Proceeding is brought by any party
under this Agreement to enforce or construe any of its terms, the party that
prevails by enforcing this Agreement shall be entitled to recover, in
addition to all other amounts and relief, its reasonable costs and attorneys'
fees incurred in connection with such Proceeding.
8.12 SEVERABILITY. If any part of this Agreement is or becomes legally
ineffective, invalid or unenforceable in any jurisdiction, the effectiveness,
validity or enforceability of this Agreement in any other jurisdiction, or
the remainder of it in that jurisdiction, will not be affected.
8.13 JOINT AND SEVERAL. In this Agreement:
(a) any agreement, covenant, obligation, representation or warranty
on the part of two or more persons binds them jointly and severally; and
(b) any agreement, covenant, obligation, representation or
warranty in favor of two or more persons is for the benefit of them jointly
and severally.
ARTICLE 9
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified or referred to below when used in this Agreement. Any
reference or citation to a law, statute or regulation shall be deemed to
include any amendments to that law, statute or regulation and judicial and
administrative interpretations of it.
23
9.1 "ACQUISITION" shall have the meaning set forth in SECTION 1.1.
9.2 "AFFILIATE" means, with respect to any specified Person, each other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such specified Person (whether a general or limited
partner), each officer, director or general partner of such specified Person,
and each other Person who is the beneficial owner of five percent (5%) or
more of any class of the voting securities of such specified Person or five
percent (5%) or more in market value of the outstanding securities of such
Person. For purposes of this definition, "control" means the possession of
the power to direct or cause the direction of all or any part of the
management and policies of a specified Person, whether through the ownership
of voting securities, by contract or otherwise.
9.3 "AGREEMENT" means this Asset Purchase Agreement, including the
Exhibits hereto, which are hereby incorporated herein.
9.4 "ALLOCATION SCHEDULE" shall have the meaning set forth in
SECTION 1.2(c).
9.5 "ASSETS" means the assets of Seller identified more particularly on
EXHIBIT A.
9.6 "BUYER" means Sento Technical Innovations Corporation, a Utah
corporation, or any successor, transferee or assignee thereof.
9.7 "BUYER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.1.
9.8 "CENTERPOST" means Centerpost Innovations Pty Limited, ACN 074-678-
774, a limited company organized under the laws of Australia.
9.9 "CLOSING" shall have the meaning set forth in SECTION 1.5(a).
9.10 "CLOSING DATE" means the date and time as of which the Closing
actually takes place.
9.11 "CONTRACTS" means those contracts and agreements identified more
particularly on EXHIBIT B, the rights of which Buyer has elected to acquire
from Seller hereunder.
9.12 "DEED OF RESTRAINT OF TRADE" shall mean that certain Deed of
Restraint of Trade to be executed by and among Buyer and the Shareholders
contemporaneously with the execution of this Agreement, substantially in the
form of EXHIBIT H, acceptable to Buyer in its discretion.
9.13 "DISCLOSURE SCHEDULES" means the disclosure schedules prepared and
delivered by Seller, Kilat and the Shareholders to Buyer prior to the Closing.
The Disclosure Schedules shall contain all information necessary to make the
representations and warranties set forth in ARTICLE 2 true and correct.
9.14 "DOLLARS" or "$" means United States dollars.
9.15 "EMPLOYEE BENEFIT PLAN" means any stock option, stock right, profit
sharing, thrift-savings, simplified employee pension plan, deferred
compensation plan, severance pay,
24
golden parachute, cafeteria plan, flexible compensation plan, life insurance,
medical, dental, disability, welfare, superannuation or vacation plans or any
other similar plan or arrangement of any kind or character.
9.16 "ENCUMBRANCE" means any lien, pledge, hypothecation, charge,
mortgage, deed of trust, security interest, encumbrance, equity, trust,
equitable interest, claim, easement, right-of-way, servitude, right of
possession, lease tenancy, license, encroachment, burden, intrusion,
covenant, infringement, interference, proxy, option, right of first refusal,
community property interest; or legend, defect, impediment, exception,
condition, restriction, reservation, limitation, impairment, imperfection of
title; or restriction on or condition to the voting of any security,
restriction on the transfer of any security or other asset, restriction on
the receipt of any income derived from any security or other asset, and
restriction on the possession, use, exercise or transfer of any other
attribute of ownership, whether based on or arising from common law,
constitutional provision, statute or contract.
9.17 "ENTITY" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
company, joint venture, joint stock association, estate, trust, cooperative,
foundation, union, syndicate, league, consortium, coalition, committee,
society, firm, company or other enterprise, association, organization or
entity of any nature, other than a Governmental Authority.
9.18 "GOVERNMENTAL AUTHORITY" means any Australian national, state,
territorial or local governmental authority or semi-governmental authority,
any foreign governmental authority, the United States of America, any State
of the United States, any local authority and any political subdivision of
any of the foregoing, any multi-national organization or body, any agency,
department, commission, board, bureau, court or other authority thereof, or
any quasi-governmental or private body exercising, or purporting to exercise,
any executive, legislative, judicial, administrative, police, regulatory or
taxing authority or power of any nature.
9.19 "GOVERNMENTAL AUTHORIZATION" means any permit (including without
limitation any Environmental Permit), license, franchise, approval,
certificate, consent, ratification, permission, confirmation, endorsement,
waiver, certification, registration, transfer, qualification or other
authorization issued, granted, given or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Legal
Requirement.
9.20 "INTELLECTUAL PROPERTY" means any and all trademarks, trade names,
service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing),
technology, trade secrets, inventions, know-how, names, logos, artwork,
designs, discoveries, computer programs, software products and related source
code and documentation, processes, and all other intangible assets,
properties and rights.
9.21 "INTELLECTUAL PROPERTY ASSETS" means all Intellectual Property of
Seller, including, without limitation, all Intellectual Property necessary to
or currently utilized in Seller's business.
25
9.22 "INTELLECTUAL PROPERTY PURCHASE AGREEMENT" means that certain
Intellectual Property Purchase Agreement to be executed by and among Buyer,
Seller, Kilat and the Shareholders contemporaneously with the execution of
this Agreement, substantially in the form of EXHIBIT G, acceptable to Buyer
in is discretion.
9.23 "KILAT" means Kilat Holding Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia.
9.24 "KNOWLEDGE" or "KNOWN" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving or who has at any time served as an
officer, director, member, manager, trustee, or shareholder of such Entity (or
in any similar capacity) has, or at any time had, knowledge of such fact or
other matter.
"LEGAL REQUIREMENT" means any law (including without limitation any
Environmental Laws), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
9.26 "LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles.
9.27 "LOSS" means any loss, damage, injury, harm, detriment, decline in
value, lost opportunity, Liability, exposure, claim, demand, cost of any
Proceeding, settlement, judgment, award, punitive damage award, fine,
penalty, Tax, fee, charge, cost or expense (including, without limitation,
costs of attempting to avoid or in opposing the imposition thereof, interest,
penalties, costs of preparation and investigation, and the fees,
disbursements and expenses of attorneys, accountants and other professional
advisors).
9.28 "OPTION" shall have the meaning set forth in RECITAL A.
9.29 "OPTION AGREEMENT" shall have the meaning set forth in RECITAL A.
9.30 "OPTION PURCHASE PAYMENT" shall have the meaning set forth in
SECTION 1.4(a).
9.31 "ORDER" means any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, consent
decree, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
9.32 "ORDINARY COURSE OF BUSINESS" means an action taken by a Person if:
26
(I) such action is recurring in nature, is consistent with the past
practices of such Person and is taken in the ordinary course of the normal day-
to-day operations of such Person;
(ii) the aggregate monetary amount associated with such action (or
any series of related actions) is less than Twenty-Five Thousand Dollars
($25,000), unless prior to taking such action, the Person obtains from Buyer
written consent to the taking of such action; and
(iii) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other persons that are
in the same line of business as such Person.
9.33 "PERSON" means any individual, Entity or Governmental Authority.
9.34 "PROCEEDING" means any action, suit, litigation, arbitration,
lawsuit, claim, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination,
investigation, challenge, controversy or dispute commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Authority or any arbitrator.
9.35 "PROPRIETARY INFORMATION" shall have the meaning set forth in SECTION
6.2.
9.36 "PURCHASE PRICE" shall have the meaning set forth in SECTION 1.3.
9.37 "SELLER" means Australian Software Innovations (Services) Pty Ltd ACN
▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia.
9.38 "SELLER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.2.
9.39 (a) "SENTO COMMON STOCK" means the Common Stock, $.25 par value, of
Sento Technical Innovations Corporation.
9.40 "SHAREHOLDERS" refers collectively to Eng ▇▇▇ and ▇▇▇▇ ▇▇▇, in their
individual capacities.
9.41 (a) "TAX" means any federal, national, state, territorial, local
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, environmental, customs duties,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, fringe benefits or other tax or assessment of any
nature whatsoever, including, without limitation, any customs duty, municipal
rates, stamp duties and all other charges and levies which may be imposed by
a Governmental Authority (including any interest, penalties and additions
thereto that may arise in connection therewith), whether disputed or not.
9.42 "TAX RETURNS" means any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any
27
Governmental Authority in connection with the determination, assessment,
collection or payment of any Tax or in connection with the administration,
implementation or enforcement of or compliance with any Legal Requirement
relating to any Tax.
9.43 "TRANSACTION AGREEMENTS" means this Agreement and such other
documents as are entered into in connection with this Agreement in order to
complete the transactions contemplated hereby, including, without limitation,
the Option Agreement, the Intellectual Property Purchase Agreement and the
Deed Restraint of Trade.
28
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By: _________________________________________________
Its: _________________________________________________
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
____________________________ _______________________________
Signature of Director Signature of Director/Secretary
____________________________ _______________________________
Print Name Print Name
____________________________ _______________________________
Office Held Office Held
"KILAT":
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
____________________________ _______________________________
Signature of Director Signature of Director/Secretary
____________________________ _______________________________
Print Name Print Name
____________________________ _______________________________
Office Held Office Held
29
"SHAREHOLDERS":
_________________________
Eng ▇▇▇, individually
_________________________
▇▇▇▇ ▇▇▇, individually
30
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
ASSETS
[To be completed- Non-intellectual property assets only]
EXHIBIT B
TO
ASSET PURCHASE AGREEMENT
CONTRACTS
[To be completed]
EXHIBIT C
TO
ASSET PURCHASE AGREEMENT
ALLOCATION SCHEDULE
Tangible Assets: $100,000
Good Will: $650,000
Purchase Price: $750,000
EXHIBIT D
TO
ASSET PURCHASE AGREEMENT
FORM OF SUBSCRIPTION AGREEMENT
[To Be Attached]
EXHIBIT E
TO
ASSET PURCHASE AGREEMENT
FORM OF REGISTRATION RIGHTS AGREEMENT
[To Be Attached]
EXHIBIT F
TO
ASSET PURCHASE AGREEMENT
FORM OF EMPLOYMENT AGREEMENT
[To Be Attached]
EXHIBIT G
TO
ASSET PURCHASE AGREEMENT
FORM OF INTELLECTUAL PROPERTY PURCHASE AGREEMENT
[To Be Attached]
EXHIBIT H
TO
ASSET PURCHASE AGREEMENT
FORM OF DEED OF RESTRAINT OF TRADE
[To Be Attached]
EXHIBIT G
TO
OPTION AGREEMENT
FORM OF INTELLECTUAL PROPERTY PURCHASE AGREEMENT
Attached
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
BY AND AMONG
SENTO TECHNICAL INNOVATIONS CORPORATION,
KILAT HOLDINGS PTY. LIMITED,
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY LTD,
AND
ENG ▇▇▇ AND ▇▇▇▇ ▇▇▇, INDIVIDUALLY
________________, 199__
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
THIS INTELLECTUAL PROPERTY PURCHASE AGREEMENT (this "AGREEMENT") is
entered into in Orem, Utah effective as of the ____ day of ________________,
199__, by and among Sento Technical Innovations Corporation, a Utah
corporation (the "BUYER"), Australian Software Innovations (Services) Pty.
Ltd ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia
(the "SELLER"), Kilat Holdings Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia ("KILAT"), and Eng ▇▇▇ and ▇▇▇▇
▇▇▇ (collectively, the "SHAREHOLDERS"), individually.
RECITALS
9.44 Pursuant to an Option Agreement (the "OPTION AGREEMENT") dated as
of the 10th day of September, 1996 between Buyer, Seller, Kilat and the
Shareholders, Seller granted to Buyer and its nominee, Centerpost, an option
(the "OPTION") to purchase the Assets and the Intellectual Property Assets,
Kilat and the Shareholders agreed to facilitate Buyer's purchase of the
Assets and the Intellectual Property Assets and Seller, Kilat and the
Shareholders agreed to execute the Deed of Restraint of Trade.
9.45 Eng ▇▇▇ is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital
stock of Kilat.
9.46 Buyer has elected pursuant to Section 1.6 of the Option Agreement to
exercise the Option with respect to the Assets and the Intellectual Property
Assets.
9.47 Buyer desires to purchase the Assets and the Intellectual Property
Assets from Seller, and Seller is obligated pursuant to the Option Agreement to
sell the Assets and the Intellectual Property Assets to Buyer, in accordance
with the terms and conditions of the Option Agreement. All capitalized terms
used herein without definition shall have the meanings set forth in ARTICLE 9.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, Buyer, Seller, Kilat and the Shareholders hereby agree as
follows:
ARTICLE 1
SALE OF INTELLECTUAL PROPERTY ASSETS;
ADDITIONAL AGREEMENTS; CLOSING
1.1 ACQUISITION. Subject to the terms and conditions of this Agreement,
at the Closing, Seller shall sell, transfer and deliver to Buyer, and Buyer
shall purchase, all of Seller's right, title and interest in and to the
Intellectual Property Assets (the "ACQUISITION").
1.2 ADDITIONAL UNDERSTANDINGS. In connection with the Acquisition, the
parties hereto agree as follows:
(a) Buyer will not, pursuant to this Agreement, acquire any
property of Seller other than the Intellectual Property Assets to be acquired
by Buyer from Seller pursuant to the terms of this Agreement; nor will Buyer
assume or be bound by any contract or agreement other than the Contracts and
the Deed of Restraint of Trade (PROVIDED, HOWEVER, that Buyer shall not
assume any obligation of Seller thereunder); nor will Buyer assume any other
debt, claim, Liability, Tax, judgment or obligation whatsoever of Seller
except for those obligations under the Contracts to be performed after the
Closing Date. Except as set forth on EXHIBIT B, Buyer will not recognize or
assume any obligations of Seller to employees of Seller or any collective
bargaining agreements between Seller and any labor organizations. Except as
set forth on EXHIBIT B, Buyer will not assume or be obligated to pay any
debts, obligations, responsibilities, Liabilities, claims, damages, judgments
or settlements arising from any such labor contracts or agreements or any
other employment-related matter involving Seller.
(b) In connection with the Acquisition, Seller, Kilat and each of
the Shareholders shall, from the date of this Agreement until the Closing
Date, afford Buyer's employees, auditors, legal counsel and other authorized
representatives reasonable access to the properties, records and personnel of
Seller in order to inspect, investigate and audit the Intellectual Property
Assets and the operations and business of Seller. Buyer agrees to conduct
any such inspection, investigation or audit in a reasonable manner, during
regular business hours, so as not to disrupt the normal functioning of
Seller's business. Seller, Kilat and the Shareholders agree to cooperate
fully with Buyer and to make the Seller's books and records, the Assets, the
Intellectual Property Assets and the employees of Seller available to Buyer
as reasonably required by Buyer in order for Buyer to complete its due
diligence in a timely fashion.
(c) Except as set forth on EXHIBIT B, Buyer will not have any
obligation for, and the parties specifically understand and acknowledge that
Buyer will not be assuming any responsibility for or liability under any
Employee Benefit Plan of Seller. Except as set forth on EXHIBIT B, Buyer
does not and shall not recognize or assume any Liability with respect to any
Employee Benefit Plan of Seller, nor shall the inclusion by Buyer, or an
Affiliate of Buyer, of a former employee of Seller in an Employee Benefit
Plan of Buyer or an Affiliate of Buyer, be deemed to constitute the adoption
or continuation by Buyer of any Employee Benefit Plan of Seller except as set
forth on EXHIBIT B.
(d) Seller, Kilat and the Shareholders covenant and agree that
they will do all acts and execute or cause Seller to execute all such
documents as are necessary to cause the name of Seller to be changed as of
the Closing Date to a name that does not include the words
2
"Australian Software Innovations" or the acronym "ASI" or any similar name
and will on or before the Closing Date deliver to Buyer appropriate signed
notices to the Australian Securities Commission having such effect and all
other materials reasonably requested by Buyer in connection therewith,
together with all filing fees payable in respect of lodging such notices.
Seller, Kilat and the Shareholders consent to Buyer causing a company
controlled by Buyer or its Affiliates to change its name to Australian
Software Innovations Pty Limited on or after the Closing Date.
1.3 PURCHASE PRICE. The price to be paid by Buyer for the purchase of
the Intellectual Property Assets (the "PURCHASE PRICE") shall be Five Hundred
Fifty Five Thousand Dollars ($555,000).
1.4 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall pay to
Seller Five Hundred Fifty Five Thousand Dollars ($555,000), representing the
full amount of the Purchase Price, in the form of cash, certified funds or
wire transferred funds, with the transfer of such funds to be initiated by
Buyer within twenty-four hours of the Closing.
1.5 CLOSING. Upon satisfaction or waiver of the conditions to Closing
contained in ARTICLE 4 and ARTICLE 5 hereof, the parties hereto agree to
close the Acquisition contemporaneously with the consummation of the
transactions described in the Asset Purchase Agreement and the Deed of
Restraint of Trade (the "CLOSING"). The Closing shall take place at the
principal offices of Buyer, or such other place as may be agreed to by the
parties, on the date agreed to by the parties, but in all events on or before
thirty (30) days from the date hereof. It is the intent of the parties to
consummate the Closing as soon as possible after the execution of this
Agreement. The parties agree to use their good faith and reasonable efforts
to close the Acquisition as soon as possible and to cooperate fully with each
other to complete the Closing.
1.6 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver to Buyer:
(i) A ▇▇▇▇ of Sale transferring the Intellectual Property
Assets to Buyer, free and clear of all Encumbrances except as expressly
assumed by Buyer and described on EXHIBIT B;
(ii) An Assignment Agreement assigning to Buyer the Contracts,
free and clear of all Encumbrances except as expressly assumed by Buyer and
described on EXHIBIT B;
(iii) Complete and accurate Disclosure Schedules;
(iv) An executed Asset Purchase Agreement, acceptable to Buyer
in its discretion;
(v) An executed Deed of Restraint of Trade, acceptable to Buyer
in its discretion;
3
(vi) Such other documents, including certificates of independent
legal advice and appropriate statutory declarations, as may be required by this
Agreement or the Asset Purchase Agreement, or reasonably requested by Buyer to
carry out the transactions contemplated hereby or thereby; and
(vii) Possession of the Intellectual Property Assets.
(b) At the Closing, Buyer shall deliver to Seller:
(i) The amount of Five Hundred Fifty Five Thousand Dollars
($555,000) in the form of cash, certified funds or wire transferred funds, with
the transfer of such funds to be initiated by Buyer within twenty-four hours of
the Closing;
(ii) An executed Asset Purchase Agreement, acceptable to Buyer
in its discretion;
(iii) An Assignment Agreement accepting assignment to
Buyer of all Seller's rights under the Contracts and assuming the obligations
arising under the Contracts to be performed after the Closing Date; and
(iv) Such other documents, including officers' certificates,
as may be required by this Agreement or the Asset Purchase Agreement, or as
reasonably requested by Seller to carry out the transactions contemplated
hereby or thereby.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER,
KILAT AND THE SHAREHOLDERS
Except as otherwise indicated, Seller, Kilat and each of the
Shareholders jointly and severally represent and warrant to Buyer that the
following representations and warranties are true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing Date:
2.1 AUTHORITY. Seller, Kilat and each of the Shareholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver the Transaction Agreements, as applicable, to perform his, her or its
obligations thereunder and to consummate the transactions contemplated
thereby. This Agreement has been, and each of the Transaction Agreements will
be when executed, duly and validly executed and delivered by Seller, Kilat
and each of the Shareholders, and each of the Transaction Agreements, as
applicable, constitutes, or will when executed constitute, the legal, valid
and binding agreement of Seller, Kilat and each of the Shareholders,
enforceable against Seller, Kilat and each of the Shareholders in accordance
with its terms except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws
affecting creditors' rights generally.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF SELLER AND KILAT.
Seller is a limited company duly organized, validly existing and in good
standing under the laws of
4
Australia and has full power and authority to carry on its business as now
being conducted, to own and operate its properties and assets, and to perform
all its obligations under the Transaction Agreements and the Contracts. Kilat
is a limited company duly organized, validly existing and in good standing
under the laws of Australia and has full power and authority to carry on its
business as now being conducted, to own and operate its properties and
assets, and to perform all its obligations under the Transaction Agreements.
2.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Disclosure Schedules, neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor
the compliance by Seller and Kilat with any of the provisions thereof will,
as of the Closing Date, (i) conflict with or violate any provision of the
Memorandum and Articles of Association or other charter or governing
documents of Seller or Kilat, respectively, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
contract, agreement, commitment, bond, mortgage, indenture, license, lease,
pledge agreement or other instrument or obligation to which Seller or Kilat
is a party or by which Seller or Kilat or any of their respective properties
or assets may be bound, including, without limitation, any other agreement
with respect to the sale by Seller of any of its properties or assets, (iii)
to the best knowledge of Seller, Kilat and the Shareholders, violate or
conflict with any provision of any Legal Requirement binding upon Seller or
Kilat, or (iv) to the best knowledge of Seller, Kilat and the Shareholders,
result in, or require, the creation or imposition of, any Encumbrance upon or
with respect to any properties of Seller or Kilat, including, without
limitation, the Assets or the Intellectual Property Assets, or impair the
ability of Seller, Kilat or the Shareholders to carry out their respective
obligations under or the Transaction Agreements.
2.4 BOOKS AND RECORDS. The books of account and other business records
of Seller regarding the Intellectual Property Assets and the business and
operations of Seller have all been made available to Buyer and such books and
records are complete and correct with regard to the matters which are the
subject of the Transaction Agreements.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
fully disclosed in writing to Buyer in the Disclosure Schedules, as of the
Closing Date, Seller will have no Liabilities, including, without limitation,
any Liabilities resulting from failure to comply with any Legal Requirement
applicable to Seller, its business or operations, the Intellectual Property
Assets due or to become due and whether incurred in respect of or measured by
the income or sales of Seller for any period or arising out of any
transactions entered into, or any state of facts existing, on or before the
Closing Date which could, as of or after the Closing Date, materially
adversely affect Seller's business or operations or the Intellectual Property
Assets, give rise to an Encumbrance against the Intellectual Property Assets
or materially adversely affect Seller's ability to carry out the transactions
contemplated by the Transaction Agreements.
2.6 ABSENCE OF CHANGES. Between the date of this Agreement and the
Closing Date, there will not have been (i) any material adverse change, or
any event, condition or contingency that is likely to result in a material
adverse change in the condition of Seller's business or operations or the
Intellectual Property Assets; (ii) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting Seller's
business or operations, the Assets or the Intellectual Property Assets; (iii)
any termination or receipt of notice of
5
termination of one or more of the Contracts; (iv) any dispute or any other
occurrence, event or condition of any character, which reasonably could be
anticipated to give rise to a legal or administrative action or to a material
adverse change affecting the Assets or the Intellectual Property Assets or
Seller's ability to carry out its obligations hereunder; or (v) any agreement
to do any of the foregoing.
2.7 CONTRACTS. Except as set forth on the Disclosure Schedules or as
otherwise described in this Agreement:
(a) Complete and accurate copies, including all amendments, of the
Contracts have been delivered to Buyer.
(b) All of the Contracts are in full force and effect and are valid
and enforceable in accordance with their terms, there are no material defaults
thereunder or breaches thereof, and no condition exists or event has occurred
which, with notice or lapse of time or both, would constitute a default
thereunder.
(c) Seller has the right to assign its rights and obligations
under the Contracts to Buyer, and such assignment will not result in a
default, breach or right of termination thereunder.
(d) Set forth in the Disclosure Schedules is a complete and
accurate description of all obligations or commitments of Seller with respect
to any asset of any nature whatsoever that is used in whole or in part for
the personal use or benefit of any shareholder, officer, director or employee
of Seller or any Affiliate thereof.
2.8 PERSONAL PROPERTY.
(a) Except as set forth in the Disclosure Schedules, there is no
asset, property, right or interest of any nature whatsoever necessary to or
currently utilized in the operation of Seller's business which is not
included in the Assets or the Intellectual Property Assets and Buyer has been
given, pursuant to the Option, an opportunity to acquire all of such assets,
properties, rights and interests.
(b) Seller has made available to the Buyer true, correct and
complete copies of all material contracts, agreements, mortgages, leases and
commitments relating to or affecting any interest in the Intellectual
Property Assets.
(c) Other than the Contracts, there are no agreements, whether
verbal or written, affecting any of the Intellectual Property Assets which
have not been disclosed in writing to Buyer. Other than the Contracts or as
authorized by Buyer in writing prior to the Closing, all such agreements
affecting the Intellectual Property Assets will be terminated prior to or at
the Closing.
2.9 TITLE TO ASSETS AND RELATED MATTERS. Seller owns all of the
Intellectual Property Assets free and clear of all Encumbrances and the
claims or rights of any other party. Seller has the power, authority and
right to sell the Intellectual Property Assets to Buyer free and clear of any
Encumbrances.
6
2.10 INTELLECTUAL PROPERTY. Except as set forth in the Disclosure
Schedules:
(a) The Intellectual Property Assets constitute all of the
Intellectual Property necessary to or currently utilized in Seller's business
and all such Intellectual Property is owned by Seller free and clear of all
Encumbrances, and is not subject to any license, royalty or other agreement,
and Seller has not granted any license or agreed to pay any royalty in
respect of any Intellectual Property necessary to or currently utilized in
Seller's business, except for that license granted pursuant to an Exclusive
License and Technical Assistance Agreement between Seller and Spire
Technologies, Inc. dated as of July 1, 1996;
(b) None of the Intellectual Property necessary to or currently
utilized in Seller's business has been or is the subject of any pending or
threatened Proceeding or claim of infringement;
(c) No license or royalty agreement to which Seller is a party or
by which any of the Intellectual Property necessary to or currently utilized
in Seller's business is or could be materially affected is in breach or
default by any party thereto or the subject of any notice of termination
given or threatened;
(d) To the best knowledge of Seller and each of the Shareholders,
the products manufactured or sold by Seller and any process, method, part,
design, material or other Intellectual Property they employ, and the
marketing and use by Seller of any such product, service or other
Intellectual Property, do not infringe any Intellectual Property or
confidential or proprietary rights of another, and Seller has not received
any notice contesting its right to use any Intellectual Property; and
(e) Seller owns or possesses adequate rights in perpetuity in and
to all Intellectual Property necessary to conduct its business as presently
conducted.
2.11 COMPLIANCE WITH LAWS. Seller is in compliance with all Legal
Requirements applicable to the ownership of the Assets and the Intellectual
Property Assets and the operation of its business where the failure so to
comply would have a material adverse effect on Seller's ability to carry out
its obligations under the Transaction Agreements, or the ability of Buyer to
carry on the business operations related to the Intellectual Property Assets
after the Closing, and Seller does not have any basis to expect, nor has it
received, any Order, notice, or other communication from any Governmental
Authority of any alleged, actual, or potential violation and/or failure to
comply with any such Legal Requirement, except as disclosed on the Disclosure
Schedules.
2.12 LITIGATION. Except as set forth in the Disclosure Schedules, (i)
neither Seller, Kilat nor either of the Shareholders is subject to any Order
in which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Intellectual Property Assets, the operation of
Seller's business or the matters covered by the Transaction Agreements which
would prevent, delay, or make illegal the transactions contemplated by the
Transaction Agreements, (ii) there are no Proceedings pending or threatened
against, involving, affecting, or relating to Seller, Kilat or either of the
Shareholders, the operation of Seller's business or to Seller's ownership,
operation or use of the Intellectual Property Assets before any arbitrator or
Governmental Authority, and (iii) to the best knowledge of Seller, Kilat and
each of the
7
Shareholders, there exist no facts to serve as a basis for the institution of
any Proceeding against Seller, Kilat, either of the Shareholders or any of
the Intellectual Property Assets which would prohibit or adversely affect the
Assets or the Intellectual Property ability of Seller, Kilat or the
Shareholders to carry out their respective obligations under the Transaction
Agreements.
2.13 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or
similar Person has acted directly or indirectly on behalf of Seller in
connection with the Transaction Agreements or the transactions contemplated
thereby, and no Person, including Seller, Kilat or either of the Shareholders,
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee or expense, directly or indirectly, in connection with the
Transaction Agreements or the transactions contemplated thereby.
2.14 BANKRUPTCY. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or proceeding has been commenced or threatened against
Seller by any creditor, claimant, Governmental Authority or any other person.
2.15 LABOR MATTERS. Except as set forth in the Disclosure Schedules,
(a) Seller has made all payments to its employees required by any
Legal Requirement or any Employee Benefit Plans;
(b) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
threatened, any Proceeding against Seller under any Legal Requirement
governing the conditions of Seller's employment of its employees, or any
basis or ground for any such claim;
(c) Seller has not been a party to any collective bargaining
agreement or other labor contract affecting the employees of Seller;
(d) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
existing or threatened, any strike, slowdown, picketing, work stoppage, labor
arbitration or proceeding in respect of the grievance of any employee, an
application or complaint filed by an employee or union with any Governmental
Authority, or organizational activity or labor dispute against or affecting
the business of Seller; and
(e) Seller has complied with all its obligations under all
relevant superannuation legislation and has made all contributions required
to be made in respect of its employees for their period of employment up to
and including the Closing Date. Seller has established reserves and accruals
(each of which is accurately set forth in the Disclosure Schedules) in
amounts sufficient to satisfy all superannuation obligations in respect of
its employees for their period of employment up to and including the Closing
Date.
8
2.16 DISCLOSURE. No representation or warranty of Seller, Kilat or the
Shareholders contained in this Agreement, the Exhibits hereto, or any other
Transaction Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to Seller, Kilat or either of the
Shareholders which has specific application to Seller (other than general
economic or industry conditions) and which materially and adversely affects
or, so far as Seller, Kilat or either of the Shareholders can reasonably
foresee, materially threatens, the Intellectual Property Assets or the
ability of Seller, Kilat or the Shareholders to carry out their respective
obligations under the Transaction Agreements, which has not been set forth in
this Agreement or in the Disclosure Schedules.
2.17 TAX MATTERS. With respect to Taxes, including, without limitation,
Taxes imposed by the Income Tax Assessment Act of 1936 of the Commonwealth of
Australia (the "TAX ACT") and any other Australian national, state or
territorial law or regulation:
(a) Seller has lodged, or will lodge, at or before the correct time all
Tax Returns required by law to be lodged on or before the Closing Date and
all such Tax Returns have been, or will be, as the case may be, fully and
accurately completed;
(b) Seller has made, to the Commissioner of Taxation or the appropriate
Governmental Authority a full and true disclosure of all material facts
necessary for the proper assessment of Seller and each deduction, rebate or
credit claimed in those Tax Returns has been properly claimed and is duly
allowable;
(c) All other necessary information, documents and notices in respect
of Tax have been properly and duly submitted by Seller to all relevant
Governmental Authorities in respect of Tax for all periods up to the Closing
Date and will continue to be properly and duly submitted up to the Closing
Date and there is no unresolved dispute with any of those authorities nor is
any such dispute foreshadowed or contemplated;
(d) All Taxes which have been assessed or imposed or are lawfully
assessable upon or are payable by Seller and which are due and payable or
which may become due and payable subsequent to but are referable to the
period ending on the Closing Date have been paid by Seller or adequate
provisions has been made for them in Seller's accounts and such provisions
have been fully disclosed to Buyer; and
(e) All obligations imposed on Seller under all laws relating to Tax
have been complied with and, without limiting the generality of the
foregoing, all amounts of income tax and medicare levy required by law to be
deducted by Seller from salary or wages of Seller's employees (including,
without limitation, Seller's directors and officers) and from prescribed
payments and all amounts of withholding tax have been duly deducted and where
payable to the relevant taxing authority have been duly paid.
2.18 INSURANCE. The Intellectual Property Assets are adequately insured
by respect of the risks to which they are subject (including loss or damage
by disease, fire, theft, storm and tempest) in such amounts as accord with
sound business principles and such policies will not expire earlier than the
Closing Date. Seller is adequately insured against public liability in such
amounts as accord with sound business principles and such policies will not
expire prior to the
9
Closing Date. Seller is adequately insured against workers' compensation
liability and has complied with all respects with the legislation relating to
workers' compensation in all jurisdictions where relevant. All premiums in
respect of the insurance coverage referred to in this Agreement will have
been paid prior to the Closing Date, Seller has complied with all the
conditions of the associated policies and has not made any false or
misleading statement or done or omitted to do anything which would entitle
the insurers to avoid the policies or refuse to meet any claim thereunder in
full other than as disclosed by Seller to Buyer in writing prior to the
Closing Date. There is no fact or matter of which Seller, Kilat or the
Shareholders is aware which could lead to Seller's insurance policies being
vitiated or repudiated and neither Seller, Kilat nor the Shareholders will
permit any such policies to lapse prior to the Closing Date, nor will Seller,
Kilat or the Shareholders do or fail to do anything which will render any of
Seller's insurance policies void or voidable prior to the Closing Date.
2.19 TRADE PRACTICES. There is no agreement, arrangement or activity
whether by commission or omission in which Seller has been or will be
concerned which infringes or which has been or which is required to be
authorized under the Trade Practices Act of 1974 of the Commonwealth of
Australia or any other anti-trust legislation in relation to the Intellectual
Property Assets, including, without limitation, any Australian national,
state or territorial law or regulation.
2.20 ENVIRONMENTAL LIABILITIES. There are no Environmental Liabilities
(as defined below) affecting any of Seller's business premises. There are no
factors affecting any of Seller's business premises which are likely within
the next twelve months to give rise to any Environmental Liability. For the
purposes of this clause, the term "ENVIRONMENTAL LAW" means any planning,
environmental, health, toxic, hazardous substances, dangerous goods,
waste/disposal or pollution laws, regulations, orders, notices, ordinances or
requirements, and the term "ENVIRONMENTAL LIABILITY" means any obligation,
expense, penalty or fine under an Environmental Law which could be imposed on
any occupier in possession of Seller's business premises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Kilat and the Shareholders as
follows:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full power and authority to purchase the Assets and the
Intellectual Property Assets and to carry on its intended business therewith.
3.2 AUTHORITY. Buyer has full power and authority to execute and
deliver the Transaction Agreements, to perform its obligations thereunder,
and to consummate the transactions contemplated thereby. This Agreement has
been, and each of the Transaction Agreements will be, when executed, duly and
validly executed and delivered by Buyer and each of the Transaction
Agreements, as applicable, constitutes, or will, when executed, constitute,
the legal, valid, and binding agreement of Buyer, enforceable against Buyer
in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency,
10
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditor's rights generally.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration
with, no notice to and no Governmental Authorization, consent or approval of
any Governmental Authority, creditor or other person in a contractual
relationship with Buyer is necessary in connection with Buyer's execution and
delivery of the Transaction Agreements, the performance of its obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby. Neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor
the compliance by Buyer with any of the provisions thereof will, as of the
Closing Date, (i) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of the Buyer's Articles of Incorporation or Bylaws,
or of any note, contract, agreement, commitment, bond, mortgage, indenture,
license, lease, pledge agreement or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or assets may be
bound, or (ii) violate or conflict with any provision of any Legal
Requirement binding upon Buyer.
3.4 BANKRUPTCY. Buyer has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator
or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction;
and no such action or proceeding has been commenced or threatened against
Buyer by any creditor, claimant, governmental authority or any other person.
3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
or similar Person has acted directly or indirectly on behalf of Buyer in
connection with the Transaction Agreements or the transactions contemplated
hereby, and no Person, including Buyer, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee or expense,
directly or indirectly, in connection with the Transaction Agreements or the
transactions contemplated thereby.
ARTICLE 4
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
the Transaction Agreements at the Closing are subject to fulfillment of the
following conditions, any one or more of which may be waived in whole or in
part by Buyer in the manner provided for herein.
4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Seller, Kilat and the Shareholders
contained in the Transaction Agreements, including the Exhibits thereto, are
true, correct and complete in all material respects as of the Closing Date.
11
4.2 PERFORMANCE; COMPLIANCE WITH AGREEMENT. Seller, Kilat and each of
the Shareholders shall have performed and complied with all obligations,
agreements, covenants and conditions required by the Transaction Agreements
to be performed or complied with by them on or before the Closing Date,
including without limitation making all the deliveries required by SECTION
1.6.
4.3 AUTHORIZATION; THIRD-PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with the execution and delivery of the Transaction Agreements
by Seller, Kilat and the Shareholders, the performance of their respective
obligations hereunder and thereunder, or the consummation of the transactions
contemplated hereby and thereby shall have been made or obtained. All
corporate actions necessary to authorize the execution, delivery and
performance of the Transaction Agreements by Seller and Kilat, and the
consummation by Seller and Kilat of the transactions contemplated by the
Transaction Agreements shall have been duly and validly taken, and Seller and
Kilat shall have full right and power to sell the Intellectual Property
Assets and to perform their respective obligations upon the terms provided in
the Transaction Agreements. On or prior to the Closing Date, Seller, Kilat
and the Shareholders shall have furnished to the Buyer evidence of the
foregoing filings, notices, consents, stipulations and assignments.
4.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of
this Agreement through the Closing Date, there shall not have been any
material adverse change in the Intellectual Property Assets, and none of the
events described in SECTION 2.6 shall have occurred.
4.5 COMPLETION OF BUYER'S INVESTIGATION. Buyer shall have completed,
to its sole satisfaction and at its expense, an investigation into the
condition of the Intellectual Property Assets and the business and operations
of Seller. If Buyer is not satisfied with any matter revealed during its
investigation, or with any matter set forth on the Disclosure Schedules,
Buyer shall have the right to terminate this Agreement if notice of
termination is given to the Seller, Kilat and the Shareholders prior to the
Closing.
4.6 GOOD TITLE TO BUYER. Seller shall have conveyed the Intellectual
Property Assets to Buyer, free and clear of all Encumbrances.
4.7 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the
transactions contemplated by the Transaction Agreements shall have been
satisfactory in all reasonable respects to Buyer and its counsel.
12
ARTICLE 5
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER, KILAT AND THE SHAREHOLDERS
The obligations of Seller, Kilat and the Shareholders to consummate the
transactions contemplated by the Transaction Agreements at the Closing are
subject to the fulfillment of the following conditions, any one or more of
which may be waived in whole or in part by Seller, Kilat or the Shareholders
in the manner provided for herein.
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Buyer contained in the Transaction
Agreements shall be true, correct and complete in all material respects as of
the Closing Date.
5.2 BUYER'S PERFORMANCE; COMPLIANCE WITH AGREEMENT. Buyer shall have
performed and complied with all obligations, agreements, covenants and
conditions required by the Transaction Agreements to be performed or complied
with by Buyer on or before the Closing Date, including without limitation
making all the deliveries required by SECTION 1.6.
5.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary
in connection with Buyer's execution and delivery of the Transaction
Agreements, the performance of its obligations thereunder, or the
consummation of the transactions contemplated thereby shall have been made or
obtained. All corporate action necessary to authorize the execution,
delivery and performance of the Transaction Agreements by Buyer and the
consummation by Buyer of the transactions contemplated by the Transaction
Agreements shall have been duly and validly taken, and Buyer shall have full
right and power to purchase the Intellectual Property Assets and to perform
its obligations upon the terms provided in the Transaction Agreements. Buyer
shall have furnished to Seller, Kilat and the Shareholders evidence of the
foregoing consents and actions, if requested.
5.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing Date, there will not have been any material adverse change, or
any event, condition or contingency that results in a material adverse change
affecting the ability of Buyer to carry out its obligations under the
Transaction Agreements.
5.5 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the
transactions contemplated by the Transaction Agreements shall have been
satisfactory in all reasonable respects to Seller, Kilat and the Shareholders
and their counsel.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution and performance of the Transaction
Agreements and the transactions contemplated
13
hereby, including without limitation all fees and expenses of agents,
business brokers, legal counsel, accountants, tax and financial advisors and
other facilitators and advisors.
6.2 CONFIDENTIALITY.
(a) NON-DISCLOSURE AND USE. Each of Buyer, Seller, Kilat and the
Shareholders acknowledges that, in connection with the transactions
contemplated by the Option Agreement and the Transaction Agreements, each has
become or may become privy to the technical, marketing and other proprietary
information of another party, including, without limitation, information,
material, documents and data related to such other party, to the business
activities of such other party and/or to its customers, trade secrets and
other proprietary information (collectively, the "PROPRIETARY INFORMATION").
Each agrees (i) to take at all times all reasonably necessary steps to
safeguard the confidentiality of any Proprietary Information; (ii) not to
disclose, reveal, make accessible or make available to any third Person any
Proprietary Information; and (iii) not to use any Proprietary Information for
such party's own benefit or for any other Person's benefit; PROVIDED,
HOWEVER, that Buyer, Seller, Kilat or the Shareholders may disclose (A)
Proprietary Information which at the time of the disclosure is part of the
public knowledge and readily accessible to such third party and (B)
Proprietary Information which is required by law to be disclosed.
(b) RETURN. Buyer, Seller, Kilat and the Shareholders agree that
if the Acquisition is not consummated, each of them will return to the other
parties hereto any and all material containing or reflecting Proprietary
Information.
(c) REMEDIES. Each of Buyer, Seller, Kilat and the Shareholders
acknowledges and agrees that any breach of the terms of this SECTION 6.2
would result in irreparable injury and damage to the injured party for which
such party would have no adequate remedy at law; each of Buyer, Seller, Kilat
and the Shareholders therefore also acknowledges and agrees that in the event
of such breach or any threat of breach, the injured or threatened party shall
be entitled, in addition to any other remedies to which such party may be
entitled at law or in equity, to an immediate injunction and restraining
order to prevent such breach and/or threatened breach by the breaching or
threatening party and/or any and all persons and/or entities acting for
and/or with such breaching or threatening party, without having to provide a
bond or other security or to prove actual damages.
6.3 OPERATION OF BUSINESS. Neither Seller, Kilat nor either of the
Shareholders will engage in any practice, take any action or enter into any
transaction outside the Ordinary Course of Business with respect to the
Intellectual Property Assets or the operation of Seller's business from the
date of this Agreement until the Closing Date without the prior written
consent of Buyer. Without in any manner limiting the foregoing, Seller,
Kilat and the Shareholders covenant and agree that during such period,
(i) the aggregate monthly remuneration (including, without
limitation, all salary, distributions, dividends, bonuses, deferred
compensation, automobile lease expense, superannuation payments and other
payments) paid to or for the benefit of Kilat and the Shareholders and all
Affiliates of Kilat and the Shareholders shall not exceed Sixteen Thousand
Six Hundred Sixty Seven Australian Dollars (AUS$16,667), and
14
(ii) Except as set forth in the Disclosure Schedules, Seller will
not, and Kilat and the Shareholders will not permit Seller to, make any
payment or incur any obligation with respect to any asset of any nature
whatsoever that is used in whole or in part for the personal use or benefit
of any shareholder, officer, director or employee of Seller or any
Affiliate thereof.
Seller, Kilat and the Shareholders will use their best commercially
reasonable efforts to preserve the Intellectual Property Assets and the
goodwill and value of Seller's business, to comply with all laws applicable
to the Intellectual Property Assets and Seller's business and to maintain
good working relationships with lessors, licensors, suppliers, customers and
employees. In addition, Seller will not sell or contract to sell any
interest in Seller or lease, license, transfer, pledge, mortgage, hypothecate
or otherwise dispose of any of the Intellectual Property Assets and Kilat and
the Shareholders will not permit Seller to take any such action. Seller will
not, and Kilat and the Shareholders will not permit Seller to, do any act or
thing or suffer or permit any omission which would make any policy of
insurance of Seller written with respect to the Intellectual Property Assets
void or voidable or do anything that would mean that any existing insurance
policy of Seller is not materially in full force and effect at all times
prior to the Closing Date.
6.4 PUBLICITY. The parties hereto agree, subject to the provisions of
SECTION 6.2, to advise and confer with each other, to the maximum extent
possible, regarding and prior to the issuance of any reports, statements,
releases, public announcements or similar publicity with respect to this
Agreement or the transactions contemplated hereby; PROVIDED, HOWEVER, that
any of the parties may make such announcements, give such notices and provide
such information to Governmental Authorities, employees, creditors,
affiliates and the public as its counsel may advise is legally required.
6.5 EXCLUSIVITY. From and after the date of this Agreement until the
Closing:
(a) Neither Seller nor any of its officers, directors, stockholders
or agents (including, without limitation, Kilat and the Shareholders) shall
directly or indirectly:
(i) Enter into any transaction with any party other than Buyer
relative to any disposition of the Intellectual Property Assets or Seller's
business or operations or any part thereof; or
(ii) Solicit or encourage submission of inquiries, proposals or
offers from any other party relative to potential disposition of the
Intellectual Property Assets or Seller's business or operations or any part
thereof; or
(iii) Provide further information to any party other than
Buyer relating to any possible disposition of the Intellectual Property Assets
or Seller's business or operations or any part thereof.
(b) Seller, Kilat and the Shareholders agree that if Seller, Kilat
or either of the Shareholders receives an offer or proposal relating to the
possible disposition of the Intellectual Property Assets or Seller's business
or operations or any part thereof, Seller, Kilat
15
and the Shareholders will immediately notify Buyer of such offer or proposal,
the identity of the party making the offer or proposal and the specific terms
of the offer or proposal.
6.6 COOPERATION. Kilat and each of the Shareholders agrees to cause
Seller to take, or to refrain from taking, all actions necessary to fulfill
Seller's covenants and obligations under the Transaction Agreements.
ARTICLE 7
INDEMNIFICATION AND LIMITATION
7.1 INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS. Subject to the
limitations set forth in SECTION 7.4, Seller, Kilat and each of the
Shareholders, jointly and severally, unconditionally, absolutely and
irrevocably agree to and shall defend, indemnify and hold harmless Buyer, and
each of Buyer's officers, directors, employees, counsel, successors, assigns,
and legal representatives (Buyer and such persons are collectively referred
to as the "BUYER'S INDEMNIFIED PERSONS") from and against, and shall
reimburse Buyer's Indemnified Persons for, each and every Loss paid, imposed
on or incurred by Buyer's Indemnified Persons, directly or indirectly,
relating to, resulting from or arising out of any inaccuracy in any
representation or warranty of Seller, Kilat or the Shareholders under the
Option Agreement, the Transaction Agreements or the Exhibits thereto or any
agreement, certificate or document delivered by Seller, Kilat or the
Shareholders pursuant hereto in any respect, or any breach or nonfulfillment
of any covenant, agreement or other obligation of Seller, Kilat or the
Shareholders under the Option Agreement, the Transaction Agreements or the
Exhibits thereto or any agreement, certificate or document to be delivered by
Seller, Kilat or the Shareholders pursuant hereto. With respect to matters
not involving Proceedings brought or asserted by third parties against
Buyer's Indemnified Persons, within thirty (30) days after notification from
Buyer's Indemnified Persons supported by reasonable documentation setting
forth the nature of the circumstances entitling Buyer's Indemnified Persons
to indemnity hereunder, Seller, Kilat and the Shareholders shall, at no cost
or expense to Buyer's Indemnified Persons, diligently commence resolution of
such matters in a manner reasonably acceptable to Buyer's Indemnified Persons
and shall diligently and timely prosecute such resolution to completion;
PROVIDED, HOWEVER, with respect to those valid claims that may be satisfied
by payment of a liquidated sum of money and which are not disputed reasonably
and in good faith by Seller, Kilat and the Shareholders, Seller, Kilat and
the Shareholders shall promptly pay the amount so claimed. If litigation or
any other Proceeding is commenced or threatened, the provisions of SECTION
7.3 shall control over the immediately preceding sentence. Buyer shall be
entitled to offset against any amounts owed by Buyer to Seller, Kilat or the
Shareholders under any Transaction Agreement any amounts owed by Seller,
Kilat or the Shareholders, respectively, to Buyer hereunder.
7.2 INDEMNIFICATION BY BUYER. Buyer unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Seller,
Kilat, the Shareholders and the successors, assigns, heirs and legal and
personal representatives of Seller, Kilat and the Shareholders (Seller,
Kilat, the Shareholders and such persons are collectively referred to as the
"SELLER'S INDEMNIFIED PERSONS") from and against, and shall reimburse
Seller's Indemnified Persons for, each and every Loss paid, imposed on or
incurred by Seller's Indemnified Persons, directly or indirectly, relating
to, resulting from or arising out of any inaccuracy in any
17
representation or warranty of Buyer under the Option Agreement, the
Transaction Agreements or the Exhibits thereto or any agreement, certificate
or other document delivered or to be delivered by Buyer pursuant hereto in
any respect, or any breach or nonfulfillment of any covenant, agreement or
other obligation of Buyer under the Option Agreement, the Transaction
Agreements, the Exhibits thereto or any agreement, certificate or document to
be delivered by Buyer pursuant hereto. With respect to matters not involving
Proceedings brought or asserted by third parties against Seller's Indemnified
Persons, within thirty (30) days after notification from Seller's Indemnified
Persons supported by reasonable documentation setting forth the nature of the
circumstances entitling Seller's Indemnified Persons to indemnity hereunder,
the Buyer, at no cost or expense to Seller's Indemnified Persons, shall
diligently commence resolution of such matters in a manner reasonably
acceptable to Seller's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Buyer, Buyer
shall promptly pay the amount so claimed. If litigation or any other
Proceeding is commenced or threatened, the provisions of SECTION 7.3 shall
control over the immediately preceding sentence.
7.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any Proceeding shall
be brought or asserted against a party entitled to indemnification pursuant
to SECTIONS 7.1 or 7.2, or any successor thereto (the "INDEMNIFIED PERSON")
in respect of which indemnity may be sought under this Article from an
indemnifying person or any successor thereto (the "INDEMNIFYING PERSON"), the
Indemnified Person shall give prompt written notice of such Proceeding to the
Indemnifying Person who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Person and
the payment of all expenses; provided, that any delay or failure to so notify
the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure. In no event shall any Indemnified Person be
required to make any expenditure or bring any cause of action to enforce the
Indemnifying Person's obligations and liability under and pursuant to the
indemnification obligations set forth in this Article. In addition, actual
or threatened action by a Governmental Authority or other Person is not a
condition or prerequisite to the Indemnifying Person's obligations under this
Article. The Indemnified Person shall have the right to employ separate
counsel in any of the foregoing Proceedings and to participate in the defense
thereof, but the reasonable fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless the Indemnified Person shall in good
faith determine that there exist actual or potential conflicts of interest
which make representation by the same counsel inappropriate. The Indemnified
Person's right to participate in the defense or response to any Proceeding
should not be deemed to limit or otherwise modify its rights and obligations
under this Article. In the event that the Indemnifying Person, within
fifteen (15) days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of the
Indemnifying Person, subject to the right of the Indemnifying Person to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the Indemnified Person at any time prior to the settlement, compromise or
final determination thereof. If the Indemnifying Person assumes the defense
of any Proceeding, the Indemnified Person shall, reasonably and in good
faith, assist and cooperate in the defense thereof. Anything in this Article
to the contrary notwithstanding, the Indemnifying Person shall not, without
the Indemnified Person's prior written consent, settle or compromise any
Proceeding or consent to the entry of any judgment with respect to any
Proceeding for anything other than money damages paid by the Indemnifying
18
Person. The Indemnifying Person may, without the Indemnified Person's prior
written consent, settle or compromise any such Proceeding or consent to entry
of any judgment with respect to any such Proceeding that requires solely the
payment of money damages by the Indemnifying Person and that includes as an
unconditional term thereof the release by the claimant or the plaintiff of
the Indemnified Person from all liability in respect of such Proceeding.
7.4 LIMITATION OF LIABILITY. Notwithstanding the foregoing provisions
of this ARTICLE 7, Buyer agrees that the maximum monetary amount for which
the Shareholders shall be liable to Buyer's Indemnified Persons in connection
with the provisions of the Transaction Agreements shall be limited to the
aggregate amount of One Million Eight Hundred Thousand Dollars ($1,800,000);
PROVIDED, HOWEVER, that the foregoing limitation on the liability of the
Shareholders shall not apply to, and each of the Shareholders shall be
jointly and severally liable to Buyer's Indemnified Persons, and any of them,
for the aggregate amount of actual damages resulting from:
(a) any representation made by Seller, Kilat or either of the
Shareholders which any of Seller, Kilat or either of the Shareholders knows
or has reason to know is false or misleading at the Closing Date, or
(b) any fraudulent conduct of Seller, Kilat or either of the
Shareholders.
Furthermore, each of Seller, Kilat and the Shareholders acknowledges and
agrees that the foregoing limitation of liability shall not in any manner
limit the liability of Seller and Kilat for any reason whatsoever.
7.5 GUARANTEE.
(a) Kilat and each of the Shareholders gives the indemnity set
forth in SECTION 7.1 and the guarantee set forth in this SECTION 7.5 in
consideration of Buyer's agreement to enter into the Transaction Agreements.
Kilat and each of the Shareholders acknowledges the receipt of valuable
consideration from Buyer for the agreement of Kilat and the Shareholders to
incur obligations and give rights under such indemnity and guarantee.
(b) Kilat and each of the Shareholders unconditionally and
irrevocably guarantees to Buyer the due and punctual performance and
observance by Seller of its obligations under the Transaction Agreements
including, without limitation, any obligation to pay money.
(c) Kilat and each of the Shareholders waive any right it, he or
she have of first requiring Buyer to commence proceedings or enforce any
other right against Seller or any other person before claiming under such
indemnity and guarantee.
(d) This guarantee and the foregoing indemnity are continuing
security obligations and are not discharged by any one payment. Such
guarantee and indemnity do not merge on completion.
(e) The liabilities of Kilat and each of the Shareholders under
such guarantee and indemnity are as a guarantor, indemnifier and principal
debtor and the rights of Buyer under
18
such guarantee and indemnity are not affect by anything which might otherwise
affect them at law or in equity including, but not limited, one or more of
the following:
(i) Buyer granting time or other indulgence to, compounding or
compromising with or releasing Seller, or any other guarantor;
(ii) acquiescence, delay, acts, omissions or mistakes on the part
of Buyer;
(iii) any novation of a right of Buyer;
(iv) any variation of the Transaction Agreements, or any
agreement entered into in performance of thereof; or
(v) the invalidity or unenforceability of an obligation or
liability of a person other than the relevant guarantor (being Kilat or one
of the Shareholders).
(f) Kilat and each of the Shareholders may not, without the consent
of Buyer:
(i) raise a set-off or counterclaim available to it or Seller
against Buyer in reduction of it's liability under such guarantee and
indemnity;
(ii) claim to be entitled by way of contribution, indemnity,
subrogation, marshaling or otherwise to the benefit of any security or
guarantee held by Buyer in connection with the Transaction Agreements; or
(iii) prove in competition with Buyer, if a liquidator,
provisional liquidator, receiver, official manager or trustee in bankruptcy
is appointed in respect of Seller or Seller is otherwise unable to pay its
debts when they fall due,
until all money payable to Buyer in connection with the Transaction
Agreements is paid.
(g) If a claim that a payment or transfer to Buyer in connection
with the Transaction Agreements is void or voidable (including, but not
limited to, a claim under laws relating to liquidation, insolvency or
protection of creditors) is upheld, conceded or compromised, then Buyer is
entitled immediately as against Kilat and each Shareholder to the rights to
which it would have been entitled under such guarantee and indemnity if the
payment or transfer had not occurred.
(h) Kilat and each of the Shareholders agree to pay or reimburse
Buyer on demand for its costs, charges and expenses in making, enforcing and
doing anything in connection with such guarantee and indemnity including,
without limitation, legal costs and expenses on a full indemnity basis. Any
amounts paid to Buyer by Kilat or one of the Shareholders must be applied first
against payment of costs, charges and expenses under this SECTION 7.5(H), then
against other obligations under such guarantee and indemnity.
19
(i) Kilat and each of the Shareholders acknowledges having been
given a copy of this Agreement and having had full opportunity to consider
its provisions before entering into such guarantee and indemnity.
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any investigation made at any time by or on behalf of the
parties hereto, all of the representations and warranties of the parties
shall survive the Closing of the transactions contemplated by the Transaction
Agreements (even if the other party knew or had reason to know of any
misrepresentation or breach of any warranty at the time of the Closing) and
all of the covenants of the parties shall survive the Closing, including but
not limited to the obligations of the parties set forth in SECTION 6.2 and
the indemnification obligations of the parties hereto. In addition, the
covenants and obligations set forth in SECTION 6.2 shall survive the
termination of this Agreement.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
terminated, rescinded or supplemented only by written agreement of the parties
hereto.
8.3 WAIVER; CONSENTS. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Any failure of a party to
comply with any obligation, covenant, agreement or condition herein may be
waived by each party affected thereby only by a written instrument signed by
the party granting such waiver. No waiver, or failure to insist upon strict
compliance, by any party of any condition or any breach of any obligation,
term, covenant, representation, warranty or agreement contained in this
Agreement, in any one or more instances, shall be construed to be a waiver
of, or estoppel with respect to, any other condition or any other breach of
the same or any other obligation, term, covenant, representation, warranty or
agreement. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver.
8.4 FURTHER ASSURANCES; COOPERATION. The parties hereto agree (i) to
furnish upon request to each other such further information, (ii) to execute
and deliver to each other such other documents, and (iii) to do such other
acts and things, all as another party hereto may at any time reasonably
request, including before, at and after the Closing, for the purpose of
carrying out the intent of the Transaction Agreements, the Transaction
Agreements and the documents referred to therein.
8.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when (i) delivered
personally, (ii) sent by telecopier (with receipt confirmed), or (iii)
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested) or (iv) three business days
after being sent by registered or certified mail, return receipt requested,
in each case to the other party at the following addresses and telecopier
numbers (or to such other address or telecopier number for a party as shall
be specified by like notice; provided that notices of a change of address or
telecopier number shall be effective only upon receipt thereof):
20
if to Seller, to:
Australian Software Innovations (Services) Pty Ltd
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Attn: Eng ▇▇▇, Managing Director
Telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Kilat or the Shareholders, to:
Eng ▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Telecopier: ▇▇-▇-▇▇▇-▇▇▇▇
if to Buyer, to:
Sento Technical Innovations Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Bench, President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇, Parr, Waddoups, ▇▇▇▇▇ & Gee
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
8.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
Buyer may, in its discretion, assign its rights, interests and obligations
hereunder to any Person without the prior consent of any other party hereto.
Neither Seller, Kilat nor either of the Shareholders may assign any of their
respective rights, interests or obligations hereunder without the prior
written consent of Buyer. This Agreement is not intended to and shall not
confer upon any person other than the parties any rights or remedies
hereunder or with respect hereto.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of New South Wales, Australia applicable to
contracts made and to be performed wholly therein.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
21
8.9 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. Unless otherwise provided, all references
in this Agreement to articles and sections refer to the corresponding
articles and sections of this Agreement. All words used herein shall be
construed to be of such gender or number as the circumstances require.
Unless otherwise specifically noted, the words "herein," "hereof," "hereby,"
"hereinabove," "hereinbelow," "hereunder," and words of similar import, refer
to this Agreement as a whole and not to any particular article, section,
clause or other subdivision hereof. Whenever the term "including" or a
similar term is used in this Agreement, it shall be read as if it were
written "including by way of example only and without in any way limiting the
generality of the clause or concept to which reference is made." This
Agreement shall be construed as though all parties had drafted it.
8.10 ENTIRE AGREEMENT. This Agreement and the Transaction Agreements,
including the Exhibits and the documents, instruments and schedules referred
to herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, representations, warranties, covenants, or
undertakings other than those expressly set forth or referred to herein and
in the Transaction Agreements. The Transaction Agreements supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
8.11 ATTORNEYS' FEES. In the event a Proceeding is brought by any party
under this Agreement to enforce or construe any of its terms, the party that
prevails by enforcing this Agreement shall be entitled to recover, in
addition to all other amounts and relief, its reasonable costs and attorneys'
fees incurred in connection with such Proceeding.
8.12 SEVERABILITY. If any part of this Agreement is or becomes legally
ineffective, invalid or unenforceable in any jurisdiction, the effectiveness,
validity or enforceability of this Agreement in any other jurisdiction, or
the remainder of it in that jurisdiction, will not be affected.
8.13 JOINT AND SEVERAL. In this Agreement:
(a) any agreement, covenant, obligation, representation or warranty
on the part of two or more persons binds them jointly and severally; and
(b) any agreement, covenant, obligation, representation or
warranty in favor of two or more persons is for the benefit of them jointly
and severally.
ARTICLE 9
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified or referred to below when used in this Agreement. Any
reference or citation to a law, statute or regulation shall be deemed to
include any amendments to that law, statute or regulation and judicial and
administrative interpretations of it.
22
9.1 "ACQUISITION" shall have the meaning set forth in SECTION 1.1.
9.2 "AFFILIATE" means, with respect to any specified Person, each other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such specified Person (whether a general or limited
partner), each officer, director or general partner of such specified Person,
and each other Person who is the beneficial owner of five percent (5%) or
more of any class of the voting securities of such specified Person or five
percent (5%) or more in market value of the outstanding securities of such
Person. For purposes of this definition, "control" means the possession of
the power to direct or cause the direction of all or any part of the
management and policies of a specified Person, whether through the ownership
of voting securities, by contract or otherwise.
9.3 "AGREEMENT" means this Asset Purchase Agreement, including the
Exhibits hereto, which are hereby incorporated herein.
9.4 "ASSETS" means the assets of Seller identified more particularly on
EXHIBIT A.
9.5 "ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement to be executed by and among Buyer, Seller, Kilat and the
Shareholders contemporaneously with the execution of this Agreement,
acceptable to Buyer in its discretion.
9.6 "BUYER" means Sento Technical Innovations Corporation, a Utah
corporation, or any successor, transferee or assignee thereof.
9.7 "BUYER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.1.
9.8 "CENTERPOST" means Centerpost Innovations Pty Limited, ACN
▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia.
"CLOSING" shall have the meaning set forth in SECTION 1.5(a).
9.10 "CLOSING DATE" means the date and time as of which the Closing
actually takes place.
9.11 "CONTRACTS" means those contracts and agreements identified more
particularly on EXHIBIT B, the rights of which Buyer has elected to acquire
from Seller hereunder.
9.12 "DEED OF RESTRAINT OF TRADE" shall mean that certain Deed of
Restraint of Trade to be executed by and among Buyer and the Shareholders
contemporaneously with the execution of this Agreement, acceptable to Buyer
in its discretion.
9.13 "DISCLOSURE SCHEDULES" means the disclosure schedules prepared and
delivered by Seller, Kilat and the Shareholders to Buyer prior to the
Closing. The Disclosure Schedules shall contain all information necessary to
make the representations and warranties set forth in ARTICLE 2 true and
correct.
9.14 "DOLLARS" or "$" means United States dollars.
23
9.15 "EMPLOYEE BENEFIT PLAN" means any stock option, stock right, profit
sharing, thrift-savings, simplified employee pension plan, deferred
compensation plan, severance pay, golden parachute, cafeteria plan, flexible
compensation plan, life insurance, medical, dental, disability, welfare,
superannuation or vacation plans or any other similar plan or arrangement of
any kind or character.
9.16 "ENCUMBRANCE" means any lien, pledge, hypothecation, charge,
mortgage, deed of trust, security interest, encumbrance, equity, trust,
equitable interest, claim, easement, right-of-way, servitude, right of
possession, lease tenancy, license, encroachment, burden, intrusion,
covenant, infringement, interference, proxy, option, right of first refusal,
community property interest; or legend, defect, impediment, exception,
condition, restriction, reservation, limitation, impairment, imperfection of
title; or restriction on or condition to the voting of any security,
restriction on the transfer of any security or other asset, restriction on
the receipt of any income derived from any security or other asset, and
restriction on the possession, use, exercise or transfer of any other
attribute of ownership, whether based on or arising from common law,
constitutional provision, statute or contract.
9.17 "ENTITY" means any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
company, joint venture, joint stock association, estate, trust, cooperative,
foundation, union, syndicate, league, consortium, coalition, committee,
society, firm, company or other enterprise, association, organization or
entity of any nature, other than a Governmental Authority.
9.18 "GOVERNMENTAL AUTHORITY" means any Australian national, state or
territorial or local governmental authority or semi-governmental authority,
and foreign governmental authority, the United States of America, any State
of the United States, any local authority and any political subdivision of
any of the foregoing, any multi-national organization or body, any agency,
department, commission, board, bureau, court or other authority thereof, or
any quasi-governmental or private body exercising, or purporting to exercise,
any executive, legislative, judicial, administrative, police, regulatory or
taxing authority or power of any nature.
9.19 "GOVERNMENTAL AUTHORIZATION" means any permit (including without
limitation any Environmental Permit), license, franchise, approval,
certificate, consent, ratification, permission, confirmation, endorsement,
waiver, certification, registration, transfer, qualification or other
authorization issued, granted, given or otherwise made available by or under
the authority of any Governmental Authority or pursuant to any Legal
Requirement.
9.20 "INTELLECTUAL PROPERTY" means any and all trademarks, tradenames,
service marks, patents, copyrights (including any registrations,
applications, licenses or rights relating to any of the foregoing),
technology, trade secrets, inventions, know-how, names, logos, artwork,
designs, discoveries, computer programs, software products and related source
code and documentation, processes, and all other intangible assets,
properties and rights.
9.21 "INTELLECTUAL PROPERTY ASSETS" means all Intellectual Property of
Seller, including, without limitation, all Intellectual Property necessary to
or currently utilized in
24
Seller's business and all of the intangible assets of Seller identified more
particularly on EXHIBIT C.
9.22 "INTELLECTUAL PROPERTY PURCHASE AGREEMENT" means that certain
Intellectual Property Purchase Agreement to be executed by and among Buyer,
Seller, Kilat and the Shareholders contemporaneously with the execution of
this Agreement, substantially in the form of EXHIBIT G, acceptable to Buyer
in is discretion.
9.23 "KILAT" means Kilat Holding Pty. Limited ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia.
9.24 "KNOWLEDGE" or "KNOWN" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall
be deemed to have "knowledge" of or to have "known" a particular fact or
other matter if any individual who is serving or who has at any time served
as an officer, director, member, manager, trustee, or shareholder of such
Entity (or in any similar capacity) has, or at any time had, knowledge of
such fact or other matter.
9.25 "LEGAL REQUIREMENT" means any law (including without limitation any
Environmental Laws), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
9.26 "LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles.
9.27 "LOSS" means any loss, damage, injury, harm, detriment, decline in
value, lost opportunity, Liability, exposure, claim, demand, cost of any
Proceeding, settlement, judgment, award, punitive damage award, fine,
penalty, Tax, fee, charge, cost or expense (including, without limitation,
costs of attempting to avoid or in opposing the imposition thereof, interest,
penalties, costs of preparation and investigation, and the fees,
disbursements and expenses of attorneys, accountants and other professional
advisors).
9.28 "OPTION" shall have the meaning set forth in RECITAL A.
9.29 "OPTION AGREEMENT" shall have the meaning set forth in RECITAL A.
"ORDER" means any order, judgment, injunction, edict, decree,
ruling, pronouncement, determination, decision, opinion, sentence, subpoena,
consent decree, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
9.31 "ORDINARY COURSE OF BUSINESS" means an action taken by a Person if:
25
(i) such action is recurring in nature, is consistent with the past
practices of such Person and is taken in the ordinary course of the normal day-
to-day operations of such Person;
(ii) the aggregate monetary amount associated with such action (or
any series of related actions) is less than Twenty-Five Thousand Dollars
($25,000), unless prior to taking such action, the Person obtains from Buyer
written consent to the taking of such action; and
(iii) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other persons that are
in the same line of business as such Person.
9.32 "PERSON" means any individual, Entity or Governmental Authority.
9.33 "PROCEEDING" means any action, suit, litigation, arbitration,
lawsuit, claim, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination,
investigation, challenge, controversy or dispute commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Authority or any arbitrator.
9.34 "PROPRIETARY INFORMATION" shall have the meaning set forth in
SECTION 6.2.
9.35 "PURCHASE PRICE" shall have the meaning set forth in SECTION 1.3.
9.36 "SELLER" means Australian Software Innovations (Services) Pty Ltd
ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized under the laws of Australia.
9.37 "SELLER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.2.
9.38 "SHAREHOLDERS" refers collectively to Eng ▇▇▇ and ▇▇▇▇ ▇▇▇, in
their individual capacities.
9.39 "TAX" means any federal, national, state, territorial, local or
foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, environmental, customs duties,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, fringe benefits or other tax or assessment of any
nature whatsoever, including, without limitation, any customs duty, municipal
rates, stamp duties and all other charges and levies which may be imposed by
a Governmental Authority (including any interest, penalties and additions
thereto that may arise in connection therewith), whether disputed or not.
9.40 "TAX RETURNS" means any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or enforcement
of or compliance with any Legal Requirement relating to any Tax.
26
9.41 "TRANSACTION AGREEMENTS" means this Agreement and such other
documents as are entered into in connection with this Agreement in order to
complete the transactions contemplated hereby, including, without limitation,
the Option Agreement, the Asset Purchase Agreement and the Deed of Restraint
of Trade.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf as of the date first above written.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By: _______________________________________
Its: _______________________________________
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN ▇▇▇-▇▇▇-▇▇▇, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
________________________________ _______________________________
Signature of Director Signature of Director/Secretary
________________________________ _______________________________
Print Name Print Name
________________________________ _______________________________
Office Held Office Held
27
"KILAT":
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN ▇▇▇-▇▇▇-▇▇▇, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
________________________________ _______________________________
Signature of Director Signature of Director/Secretary
________________________________ _______________________________
Print Name Print Name
________________________________ _______________________________
Office Held Office Held
"SHAREHOLDERS":
________________________________
Eng ▇▇▇, individually
________________________________
▇▇▇▇ ▇▇▇, individually
28
EXHIBIT A
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
ASSETS
[To be completed - Non-intellectual property assets only]
EXHIBIT B
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
CONTRACTS
[To be completed]
EXHIBIT C
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
INTELLECTUAL PROPERTY ASSETS
[To Be Attached]
EXHIBIT H
TO
OPTION AGREEMENT
FORM OF DEED OF RESTRAINT OF TRADE
[Not Filed Herewith]