Exhibit 1
SALE OF BUSINESS AGREEMENT
between:
SOFTLINE LIMITED
and
FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED
(WHICH NAME IS TO BE CHANGED TO SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED)
XXXXXX XXXXXXXXX INC.
0xx Xxxxx, Xxxx Xxxxxx Xxxx
Xxxxxxx Xxxx
Xxxxxxx, 0000
Telephone: (000) 000-0000
Fax: (000) 000-0000
CONTENTS
1. INTERPRETATION...................................................................................4
2. SUSPENSIVE CONDITIONS...........................................................................10
3. SALE............................................................................................14
4. ASSUMPTION OF THE LIABILITIES...................................................................15
5. PURCHASE PRICE OF THE BUSINESS AND ALLOCATION OF THE PURCHASE PRICE.............................18
6. PAYMENT OF THE PURCHASE PRICE...................................................................19
7. DELIVERY........................................................................................20
8. OWNERSHIP, RISK AND BENEFIT.....................................................................26
9. ASSIGNMENT OF CONTINUING CONTRACTS..............................................................26
10. WARRANTIES AND UNDERTAKINGS..................................................................27
11. THE TRADE NAMES..............................................................................32
12. RECORDAL.....................................................................................33
13. RELEASE OF SURETYSHIPS AND GUARANTEES........................................................34
14. WARRANTIES BY THE PURCHASER..................................................................34
15. MORE FAVOURABLE OFFER........................................................................37
16. BREACH.......................................................................................38
17. ANNOUNCEMENTS AND CONFIDENTIALITY............................................................39
18. GENERAL PROVISIONS FOR INDEMNITIES...........................................................40
19. INSOLVENCY NOTICES...........................................................................44
20. DELEGATION OF OBLIGATIONS IN RESPECT OF UNCLAIMED DIVIDENDS..................................44
21. ARBITRATION..................................................................................45
22. GENERAL......................................................................................46
23. ADDRESSES FOR LEGAL PROCESS AND NOTICES......................................................49
24. EXERCISE OF THE XXXXXX XXXX OPTION...........................................................50
APPENDICES:
1. American Sale Shares (clause 1.1.3), American Subsidiaries (clause 1.1.4) and Direct American
Subsidiaries (clause 1.1.15)
2. Australian Subsidiaries (clause 1.1.7)
3. Canadian Sale Shares (clause 1.1.10) and Direct Canadian Subsidiary (clause 1.1.16)
4. Continuing Contracts (clause 1.1.14)
5. Irish Sale Shares (clause 1.1.25), Irish Subsidiaries (clause 1.1.26) and Direct Irish Subsidiary
(clause 1.1.17)
6. South African Sale Shares (clause 1.1.35), South African Subsidiaries (clause 1.1.36) and Direct
South African Subsidiaries (clause 1.1.18)
7. Shareholder Loans (clause 1.1.20)
8. Integrity Software Sale Shares (clause 1.1.23)
9. Island Pacific Sale Shares (clause 1.1.28)
10. Management Accounts (clause 1.1.30)
11. Contracts requiring consent of third parties (clause 2.2.12)
12. Guarantee from The Sage Group plc (clause 2.2.13)
13. Form of Resolution in terms of section 228 of the Companies Act (clause 2.7)
14. Manner of distribution (clause 4.3)
15. Form of cession or assignment (clause 7)
16. Appointment of directors (clause 7)
17. Warranties in respect of the Business (clause 10.2)
18. Warranties in respect of the South African Subsidiaries, the Irish Subsidiaries, Xxxxx Consulting
and Pastel Software (clause 10.3)
19. Warranties in respect of the Australian Subsidiaries (clause 10.4)
20. Warranties in respect of the American Subsidiaries (clause 10.5)
21. Warranties in respect of the Canadian Subsidiaries (clause 10.6)
22. Warranties in respect of Integrity Software and Island Pacific (clause 10.7)
23. Disclosure schedule (clause 10.12)
24. Transaction costs (clause 22.3.1)
25. Liquidator's costs (clause 22.3.2)
SALE OF BUSINESS AGREEMENT
between:
SOFTLINE LIMITED
(a company registered in accordance with the laws of South Africa under
Registration No. 1977/002304/06)
("the Seller")
and
FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED
(which name is to be changed to Sage Software (SA) (Proprietary) Limited, a
company registered in accordance with the laws of South Africa under
Registration No. 2003/015693/07)
("the Purchaser")
WHEREAS:
A. The Seller is listed on the JSE Securities Exchange South Africa and
conducts the business of operating as an investment holding company
and holds the Sale Shares and, indirectly, the shares in the
subsidiary companies of the Direct American Subsidiaries, the Direct
Irish Subsidiary and the Direct South African Subsidiaries.
B. On 1 August 2003 The Sage Group plc, a company incorporated in England
and Wales, the shares of which are listed on the London Stock
Exchange, the holding company of the Purchaser, announced its
intention to acquire the Business, including the Equity Interests, of
the Seller in terms of section 228 of the Companies Act and the Seller
wishes to sell the Business and the Equity Interests to the Purchaser,
upon the terms and conditions set out in this Agreement.
NOW THEREFORE THE PARTIES AGREE:
1. INTERPRETATION
1.1 Definitions
In this Agreement and the preamble above, unless the context
requires otherwise:
1.1.1 "2003 Accounting Policies" means the accounting policies, principles,
practices and methods applied in the
preparation of the Seller's audited draft
annual financial statements as at and for its
financial year ended 31 March 2003;
1.1.2 "this Agreement" means this sale of business agreement and all
of its appendices;
1.1.3 "American Sale Shares" means the shares in the Direct American
Subsidiaries held by the Seller, as listed in
APPENDIX 1;
1.1.4 "American Subsidiaries" means the subsidiaries of the Seller
incorporated in various states of the United
States of America, as listed in APPENDIX 1;
1.1.5 "Assets" means all the assets of the Business which the
Seller is selling to the Purchaser in terms of
this Agreement, which are described more fully
in clause 3 below and shall include the Equity
Interests;
1.1.6 "Auditors" means Xxxxxxx Xxxxxx & Company;
1.1.7 "Australian Subsidiaries" means Pastel Software (Australia) Proprietary
Limited, a company incorporated in Australia
and all the subsidiaries (incorporated in
Australia) of Softline Australia (Proprietary)
Limited, a company registered in accordance
with the laws of South Africa under
registration number 2000/028147/07, a wholly
owned subsidiary of the Seller, as listed in
APPENDIX 2;
1.1.8 "Business" means the business of the Seller referred to in
paragraph A of the preamble above, as at the
Closing Date;
1.1.9 "Business Day" means any day other than a Saturday, Sunday or
national statutory holiday in South Africa;
1.1.10 "Canadian Sale Shares" means the shares in the Direct Canadian
Subsidiary held by the Seller, as listed in
APPENDIX 3;
1.1.11 "Claim" means the claim against The Softline Trust for
a loan made by the Seller to The Softline
Trust for purposes of the Seller's share
incentive scheme as at the Closing Date, which
loan, as at 31 July 2003, was an amount of R20
374 623,00 (twenty million three hundred and
seventy four thousand six hundred and twenty
three Rand);
1.1.12 "Closing Date" means the first Business Day after the first
trading Friday (being a Friday on which
trading occurs on the JSE Securities Exchange
South Africa), after the tenth day on which
trading occurs on the JSE Securities Exchange
South Africa following the Effective Date or
such later date referred to in clause 4.7;
1.1.13 "Companies Act" means the South African Companies Act, 1973;
1.1.14 "Continuing Contracts" means the contracts listed in APPENDIX 4;
1.1.15 "Direct American Subsidiaries" means the subsidiaries, incorporated in various
states of the United States of America, the
shares in which are held directly by the
Seller, as listed in APPENDIX 1;
1.1.16 "Direct Canadian Subsidiary" means the subsidiary, incorporated in Canada,
the shares in which are held directly by the
Seller, as set out in APPENDIX 3;
1.1.17 "Direct Irish Subsidiary" means the subsidiary, incorporated in the
Republic of Ireland, the shares in which are
held directly by the Seller, as set out in
APPENDIX 5;
1.1.18 "Direct South African
Subsidiaries" means the subsidiaries, incorporated in South
Africa, the shares in which are held directly
by the Seller, as listed in APPENDIX 6;
1.1.19 "Effective Date" means the date of fulfilment, or where
applicable deemed fulfilment, of all the
suspensive conditions set out in clause 2;
1.1.20 "Equity Interests" means the Sale Shares, and all shareholder
loans made to the Subsidiaries by the Seller
and any other companies owned or controlled by
the Seller, all as at the Closing Date, and as
set out in APPENDIX 7;
1.1.21 "GAAP" means Statements of Generally Accepted
Accounting Practice in South Africa;
1.1.22 "Integrity Software" means Integrity Software Limited, a company
incorporated under the laws of England and
Wales;
1.1.23 "Integrity Software Sale Shares" means the shares in Integrity Software held by
the Seller as listed in APPENDIX 8;
1.1.24 "Investor Rights
Agreement" means the Investor Rights Agreement entered
into between the Seller and Island Pacific
dated 1 January 2002;
1.1.25 "Irish Sale Shares" means the shares in the Direct Irish
Subsidiary held by the Seller as set out in
APPENDIX 5;
1.1.26 "Irish Subsidiaries" means the subsidiaries of the Seller
incorporated in the Republic of Ireland as
listed in APPENDIX 5;
1.1.27 "Island Pacific" means Island Pacific, Inc., previously known
as SVI Solutions Inc., a company incorporated
under the laws of the State of Delaware,
United States of America;
1.1.28 "Island Pacific Sale Shares" means the shares of common and preferred stock
in Island Pacific held by the Seller as set
out in APPENDIX 9;
1.1.29 "Liabilities" means the liabilities of the Seller as set out
in clause 4.1 below;
1.1.30 "Management Accounts" means the unconsolidated unaudited management
accounts prepared for:
(i) the Business for the period from 1 April
2003 to 31 July 2003;
(ii) for each of the Subsidiaries (except for
the dormant companies listed in APPENDIX
17B) for the period from 1 April 2003 to
30 June 2003; and
(iii) the Irish Subsidiaries for the twelve
month period ending on 31 March 2003,
attached to this Agreement as APPENDIX 10;
1.1.31 "Parties" means the parties to this Agreement, and
"Party" means any one of them as the context
may require;
1.1.32 "Sale Shares" means the American Sale Shares, the Canadian
Sale Shares, the Irish Sale Shares, the
Integrity Software Sale Shares, the Island
Pacific Sale Shares and the South African Sale
Shares;
1.1.33 "Signature Date" means the date on which this Agreement is
signed by both the Parties, or if they do not
sign it on the same date, the date of the last
signature;
1.1.34 "South Africa" means the Republic of South Africa;
1.1.35 "South African Sale Shares" means the shares in the Direct South African
Subsidiaries held by the Seller, as listed in
APPENDIX 6;
1.1.36 "South African Subsidiaries" means the subsidiaries of the Seller
incorporated in South Africa, as listed in
APPENDIX 6; and
1.1.37 "Subsidiaries" means the American Subsidiaries, the
Australian Subsidiaries, the Direct Canadian
Subsidiary, the Irish Subsidiaries and the
South African Subsidiaries.
1.2 General Interpretation
For the purposes of this Agreement the following rules of construction
shall apply, unless the context requires otherwise:
1.2.1 the singular shall include the plural and vice versa;
1.2.2 a reference to any one gender, whether masculine, feminine or
neuter, includes the other two;
1.2.3 any reference to a person includes, without being limited to, any
individual, body corporate, unincorporated association or other
entity recognised under any law as having a separate legal
existence or personality;
1.2.4 any word or expression defined in, and for the purposes of, this
Agreement shall if expressed in the singular include the plural and
vice versa, and a cognate word or expression shall have a
corresponding meaning;
1.2.5 all accounting terms used in this Agreement shall be interpreted
and all accounting classifications and determinations under it
shall be made in accordance with GAAP;
1.2.6 references to a statutory provision include any subordinate
legislation made from time to time under that provision and
references to a statutory provision include that provision as from
time to time modified or re-enacted as far as such modification or
re-enactment applies, or is capable of applying, to this Agreement
or any transaction entered into in accordance with this Agreement;
1.2.7 a "law" shall be construed as any law (including common law),
statute, constitution, decree, judgment, treaty, regulation,
directive, by-law, order or any other legislative measure or
enactment of any government, local government, statutory or
regulatory body or court and shall be deemed to include the rules
and other requirements of any applicable stock exchange;
1.2.8 references in this Agreement to "clauses" and "Appendices" are to
clauses of, and appendices to, this Agreement; and
1.2.9 any reference in this Agreement to this Agreement or any other
agreement, document or instrument shall be construed as a reference
to this Agreement or that other agreement, document or instrument
as amended, varied, novated or substituted from time to time.
1.3 Headings and Sub-headings
All the headings and sub-headings in this Agreement are for
convenience only and are not to be taken into account for the purposes
of interpreting it.
2. SUSPENSIVE CONDITIONS
2.1 The provisions of this clause 2 and clauses 1, 4.5, 4.6, 4.7, 4.8,
4.9, 10, 16, 17, 18.4, 18.5, 21, 22 and 23, shall take effect and
become operative immediately upon the Signature Date.
2.2 Subject to clause 2.1 above, the whole of this Agreement shall be
subject to the fulfilment, by 30 November 2003 (or, in the case of
clause 2.2.13, within 14 (fourteen) days from the Signature Date) or
by such later date as the Parties may agree upon in writing, of the
following suspensive conditions that:
2.2.1 all unconditional approvals required in terms of the Xxxxxxxxxxx
Xxx, 0000, for the implementation of this Agreement are given or
deemed to be given. If any approval is subject to any conditions,
this suspensive condition will only be deemed to have been
fulfilled if the Parties in their sole discretion agree in writing
to such conditions;
2.2.2 to the extent required by the law of the country where any
Subsidiary is incorporated, all and any approvals required from any
anti-trust, competition or merger authorities outside of South
Africa for the implementation of this Agreement are given or deemed
to be given. If any approval is subject to any conditions, this
suspensive condition will only be deemed to have been fulfilled if
the Parties in their sole discretion agree in writing to such
conditions;
2.2.3 all and any approvals for the implementation of this Agreement from
the Exchange Control Department of the South African Reserve Bank
are given. If any approval is subject to any conditions, this
suspensive condition will only be deemed to have been fulfilled if
the Purchaser in its sole discretion agrees in writing to such
conditions;
2.2.4 to the extent required by the law of the country where any
Subsidiary is incorporated, all and any other regulatory approvals
for the implementation of this Agreement are given;
2.2.5 the shareholders of the Seller authorise and approve the sale of
the Business and the Equity Interests in terms of this Agreement as
required by section 228 of the Companies Act;
2.2.6 the acquisition of the Island Pacific Sale Shares be approved by
the board of directors of Island Pacific for purposes of
eliminating restrictions that would otherwise be applicable to the
Purchaser under section 203 of the Delaware General Corporation
Law;
2.2.7 either (i) an opinion of Island Pacific's counsel is delivered
pursuant to section 2.2 of the Investor Rights Agreement or (ii)
Island Pacific waives such requirement in writing;
2.2.8 Island Pacific waives its right of first refusal under the Investor
Rights Agreement and consents, in writing, to the transfer and
assignment to the Purchaser of all of the registration rights and
other rights of the Seller under the Investor Rights Agreement;
2.2.9 Island Pacific does not redeem the Series A Preferred Stock held by
the Seller, provided that this condition shall be deemed to have
been fulfilled if the Seller delivers to the Purchaser a written
statement by Island Pacific that it will not redeem the Series A
Preferred Stock prior to the Closing Date;
2.2.10 Xxxxxx Xxxx consents in writing to the sale of the Island Pacific
Sale Shares by the Seller to the Purchaser;
2.2.11 the written consent by Omicron Master Trust and Midsummer
Investments Limited to the transfer of the Island Pacific Sale
Shares to the Purchaser in order that such sale will not trigger
any rights under any pre-emptive rights, anti-dilution rights,
rights of first offer or refusal, options, put or call rights,
encumbrances or liens with respect to the Island Pacific Sale
Shares, lock-up provisions or default provisions;
2.2.12 the third parties to the Continuing Contracts and the contracts
listed in APPENDIX 11 consent to the assignment of the rights and
obligations under such contracts to the Purchaser. If any consent
is subject to any conditions, this suspensive condition will only
be deemed to have been fulfilled if the Purchaser, in its sole
discretion, agree in writing to such conditions;
2.2.13 within 14 (fourteen) days from the Signature Date, the Purchaser
delivers to the Seller a guarantee in the form attached as APPENDIX
12 from the Purchaser's holding company, The Sage Group plc, a
company registered in accordance with the laws of England and
Wales, for the due performance by the Purchaser of its obligations
under this Agreement; and
2.2.14 the Seller obtains a certificate issued by the Minister of National
Revenue under section 116 of the Income Tax Act (Canada) and
delivers a certified copy of such certificate to the Purchaser.
2.3 The suspensive conditions in clauses 2.2.6, 2.2.7, 2.2.8, 2.2.9,
2.2.10, 2.2.11, 2.2.12 and 2.2.14, or any part of any of those
suspensive conditions above are stipulated for the benefit of the
Purchaser alone and may be waived, either in whole or in part, by the
Purchaser at any time before 30 November 2003 or such later date as
may be agreed upon in writing by the Parties, but only by written
notice given to the Seller before the end of that period. If any one
or more of those conditions is duly waived by the Purchaser, then the
condition so waived shall be deemed to have been fulfilled.
2.4 If the suspensive conditions referred to in clause 2.2 above are not
fulfilled or where applicable deemed to be fulfilled by 30 November
2003 (or, in the case of clause 2.2.13, within 14 (fourteen) days from
the Signature Date) or such later date as may be agreed upon in
writing by the Parties then the provisions of this Agreement that are
suspended shall not take effect and those that have taken effect and
become operative shall fall away, unless otherwise agreed in writing
by the Parties.
2.5 If the suspensive conditions referred to in clause 2.2 above are
fulfilled or where applicable deemed to be fulfilled, then all the
provisions of this Agreement, which were suspended, in terms of clause
2.2 above shall also take effect and become operative, and the whole
of this Agreement shall accordingly become unconditional.
2.6 Each Party shall sign all such documents and do everything else that
may reasonably be required of it by the other Party to bring about the
fulfilment of the suspensive conditions in clause 2.2 above, and they
shall co-operate with each other in all respects to that end.
2.7 The Seller undertakes to the Purchaser that it shall submit this
Agreement to its shareholders for approval in terms of section 228 of
the Companies Act in the form of the resolution attached as APPENDIX
13, or such other form as the Parties may agree in writing, as soon as
possible after the Signature Date and that it shall not agree to any
amendments of the resolution without the prior written consent of the
Purchaser.
3. SALE
The Seller agrees to sell to the Purchaser and the Purchaser agrees to
purchase from the Seller, upon and subject to the terms and conditions
of this Agreement, the Business as a going concern, together with all
of its assets of every kind, movable and immovable, corporeal and
incorporeal and wherever situated and with all rights, including
dividend rights, attached or accruing to them all as at the Closing
Date and which shall include, without being limited to:
3.1 all information files, records, data, plans, contracts and recorded
knowledge owned by the Seller for or in connection with the Business,
including customer and supplier lists;
3.2 all the Seller's rights and obligations under the Continuing Contracts
to be assigned to the Purchaser in terms of clause 9 below;
3.3 the Claim; and
3.4 all the Seller's rights and obligations in respect of the Equity
Interests.
4. ASSUMPTION OF THE LIABILITIES
4.1 The Purchaser agrees to assume the following liabilities of the Seller
with effect from the Closing Date and to discharge them as and when
they fall due:-
4.1.1 All current liabilities of the Seller in respect of the Business,
set out in the Management Accounts of the Business, totaling an
amount of R105 605,00 (one hundred and five thousand six hundred
and five Rand).
4.1.2 Provided that the distribution of the proceeds of the sale of the
Business to shareholders of the Seller occurs within a period of 6
(six) months from the Closing Date and that the Purchaser fully
complies with the provisions of clause 4.3 below:
4.1.2.1 any liability for Capital Gains Tax levied in terms of Schedule
8 of the Income Tax Act, 1962 ("the Income Tax Act") arising out
of the transaction set out in the Agreement or the distribution
of the proceeds of the sale of the Business to shareholders of
the Seller; and
4.1.2.2 any liability for Secondary Tax on Companies levied in terms of
section 64B of the Income Tax Act arising out of the transaction
set out in this Agreement or the distribution of the proceeds of
the sale of the Business to shareholders of the Seller,
provided further that the Purchaser's liability in terms of clauses
4.1.2.1 and 4.1.2.2 shall be limited to the amounts of those taxes
that would have been payable if the distribution of the proceeds of
the sale of the Business to shareholders of the Seller occurred on
the Closing Date or within 10 (ten) days after the Closing Date,
and in accordance with clause 4.3 below.
4.1.3 The loan by Softline Holdings (Proprietary) Limited (a company
incorporated in South Africa under registration number:
1996/000595/07) to the Seller in an amount of R227 891 115,00 (two
hundred and twenty seven million eight hundred and ninety one
thousand one hundred and fifteen Rand).
4.1.4 The loan by Datafaction Inc. (a company incorporated in the State
of Delaware, United States of America) to the Seller in an amount
of R12 353 924,00 (twelve million three hundred and fifty three
thousand nine hundred and twenty four Rand).
4.1.5 The loan by Handisoft Software Proprietary Limited (a company
incorporated in Western Australia) to the Seller in an amount of
R115 154 327,00 (one hundred and fifty million one hundred and
fifty four thousand three hundred and twenty seven Rand).
4.2 The Purchaser does not agree to assume or discharge and shall not be
obliged to assume or discharge any liabilities of any kind of the
Business, other than those which it agrees to assume or discharge in
terms of this Agreement, and accordingly the Seller shall take no
action which would have the effect of increasing the amount of the
Liabilities as at the Closing Date, without the prior written consent
of the Purchaser.
4.3 The Seller undertakes to the Purchaser to distribute the proceeds of
the sale of the Business to its shareholders strictly in the manner
set out in APPENDIX 14.
4.4 The Purchaser agrees to indemnify and hold the Seller harmless against
all the Liabilities which the Purchaser is obliged to assume and
discharge in terms of clause 4.1 above and against any demand, claim,
action or other legal proceedings made or instituted against the
Seller in respect of any of them, and against all costs incurred by
the Seller or awarded against them in respect of any such demand,
claim, action or other legal proceedings (but always excluding
liabilities which the Seller is obliged to retain and discharge in
terms of this Agreement).
4.5 The Seller agrees to indemnify the Purchaser against all costs
incurred by the Purchaser or awarded against it in respect of any
demands, claims, actions or other legal proceedings made or instituted
against the Purchaser in respect of any of the liabilities which the
Purchaser is not obliged to assume and discharge in terms of this
Agreement.
4.6 Subject to clause 4.9, if the Seller becomes aware of any liability in
respect of the Business after the Signature Date but before the
Closing Date other than the Liabilities ("additional liability"), it
shall be entitled but not obliged, to notify the Purchaser in writing
of such additional liability and such written notice shall set out
full details of the additional liability, the amount of such
additional liability and the basis and source of such additional
liability. The Purchaser shall have 7 (seven) days from the date of
receipt of such written notice within which to notify the Seller in
writing whether or not it will, unconditionally and irrevocably,
assume such additional liability and discharge such additional
liability as and when it falls due. If the Purchaser notifies the
Seller in writing that it will not so assume the additional liability,
the Seller shall be entitled but not obliged to terminate this
Agreement on 3 (three) days' written notice to the Purchaser, and
neither Party shall have a claim against the other Party arising out
of such termination.
4.7 If the Closing Date falls within the 7 (seven) or 3 (three) day
period, as the case may be, referred to in clause 4.6 above, the
Closing Date shall be automatically postponed to the first Business
Day after the last day of the 7 (seven) or 3 (three) day period, as
the case may be.
4.8 If the Purchaser assumes the additional liability set out in the
written notice delivered in terms of clause 4.6, such additional
liability shall be included in the liabilities assumed by the
Purchaser in terms of clause 4.1 above, and the purchase price
referred to in clause 5.1 above shall be increased accordingly.
4.9 Notwithstanding anything to the contrary in this Agreement the Seller
shall not be entitled to give the written notification referred to in
clause 4.6 in respect of any liability which arises as a result of a
breach by the Seller of the terms or conditions of this Agreement or a
breach by the Seller of any Continuing Contract or a breach by the
Seller or any Subsidiary of any material agreement with a third party.
5. PURCHASE PRICE OF THE BUSINESS AND ALLOCATION OF THE PURCHASE PRICE
5.1 The purchase price of the Business shall be an amount equal to the sum
of the Liabilities and R784 830 000,00 (seven hundred and eighty four
million eight hundred and thirty thousand Rand).
5.2 The Parties shall agree, on or before the Effective Date, on the
allocation of the whole of the purchase price referred to in clause
5.1 among the Assets as follows:
5.2.1 the Claim and the shareholder loans set out in APPENDIX 7, at their
book value as reflected in the respective Management Accounts; and
5.2.2 the American Subsidiaries, the Australian Subsidiaries, the Irish
Subsidiaries, the South African Subsidiaries, the Direct Canadian
Subsidiary, the Island Pacific Sale Shares and the Integrity
Software Sale Shares, at the values agreed upon between the Parties
or, failing agreement, determined in accordance with clause 5.3
below.
5.2.3 the amount of the purchase price allocated to the Direct Canadian
Subsidiary in terms of clause 5.2.2 shall, for purposes of the
application for a clearance certificate under section 116 of the
Income Tax Act (Canada) to the Canada Customs and Revenue Agency be
converted into Canadian Dollars at the rate of exchange quoted by
The Standard Bank of South Africa Limited as the market selling
rate of the Canadian Dollar against the Rand at or around 11:00am
on the Closing Date, as certified by a duly authorized officer of
The Standard Bank of South Africa Limited.
5.3 If the Parties fail to agree on the allocation of the purchase price
as set out in clause 5.2.2 above the matter shall be referred, within
2 (two) Business Days from the Effective Date, to
PricewaterhouseCoopers Inc. ("PWC") for determination at least 1 (one)
Business Day before the Closing Date. PWC shall act as valuators and
not as arbitrators and their decision shall, in the absence of
manifest error, be final and binding on the Parties.
5.4 If any Value Added Tax ("VAT") is payable by the Seller for the sale
of the Business or any of the Assets in terms of this Agreement under
the Value Added Tax Act, 1991, the Purchaser shall be obliged to pay
to the Seller the amount of the VAT so payable by the Seller against
presentation to the Purchaser of a VAT invoice and the purchase price
referred to in clause 5.1 above shall be increased accordingly.
6. PAYMENT OF THE PURCHASE PRICE
6.1 The purchase price of the Business shall be payable by the Purchaser
to the Seller on the Closing Date as follows:
6.1.1 against compliance by the Seller with its obligations in terms of
clause 7, the Purchaser shall assume, and discharge on due date,
the Liabilities (being the liabilities referred to in clause 4.1
above);
6.1.2 R784 830 000,00 (seven hundred and eighty four million eight
hundred and thirty thousand Rand) shall be payable in cash on the
Closing Date against completion of all the matters referred to in
clause 7.
6.2 The payment by the Purchaser of the purchase price in terms of this
clause 6 shall be without any withholding, set-off or deduction.
7. DELIVERY
7.1 Delivery of the Business
The Seller shall, on the Closing Date, deliver the Business
together with the Assets to the Purchaser in accordance with
the following provisions:-
7.1.1 The Seller shall take all such steps and do everything which may be
required of it to put the Purchaser in actual possession of the
Business.
7.1.2 The Seller hereby cedes to the Purchaser, with effect from the
Closing Date, all its rights to the Claim. The Seller shall sign
all such documents and do everything else which may reasonably be
required by the Purchaser to record or otherwise give effect to the
cession of those rights or any of them.
7.1.3 The Seller shall deliver to the Purchaser on the Closing Date all
papers, drawings, electronic discs, software and other material
embodying or containing or otherwise recording the assets referred
to in clause 3.1.
7.2 Books and Records
The Seller shall, on the Closing Date, place all the
documents, books and records of each of the Subsidiaries,
including without derogating from the generality thereof the
share certificates in respect of the Subsidiaries, minute
books, share registers, stock books, stock ledgers, corporate
seals, certificates of incorporation, memoranda and articles
of association, books of account, title deeds and the like,
in the possession of the Seller, or, where such documents,
books and records are not in the possession of the Seller,
the Seller shall place them under the control of the
Purchaser by delivering to the Purchaser on the Closing Date
a certified copy of a written instruction to any third party
under whose control such documents, books and records are to
act on the instructions, and under the direction, of the
Purchaser from the Closing Date.
7.3 Delivery in respect of the Direct South African Subsidiaries
The Seller shall deliver to the Purchaser on the Closing Date
the following documents in respect of the South African Sale
Shares:
7.3.1 the share certificates for the South African Sale Shares, together
with such duly executed deeds of cession in the form attached as
APPENDIX 15 and share transfer forms for the transfer of the South
African Sale Shares to the Purchaser or The Sage Group plc or such
other entity or entities which is/are (a) subsidiary/ies of The
Sage Group plc as the Purchaser may by written notice to the Seller
designate at least 15 (fifteen) days before the Closing Date
("designated subsidiary");
7.3.2 a written cession in the form attached as APPENDIX 15 of all the
shareholder loans to each Direct South African Subsidiary which are
included in the Equity Interests;
7.3.3 duly certified copies of resolutions of the directors of each
Direct South African Subsidiary approving the following matters:
7.3.3.1 the transfer from the Seller of the South African Sale Shares in
each of the Direct South African Subsidiaries to the Purchaser
or the designated subsidiary and the cession by the Seller to
the Purchaser or the designated subsidiary of each shareholder
loan to each Direct South African Subsidiary;
7.3.3.2 the placing on each Direct South African Subsidiary's register
of members of the name of the transferee of the shares for
registration in accordance with the share transfer forms
delivered in terms of clause 7.3.1 and authorising the issue of
appropriate new share certificates to the Purchaser; and
7.3.3.3 the appointments of the persons as directors of the Direct South
African Subsidiaries as set out in PART A of APPENDIX 16.
7.4 Delivery in respect of the Direct American Subsidiaries and Island
Pacific
The Seller shall deliver to the Purchaser on the Closing Date the
following documents with respect to the Direct American Subsidiaries
and Island Pacific:
7.4.1 the share certificates representing all of the American Sale Shares
and Island Pacific Sale Shares, together with duly executed stock
powers for the transfer to the Purchaser or the designated
subsidiary. For the purposes of this clause 7.4 the designated
subsidiary shall be a subsidiary of The Sage Group plc incorporated
in the United States of America;
7.4.2 copies of the required opinions, statements, third party consents
or waivers with respect to the Island Pacific Sale Shares as set
forth in clauses 2.2.7, 2.2.8, 2.2.9, 2.2.10, 2.2.11 and 2.2.12 of
this Agreement, on terms satisfactory in substance and form to the
Purchaser;
7.4.3 certified copies of resolutions evidencing the required approval of
the board of the directors of Island Pacific with respect to the
acquisition of the Island Pacific Sale Shares by the Purchaser or
the designated subsidiary as set forth in clause 2.2.6 of this
Agreement, on terms satisfactory in substance and form to the
Purchaser;
7.4.4 the appointments of the persons as directors of each Direct
American Subsidiary as set out in PART B of APPENDIX 16;
7.4.5 all such other certificates, documents and instruments with respect
to the American Subsidiaries and Island Pacific Sale Shares as the
Purchaser shall reasonably request, in writing, at least 15
(fifteen) days before the Closing Date, in connection with the
consummation of the transactions contemplated by this Agreement.
7.5 Delivery in respect of the Australian Subsidiaries
The Seller shall deliver to the Purchaser on the Closing Date the
following documents in respect of the Australian Subsidiaries:
7.5.1 duly completed bank authorities directed to the bankers of each
Australian Subsidiary authorizing the operation of each of its bank
accounts by nominees of the Purchaser and terminating the authority
of each of the present signatories;
7.5.2 written resignations of the company secretaries of the Australian
Subsidiaries, acknowledging that:
7.5.2.1 they have no claim for fees, entitlements, salary or
compensation for loss of office or otherwise against any of the
Australian Subsidiaries; and
7.5.2.2 there is no agreement, arrangement or understanding under which
any of the Australian Subsidiaries has, or could have, any
obligation to them;
7.5.3 duly certified copies of resolutions of the directors of each
Australian Subsidiary approving the appointments of the persons as
directors of the Australian Subsidiaries as set out in PART C of
APPENDIX 16.
7.6 Delivery in respect of the Direct Canadian Subsidiary
The Seller shall deliver to the Purchaser on the Closing Date the
following documents in respect of the Canadian Sale Shares:
7.6.1 the share ledgers and minute books of the Direct Canadian
Subsidiary;
7.6.2 a certificate of status and certified document list of the Direct
Canadian Subsidiary from the Minister of Consumer and Business
Services (Ontario), as well as of each jurisdiction in which the
nature of its business or the ownership or leasing of its
properties requires the Direct Canadian Subsidiary to be duly
qualified or licensed, each dated within 3 (three) Business Days of
the Closing Date;
7.6.3 share certificates evidencing all of the Canadian Sale Shares duly
endorsed in blank or accompanied by stock transfer powers duly
executed in blank, in proper form for transfer of the Canadian Sale
Shares to the Purchaser or the designated subsidiary;
7.6.4 certified copies of resolutions of the board of directors of the
Direct Canadian Subsidiary approving the transfer of the Canadian
Sale Shares from the Seller to the Purchaser or the designated
subsidiary;
7.6.5 all other documents reasonably required from the Seller to
consummate the transactions contemplated herein, and as requested,
in writing, by the Purchaser at least 15 (fifteen) days before the
Closing Date.
7.7 Delivery in respect of Integrity Software
The Seller shall deliver to the Purchaser on the Closing Date the
following documents in respect of the Integrity Software Sale Shares:
7.7.1 transfers of the Integrity Software Sale Shares duly executed by
the registered holders thereof in favour of the Purchaser or the
designated subsidiary together with the relevant share certificates
in the names of such registered holders or an indemnity in a form
acceptable to the Purchaser;
7.7.2 duly certified copies of resolutions of the directors of Integrity
Software approving the transfer from the Seller of the Integrity
Software Sale Shares to the Purchaser or the designated subsidiary.
7.8 Delivery in respect of the Direct Irish Subsidiary
The Seller shall deliver to the Purchaser on the Closing Date the
following documents in respect of the Irish Sale Shares:
7.8.1 transfers of the Irish Sale Shares duly executed by the registered
holders thereof in favour of the Purchaser or the designated
subsidiary together with the relevant share certificates in the
names of such registered holders or an indemnity in a form
acceptable to the Purchaser;
7.8.2 a written assignment of the shareholders loan in the form attached
as APPENDIX 15 to the Direct Irish Subsidiary which is included in
the Equity Interests; and
7.8.3 duly certified copies of resolutions of the directors of the direct
Irish Subsidiary approving the transfer from the Seller of the
Irish Sale Shares to the Purchaser or the designated subsidiary and
the assignment to the Purchaser or the designated subsidiary of the
shareholders loan to the Direct Irish Subsidiary.
8. OWNERSHIP, RISK AND BENEFIT
The ownership of, and the risk and benefit in, the Business and all
the Assets shall pass to the Purchaser upon delivery of the Business
to the Purchaser in accordance with the provisions of clause 7 above.
9. ASSIGNMENT OF CONTINUING CONTRACTS
9.1 On the Closing Date the Seller shall be obliged to assign to the
Purchaser, with effect from the Closing Date, all the Seller's rights
and all its obligations under every Continuing Contract and the
Purchaser shall be obliged to accept the assignment of all those
rights and obligations under each such Continuing Contract.
9.2 The Seller and the Purchaser shall be obliged to enter into all such
agreements and sign all such documents and do all such things as may
reasonably be required of it to give effect to the provisions of
clause 9.1.
9.3 The Purchaser hereby indemnifies the Seller against any claim which
may be made against the Seller and any liability which may be incurred
by the Seller arising out of or attributable to the failure of the
Purchaser to discharge its obligations under any Continuing Contract
after the Closing Date, as set out in clause 9.1.
10. WARRANTIES AND UNDERTAKINGS
10.1 The Seller warrants and undertakes to the Purchaser, in respect of
each of the Subsidiaries and the Seller, for the period between 31
March 2003 and the Closing Date, that, save as the Purchaser may
otherwise consent in writing in advance:-
10.1.1 None of the Subsidiaries shall have varied the terms of employment
of or remuneration payable to any of its key employees, directors
or officers, and none of the Subsidiaries will agree to any
compensation or other benefits payable on or in connection with the
termination of or retirement from employment or office of any such
person.
10.1.2 Neither the Seller nor any of the Subsidiaries shall incur or
become committed to incur any capital expenditure, except in the
ordinary and regular conduct of the Business or that Subsidiary's
business.
10.1.3 Neither the Seller nor any of the Subsidiaries shall enter into any
transaction except in the ordinary and regular conduct of the
Business or that Subsidiary's business.
10.1.4 No resolutions shall be passed by the members or directors of any
of the Subsidiaries or the Seller, other than such resolutions as
are strictly necessary to give effect to this Agreement or that are
passed in the ordinary and regular course of business.
10.1.5 No dividend shall be declared nor will any distribution out of
profit, accumulated profit, reserves or capital of any of the
Subsidiaries or the Seller be made.
10.1.6 The business of each of the Subsidiaries and the Business shall be
conducted in the ordinary course and no material adverse change or
deterioration will occur in the financial position, assets or
liabilities of (or any of their constituent items) the Subsidiaries
or the Seller.
10.1.7 There has not been and nor shall there be any material change in
the assets or liabilities of (or any of their constituent items) or
shareholders equity in any of the Subsidiaries or the Seller.
10.1.8 Neither the Seller nor any of the Subsidiaries has and shall not
have sold or disposed of or entered into any agreement for the sale
or disposal of any of its assets, except in the ordinary and
regular conduct of the Business or of that Subsidiary's business.
10.1.9 Neither the Seller nor any of the Subsidiaries has and shall not
have incurred any liabilities (including contingent liabilities,
which shall, without derogating from the generality thereof,
include contingent liabilities arising from or relating to any
warranty or guarantee given to any third party in connection with
the activities of the Subsidiaries and the Seller) or undertaken
any commitments or sold or otherwise disposed of any of its assets,
except in the ordinary and regular conduct of the Business or of
that Subsidiary's business.
10.2 The Seller hereby gives to the Purchaser in connection with the sale
of the Business all of the warranties set out in APPENDIX 17.
10.3 The Seller hereby gives to the Purchaser in connection with the sale
of the South African Sale Shares, the South African Subsidiaries, the
Irish Sale Shares and the Irish Subsidiaries all of the warranties set
out in APPENDIX 18.
10.4 The Seller hereby gives to the Purchaser in connection with the
Australian Subsidiaries all of the warranties set out in APPENDIX 19.
10.5 The Seller hereby gives to the Purchaser in connection with the sale
of the American Sale Shares and the American Subsidiaries all of the
warranties set out in APPENDIX 20.
10.6 The Seller hereby gives to the Purchaser in connection with the sale
of the Canadian Sale Shares and the Direct Canadian Subsidiary all of
the warranties set out in APPENDIX 21.
10.7 The Seller hereby gives to the Purchaser in connection with the sale
of the Integrity Sale Shares and the Island Pacific Sale Shares all
the warranties set out in APPENDIX 22.
10.8 Each warranty shall continue and remain in force notwithstanding the
completion of the transactions provided for in this Agreement.
10.9 Notwithstanding anything to the contrary contained in this Agreement:
10.9.1 the Purchaser shall only be entitled to exercise its rights to
terminate the Agreement in terms of clause 10.9.4 if the breach of
the warranty is of such a nature that had the facts to which the
breach of the warranty relate, been in existence and known prior to
the Signature Date to the Purchaser, the Purchaser would not have
entered into this Agreement or would have entered into the
Agreement on materially different terms, whether such knowledge
relates to the Seller, the Business and/or the Subsidiaries;
10.9.2 the Purchaser's only remedy in the event of a breach of a warranty
shall be to terminate this Agreement in accordance with the
provisions of this clause 10.9, and neither Party shall have a
claim against the other Party arising out of such termination;
10.9.3 the Purchaser shall not be entitled to exercise any of its rights
in respect of a breach of any of the warranties referred to in this
clause 10 after the distribution to shareholders of the Seller of
the full proceeds of the sale contemplated in this Agreement
whether by way of liquidation dividend, dividend in anticipation of
liquidation or any other form of distribution or payment;
10.9.4 the Purchaser shall as soon as practicable upon becoming aware of
any breach of any of the warranties referred to in this clause 10
and after the Purchaser has had the reasonable opportunity to
assess the impact of such breach on the Business or the Subsidiary,
notify the Seller in writing of such breach and the Seller shall
have 3 (three) days from the date of such written notice within
which to remedy such breach and if the Seller fails to remedy such
breach, the Purchaser shall be entitled to terminate this Agreement
by giving written notice of such termination to the Seller within 7
(seven) days from the date of expiry of the 3 (three) days referred
to in this clause 10.9.4;
10.9.5 the Seller shall not be entitled to distribute to the shareholders
of the Seller any part of the proceeds of the sale contemplated in
this Agreement whether by way of liquidation dividend, dividend in
anticipation of liquidation or any other form of distribution or
payment in the event that the Purchaser has notified the Seller, in
terms of clause 10.9.4, of any breach of any of the warranties
referred to in this clause 10, provided that the Seller shall be
entitled so to distribute the proceeds of the sale contemplated in
this Agreement if the 7 (seven) days from the date of expiry of the
3 (three) days referred to in clause 10.9.4 has expired and:
10.9.5.1 the Purchaser has not terminated the Agreement upon written
notice to the Seller in terms of clause 10.9.4; and
10.9.5.2 no dispute exists between the Parties in respect of such breach
or termination,
subject to clause 4.3;
10.9.6 in order for the Purchaser to exercise its rights in terms of this
clause 10, the Seller shall give the Purchaser access to the
Business and the Subsidiaries (including, without being limited to,
all documents, financial records and financial information) and
shall cooperate with the Purchaser by providing to it full
information on the breach of the warranty and the steps taken by
the Seller to remedy the breach; and
10.9.7 the Purchaser shall send a written notice to the Seller at least 24
(twenty four) hours before the commencement of the general meeting
of the shareholders of the Seller called to approve the sale of the
business and the Equity Interests referred to in clause 2.2.5,
stating whether or not it has become aware of any breach of any
warranty, if so, the nature of such breach and whether or not it
has had the reasonable opportunity to assess the materiality of
such breach. If the Purchaser has had the reasonable opportunity to
assess the materiality of such breach the notice shall state
whether or not it wishes to exercise its rights in terms of clause
10.9.4 because of such breach. To the extent that the Purchaser
notifies the Seller of its intention not to terminate this
Agreement as a result of such breach only, the Purchaser shall be
deemed to have waived its right to terminate the Agreement as a
result of such breach. For the avoidance of doubt, it is agreed
that the Purchaser shall be entitled to exercise its rights in
terms of clause 10.9.4 at any time in respect of a breach of a
warranty that the Purchaser becomes aware of after the written
notice referred to in this clause 10.9.7.
10.10 Each warranty shall be a separate warranty and shall in no way be
limited to or restricted by reference to or by inference from the
terms of any other warranty, or by any words in this Agreement.
10.11 The Seller acknowledges that in entering into this Agreement the
Purchaser is relying on those warranties and all of the other
warranties given by the Seller in terms of this Agreement.
10.12 All the warranties referred to in this clause 10 are given subject to
the disclosure schedule attached to this Agreement as APPENDIX 23.
10.13 A breach of a warranty given in terms of clauses 10.2 to 10.7 which
occurs only as a result of a change in the laws or regulatory practice
in the relevant country of incorporation of the Seller or any
Subsidiary, shall not constitute a breach of a warranty for purposes
of clause 10.9.
11. THE TRADE NAMES
11.1 After the Closing Date the Seller shall not be entitled to use any
name included among the Assets (including without being limited to the
name "Softline") or any words which are confusingly similar to any
such trade name for any purpose whatever, whether as a trade xxxx,
trade name or as part of a corporate name, and the Seller acknowledges
that the right to the use of any such trade name will be vested
exclusively in the Purchaser.
11.2 The Seller undertakes that with effect from the Closing Date it shall
remove the word "Softline" or any other word which is confusingly
similar to the word "Softline" from its corporate name and the Seller
undertakes to the Purchaser that it shall submit to its shareholders
for approval a special resolution for the change of the name of the
Seller to any name which does not include any name referred to in
clause 11.1 at the same general meeting of shareholders of the Seller
referred to in clause 2.2.5.
12. RECORDAL
12.1 It is recorded that at 31 July 2003, 29 460 315 (twenty nine million
four hundred and sixty thousand three hundred and fifteen) ordinary
shares in the Seller held by the Trustees for the time being ("the
Trustees") of The Softline Trust ("the Trust") have been allocated to
and purchased by beneficiaries of the Trust ("the Beneficiaries") in
accordance with the provisions of the Trust Deed between the Seller
and the Trustees which governs the share incentive scheme ("the
Scheme"), and, in order to ensure that the Beneficiaries in the Scheme
are placed in a position which is no worse, or better, than other
shareholders of the Seller as a consequence of the implementation of
this Agreement, the board of directors of the Seller instructed the
Trustees to deal with Beneficiaries in the following manner:
12.1.1 the delivery period of all shares purchased by Beneficiaries in
terms of the Scheme, will be accelerated and be effective from the
Closing Date;
12.1.2 with respect to each Beneficiary, for that amount constituting a
positive difference between the amount of the distribution received
and the purchase price of the shares purchased, the Beneficiary
will become a creditor of the Trust in respect of the Scheme;
12.1.3 the Trustees will, on receipt of notification from a Beneficiary
setting out the positive difference referred to in clause 12.1.2
above, immediately pay any such amount to the respective
Beneficiaries.
12.2 The Seller shall procure that the Claim is repaid to the Purchaser on
the date of distribution of all or any part of the proceeds of the
sale contemplated in this Agreement whether by way of liquidation
dividend, dividend in anticipation of liquidation or any other form of
distribution or payment.
13. RELEASE OF SURETYSHIPS AND GUARANTEES
The Purchaser shall procure the release of the Seller from the
suretyship in favour of The Standard Bank of South Africa Limited
dated 3 July 2003 and shall be obliged to furnish its own suretyship
insofar as it may be necessary to procure any such release, but shall
not be obliged to effect any payment, provide any further security, or
agree to any variation of the terms of any obligations guaranteed in
order to procure any such release.
14. WARRANTIES BY THE PURCHASER
14.1 The Purchaser warrants that:
14.1.1 it is incorporated as a private company with limited liability
according to the laws of South Africa;
14.1.2 it has the power to enter into this Agreement and the execution by
it of, and the performance by the Purchaser of its obligations
under, this Agreement, does not breach the provisions of its
articles of association; and
14.1.3 it is a subsidiary of The Sage Group plc, a company incorporated in
England and Wales, an international investment holding company and
which is listed on the London Stock Exchange.
14.2 The Purchaser represents and warrants that it is not a resident of the
United States of America ("the USA") or an entity domiciled in the
USA, and that it is not acquiring the Island Pacific Sale Shares for
the account or benefit of, any of the following:
14.2.1 a natural person resident in the USA;
14.2.2 a partnership or corporation organized or incorporated under the
laws of the USA;
14.2.3 an estate of which any executor or administrator is organized,
incorporated, or (if an individual) resident in the USA;
14.2.4 a trust of which any trustee is organized, incorporated, or (if an
individual) resident in the USA;
14.2.5 an agency or branch of a foreign entity located in the USA;
14.2.6 a non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a person or entity organized, incorporated,
or (if an individual) resident in the USA;
14.2.7 a discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated,
or (if an individual) resident in the USA; or
14.2.8 a partnership or corporation (a) organized or incorporated under
the laws of any jurisdiction outside the USA; and (b) formed by a
person or entity organized, incorporated, or (if an individual
resident) in the USA principally for the purpose of investing in
securities not registered under the USA Securities Act of 1933
("the Securities Act"), unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a) under the
Securities Act) who are not natural persons, estates or trusts.
14.3 The Purchaser does not intend to resell the Pacific Island Sale Shares
except in accordance with the provisions of Regulation S under the
Securities Act, pursuant to registration under the Securities Act, or
pursuant to an available exemption from registration. The Purchaser
does not intend to engage in hedging transactions with regard to such
securities unless in compliance with the Securities Act. The Purchaser
acknowledges that it has been informed by the Seller (it being
understood that the Purchaser has not independently verified such
information) that the Island Pacific Sale Shares have not been
registered under the Securities Act in reliance on an exemption for
offerings made outside the USA under the Securities Act.
14.4 The Purchaser represents and warrants to the Seller the following:
14.4.1 the Island Pacific Sale Shares will be acquired for investment
purposes and not with a view to resale or distribution;
14.4.2 the Purchaser qualifies as an "Accredited Investor," as such term
is defined in Rule 501(a) of Regulation D under the Securities Act;
14.4.3 the Purchaser has such knowledge and experience in financial, tax,
and business matters in order to enable it to use the information
made available to it to fully evaluate the risks associated with an
investment in the Island Pacific Sale Shares, to evaluate the
merits and risks of the Purchaser's prospective investment in the
Island Pacific Sale Shares, to make an informed investment
decision, and to protect its interests in connection with an
investment in the Island Pacific Sale Shares; and
14.4.4 the Purchaser is a sophisticated investor and has access to
information regarding an investment in the Island Pacific Sale
Shares as would be available if the Island Pacific Sale Shares were
registered in a registration statement.
14.5 The Purchaser understands that some of the Island Pacific Sale Shares
have not been registered under the Securities Act in reliance upon an
exemption from registration for non-public, offerings and certain
related factors, and such Island Pacific Sale Shares may not be sold
and must be held indefinitely unless subsequently registered under the
Securities Act (and qualified under any applicable state securities
laws) or Island Pacific receives the written opinion of counsel
acceptable to Island Pacific that an exemption from registration (and
qualification) is available.
14.6 It is recorded that the certificates representing the Island Pacific
Sale Shares will contain the following legends:-
14.6.1 "The shares represented by this certificate have not been
registered or qualified under the Securities Act of 1933 or the
Securities or Blue Sky laws of California or any other state and
may be offered and sold only if registered and qualified pursuant
to the relevant provisions of federal and state securities or Blue
Sky laws or if an exemption from such registration or qualification
is applicable."
14.6.2 "Transfer of the shares represented by this certificate is
prohibited except in accordance with the provisions of Regulation S
under the Securities Act of 1933, pursuant to registration under
the Securities Act, or pursuant to an available exemption from
registration. "
15. MORE FAVOURABLE OFFER
It is recorded that the Seller shall be entitled, at any time before
(and not on or after that date) the date of the meeting of
shareholders of the Seller to authorise and approve this Agreement
referred to in clause 2.2.5 above, to conclude an agreement with any
third party for the sale of the Business which is on the whole more
favourable than the terms of this Agreement, provided that such
agreement shall be conditional upon this Agreement not being approved
by shareholders of the Seller at the meeting referred to above.
16. BREACH
16.1 If the Purchaser commits a breach of its obligations under clause 6
and remains in default for 3 (three) days after receiving written
notice from the Seller to remedy the default, the Seller's only
remedies shall be to:
16.1.1 cancel this Agreement by giving written notice to that effect to
the Purchaser, and neither Party shall have a claim against the
other Party arising out of such termination; or
16.1.2 claim for specific performance and/or damages.
16.2 If the Seller commits a material breach of its obligations to deliver
the Business, the Assets or any document in accordance with the
provisions of clause 7 above and remains in default for 3 (three) days
after receiving written notice to remedy the default the Purchaser's
only remedies shall be to:
16.2.1 cancel this Agreement by giving written notice to that effect to
the Seller, and neither Party shall have a claim against the other
Party arising out of such termination; or
16.2.2 claim for specific performance and/or damages.
16.3 Subject to clause 16.1 and 16.2, should either Party ("the defaulting
party") breach any of the other terms or conditions of this Agreement
(except for the provisions of clauses 10 and 18), then the other Party
("the aggrieved party") shall not be entitled to cancel this
Agreement, but the aggrieved party shall, in the event that the
defaulting party remains in default for 14 (fourteen) days after
receiving written notice to remedy the default from the aggrieved
party, be entitled to exercise all other remedies available to it in
law as a result of the breach and which are consistent with the
contract remaining in force, including specific performance (so far as
permissible) and damages.
17. ANNOUNCEMENTS AND CONFIDENTIALITY
17.1 Subject to clause 17.2, neither of the Parties shall make any public
announcement or statement about this Agreement or its contents without
first having obtained the other Party's prior written consent (which
may not be unreasonably withheld) to the announcement or statement and
to its contents.
17.2 The provisions of clause 17.1 shall not apply to any announcement or
statement which a Party is obliged to make under any applicable law,
or because of its shares or those of its holding company being listed
on any recognised stock exchange, provided that the Party in question
shall consult with the other Parties before making any announcement or
statement contemplated in this clause 17.
17.3 Neither Party shall, without the prior written consent of the other
Party disclose to any person the details of this Agreement, the
details of the negotiations of this Agreement, as well as the details
of all the transactions contemplated in this Agreement nor shall a
Party directly or indirectly use or allow the use, to the detriment or
prejudice of the other Party ("the aggrieved party"), or divulge or
allow the divulgence to any person, of any trade secret or other
confidential information concerning the business affairs of the
aggrieved party, or any associated company of the aggrieved party,
which may come to the knowledge of the Party during the negotiations
leading to the conclusion of this Agreement and/ or during the
subsistence of this Agreement, unless such information is required to
be disclosed pursuant to clauses 17.2. The provisions of this clause
17.3 shall survive the termination or cancellation of this Agreement
or if this Agreement does not take effect because all the suspensive
conditions referred to in clause 2.2 are not fulfilled.
17.4 It is recorded that the Confidentiality Agreement entered into between
The Sage Group plc, the Seller, Deutsche Bank AG London and Deutsche
Securities SA (Proprietary) Limited on 5 July 2003 shall:
17.4.1 remain in force in accordance with its terms, notwithstanding the
termination or cancellation of this Agreement or if this Agreement
does not take effect because all the suspensive conditions referred
to in clause 2.2 are not fulfilled.
17.4.2 be deemed to have been amended to the extent inconsistent with this
Agreement and shall terminate automatically upon completion of the
matters referred in clause 7 above on the Closing Date.
18. GENERAL PROVISIONS FOR INDEMNITIES
18.1 If the Seller becomes aware of any matter which may give rise to a
claim by the Seller against the Purchaser in terms of any indemnity
given under clause 4.4 of this Agreement, notice of the claim and full
details of it shall be given by the Seller to the Purchaser as soon as
reasonably possible after the Seller becomes aware of it and, if the
claim in question arises out of or is connected with a claim by, or
liability to, a third party, the claim shall not be compromised or
settled without the consent of the Purchaser.
18.2 The Purchaser shall be entitled to avoid, dispute, resist, appeal,
compromise or contest any claim by a third party in the name of the
Seller and to control any proceedings arising out of the exercise of
any of those rights by the Purchaser, provided that:
18.2.1 The Purchaser shall indemnify the Seller against all reasonable
costs, charges, liabilities and expenses which may be incurred by
the Seller for the purposes of or in connection with anything done
by the Purchaser in its name in accordance with the provisions of
this clause 18.2; and
18.2.2 The Purchaser shall keep the Seller informed of the way in which it
exercises its rights under this clause 18.2 and shall at all times
exercise those rights in such manner as the Seller may reasonably
require to avoid or to minimise any damage to its relationship with
any of its own suppliers or customers.
18.3 The Seller shall make available to the Purchaser all such information
and assistance and sign all such documentation as may reasonably be
required by the Purchaser for the purposes of avoiding, disputing,
resisting, appealing, compromising or contesting any such claim or
liability.
18.4 The Seller shall have all the same rights against the Purchaser as the
Purchaser has against the Seller in terms of clauses 18.1, 18.2 and
18.3 and all the provisions of those clauses shall accordingly apply
mutatis mutandis for the purposes of this clause 18.4, for any
indemnities given by the Seller to the Purchaser under clauses 4.5 and
19.2.
18.5 Notwithstanding anything to the contrary contained in this Agreement:
18.5.1 the Purchaser shall only be entitled to exercise its rights to
terminate the Agreement in terms of clause 18.5.4 if any claim in
respect of an indemnity is of such a nature that had the facts to
which the claim relates been in existence and known prior to the
Signature Date to the Purchaser, the Purchaser would not have
entered into this Agreement or would have entered into the
Agreement on materially different terms, whether such knowledge
relates to the Seller, the Business and/or the Subsidiaries;
18.5.2 the Purchaser's only remedy in the event of a failure by the Seller
to remedy any claim in respect of any indemnity referred to in
clause 18.4 shall be to terminate this Agreement in accordance with
the provisions of this clause 18.5, and neither Party shall have a
claim against the other Party arising out of such termination;
18.5.3 the Seller shall not be liable in respect of any of the indemnities
referred to in clause 18.4 after the final distribution to
shareholders of the Seller of the proceeds of the sale contemplated
in this Agreement whether by way of liquidation dividend, dividend
in anticipation of liquidation or any other form of distribution or
payment;
18.5.4 the Purchaser shall as soon as practicable upon becoming aware of
any claim in respect of any of the indemnities referred to in
clause 18.4 and after the Purchaser has had the reasonable
opportunity to assess the impact of such claim on the Business or
the Subsidiary, notify the Seller of such claim and the Seller
shall have 3 (three) days from the date of such notice within which
to settle such claim and if the Seller fails to settle such claim,
the Purchaser shall be entitled to terminate this Agreement by
giving written notice of such termination to the Seller within 7
(seven) days from the date of expiry of the 3 (three) days referred
to in this clause 18.5.4;
18.5.5 the Seller shall not distribute to the shareholders of the Seller
any part of the proceeds of the sale contemplated in this Agreement
whether by way of liquidation dividend, dividend in anticipation of
liquidation or any other form of distribution or payment in the
event that any claim has been made in respect of any of the
indemnities referred to in clause 18.4, provided that the Seller
shall be entitled so to distribute the proceeds of the sale
contemplated in this Agreement if the 7 (seven) days from the date
of expiry of the 3 (three) days referred to in clause 18.5.4 has
expired and:
18.5.5.1 the Purchaser has not terminated the Agreement upon written
notice to the Seller in terms of clause 18.5.4; and
18.5.5.2 no dispute exists between the Parties in respect of such claim
or termination,
subject to clause 4.3;
18.5.6 in order for the Purchaser to exercise its rights in terms of this
clause 18, the Seller shall give the Purchaser access to the
Business and the Subsidiaries (including, without being limited to,
all documents, financial records and financial information) and
shall cooperate with the Purchaser by providing full information on
the claim received and the steps taken by the Seller to settle such
claim; and
18.5.7 the Purchaser shall send a written notice to the Seller at least 24
(twenty four) hours before the commencement of the general meeting
of the shareholders of the Seller called to approve the sale of the
Business and the Equity Interests referred to in clause 2.2.5,
stating whether or not it has become aware of any claim in respect
of any of the indemnities referred to in clause 18.4, if so the
nature of such claim and whether or not it has had the reasonable
opportunity to assess the materiality of such claim. If the
Purchaser has had the reasonable opportunity to assess the
materiality of such claim the notice shall state whether or not it
wishes to exercise its rights in terms of clause 18.5.4 because of
the Seller's failure to settle such claim. To the extent that the
Purchaser notifies the Seller of its intention not to terminate
this Agreement as a result of such failure only, the Purchaser
shall be deemed to have waived its right to terminate the Agreement
as a result of such failure. For the avoidance of doubt, it is
agreed that the Purchaser shall be entitled to exercise its rights
in terms of clause 18.5.4 at any time in respect of a claim that
the Purchaser becomes aware of after the written notice referred to
in this clause 18.5.7.
19. INSOLVENCY NOTICES
19.1 The Parties agree to dispense with the publication of notices in
respect of the sale of the Business as required in terms of section
34(1) of the Xxxxxxxxxx Xxx, 0000.
19.2 The Seller indemnifies the Purchaser against all losses, damages and
costs which the Purchaser may suffer, sustain or incur in consequence
of any action or other steps being taken by any of the creditors of
the Seller against the Purchaser or against or in relation to the
Business or any of the Assets as a result of the Seller being wound up
or placed under judicial management, provided, however, that the
Seller does not indemnify the Purchaser in respect of any actions
being brought or other steps being taken against the Purchaser as a
result of the Purchaser failing to discharge the Liabilities which it
has undertaken to discharge in terms of this Agreement.
20. DELEGATION OF OBLIGATIONS IN RESPECT OF UNCLAIMED DIVIDENDS
Subject to the passing by the shareholders of the Seller and the
registration by the Registrar of Companies of a special resolution to
amend article 118 of the articles of association of the Seller to
provide for the delegation of the Seller's obligation to pay unclaimed
dividends which have not been forfeited to the Seller and a resolution
authorising such delegation, and with effect from the first Business
Day following the expiry of a period of 5 (five) calendar months after
the date of the distribution to the shareholders of the Seller of the
proceeds of the sale contemplated in this Agreement whether by way of
liquidation dividend, dividend in anticipation of liquidation or any
other form of distribution or payment, or such earlier date, after
such distribution, as the Seller may determine by written notice to
the Purchaser ("the delegation date"):
20.1 the Seller shall delegate to the Purchaser, and the Purchaser shall
accept such delegation, with effect from the delegation date, all the
Seller's obligations to shareholders of the Seller to pay unclaimed
dividends which have not been forfeited to the Seller; and
20.2 the Seller shall, with effect from the delegation date, pay to the
Purchaser all cash in the Seller's unclaimed dividend account and the
Seller shall within 14 (fourteen) days of the delegation date deliver
a certificate signed by the Auditors certifying that the amount so
paid was correct and was sufficient to discharge the Seller's
obligation to pay unclaimed dividends which have not been forfeited to
the Seller at the delegation date.
21. ARBITRATION
21.1 Any dispute between the Parties in regard to any matter arising out of
this Agreement or its interpretation or their respective rights and
obligations under this Agreement or its cancellation or any matter
arising out of its cancellation, shall be submitted to and decided by
arbitration in accordance with the rules of the Arbitration Foundation
of Southern Africa, by an arbitrator agreed upon between the Parties
or, failing agreement, appointed by that Foundation.
21.2 Unless otherwise agreed by the Parties in writing the arbitration
shall be held in Johannesburg in the Gauteng Province.
21.3 The arbitrator shall be obliged to give the reasons for any decision
made by him in the course of the arbitration.
21.4 Subject to the other provisions of this clause 20, each arbitration
shall be held in accordance with the provisions of the Arbitration
Act, 1965, as amended.
21.5 Nothing in this clause 20 shall preclude either Party from seeking any
interim relief from any competent court having jurisdiction pending
the institution of any arbitration proceedings in terms of this clause
20.
22. GENERAL
22.1 Severance
If any provision of this Agreement, which is not material to its
efficacy as a whole, is rendered void, illegal or unenforceable in any
respect under any law, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired
thereby and the Parties shall endeavour in good faith to agree an
alternative provision to the void, illegal or unenforceable provision.
22.2 Survival of Rights, Duties and Obligations
Termination of this Agreement for any cause shall not release a Party
from any liability which at the time of termination has already
accrued to such Party or which thereafter may accrue in respect of any
act or omission prior to such termination.
22.3 Costs
The Purchaser shall:
22.3.1 bear all costs in respect of the negotiation and preparation of
this Agreement and the preparation and lodging of the application
to the Competition Commission, established in terms of the
Xxxxxxxxxxx Xxx, 0000, ("the Competition Commission") in terms of
clause 2.2.1, and all other transaction costs as set out in
APPENDIX 24, subject to a maximum amount of R8 000 000,00 (eight
million Rand) excluding value added tax;
22.3.2 if the special resolution for the voluntary winding up of the
Sellers is passed and registered, pay the liquidator's costs as set
out in APPENDIX 25, which costs shall not exceed R130 000,00 (one
hundred and thirty thousand Rand) excluding value added tax;
22.3.3 pay all stamp duty and other taxes or duties payable on the
transfer of the Sale Shares; and
22.3.4 shall pay the filing fee payable to the Competition Commission in
respect of the sale of the Business.
22.4 Entire Agreement
This Agreement contains the entire agreement between the Parties in
respect of the sale and purchase of the Business and the Assets.
22.5 Non-variation
Save as otherwise expressly provided no agreement to amend, add to or
otherwise vary or waive any of the provisions of this Agreement or to
cancel or terminate it shall be effective unless made in writing and
duly signed by the Parties or on their behalf by their duly authorised
agents.
22.6 Assignment
22.6.1 Save as otherwise expressly provided in this Agreement, neither of
the Parties may assign this Agreement or any of its rights or
obligations under it without the prior written consent of the other
Party.
22.6.2 Notwithstanding anything to the contrary in this Agreement, the
Purchaser shall be entitled to assign this Agreement or any of its
rights or obligations under it to any company which is its holding
company or a subsidiary of it, or of its holding company. For the
avoidance of doubt the Purchaser shall be entitled to assign its
rights and/or obligations in respect of the American Subsidiaries
and the Island Pacific Sale Shares to a subsidiary of The Sage
Group plc incorporates in the United States of America.
22.7 Further Assurance
The Parties shall co-operate with one another and execute and deliver
to the other Party such other instruments and documents and take such
other actions as may be reasonably requested from time to time in
order to carry out, evidence and confirm their rights and the intended
purpose of this Agreement.
22.8 Counterparts
This Agreement may be signed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. The
Parties may enter into this Agreement by signing any such counterpart.
22.9 Successors Bound
This Agreement shall be binding on and shall inure for the benefit of
the successors and permitted assigns and personal representatives (as
the case may be) of each of the Parties.
22.10 Good Faith
The Parties undertake to each other to do all things reasonably within
their power which are necessary or desirable to give effect to the
spirit and intent of this Agreement.
22.11 Governing Law
The validity of this Agreement, its interpretation, the respective
rights and obligations of the Parties and all other matters arising in
any way out of it or its expiration or earlier termination for any
reason shall be determined in accordance with the laws of South
Africa, without giving effect to the principles of conflict of laws.
23. ADDRESSES FOR LEGAL PROCESS AND NOTICES
23.1 The Parties choose for the purposes of this Agreement the following
addresses and telefax numbers:
23.1.1 the Purchaser: c/o The Sage Group plc
Xxxxxx Xxxx Xxxx
Xxxx Xxxxx
Xxxxxxxxx Xxxx Xxxx
XX0 0X0
Telefax No: x00 000 000 0000
For Attention: Mr Xxxx Xxxxxx
23.1.2 the Seller Softline Technology Park
000 Xxxxxxxxx Xxxxxx
Xxxxxx Xxx. 13
Sandton 2031
Telefax No: (011) 292 8201
For Attention: Xx Xxxx Xxxxxxx
23.2 Any legal process to be served on the Parties may be served on it at
the address specified for it in clause 23.1 and it chooses that
address as its domicilium citandi et executandi for all purposes under
this Agreement.
23.3 Any notice or other communication to be given to the Parties in terms
of this Agreement shall be valid and effective only if it is given in
writing, provided that any notice given by telefax shall be regarded
for this purpose as having been given in writing.
23.4 A notice to a Party which is sent by registered post in a correctly
addressed envelope to the address specified for it in clause 23.1
shall be deemed to have been received (unless the contrary is proved)
within 14 (fourteen) days from the date it was posted, or which is
delivered to the Party by hand at that address shall be deemed to have
been received on the day of delivery, provided it was delivered to a
responsible person during ordinary business hours.
23.5 Each notice by telefax to a Party at the telefax number specified for
it in clause 23.1 shall be deemed to have been received (unless the
contrary is proved) within 4 (four) hours of transmission if it is
transmitted during normal business hours of the receiving Party or
within 4 (four) hours of the beginning of the next Business Day after
it is transmitted, if it is transmitted outside those business hours.
23.6 Notwithstanding anything to the contrary in this clause 23, a written
notice or other communication actually received by a Party (and for
which written receipt has been obtained) shall be adequate written
notice or communication to it notwithstanding that the notice was not
sent to or delivered at its chosen address.
23.7 A Party may by written notice to the other Party change its address
for the purposes of clause 23.1 to any other address (other than a
post office box number) provided that the change shall become
effective on the 7th (seventh) day after the receipt of the notice.
24. EXERCISE OF THE XXXXXX XXXX OPTION
In the event that Xxxxxx Xxxx exercises the option to acquire all or
part of the shares held by the Seller in Island Pacific, the Seller
undertakes to apply the proceeds it receives in respect of such sale
to repay the loans referred to in clauses 4.1.3, 4.1.4 and 4.1.5, on
or before the Closing Date and the amount of the Liabilities assumed
by the Purchaser in terms of clauses 4.1.3, 4.1.4 and 4.1.5, as the
case may be, shall be reduced by the same amount.
SIGNED at Sandton on 26 AUGUST 2003.
For: SOFTLINE LIMITED
/s/ X. Xxxxxx
-----------------------------
Signatory: X. Xxxxxx
Capacity: C.F.O.
Authority: Board Resolution
SIGNED at Newcastle on 26 AUGUST 2003.
For: FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED
/s/ Xxxx Xxxxxx
-----------------------------
Signatory: Xxxx Xxxxxx
Capacity: C.E.O.
Authority: Board Resolution
