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EXHIBIT 10.6
AGREEMENT AND PLAN OF EXCHANGE
BY AND AMONG
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
AND
SOFTWARE CONSULTING SERVICES PTY. LTD.
IN ITS CAPACITY AS TRUSTEE OF THE
SCS UNIT TRUST AND
THE UNDERSIGNED HOLDERS OF ALL
OF THE OUTSTANDING OWNERSHIP INTERESTS
IN THE SCS UNIT TRUST
AND DATA COLLECTION SYSTEMS INTEGRATION
(DCSI) PTY LTD (ACN 080 412 166)
December 20, 1997
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AGREEMENT AND PLAN OF EXCHANGE
This AGREEMENT AND PLAN OF EXCHANGE (this "Agreement") is effective as
of December 20, 1997 (the "Effective Date"), between:
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC., a Delaware corporation of 00000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, XXX, 00000 (the "Purchaser");
SOFTWARE CONSULTING SERVICES PTY. LTD., (ACN 005 931 886) of c/-Cugley
Ciravolo Bordin Pty Ltd, 0-00 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxxx, Xxxxxxxx, 0000 in
its capacity as trustee of the Trust ("Company");
KENTCOM PTY LTD (ACN 065 369 440) in its own right and in its capacity as
trustee of the Xxxxx Family Trust and XXXXXXXXX XXXXX both of 0 Xxxxxxxx Xxxxx,
Xxxx Xxxx, Xxxxxxxx, 0000 and PEPPER TREE PTY LTD (ACN 007 342 538) in its own
right and in its capacity as trustee of the Banks Trust and XXXXXXXXXXX XXXXXXX
XXXXX both of 00 Xxxxxxx Xxxx, Xxxxxxxx, XX, 0000 and CEDARMAN PTY LTD (ACN 067
279 850) in its own right and in its capacity as trustee of the Xxxxxxx Trust
and XXXXXXX XXXXXX XXXXXXX both of 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 0000 and
QUICKTREND PTY LTD (ACN 000 000 000) in its own right and in its capacity as
trustee of the Lock Trust and DESMOND XXXX XXXX both of 00 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx, 0000, and KULLAMURRA PTY LTD (ACN 066 512 534) in its own
right and in its capacity as trustee of the Kullamurra Trust and XXXXXX XXXXXXX
XXXXXXXX both of 0 Xxxxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxxx, 0000 and KPMG
INFORMATION SOLUTIONS PTY LTD (ACN 065 410 746) in its own right of Xxxxx 0,
000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, 0000 (together, the "Owners"); and
DATA COLLECTION SYSTEMS INTEGRATION PTY LTD (ACN 080 412 166) of 0-00 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx, Xxxxxxxx ("DCSI").
WHEREAS, Purchaser, the Company, and the Owners have each approved the
assignment and transfer to Purchaser of substantially all of the assets of the
Company in exchange for cash and shares of common stock, US$.001 par value per
share of Purchaser ("Purchaser Common Stock") and the assumption of certain
liabilities of the Company as provided herein (the "Exchange");
WHEREAS, the Exchange is one of several related transactions involving
the assignment of property to Purchaser in exchange for common stock and cash
of Purchaser as part of an overall plan that includes an initial public
offering of Purchaser Common Stock; and for United States (U.S.) income tax
purposes, it is intended that this Exchange and the other related exchange
transactions with Purchaser shall qualify as exchanges under the provisions of
Section 351 of the U.S. Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Exchange has been approved as required by applicable law
and by appropriate action of the Company, the Trust, the Owners and Purchaser,
and the Exchange has been approved by the Owners as the holders of all of the
outstanding ownership interests of the Trust and Company as evidenced by their
signatures hereto; and
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WHEREAS:
(1) the Company owns 40% of the equity in the TCS Discretionary
Unit Trust ("TCS Trust"), being a trust constituted by trust
deed dated 26 June 1996 with Technology Consulting and
Solutions Pty Ltd (ACN 074 527 325) as trustee and the Company
as trustee for the Trust, Kullamurra Pty Ltd as trustee for
the Kullamurra Trust and Investment Technology Solutions Pty
Ltd (ACN 073 110 693) as trustee for the Technology Investment
Trust as original unit holders;
(2) the TCS Trust owns 70% of the equity in the ASAP Discretionary
Unit Trust, being a trust constituted by trust deed with
Australian Solutions & People Pty Ltd (ACN 072 496 247)
("ASAP") as trustee and Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx,
Technology Consulting and Solutions Pty Ltd, Xxxxx Xxxxx Xxxx
and Foligo Pty Ltd (ACN 074 103 763) as original unit holders;
and
(3) the Company owns 100% of the equity in DCSI.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
1. THE EXCHANGE
1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, and in consideration of delivery of the Purchase Price (as defined
below) by Purchaser and the assumption of the Assumed Obligations (as defined
below) by Purchaser, the Company agrees to sell, convey, assign, transfer,
exchange and deliver to Purchaser, and Purchaser agrees to purchase, exchange
and acquire from the Company, all of the assets owned by the Company as at the
Closing Date (as that term is defined in section 2.1), of every kind, character
and description, other than the "Excluded Assets" specified under Section 1.2
hereof (the "Acquired Assets"), whether such assets are tangible, intangible,
real, personal or mixed, and wheresoever located, and whether carried on the
books of the Company, including, but not limited to, the assets listed and/or
described as follows and in the Schedules 1.1.1-1.1.14 referenced under this
Section 1.1, free and clear of any and all liens, claims, charges, pledges,
security interests, exceptions or other encumbrances of any kind other than
those described on Schedule 3.4; and the Company and the Owners represent and
warrant to the Purchaser that the following referenced Schedules 1.1.1-1.1.13
hereto are accurate and complete:
1.1.1 Tangible Personal Property. All tangible personal
property (including computers and computer equipment and hardware, other
equipment, machinery, tools, appliances, products, implements, spare parts,
instruments, furniture, inventories and supplies) owned by the Company
("Tangible Personal Property"), a correct and complete list of which is set
forth on Schedule 1.1.1 hereto;
1.1.2 Personal Property Leases. To the extent assignable,
all of the Company's rights in, to and under all leases of equipment,
machinery, tools, appliances, implements, spare parts, instruments, furniture,
supplies, and other items of tangible personal property ("Personal Property
Leases"), a correct and complete list of which leased personal property is set
forth on Schedule 1.1.2 hereto;
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1.1.3 Real Property. All right, title and interests to the
land, buildings, improvements and other real property owned by the Company
("Real Property"), a correct and complete list of which is set forth on
Schedule 1.1.3 hereto;
1.1.4 Real Property Leases. To the extent assignable, the
leasehold estates created by, and all rights conferred on the Company under or
by virtue of, all real property lease agreements (such real property lease
agreements are hereinafter referred to as "Real Property Leases" and the
parcels of real property in which the Company has a leasehold interest and that
are subject to the Real Property Leases are hereinafter referred to as "Leased
Property"), a correct and complete list of which is set forth on Schedule 1.1.4
hereto, including all rights, titles and interests, to use all warehouses,
storage facilities, buildings, works, structures, fixtures, landings,
constructions in progress, improvements, betterments, installations and
additions constructed or located on or attached or affixed to the Leased
Property;
1.1.5 Cash and Accounts Receivable. All of the Company's
cash and accounts receivable as at the IPO Closing Date , being the accounts
receivable as of 30 September 1997 as identified in schedule 1.1.5 hereto as
adjusted between 30 September 1997 and the IPO Closing Date in the ordinary
course of business and consistent with the Company's past practices ("Accounts
Receivable") less any amounts paid out to the Owners pursuant to section 8.
1.1.6 Acquired Contracts. To the extent assignable, all of
the Company's rights in, to and under all contracts, agreements, insurance
policies, purchase orders and commitments, notes, mortgages, security
agreements, pledges, guarantees, warranties, and any other contracts or
agreements (excluding employment contracts) together with all instruments and
all documents of title representing any of the foregoing, all rights in any
merchandise or goods which any of the same represent, and all rights, title,
security and guarantees in favor of the Company with respect to any of the
foregoing (the "Acquired Contracts"), and a correct and complete list of the
material contracts which form part of the Acquired Contracts is set forth on
Schedule 1.1.6 hereto (exclusive of any contracts that are Excluded Assets);
1.1.7 Licenses. To the extent assignable, all material
franchises, licenses (including intellectual property licenses), sublicenses,
permits, certificates, approvals and other authorizations from governments and
any other entities or persons necessary to own and/or operate any of the other
Acquired Assets (the "Licenses"), a complete and correct list of which is set
forth on the Schedule 1.1.8 hereto;
1.1.8 Intellectual Property. All of the intellectual
property owned by the Company including, but not limited to: (i) United States,
Australian and foreign patents, patent applications, trademarks, trademark
applications and registrations, trade dress, brand names, logos, service marks,
service xxxx applications and registrations, copyrights, copyright applications
and registrations and trade names, fictitious names and assumed names of the
Company including, without limitation, all such rights described on Schedule
1.1.9 hereto; (ii) proprietary data and technical, manufacturing know-how and
information (and all materials embodying such information); (iii) developments,
discoveries, inventions, ideas and trade secrets of the Company; (iv) client
lists and information, marketing plans, business plans, customer and supplier
lists, pricing policies and purchasing information; (v) computer programs and
other software, computer technology, data bases operating systems, source and
object codes, flow charts, algorithms, coding sheets, routines, compilers,
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assemblers, design concepts and manuals; and (vi) covenants by others not to
compete, rights and privileges of the Company used in the conduct of its
business, rights to exclusive use and rights to xxx for past infringement with
respect to any item described in this section (all of the foregoing which is
referred to in the remainder of this Agreement as the "Intellectual Property"),
an indicative list of which is set forth on Schedule 1.1.9 hereto;
1.1.9 Ownership Interests in Other Entities. All equity
securities, partnership interests, indebtedness or other interests owned in any
other corporation, partnership, limited partnership, joint venture, limited
liability company, trust, or other entity or person, a correct and complete
list of which is set forth on Schedule 1.1.10 hereto.
1.1.10 General Intangibles and Rights of the Company. All
general intangible property of the Company and all rights in, to and under all
representations, warranties, covenants, guaranties made or provided by third
parties to or for the benefit of the Company, and all rights, privileges,
claims and causes of action of the Company; a correct and complete list of any
claims or causes of action owned by the Company is set forth on Schedule 1.1.11
hereto;
1.1.11 Prepaid Items. All of the Company's prepaid expenses,
prepaid insurance, deposits and other similar items ("Prepaid Items"), a
correct and complete list of which items is set forth on Schedule 1.1.12
hereto;
1.1.12 Company Name and Goodwill. The Company right to own
and use the name "Software Consulting Services" and all goodwill with respect
to the business and operations of the Company.
1.2 Excluded Assets. The Company shall not sell, convey, assign,
transfer or deliver to Purchaser, and Purchaser shall not acquire (or make any
payments or otherwise discharge any liability or obligation of the Company with
respect to), the assets of the Company described on Exhibit 1.2 attached hereto
(the "Excluded Assets").
1.3 Assumption of Obligations and Liabilities. At the IPO Closing
Date , Purchaser shall assume and agree to pay or perform, promptly as they
become due, the following obligations and liabilities of the Company: (i) all
obligations as at 30 September 1997 set out in Exhibit 1.3 as adjusted in the
ordinary course of business of the Company consistent with the Company's past
practices between 30 September 1997 and the IPO Closing Date, (ii) to the
extent that such liabilities are not reflected in the liabilities referred to
in section 1.3(i), all obligations arising in the ordinary course of business
and consistent with the Company's past practices under the Acquired Contracts
set forth in schedule 1.1.6, and (iii) to the extent that such liabilities are
not reflected in the liabilities referred to in section 1.3(i), all currently
pending obligations to trade creditors and vendors which have been created by
the Company in the ordinary course of business and in a manner and in amounts
consistent with the Company's prior practices, (all of which are hereinafter
referred to as the "Assumed Obligations"). Except for the assumption of the
Assumed Obligations, Purchaser shall not assume or be deemed to have assumed
and shall not be responsible for any other obligation or liability of the
Company, direct or indirect, known or unknown, xxxxxx or inchoate, absolute or
contingent, including without limitation any and all obligations regarding
foreign, federal, state or local income tax, capital gains tax or stamp duty.
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1.4 Certain Definitions. The following terms shall have the
meaning ascribed below for the purposes of this Agreement:
(i) "Closing Balance Sheet Date" means the end of the
most recent monthly accounting period of the Company preceding the
Closing Date.
(ii) "Current Assets" means the current assets of the
Company determined as of the Closing Balance Sheet Date in accordance
with GAAP.
(iii) "Current Liabilities" means the current liabilities
of the Company determined as of the Closing Balance Sheet Date in
accordance with GAAP and expressed as a positive number.
(iv) "GAAP" means U.S. generally accepted accounting
principles consistently applied.
(v) "IPO" means the Purchaser's first underwritten public
offering of Purchaser Common Stock resulting in net cash proceeds
sufficient to fund the use of proceeds of such offering as described
in the PPM (and any supplements thereto) referenced in section 3.23
herein (other than any offering pursuant to any registration statement
(A) relating to any capital stock of Purchaser or options, warrants or
other rights to acquire any such capital stock issued or to be issued
primarily to directors, officers or employees of the Purchaser or any
of its subsidiaries, (B) primarily to directors, officers or employees
of the Purchaser or any of its subsidiaries, (C) relating to any
employee benefit plan or interest therein, (D) relating principally to
any preferred stock or debt securities of the Purchaser, or (E) filed
pursuant to Rule 145 under the Securities Act of 1933 (USA), as
amended ("Securities Act"), or any successor or similar provision).
(vi) "IPO Closing Date" means the date that the Purchaser
receives funds in consideration for the sale of its securities in the
IPO.
(vii) "IPO Price" means the initial price per share,
calculated in Australian dollars at the exchange rate prevailing as at
the IPO Closing Date, to the public for shares of Purchaser Common
Stock in the IPO.
(viii) "Long-Term Debt" means all long-term liabilities of
the Company as of Closing Date, including capitalized lease
obligations, as determined under GAAP, plus current portions of such
long-term liabilities and pre-payment penalties as of the Closing
Date.
(ix) "Net Working Capital" means the Current Assets of the
Company minus the Current Liabilities of the Company as of the
applicable date of determination, all as determined under GAAP.
(x) "Trust" means the SCS Unit Trust, being a trust
constituted by trust deed dated 1 October 1994 with the Company as
original trustee and Kentcom Pty Ltd and Kullamurra Pty Ltd as
original unitholders.
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1.5 Purchase Price. The purchase price ("Purchase Price") for the
Acquired Assets shall be:
(a) AUD$15 million in cleared funds to be paid to the
Company on the IPO Closing Date; and
(b) AUD$9 million in Purchaser Common Stock at a value
per share equal to the IPO Price to be issued to the
Company upon the Company from 1 January 1998 to the
IPO Closing Date and SCSI (and its permitted
assignee) thereafter together achieving aggregate
recognized revenues less allowances for doubtful
accounts and sales returns as determined in
accordance with GAAP equal to 75% of the recognized
revenues less allowances for doubtful accounts and
sales returns (as determined in accordance with GAAP)
of the Company for the 1997 calendar year.
To avoid any doubt, the Company acknowledges that the number of shares
of Purchaser Common Stock to be issued to the Company pursuant to this section
1.5(b) shall be equal to 9 million divided by the IPO Price, and that the price
that these shares are trading at on market at the date of issue of the said
shares pursuant to this section 1.5(b) to the Company shall be irrelevant.
1.6 Successor Operating Company.
1.6.1 Subject to payment of the Closing Cash Consideration,
the parties hereto acknowledge and agree that Purchaser shall immediately after
the IPO Closing Date (as defined above) assign all Acquired Assets and all
Assumed Obligations and all of its right, title and interest in and to this
Agreement, the related agreements and documents, and its rights and obligations
thereunder and the products thereof, to a new wholly-owned subsidiary
corporation of the Purchaser named Software Consulting Services International,
Inc., a Delaware, U.S.A. corporation ("SCSI"), which shall have no material
assets or liabilities prior to acquiring the Acquired Assets. The Purchaser
shall cause SCSI to receive and assume ownership of such assets and rights and
responsibility for the performance of such obligations and seek to employ the
employees previously employed by the Company so that SCSI may after the IPO
Closing Date conduct the business previously conducted by the Company and seek
to further develop such business.
1.6.2 The parties acknowledge and agree that the employees
of SCSI will have a significant direct interest in the operation of SCSI from
the IPO Closing Date until the date which is 13 months from the IPO Closing
Date because of the Incentive Stock Bonus Plan provision set forth hereinbelow.
Accordingly, the parties agree that Purchaser shall cause the management of
SCSI to consist of the following persons, subject to their willingness to so
serve, from the IPO Closing Date until the time which is 13 months from the IPO
Closing Date, so long as there has not been a material breach of this Agreement
by the Owners. The board of directors of SCSI shall consist of Xxxxxxxx X.
Xxxx, Xxxxxx X. Xxxxxx and one nominee of the Purchaser, Xxxxxxx X. Xxxxxxx and
two nominees of the Company and the officers of SCSI shall include Xxxxxxx X.
Xxxxxxx as President and Chief Executive Officer and the Company's said nominee
as Senior Vice President. If either Xx. Xxxxxxx or the said nominee of the
Company shall for any reason cease to serve as a director, then a person named
by the other of the above two persons shall be elected to the board in the
place of the departed director. If Xx Xxxxxxx and the nominee of the Company
cease to serve as directors at the same time,
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then their positions shall be filled by two nominees of the Company. To avoid
any doubt, the parties acknowledge that: (a) for the period that this section
1.6.2 survives, the board shall comprise an equal number of directors appointed
by Purchaser and by the Company respectively; and (b) the provisions of this
section 1.6.2 shall not survive after 13 months from the IPO Closing Date have
expired.
1.7 Payment of Purchase Price. Purchaser shall deliver payment of
the Purchase Price by:
1.7.1 delivery to the Company on the IPO Closing Date of the
cash consideration referred to in section 1.5(a) (the "Closing Cash
Consideration"); and
1.7.2 delivery of the stock consideration ("Stock
Consideration") in the manner contemplated by section 1.5(b).
2. THE CLOSING
2.1 Closing. A closing into Escrow ("Closing") will take place at
the offices of Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx in Houston,
Texas at the time and on the day that the Purchaser and its underwriters agree
on the IPO Price for shares of Purchaser's Common Stock offered in the IPO as
set forth in an executed underwriting agreement, but in no event later than
April 23, 1998 ("Closing Date"); provided that each of the conditions precedent
to the obligations of the parties to effect the Closing are then satisfied or
waived by the applicable party. The parties may agree in writing on another
date, time or place for the Closing. At the Closing, the parties will deliver
or cause to be delivered into escrow with the escrow agent ("Escrow Agent")
under the Escrow Agreement set forth in Exhibit 2.1 hereto, the documents
described in Sections 7.3 and 7.5 below. On the IPO Closing Date, such
documents shall be delivered out of escrow to the parties designated to receive
such documents under this Agreement in accordance with the Escrow Agreement,
and the payment and delivery by the Purchaser of the Purchase Price shall be
made in compliance with Sections 1.5 and 1.7 of this Agreement.
2.2 No Other Assignments of Company Assets or Common Stock. It is
agreed that no assignment, transfer or other disposition of (i) any assets of
the Company (except in the ordinary course of business consistent with past
practices) or (ii) legal or beneficial ownership of any ownership interests in
the Company, may be made on or after the date hereof other than as provided
herein.
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE OWNERS
The Company and the Owners , excluding KPMG Information Solutions Pty
Ltd ("KPMG") unless expressly indicated to the contrary, hereby represent and
warrant to Purchaser as follows:
3.1 Organization of the Company and the Trust. The Trust is a
Victoria, Australia unit trust and the Company is incorporated under Australian
law. The Trust and Company are duly organized, validly existing and in good
standing under the laws of the State of Victoria and each is duly qualified and
authorized to do business in all jurisdictions where required to be qualified
and authorized, except where the failure to obtain such qualification will not
have a Company Material Adverse Effect (as defined below). Without limiting the
foregoing:
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3.1.1 The Company is empowered by the Trust and the Trust's
constituent documents to perform all of the obligations that it is contemplated
that the Company will perform under this Agreement and do all things required
by this Agreement and that there are no restrictions or conditions relating to
such conduct pursuant to the constituent documents of the Trust or for any
other reason.
3.1.2 The Company only acts in its capacity as trustee of the
Trust and does not act in its own right and does not own any property in its
own right.
3.1.3 All necessary meetings have been held and resolutions
passed as required by the constituent documents of the Trust in order to render
this Agreement fully enforceable against the Company.
3.1.4 The Company is the present and sole Trustee of the
Trust.
3.1.5 The Trust has not been determined in any way.
3.1.6 There are no restrictions on the right of the Company to
be indemnified out of the assets of the Trust.
3.1.7 The Company shall not retire as Trustee of the Trust
without the prior written consent of Purchaser.
3.1.8 The Company will not permit any amendment to the
constituent documents of the Trust unless authorised by Purchaser in writing.
3.1.9 The Company shall not appoint or distribute any of the
assets of the Trust whether capital or income or otherwise or lend any monies
to any beneficiary or other person otherwise than in the ordinary course of
business without the prior written consent of Purchaser.
3.1.10 The documents described in schedule 3.1.10 and which
have been made available by the Company to the Purchaser's solicitors,
represent all of the constituent documents of the Trust and there are no other
documents which in any way vary the terms of the Trust or impact upon the Trust
or are relevant to or relate to the Trust in any way.
3.2 Ownership Interests. All ownership interests, unitholdings and
shareholdings in the Trust and in the Company are set forth on Schedule 3.2
hereto ("Ownership Interests") and are held legally and beneficially by the
Owners in such amounts as are respectively set forth for each Owner by its name
on Schedule 3.2 hereto. All such Ownership Interests are duly and validly
authorized and issued, and were not issued in violation of the preemptive
rights of any past or present Owner. Except for the interests described on
Schedule 3.2, there are no outstanding convertible or exchangeable securities,
subscriptions, calls, options, warrants, rights or other agreements or
commitments of any character relating to the issuance or sale of any ownership
or management interest or shares or units in the Company or the Trust. Further,
the Trust and the Company have no liability, contingent or otherwise, to any
person or entity in connection with preemptive or contractual subscription
rights or the offer, sale, purchase, surrender or cancellation of any interests
or units or shares in the Trust or the Company.
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3.3 Consents. Except as provided on Schedule 3.3, no approval,
consent, order or action of or filing with any court, administrative agency,
governmental authority or other third party is required for the effective
execution, delivery or performance by the Company and the Owners, as
applicable, of this Agreement, any Company Related Document (as defined in
clause 3.7) or any Owner Related Document (as defined herein). If the required
consents listed on Schedule 3.3 hereto are acquired, the execution, delivery
and performance by the Company and each Owner of this Agreement, the Company
Related Documents and the Owner Related Documents do not violate any mortgage,
indenture, contract, agreement, lease or commitment or other instrument of any
kind to which the Company or any Owner is a party or by which the Company or
any Owner or any of their respective assets or properties may be bound or
affected or any law, rule or regulation applicable to the Company or any Owner
or any court injunction, order or decree or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction
over the Company or any Owner.
3.4 Title of Acquired Assets. Except as set forth on Schedule 3.4
hereto, the Company and the Trust own outright, and have full legal and
beneficial title to, or a valid leasehold interest in (as appropriate), all of
the Acquired Assets free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts, claims, encumbrances, rights of others
and restrictions on transfer, including good and marketable title to all of the
real property interests, free and clear of any mortgages, security agreements,
liens, claims, encumbrances, rights of others or restrictions on transfer.
3.5 Condition of the Acquired Assets.
3.5.1 Tangible Personal Property. To the best of their
knowledge and belief with respect to section 3.5.1: except as set forth on
Schedule 1.1.1, the Tangible Personal Property is in good operating condition,
working order and repair (normal wear and tear excepted) and is fully-suitable
for the uses for which it is employed in the conduct of the Company's business.
All inventory is fit for the use intended and free from any known defect and is
of a quality and quantity for good use in the ordinary course of business.
3.5.2 Leases. To the best of their knowledge and belief
with respect to section 3.5.2: with respect to the Personal Property Leases and
the Real Property Leases, except as set forth on Schedules 1.1.2 and 1.1.4,
respectively;
(1) each lease is legal, valid, binding,
enforceable and in full force and effect;
(2) each lease will continue to be legal, valid,
binding, enforceable and in full force and effect on the same
terms following the Closing as before;
(3) no party to any such lease is in material
breach or default thereof, and no event has occurred that,
with notice or lapse of time or both, would constitute a
material breach or default or permit termination, modification
or acceleration thereunder;
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(4) no party to any such lease has repudiated in
writing any provision thereof;
(5) there are no disputes, oral agreements or
forbearance programs in effect as to such lease;
(6) to the best of the knowledge of the Company
and the Owners, the owner of the property leased pursuant to
such lease has good and marketable title to such property free
of any encumbrance that would adversely affect the leasehold
interests of the Company; and
(7) the Company has performed and satisfied in
full each material obligation to be performed by the Company
under such lease as of the date hereof.
3.5.3 Accounts Receivable. To the best of their knowledge
and belief, the Accounts Receivable reflected on Schedule 1.1.5, and all
Accounts Receivable arising between the date hereof and the Closing are and
will be valid accounts receivable that arose or will have arisen from bona fide
transactions in the ordinary course of business of the Company; the services
involved were or will have been validly and properly provided to the account
obligor, and after the accounts receivable have been booked, no further
services will be required to be provided in order to complete the sales and to
entitle the Company or its assignees to collect the accounts receivable in
full. Except for the allowance for doubtful accounts in the Company Financial
Statements, the Company has no reason to believe that the Accounts Receivable
will not be timely paid. No such account has been or will be assigned or
pledged to any other person, firm or corporation.
3.5.4 Acquired Contracts. To the best of their knowledge
and belief, the Company has attached to Schedule 1.1.6 a correct and complete
copy of the Acquired Contracts all of which are listed on Schedule 1.1.6. Such
Acquired Contracts, if assigned or novated (as appropriate), along with the
other Acquired Assets, provide sufficient rights for the Purchaser to conduct
business after the Closing in substance the same as business was conducted by
the Company prior to Closing. To the best of their knowledge and belief, except
as set forth on Schedule 1.1.6, each of the Acquired Contracts is legal, valid
and enforceable and is in full force and effect, and there is no material
default or existing condition that, with the giving of notice or the passage of
time or both, would constitute such a default by the Company or by any parties
thereto, and by the Closing, the Company and the Owners shall have used their
best endeavours to have acquired any required consents necessary for the
assignment of the Acquired Contracts hereunder. Except as set out in schedule
1.1.6, the Company has performed and satisfied in full each material obligation
required to be performed by the Company under each Acquired Contract as of the
date hereof. If services are to be provided to the Company under any such
Acquired Contract, to the best of their knowledge and belief such services have
been and are being performed satisfactorily and in a timely fashion,
substantially in accordance with terms of such Acquired Contract.
3.5.5 Licenses. The Company holds adequate licenses,
including licenses to use intellectual property or other rights to conduct its
business as now conducted ("Licences"), and the Company's conduct of business
prior to Closing does not conflict with, infringe on, or otherwise violate any
rights of others. The Company has attached to Schedule 1.1.8 correct and
complete copies of all such Licenses (as amended to date) disclosed on Schedule
1.1.8. Each License is legal, valid
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and enforceable, and in full force and effect and will, if assigned, continue
to be so after the Closing on the same terms as before the Closing, and by the
Closing, the Company and the Owners shall have used their best endeavours to
have acquired any required consent necessary for the assignment to the
Purchaser hereunder of each License, such that the Purchaser may use the
Licenses to conduct business after the Closing the same as business is
conducted by the Company prior to Closing. No party to any License is in breach
or default thereof and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination or modification of
any License.
3.5.6 Intellectual Property.
(1) Except as disclosed in this Agreement, the
Company owns absolutely the Intellectual Property without
conflict with or infringement of any, right, title or interest
of others.
(2) The Intellectual Property, unless otherwise
disclosed in writing to the Purchaser, comprises all of the
intellectual property material to the conduct of the business
of the Company.
(3) Title to all Intellectual Property will
effectively pass to Purchaser under this Agreement.
(4) All Intellectual Property essential to the
successful conduct of the Company that is capable of
registration under Australian law is validly registered and
subsisting in the name of the Company free from encumbrances.
(5) The Company, excluding its employees acting
in the ordinary course of business has not dealt with,
authorised or permitted and will not before the Closing Date
deal with, authorise or permit any person to use any of the
Intellectual Property.
(6) None of the Intellectual Property constitutes
or may constitute an infringement of any intellectual property
rights of any other person. No claims have been asserted or
are or may be pending or threatened by any person in relation
to the use or the validity of the Intellectual Property.
(7) No claims have been asserted or are expected
to be asserted by any person for the use by the Company of any
intellectual property that it uses by way of licence agreement
or otherwise in its business.
(8) The Company has no knowledge of, and has not
received any notice of, any claims to the effect that any
business or trade xxxx or trade name owned by the Company and
used in the business of the Company is substantially identical
as or is confusingly or deceptively similar to the name of any
other company or any business or trade name or trade xxxx
owned or used by any other person.
3.5.7 Prepaid Items. To the best of their knowledge and
belief, each of the Prepaid Items is valid and represents a credit on the
Company's behalf with the payee and may be transferred
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to Purchaser without the necessity of obtaining any consent or approval except
as may be set forth on Schedule 3.3.
3.5.8 Completeness of Acquired Assets. The Acquired Assets
including, without limitation, the Licenses described in Schedule 1.1.8,
include all the assets and properties (excluding the employees of the Company)
necessary to conduct the business of the Company as at the date of this
Agreement.
3.6 Defaults. To the best of their knowledge and belief with
respect to section 3.6: neither the Company, nor any Owner is in default under
or in violation of, and the execution and delivery of this Agreement, the
Company Related Documents and the Owner Related Documents and the consummation
of the transactions contemplated hereby and thereby will not result in a
default by the Company, any Owner under or a violation of (i) any Acquired
Contract or (ii) any law, rule or regulation applicable to the Company or any
court injunction, order or decree, or any valid and enforceable order of any
governmental agency in effect having jurisdiction over the Company, which
default or violation could adversely affect the ability of the Company to
consummate the transactions contemplated hereby or will have a Company Material
Adverse Effect.
3.7 Authority. The Company has full right, power, legal capacity
and authority to (i) execute, deliver and perform this Agreement, and all other
documents and instruments referred to herein or contemplated hereby to be
executed, delivered and performed by the Company (each a "Company Related
Document") and (ii) consummate the transactions contemplated herein and
thereby. Each Owner has full right, power, legal capacity and authority to (i)
including KPMG with respect to this section 3.7(i) only execute, deliver and
perform this Agreement, and all other documents and instruments referred to
herein or contemplated hereby to be executed, delivered and performed by such
Owner (each an "Owner Related Document") and (ii) consummate the transactions
contemplated herein and thereby. This Agreement has been duly executed and
delivered by the Company and by each Owner and constitutes, and each Company
Related Document and each Owner Related Document, when duly executed and
delivered by each party thereto will constitute, legal, valid and binding
obligations of the Company and each Owner who or which is a party thereto,
enforceable against the Company and each Owner, as applicable, in accordance
with their respective terms and conditions, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity).
3.8 Financial Statements. To the best of their knowledge and
belief with respect to section 3.8: the Company and the Owners have furnished
to the Purchaser and to its auditors, Deloitte Touche Tohmatsu all documents
and information sufficient to enable Deloitte Touche Tohmatsu to accurately
audit the following financial statements of the Company: (i) Balance Sheet as
of September 30, 1997 (the "Balance Sheet Date"), and (ii) Statements of Income
for the fiscal years of the Company ended June 30, 1996 and June 30, 1997 and
for the interim period ended September 30, 1997 for the current fiscal year.
Such Company Financial Statements, together with the Closing Balance Sheet, are
collectively referred to herein as ("Company Financial Statements"). Such
financial statements, except as described in the notes thereto, have been
prepared from the Company's records in accordance with GAAP. Such Balance Sheet
presents accurately and fairly in all material respects the financial condition
of the Company as of the date indicated thereon, and such Statements of Income
present accurately and fairly in all respects the results of the Company's
operations for the periods indicated
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thereon. Except as set forth in the Company Financial Statements or in a
supplemental description in Schedule 3.8 hereto, and other than the performance
of its obligations under its Contracts, the Company has no liabilities or
obligations of any nature whether absolute, contingent or otherwise.
3.9 No Conflict. To the best of their knowledge and belief with
respect to section 3.9: the Company has full power, authority and legal right
and has all licenses, permits, qualifications, and other documentation
(including permits required under applicable Environmental Law, as defined
below) necessary to own and/or operate its businesses, properties and assets
and to carry on its businesses as being conducted on the date hereof, and such
businesses are now being conducted and such assets and properties are being
owned and/or operated, and there is no existing condition or state of facts
which would give rise to a violation thereof or a liability or default
thereunder, except where a violation, liability or default will not have a
Company Material Adverse Effect. The term "Environmental Law" means any law,
rule, regulation, approval, decision, decree, ordinance, by-law having the
force of law or order of any federal, state or local executive, legislative,
judicial, quasi judicial, regulatory or administrative agency, board or
authority, which relate to (i) noise; (ii) pollution or protection of the air,
surface water, ground water or land; (iii) solid, gaseous or liquid waste
generation, treatment, storage, use, processing, disposal or transportation;
(iv) exposure to hazardous or toxic substances; (v) the safety or health of
employees or (vi) regulation of the manufacture, processing, distribution in
commerce, use, or storage of chemical substances.
3.10 Compliance; Legal Actions. To the best of their knowledge and
belief with respect to section 3.10: the Company and the Owners have 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) with
respect to the Company and its business or the Trust, and except as may be
described in Schedule 3.10 hereto, no legal action, suit, audit, investigation,
unfair labor practice charge, complaint, claim, grievance, or proceeding by or
before any court, arbitration panel, governmental authority or third party is
pending or, to the best knowledge of the Company or the Owners threatened,
which involves or may involve the Company or its now or previously owned or
operated assets, operations, properties or businesses.
3.11 Real Property. Schedule 3.11 includes correct and complete
legal descriptions of all real property owned in fee simple by the Company and
all mortgages, charges and encumbrances thereon and a copy of the relevant
title deeds and any other material documents reflecting or affecting the real
property interests owned by the Company.
3.12 Employees. To the best of their knowledge and belief with
respect to section 3.12: schedule 3.12 is a complete and accurate list of the
names, start dates and current annual salary or hourly wage rates of all
salaried and hourly regular full-time and part-time employees of the Company
together with a summary of the bonuses, additional compensation and other like
benefits and entitlements (other than long service leave, sick leave and
superannuation), if any, payable to each employee and the last date, if any, on
which each employee received (a) a raise in annual salary or hourly wage or (b)
a bonus.
3.13 Employees.
3.13.1 Employees' Particulars. The particulars of the
employees and permanent contractors listed in Schedule 3.12 are true, complete
and accurate and the names listed in that
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schedule comprise all employees and permanent contractors engaged full time by
the Company ("Employees") necessary for the conduct of the business of the
Company. There are no other employees or permanent contractors necessary or
integral to the conduct of the business of the Company other than those set out
in Schedule 3.12.
3.13.2 All Material Terms of Employment.
(1) The Company has disclosed to the Purchaser
before the date of this Agreement all material terms and
conditions on which each of the Employees is employed or
retained;
(2) The engagement of all Employees is on the
basis that the Company has no obligation to pay an Employee
any commission, bonus, incentive, retiring or similar payment
other than as disclosed in Schedule 3.12.
3.13.3 Transfer of Employees. The Company has no knowledge of
any facts which would indicate that any Employees will not transfer their
employment or retainer to the Purchaser on the Closing Date.
3.13.4 No Violation of Employment Laws.
To the best of their knowledge and belief with respect to
section 3.13.4:
(1) There has been no violation by the Company of
any applicable law or regulation relating to employment of
labour (including occupational Health and Safety legislation,
Equal Opportunity legislation and all other laws or
regulations relating to labour relations, labour standards or
employment practices and any relevant regulations); or
(2) The Company has not engaged in any conduct in
relation to the Employees which will or may result in any
liability to the Company or the Purchaser.
3.13.5 Additional Employees. Between the date of execution of
this Agreement and the IPO Closing Date the Company will not:
(1) employ or retain any additional employees or
permanent contractors in the business of the Company otherwise
than in the ordinary course of business, or with the
Purchaser's prior written consent, such consent not to be
unreasonably withheld; or
(2) make any substantial change (other than any
change required to comply with any relevant award or statute)
in the basis or amount of remuneration or the terms and
conditions of employment of any Employee without the
Purchaser's written consent, such consent which shall not be
unreasonably withheld.
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3.13.6 Taxes Paid from Employees' Wages. The Company has made
timely payments of any taxes required to be deducted and withheld from the
wages and salaries paid to the Company's employees in the business of the
Company.
3.13.7 Claims by Employees. To the best of their knowledge and
belief with respect to section 3.13.7: except as disclosed to the Purchaser
under this Agreement, the Company does not know of any facts which will result
in any present or former employee or permanent contractor of the Company having
any valid claim on the date of termination of his employment or contract
against the Company (whether under law or any employment, agreement or
otherwise) on account of or for:
(1) overtime pay;
(2) wages or salaries;
(3) any statute, ordinance, regulation or award
relating to minimum wages or other working conditions;
(4) redundancy pay, payment in lieu of notice or
compensation arising out of termination of employment;
(5) superannuation payments or benefits; or
(6) workers' compensation claims or common law
claims for any injury or disease.
3.13.8 No Labour Dispute. At the date of this Agreement there
is no labour dispute, strike or work stoppage which will affect or may affect
the business of the Company or interfere with its continued operation.
3.13.9 No Agreement with Unions. Except as disclosed in this
Agreement, there is no agreement, arrangement or understanding between the
Company and any trade union or any representatives of any trade union in
relation to the Employees.
3.13.10 No Share Scheme. Except as disclosed in this
Agreement, there are no share option or share incentive or similar schemes to
which any Employee is or may become a party.
3.14 Superannuation
3.14.1 All Material Documents. The Company has made available
to the Purchaser the correct and complete copies and records of all documents
it has in its possession relating to the Company's obligation to make
superannuation contributions on behalf of the Employees.
3.14.2 No Claims for Breach of Duty. To the best of their
knowledge and belief with respect to section 3.14.2: there are no pending or
threatened claims by or on behalf of any Employee or beneficiary thereof in
respect of the Company's obligation to pay superannuation contributions on
behalf of the Employees or violations of other applicable laws which could
result in any liability on the part of the Company.
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3.14.3 All Claims Disclosed. All claims against the Company
relating to its obligation to make superannuation contributions have been
disclosed to the Purchaser in writing.
3.15 Safety Matters. Schedule 3.15 contains (if they exist) a copy
of all material safety data sheets, toxicology studies and environmental
studies of the Company.
3.16 Entities Owned. Schedule 1.1.10 hereto sets forth the name of
any corporation, partnership, firm, association, business organization, entity
or enterprise owned wholly or in part by the Company directly or indirectly.
To the best of their knowledge and belief, except as disclosed in Schedule
1.1.10, all the ownership interests of the Company in such entities are
directly or ultimately owned by the Company, free and clear of all liens,
encumbrances or adverse claims of every kind, and all such ownership interests
are duly and validly authorized and issued, fully paid and nonassessable, and
were not issued in violation of the preemptive rights of any past or present
stockholder.
3.17 Affiliate Relationships.
3.17.1 In this Agreement the term "affiliate" means with
respect to any person, any other person which directly or indirectly, by itself
or through one or more intermediaries, controls, or is controlled by, or is
under direct or indirect common control with, such person. The term "control"
means the possession, directly or indirectly, of the power to direct, or cause
the direction of, the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
3.17.2 Except as set forth on Schedule 3.17.2 hereto,
neither the Company, the Owners nor any affiliate of the Owners, and no manager
or employee of or consultant to the Company owns, directly or indirectly, in
whole or in part, any property, assets or right, tangible or intangible, which
is associated with any property, asset or right owned by the Company or which
the Company is operating or using or the use of which is necessary for its
business. Also included in Schedule 3.17.2 is the disclosure of any
relationships which any Owner, affiliate of an Owner, director, officer,
employee, agent or consultant of the Company has with any other corporation,
partnership, firm, association or business organization, entity or enterprise
which is a competitor, potential competitor, supplier or customer of the
Company.
3.18 Investment Company. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company," a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935 (USA), as amended.
3.19 No Material Adverse Change. Except as specifically set forth
on Schedule 3.19, or otherwise as occurs in the ordinary course of business of
the Company and consistent with the Company's past practices, or as otherwise
expressly disclosed in this Agreement (including section 5.1.(17) or to the
Purchaser since the Balance Sheet Date there has not been: (a) any change in
the Trust or the Company's organizational or constituent documents or
regulations, (b) any material adverse change of any nature whatsoever in the
financial condition, assets, liabilities (contingent or otherwise), income,
business or prospects of the Company; (c) any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting the
properties or business of the
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Company; (d) any change in the authorized capital of the Company or in its
securities outstanding or any change in the Ownership Interests; (e) any
declaration or payment of any dividend or distribution in respect of the
Ownership Interests or any direct or indirect redemption, purchase or other
acquisition of any of the Ownership Interests; (f) any contract or commitment
entered into by the Company or any incurrence by the Company or agreement by
the Company to incur any liability or make any capital expenditures in excess
of $10,000, except in the normal course of business; (g) any increase in the
compensation, bonus, sales commissions or fee arrangement payable or to become
payable by the Company to any of its officers, directors, Owners, employees,
consultants or agents; (h) any work interruptions, labor grievances or claims
filed, proposed law or regulation (the existence of which is known, or under
the normal course of business should be known, to the Company and/or the
Owners) or any event or condition of any character materially adversely
affecting the business or future prospects of the Company; (i) any creation,
assumption or permitting to exist of any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired, except as set forth in Schedule 3.4 ; (j) any sale or transfer, or
any agreement to sell or transfer, any material assets, properties or rights of
the Company to any person, including, without limitation, the Owners and their
respective affiliates; (k) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to the Company, including, without
limitation, any indebtedness or obligation of the Owners or any of their
affiliates; (1) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, properties or
rights of the Company or requiring consent of any party to the transfer and
assignment of any such assets, properties or rights; (m) any purchase or
acquisition, or agreement, plan or arrangement to purchase or acquire, any
property, rights or assets of the Company; (n) any negotiation for the
acquisition of any business or start-up of any new business; (o) any merger or
consolidation or agreement to merge or consolidate with or into any other
corporation (except the transactions contemplated by this Agreement); (p) any
waiver of any material rights or claims of the Company; (q) any breach,
amendment or termination of any material contract, agreement, license, permit,
permit application or other right to which the Company is a party; (r) any
discharge, satisfaction, compromise or settlement of any claim, lien, charge or
encumbrance or payment of any obligation or liability, contingent or otherwise,
other than current liabilities as of the Balance Sheet Date, current
liabilities incurred since the Balance Sheet Date in the ordinary course of
business and prepayments of obligations in accordance with normal and customary
past practices; or (s) any transaction by the Company outside the ordinary
course of its business or prohibited hereunder.
3.20 Access. The Company has provided the Purchaser and the
Purchaser's lenders, underwriters and placement agents and their respective
representatives the opportunity to make a full investigation of the properties,
operations and financial condition of the Company and afforded the Purchaser
and the Purchaser's lenders, underwriters and placement agents and their
respective representatives reasonable access to the offices, buildings, real
properties, machinery and equipment, inventory and supplies, records, files,
books of account, tax returns, agreements and commitments and personnel of the
Company to allow for a full investigation by such persons.
3.21 Disclosure. No representation or warranty by the Company or
the Owners in this Agreement, the Schedules hereto or any certificate delivered
by the Company or the Owners to the Purchaser pursuant to the Agreement,
contains or will contain any untrue statement of a material fact or omits or
will omit any material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they are or were made, not
misleading.
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3.22 Company Material Adverse Effect. The term "Company Material
Adverse Effect" shall mean an adverse effect on the properties, assets,
financial position, results of operations, long-term debt, other indebtedness,
cash flows or contingent liabilities of the Company in an amount of AUD$25,000
or more.
3.23 Restricted Securities.
Including KPMG with respect to this section 3.23 only:
(1) The Company and Owners acknowledge that the shares of
Purchaser Common Stock to be acquired by the Company hereunder, and
then by the Owners by distribution from the Company, have not been
registered under the Securities Act of 1933 (USA), as amended (the
"Securities Act"), and are being acquired for the Company or Owners'
own account for investment and not with a view to the distribution
thereof, and the Purchaser Common Stock will be subject to the Stock
Transfer Restriction Agreement in Exhibit 7.3.3 hereto.
(2) The Company and each Owner has the knowledge and
experience in financial and business matters to enable it to evaluate
the merits and risks of entering this Agreement and the transactions
contemplated hereby and acquiring shares of Purchaser Common Stock.
(3) The Company and each Owner is able to bear the
economic risks of its investment in the Purchaser Common Stock,
including the risk of a loss of the value of the Purchaser Common
Stock.
(4) The Company and the Owners have been represented by
legal counsel in this transaction and they and their representatives,
including such counsel, have been given the opportunity to ask
questions of, and receive answers from, the officers of the Purchaser
concerning the terms of the transactions contemplated by this
Agreement and the affairs and the business and financial condition of
the Purchaser but have relied upon the representations set out in
Exhibit 7.5.3.
(5) The Company and each Owner has received a
Confidential Private Placement Memorandum ("PPM") which is annexed as
Schedule 3.23(5) hereto concerning the Purchaser and an investment in
shares of Purchaser Common Stock, and each of them and their
representatives, including financial advisers have been given such
access to all documents, books and additional information concerning
Purchaser which they have requested regarding Purchaser.
(6) The Company and each Owner and their representatives
have conducted such investigations in making a decision to approve
this Agreement and the transactions contemplated hereby as they have
deemed necessary and advisable.
(7) The Company and each Owner acknowledge and agree that
the Purchaser Common Stock to be issued to the Company may not be
disposed of except in accordance with the requirements of the
Securities Act and any applicable state securities laws and the Stock
Transfer Restriction Agreement.
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3.24 Insolvency Matters.
(1) No receiver or receiver and manager has been
appointed to the whole or any part of the Acquired Assets and no
appointment has been threatened or is envisaged by the Company or the
Owners.
(2) The Company is not in liquidation and no
administrator under the Corporations Law of Australia ("Corporations
Law") has been appointed. No order, petition, application, proceeding,
meeting or resolution has been made, presented, brought, called,
threatened or passed for the purpose of liquidating the Company or the
Trust or appointing an administrator under the Corporations Law.
(3) The Company has not stopped payment to any creditor
and is not insolvent or unable to pay its debts for the purposes of
section 460 of the Corporations Law or otherwise. There is no
unfulfilled or unsatisfied judgement or court order outstanding
against the Company and there has been no unreasonable delay by the
Company in the payment of any obligation due for payment.
(4) No mortgagee is or is entitled to be in possession of
the whole or any of the part of the Acquired Assets.
3.25 Trade Practices Act Infringements. To the best of their
knowledge and belief with respect to this section 3.25: there is no agreement,
arrangement or activity (whether by commission or omission) in which the
Company has been or will be concerned which infringes or which has been or
which is required to be authorised under the Trade Practices Xxx 0000 (Cth) of
Australia or any other anti-trust legislation in relation to the Acquired
Assets of the Company.
3.26 Insurance.
(1) All of the Acquired Assets that are already insured
by the Company are insured with a company of good repute and financial
substance in an amount not less than the full cost of replacement
against fire and all other risks as are commonly insured against by
prudent persons carrying on a similar business of that carried on by
the Company (including third party injury). All other insurances
required by law and all current premiums on those insurances have been
paid. That insurance is in full force and effect until Closing and
nothing has been done or omitted to be done which would make any
insurance void, voidable or unenforceable.
(2) The Company has not failed to give any notice or
present any claim in relation to the Acquired Assets under any
insurance policy.
(3) There are no outstanding requirements or
recommendations by any:
(i) insurance company that issued a policy in
relation to any of the Acquired Assets; or
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(ii) governmental authority requiring or
recommending any material repairs or other work done on or in
relation to any of the premises occupied by the Company or the
Acquired Assets, or requiring or recommending any material
equipment or facilities to be installed in or in relation to
any of the premises of the Company or the Acquired Assets.
3.27 SAP. The Company is a designated SAP implementation partner. It
is acknowledged by the Company and the Owners that the Company's relationship
with SAP is important to the value of the goodwill of the Company and the
business of the Company ("Goodwill"). Expressly excluding Xxxxxx Xxxxxxxx, the
Company and the Owners shall:
3.27.1 not act in any way which detrimentally affects the
Goodwill;
3.27.2 use their best endeavors to protect the Goodwill; and
3.27.3 use their best endeavors to procure that the existing
relationship between the Company and SAP continues after the IPO Closing Date
with the Purchaser or SCSI (as appropriate) in the place of the Company.
3.28 Receipt of Monies from ASAP. The Company receives as at the date
of this Agreement and on a month to month basis from ASAP rental of
AUD$4,000.00 per month for the utilization of part of the Company's premises at
000 Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx and compensation with respect to ASAP's
utilization of the services of the Company from time to time and the Company
and the Owners covenant to the Purchaser that they shall use their best
endeavours to assign the right to receive such monies to the Purchaser
effective from the Closing Date.
3.29 Owner Trusts. The trusts of which the Owners are identified in
this Agreement as being trustees of ("relevant trusts") are all validly
constituted, have not been determined and there is no restriction on the right
of an Owner to be indemnified out of the assets of the relevant trust, and the
Owners are all duly authorised and empowered by the relevant trusts to enter
into this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the Owners
as follows:
4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified and authorized to do business in all other states where
required to be qualified and authorized except where the failure to obtain such
qualification will not have a Purchaser Material Adverse Effect (as defined
below). The only operations of Purchaser prior to the date hereof has been to
coordinate and implement the various steps appropriate for the consolidation of
the ownership of certain founding companies into the Purchaser contingent on
the successful completion of the IPO as described in the PPM.
4.2 Capitalization of Purchaser. The total authorized capital
stock of Purchaser is as set forth and described in the Purchaser's PPM
delivered to the Company and the Owners in connection with the transactions
contemplated by this Agreement. The outstanding shares of Purchaser Common
Stock have been duly and validly issued and are fully paid and non-assessable.
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4.3 Authority. Purchaser has full right, power, legal capacity and
authority to execute, deliver and perform this Agreement and all documents and
instruments referred to herein or contemplated hereby and to consummate the
transactions contemplated herein and thereby (the "Purchaser Related
Documents"). This Agreement has been duly executed and delivered by Purchaser
and constitutes, and all Purchaser Related Documents, when executed and
delivered by Purchaser will constitute, legal, valid and binding obligations of
Purchaser, enforceable in accordance with their respective terms and conditions
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
4.4 Consents. No approval, consent, order or action of or filing
with any court, administrative agency, governmental authority or other third
party is required for the execution, delivery or performance by the Purchaser
of this Agreement or the Purchaser Related Documents or the consummation by the
Purchaser of the transactions contemplated thereby except as may be described
in the PPM and, except for (i) the filing of the Purchaser's registration
statement with respect to the IPO ("Registration Statement") with the U.S.
Securities and Exchange Commission ("SEC") pursuant to the Securities Act and
the SEC's declaration of effectiveness of such Registration Statement and the
completion of all necessary filings required thereunder, and (ii) the obtaining
of all necessary consents and approvals required pursuant to state securities
or "blue sky" laws in connection with the IPO.
4.5 Defaults. Purchaser is not in default under or in violation
of, and the execution, delivery and performance of this Agreement and Purchaser
Related Documents and the consummation by Purchaser of the transactions
contemplated hereby and thereby will not result in a default under or in
violation of (i) any mortgage, indenture, charter or bylaw provision, contract,
agreement, lease, commitment or other instrument of any kind to which Purchaser
is a party or by which Purchaser or any of its properties or assets may be
bound or affected or (ii) any law, rule or regulation applicable to Purchaser
or any court injunction, order or decree, or any valid and enforceable order of
any governmental agency in effect as of the date hereof having jurisdiction
over Purchaser, which default or violation could adversely affect the ability
of Purchaser to consummate the transactions contemplated hereby or will have a
Purchaser Material Adverse Effect.
4.6 Financial Statements. Purchaser has provided certain financial
statements of the Purchaser to the Owners ("Purchaser Financial Statements")
and such Purchaser Financial Statements have been prepared in accordance with
GAAP, are true and correct in all material respects, and are fair presentations
of the consolidated financial position, results of operations and cash flows of
Purchaser and its then existing consolidated subsidiaries as of the dates and
for the periods indicated. The books and records of Purchaser have been kept in
reasonable detail and accurately and fairly reflect the transactions of
Purchaser. Except as set forth in the Purchaser Financial Statements or the
PPM, the Purchaser has no liabilities or obligations of any nature whether
absolute, contingent or otherwise.
4.7 Taxes. Purchaser has either accrued, discharged or caused to
be discharged, as the same have become due, or the Purchaser Financial
Statements contain adequate accruals and reserves for, all taxes, interest
thereon, fines and penalties of every kind and character, attributable or
relating to the properties and business of Purchaser.
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4.8 Compliance. Purchaser has full power, authority and legal
right and has all licenses, permits, qualifications, and other documentation
(including permits required under applicable Environmental Law) necessary to
own and/or operate its businesses, properties and assets and to carry on its
businesses as being conducted on the date of this Agreement, and such
businesses are now being conducted and such assets and properties are being
owned and/or operated in compliance with all applicable laws (including
Environmental Law), ordinances, rules and regulations of any governmental
agency of the United States, any state or political subdivision thereof, or any
foreign jurisdiction, all applicable court or administrative agency decrees,
awards and orders and all such licenses, permits, qualifications and other
documentation, except where the failure to comply will not have a Purchaser
Material Adverse Effect, and there is no existing condition or state of facts
which would give rise to a violation thereof or a liability or default
thereunder, except where a violation, liability or default will not have a
Purchaser Material Adverse Effect.
4.9 Investment Company. Purchaser is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
4.10 Disclosure. No representation or warranty by Purchaser in this
Agreement or the Schedules hereto and no statement contained any certificate
delivered by Purchaser to the Owners pursuant to this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they are or were made, not misleading.
4.11 Purchaser Material Adverse Effect. The term "Purchaser
Material Adverse Effect" shall mean an adverse effect on the properties,
assets, financial position, results of operations, long-term debt, other
indebtedness, cash flows or contingent liabilities of Purchaser and its
consolidated subsidiaries, taken as a whole, in an amount of AUD$25,000 or
more.
4.12 Specific Warranty of Purchaser. The Purchaser shall indemnify
the Company against any claims made against the Company arising solely out of
the publication of the name of the Company in any documentation issued to the
public by the Purchaser in relation to the IPO.
4.13 Stock Warranty. The common stock of Brightstar ("Brightstar
Stock") issued to the Company in accordance with the provisions of this
Agreement and the PPM shall be validly issued and outstanding and in compliance
with requirements of the United States Federal Securities Laws ("US Securities
Laws"). Such Brightstar Stock has not been registered under the US Securities
Laws in reliance on an exemption from such registration.
5. CERTAIN OTHER ACTIONS, COVENANTS AND DOCUMENTS
The Company and the Owners further agree with the Purchaser that from
the date hereof to the Closing Date:
5.1 Conduct of Business. Expressly excluding KPMG with respect to
this section 5.1, the Owners shall cause the Company to, and the Company shall,
conduct its operations according to its
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ordinary and usual course of business to preserve substantially intact its
business organization, keep available the services of its officers and
employees, and maintain its present relationships with licensors, suppliers,
distributors, customers and others having significant business relationships
with it. The Company and Owners agree to confer with the Purchaser to keep it
informed with respect to the general status of the on-going operations of the
business of the Company. Without limiting the generality of the foregoing, and
except as otherwise contemplated herein or agreed to by Purchaser, the Owners
will cause the Company to, and the Company shall:
(1) carry on its business in substantially the same
manner as heretofore carried on and not introduce any material new
method of management, operation or accounting, nor provide discounted
services;
(2) maintain its properties, facilities, equipment and
other assets, including those held under leases, in good working
order, condition and repair, ordinary wear and tear excepted;
(3) perform all of its obligations under all contracts to
which the Company is a party including all debt and lease instruments
and other agreements (including the Acquired Contracts) relating to or
affecting its business, assets, properties, equipment and rights, and
pay all vendors, suppliers, and other third parties (including
mechanics and materialmen) as and when its bills are due and pay in
full all payroll obligations when due;
(4) keep in full force and effect its present insurance
policies or other comparable insurance coverage;
(5) use its best efforts to maintain and preserve its
business organization intact, retain its present employees and
maintain its relationships with suppliers, customers and others having
business relations with the Company;
(6) refrain from effecting any change in the capital
structure of the Company; refrain from incurring any expenditures
outside the normal course of business, including any capital
expenditures in excess of AUD$10,000, without prior written
notification to the Purchaser;
(7) refrain from starting or acquiring any new businesses
without the prior written consent of the Purchaser (such consent not
to be unreasonably withheld);
(8) maintain its present salaries, commission levels and
bonus schemes for all officers, directors, employees or agents, except
for the usual and customary merit increases for employees;
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(9) refrain from declaring or paying any extraordinary
bonuses, fees, commissions or any other unusual distributions to the
Owners, management, sales agents, employees or other personnel without
prior written consent of the Purchaser (such consent not to be
unreasonably withheld);
(10) promptly notify the Purchaser of the receipt by the
Company or any Owner of any notice or claim, written or oral, of (a)
default or breach by the Company under, or of any termination (other
than at the end of the stated term thereof) or cancellation, or threat
of termination (other than at end of the stated term thereof) of
cancellation, of any company contract, (b) any loss of, damage to or
disposition of, any of the properties, assets or the products of the
Company of a value of AUD$10,000 or more, singly or in the aggregate
(other than the sale or use of inventories in the ordinary course of
business), (c) any claim or litigation threatened or instituted, or
any other adverse event or occurrence involving or affecting the
Company or any of its assets, properties, operations, businesses or
employees, and (d) any proposal made by any third party received by
the Company, or of which any Owner obtains knowledge, in respect of
any sale or other disposition, direct or indirect, of the assets
(other than the sale or use of inventories in the ordinary course of
business), businesses or outstanding ownership or voting interests of
the Company;
(11) comply with and cause to be complied with all
applicable laws, rules, regulations and orders of all federal, state
and local governments or governmental agencies affecting or relating
to the Company or its assets, properties, operations, businesses or
employees except where the failure to comply will not have a Company
Material Adverse Effect;
(12) refrain from any sale, disposition, distribution or
encumbrance of any of its properties or assets and refrain from
entering into any agreement or commitment with respect to any such
sale, disposition, distribution or encumbrance (other than the sale or
use of inventories in the ordinary course of business);
(13) refrain from any purchase or redemption of, or any
dealing with any ownership or voting interest (including without
limitation, shares and units) in the Company or the Trust and, refrain
from issuing any ownership interest;
(14) refrain from making any change in any accounting
principle, classification, policy or practice;
(15) refrain from effecting any amendment to the
organizational and governing instruments of and documents relating to
the Company or the Trust;
(16) refrain from entering into or agreeing to enter into
any merger or consolidation by the Company with or into, and refrain
from acquiring all or substantially all of the assets, capital stock
or business of, any person, corporation, partnership, association or
other business organization or division of any thereof;
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(17) maintain its present debt and lease agreements and
instruments (except those that expire on their stated maturity or
lease termination dates); refrain from entering into any amendment
thereto or new debt or lease agreements or instruments except that the
Company's planned increase in its overdraft line of credit to AUD
$1,500,000, and the proposed new Sydney and Perth leases currently
being implemented by the Company and the possible negotiation of a new
Melbourne lease, and equipment leases with CBFC (all as disclosed
previously to the Purchaser) are hereby agreed to by Purchaser;
refrain from increasing any indebtedness for borrowed money or issuing
or selling any debt securities or letters of credit; and refrain from
making any payments of any indebtedness or interest or other amounts
thereon or with respect thereto (other than regularly scheduled
principal and interest payments and payments of principal, interest
and fees under revolving lines of credit);
(18) manage working capital in the ordinary course
consistent with past practice and refrain from introducing any new
method of management or operation, providing any discounted services
or products, discounting any receivables or taking any action to
accelerate payment of any receivable prior to its due date; and
(19) refrain from entering into any contract, lease,
undertaking, commitment, mortgage, indenture, note, security
agreement, license or other agreement (a) involving the receipt or
expenditure of more than AUD$25,000 over the term thereof, (b)
containing provisions calling for the sale or purchase of raw
materials, product or service at prices that vary from the market
prices of such raw materials, products or services generally
prevailing in customary third-party markets, (c) which include "take
or pay", "meet or release", "most favored nations" or similar pricing
or delivery arrangements, (d) with any officer, director, Owner or
affiliate of the Company, (e) other than in the ordinary course of
business and consistent with the Company's past practices requiring
the Company to indemnify or hold harmless any other person or entity,
(f) evidencing any warranty obligation of the Company with respect to
goods, services or products sold or leased by it (other than
warranties given in the normal course of business containing
substantially the same terms as those presently in effect), or (g)
imposing on the Company any confidentiality, non-disclosure or
non-compete or restraint of trade obligation.
5.2 Cooperation. The Company and each Owner will use reasonable
endeavours to cooperate fully with the Purchaser as to arrangements for the
consummation of the transactions contemplated hereby in an orderly fashion. The
Company and the Owners will use their reasonable efforts to obtain, as soon as
possible, all required consents or approvals, and will take all other
reasonable action which is necessary or desirable to effect the assignment to
Purchaser of the Licenses, Personal Property Leases, Assumed Contracts, Real
Property Leases, Real Property, and Prepaid Items, as well as the telephone
numbers and goodwill of the Company and other rights of the Company related to
the Acquired Assets.
5.3 Filings, Etc. Each Owner and the Company will make all filings
which are required to be made by them to lawfully consummate the transactions
contemplated hereby.
5.4 Access. The Owners (excluding KPMG to the intent that it is
only required to use its reasonable endeavours with respect to this section
5.4) and the Company will cooperate fully in permitting the Purchaser and the
Purchaser's lenders, underwriters and placement agents and their
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respective representatives, advisers, consultants, appraisers, auditors,
engineers and other experts to make a full investigation of the properties,
operations and financial condition of the Company and will afford the Purchaser
and the Purchaser's lenders, underwriters and placement agents and their
respective representatives, advisers, consultants, appraisers, auditors,
engineers and other experts reasonable access to the offices, buildings, real
properties, machinery and equipment, inventory and supplies, records, files,
books of account, tax returns, agreements and commitments and personnel of the
Company. Without limitation of the foregoing, the Owners and the Company shall
provide the Purchaser with such reasonably available financial information (and
schedules with respect thereto) with respect to the Company as the Purchaser
may reasonably request and will cooperate with and assist representatives of
the Purchaser in the preparation of such financial information (and any
opinions or reports with respect thereto) with respect to the Company as the
Purchaser may reasonably request. Notwithstanding the above, the Purchaser and
its respective lenders, underwriters and placement agents and their respective
representatives, advisers, consultants, appraisers, engineers and other experts
shall incur no liability with respect to control, operation or management (or
alleged control, operation or management) of the Company as a result of the
covenants in this Section 5.4. The Purchaser agrees to keep all of the
financial information provided to it by the Company for as long as it does not
enter the public domain (other than due to the default of the Purchaser) secret
and confidential.
5.5 Satisfaction of Conditions. Excluding KPMG with respect to
sections 5.5(i) and (ii) hereof, the Company and the Owners shall (i) use all
reasonable efforts to obtain, as soon as possible, all governmental approvals
required to be obtained by the Company and make, as soon as possible, all
filings with any governmental authority required on the part of the Company to
consummate the transactions contemplated hereby, (ii) use their reasonable
efforts to obtain, as soon as possible, all other consents to and approvals
required to be obtained by the Company to consummate the transactions
contemplated hereby, and (iii) otherwise use their reasonable efforts to
satisfy the conditions set forth in Section 7 of this Agreement to the extent
that such satisfaction is within their control.
5.6 Capital Budget. Exhibit 5.6 attached hereto contains the
budgeted capital expenditures of the Company from August 31, 1997 through
December 31, 1998. Unless otherwise consented to by the Purchaser, prior to the
Closing, the Company will make capital expenditures only in accordance with
such budget.
5.7 Exclusivity. The Company and the Owners shall not (i) solicit,
initiate, or encourage the submission of any proposal or offer from any person
or entity relating to the acquisition of any ownership or management interest
in the Company, or any substantial portion of the assets of the Company
(including any acquisition structured as a merger, consolidation, or share
exchange) or (ii) participate in any negotiations or discussions regarding,
furnishing any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person or entity in
favor of any such acquisition. The Owners and the Company will promptly notify
the Purchaser if any person or entity makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
5.8 Limitation on Assignments to Purchaser. Expressly excluding
KPMG with respect to section 5.8, notwithstanding anything herein contained to
the contrary, this Agreement shall not constitute nor require an assignment to
the Purchaser of any claim, lease, easement, permit, license,
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contract or other right if an attempted assignment of the same without the
consent of any party would constitute a breach thereof unless and until such
consent shall have been obtained. In the case of any such claim, lease,
easement, permit license, contract or other right which cannot effectively be
transferred to Purchaser without such consent, the Owners and the Company will
each use all reasonable efforts to obtain such consent promptly and if such
consent is not obtained, the Company and the Purchaser agree to enter into such
reasonable arrangements as may be appropriate to provide Purchaser with
benefits purported to be vested in Purchaser pursuant to the terms of this
Agreement had such consent been obtained.
5.9 Release. The Owners and the Company do hereby release, acquit
and discharge Purchaser from any and all liabilities, obligations, claims,
demands, actions or causes of action arising from or relating to the Acquired
Assets, prior to the Closing Date other than those based on obligations of
Purchaser under this Agreement or which relate to actions of the Company
undertaken at the direction of the Purchaser, including, without limitation,
any claim arising from any event, occurrence, act, omission or condition
relating to the Acquired Assets occurring or existing on or prior to the
Closing Date.
6. CERTAIN AGREEMENTS
The parties hereto further agree as follows:
6.1 Restraint of Trade. The Company, the Owners and DCSI (expressly
excluding, with respect to this section 6.1 only, KPMG, and with respect to
sections 6.1.1(1), (2) and (3) only, Xxxxxx Xxxxxxxx and DCSI) agree with the
Purchaser that in order to protect the goodwill of the Company that is being
transferred to Purchaser hereunder and the business of the Company in the form
that it is conducted at the date of this Agreement, namely the provision of SAP
implementation services, ("Business"), the Company, the Owners and DCSI will
not:
6.1.1 either directly or indirectly:
(1) undertake, carry on or be engaged in or concerned
with (whether as director, employee, agent, principal, partner,
representative, shareholder, debenture holder, trustee, the holder of
any security or in any other capacity) any business which competes
with the Business or is similar in nature to the Business;
(2) counsel, procure or otherwise assist or encourage any
person to do anything referred to in clause 6.1.1(1);
(3) be a lender to or guarantor for any person engaged in
any business which may be competitive with the Business;
(4) canvass or solicit any employee of the Business to
leave his employment with the Business or the Purchaser;
(5) canvass or solicit any person who has been a client
or customer of the Company or of the Business in a way that is
detrimental to the Business, at any time during the year prior to the
Closing Date;
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6.1.2 within:
(1) Australia;
(2) the State of Victoria;
(3) forty (40) kilometres of the Melbourne Central
Business District ("CBD");
(4) ten (10) kilometres of the CBD;
(5) two (2) kilometres of the CBD;
6.1.3 for a period of:
(1) three (3) years after the Closing Date;
(2) two (2) years after the Closing Date;
(3) one (1) year after the Closing Date;
6.1.4 Construction. Clause 6.1 is to be construed and take
effect as if it consisted of the number of separate provisions which are the
result of combining each type of conduct referred to in clause 6.1.1 with each
of the areas referred to in clause 6.1.2, and then relating each of those
combinations to each of the periods of time referred to in clause 6.1.3. If any
of those separate provisions is unenforceable, illegal or void for any reason
that provision shall be severed. Severance will not affect the validity or
unenforceability of any of the other separate provisions.
6.1.5 Fair and Reasonable. Each of the separate provisions
comprising clause 6.1 constitutes a fair and reasonable restraint of trade.
6.1.6 Marketable Securities. Clause 6.1 is not intended to
preclude the Company, the Owners or DCSI from owning marketable securities of a
stock exchange in Australia or elsewhere. But the Company, the Owners and DCSI
must not hold more than five percent (5%) of such marketable securities of such
corporation or trust if that corporation or trust carries on any business which
competes directly with the Business.
6.1.7 Insolvency. Notwithstanding any of the other provisions
of this Agreement, if the Purchaser or SCSI enters into any form of insolvency
administration within two (2) years of the IPO Closing Date, then the
provisions of this section 6.1 shall not, from the occurrence of that event
onwards, apply.
6.2 Audit. Prior to Closing, Deloitte Touche Tohmatsu, shall
complete an audit of the Company through December 31, 1997, and such additional
review work as may be requested by the Purchaser through and including the
Closing Date (or other periods subsequent to December 31, 1997), and provide
its report to the Purchaser and the Owners.
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6.3 Confidentiality. Prior to Closing, none of the Purchaser, the
Company nor the Owners will disclose the terms of this Agreement to any person
other than their respective directors, officers, agents or representatives,
except as otherwise provided herein or unless required by law. The Company may
make appropriate disclosures of the general nature of the acquisition
contemplated by this Agreement to its employees, vendors and customers to
protect the Company's goodwill and to facilitate the Closing. The Purchaser may
disclose pertinent information regarding the said acquisition to its existing
and prospective investors, lenders, or investment bankers or financial advisors
for the purpose of obtaining financing, including, without limitation,
financing related to the IPO or other offerings of its securities. The
Purchaser may describe this Agreement and the transactions contemplated hereby
in any registration statement filed by the Purchaser under the Securities Act
and in reports filed by the Purchaser under the Securities Exchange Act of
1934, and may file this Agreement as an exhibit to any thereof. The Purchaser
may also make appropriate disclosures of the general nature of the Acquisition
and the identity, nature and scope of the Company's operations to prospective
acquisition candidates in connection with the Purchaser's efforts to effect
additional acquisitions. Each party will have mutual approval rights with
respect to written employee presentations concerning the Exchange.
6.4 Tax-Free Exchange. None of the Owners, the Purchaser or the
Company shall knowingly take or fail to take any action, which action or
failure to act would jeopardize the qualification of the Exchange as an
exchange within the meaning of Section 351 of the Code.
6.5 Motor Vehicles. Expressly excluding KPMG, the Owners and the
Company represent and warrant that no motor vehicle primarily used by an
executive management employee in the business of the Company prior to the
Closing is owned by the Company.
6.6 Incentive Stock Bonus Plan. In order to provide incentive to
the key employees of SCSI, Purchaser agrees to cause SCSI, as a subsidiary of
Purchaser, to enter into an Incentive Stock Bonus Plan ("Bonus Plan") with the
key employees of SCSI (who were formerly the key employees of the Company),
which will provide for a bonus pool of shares of Purchaser's Common Stock to be
issued to key employee participants in the Bonus Plan, being the persons
specified in section 6.11 ("Participants") contingent on the combined
recognised revenues for the 1998 calendar year of the Company to the IPO
Closing Date and SCSI (and its permitted assignee) between the IPO Closing Date
and the end of the 1998 calendar year. The Participants shall determine the
amount of participation of each Participant. The shares will be issued at a
value per share equal to the IPO Price. The Bonus Plan will provide that if,
for the 1998 calendar year, the Company from 1 January 1998 to the IPO Closing
Date and SCSI (and its permitted assignee) from the IPO Closing Date to the end
of the 1998 calendar year ("1998 Year") have combined recognized revenue (less
allowances for doubtful accounts and sales returns) as determined in accordance
with GAAP ("Recognized Revenue"), of AUD $38,400,000 or more, , then there
shall be a bonus pool payable to the key employee participants in the Bonus
Plan of AUD $4,000,000 in value of Purchaser's Common Stock to be issued at a
value per share in United States dollars equal to the IPO Price. If the Company
from 1 January 1998 to the IPO Closing Date and SCSI (and its permitted
assignee) from the IPO Closing Date to the end of the 1998 Year have combined
Recognized Revenue of AUD$31,200,000 or less for the 1998 Year, then there will
be no bonus pool payable. If the Company from 1 January 1998 to the IPO Closing
Date and SCSI (and its permitted assignee) from the IPO Closing Date to the end
of the 1998 Year have Recognized Revenue of more than AUD $31,200,000, but less
than
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AUD $38,400,000, for the 1998 Year, then the amount of the bonus pool shall be
the result of the following computation:
Recognized Revenue for 1998 Year minus AUD$31,200,000 times AUD$4,000,000
-----------------------------------------------------
AUD$7,200,000
6.7 Transfer of Interest in DCSI or TCS.
6.7.1 If the Company wishes (whether of its own accord, or
as a result of receiving an offer from a third party) to sell, transfer, assign
or otherwise dispose of or grant an option over any of the Company's shares in
DCSI or units in the TCS Trust (as appropriate) ("Ownership Interests") or any
interest in those Ownership Interests or right forming part of or attaching to
those Ownership Interests the following will apply:
(1) the Company must first serve a notice
("Notice") in writing on the Purchaser setting out:
(a) if it has not received an offer from a
third party for the Ownership Interests, the terms upon which it wishes to
sell; or
(b) if it has received an offer from a third
party for the Ownership Interests, the terms of that offer.
(2) the Purchaser shall be given by the Company,
prior to any sale of the Ownership Interests being entered into,
becoming binding or being effected, the opportunity to provide its own
offer to purchase the Ownership Interests to the Company.
6.7.2 The Purchaser acknowledges that the Company is not
required to accept any offer made by the Purchaser for any of the Ownership
Interests.
6.7.3 In this section 6.7, reference to the Ownership
Interests include any part of the Ownership Interests.
6.8 Business Records. The Company agrees to make available to the
Purchaser at any time upon request free of charge, all books and records of the
Company relating to the Acquired Assets and the Assumed Obligations wherever
located, including without limitation, all credit records, payroll records,
computer records, computer programs, contracts, agreements, operating manuals,
schedules of assets, accounting and financial records, sales and property tax
records and returns, sales records, customer and supplier data, blueprints,
specifications, plans, maps, surveys, building and machinery diagrams,
maintenance records, personnel and labor relation records, real estate records,
construction records, environmental records and returns, files, papers, books
and all other public and confidential business records (together the "Business
Records"), whether such Business Records are in hard copy form or are
electronically or magnetically stored, excluding only the Company's income tax
records
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and returns, its Minute Books and constituent documents and stock records. The
Purchaser shall be entitled to take photocopies of any of the Business Records.
6.9 Telephone Numbers. The Company shall use its best endeavours
to transfer all of the Company' right, title and interest in, to and under all
telephone numbers used by the Company and Company business telephone numbers
used by its employees to the Purchaser, a correct and complete list of which is
set forth on Schedule 1.1.13 hereto.
6.10 Transferring Employees.
6.10.1 Prior to the IPO Closing Date the Purchaser must
offer employment or contracts (as appropriate) to each of the Employees to
commence on the IPO Closing Date subject to the completion of the transactions
contemplated by this Agreement. The employment or contracts (as appropriate)
offered must be on terms and conditions as to wages and salaries and other
conditions and entitlements no less favourable than those on which the
Employees are employed or retained on the date of this Agreement unless
otherwise agreed in writing by the Company and the Purchaser.
6.10.2 The Company must use its best endeavours to procure
the acceptance by all of the Employees receiving offers of employment or
contracts (as appropriate) by the Purchaser. Subject to completion of the
transactions contemplated by this Agreement, the services of each of the
employees and contractors who accept the offer of employment or agree to permit
the assignment of their contracts (as appropriate) to the Purchaser will be
transferred to the Purchaser and the Company consents to this.
6.11 Employment Agreements. The Company and the Owners (excluding
KPMG) agree in good faith to use their best endeavours to negotiate employment
agreements between Purchaser (or its permitted assignee) of the one part and
Xxxxxxx Xxxxxxx, Xxxxxxxxxxx Xxxxx and Xxxxxxx Lock of the other part,
substantially in the form of the employment agreement annexed as exhibit 6.11.
7. CONDITIONS PRECEDENT; CLOSING DELIVERIES
7.1 Conditions Precedent to the Obligations of the Purchaser. The
obligations of the Purchaser to effect the Exchange under this Agreement are
subject to the satisfaction of each of the following conditions, unless waived
by the Purchaser in writing to the extent permitted by applicable law.
Provisions in this Section 7.1 requiring the delivery of documents and
certificates to Purchaser shall be deemed satisfied by delivery of such
materials to the Escrow Agent for later release to Purchaser upon satisfaction
of the conditions contained in the Escrow Agreement.
7.1.1 Accuracy of Representations and Warranties. The
representations and warranties of the Owners and the Company contained in this
Agreement, the Schedules and Exhibits hereto, or in any closing certificate or
document delivered to the Purchaser pursuant hereto shall be true and correct
at and as of the Closing Date as though made as of that time, other than such
representations and warranties as are specifically made as of another date, and
the Owners and the Company shall each have delivered to the Purchaser a
certificate to that effect.
7.1.2 Performance of Covenants. The Owners and the Company
shall have performed and complied with all covenants of this Agreement to be
performed or complied with by
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them at or prior to the Closing Date, and the Owners and the Company shall each
have delivered to the Purchaser a certificate to that effect.
7.1.3 Legal Actions or Proceedings. Excluding KPMG with
respect to section 7.1.3, no legal action or proceeding shall have been
instituted after the date hereof against the Company or any Owner or against
the Purchaser arising by reason of the Exchange or any of the transactions
contemplated by this Agreement, which is reasonably likely (i) to restrain,
prohibit or invalidate the consummation of the transactions contemplated by
this Agreement, (ii) to have a Company Material Adverse Effect or (iii) to have
a Purchaser Material Adverse Effect after giving effect to the consummation of
the transactions contemplated by this Agreement, and the Owners and the Company
shall each have delivered to the Purchaser a certificate to that effect.
7.1.4 Approvals. Excluding KPMG with respect to section
7.1.4, subject to section 5.8, the Company and the Owners shall have acquired
all of the consents, approvals and waivers of third parties and of any
regulatory body or authority, whether required contractually or by applicable
law or otherwise, necessary for the execution, delivery and performance of this
Agreement (including the Company Related Documents and the Owner Related
Documents) by the Company and the Owners prior to the Closing Date, and the
Owners and the Company shall each have delivered to the Purchaser a certificate
to that effect.
7.1.5 Foreign Investment Review Board. The Purchaser
receiving from the Foreign Investment Review Board of the Commonwealth of
Australia approval of the purchase of the Acquired Assets and all of the other
transactions contemplated by this Agreement, such approval which is:-
(a) unconditional; or
(b) subject to conditions which do not materially
affect the commercial arrangement constituted by this Agreement or the economic
substance of the agreement reached between the parties reflected in this
Agreement.
The Purchaser agrees to consult with the Company in making its application to
the Foreign Investment Review Board for approval.
7.1.6 Closing Deliveries. All documents required to be
executed or delivered at Closing by the Owners or the Company pursuant to
Section 7.3 of this Agreement shall have been so executed and delivered.
7.1.7 No Loss or Damage. No material loss or damage shall
have occurred on or prior to the Closing Date to any of the properties or
assets of the Company.
7.1.8 Licenses, etc. The Purchaser shall have obtained, or
will obtain under this Agreement, all such licenses and permits as are legally
required for the continued operation of the business of the Company after the
Closing Date, substantially the same as before.
7.1.9 No Material Adverse Change. Since the Balance Sheet
Date there shall not have been any event that in the reasonable judgment of the
Purchaser, adversely affects the properties, assets, financial condition,
results of operations, cash flows, businesses or prospects of the Company
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to a material extent (excluding the situation where the Company is unable to
effectively assign a contract of the Company to Purchaser).
7.1.10 IPO. The Purchaser shall have completed the IPO on
terms acceptable to it, and the net proceeds thereof shall have been received
by the Purchaser.
7.1.11 Certain Corporate Actions. All necessary owner and
manager resolutions, waivers and consents required from the Company and the
Owners to consummate the transactions contemplated hereunder shall have been
executed and delivered.
7.1.12 Foreign Company. The Purchaser successfully registering
as a foreign company under the Corporations Law of the Commonwealth of
Australia.
7.1.13 ASAP Restraint. ASAP executing a deed in favour of
Purchaser containing a restraint of trade provision to the following effect, or
as otherwise mutually agreed between the parties:
"1.1 ASAP agrees with the Purchaser that in order to
protect the goodwill of the Company that is being
transferred to Purchaser under an agreement and plan
of exchange between, inter alia, the Company and
Purchaser dated on or around 20 December 1997
("Agreement and Plan of Exchange") and the business
of the Company in the form that it is conducted at
the date of the Agreement and Plan of Exchange,
namely the provision of SAP implementation services
("Business"), ASAP shall not:
1.1.1 either directly or indirectly:
(1) canvas or solicit any employee of the
Business to leave his employment with the
Business or the Purchaser;
(2) canvass or solicit any person who has been a
client or customer of the Company or of the
Business at any time during the year prior to
the Closing Date (as that term is defined in
the Agreement and Plan of Exchange) in a way
that is detrimental to the Business;
(3) engage any employees or independent
contractors after the Closing Date to be used
by ASAP to itself provide SAP software
implementation services;
1.1.2 within:
(1) Australia;
(2) the State of Victoria;
(3) forty (40) kilometres of the Melbourne
Central Business District ("CBD");
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(4) ten (10) kilometres of the CBD;
(5) two (2) kilometres of the CBD;
1.1.3 for a period of:
(1) two (2) years after the Closing Date;
(2) one (1) year after the Closing Date.
1.1.4 Construction. Clause 1.1.1 is to be construed and
take effect as if it consisted of the number of
separate provisions which are the result of combining
each type of conduct referred to in clause 1.1.1 with
each of the areas referred to in clause 1.1.2, and
then relating each of those combinations to each of
the periods of time referred to in clause 1.1.3. If
any of those separate provisions is unenforceable,
illegal or void for any reason that provision shall
be severed. Severance will not affect the validity or
unenforceability of any of the other separate
provisions.
1.1.5 Fair and Reasonable. Each of the separate provisions
comprising clause 1.1 constitutes a fair and
reasonable restraint of trade.
1.1.6 Marketable Securities. Clause 1.1 is not intended to
preclude ASAP from owning marketable securities of a
stock exchange in Australia or elsewhere. But ASAP
must not hold more than five percent (5%) of such
marketable securities of such corporation or trust if
that corporation or trust carries on any business
which competes directly with the Business.
1.1.7 Insolvency. Notwithstanding any of the other
provisions of this Agreement, if the Purchaser or
SCSI enters into any form of insolvency
administration within two (2) years of the IPO
Closing Date, then the provisions of this section 1.1
shall not, from the occurrence of that event onwards,
apply.
1.2 ASAP agrees with the Company that, consistent with
its past practices, it shall in good faith use its
best endeavours to continue referring clients to the
Business for a period of two (2) years after the IPO
Closing Date."
7.1.14 Charges. The Company delivering to Purchaser
simultaneously with the Exchange a release of the equitable mortgage in favour
of the Commonwealth Bank of Australia referred to in Schedule 3.4.
7.2 Conditions Precedent to the Obligations of the Owners and the
Company. The obligations of the Owners and the Company under this Agreement are
subject to the satisfaction of each of the following conditions, unless waived
by the Company in writing. Provisions in this Section 7.2 requiring the
delivery of documents and certificates to the Company and the Owners shall be
deemed satisfied by delivery of such materials to the Escrow Agent for later
release to the Company and the Owners upon satisfaction of the conditions
contained in the Escrow Agreement.
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7.2.1 Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement or
in any closing certificate or document delivered to the Owners or the Company
pursuant hereto shall be true and correct on and as of the Closing Date as
though made at and as of that date other than such representations and
warranties as are specifically made as of another date (such as the warranties
made with respect to the schedules referred to in section 3), and the Purchaser
shall have delivered to the Owners and the Company a certificate to that
effect.
7.2.2 Performance of Covenants. The Purchaser shall have
performed and complied with all covenants of this Agreement to be performed or
complied with by it at or prior to the Closing Date and the Purchaser shall
have delivered to the Owners and the Company a certificate to such effect.
7.2.3 Approvals. Purchaser shall have acquired all of the
consents, approvals and waivers specified under Section 4.4 prior to the
Closing Date, and Purchaser shall deliver to the Owners and the Company a
certificate to that effect.
7.2.4 Closing Deliveries. All documents required to be
executed or delivered at Closing by Purchaser pursuant to Section 7.5 of this
Agreement shall have been so executed and delivered.
7.3 Deliveries by the Company or the Owners at the Closing. At the
Closing, simultaneously with the deliveries by the Purchaser specified in
Section 7.5 below, and in addition to any deliveries required to be made by the
Owners and the Company pursuant to any other transaction document at the
Closing, the Company or the Owners, as applicable, shall deliver or cause to be
delivered to the Escrow Agent the following:
7.3.1 Closing Certificates. The Owners and the Company
shall execute and deliver the Escrow Agreement substantially in the form of
Exhibit 2.1 and the certificates and documents required pursuant to Sections
7.1.1, 7.1.2, 7.1.3, 7.1.4 and 7.1.6.
7.3.2 Instruments of Transfer.
(a) The Company shall use its best endeavours to
deliver at the Closing executed landlord's estoppel letters in a form
satisfactory to Purchaser with respect to all Real Property Leases,
and the Company shall use its best endeavours to execute and deliver
to Purchaser at the Closing an Assignment and Assumption of the Real
Property Leases, in substantially the form attached as Exhibit
7.3.2(i) hereto;
(b) At the Closing, the Company shall use its
best endeavours to deliver to Purchaser such other instruments of
transfer as shall be reasonably necessary or appropriate to vest in
Purchaser good and indefeasible title to the Acquired Assets and to
evidence the assignment by the Company and the assumption by Purchaser
of the Assumed Obligations.
7.3.3 Stock Transfer Restriction Agreement. The Company and
the Owners shall execute and deliver a Stock Transfer Restriction Agreement,
effective as of the Closing Date, substantially in the form set forth in
Exhibit 7.3.3.
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7.3.4 Opinion of Counsel for the Owners and the Company.
The Owners and the Company shall deliver the favorable opinion of its legal
counsel, dated as of the Closing Date, substantially in the form and to the
effect set forth in Exhibit 7.3.5 attached hereto.
7.3.5 Documents.. The Company and the Owners shall execute
and deliver, the documents, certificates, opinions, instruments and agreements
required to be executed and delivered by the Company or any Owner at the
Closing as contemplated hereby or as may be reasonably requested by the
Purchaser.
7.4 No Waiver. The consummation of the Closing shall not be deemed
to be a waiver by the Purchaser of any of its rights or remedies against the
Owners or the Company hereunder for any breach of warranty, covenant or
agreement by the Company or the Owners herein irrespective of any knowledge of
or investigation made by or on behalf of the Purchaser; provided, however, that
if the Company shall disclose in writing to the Purchaser prior to the Closing
Date a specified breach of a specifically identified representation, warranty,
covenant or agreement of the Company or a Owner herein by the Company or a
Owner, and requests a waiver thereof by the Purchaser, and the Purchaser shall
waive any such specifically identified breach in writing prior to the Closing
Date, the Purchaser, for themselves and for each Purchaser Indemnified Party
(as defined below) shall be deemed to have waived their respective rights and
remedies hereunder for, and the Owners and the Company shall have no liability
with respect to any such specifically identified breach to the extent so
identified by the Company and so waived by the Purchaser.
7.5 Deliveries by the Purchaser at the Closing. At the Closing,
simultaneously with the deliveries by the Owners specified in Section 7.3
above, and in addition to any other deliveries to be made by the Purchaser
pursuant to any other transaction document at the Closing, the Purchaser, as
applicable, shall deliver or cause to be delivered to the Owners and the
Company the following:
7.5.1 Closing Certificates. The Purchaser shall execute and
deliver the Escrow Agreement in the form of Exhibit 2.1, the certificates and
documents required pursuant to Sections 7.2.1, 7.2.2, 7.2.3 and 7.2.4.
7.5.2 Instruments of Transfer. At the Closing, the
Purchaser shall execute and deliver to the Company the following documents:
(i) the Assignment and Assumption of the Real
Property Leases, in substantially the form attached as Exhibit
7.3.2(i) hereto; and
(ii) such other instruments or documents as shall
be reasonably necessary or appropriate to vest in Purchaser good and
indefeasible title to the Acquired Assets and to evidence the
assumption by Purchaser of the Assumed Obligations.
7.5.3 Opinion of Counsel for the Purchaser. The Purchaser
shall deliver the favorable opinion of its legal counsel dated as of
the Closing Date, substantially in the form and to the effect set
forth in Exhibit 7.5.3.
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7.5.4 Closing Cash Consideration. The Purchaser shall
deliver the Closing Cash Consideration to the Company as set forth in
Section 1.5 hereof.
7.6 No Waiver. The consummation of the Closing shall not be deemed
to be a waiver by the Owners or the Company of any of their rights or remedies
hereunder for breach of any warranty, covenant or agreement herein by the
Purchaser irrespective of any knowledge of or investigation with respect
thereto made by or on behalf of any Owner or the Company; provided, however,
that if the Purchaser shall disclose in writing to the Owners prior to the
Closing a specified breach of a specifically identified representation,
warranty, covenant or agreement of the Purchaser contained herein by the
Purchaser, and requests a waiver thereof by the Company and the Owners, and the
Company and the Owners shall waive any such specifically identified breach in
writing prior to the Closing, the Company and the Owners shall be deemed to
have waived their rights and remedies hereunder for, and the Purchaser shall
have no liability or obligation to the Owners or the Company with respect to,
any such specifically identified breach, to the extent so identified by the
Purchaser and waived by the Company and the Owners.
7.7 Conditions Precedent to Completion of the Closing. The
obligations of the parties to consummate the Exchange under this Agreement on
the IPO Closing Date are subject to the satisfaction of each of the following
conditions (unless waived by each of the parties in writing):
7.7.1 Legal Actions or Proceedings. No legal action or
proceeding shall have been instituted after the date hereof against the Company
or the Owners which is reasonably likely (i) to restrain, prohibit or
invalidate the consummation of the transactions contemplated by this Agreement,
(ii) to have a Company Material Adverse Effect or (iii) to have a Purchaser
Material Adverse Effect after giving effect to the consummation of the
transactions contemplated by this Agreement.
7.7.2 IPO. The Purchaser shall have completed the IPO on
terms described in the Registration Statement for the IPO, and the net proceeds
thereof shall have been received by the Purchaser.
7.8 Delivery of the Closing Cash Consideration. On the IPO Closing
Date, the Purchaser shall deliver the Closing Cash Consideration to the Company
and the Escrow Agent shall release and deliver all documents and certificates
held in escrow to the appropriate parties.
7.9 Provision of Working Capital. As soon as practicable after
completion of Closing the Purchaser will arrange for the provision to SCSI of
monies sufficient for its day to day operations, including without limitation
arranging a line of credit.
8. ACCOUNTS RECEIVABLE AND OWNERS ENTITLEMENTS
8.1 The Owners represent that as at 30 September 1997 the
accounting records of the Company prior to any adjustment for purposes of the
financial statements referred to in section 3.8 show certain amounts were owing
to them by the Company representing loans, undistributed pre-30 June 1997
profits, capital introductions, post-30 June 1997 interest and profit
accumulation all of which are contained in exhibit 1.3 and which, as at that
date, stood at AUD$2,723,987.
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8.2 The Purchaser, which is acquiring the Accounts Receivable
pursuant to section 1.1.5, agrees to apply the proceeds of the collection of
the Accounts Receivable in the following manner:
8.2.1 First, to the Owners in satisfaction of the
entitlements of the Owners referred to in section 8.1, as adjusted in the
ordinary course of business of the Company and consistent with its past
practices (including interest and profit accumulation from 1 October 1997 to
the IPO Closing Date) and which includes the crediting of profits of the
Company earned between 30 September 1997 and the IPO Closing Date, less any
amounts distributed by the Company to the Owners between 30 September 1997 and
the IPO Closing Date in reduction of said entitlements ("Owner's
Entitlements"); and
8.2.2 Secondly, to the Purchaser.
8.3 The Purchaser agrees and acknowledges that if a shortfall
arises in respect of the payment of the Owners Entitlements pursuant to section
8.2.1, that it shall pay that shortfall to the Company within three (3) months
of the IPO Closing Date. The Purchaser reserves the right, upon the giving of
reasonable prior notice to the Company, to conduct an audit of the items
referred to in section 8, at its own cost as at the IPO Closing Date.
9. SURVIVAL; INDEMNIFICATIONS
9.1 Survival. The representations and warranties set forth in this
Agreement and the other documents, instruments and agreements contemplated
hereby shall survive after the date hereof to the extent provided herein. The
representations and warranties of the Owners and the Company in the Owner
Related Documents and the Company Related Documents other than those in Section
3.4 shall survive for a period of twenty-four (24) months after the date hereof
and the representations and warranties of the Owners and the Company contained
in Section 3.4 shall survive for the maximum period permitted by applicable
law. The representations and warranties of Purchaser herein and in the
Purchaser Related Documents shall survive for a period of twenty-four (24)
months after the date hereof. The periods of survival of the representations
and warranties as stated above in this Section 9.1 are referred to herein as
the "Survival Period." The liabilities of the parties under their respective
representations and warranties shall expire as of the expiration of the
applicable Survival Period and no claim for indemnification may be made with
respect to any breach of any representation or warranty, the applicable
Survival Period of which shall have expired, except to the extent that written
notice of such breach shall have been given to the party against which such
claim is asserted on or before the date of such expiration. The covenants and
agreements of the parties herein and in other documents and instruments
executed and delivered in connection with the closing of the transactions
contemplated hereby shall survive for the maximum period permitted by law.
9.2 Indemnification.
9.2.1 The parties agree and acknowledge that KPMG shall be
excluded completely from the operation of this section 9.2.
9.2.2 Purchaser Indemnified Parties. Subject to the
provisions of Sections 9.1 and 9.3 hereof, the Company and the Owners shall
indemnify, save and hold harmless Purchaser and any of its assignees (including
lenders) and all of their respective officers, directors, employees,
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representatives, agents, advisors and consultants and all of their respective
heirs, legal representatives, successors and assigns (collectively, the
"Purchaser Indemnified Parties") from and against any and all damages,
liabilities, losses, claims, deficiencies, penalties, interest, expenses,
fines, assessments, charges and costs, including reasonable attorneys' fees and
court costs on a solicitor and own client basis (collectively "Losses") arising
out of:
(i) the breach of any covenant of the Company or any
Owner or the failure by the Company or the Owners to perform any
obligation of any Owner or the Company contained herein or in any
Company Related Document or Owner Related Document;
(ii) any inaccuracy or breach of any representation or
warranty of any Owner contained herein or in any Owner Related
Document;
(iii) any inaccuracy or breach of any representation or
warranty of the Company contained herein or any Company Related
Document;
(iv) any act or omission of the Company or the Owners
occurring or existing at any time on, before or after the Closing and
involving or related to the Excluded Assets; and
(v) any act or omission of the Company, or any Owner
(excluding Xxxxxx Xxxxxxxx) occurring at any time on or before the IPO
Closing Date and involving or related to the Acquired Assets or the
properties, business or operations now or previously owned or operated
by the Company.
9.2.3 Minimum Losses. For purposes of this Section 9.2,
Losses shall be calculated with respect to any inaccuracy or breach of any
representation or warranty without giving effect to any clause which would
permit such inaccuracy or breach up to an amount which would be deemed a
Company or Purchaser Material Adverse Effect. The Company and the Owners shall
have no obligation under Section 9.2.2 until the aggregate amount of all such
Losses equal or exceed $75,000 (whether or not any particular loss resulted in
a Company Material Adverse Effect), at which time the Company and the Owners
shall be subject to the provisions of Section 9.2.2 with respect to any Losses
of the Purchaser Indemnified Parties above the $75,000 allowance.
9.2.4 Purchaser Indemnity. Subject to the provisions of
Sections 9.1 and 9.3, Purchaser shall indemnify, save and hold harmless the
Company, the Owners and all of their respective heirs, legal representatives,
successors and assigns from and against all Losses arising from, out of or in
any manner connected with or based on:
(i) any breach of any covenant of Purchaser or the
failure by Purchaser to perform any of its obligations contained
herein or in the Purchaser Related Documents;
(ii) any inaccuracy or breach of any representation or
warranty of Purchaser contained herein or in the Purchaser Related
Documents; and
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(iii) any act, omission, event, condition or circumstance
occurring or existing at any time after (but not on or before) the IPO
Closing Date that involve or relate to the Acquired Assets or the
Assumed Obligations; provided, however, that this clause (iii) shall
not apply to any Losses to the extent that such Losses result from any
Owner's acts or omissions (unless such acts or omissions occur as a
result of a request from the Purchaser) after the date hereof as an
officer, director and/or employee of Purchaser or its affiliates.
9.3 Limitations. Notwithstanding any of the other provisions of
this Agreement:
(1) The aggregate liability of the Company under
Section 9.2.2 shall not exceed:
(a) the aggregate Purchase Price less an
amount equal to the dimunition in value of the
Purchaser Common Stock issued to the Company under
this Agreement between the IPO Closing Date and the
date the indemnity is called upon pursuant to section
9.2.2 ("Adjusted Purchase Price"); or
(b) AUD$24 million,
whichever is the lesser.
(2) The aggregate liability of each Owner under
section 9.2.2 shall not exceed such Owner's pro rata
derivative interest in:
(a) the Adjusted Purchase Price based on such
Owner's Ownership Interest as set forth on Schedule
3.2 hereto; or
(b) AUD$24 million,
whichever is the lesser.
(3) The liability of each Owner under section 9.2.2,
with respect to any claim made by the Purchaser for indemnity
("Claim") shall not exceed that proportion of the Claim which
is equal to the proportion reflected by the Owner's pro-rata
derivative interest in:
(a) the Adjusted Purchase Price based on such
Owner's Ownership Interests as set forth on schedule
3.2 hereto; or
(b) AUD$24 million,
whichever is the lesser.
(4) The aggregate liability of the Purchaser under
Section 9.2.4 shall not exceed the amount of the Purchase
Price, except that after the Closing Cash Consideration has
been paid to the Company, the aggregate liability of the
Purchaser
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under section 9.2.4 shall not exceed the amount of the
Purchase Price paid with Purchaser Common Stock.
9.4 Procedures for Indemnification.
9.4.1 Notice. The party (the "Indemnified Party") that may
be entitled to indemnity hereunder shall give prompt notice to the party
obligated to give indemnity hereunder (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding
in respect of which indemnity may be sought hereunder. Any failure on the part
of any Indemnified Party to give the notice described in this Section 9.4.1
shall relieve the Indemnifying Party of its obligations under this Article 9
only to the extent that such Indemnifying Party has been prejudiced by the lack
of timely and adequate notice (except that the Indemnifying Party shall not be
liable for any expenses incurred by the Indemnified Party during the period in
which the Indemnified Party failed to give such notice). Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, promptly (and in any
event within 10 days thereof) after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to such claim, action, suit or proceeding.
9.4.2 Legal Defense. The Purchaser shall have the
obligation to assume the defense or settlement of any third-party claim, suit,
action or proceeding in respect of which indemnity may be sought hereunder,
provided that (i) the Owners and the Company shall at all times have the right,
at their option, to participate fully therein, and (ii) if the Purchaser does
not proceed diligently to defend the third-party claim, suit, action or
proceeding within 10 days after receipt of notice of such third-party claim,
suit, action or proceeding, the Owners and the Company shall have the right,
but not the obligation, to undertake the defense of any such third-party claim,
suit, action or proceeding.
9.4.3 Settlement. The Indemnifying Party shall not be
required to indemnify the Indemnified Party with respect to any amounts paid in
settlement of any third-party suit, action, proceeding or investigation entered
into without the written consent of the Indemnifying Party; provided, however,
that if the Indemnified Party is a Purchaser Indemnified Party, such
third-party suit, action, proceeding or investigation may be settled without
the consent of the Indemnifying Party on 10 days' prior written notice to the
Indemnifying Party if such third-party suit, action, proceeding or
investigation is then unreasonably interfering with the business or operations
of the Company and the settlement is commercially reasonable under the
circumstances; and provided further, that if the Indemnifying Party gives 10
days' prior written notice to the Indemnified Party of a settlement offer which
the Indemnifying Party desires to accept and to pay all Losses with respect
thereto ("Settlement Notice") and the Indemnified Party fails or refuses to
consent to such settlement within 10 days after delivery of the Settlement
Notice to the Indemnified Party, and such settlement otherwise complies with
the provisions of this Section 9.4, the Indemnifying Party shall not be liable
for Losses arising from such third-party suit, action, proceeding or
investigation in excess of the amount proposed in such settlement offer.
Notwithstanding the foregoing, no Indemnifying Party will consent to the entry
of any judgment or enter into any settlement without the consent of the
Indemnified Party, if such judgment or settlement imposes any obligation or
liability upon the Indemnified Party other than the execution, delivery or
approval thereof and customary releases of claims with respect to the subject
matter thereof.
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9.4.4 Cooperation. The parties shall cooperate in defending
any such third-party suit, action, proceeding or investigation, and the
defending party shall have reasonable access to the books and records, and
personnel in the possession or control of the Indemnified Party that are
pertinent to the defense. The Indemnified Party may join the Indemnifying Party
in any suit, action, claim or proceeding brought by a third party, as to which
any right of indemnity created by this Agreement would or might apply, for the
purpose of enforcing any right of the indemnity granted to such Indemnified
Party pursuant to this Agreement.
10. TERMINATION
10.1 Grounds for Termination. This Agreement may be terminated only
as provided below.
10.1.1 Prior to Closing. The parties may terminate this Agreement
at any time prior to the Closing only as provided below:
(i) Mutual Consent. Purchaser and the Company may
terminate this Agreement by mutual written consent at any time prior
to the Closing;
(ii) Termination by Purchaser. Purchaser may terminate
this Agreement by giving written notice thereof to the Company at any
time prior to the Closing: (a) in the event that the Owners or the
Company has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect,
Purchaser has notified the Company of the breach, and the breach has
continued without cure until the earlier of 20 days after the notice
of such breach or the Closing Date, whichever is earlier, (b) if the
Registration Statement for the IPO has not been filed with the U.S.
Securities and Exchange Commission on or before December 31, 1997, or
(c) if the IPO Closing Date shall not have occurred on or before April
30, 1998, by reason of the failure of any condition precedent under
Section 7.1 hereof (unless the failure results primarily from
Purchaser itself ); and
(iii) Termination by the Company. The Company may terminate
this Agreement by giving written notice thereof to Purchaser at any
time prior to the Closing: (a) in the event the Purchaser has breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Company has notified Purchaser
of the breach, and the breach has continued without cure until the
earlier of 20 days after the notice of such breach or the Closing
Date, whichever is earlier, (b) if the Registration Statement for the
IPO has not been filed with the U.S. Securities and Exchange
Commission on or before December 31, 1997, or (c) if the IPO Closing
Date shall not have occurred on or before April 30, 1998 by reason of
the failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from the Company or an Owner
materially breaching any material representation, warranty, or
covenant contained in this Agreement).
10.1.2 After the Closing Date. This agreement may be
terminated after the Closing only as follows:
(i) Termination of Underwriting Agreement. Upon
termination, prior to the successful completion of the IPO, of the
agreement between Purchaser and certain investment banking firms (the
"Underwriting Agreement") under which such firms agree to purchase
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shares of Purchaser Common Stock from Purchaser on a firm commitment
basis for resale to the public initially at the IPO Price, Purchaser
or the Company may each terminate this Agreement by providing written
notice to the other.
(ii) Automatic Termination. This Agreement shall terminate
automatically and without action on the part of any party hereto if
the IPO is not consummated within 10 business days after the Closing.
10.2 Effect of Termination. If this Agreement is terminated as
permitted under Section 10.1, such termination shall be without liability of
any party to any other party, except that such termination shall be without
prejudice to any and all remedies the parties may have against each other for
breach of this Agreement.
11. MISCELLANEOUS
11.1 Notice. Any notice, delivery or communication required or
permitted to be given under this Agreement shall be in writing, and shall be
mailed, postage prepaid, or delivered, to the addresses given below, or sent by
facsimile or e-mail to the telecopy numbers set forth below, as follows:
To the Company:
c/- Xxxxxx Xxxxxxxx
Cugley Ciravolo Bordin Pty Ltd
0-00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxxx Xxx 0000
Facsimile: (000) 0000-0000
E-mail xxx@xxxxxxxx.xxx.xx
To the Owners:
c/- Xxxxxx Xxxxxxxx
Cugley Ciravolo Bordin Pty Ltd
0-00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxxx Xxx 0000
Facsimile: (000) 0000-0000
E-mail xxx@xxxxxxxx.xxx.xx
To the Purchaser:
(a) BrightStar Information Technology Group, Inc.
00000 Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx, XXX, 00000
Attn: President
Facsimile: (000) 000-0000
E-mail xxxxxx@xxxxxx.xxx
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(b) with a copy to Xxxxxx X. Xxxxxx Jnr.
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx,
0000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx, XXX, 00000
Facsimile: (000) 000-0000
or other such address as shall be furnished in writing by any such party to the
other party
11.2 A notice or other communication shall be deemed to have been
served:
11.2.1 if mailed by air-mail, seven days after mailing;
11.2.2 if hand delivered, at the time of delivery;
11.2.3 if sent by facsimile, on the date of receipt by the
sender from the sender's facsimile machine of an acknowledgment of error free
transmission in legible form; or
11.2.4 if e-mailed, on receipt of an acknowledgment from the
person receiving the e-mail of receipt of the e-mail.
To the extent any notice provision in any other agreement, instrument
or document required to be executed or executed by the parties in connection
with the transactions contemplated herein contains a notice provision which is
different from the notice provision contained in Sections 11.1 and 11.2 with
respect to matters arising under such other agreement, instrument or document,
the notice provision in such other agreement, instrument or document shall
control.
11.3 Further Documents. Each party shall, at any time and from time
to time after the date hereof, upon request by another party and without
further consideration, execute and deliver such instruments or other documents
and take such further action as may be reasonably required in order to perfect
any other undertaking made by the Owners or the Company hereunder.
11.4 Assignability. Neither the Company nor any Owner shall assign
this Agreement in whole or in part without the prior written consent of the
Purchaser, except by the operation of law and the Purchaser may only assign its
rights under this Agreement, the Company Related Documents and the Owner
Related Documents: (a) to SCSI at any time, or (b) after thirteen months from
the IPO Closing Date has expired, to any entity, or (c) within the thirteen
month period from the IPO Closing Date, to any entity which forms part of a
bona fide reconstruction or reorganisation of the affairs of the Purchaser or
SCSI or the group of companies of which they are a part with the consent of the
Owners and the Company, such consent not to be unreasonably withheld.
11.5 Exhibits and Schedules. The Exhibits and Schedules (and any
appendices thereto) referred to in this Agreement are and shall be incorporated
herein and made a part hereof.
11.6 Entire Agreement. This Agreement constitutes the full
understanding of the parties, a complete allocation of risks between them and a
complete and exclusive statement of the terms and conditions of their agreement
relating to the subject matter hereof and supersedes any and all prior
agreements, whether written or oral, that may exist between the parties with
respect thereto. Except
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as otherwise specifically provided in this Agreement, no conditions, usage of
trade, course of dealing or performance, understanding or agreement purporting
to modify, vary, explain or supplement the terms or conditions of this
Agreement shall be binding unless hereafter made in writing and signed by the
party to be bound, and no modification shall be effected by the acknowledgment
or acceptance of documents containing terms or conditions at variance with or
in addition to those set forth in this Agreement. No waiver by any party with
respect to any breach or default or of any right or remedy and no course of
dealing shall be deemed to constitute a continuing waiver of any other breach
or default or of any other right or remedy, unless such waiver be expressed in
writing signed by the party to be bound. Failure of a party to exercise any
right shall not be deemed a waiver of such right or rights in the future.
11.7 Headings. Headings as to the contents of particular articles
and sections are for convenience only and are in no way to be construed as part
of this Agreement or as a limitation of the scope of the particular articles or
sections to which they refer.
11.8 Governing Law. The law of this Agreement is the law of the
State of Victoria, Australia. The parties irrevocably and unconditionally
submit themselves to the non-exclusive jurisdiction of the courts of the State
of Victoria, Australia or courts having jurisdiction in the State of Victoria,
Australia and of all courts competent to hear appeals from those courts. The
parties waive any right to object to any proceedings being brought in those
courts.
11.9 Public Announcements.
(a) Neither the Company nor any Owner shall make any
press release, public announcement, or public confirmation or
disclose any other information regarding this Agreement or the
contents hereof except with the consent of the Purchaser, such
consent not to be unreasonably withheld, or as required by
law.
(b) The Purchaser shall not make any press release,
public announcement or prior confirmation or disclosure
regarding SCSI or the Company unless it has first informed the
Company of the general terms of that disclosure.
11.10 No Third Party Beneficiaries. Except as set forth in Article
9, no person or entity not a party to this Agreement shall have rights under
this Agreement as a third party beneficiary or otherwise.
11.11 Amendments and Waivers. This Agreement may be amended prior to
Closing by the Purchaser, the Company, and the Owners, by an instrument in
writing signed on behalf of each such party and in compliance with applicable
law. Any term or provision of this Agreement may be waived in writing at any
time by the party which is entitled to the benefits thereof.
11.12 No Employee Rights. Subject to clause 6.11, nothing herein
expressed or implied (unless expressly set out in any written employment
agreements between the Company and an employee of the Company) shall confer
upon any employee of the Company, any other employee or legal representatives
or beneficiaries of any thereof any rights or remedies, including any right to
employment or continued employment for any specified period, of any nature or
kind whatsoever
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under or by reason of this Agreement, or shall cause the employment status of
any employee to be other than terminable at will.
11.13 No Personal Liability of Representatives of Purchaser. No
recourse for the payment of any amounts due hereunder or for any claim based on
this Agreement or the transactions contemplated hereby or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Purchaser in this Agreement shall be had against any incorporator,
organizer, promoter, shareholder, officer, director, employee or representative
as such, past, present or future, of the Purchaser or of any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such obligations are those of the Purchaser as a separate
corporate entity.
11.14 When Effective. This Agreement shall become effective only
upon the execution and delivery of one or more counterparts of this Agreement
by each of the Purchaser, the Company and the Owners.
11.15 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, Purchaser, and the
Company and its Owners shall grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated herein and
otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated herein.
11.16 Number and Gender of Words. Whenever herein the singular
number is used, the same shall include the plural where appropriate and words
of any gender shall include each other gender where appropriate.
11.17 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws, such
provisions shall be fully severable as if such invalid or unenforceable
provisions had never comprised a part of the Agreement; and the remaining
provisions of the Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
11.18 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts. If so executed, each of such counterparts is
to be deemed an original for all purposes and all such counterparts shall,
collectively, constitute one agreement, but, in making proof of this Agreement,
it shall not be necessary to produce or account for more than one such
counterpart.
11.19 No Rule of Construction. All of the parties hereto have been
represented by counsel in the negotiations and preparation of this Agreement;
therefore, this Agreement will be deemed to be drafted by each of the parties
hereto, and no rule of construction will be invoked respecting the authorship
of this Agreement.
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11.20 Expenses. Each of the parties shall bear all of their own
expenses in connection with the negotiation and closing of this Agreement and
the transactions contemplated hereby; provided that Purchaser shall pay all
expenses associated with the accounting and auditing fees and expenses of
Deloitte and Touche, L.L.P.
11.21 Interpretation. Unless expressly provided otherwise in this
Agreement, or unless the context otherwise requires:
11.21.1 the singular includes the plural and vice versa and
reference to a gender includes other genders;
11.21.2 a reference to any legislation or statutory
instrument:
(1) includes:
(a) a reference to that legislation or
statutory instrument as amended, modified, re-
enacted and replaced from time to time; and
(b) any rulings, regulations or guidelines
made or issued under or in relation to that
legislation or statutory instrument; and
(2) is to be construed according to the relevant
State or Federal Acts Interpretation Act applicable
to that legislation or statutory instrument;
11.21.3 a reference to a person includes a corporation, firm
or body of persons recognised by law and that person's successors, assigns and
legal personal representatives;
11.21.4 other grammatical forms of defined words or phrases
have corresponding meanings;
11.21.5 a reference to a section, schedule or annexure is a
reference to a section of or schedule or annexure to this Agreement;
11.21.6 a reference to a document (including this document)
includes a reference to that document as amended or replaced from time to time;
and
11.21.7 a reference to money (including a reference to dollars
and expressions preceded by the symbol "$") is a reference to Australian
currency.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered on the date first hereinabove written.
PURCHASER:
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By: /s/ XXXXXXXX X. XXXX
------------------------------------
Xxxxxxxx X. Xxxx, President
COMPANY:
SOFTWARE CONSULTING SERVICES
PTY. LTD.
[SEAL] THE COMMON SEAL OF SOFTWARE CONSULTING
SERVICES PTY. LTD. (ACN 005 931 886) was
hereunto affixed in accordance with its
Articles of Association in the presence
of:
/s/ S.D. XXXXXXX Director
------------------------
S.D. Xxxxxxx Name (please
------------------------ print)
/s/ XXXXXX XXXXXXXX Secretary
------------------------
/s/ XXXXXX XXXXXXXX Name (please
------------------------ print)
OWNERS:
[SEAL] THE COMMON SEAL of KPMG INFORMATION
SOLUTIONS PTY. LTD. (ACN 065 410 746)
was hereunto affixed in accordance with
its Articles of Association in the
presence of:
/s/ [TO BE FURNISHED Director
UPON REQUEST]
------------------------
[TO BE FURNISHED] Name (please
UPON REQUEST print)
------------------------
/s/ XXX X. XxXXXXX Secretary
------------------------
Xxx X. XxXxxxx Name (please
------------------------ print)
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[SEAL] THE COMMON SEAL of KENTCOM PTY LTD (ACN
065 369 440) was hereunto affixed in
accordance with its Articles of
Association in the presence of:
/s/ XXXXX XXXXX Director
----------------------
Xxxxx Xxxxx Name (please print)
----------------------
/s/ XXXXXXXXX XXXXX Secretary
----------------------
Xxxxxxxxx Xxxxx Name (please print)
----------------------
SIGNED by XXXXXXXXX XXXXX in the presence
of:
/s/ XXXXXXXXX XXXXX Xxxxxxxxx Xxxxx
----------------------
/s/ XXXXXX XXXXXXXX Witness
----------------------
XXXXXX XXXXXXXX Name (please print)
----------------------
[SEAL] THE COMMON SEAL of PEPPER TREE PTY LTD
(ACN 007 342 538) was hereunto affixed in
accordance with its Articles of
Association in the presence of:
/s/ X. XXXXX Director
----------------------
X. Xxxxx Name (please print)
----------------------
/s/ X.X. XXXXX Secretary
----------------------
X.X. Xxxxx Name (please print)
----------------------
SIGNED by XXXXXXXXXXX XXXXXXX XXXXX in
the presence of:
/s/ X.X. XXXXX Xxxxxxxxxxx Xxxxx
----------------------
/s/ XXXXXX XXXXXXXX Witness
----------------------
XXXXXX XXXXXXXX Name (please print)
----------------------
49
