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Exhibit 2.18
UNITS PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is dated 7 April 2000,
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Schedule 1 (the
"Sellers"); and
(2) XXXXXX UK INC., an Ohio corporation, whose principal place of business
is at 1200 Xxxxx Tower, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000, XXX
("Xxxxxx").
RECITALS
A. The Sellers, in the aggregate, own:
(a) all of the issued share capital of SYNERMEDICA PTY LIMITED (ACN 064
353 840), a private company limited by shares registered in Australia and having
its registered office at First Floor, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx
0000 Xxxxxxxxx, which in turn owns all of the issued share capital of
SYNERMEDICA RESEARCH & DEVELOPMENT PTY LIMITED (ACN 064 945 651), a private
company limited by shares registered in Australia and having its registered
office at First Floor, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 0000 Xxxxxxxxx;
and
(b) all of the trust units of the SYNERMEDICA UNIT TRUST, which in turn
owns all of the trust units of the SYNERMEDICA R&D UNIT TRUST.
together, the "TARGET".
B. This Agreement contemplates a transaction in which Xxxxxx will
purchase from the Sellers, and the Sellers will sell to Xxxxxx, all of the
issued share capital and units of TARGET in return for cash and KII Shares.
THE PARTIES AGREE as follows:
1. DEFINITIONS.
In this agreement, unless the contrary intention appears, the singular
includes the plural and vice versa.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
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investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, Encumbrances, losses, expenses
and fees, including (without limitation) court costs and reasonable attorneys'
fees and expenses.
"AFFILIATE" means any Person where Target has the capacity to directly
or indirectly control the outcome of decisions about that Person's financial and
operational policies.
"AUSTRALIAN DOLLAR" or "AUD" shall mean the lawful currency for the
time being of Australia.
"BASIS" means any known past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open for ordinary banking business in Melbourne, Victoria, Australia
and Cincinnati, Ohio, USA.
"CASH CLOSING PAYMENT" has the meaning set forth in Section 2(b) below.
"CLAIM AMOUNT" MEANS:
(a) the amount the TARGET is required to pay in Tax
to a Government Agency as a result of a Tax Claim; or
(b) the amount of any credit, rebate or refund of Tax
lost by the TARGET as a result of a Tax Claim; or
(c) the amount of Tax that would, if TARGET had
taxable income in the year of income to which the Tax
Claim relates, be payable by that company as a result
of the loss of any relief, allowance, deduction or
loss carried forward, calculated at the rate of Tax
applicable to companies in the year in which the Tax
Claim is made.
"CLOSING" has the meaning set forth in Section 2(c) below.
"CLOSING DATE" has the meaning set forth in Section 2(c) below.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Exhibit
7(a)(ix).
"CORPORATIONS LAW" MEANS THE CORPORATIONS LAW OF AUSTRALIA.
"CURRENT USE" has the meaning set forth in Exhibit 4(l)(iv)(A).
"COVENANTS" has the meaning set forth in Section 7(a)(vii) below.
"DISCLOSURE SCHEDULE" means the disclosure schedule delivered by the
Parties hereto pursuant to Section Section 3 and 4 below. Nothing contained in
the Disclosure Schedule shall be deemed
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adequate to disclose an exception to a representation or warranty made in this
Agreement unless the exception is identified in the Disclosure Schedule with
reasonable particularity, describing the relevant facts in reasonable detail.
"DOLLAR EQUIVALENT" means on the Closing Date, with respect to an
amount denominated in Australian Dollars, the amount of Dollars which could be
purchased with that amount of Australian Dollars at a rate of exchange
calculated using the spot FX AUD/US$ exchange rate of .6280.
"DOLLARS" and "$" mean dollars in the lawful currency of the United
States.
"EMPLOYEES" has the meaning set forth in Section 4(t)(i).
"EMPLOYMENT AGREEMENTS" has the meaning set forth in Section 7(a)(vi)
below.
"ENCUMBRANCE" means any Security Interest, warrant, option, purchase
right, pre-emptive right, or other right or claim of any character that
restricts the transfer of share capital.
"ENVIRONMENTAL LAW" means all laws (including common law, Acts of
Parliament, regulations, policies, by-laws and local laws, or any relevant code
of practice, note, standard or other advisory material issued by any competent
authority, and all leases, permits, consents and approvals made pursuant to such
laws) relating to the Environment, the health and safety of persons or property,
the protection of natural amenity or Hazardous Materials.
"ENVIRONMENT" shall have the same meaning as in the Environment
Protection Xxx 0000 (Vic).
"ESCROW AGREEMENT" has the meaning set forth in Section 2(b) below.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g) below.
"GAAP" means Australian generally accepted accounting principles, as in
effect from time to time.
"GOVERNMENT AGENCY" means any governmental authority or instrumentality
responsible for Tax, wherever situated.
"GST" means a goods and services tax or any similar tax imposed in
Australia.
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"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"dangerous goods", "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants," or words of
similar import, under any applicable Environmental Law; (c) any pollutant, or
any hazardous, toxic, noxious, corrosive or caustic substance whether in solid,
liquid or gaseous form; and (d) any other chemical, material or substance
exposure to which is prohibited, limited or regulated by any governmental
authority.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(e) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(e) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trade marks, service marks, rights (registered
or unregistered) in any designs, trade dress, logos, trade names, together with
all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including related technical documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
"XXXXXX" has the meaning set forth in the preface above.
"XXXXXX MATERIAL ADVERSE CHANGE" has the meaning set forth in
Section 7(b)(vii) below.
"KII SHARES" has the meaning set forth in Section 2(b) below.
"KII" means Xxxxxx International Inc.
"KNOWLEDGE" means knowledge after reasonable investigation.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated
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or unliquidated, and whether due or to become due), including (without
limitation) any liability for Taxes.
"MARKET VALUE" means:
(a) if the average closing price of KII shares for the twenty Trading
Days which cease five days before Closing is between US$10 and US$14, US$12 per
KII share ("Base Amount");
(b) if the average closing price of KII shares for the twenty Trading
Days which cease five days before Closing is between US$8.00 and US$9.99, the
Base Amount less the difference between US$10 and the average closing price of
KII shares for that period; or
(c) if the average closing price of KII shares for the twenty Trading
Days which cease five days before Closing is between US$14.01 and US$16.00, the
Base Amount plus the average closing price of KII shares for that period less
US$14.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in
Section 4(g) below.
"MOST RECENT FINANCIAL MONTH END" has the meaning set forth in
Section 4(g) below.
"MOST RECENT FINANCIAL YEAR END" has the meaning set forth in
Section 4(g) below.
"NASDAQ" means the National Market System of the National Association
of Securities Dealers, Inc.
"NIRVANA SUPERANNUATION FUND" means the Nirvana Superannuation Fund
established by deed dated 13 June 1995.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTY" means Xxxxxx or the Sellers, as the case requires, and Parties
means both of them.
"PERMITS" has the meaning set forth in Section 4(c).
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organisation, or a governmental entity (or any
department, agency, or political subdivision thereof).
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"PLANNING ACT" means any law regulating or relating to land use
planning, including any planning scheme.
"PREMISES" means the land and premises particulars of which are set out
in Schedule 2.
"PURCHASE PRICE" has the meaning set forth in Section 2(b) below.
"RELEASE" has the meaning set forth in Section 7(a)(vii) below.
"RELEVANT EMPLOYEE" means any past or present employee of TARGET.
"SEC" has the meaning set forth in Section 3(b)(v) below.
"SECURITIES ACT" means the US Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the US Securities Exchange Act of 1934,
as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, assignment, hypothecation, security interest (including any created by
law), title retention or other security agreement or arrangement, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"SELLER" has the meaning set forth in the preface above.
"SUPERANNUATION FUNDS" means collectively the superannuation fund known
as the Synermedica Pty Ltd Mercantile Mutual Mastertrust Number 12758
and the Nirvana Superannuation Fund.
"TARGET" has the meaning set forth in the first recital above.
"TARGET MATERIAL ADVERSE CHANGE" has the meaning set forth in
Section 7(a)(viii) below.
"TARGET SHARE AND TRUST UNIT" means all of the ordinary shares, trust
units or other issued securities of TARGET, and TARGET Share alone means all of
the ordinary shares of TARGET.
"TAX" means taxes, levies, imposts, deductions, charges, withholdings,
excises, fees, compulsory loan or and duties imposed by any Government Agency
(including, without limitation, stamp and transaction duties), together with any
related interest, penalties, fines
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and expenses.
"TAX ACT" means the Income Tax Assessment Xxx 0000 (Cth).
"TAX CLAIM" means an assessment notice (including a notice of
adjustment of a loss claimed by the TARGET in a manner adversely affecting the
company), demand or other document issued or action taken by or on behalf of a
Government Agency, whether before or after the date of this deed, as a result of
which the TARGET is liable to make a payment for Tax or is deprived of any
credit, rebate, refund, relief, allowance, deduction, or loss carried forward.
"TAX LIABILITY" means any Liability with respect to Taxes.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(d) below.
"TRADING DAY" means those days on which NASDAQ is open for trading.
"US" or "UNITED STATES" means the United States of America.
"US GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
2. PURCHASE AND SALE OF TARGET SHARES AND TRUST UNITS.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, Xxxxxx agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to Xxxxxx, all of his or her
TARGET Shares and Trust Units for the consideration specified below in this
Section 2.
(b) PURCHASE PRICE. Subject to Section 2(f), Xxxxxx shall pay
the Sellers a purchase price of four million, five hundred thousand Australian
Dollars (AUD4,500,000) (the "PURCHASE PRICE"), to be paid as set out in this
Section 2(b). The Purchase Price paid to each Seller shall be as set forth in
Schedule 1 hereto.
(i) Three million Australian Dollars (AUD3,000,000)
shall be paid in cash at the Closing (the "CASH CLOSING PAYMENT").
(ii) Seventy-eight thousand, five hundred (78,500)
Xxxxxx International Inc Shares, which represents the Dollar Equivalent
of one million, five hundred thousand Australian Dollars (AUD1,500,000)
shall be paid to Fifth Third Bank N/A, as escrow agent under the Escrow
Agreement (which shall be in the form
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of Exhibit 2(b) hereto), in non-registered KII common stock, no par
value ("KII SHARES") valued at the Market Value (the "KII SHARE
CONSIDERATION"). If there are no claims within 12 months of the Closing
by Xxxxxx against any or all of the Sellers for a breach of this
agreement (including the warranties contained in it), two-thirds of the
KII Share Consideration will be released to the Seller. If there are no
claims within 24 months of the Closing by Xxxxxx against any or all of
the Sellers for a breach of this agreement (including the warranties
contained in it) the remaining one-third of the KII Share Consideration
will be released to the Seller. For the avoidance of doubt, if there is
a claim by Xxxxxx against any or all of the Sellers for a breach of
this agreement, KII Share Consideration (to the value of the amount of
the claim) which is held in escrow under the Escrow Agreement at the
time the claim is made shall not be released to the Sellers until
resolution of the claim.
(c) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at 10:00 a.m., local time, on
7 April 2000 (the "CLOSING DATE"), and the parties agree that Closing shall take
effect from 31 March 2000. Execution and completion of this agreement shall
simultaneously take place at the offices of Xxxxxxx Xxxx & Xxxxxx.
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the Sellers
will deliver to Xxxxxx the various certificates, instruments and documents
referred to in Section 7(a) below, (ii) Xxxxxx will deliver to the Sellers the
various certificates, instruments and documents referred to in Section 7(b)
below, (iii) each of the Sellers will deliver to Xxxxxx share and trust unit
certificates representing all of his, her or its TARGET Shares and Trust Units,
accompanied by duly executed transfers of such share and trust unit certificates
endorsed in blank together with such waivers or consents as Xxxxxx may require
to enable Xxxxxx or its nominees to be registered as holders of TARGET shares
and trust units, (iv) Xxxxxx will deliver to the Sellers the consideration
specified in Section 2(b) above, and (v) Xxxxxx will, by 6 equal monthly
instalments paid in the first half of each month commencing with April 2000,
distribute to the Sellers Synermedica's pre-tax profit for the 9 month period
ending March 31, 2000, which, for the avoidance of doubt, is Seven Hundred and
Eleven Thousand and Thirty Australian Dollars (AUD711,030). This distribution
will be payable from the cash flow of Synermedica and secured by a note issued
by Synermedica in favour of the Sellers.
(e) PRE-EMPTION RIGHTS WAIVER. The Sellers waive all rights of
pre-emption (if any) over TARGET Shares and Trust Units to which they may be
entitled under the constitution of TARGET, or otherwise, in relation to the sale
and purchase of TARGET Shares and Trust Units pursuant to this Agreement.
(f) REDUCTION OF PURCHASE PRICE.
(i) The Purchase Price shall be reduced on each
occurrence of the following events:
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(A) If Xxxxxx Xxxxxx either Resigns without
Good Reason or is Terminated for Cause (as each such term is
defined below):
(1) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to fifty
percent (50%) of the amount of the Purchase Price payable to
Xxxxxx Xxxxxx and Xxxxx Pty Limited;
(2) prior to the second anniversary of
the Closing Date, there shall be a reduction equal to forty
percent (40%) of the amount of the Purchase Price payable to
Xxxxxx Xxxxxx and Xxxxx Pty Limited; or
(3) prior to the third anniversary of the
Closing Date, there shall be a reduction equal to thirty
percent (30%) of the amount of the Purchase Price payable to
Xxxxxx Xxxxxx and Xxxxx Pty Limited; or
(B) If Xxxxxxxx Xxxxxxxxxxxx either Resigns
without Good Reason or is Terminated for Cause (as each such
term is defined below):
(1) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to fifty
percent (50%) of the amount of the Purchase Price payable to
Xxxxxxxx Xxxxxxxxxxxx and J&M Psycharis Pty Limited;
(2) prior to the second anniversary of
the Closing Date, there shall be a reduction equal to forty
percent (40%) of the amount of the Purchase Price payable to
Xxxxxxxx Xxxxxxxxxxxx and J&M Psycharis Pty Limited; or
(3) prior to the third anniversary of the
Closing Date, there shall be a reduction equal to thirty
percent (30%) of the amount of the Purchase Price payable to
Xxxxxxxx Xxxxxxxxxxxx and J&M Psycharise Pty Limited; or
(C) If Xxxxxx Xxxx either Resigns without
Good Reason or is Terminated for Cause (as each such term is
defined below):
(1) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to fifty
percent (50%) of the amount of the Purchase Price payable to
Xxxxxx Xxxx;
(2) prior to the second anniversary of
the Closing Date, there shall be a reduction equal to forty
percent (40%) of the amount of the Purchase Price payable to
Xxxxxx Xxxx; or
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(3) prior to the third anniversary of the
Closing Date, there shall be a reduction equal to thirty
percent (30%) of the amount of the Purchase Price payable to
Xxxxxx Xxxx.
(ii) For purposes of this Section 2(f) the terms
"RESIGNS WITHOUT GOOD REASON" and "TERMINATED FOR CAUSE" shall have the
meanings as applied with respect to one of the individuals referred to
in paragraphs (A), (B) and (C) above, given in the Employment Agreement
between such individual and as such agreement is in effect on and from
the Closing Date, and without regard to whether such agreement is
amended or terminated in the future, unless Xxxxxx and the Sellers
shall specifically agree in writing that any such amendment or
termination shall have the effect of amending this Section 2(f), save
that termination of the individual's Employment Agreement as a result
of disability of the individual pursuant to clause 15.3(a) of the
Employment Agreement shall not operate to invoke the reduction of
Purchase Price mechanism set out in this Section 2(f).
(iii) The Purchase Price reductions required by this
Section 2(f) shall be calculated on the full amount of the Purchase
Price payable in respect of the Seller to which the Purchase Price
reduction relates, and without regard to any prior or concurrent
Purchase Price reduction taken pursuant to this Section 2(f) or
pursuant to any other provision of this Agreement.
(iv) On the effective date of a Termination for Cause
or a Resignation without Good Reason (a "REDUCTION DATE") causing a
Purchase Price reduction pursuant to this Section 2(f), the relevant
Seller shall become liable to pay to Xxxxxx such Purchase Price
reduction, and Xxxxxx shall be entitled to receive such amount within
thirty (30) days after the relevant Reduction Date, with interest
thereon at the rate of ten percent (10%) per annum from the Reduction
Date to the date of actual payment if such payment is not made in full
by such date.
(v) If there are assets held under the Escrow
Agreement against which there is no claim pending at the time the
Sellers become obligated to refund a portion of the Purchase Price
under this Section 2(f), Xxxxxx shall be obligated and have the right
to receive from the escrow available cash or other assets to satisfy
the obligations of the Sellers to repay such portion of the Purchase
Price, but if the escrow is exhausted or unavailable for whatever
reason, Xxxxxx shall have the right to receive payment directly from
the Sellers.
(vi) Each of the events described in paragraph (i)
above are independent of each other, and the refund of a portion of the
Purchase Price in connection with termination of employment of one of
the Sellers shall not relieve the Sellers from any obligation to make a
further refund of the Purchase Price if required by this Section 2(f).
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(vii) For the avoidance of doubt, an individual
referred to in Section 2(f)(i)(A), (B) or (C) will not be subject to a
Purchase Price reduction in the event he or she Resigns with Good
Reason, as that term is defined in his or her Employment Agreement.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers represents and warrants to Xxxxxx that the statements contained in this
Section 3(a) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)) with respect to himself, herself or itself (but
not with respect to any other Seller).
(i) AUTHORISATION OF TRANSACTION. Such Seller has
full power and authority to execute and deliver this Agreement and to
perform his, her or its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of such Seller,
enforceable in accordance with its terms and conditions. Such Seller
need not give any notice to, make any filing with, or obtain any
authorisation, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which such Seller is subject (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which such Seller is a party or by
which he, she or it is bound or to which any of his assets is subject.
(iii) BROKERS' FEES. Such Seller has no Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which Xxxxxx or TARGET could become liable or obligated.
(iv) INVESTMENT. Such Seller in connection with the
receipt of KII Share Consideration (A) understands that KII Share
Consideration has not been, and will not be, registered under the
Securities Act, or under any state securities laws and are being
offered and sold in reliance upon US federal and state exemptions for
transactions not involving any public offering, (B) is acquiring KII
Shares solely for his own account for investment purposes, and not with
a view to the distribution thereof, (C) is a sophisticated investor
with knowledge and experience in business and financial matters, (D)
has received certain information concerning Xxxxxx and has had
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the opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding KII Shares, and
(E) is able to bear the economic risk and lack of liquidity inherent in
holding KII Shares.
(v) TARGET SHARES AND TRUST UNITS. Such Seller is the
registered and sole beneficial owner of the number of TARGET Shares and
Trust Units set forth next to his, her or its name in Schedule 1 free
and clear of any Encumbrances (other than restrictions on transfer
imposed by any applicable securities laws and regulations). Such Seller
is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any share capital of
TARGET.
(vi) SELLERS AS TRUSTEES. Each of the Sellers
warrants in respect of Synermedica Pty Limited and Synermedica Research
and Development Pty Limited (together, the "Trustees") and Synermedica
Unit Trust and The Synermedica R&D Unit Trust (together, the "Trusts")
that:
(A) the Trustees are the only Trustees of
the Trusts and no action has been taken or proposed to remove either of
them as Trustee of the respective Trust;
(B) the copies of the trust deeds and
variations dated 16 August 1994, 30 June 1995, and 1 July 1996
(Synermedica Unit Trust) and 6 November 1997 (The Synermedica R&D Unit
Trust) provided by the Sellers to Xxxxxx disclose all the terms of the
Trusts and they are not in default under the terms of the Trusts;
(C) the Trustees have the power and
authority under the terms of the Trusts to enter into and perform this
agreement including the power to sell the TARGET Shares;
(D) the entry into and performance of this
agreement is for the benefit of the beneficiaries of the Trusts, whose
consents (if necessary) have been obtained;
(E) the sale of the TARGET Shares under this
agreement is not limited to the interest of the Trustees in the TARGET
Shares in their capacity as the trustees of the Trusts but extends to
the full beneficial interest in the TARGET Shares and Trust Units;
(F) the Trustees have a right to be fully
indemnified out of the Trusts' assets in respect of all of their
obligations and liabilities incurred by them under this agreement and
the assets of the Trusts are sufficient to satisfy that right; and
(G) pending Closing the Trustees will not:
(1) resign as trustees of the
Trusts or permit any
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substitute or additional trustees to be appointed;
(2) do anything which effects or
facilitates the termination of the Trusts;
(3) do anything which effects or
facilitates the variation of the terms of the Trusts;
(4) vest or distribute or advance
any property of the Trusts to any beneficiary or sell any of the
property of the Trusts (subject to the distribution of pre-tax profit
described in Section 2(d)); or
(5) do anything which effects or
facilitates the resettlement of the Trusts' funds.
(vii) The Sellers agree, in relation to each Trustee
and Trust, to ensure that until all obligations under this agreement
are discharged:
(A) the Trustees do not resign and no
additional trustee is appointed;
(B) the Trusts are not terminated;
(C) the terms of the Trusts are not varied;
(D) the property of the Trusts are not
vested or distributed (subject to the distribution of pre-tax profit
described in Section 2(d)); and
(E) the Trust funds are not resettled,
without the prior written consent of Xxxxxx.
That consent may not be unreasonably withheld if a person reasonably
satisfactory to Xxxxxx covenants with Xxxxxx before the relevant event,
in a form reasonably required by Xxxxxx, to discharge all outstanding
obligations of the Trustees under this agreement which remain
outstanding.
(viii) MIHALY FAMILY TRUST. The Sellers agree to
indemnify Xxxxxx against any liability of any nature that was incurred
by Synermedica Pty Limited in its capacity as or when it was Trustee of
the Mihaly Family Trust.
(b) REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx
represents and warrants to the Sellers that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(b)) , except as set forth in Annex I.
(i) ORGANISATION OF XXXXXX. Xxxxxx is a corporation
organised, validly existing and in good standing under the laws of the
State of Ohio.
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(ii) AUTHORISATION OF TRANSACTION. Xxxxxx has full power and authority
(including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Xxxxxx,
enforceable in accordance with its terms and conditions. Assuming the
truth and correctness of the Seller's statements in Section 3(a)(v) of
this Agreement, Xxxxxx need not give any notice to, make any filing
with, or obtain any authorisation, consent, or approval of any
government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which Xxxxxx is subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any material agreement, contract, lease, license, instrument, or other
arrangement to which Xxxxxx is a party or by which it is bound or to
which any of its assets is subject.
(iv) CAPITALISATION. KII's authorised equity
securities consist of Forty-five Million (45,000,000) shares of common
stock, no par value per share, and One Hundred Thousand (100,000)
shares of undesignated preferred stock, no par value per share. As of
February 1, 2000, Eleven Million, Four-hundred and Ninety-seven
Thousand, Seven Hundred and Thirty-one (11,497,731) shares of common
stock were issued and outstanding and no shares of undesignated
preferred stock were issued and outstanding. The KII Shares to be
received by certain Sellers in connection with the transactions
contemplated hereby will be duly authorised, validly issued, fully paid
and non-assessable shares of common stock free and clear of any and all
Encumbrances other than restrictions on transfer imposed by US federal
and state securities laws and regulations.
(v) SEC REPORTS. KII has timely filed with the US
Securities and Exchange Commission ("SEC") all materials and documents
required to be filed by it under the US Securities Exchange Act of 0000
(xxx "Xxxxxxxx Xxx"). All the materials and documents filed with the
SEC by KII since July 2, 1997, including its initial Registration
Statement on Form S-1, are hereinafter referred to as the "Xxxxxx SEC
Reports." Section 3(b) of the Disclosure Schedule lists all the Xxxxxx
SEC Reports filed on or prior to the date of this Agreement. The Xxxxxx
SEC Reports, copies of which have been delivered to the Sellers, are
true and correct in all material respects, including the financial
statements and other financial information contained therein, and do
not omit to state any material fact necessary to make the statements in
such Xxxxxx SEC Reports, in light of the circumstances in which they
were made, not misleading. The financial statements included in the
Xxxxxx SEC Reports fairly present in all material respects the
financial condition and the results of operations,
15
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changes in stockholders' equity and cash flow of Xxxxxx as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with US GAAP. Since the date of the most
recent Xxxxxx SEC Report, there has been no Xxxxxx Material Adverse
Change.
(vi) BROKERS' FEES. Other than liability or
obligation to Technomark (which shall be the liability of Xxxxxx and
not of the Sellers), Xxxxxx has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Seller could
become liable or obligated.
(vii) INVESTMENT. Xxxxxx is not acquiring TARGET
Shares and Trust Units with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET. The Sellers,
jointly and severally, represent and warrant to Xxxxxx that the statements
contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the Disclosure
Schedule.
(a) ORGANISATION, QUALIFICATION, AND CORPORATE POWER. TARGET
comprises one private company limited by shares duly incorporated and
registered, validly existing and in good standing under the laws of Australia in
addition to one unit trust validly existing and in good standing under the laws
of Australia. TARGET is duly authorised to conduct business and is in good
standing under the laws of each jurisdiction set forth in Section 4(a) of the
Disclosure Schedule and the failure to so qualify in any other jurisdiction will
not result in a TARGET Material Adverse Change. TARGET has full corporate power
and authority and all licenses, permits, and authorisations necessary to carry
on the businesses in which it is engaged and in which it presently proposes to
engage and to own and use the properties owned and used by it. Section 4(a) of
the Disclosure Schedule lists the directors and officers of TARGET. The Sellers
have delivered to Xxxxxx a correct and complete copy of the constitution of
TARGET (as amended to date). The statutory and other books (containing among
other things the records of meetings of the stockholders and trust unit holders,
the board of directors and any committees of the board of directors, the share
and trust unit certificates and the share and trust unit certificate records) of
TARGET are correct and complete. TARGET is not in default under or in violation
of any provision of its constitution.
(b) CAPITALISATION. The capitalisation of TARGET consists of:
(i) authorised share capital of two (2) shares and
issued share capital of two (2) shares in Synermedica Pty Limited; and
(ii) one hundred (100) ordinary units and twenty (20)
employee
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units in Synermedica Unit Trust.
All of the issued TARGET Shares and Trust Units have been duly
authorised, are validly issued, fully paid and (in the case of shares)
nonassessable, and are held legally and beneficially by the respective Sellers
as set forth in Section 4(b) of the Disclosure Schedule, except for the shares
in Synermedica Research & Development Pty Limited, which are owned by
Synermedica Pty Limited, and the units in Synermedica R&D Unit Trust, which are
owned by Synermedica Pty Limited as trustee for Synermedica Unit Trust. Except
as set forth in Section 4(b) of the Disclosure Schedule, there are no
outstanding or authorised options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require TARGET to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorised
stock appreciation, phantom stock, profit participation, or similar rights with
respect to TARGET. TARGET is not a party to any voting trusts, proxies, or other
agreements or understandings with respect to the voting of the share capital of
TARGET.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which TARGET is subject or any provision of the
charter or bylaws of TARGET or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license instrument to which TARGET is a
party or by which it is bound or to which any of its assets is subject; or (iii)
result in the imposition of any Security Interest upon any of its assets. TARGET
does not need to give any notice to, make any filing with, or obtain any
authorisation, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement. TARGET maintains, and Section 4(c) of the Disclosure Schedule sets
forth, all operating authorities, licenses, permits and approvals and other
authorisations from all governmental authorities (collectively, the "PERMITS")
as are necessary for the conduct of the business of TARGET. Except as expressly
designated on Section 4(c) of the Disclosure Schedule, none of TARGET's rights
under each of the Permits will not terminate in connection with the change in
control of TARGET at Closing.
(d) BROKERS' FEES. TARGET has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) PROFESSIONAL FEES. Each of the Sellers agrees to indemnify
TARGET against any liability incurred by TARGET with respect to the transactions
contemplated by this agreement, including but not limited to, liability for any
professional fees for advice related to the transactions.
(f) TITLE TO ASSETS. TARGET has good and marketable title to,
or a valid
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leasehold interest in, the properties and assets used by it, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free and clear of
all Encumbrances, excepting only properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet and
certain other properties and assets involving in the aggregate more than
Twenty-five Thousand Australian Dollars (AUD25,000) disposed of other than in
the Ordinary Course of Business as disclosed on the Disclosure Schedule.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit 4(g) are
the following financial statements (collectively the "FINANCIAL STATEMENTS"):
(i) unaudited consolidated and consolidating financial statements (including the
profit and loss accounts, balance sheets and cash flow statements) for TARGET as
of and for the financial year ended 30 June 1999, including, in each case, the
notes thereto and the directors' report and auditors' report (the "MOST RECENT
FINANCIAL YEAR END"); and (iii) unaudited consolidated and consolidating
financial statements (including the profit and loss accounts, balance sheets and
cash flow statements) for TARGET as of and for the eight (8) months ended 28
February 2000 (the "MOST RECENT FINANCIAL MONTH END"), including, in each case,
the notes thereto and the directors' report and auditors' report (the "MOST
RECENT FINANCIAL STATEMENTS"). The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly in all material
respects the financial condition of TARGET as of such dates and the results of
operations of TARGET for such periods and are consistent with the books and
records of TARGET; PROVIDED, however, that the Most Recent Financial Statements
are subject to normal year-end adjustments (which will not be material
individually or in the aggregate).
(h) EVENTS SUBSEQUENT TO MOST RECENT FINANCIAL YEAR END.
Except as set forth in Section 4(h) of the Disclosure Schedule, since 30 June
1999, there has not been any TARGET Material Adverse Change. Without limiting
the generality of the foregoing, since that date:
(i) TARGET has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, involving in the
aggregate more than Twenty-five Thousand Australian Dollars (AUD25,000)
other than for a fair consideration in the Ordinary Course of Business;
(ii) other than agreements and contracts with
customers, as to which One Hundred Thousand Australian Dollars
(AUD100,000) shall be the disclosure threshold for Section 4(h) of the
Disclosure Schedule, TARGET has not entered into any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) either involving more than Twenty-five
Thousand Australian Dollars (AUD25,000) or outside the Ordinary Course
of Business;
(iii) no party (including TARGET) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than Twenty-five Thousand Australian Dollars
(AUD25,000) to which TARGET is a party or by which
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it is bound;
(iv) TARGET has not imposed or permitted to be
imposed any Security Interest upon any of its assets, tangible or
intangible;
(v) TARGET has not made any capital expenditure (or
series of related capital expenditures) either involving more than
Twenty-five Thousand Australian Dollars (AUD25,000) or outside the
Ordinary Course of Business;
(vi) TARGET has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions) either involving more than Twenty-five Thousand
Australian Dollars (AUD25,000) or outside the Ordinary Course of
Business;
(vii) TARGET has not issued any share, bond, or other
debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalised lease obligation either
involving more than Twenty-five Thousand Australian Dollars (AUD25,000)
singly or Twenty-five Thousand Australian Dollars (AUD25,000) in the
aggregate;
(viii) TARGET has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) TARGET has not cancelled, compromised, waived,
or released any right or claim (or series of related rights and claims)
either involving more than Twenty-five Thousand Australian Dollars
(AUD25,000) or outside the Ordinary Course of Business;
(x) TARGET has not granted any license or sublicense
of any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorised in
the constitution or other constitutional documents of TARGET;
(xii) TARGET has not declared, set aside, or paid any
dividend or made any distribution with respect to its share capital
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its share capital;
(xiii) TARGET has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
assets and property in excess of Twenty-five Thousand Australian
Dollars (AUD25,000) ;
(xiv) TARGET has not made any loan (that will remain
outstanding on the Closing Date) to or with any of its directors,
officers, and employees outside
19
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the Ordinary Course of Business;
(xv) TARGET has not entered into any employment
contract or collective bargaining agreement, written or oral, or
changed or modified the terms of any existing such contract or
agreement;
(xvi) TARGET has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xvii) TARGET has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to the
Superannuation Funds);
(xviii) TARGET has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xix) there has not been any other material
occurrence, event or transaction outside the Ordinary Course of
Business; and,
(xx) TARGET has not committed to any of the
foregoing.
(i) UNDISCLOSED LIABILITIES. TARGET has no Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
Liability), that individually or in the aggregate is material to the results of
operations or the financial or other condition of TARGET except for (i)
Liabilities reflected or reserved against on the Most Recent Balance Sheet or
described on Section 4(i) of the Disclosure Schedule or in the notes to the Most
Recent Financial Statements; or (ii) Liabilities which have arisen after the
Most Recent Fiscal Month End in the Ordinary Course of Business (none of which
results from, arises out of or was caused by any breach by TARGET of any
contract or warranty, by any TARGET tort or infringement or by any violation of
law by TARGET).
(j) LEGAL COMPLIANCE. TARGET has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local and
foreign governments (and all agencies thereof), except where such failure to
comply would not, individually or in the aggregate, have an TARGET Material
Adverse Effect; and to the Knowledge of the Sellers, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any such failure to
comply.
(k) TAX MATTERS.
(i) TARGET and its Affiliates are and always have
been resident
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for Tax purposes only in the Commonwealth of Australia.
(ii) TARGET and its Affiliates have filed all Tax
Returns that they were required to lodge. All such Tax Returns were
correct and complete in all respects and such Tax Returns did not
contain any statement that was false and misleading in any material
particular or omitted to refer to any matter which is required to be
included or without which the statement is false and misleading. All
records relating to the preparation of such Tax Returns required by law
to be maintained have been duly maintained. TARGET and its Affiliates
have lodged all statements required by Division 6D of Part III of the
Tax Act or will do so by the due date for lodging. All Taxes owed by
TARGET and its Affiliates (whether or not shown on any Tax Return) have
been paid. TARGET and its Affiliates are not currently the beneficiary
of any extension of time within which to file any Tax Return. There is
no current dispute between Target or its Affiliates and the
Commissioner of Taxation of the Commonwealth of Australia or any
federal, state, or municipal body or authority responsible for the
collection of Tax in the Commonwealth of Australia. No claim has ever
been made by an authority in a jurisdiction where TARGET and its
Affiliates do not file Tax Returns that TARGET is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any
of the assets of TARGET or its Affiliates that arose in connection with
any failure (or alleged failure) to pay any Tax.
(iii) TARGET and its Affiliates have withheld and
paid all Taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(iv) No Seller or director or officer (or employee
responsible for Tax matters) of TARGET and its Affiliates expects any
Government Agency to assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of TARGET and its Affiliates either (A)
claimed or raised by any authority in writing or (B) as to which any of
the Sellers and the directors and officers (and employees responsible
for Tax matters) of TARGET or its Affiliates have Knowledge based upon
personal contact with any agent of such authority. Section 4(k) of the
Disclosure Schedule lists all federal, state, local, and foreign income
Tax Returns filed with respect to TARGET and its Affiliates (including
Tax Returns filed by a Seller relating to TARGET activities) for
taxable periods ended on or after 30 June 1996, 1997, 1998 and 1999.
The Sellers have delivered to Xxxxxx correct and complete copies of all
Tax Returns and assessments, if any, of TARGET and its Affiliates for
the financial years ending 30 June 1996, 1997, 1998 and 1999.
(v) TARGET and its Affiliates have not waived any
time limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment.
(vi) No tax authority in any jurisdiction in which
TARGET or its
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Affiliates do not file Tax Returns has made or asserted a claim that
TARGET or its Affiliates(or any Seller) is subject to taxation in that
jurisdiction based on the activities of TARGET or its Affiliates.
(vii) Without limiting the generality of the
foregoing, all contracts under which TARGET makes supplies, or is taken
to have made supplies, to any person on or after 1 July 2000 (or such
other date on which GST commences to have application to any supply
made by TARGET) are effective to enable TARGET to recover an additional
amount on account of GST such that after allowing for any liability of
TARGET to GST, TARGET will obtain the same consideration as TARGET
would have obtained in the absence of any law imposing GST. For the
purposes of this provision only, in the determination of consideration
obtained by TARGET for any supply, regard shall not be had to any
reduction in such consideration made or required to be made by TARGET
on account of the abolition or reduction of other taxes as part of the
introduction of GST.
(l) PROPERTY.
(i) Section 4(l)(i) of the Disclosure Schedule sets
forth a true and correct description of the particulars of all property owned by
TARGET. With respect to each such Premises
(A) TARGET is the sole legal and beneficial
owner of entitled to and has good and marketable title and exclusive occupation
of such Premises; and
(B) TARGET has good and marketable title to
the parcel of real property free and clear of any mortgage or
charge (whether legal or equitable, fixed or floating),
encumbrance, lease, sub-lease, tenancy, licence or right of
occupation, rent charge, exception, reservation, easement,
quasi-easement or privilege favour of a third party.
(ii) Section 4(l)(ii) of the Disclosure Schedule
lists all real property leased or subleased to any of TARGET. The
Sellers have delivered to Xxxxxx correct and complete copies of the
leases and subleases listed in Section 4(l)(ii) of the Disclosure
Schedule (as amended to date). With respect to each lease and sublease
listed in Section 4(l)(ii) of the Disclosure Schedule:
(A) to the Knowledge of the Sellers, the
lease or sublease is in full force and effect and will
continue to be in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(B) no party to the lease or sublease is in
material breach or material default or has repudiated such
lease or sublease, and no event has occurred which, with
notice or lapse of time, would constitute a material
22
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breach or material default or permit termination,
modification, or acceleration thereunder;
(C) TARGET has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(D) all facilities leased or subleased
thereunder are supplied with utilities and other services and
have all licenses and permits that are material for the
operation of TARGET's business as presently conducted thereat
and as presently proposed to be conducted thereat; and
(E) to the Knowledge of the Sellers, the
owner of each facility leased or subleased to TARGET has good
and marketable title to the parcel of real property free and
clear of any Security Interest other than Security Interests
that do not materially impair TARGET's use of such facility.
(iii) There are appurtenant to each of the Premises
all rights and easements necessary for its current use and enjoyment
(without restriction as to time or otherwise) and the access for each
of the Premises is over roads adopted by the local authority and
maintained at public expense.
(iv) None of the Premises or any part thereof is
affected by any of the following matters or is to the best knowledge of
the Sellers likely to become so affected:
(A) any outstanding dispute, notice or
complaint or any exception, reservation, fight, covenant,
restriction or condition which is of an unusual nature or
which affects or might in the future affect the use of any of
the Premises for the purpose for which it is now used (the
"CURRENT USE") or which affects or might in the future affect
the value of the Premises;
(B) any notice, order, demand, requirement
or proposal of which the owner has notice or of which the
Sellers are aware made or issued by or on behalf of any
government or statutory authority, department or body for
acquisition, clearance, demolition or closing, the carrying
out of any work upon any building, the modification of any
planning permission, the discontinuance of any use or the
imposition of any building or improvement line, the alteration
of any road or footpath or which otherwise affects any of the,
Premises or their current use or value;
(C) any compensation received as a result of
any refusal of any application for planning consent or the
imposition of any restrictions in relation to any planning
consent;
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(D) any commutation or agreement for the
commutation of rent or payment of rent in advance of the due
dates of payment thereof;
(E) any outstanding claim or liability
(contingent or otherwise) whether under the Planning Acts or
otherwise;
(F) any outgoings except uniform business
rates and water rates; or
(G) the requirement of consent from any
third party to the charging of the Premises or any of them.
(v) To the Knowledge of the Sellers, each of the
Premises is in a good state of repair and condition and fit for the
current use and no deleterious material (including without limit high
alumina cement, woodwool, calcium chloride, sea dredged aggregates or
asbestos material) was used in the construction, alteration or repair
thereof or of any of them and there are no development works,
redevelopment works or fitting out works outstanding in respect of any
of the Premises.
(vi) To the best knowledge of the Sellers, all
restrictions, conditions and covenants affecting any of the Premises
have been observed and performed and no notice of any breach of any of
the same has been received or is to the Sellers' knowledge likely to be
received.
(vii) The current use of the Premises and all
machinery and equipment therein and the conduct of any business therein
complies in all respects with all relevant statutes and regulations and
with all rules regulations and delegated legislation thereunder and all
necessary licences and consents required thereunder have been obtained.
(viii) There are no restrictive covenants or
provisions, legislation or orders, charges, restrictions, agreements,
conditions or other matters which preclude or limit the current use of
any of the Premises and the current use is the permitted use under the
provisions of the Planning Acts and regulations made thereunder and is
in accordance with the requirements of the Local Authorities and all
restrictions, conditions and covenants imposed by or pursuant to the
Planning Acts have been observed and performed and no agreements have
been entered into with any public authority or statutory authority in
respect of any of the Premises whether pursuant to the Planning Acts or
otherwise.
(ix) All necessary planning permissions, listed
building consents, by-law consents, building regulation consents and
other permissions and approvals (whether or not required by statute)
for the construction, extension and alteration of the Premises have
been obtained and complied with, and none of those permissions,
24
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consents and approvals has been given on a temporary or personal basis
nor does it require the removal at any time of the works so authorised.
(x) Any necessary or appropriate action to protect
the interests of TARGET has been taken under law governing the
relationship between a landlord and its tenant and in relation to rent
review provisions in relation to each lease, sub-lease, tenancy or
agreement for any of the same in respect of which the TARGET is the
landlord or the tenant thereunder and all appropriate time limits have
been complied with and no rent reviews are outstanding at the date
hereof or exercisable prior to the Closing.
(xi) Where the interest of the TARGET in any of the
Premises is leasehold, there is no right for the landlord to determine
the lease except in the event of nonpayment of rent or other breach of
covenant by the tenant.
(xii) Except in relation to the Premises, TARGET has
no liabilities (actual or contingent) arising out of the conveyance,
transfer, lease, tenancy, licence, agreement or other document relating
to land or premises or an interest in land or premises, including,
without limitations leasehold premises assigned or otherwise disposed
of.
(m) INTELLECTUAL PROPERTY.
(i) TARGET owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
that is material to the operation of the businesses of TARGET as
presently conducted and as presently proposed to be conducted. Except
as set forth on Section 4(m) of the Disclosure Schedule, each such
material item of Intellectual Property will be owned or available for
use by TARGET on identical terms and conditions immediately subsequent
to the Closing hereunder.
(ii) None of the Sellers and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of TARGET have ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that TARGET must
license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for Intellectual
Property matters) of TARGET, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of TARGET.
(iii) Section 4(m)(iii) of the Disclosure Schedule
identifies each patent or registration which has been issued to TARGET
with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which TARGET
has made with respect to any of its Intellectual Property, and
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identifies each license, agreement, or other permission which TARGET
has granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Sellers have delivered to
Xxxxxx correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to
date) and have made available to Xxxxxx correct and complete copies of
all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. Section 4(m)(iii) of the Disclosure
Schedule also identifies each trade name or unregistered trademark used
by TARGET in connection with any of its businesses. With respect to
each item of Intellectual Property required to be identified in Section
4(m)(iii) of the Disclosure Schedule:
(A) TARGET has all right, title, and
interest in and to the item, free and clear of any
Encumbrance, license, or other restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for
Intellectual Property matters) of TARGET, is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) TARGET has not agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns
and that TARGET uses pursuant to license, sublicense, agreement, or
permission. The Sellers have delivered to Xxxxxx correct and complete
copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 4(m)(iv) of the
Disclosure Schedule:
(A) to the Knowledge of the Sellers, the
license, sublicense, agreement, or permission covering the
item is in full force and effect and will continue to be in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in
Section 2 above);
(B) to the Knowledge of the Sellers, no
party to the license, sublicense, agreement, or permission is
in material breach or material default or has repudiated such
license, sublicense, agreement or permission, and no event has
occurred which with notice or lapse of time would constitute a
material breach or material default or permit termination,
modification, or
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acceleration thereunder;
(C) the underlying item of Intellectual
Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(D) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for
Intellectual Property matters) of TARGET, is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(E) TARGET has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement, or permission.
(v) To the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for
Intellectual Property matters) of TARGET, TARGET will not interfere
with, infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a result of
the continued operation of its businesses as presently conducted and as
presently proposed to be conducted.
(vi) The technology of TARGET is "Year 2000
compliant" in that it correctly performs all date-related operations
(A) without human intervention, other than original data entry of any
date, (B) without regard to whether any date involved in the operation
occurs in the twentieth or twenty-first centuries and (C) without
regard to the system date at the time the calculation is performed.
Without limiting the foregoing, such technology must (1) accept as
input (by key entry or otherwise) fully specified dates (four-digit
year, month and day of month), (2) if two-digit year specifications are
accepted as input, correctly translate such dates without human
intervention into fully specified dates in a manner that unambiguously
preserves the user's intent in light of the application context, (3)
perform all date-related arithmetic and logical operations correctly
(for example, January 2, 2000 is greater than December 31, 1999;
January 2, 2000 minus December 31, 1999 equals two days), (4) sort
date-related information in correct chronological order, (5) otherwise
correctly process (update, maintain, report) dates, and (6) store
internal, date-related information (including all interim date-related
results) in a manner that is unambiguous (in the context of software
processing) as to century and permits all of the foregoing to occur
correctly without human intervention.
(n) TANGIBLE ASSETS. TARGET owns or leases all facilities,
machinery, equipment, and other tangible assets necessary for the conduct of its
businesses as presently conducted and as presently proposed to be conducted.
Each such tangible asset has been maintained in accordance with normal industry
practice, is in good operating condition and
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repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used and presently is proposed to be used.
(o) CONTRACTS. Section 4(o) of the Disclosure Schedule lists
the following contracts and other agreements to which TARGET is a party:
(i) any agreement (or group of related agreements)
for the lease of personal property (other than capitalised lease
obligations) to or from any Person providing for lease payments in
excess of Twenty-five Thousand Australian Dollars (AUD25,000) per
annum;
(ii) other than agreements and contracts with
customers, as to which Two Hundred Thousand Australian Dollars
(AUD200,000) shall be the disclosure threshold for Section 4(o) of the
Disclosure Schedule, any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products,
or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more
than one year, result in a material loss to TARGET, or involve
consideration in excess of Twenty-five Thousand Australian Dollars
(AUD25,000);
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of Twenty-five Thousand Australian Dollars (AUD25,000);
(v) any agreement concerning confidentiality or
noncompetition other than standard provisions in contracts with
TARGET's customers;
(vi) any agreement with any of the Sellers and their
Affiliates (other than TARGET and its Affiliates);
(vii) any profit sharing, stock option, stock
purchase, phantom stock, stock appreciation, deferred compensation,
severance, or other material plan or arrangement for the benefit of its
current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of Twenty-five Thousand
Australian Dollars (AUD25,000) or providing severance benefits in
excess of Twenty-five Thousand Australian Dollars (AUD25,000);
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(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of TARGET; or
(xii) other than agreements or contracts with
customers, any other agreement (or group of related agreements) the
performance of which involves consideration in excess of Twenty-five
Thousand Australian Dollars (AUD25,000).
The Sellers have delivered to Xxxxxx a correct and complete copy of each written
agreement listed in Section 4(o) of the Disclosure Schedule (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4(o) of the Disclosure Schedule. With respect
to each such agreement: (A) to the Knowledge of the Sellers, the agreement is in
full force and effect; (B) to the Knowledge of the Sellers, the agreement will
continue to be in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) to the Knowledge of
the Sellers, no party is in material breach or material default, and no event
has occurred which with notice or lapse of time would constitute a material
breach or material default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement. Except as listed on Section 4(o) of the Disclosure Schedule,
TARGET is not a party to any contract or agreement, relating to provision by
TARGET of services, with any applicable governmental authority.
(p) NOTES AND BOOK DEBTS. All notes and all book debts of
TARGET are reflected properly on their books and records, are valid receivables
subject to no setoffs or counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded amounts, subject only
to the reserve for bad debts set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
TARGET.
(q) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of TARGET.
(r) INSURANCE. Section 4(r) of the Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which TARGET has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past five (5) years:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the
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name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) to the Knowledge of the Sellers,
the policy is in full force and effect; (B) to the Knowledge of the Sellers, the
policy will continue to be in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) to the Knowledge
of the Sellers, neither TARGET nor any other party to the policy is in material
breach or material default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or material default, or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. TARGET has been
covered during the past five (5) years by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period. Section 4(r) of the Disclosure Schedule describes any
self-insurance arrangements affecting TARGET.
(s) LITIGATION. Section 4(s) of the Disclosure Schedule sets
forth each instance in which TARGET (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or ,
to the Knowledge of any of the Sellers and the directors and officers (and
employees with responsibility for litigation matters) of TARGET, is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
applicable jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 4(s) of the
Disclosure Schedule is likely, if adversely determined, to result in any TARGET
Material Adverse Change. None of the Sellers and the directors and officers (and
employees with responsibility for litigation matters) of TARGET has any reason
to believe that any such action, suit, proceeding, hearing, or investigation may
be brought or threatened against TARGET.
(t) EMPLOYEES AND SUPERANNUATION FUNDS.
(i) The individuals, details of whom are set forth in
Section 4(t)(i) of the Disclosure Schedule (the "EMPLOYEES") are all
employed by TARGET at the date of this Agreement. There are no other
individuals employed by the TARGET at the date of this Agreement.
(ii) The particulars shown in Section 4(t)(i) of the
Disclosure Schedule
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show true and complete details of the names, ages and lengths of
continuous service of all of the Employees and by reference to each of
the Employees remuneration payable and other benefits provided by
TARGET or which TARGET is bound to provide (whether now or in the
future) to each category of the Employees at Closing or any Person
connected with any such Person and (without limiting the generality of
the foregoing) include particulars of all profit sharing, incentive,
bonus, commission arrangements and any other benefit to which any such
category of the Employees is entitled or which is regularly provided or
made available to them (including details of their notice period and
their entitlement to holiday) in any case whether legally binding on
TARGET or not.
(iii) All Employees (other than those set forth on
Section 4(t)(iii)) have entered into and are subject to the terms of
employment contracts in substantially similar form to the employment
agreement attached hereto as Exhibit 7(t)(iii).
(iv) There are no subsisting contracts for the
provision by any person of any consultancy services to TARGET.
(v) None of the Employees has given notice
terminating his contract of employment.
(vi) None of the Employees is employed pursuant to an
employment contract which contains any provision which relates to or is
triggered by a change in control of TARGET.
(vii) None of the Employees is under notice of
dismissal or has any outstanding dispute with TARGET in connection with
or arising from his employment nor is there any liability outstanding
to such persons except for remuneration or other benefits accruing due
and no such remuneration or other benefit which has fallen due for
payment has not been paid.
(viii) During the period of six months ending with
the execution of this Agreement TARGET has not directly or indirectly
terminated the employment of any person employed in or by TARGET.
(ix) None of the Employees belongs or has belonged at
any material time to an independent trade union recognised by the
TARGET.
(x) There are no employee representatives
representing all or any of the Employees.
(xi) The TARGET has compiled with all of its
statutory obligations to inform and consult appropriate representatives
as required by law.
(xii) Except for the Superannuation Funds, there is
no plan, scheme,
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commitment, policy, custom or practice (whether legally binding or not)
relating to redundancy affecting any of the Employees more generous
than the statutory redundancy requirements.
(xiii) All plans for the provision of benefits to the
Employees comply in all respects with all relevant statutes,
regulations and other laws and all necessary consents in relation to
such plans have been obtained and all governmental filings in relation
to such plans have been made.
(xiv) There are no loans owed by any of the Employees
to the TARGET.
(xv) For each of the last three years, the TARGET has
provided each Employee with at least the minimum level of
superannuation support prescribed from time to time under the
Superannuation Guarantee (Administration) Xxx 0000 and has not incurred
a superannuation guarantee charge within the meaning of that Act in
respect of any Employee.
(xvi) Except for the Superannuation Funds the TARGET
is not under any present or future liability to pay to any of the
Employees or to any other person who has been in any manner connected
with the TARGET any pension, superannuation allowance, death benefit,
retirement gratuity or like benefit or to contribute to any life
assurance scheme, medical insurance scheme, or permanent health scheme
and the TARGET has not made any such payments or contributions on a
voluntary basis nor is it proposing to do so.
(xvii) There is no:
(A) outstanding or threatened claim by any
person who is now or has been an Employee of the TARGET or any
dispute outstanding with any of the said persons or with any
unions or any other body representing all or any of them in
relation to their employment by the TARGET or of any
circumstances likely to give rise to any such dispute;
(B) industrial action involving any
Employee, whether official or unofficial, currently occurring
or threatened; or
(C) industrial relations matter which has
been referred to ACAS or any similar governmental agency in
the applicable jurisdiction for advice, conciliation or
arbitration.
(xviii) Save for the Superannuation Funds , the
TARGET is not a party to or does not participate in or contribute to
any scheme, agreement or arrangement (whether legally enforceable or
not) for the provision of any pension, retirement, death, incapacity,
sickness, disability, accident or other like benefits
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(including the payment after cessation of employment with TARGET of
medical expenses) for any Relevant Employee or for the widow, widower,
child or dependent of any Relevant Employee.
(xix) The TARGET has disclosed all material details
relating to the Superannuation Funds, including without limitation the
following:
(A) true and complete copies of the
following documents referable to the Superannuation Funds:
(1) an accurate list of all active
members, preserved members and pensioners with such
data as is necessary to establish their respective
entitlements under the Superannuation Funds;
(2) an accurate list with the names
and addresses of the trustees of the Nirvana
Superannuation Fund;
(B) details of all discretionary increases
(if any) to benefits under the Superannuation Funds which have
been granted in the three years prior to the date of this
Agreement or which are under consideration;
(C) details of all discretionary practices
(if any) which may have led any person to expect additional
benefits in a given set of circumstances (by way of example,
but without limitation, on retirement at the behest of the
TARGET or in the event of redundancy); and
(D) details of the rate at which and basis
upon which the TARGET currently contributes to the
Superannuation Funds, any change to that rate and/or basis
which is proposed or which is under consideration and all
contributions paid to the Superannuation Fund by the TARGET in
the three years prior to the date of this Agreement.
(xx) Every person who has at any time had the right
to join, or apply to join, the Superannuation Funds has been properly
advised of that right.
(xxi) There has not in the last three years been any
restructuring of the earnings of all or any members or prospective
members of the Superannuation Funds (by way of example, but without
limitation, consolidation of bonuses into basic pay).
(xxii) All contributions and other amounts relating
to the Nirvana Superannuation Fund which have fallen due for payment
have been paid. No fee, charge or expense relating to or in connection
with the Nirvana Superannuation Fund has been incurred but not paid. If
any such fee, charge or expense has been paid by any person other than
the Nirvana Superannuation Fund, the Nirvana Superannuation
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Fund has reimbursed that person if to the extent that the Fund is or
may become liable so to do.
(xxiii) To the best of the Seller's knowledge no
powers have been exercised by the TARGET or the trustees of the Nirvana
Superannuation Fund in relation to any Employee of the TARGET or, since
the date as at which the last actuarial valuation of the Nirvana
Superannuation Fund to be completed prior to the date of this Agreement
was undertaken, in respect of any other person:
(A) to provide terms of membership of the
Nirvana Superannuation Fund (whether as to benefits or
contributions) which are different from those generally
applicable to the members of the Nirvana Superannuation Fund;
or
(B) to provide any benefits which would not
but for the exercise of that power have been payable under the
Nirvana Superannuation Fund; or
(C) to augment any benefits under the
Nirvana Superannuation Fund.
(xxiv) The TARGET has observed and performed those
provisions of the Superannuation Funds which apply to it.
(xxv) Each of the Superannuation Funds is a
regulated superannuation fund with complying fund status for
the purposes of the Superannuation Industry (Supervision) Xxx
0000.
(xxvi) The Nirvana Superannuation Fund has at all
times complied with and been administered in accordance with
all applicable laws, regulations and governmental
requirements.
(xxvii) The Nirvana Superannuation Fund is an
excluded fund, a self managed superannuation fund or a small approved
fund and the TARGET is not involved in the trusteeship, administration
or management of the Fund.
(xxviii) To the best of the Seller's knowledge
neither the Nirvana Superannuation Fund nor the TARGET is engaged or
involved in any litigation or arbitration, investigation or
determination involving any court, tribunal or governmental body or any
complaint under the internal dispute resolution procedure established
in connection with the Nirvana Superannuation Fund which relates to or
is in connection with the Nirvana Superannuation Fund or the benefits
thereunder and no such proceedings are pending or threatened and to the
Knowledge of the Sellers there are no facts likely to give rise to any
such proceedings.
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(xxix) The TARGET has made all award payments in
respect of each Employee in accordance with each relevant award.
(xxx) To the extent that the TARGET has not
contributed the minimum level of superannuation support prescribed
under the Superannuation Guarantee (Administration) Xxx 0000 for the
1999/2000 financial year, the TARGET has made adequate provision for
the payment of such contributions and has disclosed such provision to
Xxxxxx in the Disclosure Schedule.
(xxxi) With the exception of providing the minimum
level of superannuation support prescribed from time to time under the
Superannuation Guarantee (Administration) Xxx 0000 the TARGET is not
and has not been under any obligation to contribute to any scheme,
agreement or arrangement (whether legally enforceable or not) for the
provision of any superannuation, retirement, death, incapacity,
sickness, disability, accident or other like benefits (including the
payment after cessation of employment with TARGET of medical expenses)
for any Relevant Employee or for the widow, widower, child or dependant
of any Relevant Employee.
(u) GUARANTIES. TARGET is not a guarantor or otherwise is
liable for any Liability or obligation (including indebtedness) of any other
Person.
(v) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
Except as disclosed in Section 4(v) of the Disclosure Schedule:
(i) Hazardous Materials have not at any time been
generated, used, treated or stored by TARGET in violation in any
material respect of any applicable Environmental Law, or in any way
which will hereafter require material remedial action under any
applicable Environmental law, and TARGET has not received any notice of
any such violation with respect to Hazardous Materials;
(ii) to the Knowledge of the Sellers, there has been
no spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto any property owned or leased by TARGET, or
into the environment surrounding any such property, of Hazardous
Materials, other than releases permissible under applicable Law or
allowable under applicable permits;
(iii) TARGET, its operations and any property owned,
leased or operated by it are in compliance in all material respects
with (i) all applicable Environmental Laws, and (ii) the requirements
of any permits issued under such laws; and
(iv) there are no pending or threatened claims
against TARGET or any property owned, leased or operated by them
relating to Hazardous Materials or environmental matters.
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None of the circumstances, conditions or occurrences disclosed in
Section 4(v) of the Disclosure Schedule or reflected in the Financial Statements
involves or will result in any material liability on the part of TARGET.
(w) CERTAIN BUSINESS RELATIONSHIPS WITH TARGET. Except as
contemplated or permitted by this Agreement, disclosed in Section 4(w) of the
Disclosure Statement or reflected in the Financial Statements, none of the
Sellers is involved in any business arrangement or relationship with TARGET and
none of the Sellers owns any material asset, tangible or intangible, which is
used in the business of TARGET.
(x) DISCLOSURE. The representations and warranties contained
in this Section 4 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 4, in light of the circumstances under
which they were made, not misleading.
(y) PREDECESSOR ENTITIES. There are no predecessor entities of
the TARGET or Synermedica R&D Unit Trust.
(z) OUTSTANDING UNITS/SHARES. There are no other outstanding
units or shares in the TARGET other than those described in Section 4(b).
(za) INTERIM DISTRIBUTION. The interim distribution described
in Section 2(d) above is in all respects correct and accurate.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his, her or its
reasonable best efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below).
(b) NOTICES AND CONSENTS. The Sellers will cause TARGET to
give any notices to third parties, and will cause TARGET to use its reasonable
best efforts to obtain any third party consents, that Xxxxxx reasonably may
request in connection with the matters referred to in Section 4(c) above. Each
of the Parties will (and the Sellers will cause TARGET to) give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorisations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in Section 3(a)(i), Section 3(b)(ii),
and Section 4(c) above.
(c) OPERATION OF BUSINESS. Section The Sellers will not
cause or permit TARGET to engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business without prior
notification to and the consent of Xxxxxx (which consent shall not be
unreasonably withheld or delayed). Without limiting the generality of the
36
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foregoing, the Sellers will not cause or permit TARGET to (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock or redeem, purchase, or otherwise acquire any of its capital stock
(subject to the distribution of pre-tax profit set out in Section 2(d), or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 4(h) above.
(d) PRESERVATION OF BUSINESS. The Sellers shall use their
best efforts to cause TARGET to keep its business and properties substantially
intact, including its present operations, physical facilities, working
conditions and relationships with lessors, licensors, suppliers, customers and
employees.
(e) FULL ACCESS. Each of the Sellers will permit, and the
Sellers will cause TARGET to permit, representatives of Xxxxxx to have full
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of TARGET, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to TARGET.
(f) NOTICE OF DEVELOPMENTS. The Sellers will give prompt
written notice to Xxxxxx of any material adverse development causing a breach of
any of the representations and warranties in Section 4 above. Each Party will
give prompt written notice to the others of any material adverse development
causing a breach of any of his, her or its own representations and warranties in
Section 3 above.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below). The Sellers acknowledge and agree that, from and after the
Closing, Xxxxxx will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any sort within the
possession of, or under the control of, any Seller or TARGET, relating to TARGET
(other than such documents, books, records (including Tax records), agreements
and financial data that solely relate to one or more Sellers personally).
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving TARGET, each of the other Parties will co-operate
with him, her or it and his, her or its counsel in the contest or defence, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in
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connection with the contest or defence, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 8 below).
(c) TRANSITION. None of the Sellers will take any action that
is designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of TARGET from maintaining the
same business relationships with TARGET after the Closing as it maintained with
TARGET prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the business of TARGET to Xxxxxx from and after the
Closing.
(d) CONFIDENTIALITY. Each of the Sellers will treat and hold
as such all of the Confidential Information, refrain from using any of the
Confidential Information (other than Confidential Information that solely
relates to the Seller personally) except in connection with this Agreement or
the business of TARGET and will deliver promptly to Xxxxxx or destroy, at the
request of Xxxxxx, all copies of the Confidential Information which are in his,
her or its possession. In the event that any of the Sellers is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Seller will notify
Xxxxxx promptly of the request or requirement so that Xxxxxx may seek an
appropriate protective order or waive compliance with the provisions of this
Section 6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, Seller is compelled to disclose such Confidential Information,
Seller may disclose the Confidential Information to the tribunal; PROVIDED,
HOWEVER, that the disclosing Seller shall use his, her or its reasonable best
efforts to obtain, at the reasonable request of Xxxxxx, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as Xxxxxx shall designate.
(e) KII SHARES. Each KII Share will be imprinted with a legend
substantially in the following form:
The shares evidenced by this certificate were originally issued on 7
April 2000, and have not been registered under the Securities Act of
1933, as amended. The transfer of the shares evidenced by this
certificate is subject to the restrictions set forth in Section 6(e) of
the Share Purchase Agreement dated 7 April 2000. The issuer of the
shares evidenced by this certificate will furnish a copy of these
provisions to the holder hereof without charge upon written request.
Each holder desiring to transfer a Xxxxxx Share first must furnish Kendle with
(i) a written opinion reasonably satisfactory to Xxxxxx in form and substance
from counsel reasonably satisfactory to Xxxxxx by reason of experience to the
effect that the holder may transfer KII Shares as desired without registration
under the Securities Act and (ii) a written undertaking executed by the desired
transferee reasonably satisfactory to Xxxxxx in form and substance agreeing to
be bound by the restrictions on transfer contained herein.
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(f) FINANCIAL PERFORMANCE. Each of the Sellers warrants that
the TARGET will meet or exceed the financial projections for the 9 month period
ending 31 March 2000, as set out in the Synermedica Budget document referred to
in the Disclosure Schedule. Each of the Sellers acknowledges and agrees that the
Purchase Price has been calculated on the basis of the financial projections
provided to Xxxxxx by the Sellers, and that should TARGET fail to achieve those
projections, this would be grounds for a claim by Xxxxxx for breach of this
agreement and a claim against the KII Share Consideration held in escrow
pursuant to clause 2(b)(ii).
(g) SET-OFF. The Sellers acknowledge and agree that Xxxxxx
may, without limiting any of its other rights or remedies, offset any amount
remaining unpaid under this Agreement or any other agreement related to this
transaction, as of and by the amount of any damages (up to a maximum of the
Purchase Price) incurred by Xxxxxx as determined by a final non-appealable order
of a court of competent jurisdiction or by agreement between Xxxxxx and the
Sellers to result from a breach of this Agreement by any of the Sellers.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF XXXXXX. The obligation of
Xxxxxx to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all
material respects (other than representations and warranties having
materiality qualifiers, which shall be true and correct in all
respects) at and as of the Closing Date;
(ii) the Sellers shall have performed and complied
with all of their covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator wherein an unfavourable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of Xxxxxx to own TARGET
Shares and Trust Units and to control TARGET, or (D) affect adversely the right
of TARGET to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) Xxxxxx Xxxxxxx Xxxxxx, Stuart Xxxxxxx Xxxx and
Xxxxxxxx Xxxxxxxxxxxx shall have entered into Employment Agreements
substantially in the form of Exhibit 7(a)(v) hereto (the "EMPLOYMENT
AGREEMENTS");
(v) each of the Sellers shall have executed and
delivered releases in
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the form of Exhibit 7(a)(vi) hereto (the "RELEASES");
(vi) each of the Sellers shall have executed and
delivered Non-Competition and Non-Disclosure Covenants in the form of
Exhibit 7(a)(vii) hereto (the "COVENANTS");
(vii) no material adverse change in the business,
assets, liabilities, income, financial condition, operations, results
of operations or business prospects of TARGET ("TARGET MATERIAL ADVERSE
CHANGE") shall have occurred; provided, however, if a TARGET Material
Adverse Change shall have occurred, Xxxxxx and the Sellers shall
negotiate in good faith with respect to a reasonable adjustment of the
Purchase Price. If agreement is not reached with respect to such an
adjustment, Xxxxxx may terminate this Agreement for failure of a
condition precedent;
(viii) the Parties and TARGET shall have received all
authorisations, consents, and approvals of governments and governmental
agencies referred to in Section 3(a)(i), Section 3(b)(ii), and
Section 4(c) above;
(ix) Xxxxxx shall have received the resignations,
effective as of the Closing, of each director, secretary and officer of
TARGET other than Xxxxxx Xxxxxxx Xxxxxx;
(x) each of the Sellers shall have executed and
delivered the Escrow Agreement;
(xi) Xxxxxx shall have received all the statutory and
other books (duly written up to date) of TARGET and its certificate(s)
of incorporation, any certificates of incorporation on change of name
and common seal(s);
(xii) the Sellers shall have procured board meetings
of TARGET to be held at which there shall be (A) passed a resolution to
approve, in the case of TARGET, the transfers of TARGET Shares and
Trust Units and (subject only to due stamping) to register, in the
register of members, each transferee as the holder of the shares
concerned; (B) appointed as directors and/or secretary such Persons as
Xxxxxx may nominate such appointments to take effect at the close of
the meeting; (C) tendered and accepted the resignations and
acknowledgements of the directors and secretary referred to in
Section 7(a)(xiv) each such acceptance to take effect at the close of
the meeting; (D) revoked all existing authorities to banks and new
authorities shall be given to such banks and on such terms as Xxxxxx
may direct; (E) changed the situation of the registered office and
(subject to the Companies Acts) the accounting reference date, each as
Xxxxxx may direct; (F) Pricewaterhouse Coopers shall be appointed as
new auditors of each of TARGET; and (G) approved and entered into the
employment agreements referred to in Section 7(a)(vii);
(xiii) deliver to Xxxxxx, certified as correct by the
secretary of the
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relevant company, the minutes of each board meeting referred to in
Section 7(a)(xiii);
(xiv) all actions to be taken by the Sellers in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Xxxxxx.
Xxxxxx may waive any condition specified in this Section 7(a) if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The obligation of
the Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all material respects
(other than representations and warranties having materiality
qualifiers, which shall be true and correct in all respects) at and
as of the Closing Date;
(ii) Xxxxxx shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before
any arbitrator wherein an unfavourable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iiv) Xxxxxx Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxxxxxxx
and Stuart Xxxxxxx Xxxx shall have entered into Employment Agreements
with Xxxxxx;
(v) no material adverse change in the business,
assets, liabilities, income, financial condition or business prospects
of Xxxxxx ("XXXXXX MATERIAL ADVERSE CHANGE") shall have occurred since
the date of the latest Xxxxxx SEC Report; provided, however, that if a
Xxxxxx Material Adverse Change shall have occurred, the Seller and
Xxxxxx shall negotiate in good faith with respect to a reasonable
adjustment to the Purchase Price. If agreement is not reached with
respect to such an adjustment, the Sellers may terminate this Agreement
for failure of a condition precedent;
(vi) Xxxxxx shall have used its commercially
reasonable best efforts to obtain releases of any personal guarantees
Xxxxxx Xxxxxx or Xxxxx Xxxxx may have given for TARGET Liabilities.
Until such time as Xxxxxx is able to obtain such releases, it will
provide Xxxxxx Xxxxxx and Xxxxx Xxxxx with indemnities in respect of
41
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their guarantees as set out in Section 8(d);
(vii) the Parties and TARGET shall have received all
authorisations, consents, and approvals of governments and governmental
agencies referred to in Section 3(a)(i), Section 3(b)(ii), and Section
4(c) above;
(viii) Xxxxxx and the Sellers shall have executed and
delivered the Escrow Agreement;
(ix) all actions to be taken by Xxxxxx in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Sellers contained in Section 4(a)-(j),
Section 4(l)-(u) and Section 4(w)-(za) above shall survive the Closing hereunder
and continue in full force and effect for a period of three years after Closing.
All of the other representations and warranties of the Parties contained in this
Agreement (including the representations and warranties of the Sellers contained
in Section 3(a), Section 4(k) and Section 4(v) above) shall survive the Closing
and continue in full force and effect forever thereafter (subject to any
applicable statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF XXXXXX.
(i) In the event any of the Sellers breaches (or in
the event any third party alleges facts that, if true, would mean any
of the Sellers has breached) any of their representations, warranties,
and covenants contained herein (other than the covenants in Section
2(a) above and the representations and warranties in Section 3(a)
above), and, if there is an applicable survival period pursuant to
Section 8(a) above, provided that Xxxxxx makes a written claim for
indemnification against any of the Sellers pursuant to Section 11(h)
below within such survival period, then each of the Sellers agrees, on
a joint and several basis, to indemnify Xxxxxx from and against any
Adverse Consequences Xxxxxx may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences
Xxxxxx may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach), provided that Xxxxxx may
not claim under this Section 8(b) unless and until the cumulative
amount of all such claims exceeds twenty-five thousand Australian
Dollars (AUD25,000) but then Xxxxxx may make all available claims under
this Section 8(b). The Sellers' joint liability under this Section 8(b)
is limited to the amount of the Purchase Price.
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(ii) In the event any of the Sellers breaches (or in
the event any third party alleges facts that, if true, would mean any
of the Sellers has breached) any of his, her or its covenants in
Section 2(a) above or any of his, her or its representations and
warranties in Section 3(a) above, and, if there is an applicable
survival period pursuant to Section 8(a) above, provided that Xxxxxx
makes a written claim for indemnification against the Seller pursuant
to Section 11(h) below within such survival period, then the Seller
agrees to indemnify Xxxxxx from and against the entirety of any Adverse
Consequences Xxxxxx may suffer through and after the date of the claim
for indemnification (including any Adverse Consequences Xxxxxx may
suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach), provided that Xxxxxx may not claim under this
Section 8(b) unless and until the cumulative amount of all such claims
exceeds twenty-five thousand Australian Dollars (AUD25,000) but then
Xxxxxx may make all available claims under this Section 8(b). A
Seller's several liability under this Section 8(b)(ii) is limited to
the amount of the Purchase Price payable to the particular Seller save
that, in the case of Xxxxxx Xxxxxx or Xxxx Xxxxxx, it shall be limited
to the amount of the Purchase Price payable to Xxxxx Pty Limtied, and
in the case of Xxxxxxxx Xxxxxxxxxxxx it shall be limited to the amount
of the Purchase Price payable to J&M Psycharis Limited.
(iii) Xxxxxx may satisfy Seller's indemnification
obligations by recourse to the escrow fund held by Fifth Third Bank
N/A, as escrow agent, pursuant to the Escrow Agreement but recourse to
that escrow fund shall not constitute Xxxxxx'x sole remedy or source
for satisfaction of indemnification claims under this Agreement.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. In
the event Xxxxxx breaches any of its representations, warranties, and covenants
contained herein (or in the event any third party alleges facts that, if true,
would mean Xxxxxx has breached), and, if there is an applicable survival period
pursuant to Section 8(a) above, provided that any of the Sellers makes a written
claim for indemnification against Xxxxxx pursuant to Section 11(h) below within
such survival period, then Xxxxxx agrees to indemnify each of the Sellers from
and against the entirety of any Adverse Consequences the Seller may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Seller may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach), provided that the Sellers may
not claim under this Section 8(c) unless and until the cumulative amount of all
such claims exceeds twenty-five thousand Australian Dollars (AUD25,000) but then
the Sellers may make all available claims under this Section 8(c). Xxxxxx shall
also indemnify any Seller from and against the entirety of any Adverse
Consequences such Seller may suffer as a result of any obligations or liability
of TARGET (other than this Agreement) guaranteed by such Seller, provided that
the Sellers may not claim under this Section 8(c) unless and until the
cumulative amount of all such claims exceeds twenty-five thousand Australian
Dollars (AUD25,000) but then the Sellers may make all available claims under
this Section 8(c).
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(d) INDEMNITY FOR GUARANTEES. Until such time as Xxxxxx is
able to obtain releases of the guarantees, Xxxxxx agrees to indemnify Xxxxxx
Xxxxxx and Xxxxx Xxxxx against liability incurred as a result of the personal
guarantees provided by them for TARGET Liabilities.
(e) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against any other
Party (the "INDEMNIFYING PARTY") under this Section 8, then the
Indemnified Party shall promptly notify each Indemnifying Party thereof
in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so long
as (A) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defence of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting
the defence of the Third Party Claim in accordance with Section
8(e)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defence
of the Third Party Claim, (B) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld
unreasonably).
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(iv) In the event any of the conditions in
Section 8(e)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 8.
(f) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money (using ten percent (10%) as the
interest rate) in determining Adverse Consequences for purposes of this Section
8. All indemnification payments under this Section 8 shall be deemed adjustments
to the Purchase Price.
(g) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and Safety Requirements) any
Party may have with respect to TARGET or the transactions contemplated by this
Agreement.
9. TAX COVENANTS.
(a) PAYMENT OF TAXES AND FEES. The Sellers shall pay or
reserve for payment when due out of the Purchase Price all fees and charges that
were incurred by the Sellers in connection with the transactions contemplated
hereby other than stamp duty or other taxes relating to the transfer of the
TARGET share and Trust Units. The Sellers shall cause to be prepared and filed
any and all returns and other filings relating to any Taxes.
10 TAX INDEMNITY.
(a) The Seller agrees that if at any time the TARGET or its
Affiliates receives or suffers a Tax Claim that relates to an act or
omission of, or occurrence affecting TARGET or its Affiliates before
the close of business on the Closing Date, then the Seller must pay to
Xxxxxx the amount of the Claim Amount for that Tax Claim.
(b) The obligations of the Seller under clauses 10(a) do not
apply in respect of a Tax Claim:
(i) if the possibility of the Tax Claim for the Claim
Amount arising has been disclosed in writing to Xxxxxx before execution
of this agreement, in sufficient detail to enable Xxxxxx to calculate
the Claim Amount of the Tax Claim;
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(ii) to the extent that the Tax Claim arises from the
failure by Xxxxxx to supply to the Seller on a timely basis information
which is reasonably requested by the Seller in relation to a Tax Claim;
(iii) to the extent that the Tax Claim represents the
disallowance of any deduction for carried forward losses, and the
disallowance results from:
(A) the TARGET or its Affiliates, as the
case may be, not carrying on the same business after Closing
as it carried on immediately before Closing; or
(B) the TARGET or its Affiliates, as the
case may be,, after Closing, deriving income from a business
of a kind that it did not carry on or from a transaction of a
kind that it had not entered into in the course of its
business operations before Closing;
(iv) to the extent that the Tax Claim arises from the
failure by the TARGET or its Affiliates, as the case may be, after
Closing, in a timely manner, to:
(A) lodge any return, notice, objection or
other document in relation to the Tax Claim;
(B) claim all or any portion of any relief,
allowance, deduction, credit, rebate or right to repayment;
(C) disclose or correctly describe in any
return, notice, objection or other document relating to the
Tax Claim any fact, matter or thing to the extent that it was
or might reasonably be expected to have been within the
knowledge of either the Purchaser or the company; or
(D) take any other action which the company
is required to take under this clause or any laws relating to
Tax.
(c) Payments under clause 10(a) must be made to Xxxxxx as
follows:
(i) if the TARGET or its Affiliates, must make a
payment of Tax in respect of a Tax Claim to which clause 10(a) applies
- seven days before the latest date on which that payment may lawfully
be made without incurring any penalty or additional tax for late
payment; and
(ii) if the TARGET or its Affiliates is deprived of
any credit, rebate, refund, relief, allowance, deduction, loss carried
forward - seven days before the latest date on which Tax becomes
payable by the company without incurring any penalty or additional tax
for late payment, being Tax which would not have been payable were it
not for the Tax Claim.
(d) The Seller must pay interest to Xxxxxx on any moneys due
under this
46
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clause 10 but unpaid, from the date payment is due until paid in full, at a rate
equal to ten percent (10%).
(e) If for any reason an amount received by Xxxxxx under
clause 10(a) is treated as assessable income of Xxxxxx under any law relating to
Tax the Seller agrees to pay to Xxxxxx an increased amount so that, after
deducting from that amount all Tax paid or payable in respect of the receipt,
the balance remaining is equal to the amount due under the relevant clause.
(f) If Xxxxxx or the TARGET and its Affiliates becomes aware
of a Tax Claim Xxxxxx must give written notice of it to the Seller within 30
days of becoming so aware.
Xxxxxx must ensure the Seller and its professional advisers
have reasonable access to the personnel of Xxxxxx and the TARGET and its
Affiliates and to any relevant premises, assets and Records within the custody,
power, possession or control of those companies to enable the Seller and its
professional advisers to examine the Tax Claim and Records and to take copies or
photographs of them, at the expense of the Seller, provided Seller and its
professional advisers give to Xxxxxx such undertakings as to confidentiality as
Xxxxxx may reasonably require.
Xxxxxx must ensure that the TARGET and its Affiliates takes
any proposed and reasonable action that the Seller requires to avoid, resists,
compromise or defend a demand or notice issued by a Government Agency which
gives rise to the Tax Claim, provided the Seller indemnifies Xxxxxx and the
Target and its Affiliates to the reasonable satisfaction of Xxxxxx against any
liability or loss which may be suffered or costs, damages or expenses which may
be incurred as a result of compliance with their requirements.
The Seller may only request an action under this clause 10(g)
if it provides Xxxxxx with an opinion from a partner specialising in Tax of a
major law firm or accounting firm in the city where the action is taken by a
Government Agency which gives rise to the Tax Claim that there is a real
prospect that the requested action will result in demand or notice issued by the
Government Agency being avoided, resisted, compromised or defended.
The action that the Seller may require to be taken by Xxxxxx
or the TARGET and its Affiliates in respect of a Tax Claim includes the making
of appeals and objections, provided that all over avenues of review have been
exhausted.
Any action required under this clause 10(g) must be taken in a
timely manner.
(g) If, following the making of a payment under clause 10(b)
for a Tax Claim, all or part of the Claim Amount is refunded either in cash or
by credit to the TARGET or its Affiliates (including, but not limited to, any
amount or credit received following a successful objection or appeal), Xxxxxx
must immediately pay to the Seller the lesser of the refund and the amount of
the payment paid under clause 10(b).
(h) If the Seller and Xxxxxx cannot agree on any amount to be
paid under
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this clause 10 within 21 days of a dispute arising, then either the Seller or
Xxxxxx may refer the disagreement to an expert with the request that the expert
make a decision on the disagreement as soon as practicable after receiving any
submissions from the Seller and Xxxxxx. The expert is to be a person with over
ten years experience in Tax agreed by the Seller and Xxxxxx, or if they do not
agree on the person to be appointed within seven days of one party requesting
appointment, a person with the same expertise appointed by the President of the
Australian Institute of Chartered Accountants at the request of either the
Seller or Xxxxxx. The decision of the expert is to be conclusive and binding on
the parties in the absence of manifest error. The Seller and Xxxxxx agree to
each pay one half of the expert's costs and expenses in connection with the
reference. The expert is appointed as an expert and not as an arbitrator. The
procedures for determination are to be decided by the expert in its absolute
discretion.
11. MISCELLANEOUS.
(a) NATURE OF CERTAIN OBLIGATIONS.
(i) The covenants of each of the Sellers in
Section 2(a) above concerning the sale of his, her or its TARGET Shares
and Trust Units to Xxxxxx and the representations and warranties of
each of the Sellers in Section 3(a) above concerning the transaction
are several obligations. This means that the particular Seller making
the representation, warranty, or covenant will be solely responsible to
the extent provided in Section 8 above for any Adverse Consequences
Xxxxxx may suffer as a result of any breach thereof.
(ii) The remainder of the representations,
warranties, and covenants in this Agreement are joint and several
obligations. This means that each Seller will be responsible to the
extent provided in Section 8 above for the entirety of any Adverse
Consequences Xxxxxx may suffer as a result of any breach thereof.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of Xxxxxx and the Sellers (which approval shall not be unreasonably withheld or
delayed); PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior
48
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understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his, her or its rights, interests, or obligations hereunder without the
prior written approval of Xxxxxx and the Sellers; provided, however, that Xxxxxx
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases Xxxxxx nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(f) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent (i) from and to Australia, by first class
pre-paid post, recorded delivery, or (ii) from or to any place outside
Australia, by pre-paid priority airmail, international recorded delivery (or the
equivalent thereof), in either case addressed to the intended recipient as set
forth below:
IF TO THE SELLERS: XXXXXX XXXXXXX XXXXXX
-----------------
0 Xxxxxxx Xxxxxx
Xxxx Xxxxxxx XXX 0000
XXXX XXXXXX XXXXXX
0 Xxxxxxx Xxxxxx
Xxxx Xxxxxxx XXX 0000
J&M PSYCHARIS PTY LIMITED
0 Xxxx Xxxx
Xxxxxx XXX
LAMPAM PTY LIMITED
00 Xxxxxxxxx Xxxx
Xxxx Xxxx XXX
XXXXX PTY LIMITED
0 Xxxxxxx Xxxxxx
00
-00-
Xxxx Xxxxxxx XXX 0000
XXXXX XXXXX XXXX XXXXXXX
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx XXX
XXXXXX XXXXXXX XXXX
00 Xxxxx Xxxxxx
Xxx Xxxx XXX
COPY TO: XXXXXXX XXXX & XXXXXX
------- Xxxxx 00
000 Xxxxxx Xxxxxx
Xxxxxxxxx XXX 0000
Attention: Xxxxxx Xxxxx
Partner
IF TO XXXXXX: XXXXXX INTERNATIONAL INC.
------------ 000 Xxxx Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
General Counsel
COPY TO: MALLESONS XXXXXXX XXXXXX
-------- Xxxxx 00 Xxxxx, Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx XXX 0000
Attention: Xxxxxxx Xxxx
Partner
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with Victorian law. In relation to any legal action or
proceedings to enforce this Agreement or arising out of or in connection with
this Agreement, each of the Parties irrevocably submits to the jurisdiction of
the Victorian courts and waives any objection to any
50
-50-
proceedings in such courts on the grounds of venue or on the grounds that such
proceedings have been brought in an inconvenient forum.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Xxxxxx and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) EXPENSES. Each of the Parties and TARGET will bear his,
her or its own costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions contemplated hereby. The
Sellers agree that TARGET shall not bear any of the Sellers' costs and expenses
(including any of their legal fees and expenses or any brokerage fees) in
connection with this Agreement or any of the transactions contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favouring or disfavouring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
References to, or any provision of, any treaty, statute, directive, regulation,
decision, order, instrument, by-law or any other law of, or having effect in,
any jurisdiction shall be construed also as references to such provisions as
replaced, amended or re-enacted from time to time. Any statute, statutory
instrument, regulation, by-law or other requirement of US federal, state or
local law and any US legal term of any action, remedy, method of judicial
proceeding, legal documents, legal status, procedure, court, official or any
legal concept or doctrine or other expression shall in respect of any non-US
jurisdiction be deemed to include that which most nearly approximates in such
non-US jurisdiction such US statute, statutory instrument, regulation, by-law or
other requirement of law or legal term. The word "including" shall mean
including without limitation. The Parties intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty or covenant contained herein
in any respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of relative levels of
specificity) which the Party has not breached shall not detract from or mitigate
the fact that the Party is in breach of the first representation, warranty or
covenant.
51
-51-
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court having jurisdiction over the Parties and the matter in
addition to any other remedy to which they may be entitled, at law or in equity.
AS WITNESS the hands of the duly authorised representatives of the Parties on
the date first before written.
52
-52-
SIGNED by XXXXXX )
XXXXXXX XXXXXX )
)
in the presence of: )
Witness:
Name:
Address:
Occupation:
SIGNED by XXXX XXXXXX )
MIHALY )
)
in the presence of: )
Witness:
Name:
Address:
Occupation:
SIGNED by Xxxxxxxx Xxxxxxxxxxxx )
duly authorised for and on )
behalf of J&M PSYCHARIS )
PTY LIMITED, as trustee for the )
J&M Psycharis Family Trust )
in the presence of: )
Witness:
Name:
Address:
53
-53-
Occupation:
SIGNED by Xxxxx Xxxxxx Xxxxx )
duly authorised for and on )
behalf of LAMPAM PTY )
LIMITED, as trustee for the )
Marks Family Trust )
in the presence of: )
Witness:
Name:
Address:
Occupation:
SIGNED by Xxxxxx Xxxxxxx Xxxxxx )
duly authorised for and on )
behalf of XXXXX PTY LIMITED, )
as trustee for the Mihaly Family Trust)
in the presence of: )
Witness:
Name:
Address:
Occupation:
SIGNED by XXXXX XXXXX )
XXXX XXXXXXX )
)
in the presence of: )
Witness:
Name:
54
-54-
Address:
Occupation:
SIGNED by )
STUART XXXXXXX XXXX ) )
in the presence of: )
Witness:
Name:
Address:
Occupation:
SIGNED by )
Xxxxxxx X Xxxxxx )
duly authorised for and on )
behalf of XXXXXX )
UK INC. )
Witness:
Name:
Address:
Occupation:
00
-00-
XXXXX XXXXXXXX XXXXXXXXX
XXXXX
XXXXXX XX INC.,
AND
XXXXXX XXXXXXX XXXXXX
XXXX XXXXXX XXXXXX
J&M PSYCHARIS PTY LIMITED
LAMPAM PTY LIMITED
XXXXX PTY LIMITED
XXXXX XXXXX XXXX XXXXXXX
STUART XXXXXXX XXXX
56
TABLE OF CONTENTS
-----------------
PAGE
1. DEFINITIONS. 2
2. PURCHASE AND SALE OF TARGET SHARES. 7
(a) BASIC TRANSACTION. 7
(b) PURCHASE PRICE. 7
(c) THE CLOSING. 8
(d) DELIVERIES AT THE CLOSING. 8
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION. 11
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. 11
(ii) AUTHORIZATION OF TRANSACTION. 11
(iii) NONCONTRAVENTION. 11
(iv) BROKERS' FEES. 11
(v) INVESTMENT. 11
(vi) TARGET SHARES. 11
(b) REPRESENTATIONS AND WARRANTIES OF XXXXXX. 13
(i) ORGANIZATION OF XXXXXX. 13
(ii) AUTHORIZATION OF TRANSACTION. 13
(iii) NONCONTRAVENTION. 14
(iv) CAPITALIZATION. 14
(v) SEC REPORTS. 14
(vi) BROKERS' FEES. 15
(vii) INVESTMENT. 15
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET. 15
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. 15
(b) CAPITALIZATION. 15
(c) NONCONTRAVENTION. 16
(d) BROKERS' FEES. 16
(e) TITLE TO ASSETS. 16
(g) FINANCIAL STATEMENTS. 17
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. 17
(i) UNDISCLOSED LIABILITIES. 19
(j) LEGAL COMPLIANCE. 19
(l) REAL PROPERTY. 21
(m) INTELLECTUAL PROPERTY. 24
(n) TANGIBLE ASSETS. 26
(o) CONTRACTS. 26
(p) NOTES AND ACCOUNTS RECEIVABLE. 28
(q) POWERS OF ATTORNEY. 28
(r) INSURANCE. 28
(s) LITIGATION.29
(t)EMPLOYEE BENEFITS. 29
(u) GUARANTIES.34
(w) CERTAIN BUSINESS RELATIONSHIPS WITH TARGET. 34
(x) DISCLOSURE.35
5. PRE-CLOSING COVENANTS. 35
(a) GENERAL. 35
(b) NOTICES AND CONSENTS. 35
(c) OPERATION OF BUSINESS. 35
(e) FULL ACCESS. 36
(f) NOTICE OF DEVELOPMENTS. 36
6. POST-CLOSING COVENANTS. 36
(a) GENERAL. 36
(b) LITIGATION SUPPORT. 36
57
(d) CONFIDENTIALITY. 37
(e) XXXXXX SHARES. 37
7. CONDITIONS TO OBLIGATION TO CLOSE. 38
(a) CONDITIONS TO OBLIGATION OF XXXXXX. 38
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. 39
8. REMEDIES FOR BREACHES OF THIS AGREEMENT. 41
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. 41
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF XXXXXX. 41
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS. 42
(d) MATTERS INVOLVING THIRD PARTIES. 42
(d) MATTERS INVOLVING THIRD PARTIES. 42
(e) DETERMINATION OF ADVERSE CONSEQUENCES. 44
(f) OTHER INDEMNIFICATION PROVISIONS. 44
(b) PAYMENT OF TAXES AND FEES 44
11. MISCELLANEOUS. 47
(a) NATURE OF CERTAIN OBLIGATIONS. 47
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. 47
(c) NO THIRD-PARTY BENEFICIARIES. 47
(d) ENTIRE AGREEMENT. 47
(e) SUCCESSION AND ASSIGNMENT. 47
(f) COUNTERPARTS. 47
(g) HEADINGS. 48
(h) NOTICES. 48
(i) GOVERNING LAW. 49
(j) AMENDMENTS AND WAIVERS. 49
(k) SEVERABILITY. 49
(l) EXPENSES. 50
(m) CONSTRUCTION. 50
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. 50
(o) SPECIFIC PERFORMANCE. 50
SCHEDULES
Schedule 1 Sellers, Share Holdings, Purchase Price Allocation, Etc.
Schedule 2 Premises
Schedule 3 Subsidiaries
Schedule 3(b) -- Exceptions to Xxxxxx'x Representations and Warranties
Concerning the Transaction
Disclosure Schedule -- Exceptions to Representations and Warranties Concerning
TARGET and its Subsidiaries
EXHIBITS
Exhibit 2(b) -- Escrow Agreement
Exhibit 4(g) -- TARGET Financial Statements
Exhibit 7(a)(vii) -- Employment Agreements
Exhibit 7(a)(viii) -- Releases
Exhibit 7(a)(ix) -- Covenants
Exhibit 7(t)(iii) Specimen Existing Employment Contract
58
SCHEDULE 1
SELLERS, SHARE HOLDINGS, PURCHASE PRICE ALLOCATION, ETC.
------------------------------------------------------------------------------------------------------------------
SELLER NO OF SHARES/ CASH CLOSING SHARE TOTAL PURCHASE
UNITS PAYMENT ALLOCATION PRICE
ALLOCATION ALLOCATION
------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx Xxxxxx 1 ordinary $1.00 none $1.00
share
------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx Xxxxxx 1 ordinary $1.00 none $1.00
share
------------------------------------------------------------------------------------------------------------------
Xxxxx Pty Ltd as Trustee for the Mihaly 100 ordinary $2,499,998 $1,250,000 $3,749,998
Family Trust units (65,416
shares)
------------------------------------------------------------------------------------------------------------------
J & M Psycharis Pty Ltd as Trustee for the J 12 employee $300,000 $150,000 $450,000
& M Psycharis Family Trust units (7,850
shares)
------------------------------------------------------------------------------------------------------------------
Lampam Pty Ltd as Trustee for the Marks 4 employee $100,000 $50,000 $150,000
Family Trust units (2,617
shares)
------------------------------------------------------------------------------------------------------------------
Stuart Xxxxxxx Xxxx 3 employee $75,000 $37,500 $112,500
units (1,963
shares)
------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx Xxxx Xxxxxxx 1 employee $25,000 $12,500 $37,500
unit (654
shares)
------------------------------------------------------------------------------------------------------------------
59
SCHEDULE 2
----------
PREMISES
--------
Lease details are as follows:
Lease of 0xx Xxxxx, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx:
- Landlord - Eastsmith Pty Ltd and Xxxxxxx Pty Ltd
- Tenant - Synermedica Pty Ltd
- Commencement Date - 1 October 1995
- Term - Four (4) years
- Option - Further term of four (4) years
Licence to use storeroom at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx:
- Term - 1 July 1999 to 30 September 2003
Lease of Xxxxx 000, 00 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxx Xxxxx Xxxxx:
- Lessor - Xxxxxxxx Xxxxx
- Tenant - Synermedica Pty Ltd
- Term - 1 January 1999 to 30 June 2000
- Option - Further period of eighteen (18) months from 1 July 2000
(Note: Option for further term has been exercised.)
60
SCHEDULE 3
----------
SUBSIDIARIES
------------
Synermedica Research & Development Pty Limited (ACN 064 945 651)
Synermedica R&D Unit Trust
61
SCHEDULE 3(b)
-------------
EXCEPTIONS TO XXXXXX'X REPRESENTATIONS AND WARRANTIES CONCERNING THE
--------------------------------------------------------------------
TRANSACTION
-----------
[None]
62
DISCLOSURE SCHEDULE
-------------------
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES CONCERNING TARGET AND ITS SUBSIDIARIES
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Section 4(a)
Jurisdiction
Synermedica Pty Ltd and Synermedica Research & Development Pty Ltd are
incorporated in Australia. The only relevant jurisdiction for both
companies is Australia.
List of Directors and Officers of Target The Directors of Synermedica Pty Ltd are:
(i) Xxxxxx Xxxxxxx Xxxxxx
(ii) Xxxxxxxx Xxxxxxxxxxxx
(iii) Xxxxxx Xxxx
(iv) Xxxxx Xxxxxx Xxxxx
The Secretary of Synermedica Pty Ltd is:
(i) Xxxxxx Xxxxxxx Xxxxxx
The Directors of Synermedica Research & Development Pty Ltd are:
(i) Xxxxxx Xxxxxxx Xxxxxx
(ii) Xxxxxxxx Xxxxxxxxxxxx
(iii) Xxxxxx Xxxx
The Secretary of Synermedica Research & Development Pty Ltd is:
-----------------------------------------------------------------------------------------------------------------------------
63
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
(i) Xxxxxx Xxxxxxx Xxxxxx
-----------------------------------------------------------------------------------------------------------------------------
Section 4(b)
Sellers' Details Xxxxx Pty Ltd as Trustee for the Mihaly Family Trust - 100 ordinary units
J & M Psycharis Pty Ltd as Trustee for the J & M Psycharis Family
Trust - 12 employee units
Xxxxxx Xxxx - 3 employee units
Lampam Pty Ltd as trustee for the Marks Family Trust - 4 employee units
Xxxxx Xxxxxxx - 1 employee unit
Xxxxxx Xxxxxxx Xxxxxx - 1 share in Synermedica Pty Ltd
Xxxx Xxxxxx Xxxxxx - 1 share in Synermedica Pty Ltd
-----------------------------------------------------------------------------------------------------------------------------
Section 4(c)
Authorisations Apart from the necessary planning permission, there are no authorities,
licences, permits, approvals or authorisations required to conduct the
business.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(h)
Events Subsequent to Most Recent
Financial Year End
Details of Contracts (ii) Details of contracts are contained in the attached schedule of
work in progress.
-----------------------------------------------------------------------------------------------------------------------------
64
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
There are no relevant contracts other than customer contracts.
(iv) A mortgage debenture has been granted by Synermedica Pty Ltd in
favour of the ANZ Bank.
Security Interest
(xv) Details of employees are contained in the attached Remuneration
Summary Table.
Employment Contracts
(xvi) The following employees have been reviewed as at 1 April 2000:
Increase in Remuneration of Employees
- Peppa Xxxxx - Secretary / Receptionist
- Xxxxxxx Xxxxxx - Clinical Research Associate
- Xxxx Xxxxxxxxxx - Clinical Services Consultant
(xvii) Details of bonuses were provided to Pricewaterhouse Coopers.
Details of bonuses
-----------------------------------------------------------------------------------------------------------------------------
Section 4(i)
Liabilities None other than those disclosed in the Most Recent Balance Sheet.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(k)(iv)
-----------------------------------------------------------------------------------------------------------------------------
65
-----------------------------------------------------------------------------------------------------------------------------
CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Tax Returns (iv) All tax returns have been filed from the financial years
ending 30 June 1995 to 30 June 1999.
GST
(vii) To the best knowledge of Target all contracts under which
Target makes supplies or is taken to have made supplies to any
person on or after 1 July 2000 are effective to enable Target
to recover an additional amount on account of GST such that
after allowing for any liability of Target to GST, Target
will obtain the same consideration as Target would have
obtained in the absence of any law imposing GST.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(l)(i)
Property
Property Owned (i) There are no Premises owned by Target.
Property Leased (ii) Lease details are as follows:
Lease of 0xx Xxxxx, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx:
- Landlord - Eastsmith Pty Ltd and Xxxxxxx Pty Ltd
- Tenant - Synermedica Pty Ltd
- Commencement Date - 1 October 1995
- Term - Four (4) years
- Option - Further term of four (4) years
Licence to use storeroom at 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx:
-----------------------------------------------------------------------------------------------------------------------------
66
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
- Term - 1 July 1999 to 30 September 2003
Lease of Xxxxx 000, 00 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxx Xxxxx Xxxxx:
- Lessor - Xxxxxxxx Xxxxx
- Tenant - Synermedica Pty Ltd
- Term - 1 January 1999 to 30 June 2000
- Option - Further period of eighteen (18) months from 1
July 2000 (Note: Option for further term has been
exercised.)
Rights and easements for current use of the Premises (iii) Each of the Premises have all rights and easements
necessary for its current use and enjoyment and the access
for each of the Premises is over roads adopted by the local
authority and maintained at public expense.
State of Repair of Premises (v) To the best knowledge of the Sellers, each of the Premises is
in a good state of repair and condition and fit for the
current use and no deleterious material (including, without
limit, high alumina cement, woodwool, calcium chloride, sea
dredged aggregates or asbestos material) was used in the
construction, alteration or repair thereof or of any of them
and there are no development works, redevelopment works or
fitting out works outstanding in respect of the Premises.
Restrictions on current use of the Premises (viii) There are no restrictions which preclude or limit the current
use of the Premises and the current use is the permitted use
under the provisions of the relevant authority.
Planning Permissions and Approvals (ix) To the best knowledge of Target, all necessary planning
permissions, consents and approvals (if any) have been
obtained by the landlord for the construction, extension and
alteration of the Premises.
-----------------------------------------------------------------------------------------------------------------------------
67
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Rent Review (x) The rent review for Premises at Xxxxx 000, 00 Xxxxxx Xxxxxx,
Xxxxx Xxxx has been concluded and the rent increased by 3% per
annum.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(m)
Intellectual Property
Trade Marks (iii) Details of trade marks are as follows:
- Synermedica (logo) in Class 42 Registration No 709995
registered in Australia from 5 June 1996
- Synermedica (logo) in Class 42 Registration No 2055347
registered in Britain and Northern Ireland from
2 February 1996
When the trade xxxx for Synermedica (logo) was lodged for
registration in the United Kingdom, an objection was
raised in respect of a trade xxxx registered by a Canadian
company, Synermed. This company provided a release at that
time to the registration of the Synermedica logo.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(m)(iv)
Intellectual Property under license (iv) Target uses:
- Microsoft Word 97 software under licence; and
- Xxxx Time software under licence from Xxxxxx Design
of Missoula MT USA.
(vi) The Xxxx Time software is not Year 2000 compliant.
Year 2000 Compliant
-----------------------------------------------------------------------------------------------------------------------------
68
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Section 4(o)
Contracts
Relevant Contracts (ii) Details of contracts are contained in the attached work in
progress schedule. There are no other relevant contracts.
Borrowings
(iv) An overdraft facility exists with the ANZ Bank for a limit
of up to $100,000.
Confidential Agreements
(v) Other than confidentiality agreements related to contracts
with Target's customers, there are none.
Profit sharing for Directors, Officers and Employees (vii) Details of profit sharing of directors or employees is
referred to in the attached Remuneration Summary Table.
Consultants (ix) Details of consultants are:
- Xxxxxx Xxxxxx - Senior Health Economist, Melbourne
- Xxxxxx Xxxxxx - Clinical Research Associate, New Zealand
Contract where termination has a material adverse (xi) Project based agreements exist with Phoenix International
effect UK, details of which have been provided to Xxxxxx in the
due diligence process.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(r)
Insurance Agent - Heath Group Australasia Pty Ltd (PH: 9826 3666)
-----------------------------------------------------------------------------------------------------------------------------
69
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Broker - Xxxxx Xxxxxxx
INSURANCE - HUMAN VOLUNTEER STUDIES
Policy No. - 62/902122/D
Insured - Synermedica Research & Development Pty Ltd
Insurer - Heath International Broking Pty Ltd
Limit of Indemnity - $2 million in one claim and in the annual aggregate
Period of Cover - To 4 March 2001
Deductibles - $500 each and every claim
INSURANCE - DIRECTORS AND OFFICERS LIABILITY INSURANCE
Insured - Synermedica Pty Ltd and Synermedica Research & Development Pty Ltd
Insurer - Resource Underwriting Pacific Pty Ltd
Period of Insurance - To 1 September 2000
Limit of Indemnity $2 million on any one claim and in the annual aggregate
Excess/Deductible - Directors/Officers - Nil
Company reimbursement - $2,500 0each and every claim
Retroactive date - Unlimited excluding known claims and circumstances
PROFESSIONAL INDEMNITY INSURANCE
-----------------------------------------------------------------------------------------------------------------------------
70
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Insurer: - Rescource Underwriting Pacific Pty Ltd
Insured - Synermedica Pty Ltd and Synermedica Research & Development
Pty Ltd
Period of Insurance - To 1 September 2000
Limit of Indemnity $2 million on any one claim and in the annual
aggregate
Excess/Deductible - $3,000 each and every claim
Retroactive date - Unlimited excluding known claims and circumstances
BUSINESS INSURANCE
Insurer - Concord Underwriting Agency Pty Ltd as agents for Mercantile
Mutual Insurance (Australia) Ltd
Insured - Synermedica Pty Ltd and Synermedica Research & Development
Pty Ltd
Period of Insurance - To 1 September 2000
Insurance Cover - Plant machinery - $51,000 - Malvern, $8,000 - Crows
Nest
Business Interruption Cover - $12,000
Burglary Cover - $15,000
Glass Cover - Replacement value
Public Liability - $5 million on any one occurrence
Excess - $100 each and every claim (applicable to accidental damage
cover only)
Insurance similar to the above policies has been in place for the five
years prior to each current insurable year. Xxxxxx can obtain
details from the broker if required.
-----------------------------------------------------------------------------------------------------------------------------
71
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CLAUSE OF UNIT PURCHASE AGREEMENT DISCLOSURE
-----------------------------------------------------------------------------------------------------------------------------
Section 4(s)
Litigation None specified.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(t)(i)
Employees (i) & (ii) Details of employees are set out in the attached
Remuneration Summary Table.
Superannuation (xix)(2) Xxxxx Pty Ltd as the trustee of the Nirvana Superannuation
Fund.
(xxi) Some earnings have been restructured for salary sacrifice
purposes and superannuation is paid on any bonuses paid.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(v)
Hazardous Materials None are used in the business.
-----------------------------------------------------------------------------------------------------------------------------
Section 4(w)
Business relationships with Target Nil.
-----------------------------------------------------------------------------------------------------------------------------
72
EXHIBIT 2(b)
------------
ESCROW AGREEMENT
----------------
73
EXHIBIT 4(g)
------------
TARGET FINANCIAL STATEMENTS
---------------------------
74
EXHIBIT 7(a)(vii)
-----------------
EMPLOYMENT AGREEMENTS
---------------------
75
EXHIBIT 7(a)(viii)
------------------
RELEASES
--------
76
EXHIBIT 7(a)(ix)
----------------
COVENANTS
---------
77
EXHIBIT 7(t)(iii)
-----------------
SPECIMEN EXISTING EMPLOYMENT CONTRACT
-------------------------------------
