EXHIBIT 10.1
AGREEMENT
This Agreement (the "Agreement") is made and entered into as of the
23rd day of October, 1997 by and among Atio Corporation (PTY) LTD ("Atio
(PTY)"), a corporation organized and existing under the laws of the Republic of
South Africa; Atio Corporation International, Inc. ("Atio International"), a
corporation organized and existing under the laws of the State of Delaware;
Venturian Corp. ("Venturian"), a corporation organized and existing under the
laws of the State of Minnesota; Venturian Software Enterprises, Inc. ("VSI"), a
corporation organized and existing under the laws of the State of Minnesota; and
Xxxx Xxxxxx ("Xxxxxx").
WHEREAS, Venturian, Atio International, and Atio (PTY) desire to create
a joint venture to pursue the development and marketing of certain software
products and certain related activities, on the terms set forth in this
Agreement; and
WHEREAS, Venturian owns 90% and Xxxxxx owns 10% of the issued and
outstanding capital stock of VSI; and
WHEREAS, Atio (PTY) owns a majority of the issued and outstanding
shares of capital stock of Atio International;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants, and subject to the conditions, herein contained, the
parties hereto agree as follows:
ARTICLE I
Formation and Capitalization of Joint Venture
Section 1.1 Formation of Corporation. On or prior to the Closing Date
(as hereinafter defined) the parties shall cause to be formed under the laws of
the State of Minnesota a corporation named Atio Corporation USA, Inc. (the
"Company"), having articles of incorporation in the form attached hereto as
Exhibit A.
Section 1.2 Capitalization. At the Closing (as hereinafter defined) and
on the Closing Date, the parties shall make the following contributions to the
capital of the Company (the "Capital Contributions"):
(a) Atio (PTY) shall, on behalf of Atio International, pay to the
Company the sum of U.S. $3,500,000 as follows: (A) $500,000 by wire transfer of
immediately available funds in United States currency at the Closing (the
"Initial Installment"), (B) $800,000 by offset against the initial prepayment
for development services owing under the License, (C) $500,000 on the thirtieth
day following the Closing Date, and (D) the remainder in ten installments of
$170,000 each, by wire transfer of immediately available funds in United States
currency on or prior to the last day of each of the ten calendar months
commencing with the last day of November, 1997 and concluding with the last day
of August, 1998 (the payments identified in clauses (C) and (D) being the
"Deferred Installments"); provided, however, that at any time and from time to
time on or after January 1, 1998, the Chief Executive Officer of the Company may
cause the acceleration of all or any portion of the Deferred Installments by
certifying in writing to Atio (PTY) that the accelerated amounts are required by
the Company under its business plan, and upon the Company's delivery of each
such certification the amounts so accelerated shall be immediately due and
payable in full. Atio (PTY)'s obligation to pay the Deferred Installments shall
be secured by a security interest in 28,000 of the Shares to be
issued to Atio International pursuant hereto, under terms set forth in the
Shareholders Agreement (as defined in Section 6.3 below).
(b) Venturian shall assign, transfer and convey to the Company:
(i) 1,800,000 common shares of VSI (representing 90% of the
issued and outstanding shares of the capital stock of VSI), free and clear of
any lien, claim or encumbrance; and
(ii) Venturian's right to the repayment of amounts advanced
by Venturian to VSI, as evidenced by that certain Promissory Note dated
September 29, 1997 by VSI in favor of Venturian (the "Venturian Note"), and all
of Venturian's rights with respect to any security interests granted in
connection therewith, free and clear of any lien, claim or encumbrance.
(c) Xxxxxx shall assign, transfer and convey to the Company
200,000 common shares of VSI (representing 10% of the issued and outstanding
shares of the capital stock of VSI), free and clear of any lien, claim or
encumbrance.
Section 1.3 Issuance of Shares. At the Closing the parties shall cause
the Company to issue to the following parties the following respective numbers
of common shares of the Company's capital stock (the "Shares"):
Number of Shares
Name of Party to be Issued
-----------------------------------------------------
Atio International 2,000,000 shares
Venturian 1,800,000 shares
Xxxxxx 200,000 shares
Such shares, when so issued, shall be duly and validly issued, fully paid and
nonassessable (subject, in the case of the Shares issued to Atio International,
to the obligation of Atio (PTY) to pay the Deferred Installments).
Section 1.4 Alternative Structure. In the event that, prior to the
Closing, VSI reaches agreement with Netcall Technologies Ltd. ("Netcall")
terminating that certain Software Distribution Agreement dated July 4, 1996
between Netcall and VSI (the "Netcall Agreement") or modifying Section 6.7 of
the Netcall Agreement to permit VSI to market software competitive with the
Software (as defined in the Netcall Agreement), then in lieu of the formation of
the Company and the Capital Contributions and share issuances contemplated in
Sections 1.1, 1.2 and 1.3 above, Atio (PTY) shall make to VSI the capital
contributions contemplated to be made by Atio (PTY) to the Company in
Subparagraphs 1.2(a)(i) and (ii) above and VSI shall, in consideration thereof,
issue to Atio International 2,000,000 common shares of the capital stock of VSI
(which shares, when so issued, shall be duly and validly issued, fully paid and
nonassessable). In such event, VSI shall be a party to the Shareholders
Agreement (as defined in Article VI below) and the License Agreement in lieu of
the Company and the other references in this Agreement to "the Company" shall be
deemed to refer to VSI to the extent consistent with the provisions of this
Section 1.4. The parties acknowledge, however, that Atio (PTY) would not make to
VSI the capital contributions contemplated to be made by it herein, and Atio
International would not accept shares in VSI as contemplated herein, if VSI
continued to owe to Venturian the amounts evidenced by the Venturian Note.
Accordingly, it shall be a condition to the obligation of Atio (PTY) to
contribute to VSI the amounts contemplated in this Section 1.4 that, prior
thereto, Venturian make, as a Capital Contribution to VSI but in exchange for no
additional shares of the capital stock or securities of VSI, Venturian's right
to receive all amounts owing by VSI to Venturian as evidenced by the Venturian
Note, other than any amounts advanced by Venturian to VSI after August 31, 1997
(the "Post-August Advances"). Promptly following the Closing, VSI shall repay to
Venturian the Post-August Advances. If the transactions contemplated
herein are consummated under the Alternative Structure set forth in this Section
1.4, the parties shall, promptly following the Closing, change the name of VSI
to Atio Corporation in USA, Inc.
Section 1.5 Time and Place of the Closing. The closing of the
transactions contemplated herein shall take place at the offices of Xxxxxxx,
Street and Deinard in Minneapolis, Minnesota at 10:00 A.M., local time, on
October ___, 1997; provided, however, that if any of the conditions set forth in
Articles VI and VII of this Agreement has not been satisfied (or waived) by such
date, then such closing shall take place on a subsequent date, which shall be
determined by the mutual agreement of Atio (PTY) and Venturian. Throughout this
Agreement, such event is referred to as the "Closing" and such date and time are
referred to as the "Closing Date."
Section 1.6 Procedure at the Closing. At the Closing, the parties agree
to take the following steps in the order listed below (provided, however, that
upon their completion all such steps shall be deemed to have occurred
simultaneously):
(a) Venturian shall deliver to Atio (PTY) evidence, in such form
as in each case is reasonably satisfactory to Atio (PTY), that each of the
conditions to the obligation of Atio (PTY) and Atio International set forth in
Article VI of this Agreement has been satisfied.
(b) Atio (PTY) shall deliver to Venturian evidence, in such form
as in each case is reasonably satisfactory to Venturian, that each of the
conditions to the obligations of Venturian and Xxxxxx set forth in Article VII
of this Agreement has been satisfied.
(c) The Distribution Agreement, the Shareholders Agreement and the
Employment Services Agreement (each as defined in Articles VI and VII hereof)
shall be executed and delivered by the respective parties thereto.
(d) Atio (PTY), Atio International and the Company shall execute
the License.
(e) Atio (PTY) shall pay to the Company the Initial Installment in
accordance with subparagraph 1.2(a) above.
(f) Unless the transactions are consummated pursuant to Section
1.4 above, Venturian and Xxxxxx shall deliver to the Company certificates
representing their respective Shares in VSI, duly endorsed for transfer or
accompanied by duly executed Assignments Separate From Certificate, and
Venturian shall executive and deliver to the Company an assignment of its rights
under the Venturian Note (other than with respect to the Post-August Advances)
and any security therefor.
(g) The Company shall issue to Atio International, Venturian and
Xxxxxx certificates representing the Shares to be issued to each of them.
(h) The Company, Atio International, Venturian and Xxxxxx shall
execute and deliver a cross receipt acknowledging receipt, respectively, of the
Shares and the Capital Contributions.
Section 1.7 License. At the Closing, Atio International and Atio PTY
shall grant to the Company a royalty-free license, in the form and on the terms
and conditions set forth in a Technology License, Transfer and Development
Agreement to be agreed to among the parties (the "License"), which License
shall, among other matters, (A) provide the Company with exclusive rights on a
royalty free basis with respect to Atio (PTY)'s AtioCall(TM) product (such
product is hereinafter referred to as the "AtioCall Product" and such rights are
hereinafter referred to as the "AtioCall Product Rights"), (B) provide for the
transfer to the Company of the AtioCall Product Rights no later than December
31, 1999, unless the Company (directly or through VSI) is not then actively
engaged in the marketing of computer telephony products as defined in the
License, (C) provide for Atio (PTY) to furnish certain development services in
connection therewith for compensation according to a quarterly budget agreed
upon by the parties, and (D) provide for the Company to pay an initial
prepayment for such development services by offset of amounts owing by Atio
(PTY) to the Company under subsection 1.2(a) above.
ARTICLE II
Representations and Warranties of Venturian and VSI
In order to induce Atio (PTY) and Atio International to enter into this
Agreement and to consummate the transactions contemplated hereunder, VSI and
Venturian jointly make the representations and warranties set forth in Sections
2.1 through 2.27 below, and Xxxxxx makes the representations and warranties set
forth in Sections 2.28 and 2.29 below, in each case as of the date hereof and as
of the Closing Date (except that, as of the Closing Date, such representations
and warranties are subject to changes arising out of the operation by VSI of its
business in the ordinary course and in compliance with the terms of this
Agreement between the date of this Agreement and the Closing Date, which changes
shall not, individually or in the aggregate, be materially adverse):
Section 2.1 Organization, Power and Authority of VSI. VSI is a
corporation duly organized and legally existing in good standing under the laws
of Minnesota, and has full corporate power and authority, and all requisite
rights, licenses, permits and franchises to own, lease and operate its assets
and to carry on its business as it is now being conducted. VSI is duly licensed,
registered and qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the ownership, leasing or operation of
its assets or the conduct of its business requires such qualification, except
where the failure to be so licensed, registered or qualified would not have a
material adverse effect upon its business or assets. The Disclosure Schedule
sets forth each state or other jurisdiction in which VSI is licensed or
qualified to do business. VSI has delivered to the Atio (PTY) an accurate,
correct and complete copy of its charter and by-laws and each agreement, trust,
proxy or other arrangement among its stockholders.
Section 2.2 Validity. This Agreement has been, and the documents to be
delivered at Closing will be, duly executed and delivered by VSI and Venturian
and constitute lawful, valid and legally binding obligations of VSI and
Venturian, enforceable in accordance with their respective terms. Except as set
forth in the Disclosure Schedule, the execution and delivery of this Agreement
by VSI and Venturian and the consummation by VSI and Venturian of the
transactions contemplated hereb will not result in the creation of any lien,
charge or encumbrance of any kind upon the assets of VSI or give rise to the
right of any party to terminate or accelerate any indebtedness or other
obligation of VSI, and are not prohibited by, do not violate any provision of,
and do not constitute a default under or a breach of (a) the Articles of
Incorporation or By-laws of VSI, (b) any note, bond, indenture, contract,
agreement, permit, license or other instrument to which VSI is a party or by
which VSI or its respective assets is bound, (c) any order, writ, injunction,
decree or judgment of any court or governmental agency, or (d) any law, rule or
regulation applicable to VSI. No approval, authorization, registration, consent,
order or other action of or filing with any person, including any court,
administrative agency or other governmental authority, is required for the
execution and delivery by VSI or Venturian of this Agreement or the consummation
by VSI and Venturian of the transactions contemplated hereby.
Section 2.3 Capital Stock of VSI. The authorized capital of VSI
consists solely of 11,000,000 common shares, $ .01 par value per share,
2,000,000 shares of which are issued and outstanding. All voting rights in VSI
are vested exclusively in its common shares. All of the issued
and outstanding shares of VSI are validly authorized and issued, fully paid and
non-assessable. The Disclosure Schedule sets forth the name and the number of
shares of VSI owned by each shareholder of record as of the date hereof, and the
name of each person having an option to acquire shares of VSI and the number of
shares subject to each such option. Except as set forth on the Disclosure
Schedule, there are no outstanding subscriptions, convertible or exchangeable
securities, preemptive rights, calls, warrants, options or rights or agreements
of any kind (other than this Agreement) to acquire from VSI any shares or
securities of any kind. Except as set forth on the Disclosure Schedule, VSI has
no obligation to acquire any of its issued and outstanding shares or any other
security issued by it from any holder thereof. Except as set forth in the
Disclosure Schedule, there are no preemptive rights existing with respect to
VSI's shares. There are no voting trusts or other agreements, arrangements or
understandings applicable to the exercise of voting or any other rights with
respect to any shares of VSI, other than the Amended and Restated Shareholders
Agreement among VSI, Venturian and Xxxxxx, whic shall be terminated
automatically and immediately upon the closing of the transactions contemplated
herein. In the event that the transactions contemplated herein are consummated
pursuant to Section 1.4 above, title to the Shares issued by VSI to Atio
International pursuant to this Agreement shall (subject to the performance by
Atio International of its obligations hereunder) be good and indefeasible, free
and clear of all claims, security interests, liens, pledges, charges, escrows,
options, proxies, rights of first refusal, preemptive rights, mortgages,
hypothecations, prior assignments, title retention agreements, indentures,
security agreements and other limitations, encumbrances and restrictions of any
kind other than those arising under the Shareholders Agreement.
Section 2.4 Subsidiaries of VSI. VSI has no equity interest, or the
right or obligation to acquire an equity interest, in any other person or
entity.
Section 2.5 Financial Statements of VSI. VSI has previously delivered
to Atio (PTY) VSI's December 31, 1996, March 31, 1997, and August 31, 1997
unaudited financial statements, a copy of each of which is attached to the
Disclosure Schedule (the "Financial Statements"). Such financial statements
present fairly the financial position of VSI at each of the dates thereof and
the results of its operations for each of the periods covered, and such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, except as may be disclosed
in the notes thereto or in the Disclosure Schedule.
Section 2.6 Litigation Involving VSI. Except as set forth in the
Disclosure Schedule, there are no actions, suits, proceedings, legal complaints
or charges, hearings, investigations or arbitration proceedings pending or to
the best knowledge of VSI threatened against VSI or any of its assets or
properties. There are no outstanding orders, decrees, writs, injunctions or
stipulations issued by any local, state or federal governmental or judicial
authority to which VSI is subject or to which VSI is or was a party.
Section 2.7 License Agreements and Distribution Agreements. The
Disclosure Schedule sets forth a true and complete list of all license and
distribution agreements pursuant to which VSI markets or distributes products
(collectively, the "License Agreements"). VSI has previously delivered to Atio
(PTY) true and complete copies of all of the License Agreements. Except as set
forth in the Disclosure Schedule, VSI is not in breach of or default under any
of the License Agreements and no event, act or omission has occurred or
circumstance exists that, with the giving of notice or the passage of time or
both, would constitute such a breach or default. To the best of VSI's knowledge,
except as set forth in the Disclosure Schedule, no other party to any of the
License Agreements is in breach or default thereunder, and no event or omission
has occurred or circumstance
exists that, with the giving of notice or the passage of time or both, would
constitute such a breach or default.
Section 2.8 Transactions with Affiliates. Since August 31, 1997, there
has not been any dividend or other distribution of assets by VSI. Except as set
forth in the Disclosure Schedule, no Affiliate:
(a) owns, directly or indirectly, any debt, equity or other
interest or investment in any corporation, association or other entity which is
a competitor, lessor, lessee, customer, supplier or advertiser of VSI or its
business;
(b) has any cause of action or other claim whatsoever against or
owes any material amount to, or is owed any material amount by, VSI;
(c) has any interest in or owns any property or right used in the
conduct of the business of VSI;
(d) has lent or advanced any money to, or borrowed any money from,
or guaranteed or otherwise become liable for any indebtedness or other
obligations of VSI;
(e) is a party to any contract, lease, agreement, arrangement or
commitment used in the business of VSI; or
(f) received from or furnished to VSI any goods or services (with
or without consideration) since August 31, 1997.
The term "Affiliate" shall mean (i) any officer or director of VSI or any owner
of 5% or more of the issued and outstanding capital stock of VSI (a "5%
Stockholder"), (ii) any member of the immediate family (including spouse,
brother, sister, descendant, ancestor or in-law) of any officer or director of
VSI or 5% Stockholder, (iii) any corporation, partnership, trust or other entity
in which any of the foregoing owns 5% or more of the equity interests or of
which any of
the foregoing are discretionary beneficiaries, and (iv) any entity that
controls, or is controlled by, or is under common control with any of the
foregoing.
Section 2.9 Interim Change. Since August 31, 1997, except as set forth
in the Disclosure Schedule, there has not been (a) any material adverse change
in the financial condition, assets, properties, liabilities, personnel or
business of VSI or in its relationships with suppliers, customers, distributors,
lenders, lessors or others, except changes in the ordinary course of business
(recognizing that VSI has since its inception, and continues to, operate at a
loss); (b) any damage, destruction or other casualty loss, whether or not
covered by insurance, materially adversely affecting the business or assets of
VSI; (c) any forgiveness or cancellation of debts or claims, waiver of any
rights or any discharge or satisfaction of any lien, charge or encumbrance or
payment of any liability or obligation, other than current liabilities in the
ordinary course of business; (d) any material change in the credit practices of
VSI or in the methods or accounting principles used in maintaining it books,
accounts or business records. Since August 31, 1997, VSI has not incurred or
become subject to, or agreed to incur or become subject to, any liability or
obligation, contingent or otherwise, except current liabilities and contractual
obligations in the ordinary course of business in amounts consistent with past
practices.
Section 2.10 Accounts Receivable. The Disclosure Schedule sets forth an
accurate, correct and complete list of all outstanding accounts and notes
receivable as of August 31, 1997, showing which are current and which are past
due. All outstanding accounts and notes receivable reflected on the Financial
Statements are due and valid claims against account debtors for goods or
services delivered or rendered, subject to no defenses, offsets or counterclaims
known to VSI. All receivables arose in the ordinary course of business. No
receivables are subject to prior assignment, claim, lien or security interest.
Section 2.11 Insurance. The Disclosure Schedule sets forth an accurate,
correct and complete list of all binders, policies of insurance or fidelity
bonds ("Insurance") maintained by VSI or in which VSI is a named insured. Except
as set forth on the Disclosure Schedule, all of the Insurance is maintained in
Venturian's name with VSI named as an additional insured. Neither VSI nor
Venturian makes any representation or warranty as to what Insurance will be
available upon the closing of the transactions contemplated herein or what the
cost thereof will be. Except as set forth in the Disclosure Schedule, there are
no pending or asserted claims against any Insurance as to which any insurer has
denied liability, and there are no claims under any Insurance that have been
disallowed or improperly filed. During calendar year 1996 and calendar year 1997
through August 31, VSI has made no claims under its property or casualty
insurance. No notice of cancellation or nonrenewal with respect to, or material
increase of premium for, any insurance has been received by VSI.
Section 2.12 Title to Assets. VSI is the sole and exclusive legal and
equitable owner of all right, title and interest in, and has good and marketable
title, to all of the assets listed on the Financial Statements. Except as set
forth on the Disclosure Schedule, none of the assets of VSI are subject to (a)
any contract of lease, license or sale; (b) any security interest, mortgage,
pledge, lien, charge or encumbrance of any kind or character, direct or
indirect, whether accrued, absolute, contingent or otherwise, except liens and
encumbrances which do not materially interfere with the present use thereof; (c)
any royalty or commission arrangement; or (d) any claim, covenant or
restriction. VSI's assets are in good operating condition and repair (reasonable
wear and tear excepted), are suitable for the purposes for which they are
presently being used, and are adequate to meet all present and reasonably
anticipated future requirements of its business as presently conducted.
Section 2.13 Real Estate Leases. The Disclosure Schedule sets forth an
accurate, correct and complete list of all real property leased or subleased by
VSI, including identification of the lease or sublease, street address, and list
of contracts, agreements, leases, subleases, options and commitments with
respect thereto to which VSI is a party (the "Real Estate Leases"). VSI has been
in peaceable possession of the premises covered by each Real Estate Lease since
the commencement of the original term of such Lease. VSI has delivered to the
Purchaser accurate, correct and complete copies of each Real Estate Lease.
Section 2.14 Personal Property Leases. The Disclosure Schedule sets
forth an accurate, correct and complete list of all leases or bailments of
personal property to which VSI is a party (the "Personal Property Leases"). VSI
has been in peaceable possession of the property covered by each Personal
Property Lease since the commencement thereof. VSI has delivered to the
Purchaser an accurate, correct and complete copy of each Personal Property
Lease.
Section 2.15 Intellectual Property. The Disclosure Schedule sets forth
an accurate, correct and complete list of all patents, trademarks, trademark
rights, trade names, trade styles, trade dress, product designations, service
marks, copyrights (the "Intellectual Property") and applications for any of the
foregoing owned by VSI and a complete list of all licenses and other agreements
relating to any Intellectual Property owned by any third party as to which VSI
has marketing or distribution rights. None of the Intellectual Property owned by
VSI is subject to any extensions, renewals, taxes or fees due within ninety (90)
days after Closing. Except as set forth in the Disclosure Schedule, with respect
to the Intellectual Property owned by VSI: (a) VSI is the sole and exclusive
owner and has the sole and exclusive right to use such Intellectual Property;
(b) no action, suit, proceeding or investigation is pending or, to VSI's
knowledge, threatened; (c) none of such Intellectual Property interferes with,
infringes upon, conflicts with or otherwise violates the rights of others or, to
VSI's knowledge, is
being interfered with or infringed upon by others, and none is subject to any
outstanding order, decree, judgment, stipulation or charge; (d) there are no
royalty, commission or similar arrangements, and no licenses, sublicenses or
agreements, pertaining to any of such Intellectual Property; (e) VSI has not
agreed to indemnify any person for or against any infringement of or by such
Intellectual Property; (f) VSI has no knowledge of any patent, invention or
application therefor or similar property which VSI believes would infringe upon
any of such Intellectual Property or render obsolete or adversely affect the
distribution or sale of products or services currently distributed or sold by
VSI based upon such Intellectual Property; (g) all items of Intellectual
Property are properly registered under applicable law. Except as set forth in
the Disclosure Schedule, with respect to the Intellectual Property owned by a
third party as to which VSI has marketing or distribution rights: (h) to VSI's
knowledge, no action, suit, proceeding or investigation is pending or
threatened; (i) there are no royalty, commission or similar arrangements,
sublicenses or other agreements pertaining to such Intellectual Property as to
which VSI is a party; and (j) VSI has not agreed to indemnify any person for or
against any infringement of or by such Intellectual Property. VSI is not subject
to any judgment, order, writ, injunction or decree of any court or any Federal,
state, local or other governmental agency or instrumentality, domestic or
foreign, or any arbitrator, and has not entered into and is not a party to any
contract which restricts or impairs the use of any Intellectual Property other
than the contracts identified in the Disclosure Schedule. VSI has all right,
title and interest necessary for the non-infringing publication, reproduction,
distribution, and importation of the Intellectua Property in the manner VSI
presently conducts its business.
Section 2.16 Customers and Suppliers. All sales contracts and orders
with customers and suppliers entered into by or on behalf of VSI were entered
into in the ordinary course of business. The Disclosure Schedule sets forth an
accurate, correct and complete list of all sales by VSI over the
last two years. Based on the actual knowledge of VSI, except as set forth in the
Disclosure Schedule, VSI has no reason to believe that any of its customers or
suppliers will cease to do business with it because of the transactions
contemplated herein. Neither VSI, nor any of its officers or employees has,
directly or indirectly, given or agreed to give any rebate, gift or similar
benefit to any supplier, customer, distributor, broker, governmental employee or
other person who was, is or may be in a position to help or hinder the business
(or assist in connection with any actual or proposed transaction) which subjects
VSI, the Company or Atio (PTY) to any damage or penalty in any civil, criminal
or governmental litigation or proceeding or which would have a material adverse
effect on VSI's business.
Section 2.17 Employees.
(a) Contracts. The Disclosure Schedule sets forth an accurate,
correct and complete list and summary description of all legally binding
agreements, arrangements and understandings with officers, directors and
employees of VSI regarding services to be rendered, terms and conditions of
employment, and compensation (the "Employment Contracts").
(b) Compensation. The Disclosure Schedule sets forth an accurate,
correct and complete list of all employees of VSI, including name, title or
position, present annual compensation (including bonuses, commissions and
deferred compensation), date of hire and any interests in any incentive
compensation plan. The Disclosure Schedule sets forth an accurate, correct and
complete list of each employee who is entitled to receive supplementary
retirement benefits or allowances, and the estimated amounts of such payments.
Since August 31, 1997, except in ordinary course of business, VSI has not (i)
paid, or made any accrual or arrangement for the payment of, bonuses or special
compensation of any kind, including any severance or termination pay, to any
present or former officer or employee, (ii) made any general wage or salary
increases, or (iii) increased or
altered any other benefits or insurance provided to any employee. No employee is
eligible for payments that would constitute " parachute payments" under Section
280G of the Internal Revenue Code of 1986, as amended (the "Code").
(c) Disputes. To the knowledge of VSI, there are no controversies
pending or threatened involving any group of employees, except individual
grievances which, in the aggregate, are not material. VSI has not suffered or
sustained any work stoppage and, to the knowledge of VSI, no such work stoppage
is threatened. To the knowledge of VSI, no union organizing or election
activities are in progress or threatened. No union or collective bargaining
agreement exists to which VSI is a party.
(d) Compliance. VSI has complied in all material respects with all
laws, rules and regulations relating to the employment of labor, including
provisions relating to wages, hours, equal opportunity, occupational health and
safety, severance, and the payment of social security and other taxes.
Section 2.18 Employment Benefit Plans.
(a) Benefit Plans. The Disclosure Schedule sets forth an accurate,
correct and complete list of all "welfare benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) (all the foregoing being herein called "Benefit Plans") maintained or
contributed to by VSI or any other organization which is a member of a
controlled group of organizations that includes VSI (within the meaning of
Section 414(b), (c), (m) or (o) of the Code).
(b) Compliance with the Code and ERISA. Except as set forth in
Disclosure Schedule, VSI and each Benefit Plan (and any related trust agreement
or annuity contract or any other funding instrument) in all material respects
comply currently, and have complied in the past, both as
to form and operation, with the provisions of ERISA and the Code (including, but
not limited to, (i) where required in order to be tax-qualified, Section 401(a)
of the Code and Section 410(b) of the Code and (ii) Code Section 4980B relating
to health coverage continuation) and all other applicable laws, rules and
regulations; all necessary governmental approvals for the Benefit Plans have
been obtained; and, where available, a favorable determination as to the
qualification under the Code of each of the Benefit Plans and each amendment
thereto has been made by the Internal Revenue Service. Except as set forth in
the Disclosure Schedule, the Benefit Plans that are employee pension benefit
plans have received determination letters from the Internal Revenue Service to
the effect that such Benefit Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the knowledge of VSI has
revocation been threatened, nor has any such Benefit Plan been amended since the
date of its most recent determination letter or application therefor in any
respect which would adversely affect its qualification.
(c) Administration. Each Benefit Plan has been administered to
date in material compliance with the requirements of the Code and ERISA. Except
as set forth in the Disclosure Schedule, all contributions to, and payments
from, the Benefit Plans that may have been required to be made in accordance
with the Benefit Plans and, when applicable, Section 302 of ERISA or Section 412
of the Code, have been timely made. All premiums, late fees, interest or
penalties relating to the Benefit Plans have been paid. All reports, returns and
similar documents with respect to the Benefit Plans required to be filed with
any government agency or distributed to any Benefit Plan participant have been
duly and timely filed or distributed. Except as set forth in the Disclosure
Schedule, there are no investigations by any governmental agency, termination
proceedings, participant claims or litigation, fiduciary liability insurance
claims, or other claims (except claims for
benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that could give rise to any material
liability, nor, to the knowledge of VSI, are there any facts that could give
rise to any material liability in the event of any such investigation, claim,
suit or proceeding. No event has occurred and no condition exists under any
Benefit Plan that would subject VSI to any tax under Code Sections 4971, 4972,
4977, 4979, or 4980B(f) or to a fine under ERISA Section 502(c). There are no
leased employees (as defined in Section 414(1) of the Code) that must be taken
into account under any Benefit Plan.
(d) Prohibited Transactions. No "prohibited transaction" (as
defined in Section 4975 of the Code or Section 406 of ERISA) has occurred which
involves the assets of any Benefit Plan and which could subject VSI or any of
its employees, or a trustee, administrator or other fiduciary of any Benefit
Plan to the tax or penalty on prohibited transactions imposed by Section 4975 of
the Code or the sanctions imposed under Title I of ERISA. During the last three
years, no Benefit Plan has been terminated nor have there been any "reportable
events" (as defined in Section 4043 of ERISA and the regulations thereunder)
with respect thereto. VSI has not engaged in any transaction or acted or failed
to act in a manner which could subject VSI to any liability for breach of
fiduciary duty under ERISA or any other applicable law.
(e) Multi-Employer Plans. At no time has VSI been required to
contribute to any "multi-employer pension plan" (as defined in Section 3(37) of
ERISA) or incurred any withdrawal liability, within the meaning of Section 4201
of ERISA, or announced an intention to withdraw, but not yet completed such
withdrawal, from any multi-employer pension plan.
Section 2.19 Licenses and Permits. The Disclosure Schedule contains an
accurate, correct and complete list of each material license, permit,
certificate, approval, exemption, franchise,
registration, variance, accreditation or authorization issued to VSI
(collectively, the "Licenses and Permits"). The Licenses and Permits are valid
and in full force and effect and there are not pending or, to the knowledge of
VSI, threatened, any proceedings which could result in the termination
revocation, limitation or impairment of any License or Permit. VSI has all
licenses, permits, certificates, approvals, franchises, registrations,
accreditations and other authorizations that are necessary or appropriate in
order to enable it to own and conduct its business and to lease or occupy its
real property in the manner such business is owned and conducted and such real
property is leased or occupied.
Section 2.20 Material Contracts. The Disclosure Schedule sets forth an
accurate, correct and complete list of all instruments, commitments, agreements,
arrangements and understanding to which VSI is a party or by which VSI is bound,
or by which any of its assets are subject or bound, or pursuant to which VSI is
a beneficiary, meeting any of the descriptions set forth below (the "Material
Contracts"):
(a) Real Estate Leases, Personal Property Leases, License
Agreements, Employment Contracts, Benefit Plans and Licenses and Permits;
(b) Any contract for capital expenditures or for the purchase of
goods or services in excess of $10,000, except those incurred in the ordinary
course of business and to be performed in six months or less;
(c) Any purchase order, agreement or commitment obligating VSI to
sell or deliver any product or service at a price which does not cover the cost
(including labor, materials and production overhead) plus the customary profit
margin associated with such product or service;
(d) Any instrument evidencing indebtedness, any liability for
borrowed money, any obligation for the deferred purchase price of property in
excess of $10,000 (excluding normal trade payables), or any instrument
guaranteeing any indebtedness, obligation or liability;
(e) Any joint venture, partnership, cooperative arrangement or any
other agreement involving a sharing of profits;
(f) Any advertising contract not terminable without payment or
penalty on sixty (60) days (or less) notice;
(g) Any contract with any government or any agency or
instrumentality thereof;
(h) Any contract with respect to the discharge, storage or removal
of effluent, waste or pollutants;
(i) Any license or royalty agreement;
(j) Any power of attorney, proxy or similar instrument;
(k) The Articles of Incorporation and By-laws of VSI and any
agreement among its stockholders;
(l) Any contract for the purchase or sale of any of its assets
other than in the ordinary course of business or granting an option or
preferential rights to purchase or sell any assets;
(m) Any contract to indemnify any party or to share tax liability
of any party;
(n) Any contract for the purchase or sale of foreign currency or
otherwise involving foreign exchange transactions;
(o) Any contract containing covenants not to compete in any line
of business or with any person in any geographical area;
(p) Any contract relating to the acquisition of a business or the
equity of any other person;
(q) Any contract relating to the purchase or sale of a portion of
VSI's requirements or output; and
(r) Any other contract, commitment, agreement, arrangement or
understanding to which VSI is a party (other than those excluded by an express
exception from the descriptions set forth in subsections (a) through (q) above)
which (i) provides for the payment or performance by either party thereto having
an aggregate value of $25,000 or more, (ii) is not terminable without payment or
penalty on sixty (60) days (or less) notice, or (iii) is between an Affiliate
and VSI; and
(s) Any arrangement currently under active negotiation of a type
that if entered into would be a Material Contract. Accurate, correct and
complete copies of each Material Contract have been delivered to Atio (PTY).
Each Material Contract is in full force and effect, and to VSI's knowledge, is
valid, binding and enforceable in accordance with its terms. Except as set forth
in the Disclosure Schedule, VSI and, to VSI's knowledge each other party, to a
Material Contract, has complied with all material commitments and obligations on
its part to be performed or observed under each Material Contract. Except as set
forth i the Disclosure Schedule, no event has occurred that is or, after the
giving of notice or passage of time or both, would constitute, a default under
or a breach of any Material Contract by VSI or, to the knowledge of VSI, by any
other party. VSI has not received or given notice of an intention to cancel or
terminate a Material Contract or to exercise or not exercise options or rights
under a Material Contract. Except as set forth in the Disclosure Schedule, VSI
has received no notice of a default, offset or counterclaim under any Material
Contract, or any other communication calling upon VSI to comply with any
provision of any Material Contract or ascertaining noncompliance.
Section 2.21 Taxes.
(a) Filings. There has been filed or will be filed, on VSI's
behalf, all returns, declarations and reports and all information returns and
statements (collectively, "Returns") required to be filed with respect to all
foreign, federal, state, county, local and other taxes of every kind and however
measured, including income, gross receipts, excise, franchise, property, value
added, import duties, employment, payroll, sales and use taxes and any additions
to tax and any interest or penalties thereon (collectively, "Taxes") for any
period ending on or before the Closing Date. As of the time of filing, the
Returns correctly reflected, and Returns not yet filed as of the date hereof
will correctly reflect, the income, business, assets, operations, activities and
status of VSI and any other information required to be shown thereon. VSI has
timely paid or made provision for all Taxes shown as due and payable on its
Returns required to be filed or sent prior to the date hereof and will timely
pay all Taxes that will be shown as due and payable on its Returns required to
be filed or sent after the date hereof. All required Tax estimates, deposits,
prepayments and similar reports or payments of VSI for current periods have been
properly made. VSI is not delinquent in the filing of any Return or the payment
of any Tax and, except as reflected in the Disclosure Schedule, has not
requested any extension of time within which to file any Return. VSI has made
available to Atio (PTY) accurate correct and complete copies of all federal and
state income tax Returns for the last three (3) fiscal years.
(b) Compliance. VSI has withheld amounts from employees, as
required under applicable law, and has filed all Returns with respect to
employee income Tax withholding and social security and unemployment Taxes in
compliance with the tax withholding provisions of the Code and other applicable
foreign, Federal, state or local laws.
(c) Disputes. There are no Tax liens on any assets of VSI and no
basis exists for the imposition of any such liens (other than liens for taxes
not yet due and payable). To the knowledge of VSI, no adjustment of or
deficiency for any Tax or claim for additional Taxes has been proposed,
threatened, asserted or assessed against VSI. There are no audit examinations
being conducted or, to the knowledge of VSI, threatened, and there is no
deficiency or refund litigation or controversy in progress or, to the knowledge
of VSI, threatened, with respect to any Taxes previously paid by VSI or with
respect to any returns previously filed by or on behalf of VSI. VSI has no
extension or waiver of any statute of limitations relating to the assessment or
collection of Taxes. There are in effect no powers of attorney or other
authorizations to any persons to represent VSI with respect to any Tax.
Section 2.22 Product Warranty. All products manufactured, processed,
distributed, shipped or sold by VSI and any services rendered by it have been in
conformity with all applicable contractual commitments and expressed or implied
warranties of VSI. No liability exists or will arise for repair, replacement or
damage in connection with sales or deliveries prior to the Closing Date in
excess of $50,000.00.
Section 2.23 Absence of Undisclosed Liabilities. Except to the extent
reflected on the balance sheet dated August 31, 1997 or the Disclosure Schedule,
VSI does not have any indebtedness, liability or obligation of any nature,
whether absolute, accrued, contingent or otherwise, related to or arising from
the operation of its business or the ownership, possession or use of its assets
through the Closing Date, other than indebtedness, liabilities and obligations
arising in the ordinary course of business which are not in aggregate materially
adverse.
Section 2.24 Compliance with Law and Rights of Others. The assets of
VSI conform to all applicable statutes, codes, ordinances, licensing
requirements, laws, rules and regulations, except for
such violations as do not materially impair or interfere with the use for which
such assets are employed. VSI has complied in all material respects with all
statutes, codes, ordinances, licensing requirements, laws, rules, regulations,
decrees, awards and orders applicable to its business o operations, including
those relating to employment, environmental matters, employee benefits, the
production, marketing, sale and distribution of products, labeling of products,
trade regulation, antitrust, warranties and control of foreign exchange; and
there is not any liability of VSI arising from or related to any violations
thereof. To the best of VSI's knowledge, the operation of its business is in all
material respects in compliance with all Material Contracts and the Intellectual
Property rights of others.
Section 2.25 Disclosure. The representations and warranties of the
Company and Venturian contained in this Agreement and the Disclosure Schedule
are accurate, correct and complete in all material respects, and do not contain
any untrue statement of a material fact or, considered in the context in which
presented, omit to state a material fact necessary in order to make the
statements and information contained herein or therein not misleading.
Section 2.26 Magic Division. The Disclosure Schedule accurately sets
forth the sales, cost of sales, and gross margin for VSI's Magic Division for
the seven month period ended July 31, 1997 and the twelve month period ended
December 31, 1996, determined in accordance with the methods used by VSI for the
preparation of its internal financial statements in the ordinary course of
business, and VSI's forecast for its performance through December 31, 1997.
Recognizing that such forecast is not a statement of fact, neither VSI nor
Venturian makes any representation or warranty as to it, but Venturian believes
in good faith that the performance of VSI's Magic Division through December 31,
1997 will not be materially adverse to that reflected in such forecast.
Section 2.27 Restrictions on Transferability. Venturian acknowledges
that the Shares are not being registered under the United States Securities Act
of 1933 or relevant state securities laws but are being offered and sold
pursuant to exemptions from such laws, and that the Company's reliance upon such
exemptions is predicated in part on Venturian's representations as contained
herein. The Shares being issued to Venturian are being purchased for Venturian's
own account, for investment, and without the intention or reselling or
distributing the same. Venturian has not made any agreement with others
regarding any of the Shares, and Venturian's financial condition is such that it
is not likely that it will be necessary to dispose of any of the Shares in the
foreseeable future. Venturian is aware that, in the view of the Securities and
Exchange Commission, a purchase of shares with intent to resell by reason of any
foreseeable specific contingency or anticipated market value, or any change in
the condition of the Company, or in connection with a contemplated liquidation
or settlement of any loan obtained for the acquisition of the Shares and for
which the Shares were pledged as security, would represent an intent
inconsistent with the representations set forth above. Venturian further
represents and agrees that if, contrary to the foregoing intentions, it should
later desire to dispose of or transfer any of the Shares in any manner, it shall
not do so without first obtaining (1) the opinion of counsel to the Company that
such proposed disposition or transfer lawfully may be made without registration
of such Shares pursuant to the Securities Act of 1933 and applicable state
securities laws, or (2) such registration (it being expressly understood that
the Company shall not have any obligation to register the Shares for such
purpose).
Section 2.28 Validity to Xxxxxx. This Agreement has been, and the
documents to be delivered at the Closing will be, duly executed and delivered by
Xxxxxx and constitute lawful, valid and legally binding obligations of Xxxxxx,
enforceable in accordance with their respective terms. Except as set forth in
the Disclosure Schedule, the execution and delivery of this Agreement by
Xxxxxx and the consummation by Xxxxxx of the transactions contemplated hereby
are not prohibited by, and d not violate any provision of, and do not constitute
a default under or a breach of (a) any note, bond, indenture, contract,
agreement, permit, license or other instrument to which Xxxxxx is a party or by
which Xxxxxx or his assets are bound, (b) any order, writ, injunction, decree or
judgment of any court or governmental agency, or (c) any law, rule or regulation
applicable to Xxxxxx. No approval, authorization, registration, consent, order
or other action of or filing with any person, including any court,
administrative agency or other governmental authority, is required for the
execution and delivery by Xxxxxx of this Agreement or the consummation by Xxxxxx
of the transactions contemplated hereby.
Section 2.29 Restrictions on Transferability. Xxxxxx acknowledges that
the Shares are not being registered under the United States Securities Act of
1933 or relevant state securities laws but are being offered and sold pursuant
to exemptions from such laws, and that the Company's reliance upon such
exemptions is predicated in part on Sharon's representations as contained
herein. The Shares being issued by Xxxxxx are being purchased for Sharon's own
account, for investment, and without the intention or reselling or distributing
the same. Xxxxxx has not made any agreement with others regarding any of the
Shares, and Sharon's financial condition is such that it is not likely that it
will be necessary to dispose of any of the Shares in the foreseeable future.
Xxxxxx is aware that, in the view of the Securities and Exchange Commission, a
purchase of Shares with intent to resell by reason of any foreseeable specific
contingency or anticipated market value, or any change in the condition of the
Company, or in connection with a contemplated liquidation or settlement of any
loan obtained for the acquisition of the Shares and for which the Shares were
pledged as security, would represent an intent inconsistent with the
representations set forth above. Xxxxxx further represents and agrees that if,
contrary to the foregoing intentions, it should later desire to dispose of or
transfer any of the shares
in any manner, it shall not do so without first obtaining (1) the opinion of
counsel to the Company that such proposed disposition or transfer lawfully may
be made without registration of such Shares pursuant to the Securities Act of
1933 and applicable state securities laws, or (2) such registration (it being
expressly understood that the Company shall not have any obligation to register
the Shares for such purpose).
ARTICLE III
Representations and Warranties of Atio (PTY) and Atio International
In order to induce Venturian, VSI and Xxxxxx to enter into this
Agreement and to consummate the transactions contemplated hereunder, Atio (PTY)
and Atio International, jointly and severally, make the following
representations and warranties to Venturian, VSI and Xxxxxx, as of the date
hereof and as of the Closing Date:
Section 3.1 Organization, Power and Authority of Atio (PTY). Atio (PTY)
is a corporation duly organized and validly existing under the laws of the
Republic of South Africa, with full corporate power and authority to own or
lease its properties, to carry on its business as it is now being conducted, and
to enter into this Agreement and carry out the transactions and agreements
contemplated hereby (subject to the approval of its Board of Directors as
contemplated in Sectio 6.8 below). Atio International is a corporation duly
organized and validly existing under the laws of the State of Delaware, with
full corporate power and authority to own or lease its properties, to carry on
its business as it is now being conducted and as contemplated in connection
herewith, and to enter into this Agreement and carry out the transaction and
agreements contemplated hereby (subject to the approval of its Board of
Directors as contemplated in Section 6.8 below).
Section 3.2 Access to Information. Atio (PTY) and Atio International
have each been provided information regarding VSI, including without limitation
access to VSI's employees, facilities, and corporate and financial books and
records and opportunities to question Xxxx Xxxxxxxxx, Xxxxxx and Xxxxx Van
Daele, in order for Atio (PTY) to conduct its due diligence.
Section 3.3 Projections. Atio (PTY) and Atio International each
recognize that any financial projections, assumptions or estimates concerning
the business or affairs of VSI are not statements of fact, and that no
representation or warranty is made by Venturian or VSI or any officer, director,
shareholder, employee or agent thereof, with respect to the accuracy of such
projections, assumptions or estimates or with respect to the future operations
or the amount of any future income or loss of VSI.
Section 3.4 Restrictions on Transferability. Atio (PTY) and Atio
International each acknowledge that the Shares are not being registered under
the United States Securities Act of 1933 or relevant state securities laws but
are being offered and sold pursuant to exemptions from such laws, and that the
Company's reliance upon such exemptions is predicated in part on Atio (PTY)'s
and Atio International's representations as contained herein. The Shares to be
issued to Atio International hereunder are being purchased for Atio
International's own account, for investment and without the intention of
reselling or redistributing the same. Neither Atio (PTY) nor Atio International
has made any agreement with others regarding any of the Shares, and Atio
International's financial condition is such that it is not likely that it will
be necessary to dispose of any of the Shares in the foreseeable future. Atio
(PTY) and Atio International are each aware that, in th view of the Securities
and Exchange Commission, a purchase of Shares with an intent to resell by reason
of any foreseeable specific contingency or anticipated change in market value,
or any change in the condition of the Company, or in connection with a
contemplated liquidation
or settlement of any loan obtained for the acquisition of the Shares and for
which the Shares were pledged as security, would represent an intent
inconsistent with the representations set forth above. Atio International
further represents and agrees that if, contrary to the foregoing intentions, it
should later desire to dispose of or transfer any of the Shares in any manner,
it shall not do so without first obtaining (1) the opinion of counsel to the
Company that such proposed disposition or transfer lawfully may be made without
the registration of such Shares pursuant to the Securities Act of 1933 and
applicable state securities laws, or (2) such registration (it being expressly
understood that the Company shall not have any obligation to register the Shares
for such purpose).
Section 3.5 Foreign Laws. Except for filings and approvals required
from the Reserve Bank of South Africa, no registration or filing with any
regulatory or other governmental authority or other third party is necessary
under the laws of the Republic of South Africa or political subdivision thereof
in connection with the issuance by the Company of the Shares pursuant to this
Agreement, and such issuance is not a violation of any laws, rules or
regulations of the Republic of South Africa or any of its political
subdivisions.
Section 3.6 Due Authorization and Absence of Breach. Subject to the
approval of this transaction by the Boards of Directors of Atio (PTY) and Atio
International as contemplated in Section 6.8 below and the receipt of Reserve
Bank approval as contemplated in Section 6.7 below, the execution, delivery and
performance of this Agreement by Atio (PTY) and Atio International and the
consummation by Atio (PTY) of the transactions contemplated hereby have been
duly authorized by all necessary corporate action of Atio (PTY) and Atio
International. This Agreement has been duly executed and delivered by Atio (PTY)
and Atio International and, subject to the approval of this transaction by the
Boards of Directors of Atio (PTY) and Atio International as contemplated in
Section 6.8 below, is a valid and binding obligation of each of them,
enforceable in accordance with its terms. Neither the execution and delivery of
this Agreement by Atio (PTY) and Atio Internationa nor the consummation by Atio
(PTY) and Atio International of the transactions contemplated hereby will: (i)
violate any provision of the certificate or articles of incorporation, by-laws
or other governing documents of Atio (PTY) or Atio International or of any law,
ordinance or regulation or any decree or order of any court or administrative or
other governmental body that is either applicable to, binding upon or
enforceable against Atio (PTY) or Atio International; or (ii) result in an
breach of or default under any mortgage, contract, agreement, indenture, will,
trust or other instrument that is either binding upon or enforceable against
Atio (PTY) or Atio International or the assets or properties of Atio (PTY) or
Atio International; or (iii) violate any legally protected right of any
individual or entity or give to any individual or entity a right or claim
against Atio (PTY), Atio International, the Company or the assets or properties
of any of them (excluding any claim against VSI under the Netcall Agreement).
ARTICLE IV
Additional Covenants of Venturian and VSI
Section 4.1 Best Efforts. Venturian and VSI shall use their respective
best efforts to cause to be satisfied as soon as practicable and prior to the
Closing Date all of the conditions set forth in Article VI to the obligations of
Atio (PTY) and Atio International.
Section 4.2 Conduct of Business Pending the Closing. From the date
hereof until the Closing, VSI shall use commercially reasonable efforts to
preserve, protect and maintain the business and assets of VSI and operate VSI
consistent with prior practice and in the ordinary course of
business. Without limiting the generality of the foregoing, from the date hereof
until the Closing, except for transactions expressly approved in writing by Atio
(PTY), VSI shall:
(a) maintain and keep in full force and effect all Insurance;
(b) use commercially reasonable efforts to preserve intact the
organization and reputation of VSI, to keep available the services of its
present executives, employees and agents, and to preserve the good will of its
suppliers, customers and others having business relationships with VSI;
(c) maintain its books, accounts and records in the usual, regular
and ordinary manner on a basis consistent with prior years;
(d) not enter into, amend or terminate any employment, bonus,
severance or retirement contract or arrangement, nor increase any salary or
other form of compensation payable or to become payable to any executives or
employees, other than in the ordinary course of business;
(e) not enter into, amend or terminate, or agree to enter into,
amend or terminate, any Material Contract, other than in the ordinary course of
business and except as contemplated in Section 1.4 above;
(f) not extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary and regular course of
business;
(g) not declare, set aside or pay any dividend or make any other
distribution with respect to its capital stock;
(h) not merge or consolidate with or agree to merge or consolidate
with, nor purchase or agree to purchase all or substantially all of the assets
of, nor otherwise acquire, any corporation, partnership, or other business
organization or division thereof;
(i) not sell, lease or otherwise dispose of or agree to sell,
lease or otherwise dispose of, any of its assets, properties, rights or claims,
except in the ordinary course of business;
(j) not authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities or
obligations convertible into shares of its capital stock of any class or issue
or grant any option, warrant or other right to purchase any shares of its
capital stock of any class, other than grants of options to employees (including
without limitation new employees) in the ordinary course of business;
(k) not incur or become subject to, nor agree to incur or become
subject to, any debt, obligation or liability, contingent or otherwise, except
current liabilities and contractual obligations in the ordinary course of
business; or
(l) not take any action to seek, encourage, solicit or support any
inquiry, proposal, expression of interest or offer from any other person or
entity with respect to an acquisition, combination or similar transaction
involving VSI or substantially all of its assets, and VSI will promptly inform
Atio (PTY) of the existence of any such inquiry, proposal, expression of
interest or offer and shall not without the written consent of Atio (PTY)
furnish any information to or participate in any discussions or negotiations
with any other person or entity regarding the same. From the date hereof through
the Closing, VSI shall confer with one or more designated representatives of
Atio (PTY) to report material operational matters and the general status of
on-going operations of VSI, to the extent such designated representatives
reasonably request. VSI shall promptly notify Atio (PTY) of any material adverse
change in the financial condition, results of operations, properties, business
or prospects of VSI and shall keep Atio (PTY) fully informed of such events and
permit Atio (PTY)'s representatives to participate in discussions relating
thereto.
Section 4.3 Access. From the date hereof through the Closing Date, VSI
shall give Atio (PTY) and its representatives full and free access to all
properties, facilities, personnel, books, contracts, leases, commitments and
records, and during this period VSI shall furnish Atio (PTY) with all financial
and operating data and other information as to VSI and its assets, properties,
rights and claims, as Atio (PTY) may from time to time reasonably request. In
particular, VSI shall, (a) afford to the officers, employees, attorneys,
accountants, appraisers, environmental engineers and other authorized
representatives of Atio (PTY) reasonable access, during normal business hours,
to the offices, plants, properties, books and records of VSI in order that Atio
(PTY) may have full opportunity to make such engineering, environmental, legal,
financial, accounting and other reviews or investigations of VSI as Atio (PTY)
shall desire to make, (b) use its best efforts to cause its independent public
accountants to permit Atio (PTY)'s independent public accountants to inspect
their work papers and other records of VSI, and (c) furnish to Atio (PTY) and
its authorized representatives such additional financial and operating data and
other information regarding its assets, properties, rights, claims, contracts,
goodwill and business as Atio (PTY) shall from time to time reasonably request.
Section 4.4 Post-August Advances. Immediately following the Closing
(whether consummated pursuant to Sections 1.2 through 1.3 or Section 1.4 above),
VSI shall repay to Venturian the Post-August Advances (and, if necessary, the
parties shall cause the Company to contribute funds to VSI to enable it to do
so); provided, however, that without the prior consent of Atio (PTY), Venturian
shall not make to VSI Post-August Advances in excess of $250,000 per month.
ARTICLE V
Additional Covenants of Atio (PTY) and Atio International
Section 5.1 Best Efforts. Atio (PTY) and Atio International shall use
their respective best efforts to cause to be satisfied as soon as practicable
and prior to the Closing Date all of the conditions set forth in Article VII to
the obligations of Venturian, VSI and Xxxxxx.
ARTICLE VI
Conditions to the Obligation of Atio (PTY) and Atio International
The obligations of Atio (PTY) and Atio International pursuant to
Article I above shall be subject to the fulfillment at or prior to the Closing
Date of each of the following conditions (unless such conditions are waived
prior to the Closing, which Atio (PTY) may do on behalf of both of them):
Section 6.1 Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of VSI, Venturian and
Xxxxxx contained in this Agreement shall have been true and correct in all
material respects at and as of the date hereof, and they shall be true and
correct in all material respects at and as of the Closing Date with the same
force and effect as though made at and as of that time (subject to changes
arising out of the operation by VSI of its business in the ordinary course and
in compliance with the terms of this Agreement between the date of this
Agreement and the Closing Date, which changes shall not, individually or in the
aggregate, be materially adverse). VSI and Venturian shall have performed and
complied with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. VSI and Venturian
shall have delivered to Atio (PTY) and Atio International a certificate, dated
as of the Closing Date and signed by an officer of VSI and Venturian, certifying
that
such representations and warranties are thus true and correct and that all such
obligations have been thus performed and complied with.
Section 6.2 License Agreement. The Company shall have executed and
delivered to Atio (PTY) the License Agreement.
Section 6.3 Shareholders Agreement. The Company and each of its
shareholders shall have executed and delivered a shareholders agreement in the
form attached hereto as Exhibit B (the "Shareholders Agreement").
Section 6.4 Employment Services Agreement. The Company and Atio
International shall have executed and delivered an Employment Services Agreement
(the "Employment Services Agreement") in a form to be agreed upon among all of
the parties hereto pursuant to which Atio International shall provide to the
Company the services of certain employees.
Section 6.5 Opinion of Counsel. Atio (PTY) and Atio International shall
have received an opinion dated the Closing Date from Xxxxxxx, Street and
Deinard, counsel for Venturian and VSI, in form and substance reasonably
satisfactory to such parties.
Section 6.6 No Adverse Litigation. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit or invalidate the transactions
contemplated hereby.
Section 6.7 Reserve Bank. Atio (PTY) shall have received all required
approvals from the Reserve Bank of South Africa to consummate the transactions
contemplated herein, including, without limiting the generality of the
foregoing, the payment of the amount contemplated in Subparagraph 1.2(a)(ii)
above.
Section 6.8 Board of Directors Approval. This Agreement and the
transactions contemplated herein shall have been approved by the Board of
Directors of Atio (PTY) and Atio
International; provided, however, that this condition shall be deemed to have
been satisfied unless Atio (PTY) or Atio International, as the case may be,
delivers to Venturian, prior to the tenth day following the date of this
Agreement, written notice that such condition has not been satisfied.
Section 6.9 Distribution Agreements. The Company and Atio International
shall have executed and delivered a distribution agreement (the "Distribution
Agreement") in a form to be agreed upon among all of the parties hereto pursuant
to which Atio International (or, in the case of Africa, Atio (PTY) as a
sub-distributor) shall distribute the Company's products in all territories
outside of North America.
ARTICLE VII
Conditions to Obligations of Venturian, VSI and Xxxxxx
The obligations of Venturian, VSI and Xxxxxx pursuant to Article I
above shall be subject to the fulfillment at or prior to the Closing Date of
each of the following conditions (unless such conditions are waived, which
Venturian may do on behalf of Venturian, VSI and Xxxxxx):
Section 7.1 Accuracy of Representations and Warranties and Compliance
with Obligations. The representations and warranties of Atio (PTY) and Atio
International contained in this Agreement shall have been true and correct in
all material respects at and as of the date hereof, and they shall be true and
correct in all material respects at and as of the Closing Date with the same
force and effect as though made at and as of that time (subject to changes
arising out of the operation by Atio (PTY) and Atio International of their
respective businesses in the ordinary course and in compliance with the terms of
this Agreement between the date of this Agreement and the Closing Date, which
changes shall not, individually or in the aggregate, be materially adverse).
Atio (PTY) and Atio International shall have performed and complied with all of
their obligations required by this Agreement to be performed or complied with at
or prior to the Closing Date. Atio (PTY) and Atio International
shall have delivered to Venturian, VSI and Xxxxxx a certificate, dated as of the
Closing Date and signed by an officer of Atio (PTY) and Atio International,
certifying that such representations and warranties are thus true and correct
and that all such obligations have been thus performed and complied with.
Section 7.2 License Agreement. Atio (PTY) and the Company shall each
have executed and delivered the License Agreement.
Section 7.3 Shareholders Agreement. The Company and its shareholders
shall have executed and delivered the Shareholders Agreement.
Section 7.4 Employment Services Agreement. The Company and Atio
International shall have executed and delivered the Employment Services
Agreement.
Section 7.5 Opinion of Counsel. Venturian, VSI and Xxxxxx shall have
received an opinion, dated the Closing Date, from XxXxxxxxx, Will & Xxxxx,
counsel for Atio (PTY) and Atio International, in form and substance reasonably
satisfactory to such parties.
Section 7.6 No Adverse Litigation. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit or invalidate the transactions
contemplated hereby.
Section 7.7 Board of Directors Approval. This Agreement, and the
transactions contemplated herein, shall have been approved by the Boards of
Directors of Venturian and VSI; provided, however, that this condition shall be
deemed to have been satisfied unless prior to the tenth day following the date
of this Agreement Venturian or VSI, as the case may be, delivers to Atio
International written notice that such condition has not been satisfied.
Section 7.8 Distribution Agreement. The Company and Atio International
shall have executed and delivered the Distribution Agreement.
ARTICLE VIII
Certain Actions After the Closing
Section 8.1 Execution of Further Documents. From and after the Closing,
upon the reasonable request of a party hereto, the other party shall execute,
acknowledge and deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be appropriate to carry
out the transactions contemplated by this Agreement.
Section 8.2 Exchange of Options. Promptly after the Closing, the
parties shall cooperate to cause all options outstanding as of the date hereof
to purchase common shares of VSI to be exchanged for options to purchase a like
number of common shares of the Company.
ARTICLE IX
Indemnification
Section 9.1 Agreement by Venturian to Indemnify. Venturian shall
indemnify and hold Atio (PTY) and Atio International harmless in respect of the
aggregate of all indemnifiable damages of Atio (PTY) and Atio International. For
purposes of this Agreement, "indemnifiable damages" shall mean the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including
court costs, amounts paid in settlements, judgments, and reasonable related
counsel fees and expenses, including those for investigating and defending).
Indemnifiable damages of Atio (PTY) and Atio International shall mean
indemnifiable damages incurred or suffered by Atio (PTY) or Atio International
(i) resulting from any inaccurate representation or warranty made by VSI or
Venturian
in Article II hereof or (ii) resulting from any default in the performance of
any of the covenants or agreements made by VSI or Venturian in this Agreement or
any agreement, assignment, certificate or other instrument executed in
connection with the Closing of the transactions contemplated herein; provided,
however, that neither VSI nor Venturian shall have any liability to Atio (PTY)
or Atio International for any indemnifiable damages arising out of any breach of
any representation or warranty if Atio (PTY) or Atio International had actual
knowledge of such breach prior to the Closing unless, prior to the Closing, Atio
(PTY) or Atio International notified Xxxx Xxxxxxxxx of such breach an Xx.
Xxxxxxxxx, or Venturian's legal counsel, asserted that such breach did not
constitute a basis for Atio (PTY) or Atio International to refuse to close the
transactions contemplated herein pursuant to Section 6.1 hereof. Nothing in this
paragraph shall be interpreted as providing Xx. Xxxxxxxxx or Venturian's legal
counsel with a right to require Atio (PTY) or Atio International to close the
transactions contemplated herein if such asserted breach violates Section 6.1
hereof. The disclosure of a matter in the Disclosure Schedule shall not be
deemed to create actual knowledge on the part Atio (PTY) or Atio International
except to the extent that it is made with sufficient particularity that a
reasonable party in the position of Atio International or Atio (PTY) would
understand the substance thereof and its relationship to the relevant
representation or warranty.
Section 9.2 Agreements by Atio (PTY) and Atio International to
Indemnify. Atio (PTY) and Atio International, jointly and severally, shall
indemnify and hold VSI, Venturian and Xxxxxx harmless in respect of the
aggregate of all indemnifiable damages of VSI, Venturian or Xxxxxx. For this
purpose, "indemnifiable damages of VSI, Venturian or Xxxxxx" shall mean the
indemnifiable damages incurred or suffered by VSI, Venturian or Xxxxxx (i)
resulting from any inaccurate representation or warranty made by Atio (PTY) or
Atio International in Article III hereof or (ii) resulting from any default in
the performance of any of the covenants or agreements made by Atio
(PTY) or Atio International in this Agreement or any agreement, assignment,
certificate or other instrument executed in connection with the Closing of the
transactions contemplated herein; provided, however, that neither Atio (PTY) nor
Atio International shall have any liability with respect to any indemnifiable
damages arising out of any breach of any representation or warranty made by Atio
(PTY) or Atio International if VSI or Venturian had actual knowledge of such
breach prior to the Closing.
Section 9.3 Survival. The representations and warranties of the parties
set forth in Articles II and III hereof shall survive the execution and delivery
of this Agreement and the closing of the transactions contemplated herein
through December 31, 1999 and shall thereafter terminate, except with respect to
claims for the breach thereof made in writing delivered to the breaching party
on or prior to December 31, 1999. Notwithstanding the foregoing, the
representations and warranties set forth in Sections 2.2 and 2.3 shall survive
indefinitely and the representations and warranties set forth in Sections 2.21
shall survive for ninety (90) days after the expiration of the applicable
statute of limitations.
Section 9.4 Limitation on Indemnification Claims. Notwithstanding
anything in this Agreement to the contrary, no party to this Agreement shall
have any liability to another party to this Agreement with respect to the breach
of any representation or warranty except to the extent the indemnifiable damages
of the party to whom the liability is owed with respect to all breaches of
representations and warranties set forth in this Agreement exceeds $50,000; and
the aggregate liability of Venturian and VSI, on the one hand, and Atio (PTY)
and Atio International, on the other hand, for all breaches of representations
and warranties set forth in this Agreement shall not exceed $500,000. A claim
for indemnification pursuant to this Section 9 shall be the sole
remedy of a party for the breach of any representation or warranty made in
connection with the transactions contemplated herein.
Section 9.5 Indemnification Procedure on Third Party Claims.
(a) Promptly after receipt by a party (an "Indemnified Party") of
notice by a third party of any complaint or the commencement of any action or
proceeding with respect to which such Indemnified Party may be entitled to
indemnification hereunder, such Indemnified Party shall, within twenty (20)
days, notify the other party (the "Indemnifying Party") of such complaint or of
the commencement of such action or proceeding; provided, however, that the
failure to so notify the Indemnifying Party shall relieve the Indemnifying Party
from liability under this Agreement with respect to such claim only if, and only
to the extent that, such failure to notify the Indemnifying Party results in the
forfeiture by the Indemnifying Party of material rights and defenses otherwise
available to the Indemnifying Party with respect to such claim. The Indemnifying
Party shall have the right, upon written notice delivered to the Indemnified
Party within twenty (20) days thereafter, to assume the defense of such action
or proceeding, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of the fees and disbursements of such
counsel. In the event, however, that the Indemnifying Party declines or fails to
assume the defense of the action or proceeding or to employ counsel reasonably
satisfactory to the Indemnified Party, in either case within such 20-day period,
then such Indemnified Party may employ counsel to represent or defend it in any
such action or proceeding and the Indemnifying Party shall pay the reasonable
fees and disbursements of such counsel as incurred. In any action or proceeding
with respect to which indemnification is being sought hereunder, the Indemnified
Party or the Indemnifying Party, whichever is not assuming the defense of such
action, shall have the right to participate in such litigation and to retain its
own counsel at such party's own expense. The Indemnifying Party or the
Indemnified Party, as the case may be, shall at all times use reasonable efforts
to keep the Indemnifying Party or the Indemnified Party, as the case may be,
reasonably apprised of the status of the defense of any action the defense of
which it is maintaining and to cooperate in good faith with each other with
respect to the defense of any such action.
Section 9.6 No Indemnified Party may settle or compromise any
claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written consent of
the Indemnifying Party, unless such settlement, compromise or consent includes
an unconditional release of the Indemnifying Party from all liability arising
out of such claim. An Indemnifying Party may not, without the prior written
consent of the Indemnified Party, settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder unless (i) the Indemnifying Party shall pay or cause to be paid all
amounts arising out of such settlement or judgment concurrently with the
effectiveness thereof; (ii) the terms or effect of the settlement shall not
encumber any of the assets of any Indemnified Party or any affiliate thereof, or
contain or result in any restriction, interference or condition that would apply
to such Indemnified Party or its affiliates or to the conduct of any of their
respective businesses; and (iii) the Indemnifying Party shall obtain, as a
condition of such settlement, a complete unconditional release of such
Indemnified Party.
ARTICLE X
Miscellaneous
A. Brokers' Commission. Atio (PTY) and Atio International shall
indemnify and hold harmless VSI and Venturian from the commission, fee or claim
of any person, firm or corporation employed or retained or claiming to be
employed or retained by Atio (PTY) or Atio International to bring about, or to
represent it in, the transactions contemplated hereby. Venturian shall indemnify
and hold harmless Atio (PTY) and Atio International from the commission, fee or
claim of any person, firm or corporation employed or retained or claiming to be
employed or retained by VSI or Venturian to bring about, or to represent it in,
the transactions contemplated hereby (including, without limitation, any claim
by The Xxxxx Group, Inc. that it is entitled to amounts in excess of that
provided in the last sentence of this paragraph). The indemnification
obligations of the parties under this Section 10.1 shall not be subject to the
limitations set forth in Section 9.4 above. Notwithstanding the foregoing, if
requested by Venturian in connection with the closing of the transactions
contemplated herein, the Company shall (at no cost to Venturian) issue up to
37,500 common shares of its capital stock to The Xxxxx Group, Inc.
B. Amendment and Modification. The parties hereto may amend, modify and
supplement this Agreement in such manner as may be agreed upon by them in
writing.
C. Payment of expenses. Each party to this Agreement shall pay all of
the expenses incurred by it in connection with this Agreement, including without
limitation its legal and accounting fees.
D. Termination.
1. Anything to the contrary herein notwithstanding, this Agreement
may be terminated and the transaction contemplated hereby may be abandoned:
a) by the mutual written consent of each of the parties
hereto at any time prior to the Closing Date;
b) by Venturian or Atio International at any time prior to
the Closing Date if there shall be a pending or threatened action or proceeding
by or before any court or other governmental body which shall seek to restrain,
prohibit or invalidate the transactions contemplated hereby;
c) by Atio International in the event of the material breach
by VSI or Venturian of any provision of this Agreement, which breach is not
remedied by VSI or Venturian within fourteen (14) Minnesota business days after
receipt of notice thereof from Atio International;
d) by Venturian in the event of the material breach by Atio
(PTY) or Atio International of any provision of this Agreement, which breach is
not remedied by Atio (PTY) or Atio International within fourteen (14) Minnesota
business days after receipt of notice thereof from Venturian;
e) by Venturian or Atio (PTY) in the event that Venturian,
VSI, Atio (PTY) or Atio International delivers notice prior to the tenth day
following the date of this Agreement that the condition set forth in Section 6.8
or 7.7 above has not been satisfied; or
f) by Venturian or Atio International if the Closing has not
taken place by October 31, 1997.
If this Agreement is terminated pursuant to clauses (i), (ii), (v) or (vi) of
this paragraph (a), no party shall have any liability for any costs, expenses,
loss of anticipated profit or any further obligation for
breach of warranty or otherwise to any other party to this Agreement, except
that the termination of this Agreement pursuant to clause (vi) above by any
party then in breach of any of its representations, warranties or covenants
hereunder shall not relieve such party of its liability for such breach (for
purposes of this sentence, Atio International and Atio (PTY) shall be considered
the same party and Venturian and VSI shall be considered the same party). Any
termination of this Agreement pursuant to clauses (iii) or (iv) of this
paragraph (a) shall be without prejudice to any other rights or remedies of the
respective parties.
E. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs and legal representatives. No party may assign its rights or delegates its
obligations under this Agreement without the prior written consent of the other
party hereto and any purported assignment or delegation without such prior
written consent shall be void and of no force or effect.
F. Third Party Beneficiaries. This Agreement is made solely and
specifically between and for the benefit of the parties hereto and no other
person shall have any rights, interests or claims hereunder or be entitled to
any benefits under or on account of this Agreement as a third party beneficiary
or otherwise.
G. Entire Agreement. This instrument and the exhibits and schedules
attached hereto and the confidentiality agreement previously entered into
between Atio (PTY) and VSI contain the entire agreement of the parties hereto
with respect to the subscription and issuance of the Shares and supersede all
prior understandings and agreements of the parties with respect to the subject
matter hereof. Any reference herein to this Agreement shall be deemed to include
the schedules and exhibits attached hereto.
H. Headings. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
I. Execution in Counterpart. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
J. Notices. Any notice, request, information or other document to be
given hereunder to any of the parties by any other party shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
as follows:
If to VSI or Venturian, 11111 Excelsior Boulevard
addressed to: Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
with a copy to: Xxxxxxx, Street and Deinard
Suite 0000
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
If to Atio (PTY), ATIO Corporation (PTY) Ltd.
addressed to: X.X. Xxx 0000
Xxxxxxx 0000
Xxxxxxxx xx Xxxxx Xxxxxx
Attention: Xxxx Xxxxx
with a copy to: XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, P.C.
If to Atio International: 00000 Xxxxxxxxx Xxxxxxxxx
addressed to: Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
with a copy to: XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, P.C.
If to Xxxxxx: Xxxx Xxxxxx
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Any party may change the address to which notices hereunder are to be sent to it
by giving written notice of such change of address in the manner herein provided
for giving notice. Any notice delivered personally shall be deemed to have been
given on the date it is so delivered, and any notice delivered by recognized
international courier service shall be deemed to have been given on the date it
is received.
K. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
L. Arbitration; Legal Proceedings.
1. The parties shall attempt in good faith to resolve any dispute
arising out of or relating in any manner to this Agreement, the breach,
termination or validity thereof or the transactions contemplated herein
(including, without limitation, any claim for indemnification pursuant to
Article IX hereof and any statutory or common law claim) promptly by negotiation
between representatives of the parties, each of whom has authority to settle the
controversy. Any party may giv the others written notice that a dispute exists
(a "Notice of Dispute"). The Notice of Dispute shall include a statement of such
party's position and the name and title of the representative who will represent
such party. Within ten (10) days of the delivery of the Notice of Dispute, the
parties' respective representatives shall meet at a mutually acceptable time and
place, and thereafter as long as they reasonably deem necessary, to attempt to
resolve the dispute. All documents and other information or data on which each
party relies concerning the dispute shall be furnished or made
available on reasonable terms to the other party at or before the first meeting
of the parties as provided by this paragraph.
2. Any controversy or claim arising out of or relating to this
Agreement, the breach, termination or validity thereof, or the transactions
contemplated herein (including, without limitation, any claims for
indemnification pursuant to Article IX hereof and any statutory or common law
claim), if not settled by negotiation as provided in paragraph (a) of this
Section 10.12, shall be settled by arbitration in New York, New York, in
accordance with the CPR Rules for Non- Administered Arbitration of Business
Disputes, by three arbitrators. Any party may initiate arbitration twenty (20)
days following the delivery of a Notice of Dispute if the dispute has not then
been settled by negotiation, or sooner if the other party fails to participate
in negotiation in accordance with paragraph (a) above. The three arbitrators
shall be appointed as provided by CPR Rule 5, Selection of Arbitrators by the
parties. The arbitrators shall have no power to add to or detract from the
agreements of the parties and shall not have the authority to make any ruling or
award that does not conform to the terms and conditions of this Agreement.
Without limitation of the foregoing, the arbitrators shall have no power to
terminate this Agreement other than in accordance with its terms and shall have
no power to award punitive damages. The arbitration procedure shall be governed
by the United States Arbitration Act, 9 U.S.C. ss. 1-16, and the award rendered
by the arbitrator shall be final and binding on the parties and may be entered
in any court having jurisdiction thereof.
3. Each party shall have discovery rights as provided by the
United States Federal Rules of Civil Procedure; provided, however, that all such
discovery shall be commenced and concluded within sixty (60) days of the
initiation of arbitration.
4. It is the intent of the parties that any arbitration shall be
concluded as quickly as reasonably practicable. Unless the parties otherwise
agree, once commenced, the hearing on the
disputed matters shall be held four days a week until concluded, with each
hearing date to begin at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators
shall use all reasonable efforts to issue the final award or awards within a
period of five business days after closure of the proceedings. Failure of the
arbitrators to meet the time limits of this Paragraph 10.12(d) shall not be a
basis for challenging the award.
5. The arbitrators shall instruct the non-prevailing party to pay
all costs of the proceedings, including the fees and expenses of the arbitrators
and the reasonable attorneys' fees and expenses of the prevailing party. If the
arbitrators determine that there is not a prevailing party, each party shall be
instructed to bear its own costs and to pay one-half of the fees and expenses of
the arbitrators.
6. Each party hereto hereby agrees that any legal proceeding
instituted to enforce an arbitration award hereunder will be brought in the U.S.
federal courts situated in New York (which shall have sole and exclusive
jurisdiction thereof), and hereby submits to personal jurisdiction therein and
irrevocably waives any objection as to venue therein, and further agrees not to
plead or claim in any such court that any such proceeding has been brought in an
inconvenient forum. VSI and Venturian each hereby designates, appoints and
empowers Xxxxxx X. Xxxxxxx, presently having offices at Xxxxxxx, Street and
Deinard, Suite 2300, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, as
VSI's true and lawful agent for service of process to receive and accept on
their behalf service of process in any such proceeding brought in any such
courts. Xxxxxx hereby designates, appoints and empowers Xxxxxx Xxxxxxx,
presently having offices at Xxxxxx Xxxxxxxx From & Xxxxxxxxxx LLP, 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000-0000 as Sharon's true and lawful agent
for service of process to receive and accept on its behalf service of process in
any such proceeding brought in any such courts. Atio (PTY) and Atio
International each hereby
designates, appoints and empowers Xxxxxx X. Xxxxxxx, P.C., presently having
offices at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, as the Purchaser's true
and lawful agent for service of process to receive and accept on their behalf
service of process in any such proceeding brought in any such courts. Each of
the foregoing parties agrees that the failure of the process agent appointed by
such person to give notice of process to such person shall not impair or affect
the validity of service upon such agent or of any judgment based thereon, and
each such person irrevocably consents to the service of process in any such
proceeding by the mailing of copies thereof by certifie mail, postage prepaid,
to such person's address for notice under this Agreement. Nothing herein shall
preclude any of the parties hereto from serving process in any other manner or
in any other jurisdiction in connection with enforcing an arbitration award
hereunder.
M. Termination of Existing Shareholder's Agreement. Upon the
consummation of the transactions contemplated herein, the Amended and Restated
Shareholders Agreement among Venturian, VSI and Xxxxxx shall terminate and be of
no further force or effect, automatically and immediately without any further
action by any party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ATIO CORPORATION (PTY) LTD
By /s/ Xxxx Xxxxx
Its Chief Executive
ATIO CORPORATION INTERNATIONAL, INC.
By /s/ Xxxxxx Xxxxx
Its Chairman
VENTURIAN CORP.
By /s/ Xxxx X. Xxxxxxxxx
Its President
VENTURIAN SOFTWARE ENTERPRISES, INC.
By /s/ Xxxx Xxxxxx
Its President
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
EXHIBITS
Exhibit A Atio Corporation USA, Inc. Articles of Incorporation (Not filed.)
Exhibit B Shareholders Agreement (See Exhibit 10.3)
