Exhibit 10.21
STOCK EXCHANGE AGREEMENT
DATED AS XX
XXXXX 0, 0000
XXXXX
XXXXXX PTY. LTD.,
THE SELLERS AND COMPANY OPTIONEES LISTED ON THE SIGNATURE PAGES HERETO,
THE SELLER'S REPRESENTATIVE
AND
OPTIUM CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS 2
1.01. Definitions 2
ARTICLE II PURCHASE AND SALE 5
2.01. Transfer of Shares and Company Stock Options; Issue of Stock and Options 5
2.02. Closing 5
2.03. Purchase Price Adjustment 9
2.04. Deposit of Stock with the Seller's Representative 12
2.05. Escrow 12
2.06. Further Assurances; Post-Closing Cooperation 14
ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY 14
3.01. Corporate Existence and Power 15
3.02. Corporate Authorization 15
3.03. Governmental Authorization; Consents 15
3.04. Non-Contravention 15
3.05. Capitalization 16
3.06. Subsidiaries 16
3.07. Financial Statements 16
3.08. Absence of Certain Changes 17
3.09. Personal Property 18
3.10. Real Property 19
3.11. No Undisclosed Liabilities 19
3.12. Litigation 19
3.13. Tax Matters 19
3.14. Material Contracts 22
3.15. Technology and Intellectual Property 23
3.16. Insurance Coverage 25
3.17. Employee Benefits 26
3.18. Compliance with Laws; Permits; No Defaults 27
3.19. Employees and Labor Matters 28
3.20. Transactions with Affiliates; Intercompany Arrangements 30
3.21. Finders' Fees 30
3.22. Corporate Records 30
3.23. Illegal Payments 30
3.24. Other Information 31
3.25. Insolvency 31
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ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS AND COMPANY OPTIONEES 32
4.01. Existence and Power; Authorization 32
4.02. Non-Contravention 33
4.03. Title to and Validity of Shares 33
4.04. Claims against Company 33
4.05. Investment Representation 34
4.06. No Shareholding Agreements 36
4.07. Trust Deeds and other Governing Documents 36
ARTICLE V REPRESENTATIONS AND WARRANTIES OF OPTIUM 36
5.01. Organization and Existence 36
5.02. Corporate Authorization; Valid Issuance 36
5.03. Governmental Authorization 36
5.04. Shares Authorized 37
5.05. Capitalization 37
5.06. Financial Statements 37
5.07. Absence of Certain Changes 38
5.08. Litigation 39
5.09. Compliance with Laws; Permits; No Defaults 39
5.10. Tax Matters 40
5.11. Other Information 40
5.12. Insolvency 41
ARTICLE VI COVENANTS OF THE COMPANY AND SELLERS 41
6.01. Confidentiality 41
6.02. Conduct before Closing 41
6.03. No Encumbrance 43
6.04. Exclusivity 43
6.05. General Release by Sellers 44
ARTICLE VII COVENANTS OF OPTIUM 44
7.01. Confidentiality 44
7.02. Post-Closing Option Grants 45
ARTICLE VIII COVENANTS OF ALL PARTIES 45
8.01. Efforts 45
8.02. Certain Filings 45
8.03. Public Announcements 45
8.04. Access 45
8.05. Notices of Certain Events; Continuing Disclosure 46
ARTICLE IX CONDITIONS TO CLOSING 47
9.01. Conditions to the Obligations of Each Party 47
9.02. Conditions to Obligation of Optium 47
9.03. Conditions to Obligation of the Company and the Sellers 47
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ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TRANSACTION RELATED INDEMNIFICATION 48
10.01. Survival of Representations, Warranties and Covenants 48
10.02. Indemnification; Manner of Payment 49
10.03. Limitations on Indemnification 50
10.04. Notice; Defense of Third-Party Claims 50
10.05. Limitation on Contribution and Certain Other Rights; Other Limitations 52
10.06. Claims against Sellers and Company Optionees and against Optium 52
10.07. No Waiver 53
10.08. Limitations of Liability and Obligations of Certain Sellers 53
ARTICLE XI TERMINATION 57
11.01. Grounds for Termination 57
11.02. Effect of Termination 57
11.03. Right to Proceed 58
ARTICLE XII SELLER'S REPRESENTATIVE 58
12.01. Appointment of Seller's Representative 58
12.02. Limitation on Actions 60
12.03. Indemnification 60
ARTICLE XIII MISCELLANEOUS 60
13.01. Notices 60
13.02. Amendments; Waivers 61
13.03. Expenses 62
13.04. Successors and Assigns 62
13.05. Further Assurances 62
13.06. Governing Law 62
13.07. Counterparts; Effectiveness 62
13.08. Entire Agreement 62
13.09. Captions 62
13.10. Jurisdiction 62
SCHEDULES
Schedule 2.01(a)(i) List of Sellers and their stockholdings
Schedule 2.01(a)(ii) List of Company Optionees and their Company Stock Options
Schedule 2.01(b)(i) Optium Stock to be issued to Sellers at Closing
Schedule 2.01(b)(ii) Proportion of Escrow Shares attributed to each Seller at Closing
Schedule 2.01(b)(iii) Optium Stock Options to be delivered to Company Optionees for transferred
Options at Closing
Schedule 7.02 Optium Stock Options to be granted to certain persons as soon as practicable
after Closing
Company Disclosure Schedule
Optium Disclosure Schedule
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EXHIBITS
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Exhibit A Share Transfer Form
Exhibit B Statutory Declaration and Indemnity for Lost Stock Certificate
Exhibit C Option Transfer Form
Exhibit D Stockholders Agreement
Exhibit E Registration Rights Agreement
Exhibit F Reserved
Exhibit G Optium Secretary's Certificate
Exhibit H Optium Charter
Exhibit I Rule 902 of the Securities Act
Exhibits J-1 and J-2 Forms of Optium Stock Option Agreements (including forms of Grant Notices)
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STOCK EXCHANGE AGREEMENT
AGREEMENT dated as of March 4, 2006 among Engana Pty. Ltd., a proprietary
limited company (the "COMPANY"); the shareholders of the Company listed on the
signature pages hereto (each individually a "SELLER" and collectively, the
"SELLERS"); the Seller's Representative (as defined herein); the option holders
of the Company listed on the signature pages hereto (each individually a
"COMPANY OPTIONEE" and collectively, the "COMPANY OPTIONEES"); and
Optium
Corporation, a Delaware corporation ("OPTIUM"). Capitalized terms not otherwise
defined herein have the meanings set forth in SECTION 1.01.
R E C I T A L S:
WHEREAS, Shareholders collectively own (i) 12,435,266 Series A preference
shares of the Company and 15,529,527 Series B preference shares of the Company
(collectively, "COMPANY PREFERRED STOCK") and (ii) 10,000,000 ordinary shares of
the Company ("COMPANY COMMON STOCK"), collectively constituting all issued and
outstanding securities of the Company and as more fully set forth on SCHEDULE
2.01(a)(i) (such shares described in clauses (i) and (ii) being referred to
collectively herein as the "SHARES");
WHEREAS, Optium desires to continue to develop the business in Australia
through investment into the research and commercialization of advanced optical
components;
WHEREAS, the Sellers desire to transfer the Shares to Optium in
consideration for the issuance of shares of Optium capital stock;
WHEREAS, the Company Optionees desire to transfer all options to purchase
Company Common Stock ("COMPANY STOCK OPTIONS") held by them to Optium (as more
fully set forth on SCHEDULE 2.01(a)(ii) hereto) in consideration of the issue of
the options to acquire stock in Optium;
WHEREAS, Optium desires to issue (i) shares of Optium's capital stock to
the Sellers and (ii) options to purchase shares of Optium Common Stock to the
Company Optionees ("OPTIUM STOCK OPTIONS"), in consideration for the transfer of
the Shares and the Company Stock Options to Optium and the cancellation of any
other rights to purchase securities;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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ARTICLE I
DEFINITIONS
1.01. DEFINITIONS.
(a) following terms, as used herein, have the following
meanings:
"$" or "DOLLARS" shall mean the lawful currency of the United States of
America and "$A" or "AUSTRALIAN DOLLARS" shall mean the lawful currency of the
Commonwealth of Australia.
"AFFILIATE" means, (i) with respect to an individual, any member of such
individual's family (including any child, step-child, parent, step-parent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law); (ii) with respect to any other Person, any
officer or director of, or any stockholder, partner or investor having a 10% or
greater interest in, such Person or any affiliate of such Person; and (iii) with
respect to any Person, any Person which directly or indirectly controls, is
controlled by, or is under common control with such Person.
"ANCILLARY AGREEMENTS" means the Stockholders Agreement, the Registration
Rights Agreement and the Optium Stock Option Agreements.
"BUSINESS OR CONDITION OF THE COMPANY" means the business, operations,
condition (financial or otherwise), results of operations, Assets and Properties
and prospects of the Company.
"BUSINESS OR CONDITION OF OPTIUM" means the business, operations, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of Optium.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on which
banks located in the State of Pennsylvania and the City of Sydney, NSW Australia
are authorized or obligated to close.
"COMPANY BALANCE SHEET" means the balance sheet of the Company as of the
Company Balance Sheet Date found in SECTION 3.07 OF THE COMPANY DISCLOSURE
SCHEDULE.
"COMPANY BALANCE SHEET DATE" means January 31, 2006.
"CLOSING DATE" means the date of the Closing.
"COMPANY INTELLECTUAL PROPERTY" means all Intellectual Property that:
(a) is owned or licensed by or on behalf of the Company;
(b) is or has been used, or is currently under development for
use, in relation to the business of the Company (as it has been, is
currently or is currently planned to be conducted); or
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(c) is required to fulfill existing obligations in relation to
the business of the Company (as it has been, is currently or is currently
planned to be conducted).
"COMPANY MATERIAL ADVERSE CHANGE" means a material adverse change in the
Business or Condition of the Company.
"COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on the
Business or Condition of the Company.
"COMPANY STOCK PLANS" means the Engana Pty. Limited Employee Share Option
Plan and each other plan, program or arrangement providing for the grant of
equity-based awards to service providers (including current or former directors,
officers, employees or consultants) to the Company.
"CORPORATIONS ACT" means the Xxxxxxxxxx XXXXXXXXXXXX XXX 0000 (Cth).
"INTELLECTUAL PROPERTY" means all tangible or intangible proprietary
information and materials, including without limitation:
(a)(i) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereon, and all
patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, divisions, revisions,
extensions and re-examinations thereof, (ii) all trademarks, service marks,
trade dress, logos, trade business or company names, domain names, and
corporate names, together with all translations, adaptations, derivations
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations and renewals in connection therewith,
(iii) all present and future copyright, (iv) all circuit layout rights, (v)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production process and techniques, methods, schematics, technology,
technical data, designs, drawings, flowcharts, block diagrams,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), and (vi) all software and
firmware (including data, databases and related documentation); (vii) all
moral rights (or rights analogous to moral rights); whether created before
or after the date of this Agreement, and whether existing in Australia or
otherwise.
(b) all documents, records and files relating to design, end
user documentation, manufacturing, quality control, sales, marketing or
customer support for, and tangible embodiments of, all intellectual
property described herein; and
(c) all licenses, agreements and other rights in any third party
product or any third party intellectual property described in (a) and (b)
above other than any "off the shelf" third party software or related
intellectual property.
"TO THE COMPANY'S KNOWLEDGE", "KNOWN TO THE COMPANY" and words of similar
import means the actual knowledge of the officers and directors of the Company
and the actual
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knowledge of each of Sellers (or the officers, directors or general partners
thereof in the case of Sellers who are corporations or partnerships), and in
each case after due inquiry.
"TO THE OPTIUM'S KNOWLEDGE", "KNOWN TO OPTIUM" and words of similar import
means the actual knowledge of Xxxxx Xxxxxx and Xxxx Xxxxxx, in each case after
due inquiry.
"TO THE KNOWLEDGE OF SELLERS OR COMPANY OPTIONEES" and words of similar
import means the actual knowledge of each of the Sellers and Company Optionees
(or the officers, directors or general partners thereof in the case of Sellers
who are corporations or partnerships), and in each case after due inquiry.
"LAWS" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, Australia any
other foreign country or any domestic or foreign state, county, city or other
political subdivision or of any governmental or regulatory authority, body,
agency, official or authority.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest, restriction or encumbrance of any kind in respect of
such asset.
"MAJOR ENGANA INVESTORS" means Deutsche, Intel Capital Corporation, TVP and
Starfish.
"OPTIUM BALANCE SHEET" means the balance sheet of the Company as of the
Optium Balance Sheet Date found in SECTION 5.07 OF THE OPTIUM DISCLOSURE
SCHEDULE.
"OPTIUM BALANCE SHEET DATE" means January 31, 2006.
"OPTIUM COMMON STOCK" means shares of Optium's (i) Common Stock, $.0001 par
value per share, (ii) Non-Voting Common Stock, $.0001 par value per share, and
(iii) Optium NV Common Stock.
"OPTIUM MATERIAL ADVERSE CHANGE" means a material adverse change in the
Business or Condition of Optium.
"OPTIUM MATERIAL ADVERSE EFFECT" means a material adverse effect in the
Business or Condition of Optium.
"OPTIUM NV COMMON STOCK" means shares of Optium's Series 2 Non-Voting
Common Stock, $.0001 par value per share.
"OPTIUM SERIES D-1 PREFERRED STOCK" means shares of Optium's Series D-1
Convertible Preferred Stock, $.0001 par value per share.
"OPTIUM STOCK" means shares of Optium Series D-1 Preferred Stock and Optium
NV Common Stock to be issued to the Sellers under the terms of this document.
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"PERSON" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"SUBSIDIARY" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are owned directly or
indirectly by another company.
ARTICLE II
PURCHASE AND SALE
2.01. TRANSFER OF SHARES AND COMPANY STOCK OPTIONS; ISSUE OF STOCK AND
OPTIONS.
(a) The Sellers agree to transfer the Shares to Optium at the
Closing. The Shares are currently owned by Sellers in the amounts opposite each
such Seller's name on SCHEDULE 2.01(a)(i). The Company Optionees agree to
transfer the Company Stock Options to Optium at the Closing. The Company Stock
Options are currently issued to the Company Optionees in the amounts, with the
exercise prices and vesting schedules opposite each Company Optionee's name on
SCHEDULE 2.01(a)(ii).
(b) Optium agrees to issue to each such Seller, at the Closing,
that number of shares of Optium Series D-1 Preferred Stock and Optium Common
Stock as is set forth opposite such Seller's name on SCHEDULE 2.01(b)(i), (ii)
Optium agrees to hold in escrow, as of the Closing, one certificate for the
total shares of Optium Series D-1 Preferred Stock to be placed into escrow
determined in accordance with Section 2.05(a), and one certificate for the total
shares of Optium Common Stock to be placed into escrow determined in accordance
with Section 2.05(a), each of which shall be registered in the name of Optium,
to be held for the benefit of the Sellers in the respective proportions set
forth opposite such Seller's name on SCHEDULE 2.01(b)(ii), and (iii) Optium
agrees to issue to the Company Optionees, at the Closing, options to purchase
shares of Optium Common Stock in the amounts as set forth opposite such Company
Optionee's name on SCHEDULE 2.01(b)(iii), on substantially the form attached
hereto as EXHIBIT J-1 (together with the form of Optium Stock Option Agreement
on EXHIBIT J-2 hereto, the "OPTIUM STOCK OPTION AGREEMENTS").
2.02. CLOSING. The closing (the "CLOSING") of the transactions described
hereunder shall take place at the offices of Corrs Xxxxxxxx Westgarth, Governor
Xxxxxxx Tower, 0 Xxxxxx Xxxxx, Xxxxxx XXX 0000, as soon as possible, but in no
event later than one (1) day after satisfaction of the conditions set forth in
Article IX, or at such other time or place as Optium and Sellers may agree. At
the Closing:
(a) the Sellers shall deliver to Optium, executed share transfer
forms (in substantially the form attached as EXHIBIT A hereto) in favor of
Optium in relation to the Shares;
(b) the Company must ensure the Seller's shares in the Company
are transferred and do all other things necessary and incidental to giving
effect to the Resolutions;
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(c) the Seller's Representative shall deliver to Optium original
share certificates for the Shares; PROVIDED, HOWEVER, if a Seller is unable to
locate and deliver an original share certificate to the Seller's Representative
for delivery, such Seller may alternatively deliver a statutory declaration and
indemnity in substantially the form attached as EXHIBIT B hereto;
(d) Optium must issue to each Seller that number of shares of
Optium Series D-1 Preferred Stock and Optium Common Stock as is set forth
opposite such Seller's name on SCHEDULE 2.01(b)(i);
(e) Optium shall hold in escrow the Escrow Shares to be held for
the benefit of the Sellers in accordance with this Agreement.
(f) the Company Optionees shall deliver to Optium, executed
Option Transfer Forms (in substantially the form attached as EXHIBIT C hereto)
in favor of Optium in relation to the Company Stock Options;
(g) Optium shall deliver to the Sellers certificates for the
shares of Optium Stock, registered in the names of the Sellers for the number of
shares shown in SCHEDULE 2.01(b)(i);
(h) Optium shall deliver to the Company Optionees executed
Optium Stock Option Agreements on substantially the form attached hereto as
EXHIBIT J-1 for options to purchase the number of shares of Optium Common Stock
with the vesting schedules opposite such Company Optionee's name shown in
SCHEDULE 2.01(b)(iii);
(i) the Sellers accept Optium Stock and agree to be bound by the
certificate of incorporation and By-Laws of Optium, as well as the Stockholders
Agreement and Registration Rights Agreement (each as defined below), on and from
the date of issue of Optium Stock;
(j) the Company shall cause a meeting of the directors of the
Company to be held and procure at that meeting (such actions to be referred to
herein as the "RESOLUTIONS") that the directors:
(i) approve the registration of the transfers to Optium
of the Shares and the Company Stock Options, subject to payment by Optium
of any stamp duty and direct the making of the requisite entry in the
Company's share register to give effect to the transfers, the cancellation
of the existing share certificates issued in respect of the Shares and the
issue of new certificates in the name of Optium;
(ii) appoint the persons nominated in writing for that
purpose by Optium as directors and secretaries of the Company;
(iii) resign from their respective offices (other than
Xxxxx Xxxxx as Secretary) without any payment as compensation for loss of
office by written resignation containing an acknowledgment and release in
terms approved by Optium, that the giver of
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such resignation has no claim of any nature against the Company, whether in
respect of salary, fees, compensation for loss of office, loans or
otherwise; and
(iv) approve the termination of the Company Stock Plans
effective as of immediately following the Closing.
(k) Seller's Representative shall deliver to Optium on or before
the Closing Date written resignations of each member of the boards of directors
(other than Xxxxx Xxxxx) and each officer of the Company (other than Xxxxx Xxxxx
as Secretary).
(l) In addition, the Sellers and Company Optionees shall each
deliver to Optium the following respective items on their own behalf on or
before the Closing Date:
(i) such Seller's executed copy of the Second Amended and
Restated Stockholders Agreement by and among the Sellers, Optium and the
other parties thereto substantially in the same form as EXHIBIT D (the
"STOCKHOLDERS AGREEMENT"); and
(ii) such Seller's executed copy of the Second Amended and
Restated Registration Rights Agreement by and among the Sellers, Optium and
the other parties thereto substantially in the same form as EXHIBIT E (the
"REGISTRATION RIGHTS AGREEMENT"); and
(iii) the minute books and other similar records of the
Company, and the stock transfer ledgers and other similar records of the
Company at the place at which such books and records are usually located in
the normal course of operations of the Company's business.
(m) Optium shall deliver to the Sellers and the Company the
following items on or before the Closing Date:
(i) the Stockholders Agreement executed by Optium and the
other requisite parties thereto (other than the Sellers); and
(ii) the Registration Rights Agreement executed by Optium
and the other requisite parties thereto (other than the Sellers); and
(iii) for the Sellers and the Company certificates, dated
the Closing Date and executed by the Secretary or any Assistant Secretary
of Optium (or such Person performing such duties), substantially in the
forms and to the effect of EXHIBIT G hereto; and
(iv) a good standing certificate for Optium certified by
the Delaware Secretary of State as of a date within 3 days of the Closing
Date.
(n) From Closing until the date on which the Shares are
registered in the name of Optium, the Sellers must take any and all reasonable
action as the registered holder of the
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Shares only as directed by Optium. Optium shall be responsible for any
reasonable out-of-pocket costs associated with such actions.
(o) The parties shall execute and deliver to the appropriate
parties any other instruments, documents and certificates that are required to
be delivered pursuant to this Agreement or as may be reasonably requested by any
party in order to consummate the transactions contemplated by this Agreement.
(p) LEGENDS ON SHARES OF OPTIUM STOCK. Each certificate for
shares of Optium Stock issued to the Sellers shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE
SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS."
Each certificate representing Optium Stock issued to a non-U.S. person will
also bear the following restrictive legends:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED AND
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (A) AS PART OF
YOUR DISTRIBUTION AT ANY TIME OR (B) OTHERWISE UNTIL 40 DAYS AFTER
CLOSING DATE, EXCEPT IN EITHER CASE IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT (OR RULE 144A OR TO ACCREDITED INSTITUTIONS
IN TRANSACTIONS THAT ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT), AND IN CONNECTION WITH ANY SUBSEQUENT SALE
BY YOU OF THE SECURITIES REPRESENTED HEREBY IN RELIANCE ON
REGULATION S UNDER THE SECURITIES ACT DURING THE PERIOD REFERRED TO
ABOVE TO ANY DISTRIBUTOR, DEALER
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OR PERSON RECEIVING A SELLING CONCESSION, FEE OR OTHER REMUNERATION,
YOU MUST DELIVER A NOTICE TO SUBSTANTIALLY THE FOREGOING EFFECT.
TERMS USED ABOVE HAVE THE MEANINGS ASSIGNED TO THEM IN REGULATION S
OF THE SECURITIES ACT."
"THE ISSUER WILL REFUSE TO REGISTER ANY TRANSFER OF SECURITIES NOT
MADE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION; PROVIDED, HOWEVER, THAT IF THE
SECURITIES ARE IN BEARER FORM OR FOREIGN LAW PREVENTS THE ISSUER
FROM REFUSING TO REGISTER STOCK TRANSFERS, OTHER REASONABLE
PROCEDURES ARE IMPLEMENTED TO PREVENT ANY TRANSFER OF ISSUER'S STOCK
NOT MADE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S."
Optium shall have no obligation to remove such legends unless in the
opinion of counsel satisfactory to Optium no such legends are required.
Additionally, the Optium Stock Options will be subject to certain transfer
and other restrictions as more fully described in the Company Stock Optionee's
Optium Stock Option Agreement and the Optium 2001 Stock Incentive Plan, as
amended.
All shares of Optium Stock will also bear the legends required to be
included thereon by the Stockholders Agreement (as defined herein).
(q) Optium shall deliver a certified copy of its Fifth Amended
and Restated Certificate of Incorporation in substantially the form attached
hereto as EXHIBIT H (the "OPTIUM CHARTER") as filed with the Delaware Secretary
of State.
2.03. PURCHASE PRICE ADJUSTMENT.
(a) GENERAL. As an adjustment to the total consideration paid
by Optium for the Shares hereunder, each Seller agrees to pay Optium its Pro
Rata Share of any Net Cash Shortfall at such time and upon the terms set forth
herein. "PRO RATA SHARE" means a fraction the numerator of which is the number
of shares of Optium Stock to be received by the applicable Seller at the Closing
and the denominator of which is the total number of shares of Optium Stock to be
received by all Sellers at the Closing, in each case calculated on an
as-converted to Optium Common Stock basis.
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(b) DEFINITIONS. The following terms, as used herein, have the
following meanings:
"CLOSING BALANCE SHEET" means a balance sheet of the Company as of
the Closing Date that (x) fairly presents the financial position of the
Company as of the Closing Date on a basis consistent with the presentation
in the Company Balance Sheet, (y) includes line items substantially
consistent with those used in the preparation of the Company Balance Sheet
and (z) is prepared in accordance with generally accepted accounting
principles in Australia consistently applied.
"CLOSING NET CASH" means the Net Cash of the Company as of the
Closing Date as shown on the Closing Balance Sheet.
"CASH" means the Company's cash and marketable securities, each as
recorded properly and in the ordinary course or business consistent with
past practices.
"CURRENT LIABILITIES" means the Company's (i) accounts payable, (ii)
accrued liabilities, (iii) deferred revenue and (iv) other current
liabilities, each (x) as accrued properly and in the ordinary course or
business consistent with past practices.
"FINAL NET CASH" means Closing Net Cash (i) as shown in Optium's
calculation delivered pursuant to Section 2.03(c) if no notice of
disagreement with respect thereto is duly delivered by the Seller's
Representative pursuant to Section 2.03(d) or (ii) if such a notice of
disagreement is duly delivered by Sellers, (A) as agreed by the parties
pursuant to Section 2.03(e) or (B) in the absence of such agreement, as
shown in the independent accountant's calculation delivered pursuant to
Section 2.03(e).
"NET CASH" means Cash minus Current Liabilities.
"NET CASH SHORTFALL" means the amount by which the Target Net Cash
Amount exceeds Final Net Cash.
"TARGET NET CASH AMOUNT" means $A5,800,000; PROVIDED, HOWEVER, in
the event that the Closing Date is later than March 5, 2006, the Target Net
Cash Amount shall mean an amount equal to $A5,800,000 minus the product of
(i) $A10,000 and (ii) the number of days elapsed between March 5, 2006 and
the actual Closing Date.
(c) PREPARATION OF CLOSING BALANCE SHEET. As promptly as
practicable after the Closing Date, Optium will cause the Closing Balance Sheet
to be prepared and will prepare a certificate based on such Closing Balance
Sheet setting forth its calculation of Closing Net Cash. If there is a Net Cash
Shortfall, as promptly as practicable, but no later than 30 days, after the
Closing Date, Optium will cause the Closing Balance Sheet, together with its
certificate to be delivered to Sellers.
(d) DISAGREEMENT BY SELLERS. If there is a Net Cash Shortfall
and if the Seller's Representative disagrees with Optium's calculation of
Closing Net Cash, the Seller's Representative may (as directed in writing by
three of the four Major Engana Investors), within
10
thirty (30) days after receipt of the documents referred to in Section 2.03(c),
deliver a notice to Optium disagreeing with such calculation and setting forth
the Seller's Representative calculation of the Closing Balance Sheet and Closing
Net Cash. Any such notice of disagreement shall specify those items or amounts
as to which the Seller's Representative disagrees, and the Seller's
Representative shall be deemed to have agreed with all other items and amounts
contained in the Closing Balance Sheet and the calculation of Closing Net Cash
delivered by Optium pursuant to Section 2.03(c).
(e) DISPUTE RESOLUTION. If a notice of disagreement shall have
been delivered by the Seller's Representative pursuant to Section 2.03(d),
Optium and the Seller's Representative shall, during the 20 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine the amount of Closing Net Cash, which amount shall
not be less than the amount shown in Optium's calculation thereof delivered
pursuant to Section 2.03(c) nor more than the amount shown in the Seller's
Representative calculation thereof delivered pursuant to Section 2.03(d). If,
during such period, Optium and the Seller's Representative are unable to reach
agreement, they shall promptly thereafter cause a firm of independent public
accountants having no material relationship to Optium, the Seller's
Representative or any of the Sellers as is reasonably acceptable to Optium and
the Seller's Representative or in the absence of agreement, an independent
accountant nominated at the request of either party by the President of the
Institute of Chartered Accountants, New South Wales Division, Australia (the
"ACCOUNTING REFEREE") promptly to review this Agreement and the disputed items
or amounts for the purpose of calculating Closing Net Cash. In making such
calculation, the Accounting Referee shall consider only those items or amounts
in the Closing Balance Sheet or Optium's calculation of Closing Net Cash as to
which the Seller's Representative has disagreed. The Accounting Referee shall
deliver to Optium and the Seller's Representative, as promptly as practicable, a
report setting forth such calculation. Such report shall be final and binding
upon the parties hereto in the absence of fraud or manifest error. The cost of
such review and report shall be borne (i) by Optium if the Seller's
Representative's calculation of Closing Net Cash is closer to Final Net Cash
than Optium's calculation thereof, (ii) by the Seller's Representative if the
reverse is true and (iii) otherwise equally by Optium and the Seller's
Representative. Each Seller agrees to reimburse the Seller's Representative for
such Seller's Pro Rata Share of any amount required to be paid under this
Section 2.03(e) by the Seller's Representative.
(f) COOPERATION. The parties hereto agree that, if necessary,
they will, and agree to cause their respective independent accountants to,
cooperate and assist in the preparation of the Closing Balance Sheet and the
calculation of Closing Net Cash and in the conduct of the audits and reviews
referred to in this Section 2.03, including without limitation the making
available to the extent necessary of books, records, work papers and personnel.
(g) TIME OF PAYMENT. Any payment required by this Section 2.03
shall be made at a mutually convenient time and place (i) within two (2)
Business Days of the date that is 30 days after Optium's delivery of the
documents referred to in Section 2.03(c) if no notice of disagreement with
respect to Closing Net Cash is delivered by the Seller's Representative or (ii)
if a notice of disagreement with respect to Closing Net Cash is so delivered
then within 10 days after the earlier of (A) agreement between Optium and the
Seller's Representative
11
pursuant to Section 2.03(e) with respect to Closing Net Cash and (B) delivery of
the calculation of Closing Net Cash by the Accounting Referee pursuant to
Section 2.03(e).
(h) METHOD OF PAYMENT. Any payments pursuant to this
Section 2.03 shall be made by delivery by Sellers of (i) in the event that the
Net Cash Shortfall is equal to or less than $A500,000, a number of unrestricted
shares of Optium Stock not subject to the Escrow (unless permitted by Optium)
equal to the amount payable hereunder in Australian dollars divided by
$A0.832989 rounded down to the nearest whole share (or at the option of an
individual Seller, by payment of the applicable amount of cash) or (ii) in the
event that the Net Cash Shortfall is more than $A500,000, (A) a certified or
official bank check payable to Optium or by causing such payments to be credited
to such account of Optium as may be designated by Optium or (B) at Optium's sole
option, a number of shares of Optium Stock not subject to the Escrow (unless
permitted by Optium) equal to the amount payable hereunder in Australian dollars
divided by $A0.832989 rounded down to the nearest whole share. Each Seller shall
be responsible for payment of such Seller's Pro Rata Share of any payment
required hereunder.
2.04. DEPOSIT OF STOCK WITH THE SELLER'S REPRESENTATIVE. Each Seller
agrees that he, she or it shall have deposited on or prior to the Closing Date
of with the Seller's Representative certificates representing the Shares owned
by such Seller. The Seller's Representative shall hold the certificates
representing the Shares deposited with it pursuant to this Section until the
Closing Date, and on the Closing Date, the Seller's Representative shall deliver
such certificates in accordance with Section 2.02. In the event that this
Agreement is terminated prior to the Closing, the Seller's Representative shall
return the respective certificates for the Shares to the Sellers.
2.05. ESCROW.
(a) Sellers agree that in accordance with Section 2.02(e), at
the Closing, share certificates for 2,447,583 shares of Optium Series D-1
Preferred Stock ("SERIES D-1 ESCROW SHARES") and 875,238 shares of Optium NV
Common Stock (the "COMMON ESCROW SHARES", and together with the Series D-1
Escrow Shares, the "ESCROW SHARES" or the "ESCROW") shall be held by Optium in
Escrow in accordance with the terms of this Agreement. All shares of Optium
Stock held by Optium in Escrow shall be applied by Optium in accordance with the
terms of this Agreement to make any payments due to Optium under Section 10.02
and/or, at the sole option of Optium, under Section 2.03(e). The Escrow Shares
may only be cancelled by Optium or delivered to the Sellers, as applicable.
(b) Any shares of Optium's capital stock issued or distributed
upon any stock split, stock dividend or recapitalization effected by Optium
after the Closing Date (the "NEW SHARES") in respect of any Escrow Shares that
have not been released from the Escrow shall be added to the Escrow and be
deemed a part thereof and shall be deemed "Escrow Shares" for all purposes
hereof. New Shares issued in respect of Escrow Shares which have been released
from the Escrow shall not be added to the Escrow, but shall be distributed to
the record holders thereof. Cash dividends on Escrow Shares shall not be added
to the Escrow but shall be distributed to the record holders thereof. In the
event that Optium shall effect a combination of its shares of capital stock
after the Closing Date, Optium shall take such necessary action to effect a
proportionate applicable combination and reissuance of the Escrow Shares held in
escrow. Subject to the terms and conditions of this Agreement, each Seller shall
be deemed the
12
record holder of, and shall have voting, dividend, distribution and all other
rights with respect to the Escrow Shares held in escrow on behalf of such Seller
(including any New Shares added to the Escrow in respect of such Escrow Shares).
Each Seller shall have the right to direct Optium to vote the Escrow Shares held
on his or her behalf in the manner that such Seller so chooses.
(c) From time to time an Optium Indemnified Party (as defined in
Section 10.02) may give notice in accordance with Section 10.04 hereof of a
claim for indemnification, specifying the nature (in reasonable detail) and
amount, in U.S. dollars, of any claim for indemnification under Article X of
this Agreement. If the Seller's Representative concedes liability (subject to
prior agreement in writing by each of the Major Engana Investors), the Seller's
Representative shall deliver to Optium instructions that the number of Escrow
Shares being held in escrow equal in value (with each Escrow Share being deemed
to have a value of $0.617029 for this purpose only) to the amount claimed in the
such notice should be released from Escrow and transferred back to Optium for
cancellation and that new certificates evidencing the balance of the Escrow
Shares should be issued in the name of Optium and the old certificates
cancelled. No earlier than 11 days following dispatch of instructions from the
Seller's Representative in accordance with Section 10.04(b), Optium shall cancel
the original stock certificates and issue two new stock certificates, a single
certificate evidencing the balance Series D-1 Escrow Shares and a single
certificate evidencing the balance Common Escrow Shares, each registered in the
name of the Optium and held by Optium in escrow. For each claim 73.66% of the
total value of such claim shall be released from the Series D-1 Escrow Shares
and 26.34% of the total value of such claim shall be released from the Common
Escrow Shares. Notwithstanding any of the foregoing, any Seller may elect to
make payment of their pro rata portion of any claim in cash by notifying Optium
and the Seller's Representative promptly following receipt by such Seller of the
instructions of the Seller's Representative described above and no later than
ten (10) days following the dispatch of such notice. If any Seller or Sellers
make such election to pay for their pro rata portion of any claim with cash,
Optium shall, following the receipt of instructions from the Seller's
Representative in accordance with Section 10.04(b), cancel the original stock
certificates and issue (i) two new stock certificates, a single certificate
evidencing the balance Series D-1 Escrow Shares and a single certificate
evidencing the balance Common Escrow Shares, each registered in the name of
Optium and held by Optium in escrow and (ii) two new stock certificates for each
Seller electing to make payment of their pro rata portion of any claim in cash,
a single certificate evidencing such Seller's pro rata portion of the Series D-1
Escrow Shares released in connection with such claim and a single certificate
evidencing such Seller's pro rata portion of the Common Escrow Shares released
in connection with such claim, as and if applicable, each registered in the name
of such Sellers and delivered to the Seller's Representative.
(d) As promptly as practicable following the release of any
Escrow Shares from the Escrow, Optium shall send a written statement to each
applicable Seller and the Seller's Representative stating the number of Escrow
Shares released and the number of Escrow Shares remaining in the Escrow for the
benefit of each Seller Indemnifying Party (as defined in Section 10.02).
(e) Upon the Expiration Date (as defined in Section 10.01(b))
and Optium's receipt of written notice and instructions from the Seller's
Representative, Optium shall transfer
13
and deliver certificates representing the number of Escrow Shares then remaining
in the Escrow to the Seller's Representative, allocated to each Seller based on
their pro rata percentages as set forth opposite each such holder's name on
SCHEDULE 2.01(b)(ii) hereto (as may be adjusted to reflect any previous
determination of any Seller to satisfy any claim by the payment of cash in
accordance with Section 2.05(c)), unless any claims are then pending against the
Escrow, in which case the number of Escrow Shares to be distributed shall be
reduced by the number of Escrow Shares equal in value to the aggregate amount of
such claims, pending their resolution in accordance with this Section 10.04
hereof. No new or additional claims may be made by Optium after the Expiration
Date. On or before the third Business Day following the resolution of all claims
outstanding on Expiration Date, Optium shall deliver any certificates evidencing
remaining Escrow Shares held in escrow to the Seller's Representative allocated
to each Seller based on their pro rata percentages as set forth opposite each
such Seller's name on SCHEDULE 2.01(b)(ii) hereto (as may be adjusted to reflect
any previous determination of any Seller to satisfy any claim by payment of cash
in accordance with Section 2.05(c)).
(f) Any delivery of Escrow Shares to the Seller's Representative
required hereunder shall be sent by personal delivery, overnight (up to a
maximum of 3 days) delivery by a recognized courier or delivery service to the
Sellers at their respective address set forth on SCHEDULE 2.01(a)(i) hereto (or
to such other address as any such party may hereafter designate by written
notice to the other parties).
2.06. FURTHER ASSURANCES; POST-CLOSING COOPERATION. At any time or from
time to time after the Closing, each Seller shall execute and deliver to Optium
such other documents and instruments, provide such materials and information and
take such other actions as Optium may reasonably request more effectively to
vest title to the Shares owned and conveyed by such Seller in and to Optium and
to the full extent permitted by Law to put Optium in actual possession and
control of the Shares.
At any time or from time to time after the Closing, Opium shall execute and
deliver to Sellers such other documents and instruments, provide such materials
and information and take such other actions as Sellers or Company Optionees may
reasonably request more effectively to effect the issuance of the Optium Stock
or Company Stock Options to be issued hereunder to the Sellers and Company
Optionees and to the full extent permitted by Law to put the Sellers and Company
Optionees in actual possession and control of the shares of Optium Stock or the
Company Stock Options, as applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
In order to induce Optium to enter into this Agreement and consummate the
transactions contemplated hereby, the Company hereby makes to Optium the
representations and warranties contained in this Article III as of the date
hereof. Such representations and warranties are subject to the qualifications
and exceptions set forth in the disclosure schedule delivered to Optium pursuant
to this Agreement (the "COMPANY DISCLOSURE SCHEDULE"). Each exception set forth
in
14
the Company Disclosure Schedule is identified by reference to, or has been
grouped under a heading referring to, a specific individual section of this
Agreement and shall be deemed to qualify the particular section or sections of
Article III specified for such item, unless it is reasonably apparent that such
exception is relevant to another section or sections of Article III in which
case such exception shall also be deemed to qualify such other section or
sections. For purposes hereof unless otherwise indicated, all references to the
Company shall include all predecessors:
3.01. CORPORATE EXISTENCE AND POWER. The Company is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted or proposed to be conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has heretofore
delivered to Optium true and complete copies of the corporate Constitution of
the Company and any agreement between the Company's shareholders as currently in
effect.
3.02. CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of this Agreement and each Ancillary Agreement to which the Company
is a party, and the consummation by the Company of the transactions contemplated
hereby and thereby, are within the Company's corporate powers and have been duly
authorized by all necessary corporate action on the part of the Company. Each of
this Agreement and each Ancillary Agreement to which the Company is a party has
been duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable in accordance with its terms.
3.03. GOVERNMENTAL AUTHORIZATION; CONSENTS.
(a) The execution, delivery and performance by the Company and
the Sellers of this Agreement requires no action by or in respect of, or filing
with, any governmental body, agency, official or authority.
(b) No consent, approval, waiver or other action (a "REQUIRED
CONSENT") by any Person (other than any governmental body, agency, official or
authority referred to in (a) above) under any contract, agreement, indenture,
lease, instrument or other document to which the Company is a party or by which
any of them is bound is required or necessary for the execution, delivery and
performance by the Company of this Agreement and each Ancillary Agreement to
which the Company is a party, or for the consummation of the transactions
contemplated hereby or thereby.
3.04. NON-CONTRAVENTION. The execution, delivery and performance by the
Company of this Agreement and each Ancillary Agreement to which the Company is a
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not (i)
15
contravene or conflict with the corporate constitution of the Company or any
agreement amongst the shareholders of the Company, (ii) contravene or conflict
with any provision of any law, regulation, judgment, injunction, order, Permit
or decree binding upon or applicable to the Company; (iii) constitute a default
(with or without notice or lapse of time, or both) under or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
the Company or to a loss of any benefit to which the Company is entitled under
any provision of any agreement, contract or other instrument binding upon the
Company or by which any of their assets may be bound or (iv) result in the
creation or imposition of any Lien on any asset of the Company.
3.05. CAPITALIZATION. SECTION 3.05 OF THE COMPANY DISCLOSURE SCHEDULE sets
forth (i) the designation and number of outstanding shares of each class of
securities of the Company, (ii) the designation of each stock option plan, the
number of shares of stock that may be issued pursuant to such plan, the number
of outstanding options and the number of outstanding options that are currently
exercisable, (iii) all relevant information regarding any outstanding
convertible securities and any other outstanding options, warrants or other
rights to acquire securities of, or other equity interests in, the Company and
(iv) a list of all holders of securities or rights to acquire securities of the
Company. All outstanding securities of the Company have been duly authorized and
validly issued, are fully paid and are owned as shown on SECTION 3.05 OF THE
COMPANY DISCLOSURE SCHEDULE. Except as set forth on SECTION 3.05 OF THE COMPANY
DISCLOSURE SCHEDULE, there are no outstanding (i) shares, other securities or
phantom or other equity interests of the Company, (ii) securities of the Company
convertible into or exchangeable for shares or other securities of the Company
or (iii) options or other rights to acquire from the Company any shares, other
securities or phantom or other equity interests of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "COMPANY
SECURITIES"). Except as set forth on SECTION 3.05 OF THE COMPANY DISCLOSURE
SCHEDULE, (i) there are no agreements to which the Company is a party or by
which it is bound and (ii) to the Company's Knowledge, there are no agreements
among other parties, to which the Company is not a party and by which it is not
bound, for any subscriptions, options, warrants, commitments, preemptive rights,
agreements, arrangements or commitments of any kind relating to the issuance or
sale of Company Securities or relating to the transfer, sale or disposition of
the shares being issued pursuant to this Agreement. There are no outstanding
obligations of the Company, actual or contingent, to issue or deliver or to
repurchase, redeem or otherwise acquire any Company Securities.
3.06. SUBSIDIARIES. The Company has no Subsidiaries or any investment or
ownership interest in any other entity.
3.07. FINANCIAL STATEMENTS.
(a) Attached as SECTION 3.07 OF THE COMPANY DISCLOSURE SCHEDULE
are true and complete copies of:
(i) the audited balance sheet and the related audited
statements of operations and cash flows for the 12 months ended as of
August 2, 2003, July 31, 2004 and July 30, 2005; and
16
(ii) the unaudited balance sheet of the Company as of
January 31, 2006 and the related unaudited statements of income and cash
flows of the Company for the one month ended January 31, 2006 ((i) and (ii)
collectively referred to as the "COMPANY FINANCIAL STATEMENTS").
(b) Each of the balance sheets included in the Company Financial
Statements fairly presents in all material respects the financial position of
the Company as of its date, and the other statements included in the Company
Financial Statements fairly present in all material respects the "results" of
operations and cash flows, as the case may be, of the Company for the periods
therein set forth, in each case in accordance with generally accepted accounting
principles in Australia consistently applied during the periods involved and,
with respect to the unaudited interim financial statements, for the omission of
footnote disclosure and, to the extent consistent with generally accepted
accounting principles, normally recurring year-end audit adjustments.
3.08. ABSENCE OF CERTAIN CHANGES. Since the Company Balance Sheet Date,
except as reflected in the unaudited Company Financial Statements, management
accounts (or in notes to the Company Financial Statements or management
accounts) (with specific cites on SECTION 3.08 OF THE COMPANY DISCLOSURE
SCHEDULE) or in SECTION 3.08 OF THE COMPANY DISCLOSURE SCHEDULE, the Company has
conducted their businesses in the ordinary course consistent with past practices
and there has not been any:
(a) Company Material Adverse Change or any event, occurrence,
development or state of circumstances or facts which could reasonably be
expected to result in a Company Material Adverse Change, or any condition, event
or occurrence which, individually or in the aggregate, could reasonably be
expected to prevent or materially delay the Sellers' ability to consummate the
transactions contemplated by this Agreement or perform its obligations hereunder
or under the Ancillary Agreements;
(b) declaration, setting aside or payment of any dividend or
other distribution of cash, assets or stock with respect to any Company
Securities or any repurchase, redemption or other acquisition by the Company of
any outstanding shares or other securities of, or other ownership interests in,
the Company;
(c) payment or grant of any right by the Company or any of its
Subsidiaries to any Interested Person, or any charge by any Interested Person to
the Company or any of its Subsidiaries, or other transaction between the Company
and any Interested Person, except in any such case for employee compensation
payments in the ordinary course of business of the Company and the Subsidiaries
consistent with past practice.
(d) amendment of any outstanding security of the Company;
(e) incurrence, assumption or guarantee by the Company of any
material indebtedness for borrowed money;
(f) creation or assumption by the Company of any material Lien
on any asset;
17
(g) any payment or discharge of a Lien or liability of the
Company which was not shown on the Company Balance Sheet or incurred in the
ordinary course of business consistent with past practices;
(h) making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(i) damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company in an
amount greater than $A100,000;
(j) change in any method of Tax or financial accounting or
accounting practice or any making of a Tax election or change of an existing
election by the Company;
(k) (i) grant of any severance or termination pay to any
director, officer or employee of the Company, (ii) entering into of any
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of the
Company, (iii) change in benefits payable under existing severance or
termination pay policies of the Company or employment agreements to which the
Company is a party or (iv) change in compensation, bonus or other benefits
payable to directors, officers or employees of the Company, other than in the
ordinary course of business consistent with past practice;
(l) labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representation thereof to
organize any employees of the Company; or
(m) agreement, undertaking or commitment to do any of the
foregoing.
3.09. PERSONAL PROPERTY.
(a) The Company has good and marketable title to, or in the case
of leased personal property have valid leasehold interests in, all personal
property (including machinery and equipment, inventory, receivables and
furniture) (whether tangible or intangible) reflected on the Company Balance
Sheet or acquired after the Company Balance Sheet Date (the "PERSONAL
PROPERTY"). None of such Personal Property is subject to any Liens, other than:
(i) Liens disclosed on the Company Balance Sheet;
(ii) Liens that do not materially detract from the value
of the Personal Property as now used, or materially interfere with any
present or intended use of the Personal Property.
(b) The Personal Property owned or leased by the Company and its
Subsidiaries, or which it otherwise has the right to use, constitutes all of the
personal property held for use or used in connection with the business of the
Company and is generally adequate to conduct such business as currently
conducted or as proposed to be conducted.
18
3.10. REAL PROPERTY.
(a) The Company does not own any real property. All real
property used or held for use by the Company in connection with the business of
the Company is leased by the Company and/or its Subsidiaries as lessee or
sublessee.
(b) SECTION 3.10(b) OF THE COMPANY DISCLOSURE SCHEDULE
completely and accurately describes all leases and subleases of real property
used by or held for use by the Company in connection with the business of the
Company (the "LEASES"), together with a description of all buildings and
material fixtures and improvements erected thereon.
(c) The Leases are in good standing and are valid, binding and
enforceable in accordance with their respective terms, and there does not exist
under any such Lease any default by the Company or, to the Company's Knowledge,
by any other Person, or any event that, with notice or lapse of time or both,
would constitute a default by the Company or, to the Company's Knowledge, by any
other Person. The Company has delivered to Optium complete and accurate copies
of all Leases, including all amendments and agreements related thereto. All rent
and other charges currently due and payable under the Leases have been paid.
(d) The Company is the holder of the lessee's interest under the
Leases and neither has assigned the Leases nor subleased all or any portion of
the premises leased thereunder. The Company has not made any alterations,
additions or improvements to the premises leased under the Leases that are
required to be removed (or of which lessor could require removal) at the
termination of the respective Lease terms.
3.11. NO UNDISCLOSED LIABILITIES. Except as disclosed in the Company
Financial Statements or set forth in SECTION 3.11 OF THE COMPANY DISCLOSURE
SCHEDULE, to the Company's Knowledge, there are no liabilities of the Company of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than liabilities incurred in the ordinary course of business
consistent with past practice since the Company Balance Sheet Date, which in the
aggregate are not material to the Company.
3.12. LITIGATION. Except as disclosed in SECTION 3.12 OF THE COMPANY
DISCLOSURE SCHEDULE, there is no claim, action, charge, suit, investigation or
proceeding (or any basis therefor) pending against or, to the Company's
Knowledge, threatened against or affecting, the Company or any of their
respective properties or the transactions contemplated hereby before any court
or arbitrator or any governmental body, agency, official or authority. There is
no claim, action, charge, suit, investigation or proceeding pending against or
threatened against or affecting any officer, director, stockholder or employee
of the Company in their capacities as such, as to matters related to the
Company.
3.13. TAX MATTERS.
(a) The Company has timely filed all Tax Returns required to be
filed (determined without regard to extensions) on or before the date hereof.
All such Tax Returns
19
were complete and correct in all respects, and such Tax Returns correctly
reflected the facts regarding the income, business, assets, operations,
activities, status and other matters of the Company and any other information
required to be shown thereon. In this Agreement, "TAX RETURNS" means all
returns, declarations, reports, claims for refund, information statements,
Business Activity Statements and other documents relating to Taxes, including
all schedules and attachments thereto, and including all amendments thereof. The
Company has paid all federal, state, local and foreign net income taxes,
alternative or add-on minimum taxes, estimated, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, capital profits,
lease, service, license, withholding, payroll, employment, superannuation
guarantee charge, workers compensation premium, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit taxes, customs
duties and other taxes, governmental fees and other like assessments and charges
of any kind whatsoever owed (including Tax liabilities incurred or borne as a
transferee or successor, or by contract or otherwise), and all interest,
penalties, additions to tax and additional amounts with respect thereto
(collectively, "TAXES"), required to be paid by it whether or not shown on the
Tax Returns filed by the Company through the date hereof. The Company has
withheld and paid all Taxes required to have been withheld and paid in respect
of required payments under any Tax Law, including in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party. In this Agreement, "TAX LAW" means any Law under which Tax is
imposed, assessed or charged by any Government Authority and includes, without
limitation, the INCOME TAX ASSESSMENT XXX 0000 (Cth), the INCOME TAX ASSESSMENT
XXX 0000 (Cth) and the TAXATION ADMINISTRATION ACT 1953 (Cth). All information
required to be retained under any relevant Tax Law is currently held by the
Company, including such elections as are required to support the positions taken
in the Tax Returns or other revenue returns and any information which may be
required to calculate the adjustable value and any capital gain or loss on
disposal of any asset held at the Closing Date. The Company has maintained
proper and adequate records to enable it to comply with its obligations to (x)
prepare and submit any information, notices, computations, returns and payments
required in respect of any Tax Law, (y) prepare any accounts necessary for the
compliance of any Tax Law and (z) retain necessary records as required by any
Tax Law and to support any Tax position taken by the Company.
(b) None of the Tax Returns filed by the Company or Taxes
payable by the Company have been the subject of an audit, action, suit,
proceeding, claim, examination, deficiency or assessment by any governmental
authority responsible for the imposition of any Tax (a "TAX AUTHORITY"), and no
such audit, action, suit, proceeding, claim, examination, deficiency or
assessment is currently pending or, to the Company's Knowledge, threatened.
(c) The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return, and the Company has not
waived any statute of limitation with respect to any Tax or agreed to any
extension of time with respect to a Tax assessment or deficiency. All material
elections with respect to Taxes affecting the Company, as of the date hereof,
are set forth in the Financial Statements.
(d) The Company has never been a member of a group filing a
consolidated federal income Tax Return or a combined, consolidated, unitary or
other affiliated group Tax Return for state, local or foreign Tax purposes
(other than a group the common parent of which is
20
the Company), and the Company has no liability for the Taxes of any Person
(other than the Company).
(e) The unpaid Taxes of the Company did not, as of the Company
Balance Sheet Date exceed the reserve for actual Taxes (as opposed to any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) as shown on the Company Balance Sheet, and will not exceed
such reserve as adjusted for the passage of time through the Closing Date in
accordance with the reasonable past custom and practice of the Company in filing
Tax Returns. The Company will not incur any liability for Taxes from the Company
Balance Sheet Date through the Closing Date other than in the ordinary course of
business and consistent with reasonable past practice.
(f) The Company has not issued or created any (x) non-share
equity interest (as defined in section 995-1 of the INCOME TAX ASSESSMENT XXX
0000 (Cth)) or non-equity share (as defined in section 6(1) of the INCOME TAX
ASSESSMENT ACT 1936 (Cth)) and there is no interest in the Company in respect of
which an election was made under section 118(6) of the NEW BUSINESS TAX SYSTEM
(DEBT AND EQUITY) XXX 0000 (Cth) which will or may, according to its terms,
still be on issue or in existence on or after 1 July 2004.
(g) The Company's aggregate franking account balance at the
Closing Date will not be in deficit and no act or omission of the Company at or
prior to the Closing Date will cause the Company to be liable for over-franking
tax under the NEW BUSINESS TAX SYSTEM (OVER-FRANKING TAX) XXX 0000 (Cth) after
the Closing Date. All franking credits of the Company as shown in the latest Tax
Return are fully available for use by the Company and franking credits will be
fully available for use by the Company on payment of Taxes to which any Tax
provision recognized in the Company Balance Sheet relates.
(h) No dividend has been paid by the Company in respect of which
the franking amount has exceeded the benchmark franking percentage or the
maximum franking credit within the meaning of Part 3-6 of the INCOME TAX
ASSESSMENT XXX 0000 (Cth) or in respect of which an application has been made to
the Commissioner of Taxation for permission to depart from the benchmark
franking percentage within the meaning of Part 3-6 of the INCOME TAX ASSESSMENT
XXX 0000 (Cth). The Company has provided or will provide before Closing
distribution statements within the meaning of section 202-80 of the INCOME TAX
ASSESSMENT XXX 0000 (Cth) to shareholders in respect of all dividends paid by
the Company before Closing.
(i) The Company has not participated in any dividend stripping
or dividend or capital streaming or franking credit trading schemes and nor will
the sale in itself, or in conjunction only with events occurring prior to
Closing, constitute such a scheme.
(j) The Company has not entered into a transaction or
arrangement that attracts the operation of any deemed dividend rules of section
108, section 109 or the provisions of Division 7A of the INCOME TAX ASSESSMENT
ACT 1936 (Cth).
(k) The share capital account of the Company is not tainted
within the meaning of section 160ARDM of the INCOME TAX ASSESSMENT XXX 0000
(Cth).
21
(l) The Company has not been required to reduce losses or the
Tax attributes of assets (whether depreciable or capital) as contemplated by
Division 245 of Schedule 2C to the INCOME TAX ASSESSMENT ACT 1936 (Cth).
(m) The Company has not entered into a transaction or
arrangement that attracts the operation of any of Division 138, Division 139,
Division 140, Division 723, Division 725 or Division 727 of the INCOME TAX
ASSESSMENT XXX 0000 (Cth). The Company has not entered into any transaction or
arrangement that attracts the operation of Division 16D or section 51AD of the
INCOME TAX ASSESSMENT XXX 0000 (Cth). The Company has not participated in any
schemes or transactions or made any payments to which the specific or general
anti-avoidance rules in any Tax Law applies or might apply.
(n) No claim has ever been made by a Tax Authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to Tax in that jurisdiction. The Company does not have, and has
never had, a permanent establishment or other taxable presence in any country
other than Australia, as determined pursuant to applicable foreign law and any
applicable Tax treaty or convention between Australia and such foreign country.
(o) The Company has not entered into any arrangement which will
give rise to any upward adjustment to the assessable income or any downward
adjustment to the allowable deductions of the Company as a result of the
operation of the transfer pricing provisions in Division 13 of Part III of the
INCOME TAX ASSESSMENT XXX 0000 (Cth).
3.14. MATERIAL CONTRACTS.
(a) Except for agreements, contracts, plans, leases,
arrangements or commitments disclosed in SECTION 3.14 OF THE COMPANY DISCLOSURE
SCHEDULE, as of the date of this Agreement the Company is not a party to or
subject to any:
(i) lease;
(ii) contract for the purchase of materials, supplies,
goods, services, equipment or other assets providing for annual payments by
the Company and/or its Subsidiaries of, or pursuant to which in the last 12
months the Company has paid, $A100,000 or more;
(iii) sales, distribution or other similar agreement
providing for the sale by the Company of, or pursuant to which in the last
12 months the Company sold, materials, supplies, goods, services, equipment
or other assets for an aggregate purchase price of $A100,000 or more;
(iv) partnership, joint venture, manufacture, development,
supply or other similar contract, arrangement or agreement;
(v) contract relating to indebtedness for borrowed money
or the deferred purchase price of property (whether incurred, assumed,
guaranteed or secured by
22
any asset), except contracts relating to indebtedness incurred in the
ordinary course of business in an amount not exceeding $A100,000;
(vi) indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for borrowing or any pledge or
security agreement;
(vii) employment or consulting agreement;
(viii) license, technology transfer, franchise or other
agreement in respect of any Intellectual Property or other property owned
or used by the Company;
(ix) agency, dealer, sales representative or other similar
agreement;
(x) contract or other document that limits the freedom of
the Company to compete in any line of business or with any Person or in any
area or which would so limit the freedom of the Company after the Closing
Date;
(xi) contract or commitment with or for the benefit of any
Interested Person; or
(xii) any contract with any governmental or
quasi-governmental entity; or
(xiii) other contract or commitment not made in the ordinary
course of business that is material to the Company taken as a whole.
(b) Each agreement, contract, plan, lease, arrangement and
commitment disclosed in any schedule to this Agreement or required to be
disclosed pursuant to Section 3.14(a) is a valid and binding agreement of
the Company and is in full force and effect, and the Company is not, nor,
to the Company's Knowledge, is any other party thereto is in default in any
material respect under the terms of any such agreement, contract, plan,
lease, arrangement or commitment, nor, to the Company's Knowledge, has any
event or circumstance occurred that, with notice or lapse of time or both,
would constitute an event of default thereunder.
3.15. TECHNOLOGY AND INTELLECTUAL PROPERTY.
(a) SECTION 3.15 OF THE COMPANY DISCLOSURE SCHEDULE lists: (i)
all patents, all trade marks and service marks (whether registered or
unregistered), copyrights, designs and other Intellectual Property (including
any applications and renewals for any of the foregoing) owned by or on behalf of
the Company and any of its Subsidiaries; (ii) all hardware products and tools,
software and firmware products and tools and services that are currently sold,
published, offered, or under development by the Company and any of its
Subsidiaries; and (iii) all licenses (in and out), sublicenses and other
agreements (other than off the shelf software licenses) to which the Company and
any of its Subsidiaries is a party and pursuant to which the Company and any of
its Subsidiaries or any other Person is authorized to use any of the Company
Intellectual Property or exercise any rights with respect thereto. In relation
to clause (iii) of the preceding sentence: (A) disclosures in SECTION 3.15 OF
THE COMPANY DISCLOSURE SCHEDULE must include the identities of
23
the parties to the relevant agreements, a brief description of the nature and
subject matter thereof, the term thereof and a brief description of the payment
terms (or a summary of any formula or procedure for determining such payment
terms); and (B) the Sellers have provided accurate, complete and true copies of
such licenses, sublicenses and agreements to Optium (other than off the shelf
software licenses).
(b) The entire right, title and interest in each item of Company
Intellectual Property is either: (i) owned solely by the Company or one of its
Subsidiaries free and clear of any Liens; or (ii) rightfully used and authorized
for use by the Company or one of its Subsidiaries and their respective
successors pursuant to a valid and enforceable written license. All of the
Company Intellectual Property that is used by the Company or its Subsidiaries
pursuant to a license or other grant of a right by a third party to use its
proprietary information is separately identified as such in SECTION 3.15 OF THE
COMPANY DISCLOSURE SCHEDULE. The Company has all rights in the Company
Intellectual Property necessary to carry out the Company's former, current and
currently planned future activities, including without limitation (except as
specifically noted in SECTION 3.15 OF THE COMPANY DISCLOSURE SCHEDULE) rights to
make, use, exclude others from using, reproduce, modify, adapt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, communicate, publish, display and perform publicly, license, rent,
lease, assign and sell the Company Intellectual Property in all geographic
locations and fields of use, and to sublicense any or all such rights to third
parties, including the right to grant further sublicenses.
(c) Neither the Company nor any Subsidiary is in violation of
any license, sublicense or other agreement to which the Company is a party or
otherwise bound relating to any of the Company Intellectual Property. Except as
noted in SECTION 3.15 OF THE COMPANY DISCLOSURE SCHEDULE, neither the Company
nor any Subsidiary is obligated to provide any consideration (whether financial
or otherwise) to any third party, nor is any third party otherwise entitled to
any consideration, with respect to any exercise of rights by the Company or
Optium, as successor to the Company, in the Company Intellectual Property.
(d) The use of the Company Intellectual Property by the Company
as currently used and as currently proposed to be used does not infringe any
other Person's copyright, trade secrets, privacy, rights in confidential
information, moral rights, patent, trade xxxx, service xxxx, trade name, firm
name, logo, trade dress, circuit layout rights or other Intellectual Property
rights. No claims (i) challenging the validity, enforceability, effectiveness or
ownership by the Company of any of the Company Intellectual Property or (ii) to
the effect that the use, reproduction, modification, manufacture, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any Company
Intellectual Property by the Company and its Subsidiaries, infringes or will
infringe on any intellectual property or other proprietary or personal right of
any Person have been asserted against the Company are threatened by any Person
nor does there exist any valid basis for such a claim. There are no legal or
governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any of
the Company Intellectual Property, other than review of pending patent
applications, and neither the Company, any Subsidiary nor any Seller is aware of
any information indicating that such proceedings are threatened or contemplated
by any governmental entity or any other Person. All granted or issued patents,
all registered trade marks and service marks, and all copyright
24
registrations owned by the Company are valid, enforceable and subsisting. There
is no unauthorized use, infringement, or misappropriation of any of Company
Intellectual Property by any third party, employee or former employee.
(e) SECTION 3.15 OF THE COMPANY DISCLOSURE SCHEDULE separately
lists all parties who have created any portion of, or otherwise have any rights
in or to, the Company Intellectual Property, including any independent
contractors engaged by the Company. The Company and each Subsidiary have secured
from all parties (including employees) who have created any portion of, or
otherwise have any rights in or to, the Company Intellectual Property owned by
the Company: (i) valid and enforceable written assignments of any such work,
invention, improvement or other rights to the Company and each Subsidiary, (ii)
written consents from each individual author of copyright works embodying
Company Intellectual Property, permitting the Company and each Subsidiary to use
the works in any manner, including acts which may infringe the author's moral
rights in those works. The Sellers have provided true and complete copies of
such assignments and consents to Optium.
(f) The transactions contemplated under this Agreement will not
alter, impair or otherwise affect any rights of the Company in any Company
Intellectual Property.
(g) The Company has taken commercially reasonable measures to
protect the proprietary nature of the Company Intellectual Property and to
maintain in confidence all trade secrets and confidential information owned or
used by the Company or any of its Subsidiaries.
(h) No Company Intellectual Property includes, contains,
incorporates, links or calls to or otherwise uses any Publicly Available
Software and the Company has not used Publicly Available Software in whole or in
part in the development of any Company Intellectual Property in a manner that
may subject any Company Intellectual Property in whole or in part, to all or
part of the license obligations of any Publicly Available Software. "PUBLICLY
AVAILABLE SOFTWARE" means each of (i) any software that contains, or is derived
in any manner (in whole or in part) from, any software that is distributed as
free software, open source software (e.g. Linux), copyleft, community source
code license, or similar licensing and distribution models; and (ii) any
software that requires as a condition of use, modification, and/or distribution
of such software that such software or other software incorporated into, derived
from, or distributed with such software (a) be disclosed or distributed in
source code form; (b) be licensed for the purpose of making derivative works; or
(c) be redistributable at no or minimal charge. Publicly Available Software
includes, without limitation, software licensed or distributed under any of the
following licenses or distribution models similar to any of the following: (a)
GNU General Public License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic
License (e.g. PERL), (c) the Mozilla Public License, (d) the Netscape Public
License, (e) the Sun Community Source License (SCSL), the Sun Industry Source
License (SISL), and the Apache Server License.
3.16. INSURANCE COVERAGE. SECTION 3.16 OF THE COMPANY DISCLOSURE SCHEDULE
lists all of the insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of the Company. The Company has furnished to Optium true and complete copies of
all insurance policies and fidelity bonds listed in SECTION 3.16 OF THE COMPANY
DISCLOSURE SCHEDULE. There is no claim by the Company pending under any
25
of such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid and the Company is otherwise in
full compliance with the terms and conditions of all such policies and bonds.
Such policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) remain in full force and effect. Such
policies of insurance and bonds are of the type and in amounts customarily
carried by Persons conducting businesses similar to those of the Company. To the
Company's Knowledge there is no threatened termination of, or material premium
increase with respect to, any of such policies or bonds.
3.17. EMPLOYEE BENEFITS.
(a) The following terms, as used herein, having the following
meanings:
"BENEFIT ARRANGEMENT" means an employment, severance or similar
contract, arrangement or policy (written or oral) and each plan or
arrangement providing for severance entitlements or other termination
entitlements, insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment
benefits, annual leave, sick leave, long-service leave, superannuation,
pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, phantom stock, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement
insurance, compensation or benefits or any co-employment agreement that (i)
is entered into, maintained or contributed to, as the case may be, by the
Company or any Co-Employer and (iii) covers any Employee or former Employee
of the Company.
"CO-EMPLOYER" means any entity that is or was considered to be a
joint employer with the Company.
"EMPLOYEE" means any employee of the Company, including any employee
Co-employed by the Company and Co-Employer.
(b) SECTION 3.17(b) OF THE COMPANY DISCLOSURE SCHEDULE includes
a list of each Benefit Arrangement of the Company, copies or descriptions of
which have been made available or furnished previously to Optium. Each Benefit
Arrangement has been maintained in compliance with its terms and with the
applicable requirements prescribed by any and all statutes, orders, rules and
regulations. All contributions and payments accrued under each Benefit
Arrangement, determined in accordance with prior funding and accrual practices,
as adjusted to include proportional accruals for the period ending on the
Closing Date, will be discharged and paid on or prior to the Closing Date except
to the extent reflected on the Closing Balance Sheet. There has been no
amendment to, written interpretation of or announcement (whether or not written)
by the Company relating to, or change in employee participation or coverage
under any Benefit Arrangement that would increase materially the expense of
maintaining such Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended prior to the date hereof. No Employee
will become entitled to any material bonus, retirement, severance or similar
benefit or enhanced benefit solely as a result of
26
the transactions contemplated hereby. Except as disclosed in SECTION 3.17(b) OF
THE COMPANY DISCLOSURE SCHEDULE. There are no retirement benefit schemes,
pension schemes or other pension arrangements relating to the Company in
operation.
(c) Except as required by statute, the Company is not under any
liability whatsoever for any superannuation payment or benefit pension retiring
or other allowance or deferred compensation, nor is there any contract agreement
or arrangement whatsoever whereby or pursuant to which the Company is liable to
be or become bound now or at any time in the future to pay any superannuation
payment or benefit, pension, retiring or other allowance or deferred
compensation to any Person. All superannuation payments are paid to externally
managed complying superannuation funds. In relation to superannuation payments,
there are no outstanding and unpaid contributions on the part of the Company in
respect of any of their employees. In relation to superannuation payments, there
are no outstanding and unpaid benefits due to any Employee, their dependents or
beneficiaries. The Company has full and proper records relating to the
superannuation matters of the Employees which are up-to-date and accurate.
3.18. COMPLIANCE WITH LAWS; PERMITS; NO DEFAULTS.
(a) The Company is not in violation of, and has not violated,
any applicable provisions of any laws, statutes, ordinances or regulations,
except for violations that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(b) SECTION 3.18 OF THE COMPANY DISCLOSURE SCHEDULE correctly
describes each governmental license, permit, concession or franchise (a
"PERMIT") material to the business of the Company, together with the name of the
governmental agency or entity issuing such Permit. To the Company's Knowledge,
such Permits are valid and in full force and effect, and none of such Permits
will be terminated or impaired or become terminable as a result of the
transactions contemplated hereby.
(c) The Company is not in default under, and no condition exists
that with notice or lapse of time or both would constitute a default under, any
judgment, order or injunction of any court, arbitrator or governmental body,
agency, official or authority which defaults or potential defaults individually
or in the aggregate would reasonably be expected to have a Company Material
Adverse Effect.
(d) The Company timely filed in a proper manner all material
reports, statements, notices and other material filings required to be filed
with any governmental authority by the Company, to the extent applicable,
including all material amendments or supplements to any of the above (the
"COMPANY FILINGS"). To the Company's Knowledge, the information contained in the
Company Filings was true and complete at the time of filing. The Company Filings
were prepared in accordance with applicable law and, without limiting the
foregoing, to the Company's Knowledge, did not when filed contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading in light of the circumstances under which
they were made.
27
3.19. EMPLOYEES AND LABOR MATTERS.
(a) SECTION 3.19(a) OF THE COMPANY DISCLOSURE SCHEDULE sets
forth, with respect to each employee of the Company (including any employee of
the Company who is on a leave of absence or on layoff status subject to recall)
(i) the name of such employee and the date as of which such employee was
originally hired by the Company or a Subsidiary, and whether the employee is on
an active or inactive status; (ii) such employee's title; (iii) such employee's
annualized compensation as of the date of this Agreement, including base salary,
sick leave, long-service leave, bonus and/or commission potential, equity
vesting schedule, severance pay potential, and any other compensation forms;
(iv) each current benefit plan in which such employee participates or is
eligible to participate; (v) any governmental authorization that is held by such
employee and that is used in connection with the Company's business; (vi) such
employee's accrued annual leave, accrued sick leave and accrued long service
leave entitlements as at the Closing Date; and (vii) the period of notice
required to terminate such employee's employment.
(b) SECTION 3.19(b) OF THE COMPANY DISCLOSURE SCHEDULE lists all
Persons who are currently performing services for the Company who are classified
as "consultants" or "independent contractors," the compensation of each such
Person and whether the Company or a Subsidiary is party to an agreement with
such Person (whether or not in writing). Any such agreements are listed on
SECTION 3.14 OF THE COMPANY DISCLOSURE SCHEDULE and have been delivered (or, in
the case of agreements that are not in writing, a summary thereof has been
delivered) to Optium. All Persons engaged by the Company as independent
contractors, rather than employees, have been properly classified as such and
have been engaged in accordance with all applicable foreign, federal, state
and/or local laws.
(c) The Company is not and has never been a party to or bound by
any industrial award or agreement (including any non-registered agreement) or
similar agreement. There has never been nor has there been a threat of any
lockout, strike, slowdown, work stoppage, industrial dispute or union organizing
activity, or any similar activity or dispute, affecting the Company or any of
their employees.
(d) SECTION 3.19(d) OF THE COMPANY DISCLOSURE SCHEDULE lists all
current employee manuals and handbooks, employment policy statements, employment
agreements, and other materials relating to the employment of the current
employees of the Company and its Subsidiaries. The Company has delivered to
Optium complete copies of all such documents.
(e) Except as disclosed in SECTION 3.19(e) OF THE COMPANY
DISCLOSURE SCHEDULE, (i) none of the employees of the Company has notified or
otherwise indicated to the Company that he or she intends to terminate his or
her employment with the Company, or not to accept employment with Optium; (ii)
the Company does not have a present intention to terminate the employment of any
employee; (iii) to the Company's Knowledge, no employee of the Company has since
September 30, 2005 received an offer of an employment from any other Person;
(iv) all employees of the Company have executed the Company's form
noncompetition, nondisclosure and developments agreement; (v) no employee of the
Company is a party to or is bound by any employment contract, patent disclosure
agreement, noncompetition agreement or
28
other restrictive covenant or other contract with any third party that would be
likely to affect in any way (A) the performance by such employee of any of his
or her duties or responsibilities as a employee, or (B) the business or
operations of the Company; (vi) to the Company's Knowledge, no employee of the
Company is in violation of any term of any employment contract, patent
disclosure agreement, noncompetition agreement, or any other restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company; and (vii) the Company is not and never have been
engaged in any dispute or litigation with an employee or former employee
regarding Intellectual Property matters.
(f) Except as disclosed in SECTION 3.19(f) OF THE COMPANY
DISCLOSURE SCHEDULE or SECTION 3.17(b) OF THE COMPANY DISCLOSURE SCHEDULE, the
Company does not have an established severance pay practice or policy; (ii) no
employee of the Company is entitled to any redundancy entitlements, severance
pay, bonus compensation, acceleration of payment or vesting of any equity
interest, or other payment from the Company or Optium as a result of or in
connection with the transactions contemplated by this Agreement or any of the
Ancillary Agreements or as a result of any termination by the Company on or
after the Closing of any Person employed by the Company on or prior to the
Closing Date.
(g) The Company is in compliance with all currently applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours. The Company is not engaged, and have never
engaged, in any unfair labor practice of any nature. The Company have not failed
to pay, any of its employees, consultants or contractors for any wages
(including overtime), salaries, commissions, bonuses or any other benefits,
under contract, statute or any industrial award or agreement for any services
performed by them to the date hereof or amounts required to be reimbursed to
such individuals.
(h) The Company, and each employee of the Company, is in
compliance with all applicable visa and work permit requirements, and no visa or
work permit held by an employee of the Company will expire during the six month
period following the date of this Agreement.
(i) If all of the services of all employees of the Company had
been terminated on the Company Balance Sheet Date, then the amount provided for
in the Company Balance Sheet as at that date for long-service leave and holiday
pay would have been sufficient to provide for all long-service leave and annual
leave which would have then been due to (or properly accrued in favor of) such
employees.
(j) Since the Company Balance Sheet Date, no emoluments,
remuneration or fees have been paid or agreed by the Company or its Subsidiaries
to be paid to any director save for remuneration of an amount consistent with
past practice in the previous 12 months for the service of full-time executive
directors.
(k) The Company has complied with all improvement notices issued
to them by Workcover Corporation.
29
(l) To the Company's Knowledge, there are no workers'
compensation claims against the Company that are not covered in full by the
Company insurance policies (excluding any excess payable, not exceeding $A500).
(m) The Company has not done or omitted to do any act or thing,
the doing or omission of which is or could be a breach of:
(i) any determination or order of any tribunal, person,
or body empowered to determine any dispute relating to the rights or duties
of the Company or of any trade union or member of a trade union pursuant to
any industrial or similar award or agreement; or
(ii) any term contained or implied in any agreement or
award between the Company and any trade or labor union or any employee of
the Company,
(iii) which leads or is likely to or could lead to any
industrial action or cause any labor problems.
(n) The Company has not done or omitted to do any act or thing,
the doing or omission of which is or could be a breach of any occupational
health and safety laws or regulations.
3.20. TRANSACTIONS WITH AFFILIATES; INTERCOMPANY ARRANGEMENTS. Except as
set forth on SECTION 3.20 OF THE DISCLOSURE SCHEDULE, there are no agreements,
loans, leases, royalty agreements or other continuing transactions between the
Company and (i) any officer, director or stockholder of the Company or any of
their Affiliates or (ii) any member of any officer, director or stockholder of
the Company's family or any of their Affiliates ("INTERESTED PERSON"). To the
Company's Knowledge, no Interested Person (x) has any material direct or
indirect interest in any entity that does business with the Company or (y) has
any direct or indirect interest in any property, asset or right that is used by
the Company in the conduct of its business. No Interested Person has any
contractual relationship (including that of creditor or debtor) with the Company
other than such relationships as result solely from being an officer, director
or stockholder of the Company.
3.21. FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of any of the Sellers or the Company who might be entitled to any fee or
commission from Optium, the Company or any of their respective Affiliates upon
consummation of the transactions contemplated by this Agreement.
3.22. CORPORATE RECORDS. The corporate record books of the Company contain
an accurate record in all material respects of corporate actions taken by the
Company's stockholders and board of directors and committees. The copies of the
corporate records of the Company, as delivered to Optium, are true and complete
copies of the originals of such documents.
3.23. ILLEGAL PAYMENTS. To the Company's Knowledge, neither the Company
nor any Person affiliated with the Company has ever offered, made or received on
behalf of the Company
30
any payment or contribution of any kind, directly or indirectly, including
payments, gifts or gratuities, to any person, entity, or United States,
Australian or foreign national, state or local government officials, employees
or agents or candidates therefor or other persons in violation of an federal or
state statute specifically governing any such payment or contribution.
3.24. OTHER INFORMATION. None of this Agreement, the Ancillary Agreements
and the schedules, exhibits and other documents delivered in connection herewith
and therewith, when read together as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading. To the Company's Knowledge, there
is no material fact directly relating to the assets, liabilities, business,
operations, condition (financial or other) or prospects of the Company
(including any competitive developments other than facts which relate to general
economic or industry trends or conditions) that materially adversely affects the
same.
3.25. INSOLVENCY.
(a) INSOLVENCY DEFINITIONS. The following terms, as used
herein, have the following meanings:
"INSOLVENCY EVENT" with respect to an entity means the happening of
the following events:
(i) an application (other than one dismissed within five
(5) Business Days) is made to a court for an order, or an order is made,
that an entity be wound up;
(ii) an application (other than one that is dismissed
within five (5) Business Days) is made to a court for an order appointing a
liquidator, provisional liquidator, receiver or other administrator in
respect of an entity, or one of them is appointed whether or not under an
order;
(iii) a resolution is passed to appoint an insolvency
administrator in respect of any entity;
(iv) an entity enters into, or resolves to enter into, a
scheme of arrangement or composition with, or assignment for the benefit
of, all or any class of its creditors, or its proposes a reorganization,
moratorium or other administration involving any of them;
(v) an entity resolves to appoint an administrator to
itself, wind itself up, or otherwise dissolves itself, or gives notice of
intention to do so, or is otherwise wound up or dissolved;
(vi) an entity is, or states that it is, unable to pay its
debts when they fall due;
(vii) an entity takes any step to obtain protection, or is
granted protection, from its creditors under any applicable legislation;
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(viii) any secured creditor of any entity enforces its
security; or
(ix) anything having a substantially similar effect to any
of the events specified in paragraphs (i) to (viii) above happens under the
law of any applicable jurisdiction.
with respect to an individual means the happening of the following events:
(x) his or her bankruptcy; or
(xi) any arrangement (including a scheme of arrangement or
deed of company arrangement), composition or compromise with, or assignment
for the benefit of, all or any class of that person's creditors or members
or a moratorium involving any of them.
(b) Insolvency Representations and Warranties
(i) No Insolvency Event has occurred in relation to the
Company.
(ii) There are no unsatisfied or partly satisfied
judgments or writs of execution against the Company and there has been no
unusual delay by the Company in payment of any obligation due for payment.
(iii) To the Company's Knowledge there are no circumstances
which could give rise to any of the events specified in clauses (i) and
(ii) above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES RELATING
TO SELLERS AND COMPANY OPTIONEES
Each Seller and Company Optionee, severally but not jointly, represents and
warrants to, and agrees with, Optium, as of the date hereof, as follows:
4.01. EXISTENCE AND POWER; AUTHORIZATION. To the extent such Seller or
Company Optionee is an entity, such Seller or Company Optionee is (a) duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization and (b) has full power and authority under its
certificate of formation, bylaws, operating agreements, governing agreements or
similar charter and governing documents to execute and deliver this Agreement
and the Ancillary Agreements to which it is a party and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby, including without limitation to own, hold, sell
and transfer (pursuant to this Agreement) the Shares and/or Company Stock
Options, as applicable, and all such actions have been duly authorized by all
necessary corporate action. To the extent such Seller or Company Optionee is an
individual, such Seller or Company Optionee has full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which it is a
party and to perform his obligations
32
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to own, hold, sell and transfer
(pursuant to this Agreement) the Shares and/or Company Stock Options, as
applicable. Each of this Agreement and each Ancillary Agreement to which the
Seller or Company Optionee is a party has been duly executed and delivered by
such Seller or Company Optionee and constitutes a valid and binding agreement of
such Seller or Company Optionee, enforceable in accordance with its terms. No
Insolvency Event has occurred in relation to such Seller or Company Optionee.
There are no unsatisfied or partly satisfied judgments or writs of execution
against the Seller or Company Optionee and there has been no unusual delays by
the Seller or Company Optionee in payment of any obligation due for payment and
the Seller or Company Optionee is not aware of any circumstances which could
give rise to any Insolvency Event or unusual delay by the Seller or Company
Optionee in payment of any obligation due for payment.
4.02. NON-CONTRAVENTION. The execution, delivery and performance by the
Seller or Company Optionee of this Agreement and each Ancillary Agreement to
which the Seller or Company Optionee is a party, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (i) to the
extent such Seller or Company Optionee is an entity, contravene or conflict with
or result in a violation or breach of any of the terms, conditions or provisions
of the certificate of formation, bylaws, operating agreements, governing
agreements, or similar charter or governing documents of such Seller or Company
Optionee, (ii) contravene or conflict with any provision of any law, regulation,
judgment, injunction, order, Permit or decree binding upon or applicable to the
Seller or Company Optionee; (iii) constitute a default (with or without notice
or lapse of time, or both) under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the Seller or Company
Optionee or to a loss of any benefit to which the Seller or Company Optionee is
entitled under any provision of any agreement, contract or other instrument
binding upon the Seller or Company Optionee or by which any of their assets may
be bound or (iv) result in the creation or imposition of any Lien on any asset
of the Seller or Company Optionee.
4.03. TITLE TO AND VALIDITY OF SHARES. Such Seller has good and marketable
title to and unrestricted power to vote and sell the Shares designated as owned
by such Seller opposite such Seller's name on SCHEDULE 2.01(a)(i), free and
clear of any Lien or claim, including claims of spouses, former spouses or other
family members, or other stockholders (or former stockholders) of the Company.
All Shares owned by such Seller have been duly authorized and validly issued and
are fully paid and non-assessable. All Shares to be sold by such Seller are
registered in the name of such Seller.
4.04. CLAIMS AGAINST COMPANY. To the Knowledge of such Seller or Company
Optionee, such party has no existing claims or causes of action against the
Company (other than claims for not yet paid wages and employee benefits, if
applicable).
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4.05. INVESTMENT REPRESENTATION.
(a) Such Seller or Company Optionee represents and warrants
that:
(i) it is acquiring Optium Stock and/or Optium Stock
Options, as applicable, solely for its account and not with a view to or
for resale in connection with a distribution thereof;
(ii) it has had the opportunity to ask questions of and
receive complete answers from representatives of Optium concerning the
business, management and financial condition of Optium and the terms and
conditions of Optium Stock and Optium Stock Options;
(iii) it is able to bear the economic risk of its
investment in Optium Stock and/or Optium Stock Options, as applicable for
an indefinite period of time;
(iv) it can afford a complete loss of its investment in
Optium Stock and/or Optium Stock Options, as applicable;
(v) such Seller or Company Optionee has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of the investment in Optium Stock and/or
Optium Stock Options, as applicable;
(vi) such Seller or Company Optionee is (A) an "accredited
investor" within the meaning of Rule 501 under the Securities Act of 1933,
as amended (the "SECURITIES ACT") or (B) if the such Seller or Company
Optionee is not a U.S. Person, as defined in Rule 902 under the Securities
Act (attached hereto on EXHIBIT I), such Seller or Company Optionee
represents and warrants that (1) such Seller or Company Optionee is not
acquiring the Optium Stock or Optium Stock Options being issued hereunder
for the account or benefit of a U.S. Person, and no offer relating to the
Optium Stock was made to such Seller or Company Optionee in the United
States and, at the time of execution by such Seller or Company Optionee or
on behalf of such Seller or Company Optionee of this Agreement and as of
the Closing, such Seller or Company Optionee will be outside the United
States and (2) such Seller or Company Optionee will resell the Optium Stock
being issued hereunder only in accordance with Regulation S, pursuant to an
effective registration statement under the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities
Act; and further agrees not to engage in hedging transactions with regard
to the securities acquired by such Seller or Company Optionee under this
Agreement unless in compliance with the Securities Act.; and
(vii) it has had the opportunity to seek from Optium, the
Company, and each of their Affiliates and their representatives all
information deemed necessary by such Seller or Company Optionee to evaluate
the merits and risks of participating in the transactions contemplated by
this Agreement, including without limitation those described in Section
2.01 and Section 2.02 hereto. Such Seller or Company Optionee (together
with its financial or other advisers) has such knowledge and experience in
34
financial and business matters as to enable it to utilize the information
made available to it in connection with the transactions contemplated by
this Agreement and to evaluate independently, and it has evaluated
independently, the merits and risks of the transactions contemplated by
this Agreement. Without limiting the foregoing, such Seller or Company
Optionee, together with its Affiliates, has significant experience in and
familiarity with, and is not relying on the advice of or information
provided by the Optium, the Company, each of their Affiliates or their
representatives with respect to the prospects or operation of, or the risks
associated with, the business of Optium or the Company.
(viii) subject to clause (ix) below, if the Seller or
Company Optionee resides in Australia:
a. the Seller or Company Optionee is a
"Sophisticated Investor" under section 708(8) of the
Corporations Act; or
b. the Seller or Company Optionee is a
"Professional Investor" under section 708(11) of the
Corporations Act; or
c. together with the other Seller or Company
Optionees that are in Australia and are not "Sophisticated
Investors" or "Professional Investors", the issue of stock
in Optium to the Seller is a "Personal Offer" that is a
small scale offering under section 708(1) of the
Corporations Act; and
(ix) if the Seller or Company Optionee is in Australia and
clause (viii)(a), (viii)(b) or (viii)(c) does not apply in relation to that
Seller or Company Optionee, the Seller or Company Optionee falls within
another exemption to the requirement to issue a disclosure document under
Chapter 6D of the Corporations Act.
(b) Such Seller or Company Optionee acknowledges and agrees
that:
(i) the shares of Optium Stock and the Optium Stock
Options to be issued to such Seller or Company Optionee hereunder have not
been registered under the Securities Act or under the securities laws of
any state or other jurisdiction, and are being issued in reliance upon
certain exemptions under such statutes;
(ii) the shares of Optium Stock and the Optium Stock
Options to be issued to such Seller or Company Optionee hereunder may not
be resold, transferred, pledged or otherwise disposed of except pursuant to
an effective registration statement under the Securities Act and any
applicable state securities laws, or pursuant to a valid exemption from
such registration requirements, and Optium shall have no obligation to
record any proposed transfer of such shares on its stock tranfer records
unless the shares to be transferred have been registered under the
Securities Act or the request for transfer is accompanied by an opinion in
form and substance satisfactory to Optium that no such registration is
required; and
35
(iii) Optium shall have no obligation to register Optium
Stock or Optium Stock Options pursuant to the Securities Act or the
securities laws of any state or to supply the information which may be
necessary to sell such securities.
4.06. NO SHAREHOLDING AGREEMENTS. Other than those agreeements disclosed
on SECTION 3.05 OF THE COMPANY DISCLOSURE SCHEDULE, there are no agreements to
which the applicable Seller is a party or by which the Seller is bound for any
subscriptions, options, warrants, commitments, preemptive rights, agreements,
arrangements or commitments of any kind relating to the issuance or sale of
Company Securities or relating to the transfer, sale or disposition of the
shares being issued pursuant to this Agreement.
4.07. TRUST DEEDS AND OTHER GOVERNING DOCUMENTS. Each of Deutsche, TVP and
Starfish represent and warrant to Optium that the trust deeds and other
governing documents provided to Optium for their own respective entity selling
hereunder are the true, correct and up-to-date copies of such documents which
govern the respective trust or other investing entity.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF OPTIUM
In order to induce the Company and the Sellers to enter into this Agreement
and consummate the transactions contemplated hereby, Optium hereby makes to the
Company and the Sellers the representations and warranties contained in this
Article V. Such representations and warranties are subject to the qualifications
and exceptions set forth in the disclosure schedule delivered to the Company
pursuant to this Agreement (the "OPTIUM DISCLOSURE SCHEDULE"). Except as set
forth in the Optium Disclosure Schedule, Optium hereby represents and warrants
to the Company and the Sellers, as of the date hereof, that:
5.01. ORGANIZATION AND EXISTENCE. Optium is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.
5.02. CORPORATE AUTHORIZATION; VALID ISSUANCE. The execution, delivery and
performance by Optium of this Agreement, the issuance and delivery of Optium
Stock and Company Stock Options, and the consummation by Optium of the
transactions contemplated hereby are within the corporate powers of Optium and
have been duly authorized by all necessary corporate action on the part of
Optium. This Agreement has been duly executed and delivered by Optium and
constitutes a valid and binding agreement of Optium. The Optium Stock, when
issued and delivered in accordance with the terms of this Agreement will be
validly issued, fully paid and nonassessable and free of third party interests
(other than the Escrow Shares with respect to the Escrow).
5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance
by Optium of this Agreement requires no action by or in respect of, or filing
with, any governmental body, agency, official or authority other than any
applicable filings with the Securities and Exchange Commission or any other
state securities authorities.
36
5.04. SHARES AUTHORIZED. Optium has sufficient shares of Optium Series D-1
Preferred Stock and Optium Common Stock, and sufficient options to purchase
Optium Common Stock authorized and available for issuance of the Optium Stock
and for issuance of the Optium Stock Options to be issued pursuant to this
Agreement.
5.05. CAPITALIZATION. Optium's fully-diluted, fully-converted
capitalization immediately prior to the Closing consists of approximately
213,570,235 shares of Optium Common Stock (calculated on an as-converted to
Optium Common Stock basis and including shares of Optium Common Stock (or shares
convertible into Optium Common Stock) subject to outstanding options to purchase
such shares or shares available for issuance pursuant to Optium's equity
incentive plans other than as set forth in the next sentence), not including the
Escrow Shares and any of the shares or options listed on Schedules 2.01(b)(i),
2.01(b)(iii), and 7.02. For further clarification, such number noted in the
first sentence of this Section 5.05 does not include any shares or stock options
that are to be issued as set forth in this Agreement. Of such shares, 24,268,500
shares are Series A Convertible Preferred Stock including warrants convertible
therefor, convertible into approximately 28,665,553 shares of Optium Common
Stock, 41,969,418 shares are Series B Convertible Preferred Stock convertible
into approximately 59,598,520 shares of Optium Common Stock, 60,467,087 shares
are Series C Senior Convertible Preferred Stock including warrants convertible
therefor, convertible into 60,467,087 shares of Optium Common Stock, 25,245,570
shares are Series D Senior Convertible Preferred Stock convertible into
25,245,570 shares of Common Stock, and none are Series D-1 Preferred Stock. The
balance of the shares included in Optium's fully-diluted, fully-converted
capitalization are comprised of outstanding shares of Optium Common Stock
(voting and non-voting), issued options to purchase Optium Common Stock (voting
and non-voting) and shares of Optium Common Stock (voting and non-voting)
available for issuance pursuant to Optium's equity incentive plans. Optium
anticipates that in the near future it will increase the number of shares of
Optium Common Stock (voting and non-voting) issuable pursuant to its equity
incentive plans. No adjustment to the number of shares of Optium Stock issuable
hereunder will be made as a result of any such increase.
5.06. FINANCIAL STATEMENTS.
(a) Attached as SECTION 5.06 OF THE OPTIUM DISCLOSURE SCHEDULE
are true and complete copies of:
(i) the audited balance sheet and the related audited
statements of operations and cash flows of Optium for the 12 months ended
as of December 31, 2003, 2004 and 2005; and
(ii) the unaudited balance sheet of Optium as of January
31, 2006 and the related unaudited statements of income and cash flows of
Optium for the one month ended January 31, 2006 ((i) and (ii) collectively
referred to as the "OPTIUM FINANCIAL STATEMENTS").
(b) Each of the balance sheets included in the Optium Financial
Statements fairly presents in all material respects the financial position of
Optium as of its date, and the other
37
statements included in the Optium Financial Statements fairly present in all
material respects the "results" of operations and cash flows, as the case may
be, of Optium for the periods therein set forth, in each case in accordance with
U.S. generally accepted accounting principles consistently applied during the
periods involved and, with respect to the unaudited interim financial
statements, for the omission of footnote disclosure and, to the extent
consistent with U.S. generally accepted accounting principles, normally
recurring year-end audit adjustments.
5.07. ABSENCE OF CERTAIN CHANGES. Since the Optium Balance Sheet Date,
except as reflected in the unaudited Financial Statements, management accounts
(or in notes to the Optium Financial Statements or management accounts) (with
specific cites on SECTION 5.07 OF THE OPTIUM DISCLOSURE SCHEDULE, Optium has
conducted their businesses in the ordinary course consistent with past practices
and there has not been any:
(a) Optium Material Adverse Change or any event, occurrence,
development or state of circumstances or facts which could reasonably be
expected to result in an Optium Material Adverse Change, or any condition, event
or occurrence which, individually or in the aggregate, could reasonably be
expected to prevent or materially delay Optium's ability to consummate the
transactions contemplated by this Agreement or perform its obligations hereunder
or under the Ancillary Agreements;
(b) declaration, setting aside or payment of any dividend or
other distribution of cash or stock with respect to any Optium securities or any
repurchase, redemption or other acquisition by Optium of any outstanding shares
or other securities of, or other ownership interests in, Optium;
(c) payment or grant of any right by Optium or any of its
Subsidiaries to any Interested Person, or any charge by any Interested Person to
Optium or any of its Subsidiaries, or other transaction between Optium and any
Interested Person, except in any such case for employee compensation payments in
the ordinary course of business of Optium and the Subsidiaries consistent with
past practice;
(d) amendment of any outstanding security of Optium;
(e) incurrence, assumption or guarantee by Optium of any
material indebtedness for borrowed money;
(f) creation or assumption by Optium of any material Lien on any
asset;
(g) any payment or discharge of a Lien or liability of Optium
which was not shown on the Optium Balance Sheet or incurred in the ordinary
course of business consistent with past practices;
(h) making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
38
(i) damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Optium in an amount
greater than $10,000;
(j) change in any method of Tax or financial accounting or
accounting practice or any making of a Tax election or change of an existing
election by Optium;
(k) (i) grant of any severance or termination pay to any
director, officer or employee of Optium, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of Optium, (iii)
change in benefits payable under existing severance or termination pay policies
of Optium or employment agreements to which Optium is a party or (iv) change in
compensation, bonus or other benefits payable to directors, officers or
employees of Optium, other than in the ordinary course of business consistent
with past practice;
(l) labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representation thereof to
organize any employees of Optium; or
agreement, undertaking or commitment to do any of the foregoing.
5.08. LITIGATION. Except as disclosed in SECTION 5.08 OF THE OPTIUM
DISCLOSURE SCHEDULE, there is no claim, action, charge, suit, investigation or
proceeding (or any basis therefor) pending against or, to Optium's Knowledge,
threatened against or affecting, Optium or any of their respective properties or
the transactions contemplated hereby before any court or arbitrator or any
governmental body, agency, official or authority. There is no claim, action,
charge, suit, investigation or proceeding pending against or threatened against
or affecting any officer, director, stockholder or employee of Optium in their
capacities as such, as to matters related to Optium.
5.09. COMPLIANCE WITH LAWS; PERMITS; NO DEFAULTS.
(a) Optium is not in violation of, and has not violated, any
applicable provisions of any laws, statutes, ordinances or regulations, except
for violations that have not had and would not reasonably be expected to have,
individually or in the aggregate, an Optium Material Adverse Effect.
(b) SECTION 5.09 OF THE OPTIUM DISCLOSURE SCHEDULE correctly
describes each Permit material to the business of Optium, together with the name
of the governmental agency or entity issuing such Permit. To the best of
Optium's Knowledge, such Permits are valid and in full force and effect, and
none of such Permits will be terminated or impaired or become terminable as a
result of the transactions contemplated hereby.
(c) Optium is not in default under, and no condition exists that
with notice or lapse of time or both would constitute a default under, any
judgment, order or injunction of any court, arbitrator or governmental body,
agency, official or authority which defaults or potential defaults individually
or in the aggregate would reasonably be expected to have an Optium Material
Adverse Effect.
39
Optium timely filed in a proper manner all material reports, statements, notices
and other material filings required to be filed with any governmental authority
by Optium, to the extent applicable, including all material amendments or
supplements to any of the above (the "OPTIUM FILINGS"). To the best of Optium's
Knowledge, the information contained in the Optium Filings was true and complete
at the time of filing. The Optium Filings were prepared in accordance with
applicable law and, without limiting the foregoing, to the best of Optium's
Knowledge, did not when filed contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
5.10. TAX MATTERS. Optium has timely and properly filed all federal,
state, local and foreign Tax returns required to be filed by it through the date
hereof, and has paid or caused to be paid all Taxes required to be paid by it
through the date hereof whether disputed or not, except Taxes which have not yet
accrued or otherwise become due. All Taxes and other assessments and levies
which Optium was or is required to withhold or collect, including, without
limitation, all Taxes which Optium is obligated to withhold from amounts owing
to employees, creditors and third parties, have been withheld and collected and
except for such Taxes which are not yet due and payable, have been paid over to
the proper governmental authorities. (i) Optium has never received written
notice of any audit or any proposed deficiencies from the Internal Revenue
Service (the "IRS") or any other taxing authority; (ii) there are in effect no
waivers of applicable statutes of limitations with respect to any Taxes owed by
Optium for any year; (iii) neither the IRS nor any other taxing authority is now
asserting, or to the Company's knowledge threatening to assert, against Optium
any deficiency or claim for additional Taxes or interest thereon or penalties in
connection therewith in respect of the income or sales of Optium; and (iv)
Optium has never been a member of an affiliated group of corporations filing a
consolidated federal income Tax return nor does Optium have any liability for
Taxes of any other Person under Treasury Regulations Section 1.1502-6 (or any
similar provision of foreign, state or local law) or otherwise. Optium is not a
party to any Tax allocation or sharing arrangement. Optium is not a party to any
contract, agreement, plan or arrangement covering any employee or former
employee thereof that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Section 162 of
the Internal Revenue Code of 1986, as amended (the "CODE"). Optium is not a
"foreign person" within the meaning of Section 1445 of the Code and Treasury
Regulations Section 1.1445-2. Optium has not elected to be treated as an S
corporation or a collapsible corporation pursuant to Section 1362(a) or Section
341(f), respectively, of the Code, nor has it made any other elections pursuant
to the Code that could have an Optium Material Adverse Effect.
5.11. OTHER INFORMATION. None of this Agreement, the Ancillary Agreements
and the schedules, exhibits and other documents delivered in connection herewith
and therewith, when read together as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading. To Optium's Knowledge, there is no
material fact directly relating to the assets, liabilities, business,
operations, condition (financial or other) or prospects of Optium (including any
competitive developments other than facts which relate to general economic or
industry trends or conditions) that materially adversely affects the same.
40
5.12. INSOLVENCY. Optium has not: (a) made a general assignment for the
benefit of creditors; (b) filed any voluntary petition in bankruptcy or suffered
the filing of any involuntary petition by its creditors; (c) suffered the
appointment of a receiver to take possession of all, or substantially all, of
its assets; (d) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets; (e) admitted in writing its inability to pay
its debts as they come due; or (f) made an offer of settlement, extension or
composition to its creditors generally.
ARTICLE VI
COVENANTS OF THE COMPANY AND SELLERS
The Company and each Seller and Company Optionee agree that:
6.01. CONFIDENTIALITY. The Company, and Sellers and their Affiliates, will
hold, and will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information concerning Optium furnished to the Company, or to Sellers or their
Affiliates, in connection with the transactions contemplated by this Agreement,
and after the Closing Date all confidential documents and information concerning
the Company, except to the extent that such information can be shown to have
been (i) previously known on a nonconfidential basis by Sellers, (ii) in the
public domain through no fault of Sellers or (iii) later lawfully acquired by
Sellers from sources other than the Company or Optium; provided that Sellers may
disclose such information to their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents (and unitholders of any
unit trust, where the Seller is the trustee of such unit trust) in connection
with the transactions contemplated by this Agreement so long as such persons are
informed by Sellers of the confidential nature of such information and are
directed by Sellers to treat such information confidentially in accordance with
this Agreement. The obligation of the Company, and Sellers and their Affiliates,
to hold any such information in confidence shall be satisfied if they exercise
the same care with respect to such information as they would take to preserve
the confidentiality of their own similar information. If this Agreement is
terminated, the Company, and Sellers and their Affiliates, will, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or deliver to
Optium, upon request, all documents and other materials, and all copies thereof,
obtained by the Company, or by Sellers or their Affiliates, or on their behalf
concerning Optium in connection with this Agreement that are subject to such
confidence.
6.02. CONDUCT BEFORE CLOSING. From the date hereof until the Closing Date
(the "INTERIM PERIOD"), except as expressly disclosed in this Agreement or
consented to by Optium, the Company must ensure that:
(i) the business of the Company is conducted only in the
ordinary course consistent with past practice, which includes the
maintenance of all existing properties and insurance policies;
41
(ii) the Company does not enter into any transaction with
any Affiliate of the Company or a Seller other than in the ordinary course
of business;
(iii) the Company does not take any action that would or
might result in any warranty or representation provided under this document
becoming untrue in any respect;
(iv) the Company does not declare, make or pay any
dividends, bonuses or other distribution to security holders (other than in
connection with their employment by the Company);
(v) the Company does not do any act or thing or suffer or
permit any omission in contravention or breach of any of the provisions of
any exchange control regulation, taxation or revenue statute or the
Corporations Act or any other Laws applicable to it;
(vi) the Company does not do any act or thing or suffer or
permit any omission which would make any policy of insurance written for
the benefit of the Company void or voidable or do anything that would mean
that any existing policy is not in full force and effect at Completion;
(vii) the Company does not enter into any contracts,
agreements, arrangements, obligations, undertakings, purchase or sale
agreements not capable of termination on 90 days notice or less or any
service employment or other agreement not capable of termination on 30 days
notice or less;
(viii) the Company does not do any act or thing the doing or
suffer or permit any omission of which is or could be a breach of:
a. any industrial or similar award; or
b. any determination or order of any tribunal,
person or body empowered to determine any dispute relating to the
rights or duties of the Company, or of any trade union or member of
a trade union pursuant to any industrial or similar award; or
c. any term contained or implied in any industrial
agreement between the Company and any trade or labour union; or
d. any term contained or implied in any agreement
between the Company and any of the employees of the Company, which
leads or is likely to or could lead to any industrial action or
cause any labour problems of whatever nature;
(ix) the Company does not merge or consolidate with any
other corporation or acquire all or substantially all of the shares or the
business or assets of any
42
other person, firm, association, corporation or business organisation, or
agree to do any of the foregoing;
(x) no change is made to the constitution of the Company;
(xi) the Company does not reduce its share capital, or
transfer an amount to its share capital account from any of its other
accounts, or allot or issue any shares or any securities or loan capital
convertible into shares, or purchase, redeem, retire or acquire any such
shares or securities, or agree to do so, or sell or give any option, right
to purchase, mortgage, charge, pledge, lien or other form of security or
encumbrance over any such shares or securities;
(xii) the Company does not enter into a hire purchase,
leasing, credit sale agreement or material capital commitment or declare
itself trustee of or encumber any assets or dispose of or deal with any
assets other than in the ordinary course of business or make any unusual or
extraordinary expenditures;
(xiii) the Company does not sell, lease, license or
otherwise dispose of any material assets or property except (A) pursuant to
existing contracts or commitments and (B) in the ordinary course of
business consistent with past practices;
(xiv) the Company does not enter into, vary or terminate
any material contract;
(xv) Optium is kept informed about the conduct of the
business of the Company by being provided with regular reports not less
frequently than weekly; and
(xvi) The Company does not enter into any agreement to take
any of the actions prohibited above.
6.03. NO ENCUMBRANCE. During the Interim Period, none of the Sellers or
Company Optionees will sell, assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of their Shares, Company Stock Options or shares of stock
issuable upon exercise or conversion of any of the forgoing. The Company will
not permit or register any actions undertaken in violation of the preceding
sentence.
6.04. EXCLUSIVITY. During the Interim Period, except with the prior
written consent of Optium, the Company will not permit any officer, director,
employee, agent (including financial advisors), stockholder or Affiliate to,
directly or indirectly continue, solicit, entertain, initiate or participate in
or encourage discussions or negotiations with, or the submission of bids, offers
or proposals, whether directly or indirectly, by any Person with respect to an
acquisition of the Company or an equity financing of the Company, or any
acquisition of any capital stock or other interest of the Company or any
material assets of the Company, by any means whatsoever, or enter into any
agreement, arrangement or understanding regarding any of the foregoing, and the
Company shall promptly notify Optium if any such bids, offers or proposals are
received, or any such negotiations or discussions are sought and, if requested,
the specific details (including any written materials) thereof. In addition,
during the Interim Period, the Company will use
43
commercially reasonable efforts to cause the Company not to disclose any
information not customarily disclosed to any Person (other than Optium)
concerning the Company or afford to any such other Person access to the
Company's properties, books or records; provided, that nothing herein shall
restrict the Company's ability to make such disclosure for a business purpose
other than those contemplated by the preceding sentence.
6.05. GENERAL RELEASE BY SELLERS. On and from the Closing, each of the
Sellers hereby irrevocably and unconditionally releases, acquits and forever
discharges the Company, its predecessors, successors, affiliates, other related
entities and assigns, and the current and former directors, officers, employees,
shareholders and representatives (other than in the case of fraud (provided that
the applicable individual does not have a right to indemnification or
contribution from the Company)) of any of the foregoing, and any persons acting
on behalf or through any of the foregoing (any and all of whom or which are
hereinafter referred to as the "COMPANY RELEASEES"), from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorneys' fees and costs actually
incurred), of any nature whatsoever, known or unknown, that such Seller now has,
owns or holds, or claims to have, own or hold, or that such Seller at any time
had, owned or held, or claimed to have had, owned or held against the Company
Releasees.
ARTICLE VII
COVENANTS OF OPTIUM
Optium agrees that:
7.01. CONFIDENTIALITY. Optium and its Affiliates will hold, and will use
their best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Company and/or any of the Sellers furnished to Optium or its Affiliates in
connection with the transactions contemplated by this Agreement, except to the
extent that such information can be shown to have been (i) previously known on a
nonconfidential basis by Optium, (ii) in the public domain through no fault of
Optium or (iii) later lawfully acquired by Optium from sources other than the
Company; provided that Optium may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors and agents in
connection with the transactions contemplated by this Agreement so long as such
Persons are informed by Optium of the confidential nature of such information
and are directed by Optium to treat such information confidentially in
accordance with this Agreement. After the closing of the transactions
contemplated by this Agreement, the existing confidentiality obligations of the
Company to the Sellers shall survive and be respected by Optium. The obligation
of Optium and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information. If this Agreement is terminated, Optium and its Affiliates will,
and will use their best efforts to cause
44
their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to Seller, upon request,
all documents and other materials, and all copies thereof, obtained by Optium or
its Affiliates or on their behalf concerning Sellers, the Company in connection
with this Agreement that are subject to such confidence.
7.02. POST-CLOSING OPTION GRANTS. As soon as practicable (and permitted in
accordance with Australian securities laws) following the Closing, Optium shall
issue options to purchase shares of Optium Common Stock to those persons listed
on Schedule 7.02 hereto, on terms no less attractive than those set forth in the
form attached hereto as EXHIBIT J-2, in the respective amounts and with the
respective vesting schedules set forth opposite each such person's name.
ARTICLE VIII
COVENANTS OF ALL PARTIES
The parties hereto agree that:
8.01. EFFORTS. Subject to the terms and conditions of this Agreement, each
party will use its reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary under applicable laws and
regulations to consummate the transactions contemplated by this Agreement and
the Ancillary Agreements. Sellers and Optium each agree, and Optium, after the
Closing, agrees to cause the Company, to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be reasonably necessary in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
8.02. CERTAIN FILINGS. The Company, the Sellers and Optium shall cooperate
with each other (a) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official or authority is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements and (b)
in taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such actions,
consents, approvals or waivers.
8.03. PUBLIC ANNOUNCEMENTS. The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law or stock exchange regulation, will not issue any such
press release or make any such public statement prior to such consultation.
8.04. ACCESS.
(a) During the Interim Period, the Company shall (i) give
Optium, its counsel, financial advisors, financing sources, auditors and other
authorized representatives full access to
45
the offices, properties, books and records of the Company, (b) furnish to
Optium, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information relating
to the Company as such Persons may reasonably request and (c) instruct the
employees, counsel and financial advisors of the Company to cooperate with
Optium in its investigation of the Company. No investigation by Optium pursuant
to this Section shall affect any representation or warranty given by the Company
hereunder or any of Optium's rights under this Agreement, including without
limitation under Articles X and XI.
(b) During the Interim Period, Optium will afford promptly to
Sellers and their agents reasonable access during normal business hours to its
properties, books, records, employees and auditors to the extent necessary to
permit Sellers to determine any matter relating to their rights and obligations
hereunder or with respect to any period ending on or before the Closing Date. No
investigation by a Seller pursuant to this Section shall affect any
representation or warranty given by Optium hereunder or any of the Sellers'
rights under this Agreement, including without limitation under Articles X and
XI.
8.05. NOTICES OF CERTAIN EVENTS; CONTINUING DISCLOSURE.
(a) During the Interim Period, the Company and Optium will
promptly notify each other of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or threatened against, or relating to or involving or
otherwise affecting the Company or that relate to the consummation of the
transactions contemplated by this Agreement, or any material developments
relating to any actions, suits, claims, investigations or proceedings
disclosed in this Agreement and the schedules thereto.
(b) During the Interim Period, the Company, the Sellers and
Optium shall have the continuing obligation promptly to advise each other with
respect to any matter hereafter arising or discovered that, if existing or known
at the date of this Agreement, would have been required to be set forth or
described in a schedule to this Agreement, or that constitutes a breach or
prospective breach of this Agreement by the Company, a Seller or Optium, as
applicable.
(c) No notice pursuant to this Section shall affect any
representation or warranty given by the Company hereunder or any of Optium's
rights under this Agreement, including without limitation under Articles X and
XI.
46
ARTICLE IX
CONDITIONS TO CLOSING
9.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Optium, the Company and Sellers to consummate the Closing are subject to the
satisfaction of the following conditions (any or all of which may be waived by
any applicable parties):
(a) No action or proceeding by or before any court,
administrative body or governmental agency shall have been instituted or
threatened that seeks to enjoin, restrain or prohibit, or might reasonably be
expected to result in damages in respect of, this Agreement or consummation of
the transactions contemplated by this Agreement;
(b) No statute, rule or regulated shall have been enacted or
promulgated by any governmental entity which directly prohibits the consummation
of the Closing.
(c) There shall be no order or injunction of a court of
competent jurisdiction in effect expressly precluding consummation of the
transactions contemplated hereby, provided that the parties shall use their
commercially reasonable efforts to have any such order or injunction vacated or
lifted.
9.02. CONDITIONS TO OBLIGATION OF OPTIUM. The obligation of Optium to
consummate the Closing is subject to the satisfaction of the following further
conditions (any or all of which may be waived by Optium with respect to the
Company and/or one or more of the Sellers):
(a) (i) the Company and each Seller shall have performed in
all material respects all of their obligations hereunder required to be
performed by them on or prior to the Closing Date, (ii) the representations and
warranties of the Company and each Seller contained in this Agreement at the
time of its execution and delivery and in any certificate or other writing
delivered by the Company or a Seller pursuant hereto, disregarding all
qualifications and exceptions contained therein relating to materiality or a
Company Material Adverse Effect, shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of such date (except
to the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be true and
correct as of such date) with only such exceptions as would not in the aggregate
reasonably be expected to have a Company Material Adverse Effect and (iii)
Optium shall have received a certificate signed by the President of the Company
and by each Seller to the foregoing effect.
(b) Optium shall have received each of the items required to be
delivered to Optium pursuant to Section 2.02 hereof.
9.03. CONDITIONS TO OBLIGATION OF THE COMPANY AND THE SELLERS. The
obligation of the Company and the Sellers to consummate the Closing is subject
to the satisfaction of the following further conditions (any or all of which may
be waived by the Company and all four of the Major Engana Investors):
47
(a) (i) Optium shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Closing Date, (ii) the representations and warranties of Optium contained in
this Agreement at the time of its execution and delivery and in any certificate
or other writing delivered by Optium pursuant hereto, disregarding all
qualifications and exceptions contained therein relating to materiality or an
Optium Material Adverse Effect, shall be true and correct in all material
respects at and as of the Closing Date as if made at and as of such date (except
to the extent such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be true and
correct as of such date) with only such exceptions as would not in the aggregate
reasonably be expected to have an Optium Material Adverse Effect on the
business, assets financial condition or results of operations of Optium and its
Subsidiaries taken as a whole, (iii) the Sellers shall have received a
certificate signed by the President of Optium to the foregoing effect and (iv)
the Sellers shall have received a legal opinion of DLA Xxxxx Xxxxxxx Xxxx Xxxx
LLP regarding the enforceability of this Agreement and the Stockholders
Agreement in a form acceptable to Deutsche in its absolute discretion.
(b) Sellers shall have received all of the items required to be
delivered to them pursuant to Section 2.02 hereto.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; TRANSACTION
RELATED INDEMNIFICATION
10.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations, warranties, covenants, and agreements
of the Company, the Sellers, the Company Optionees and Optium made in this
Agreement and the Schedules and Exhibits hereto delivered to Optium and all
agreements, documents and instruments executed and delivered at the Closing in
connection herewith are material, shall be deemed to have been relied upon by
the party or parties to whom they are made, and shall survive the Closing
regardless of any investigation on the part of such party or its
representatives, with all parties hereto reserving their respective rights
hereunder.
(b) The representations and warranties of the Company, the
Sellers, the Company Optionees and Optium contained in Article III, Article IV
(other than Sections 4.01, 4.02 and 4.03) and Article V (other than Section
5.02) hereof (including pursuant to any closing certificate) shall expire and
terminate and be of no further force and effect after the earlier of (i) the
date that is 18 months following the Closing, (ii) the date that is six (6)
months following Optium's initial firm underwritten public offering of common
stock (except Sections 3.24 and 5.11, which sections shall expire and terminate
immediately prior to the declaration of the effectiveness of a registration
statement filed by Optium covering its initial public offering of Optium Common
Stock), and (iii) the date of a sale of substantially all of Optium's capital
stock or assets (the "EXPIRATION DATE"), except that any bona fide good faith
written claim for indemnification for breach thereof made prior to such
Expiration Date and delivered to the party
48
against whom such claim is made shall survive thereafter and, as to any such
claim, such applicable expiration will not effect the rights to indemnification
of the party making such claim in relation to that claim; PROVIDED, HOWEVER,
that any such written claim by Optium with respect to a breach of the
representations and warranties of the Company, the Sellers and the Company
Optionees may with respect to a breach of the representations or warranties of
the Sellers and the Company Optionees contained in Sections 4.01, 4.02 and 4.03
or with respect to fraud by a Seller or a Company Optionee, be given at any
time.
10.02. INDEMNIFICATION; MANNER OF PAYMENT. Each of the Company, the Sellers
and the Company Optionees acknowledges and agrees that Optium has relied on the
representations, warranties, covenants and other agreements of the Company, the
Sellers and the Company Optionees contained herein in connection with their
acquisition of the shares of capital stock and options to purchase capital stock
acquired hereunder and their willingness to issue shares of Optium Stock and
Optium Stock Options to the Sellers and Company Optionees pursuant to the
transactions contemplated herein. Accordingly, effective after the Closing and
subject to the time limits set forth in Section 10.01 above and the limitations
set forth in Section 10.03 below, each of the Sellers, severally and not
jointly, on his, her or its own behalf and on behalf of his or her successors,
executors, administrators, estate, heirs and assigns (collectively, for the
purposes of this Section 10.02, the "SELLER INDEMNIFYING PARTIES", and each
individually, a "SELLER INDEMNIFYING PARTY") (or, at the sole option of Optium
with respect to any matter subject to indemnification under this Section 10.02,
the Company) agree (on a pro-rata basis, based on the proportion that the number
of shares of Optium Stock received by each such Seller in connection with the
transactions contemplated hereby bears to the number of shares of Optium Stock
received by all Sellers in connection with the transactions contemplated hereby)
to defend, indemnify and hold Optium, their respective Affiliates (including,
effective as of the Closing, the Company) and direct and indirect partners
(including partners of partners and stockholders and members of partners),
members, stockholders, directors, officers, employees and agents and each person
who controls any of them within the meaning of Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act of 1934, as amended (collectively,
the "OPTIUM INDEMNIFIED PARTIES" and, individually, an "OPTIUM INDEMNIFIED
PARTY") harmless from and against any and all damages (other than punitive
damages), liabilities, losses, claims, diminution of value, obligations, liens,
assessments, judgments, Taxes, fines, penalties, reasonable costs and expenses
(including, without limitation, reasonable fees of a single counsel representing
the Optium Indemnified Parties), as the same are incurred, of any kind or nature
whatsoever (whether or not arising out of third-party claims and including all
amounts paid in investigation, defense or settlement of the foregoing) (other
than with respect to and to the extent a payment is made with respect thereto
pursuant to Section 2.03, "LOSSES") which may be sustained or suffered by any
such Optium Indemnified Party based upon, arising out of, or by reason of any
breach of:
(a) any representation or warranty made by the Company in
Article III of this Agreement or by the Company in a certificate provided in
connection with the Closing pursuant to Article IX; or
(b) any covenant or other agreement made by the Company in
Article VI or elsewhere in this Agreement.
49
Payment of any amount to which an Optium Indemnified Party is entitled
shall be made by release of Escrow Shares from the Escrow to Optium for
cancellation; PROVIDED, that any one Seller may make such payment in cash by a
certified or official bank check payable to Optium and in accordance with
Section 2.05 hereof. For this purpose, each share of Optium Stock (whether
Optium NV Common Stock or Optium Series D-1 Preferred Stock) shall be deemed to
have a value equal to $0.617029 per share (as may be equitably adjusted in the
future as a result of any stock split, stock dividend, recapitalization and the
like).
10.03. LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything in Section
10.02 to the contrary:
(a) None of the Seller Indemnifying Parties shall be liable for
Losses in respect of claims made by any Optium Indemnified Party for
indemnification for breaches of representations and warranties under Section
10.02 above unless and to the extent the total of all Losses in respect of
claims made by the Optium Indemnified Parties for indemnification shall exceed
$100,000 in the aggregate (the "THRESHOLD") after which the full amount of
Losses shall be recoverable, including such $100,000;
(b) the maximum aggregate amount for which the Company and the
Seller Indemnifying Parties shall be liable to all Optium Indemnified Parties
taken together for Losses under Section 10.02 shall not exceed the initial
amount of the Escrow (the "CAP") (with each share of Optium Stock (whether
Optium NV Common Stock or Optium Series D-1 Preferred Stock) being deemed to
have a value of $0.617029 for this purpose only);
(c) the maximum aggregate amount for any Seller shall be liable
to all Optium Indemnified Parties taken together for Losses under Section 10.02
shall not exceed the amount the number of such Seller's shares of Optium Stock
included in the Escrow (the "INDIVIDUAL CAP"); and
(d) None of the Seller Indemnifying Parties shall be liable for
Losses in respect of claims made by any Optium Indemnified Party for
indemnification for breaches of representations and warranties under Section
10.02(a) above with respect to breaches (i) consciously Known to Optium at the
time of the signing of this Agreement, (ii) that would have been Known to Optium
had Optium performed a search of the public register of the Australian
Securities & Investment Commission, a search of the public registers of the
Supreme Court of New South Wales and the Federal Court of Australia two (2)
Business Days prior to Closing or (iii) that would have been Known to Optium had
Optium performed proprietor searches of Engana Pty Limited on the publicly
available databases of IP Australia two (2) Business Days prior to Closing.
10.04. NOTICE; DEFENSE OF THIRD-PARTY CLAIMS.
(a) An Optium Indemnified Party shall give written notice of a
claim for indemnification under Section 10.02 to the Seller's Representative,
each Seller and Optium promptly after receipt of any written claim by any third
party and in any event not later than 20 Business Days after receipt of any such
written claim (or not later than ten (10) Business Days
50
after the receipt of any such written claim in the event such written claim is
in the form of a formal complaint filed with a court of competent jurisdiction
and served on the Optium Indemnified Party), specifying in reasonable detail the
amount, nature and source of the claim, and including therewith copies of any
notices or other documents received from third parties with respect to such
claim; PROVIDED, HOWEVER, that failure to give such notice shall not limit the
right of a Optium Indemnified Party to recover indemnity or reimbursement except
to the extent that the Seller Indemnifying Party suffers any material prejudice
or material harm with respect to such claim as a result of such failure. The
Optium Indemnified Party shall also provide the Seller's Representative and the
Sellers with such further information concerning any such claims as the Seller's
Representative or an applicable Seller may reasonably request by written notice.
(b) Within ten (10) Business Days after receiving notice of a
claim for indemnification or reimbursement, the Seller's Representative shall
(upon direction of all Major Engana Investors), by written notice to the Optium
Indemnified Party, either (i) concede or deny liability for the claim in whole
or in part, or (ii) in the case of a claim asserted by a third party, advise
that the matters set forth in the notice are, or will be, subject to contest or
legal proceedings not yet finally resolved. If the Seller's Representative
concedes liability in whole or in part, it shall, within 20 Business Days of
such concession, instruct Optium to pay the amount of the claim to the Optium
Indemnified Party to the extent of the liability conceded and the number of
Escrow Shares to be released from Escrow to Optium in accordance with Section
2.05 hereof. If the Seller's Representative does not respond or denies liability
in whole or in part or advises that the matters set forth in the notice are, or
will be, subject to contest or legal proceedings not yet finally resolved, then
both Optium and the Seller's Representative shall take no actions to effect the
release of any Escrow Shares (except for the amount of any conceded liability as
set forth above) until the matter is resolved in accordance with this Agreement.
(c) In the case of any third party claim, if, within ten (10)
Business Days after receiving the notice described in the preceding paragraph
(a), the Seller Indemnifying Party gives written notice to the Optium
Indemnified Party stating that the Seller Indemnifying Party would be liable
under the provisions hereof for indemnity in the amount of such claim if such
claim were valid and that the Seller Indemnifying Party disputes and intends to
defend against such claim, liability or expense at the Seller Indemnifying
Party's own cost and expense, then counsel for the defense shall be selected by
the Seller Indemnifying Party (subject to the consent of such Optium Indemnified
Party which consent shall not be unreasonably withheld) and such Seller
Indemnifying Party shall not be required to make any payment to the Optium
Indemnified Party with respect to such claim, liability or expense as long as
the Seller Indemnifying Party is conducting a good faith and diligent defense at
its own expense; PROVIDED, HOWEVER, that the assumption of defense of any such
matters by the Seller Indemnifying Party shall relate solely to the claim,
liability or expense that is subject or potentially subject to indemnification.
If the Seller Indemnifying Party assumes such defense in accordance with the
preceding sentence, it shall have the right, with the consent of such Optium
Indemnified Party, which consent shall not be unreasonably withheld, to settle
all indemnifiable matters related to claims by third parties which are
susceptible to being settled PROVIDED the Seller Indemnifying Party's obligation
to indemnify such Optium Indemnified Party therefor will be fully satisfied only
by payment of money by the Seller Indemnifying Party pursuant to a settlement
which includes a complete release of such Optium Indemnified Party. The Seller
Indemnifying Party shall keep such
51
Optium Indemnified Party apprised of the status of the claim, liability or
expense and any resulting suit, proceeding or enforcement action, shall furnish
such Optium Indemnified Party with all documents and information that such
Optium Indemnified Party shall reasonably request and shall consult with such
Optium Indemnified Party prior to acting on major matters, including settlement
discussions. Notwithstanding anything herein stated, such Optium Indemnified
Party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; PROVIDED, HOWEVER, if the named
parties to the action or proceeding include both the Seller Indemnifying Party
and the Optium Indemnified Party and representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the reasonable expense of separate counsel for such Optium Indemnified
Party shall be paid by the Seller Indemnifying Party PROVIDED that such Seller
Indemnifying Party shall be obligated to pay for only one counsel for the Optium
Indemnified Party in any jurisdiction. If no such notice of intent to dispute
and defend is given by the Seller Indemnifying Party, or if such diligent good
faith defense is not being or ceases to be conducted, such Optium Indemnified
Party may undertake the defense of (with counsel selected by such Optium
Indemnified Party), and shall have the right to compromise or settle, such
claim, liability or expense (exercising reasonable business judgment) and after
seeking the consent of the Seller Indemnifying Parties (which consent shall not
be unreasonably withheld). If such claim, liability or expense is one that by
its nature cannot be defended solely by the Seller Indemnifying Party, then such
Optium Indemnified Party shall make available all information and assistance
that the Seller Indemnifying Party may reasonably request and shall cooperate
with the Seller Indemnifying Party in such defense.
10.05. LIMITATION ON CONTRIBUTION AND CERTAIN OTHER RIGHTS; OTHER
LIMITATIONS.
(a) The Company and the Sellers hereby agree that if, following
the Closing, any claim is made by any Seller, or otherwise becomes due from any
Seller, pursuant to this Article X in respect of any Losses (a "LOSS PAYMENT"),
such Seller shall have no rights against the Company, or any director, officer
or employee thereof (in their capacity as such except in relation to an act of
fraud (provided that the applicable individual does not have a right to
indemnification or contribution from the Company)), whether by reason of
contribution, indemnification, subrogation or otherwise, in respect of any such
Loss Payment, and shall not take any action against the Company or any such
person with respect thereto.
(b) With respect to any claim(s) made by a Seller the basis of
which is applicable to all Sellers, Optium shall not be liable for Losses in
respect of such claim(s) made unless and to the extent that the Losses in
respect of such claim(s) made by the Seller shall exceed the product of (i)
$100,000 and (ii) such Seller's Pro Rata Share (as defined herein)(such product,
the "MINIMUM CLAIM AMOUNT"), after which the full amount of Losses shall be
recoverable, including such Minimum Claim Amount.
10.06. CLAIMS AGAINST SELLERS AND COMPANY OPTIONEES AND AGAINST OPTIUM.
Optium will have all rights and remedies under applicable law with respect to
Losses resulting from any breaches of representations and warranties made by
each of the Sellers and the Company Optionees in Article IV of this Agreement
PROVIDED that (i) the maximum amount any Seller shall be liable to Optium as a
Seller, other than in the case of fraud by that Seller, shall not exceed the
52
amount of the number of shares of Optium Stock such Seller has received pursuant
to this Agreement, including the shares of Optium Stock held in escrow and (ii)
the maximum amount any Company Optionee shall be liable to Optium as a Company
Optionee, other than in the case of fraud by that Company Optionee, shall not
exceed the transfer to the Company of (1) all outstanding Optium Stock Options
issued to such Company Optionee and (2) the Optium Stock issued upon exercise of
such Optium Stock Options. For this purpose, each share of Optium Stock (whether
Optium NV Common Stock or Optium Series D-1 Preferred Stock) shall be deemed to
have a value equal to $0.617029 per share (as may be equitable adjusted in the
future as a result of any stock split, stock dividend, recapitalization and the
like). The Sellers and Company Optionees will have all rights and remedies under
applicable law with respect to Losses resulting from any breaches of
representations and warranties made by Optium in Article V of this Agreement,
subject to the survival periods of such representations and warranties. Payment
of any amount to which Optium is entitled from a Seller (in its capacity as a
Seller) under this Section 10.06 shall be made only by the delivery of Optium
Stock.
10.07. NO WAIVER. No waiver of a closing condition by Optium or Sellers
shall limit its or their rights under Section 10.02.
10.08. LIMITATIONS OF LIABILITY AND OBLIGATIONS OF CERTAIN SELLERS.
(a) DEUTSCHE.
(i) Deutsche Asset Management (Australia) Limited as
responsible entity of the Ericsson-Deutsche Technology Fund ("DEUTSCHE") is
bound by this Agreement only in its capacity as responsible entity of the
Ericsson-Deutsche Technology Fund (the "DEUTSCHE TRUST") and in no other
capacity. A liability arising under or in connection with this Agreement is
limited to, and can be enforced against Deutsche only to, the extent to
which it can be satisfied out of the assets of the Deutsche Trust out of
which Deutsche is actually indemnified for the liability. This limitation
of Deutsche's liability applies despite any other provision of this
Agreement and extends to all liabilities and obligations of Deutsche in any
way connected with any representation, warranty, conduct, omission,
agreement or transaction related to this Agreement.
(ii) No party may xxx Deutsche in any capacity other than
as responsible entity of the Deutsche Trust, including seeking the
appointment of a receiver (except in relation to property of the Deutsche
Trust), a liquidator, an administrator, or any similar person to Deutsche
or prove in any liquidation, administration or arrangement of or affecting
Deutsche (except in relation to property of the Deutsche Trust).
(iii) The provisions of this clause 10.08 do not apply to
any obligation or liability of Deutsche to the extent that it is not
satisfied because under the deed governing the Deutsche Trust or by
operation of law there is a reduction in the extent of Deutsche's
indemnification out of the assets of the Deutsche Trust, as a result of
Deutsche's fraud, negligence or breach of trust.
53
(iv) No attorney, agent, receiver or receiver and manager
appointed in accordance with this agreement has authority to act on behalf
of Deutsche in a way which exposes Deutsche to any personal liability, and
no act or omission of any such person will be considered fraud, negligence
or breach of trust of Deutsche for the purpose of clause 10.08(a)(iii).
(v) Notwithstanding any other provision of this
agreement, Deutsche:
(A) is a funds management company which is
part of Deutsche Bank AG (the "DEUTSCHE GROUP");
(B) is the responsible entity and manager of a
number of managed funds and trusts and has obligations and
duties in relation to each of those managed funds and trusts
that are similar to its obligations and duties in relation
to the Deutsche Trust;
(C) may, and other entities in the Deutsche
Group may, invest funds in companies or other entities that
may compete with Optium or the Company; and
(D) cannot xxxxxx and promote the business of
Optium or the Company where such conduct would breach its
obligations to, or adversely impact on, the shareholding of
Deutsche or other entities in the Deutsche Group in any such
competing company or entity in which funds managed by
Deutsche have been invested.
(vi) Deutsche warrants that, in respect of the Deutsche
Trust, as at the date of this Agreement:
(A) it is the only responsible entity of the
Deutsche Trust;
(B) no action is proposed to remove it as
responsible entity of the Deutsche Trust;
(C) there is no default under the terms of the
constitution of the Deutsche Trust; and
(D) it has the power to enter into and perform
this Agreement; and
(E) Deutsche as responsible entity, has a
right of indemnity out of the trust assets of the Deutsche
Trust for all liabilities incurred by it under this
Agreement in accordance with the terms of the trust.
(b) TVP.
54
(i) TVP No. 3 Fund Nominees Pty Limited as trustee of the
TVP Xx. 0 Xxxx ("XXX") enters into this agreement only in its capacity as
trustee of the TVP Xx. 0 Xxxx (xxx "XXX XXXX") and in no other capacity. A
liability arising under or in connection with this agreement is limited to
and can be enforced against TVP in its capacity as trustee of the TVP No. 3
Fund only to the extent that it can be satisfied out of the property of the
TVP No. 3 Fund out of which TVP is actually indemnified for the liability.
This limitation of TVP's liability applies despite any other provision of
this Agreement and extends to all liabilities and obligations of TVP in any
way connected with any representation, warranty, conduct, omission,
agreement or transaction related to this Agreement.
(ii) The parties hereto other than TVP may not xxx TVP in
any capacity other than as trustee of the TVP No. 3 Fund or seek the
appointment of a receiver (except in relation to property of the TVP No. 3
Fund), a liquidator, an administrator, or any similar person to TVP or
prove in any liquidation, administration or arrangement of or affecting TVP
(except in relation to property of the TVP No. 3 Fund).
(iii) The provisions of this clause 10.08 do not apply to
any obligation or liability of TVP to the extent that it is not satisfied
because under the trust deed of the TVP No. 3 Fund or by operation of law
there is a reduction in or limitation on the extent of TVP's
indemnification out of the assets of the TVP No. 3 Fund, as a result of
TVP's fraud, negligence or breach of trust.
(iv) TVP warrants that, in respect of the TVP No. 3 Fund,
as at the date of this Agreement:
(A) it is the only trustee of the TVP No. 3
Fund;
(B) no action is proposed to remove it as
trustee of the TVP No. 3 Fund;
(C) there is no default under the terms of the
constitution of TVP No. 3 Fund;
(D) it has the power to enter into and perform
this agreement; and
(E) TVP as trustee, has a right of indemnity
out of the trust assets of the TVP No. 3 Fund for all
liabilities incurred by it under this Agreement in
accordance with the terms of the trust.
(c) STARFISH.
(i) Despite any other provision of this Agreement,
Starfish Technology Fund 1, LP (an incorporated limited partnership under
the Partnership Xxx 0000 (Vic)) ("STARFISH") is not liable to pay or
satisfy, and no other party is entitled to enforce against Starfish any
loss, cost, expense or damages suffered or incurred by or
55
amounts owing to the other party which result from a breach or non
performance of an obligation, representation or warranty (whether express,
implied by law or otherwise) of Starfish under or in connection with this
Agreement or any other Ancillary Agreements (including in relation to any
conduct, omission or transaction in relation to this agreement or any other
Ancillary Agreements) except to the extent that Starfish is able to realise
assets of Starfish (other than assets by way of amounts owed by a general
partner of Starfish or a general partner of that general partner of
Starfish or rights of Starfish against a general partner of or a general
partner of that general partner) to satisfy any liability for the loss,
cost, expense or damages as well as satisfy all other actual or contingent
debts and obligations of Starfish.
(ii) If, as a result of the operation of clause 10.08(c)
(i) or otherwise, any other party does not recover all loss, cost, expense
or damages suffered or incurred and amounts owing to the other party as a
result of a breach or non performance of any obligation, representation or
warranty of Starfish under or in connection with this Agreement or any
other Ancillary Agreements (whether express or implied by applicable law or
otherwise), the other party has no recourse to Starfish in respect of the
shortfall and may not seek to recover the shortfall by applying to have
Starfish wound up.
(iii) No attorney or agent appointed in accordance with
this agreement or any other Ancillary Agreements has the authority to act
on behalf of Starfish in a way which exposes Starfish to any liability in
excess of any amount for which Starfish may be liable under clauses
10.08(c)(ii) and (ii).
(iv) Each party hereto acknowledges and agrees that each
general partner of Starfish, each general partner of a general partner of
Starfish, each limited partner of Starfish, each limited partner of a
general partner of Starfish and each of their respective officers,
employees, advisers, associates, Affiliates and related bodies corporate:
(A) is not liable under this Agreement or any
other Ancillary Agreements or in respect of any matter
arising in connection with this Agreement or any other
Ancillary Agreements to any person except to the extent that
liability cannot be excluded by statute or regulation; and
(B) is not the proper party to any claim or
other legal proceedings under this Agreement or any other
Ancillary Agreements or in respect of any matter arising in
connection with this Agreement or any other Ancillary
Agreements.
56
ARTICLE XI
TERMINATION
11.01. GROUNDS FOR TERMINATION. Notwithstanding anything to the contrary
set forth in this Agreement, this Agreement may be terminated or the
transactions contemplated hereby with respect to the Closing only may be
abandoned at any time prior to the Closing:
(a) by written agreement of the Company and three of the four
Major Engana Investors;
(b) by either (i) the Company and at least three of the four
Major Engana Investors or (ii) Optium if the Closing shall not have been
consummated on or before March 31, 2006; provided that such termination right
shall not be available to a party that has failed to fulfill its obligations
under this Agreement or whose actions or omissions have been a significant cause
of the Closing not occurring on or before such date; and
(c) by either (i) the Company and at least three of the four
Major Engana Investors or (ii) Optium if there shall be any law or regulation
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions contemplated hereby
would violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction.
(d) by the Company and the agreement of at least three of the
four Major Engana Investors if Optium shall have breached in any material
respect any representation, warranty, covenant or other agreement contained in
this Agreement which would give rise to the failure of a condition set forth in
Article IX, which breach has not been cured within 20 days after the giving of
written notice by the Seller's Representative or the Company to Optium
specifying such breach; provided, the Sellers and Company may terminate this
Agreement pursuant to this Section 11.01(d) only if none of the Company or any
of the Sellers has breached (or continues to breach) in any material respect any
of its obligations hereunder; or
(e) By Optium if the Company or any Seller shall have breached
in any material respect any representation, warranty, covenant or other
agreement made by it contained in this Agreement which would give rise to the
failure of a condition set forth in Article IX which breach has not been cured
within 20 days after the giving of written notice by Optium to the Company or
the Seller's Representative and each of the Sellers specifying such breach;
provided, Optium may terminate this Agreement pursuant to this Section 11.01(e)
only if Optium has not breached (nor or continues to breach) in any material
respect any of its respective obligations hereunder.
The party or parties desiring to terminate this Agreement pursuant to
clauses (b), (c), (d) or (e) shall give notice of such termination to the other
parties.
11.02. EFFECT OF TERMINATION. If this Agreement is terminated as permitted
by Section 11.01, such termination shall be without liability of either party
(or any shareholder, director,
57
officer, employee, agent, consultant or representative of such party) to the
other party to this Agreement; PROVIDED that if such termination shall result
from the willful failure of any party to fulfill a condition to the performance
of the obligations of another party or to perform a covenant of this Agreement
or from a willful breach of any representation or warranty by any party to this
Agreement, such party shall be fully liable for any and all Losses incurred or
suffered by the other parties as a result of such failure or breach. The
provisions of Sections 6.01 (Confidentiality), 7.01 (Confidentiality), 8.03
(Public Announcements), 13.03 (Expenses), 13.10 (Jurisdiction), and this Article
XI shall survive any termination hereof pursuant to Section 11.01.
11.03. RIGHT TO PROCEED. Notwithstanding any other provision in this
Agreement (a) if any of the conditions specified in Article IX hereof for the
benefit of the Company and/or any Seller (as the case may be) have not been
satisfied, each of the Company and the Sellers shall have the right to proceed
with the transactions contemplated hereby without waiving any of its or their
respective rights hereunder, and (b) if any of the conditions specified in
Article IX hereof for the benefit of Optium have not been satisfied, Optium
shall have the right to proceed with the transactions contemplated hereby
without waiving any of its or its respective rights hereunder. The right to
proceed by, or by Optium with respect to, any Seller shall be independent of the
right of, or by Optium with respect to, any other Seller.
ARTICLE XII
SELLER'S REPRESENTATIVE
12.01. APPOINTMENT OF SELLER'S REPRESENTATIVE.
(a) Each Seller hereby irrevocably constitutes and appoints,
Mr. Xxxx Xxxxxxxx (the "SELLER'S REPRESENTATIVE"), as such Seller's
attorneys-in-fact and agents in connection with the transactions contemplated by
this Agreement. This power is irrevocable and coupled with an interest, and
shall not be affected by the death, incapacity, illness or other inability to
act of any Seller.
(b) Each Seller hereby irrevocably grants the Seller's
Representative, subject to the approval of three of the four Major Engana
Investors in the case of any action set forth below, full power and authority on
behalf of such Seller:
(i) to execute and deliver, and to accept delivery of,
such documents as may be deemed by the Seller's Representative, in its sole
discretion, to be appropriate to consummate the transactions contemplated
by this Agreement.
(ii) to deliver certificates representing the Shares to be
sold by such Seller at the Closing.
(iii) to accept, at the Closing, Optium Stock to be issued
to that Seller.
(iv) to (A) dispute or refrain from disputing any claim
made by Optium under this Agreement; (B) negotiate and compromise any
dispute that may arise under,
58
and to exercise or refrain from exercising any remedies available under,
this Agreement and (C) execute any settlement agreement, release or other
document with respect to such dispute or remedy;
(v) to waive any closing condition contained in Article
IX of this Agreement and to give or agree to any and all consents, waivers,
amendments or modifications deemed by the Seller's Representative, in its
sole discretion, to be necessary or appropriate under this Agreement, and
to execute and deliver any documents that may be necessary or appropriate
in connection therewith;
(vi) to enforce any claim against Optium arising under
this Agreement;
(vii) to engage attorneys, accountants and agents at the
expense of Sellers; and
(viii) to give such instructions and to take such action or
refrain from taking such action as the Seller's Representative deems, in
its sole discretion, necessary or appropriate to carry out the provisions
of, and to consummate the transactions contemplated by, this Agreement or
the Escrow Agreement.
(c) Each Seller hereby agrees that:
(i) the Company and Optium shall be entitled to rely on
any and all action taken by the Seller's Representative, under this
Agreement notwithstanding any dispute or disagreement among Sellers or the
Seller's Representative without any liability to, or obligation to inquire
of, any Seller or the Seller's Representative, notwithstanding any
knowledge on the part of the Company or Optium of any such dispute or
disagreement;
(ii) the authority of the Seller's Representative, as
described in this Agreement, shall be effective until the rights and
obligations of the Seller's Representative under this Agreement shall
terminate by virtue of the termination of any and all rights and
obligations of such Seller to Optium under this Agreement;
(iii) if the Seller's Representative resigns or is removed
or otherwise ceases to function in his capacity as such for any reason
whatsoever, and no successor acceptable to Optium is appointed by three of
the four Major Engana Investors within thirty (30) days, then Optium shall
have the right to appoint a member as the Seller's Representative to serve
as described in this Agreement (who shall be a Seller) and, under such
circumstances, Optium and the Company shall be entitled to rely on any and
all actions taken by such Seller's Representative;
(iv) the Seller's Representative shall not be liable to
any Seller for Losses with respect to any action taken or any omission by
the Seller's Representative pursuant to this Article XII, except to the
extent such Losses are caused by such the Seller's Representative's gross
negligence or willful misconduct.
59
(d) Each Seller agrees that, notwithstanding the foregoing,
at the request of Optium, he shall take all actions reasonably necessary or
appropriate to consummate the transactions contemplated by this Agreement
(including, without limitation, delivery of his Shares and acceptance of the
consideration therefor) individually on his own behalf. Each Seller has
delivered to the Seller's Representative certificates for the Shares to be sold
by such Seller pursuant to this Agreement, duly endorsed or accompanied by stock
powers duly endorsed in blank, to be held by the Seller's Representative and
delivered by the Seller's Representative to Optium at the Closing if the Closing
shall occur and the Seller's Representative acknowledges receipt thereof.
12.02. LIMITATION ON ACTIONS. Any claim, action, suit or other proceeding,
whether at law or in equity, to enforce any right, benefit or remedy granted to
Sellers under this Agreement shall be asserted, brought, prosecuted, or
maintained only by the Seller's Representative on behalf of Sellers. Any claim,
action, suit or other proceeding, whether at law or in equity, to enforce any
right, benefit or remedy granted under this Agreement, including without
limitation any right of indemnification provided in this Agreement, may be
asserted, brought, prosecuted or maintained by Optium against Sellers by service
of process on the Seller's Representative and each of the Sellers but without
the necessity of otherwise joining or naming any other Seller as a defendant in
such claim, action, suit or other proceeding. With respect to any matter
contemplated by this Section, a Seller shall be bound by any determination in
favor of or against the Seller's Representative or the terms of any settlement
or release to which the Seller's Representative shall become a party.
12.03. INDEMNIFICATION. Each Seller shall indemnify the Seller's
Representative (in each case for such Seller's Pro Rata Share) against any
Losses (except such as result from such member's gross negligence or willful
misconduct) that the Seller's Representative may suffer or incur in connection
with any action taken or any omission by the Seller's Representative except to
the extent such Losses were caused by the Sellers Representative's gross
negligence or willful misconduct.
ARTICLE XIII
MISCELLANEOUS
13.01. NOTICES. All notices, requests, demands or other communications that
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given: (i) on the date of
delivery, if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
60
if to Optium, to: with a copy to:
Optium Corporation Xxxx X. Xxxx, Esq.
000 Xxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxxxxx X. Xxxxx, Esq.
Xxxxxxxx, Xxxxxxxxxxxx 00000 Xxxxxxx Procter LLP
Attention: Xxxxx Xxxxxx, Exchange Place
President 00 Xxxxx Xxxxxx
Xxxxxxxx: Xxxxxx, XX 00000
Telecopy: (000) 000-0000
if to the Company, to: with a copy to:
Engana Pty. Ltd. Xxxxxxxx Xxxxxxxx, Esq.
Suite G.04, Bay 9 Deacons
Locomotive Workshop Xxx 0, Xxxxxxxxxx Xxxxx
Xxxxxxxxx Technology Park 0 Xxxxxx Xx
Xxxxxxxx, XXX 0000 Xxxxxx XXX 0000
Xxxxxxxxx Xxxxxxxxx
Attention: Chief Executive Telecopy: x00 (0)0 0000-0000
Officer
Telecopy:
if to a Seller:
at his address shown in
SCHEDULE 2.01(a), or to the
the Seller's Representative
Seller's Representative:
Mr. Xxxx Xxxxxxxx
c/o TVP Xx. 0 Xxxx
Xxxxx 0 Xxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx XXX 0000
Telecopy:
Such information may be changed, from time to time, by means of a notice
given in the manner provided in this Section 13.01.
13.02. AMENDMENTS; WAIVERS. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of (i)
Optium (ii) the Company and (iii) three of the four Major Engana Investors. Any
provision of this Agreement
61
may be waived if the waiver is in writing and signed by the party to be bound,
which in the case of the Sellers may be taken by three of the four Major Engana
Investors. In the event that any provision of this Agreement is amended or
waived by less than unanimous consent of the parties to this Agreement, a notice
and copy of such amendment or waiver will be sent promptly to the parties
subject to this Agreement who did not execute such amendment or waiver.
13.03. EXPENSES. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense; PROVIDED
that if the Closing shall occur all such costs and expenses incurred by the
Company shall be paid by Optium. Any stamp taxes or duties payable as a result
of the transactions contemplated hereby shall be paid by Optium.
13.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
13.05. FURTHER ASSURANCES. From time to time after the Closing, at the
request of Optium and without further consideration, Sellers will execute and
deliver to Optium such other documents, and take such other action, as Optium
may reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Optium good, valid and marketable title to
the Shares.
13.06. GOVERNING LAW. This Agreement and the Ancillary Agreements shall be
construed in accordance with and governed by the law of the Commonwealth of
Massachusetts, without regard to the conflicts of law rules of such state.
13.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
13.08. ENTIRE AGREEMENT. This Agreement and the Ancillary Agreements
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter hereof, including without limitation that certain letter of
intent, dated February 8, 2006, between Optium and the Company. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. None of
the provisions of this Agreement and the Ancillary Agreements is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.
13.09. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
13.10. JURISDICTION. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the federal courts having jurisdiction in
Los Angeles, California, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such
62
action or proceeding and waives any objection to venue laid therein. Process in
any such action or proceeding may be served on any party anywhere in the world,
whether within or without the State of California.
[Remainder of Page Intentionally Left Blank]
63
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
EXECUTED BY
OPTIUM CORPORATION IN
ACCORDANCE WITH ITS CONSTITUENT
DOCUMENTS AND THE LAWS IN FORCE IN
ITS PLACE OF INCORPORATION.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Title: President and Chief Executive Officer
ENGANA PTY. LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Title: Director
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------------
Title: Director/Company Secretary
Signature Page to Optium/Engana
Stock Exchange Agreement
SELLERS:
Signed for an on behalf of DEUTSCHE ASSET
MANAGEMENT (AUSTRALIA) LIMITED ACN
076 098 596 in its capacity as trustee and manager
AS RESPONSIBLE ENTITY OF THE
ERICSSON-DEUTSCHE TECHNOLOGY FUND
by its duly authorized attorneys in the presence of
Signature of Attorney: /s/ Xxxxxxx Xxxxxxx
-----------------------------
Name of Attorney: Xxxxxxx Xxxxxxx
Signature of Attorney: /s/ Xxxxxx Xxxxxxx
-----------------------------
Name of Attorney: Xxxxxx Xxxxxxx
Signature of Attorney: /s/ Xxxx Panlino
-----------------------------
Name of Witness: Xxxx Panlino
Signature of Witness: /s/ Fiona Holyoke
------------------------------
Name of Witness: Fiona Holyoke
EXECUTED BY INTEL CAPITAL
CORPORATION IN ACCORDANCE WITH ITS
CONSTITUENT DOCUMENTS AND THE LAWS
IN FORCE IN ITS PLACE OF
INCORPORATION.
By: /s/ Xxxxx Xxxxx
------------------------------------------------
Title: Authorized Signatory
EXECUTED BY RIKEI CORPORATION IN
ACCORDANCE WITH ITS CONSTITUENT
DOCUMENTS AND THE LAWS IN FORCE
IN ITS PLACE OF INCORPORATION.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------------------
Title: President and Chief Executive Officer
Signature Page to Optium/Engana
Stock Exchange Agreement
TVP NO 3 FUND NOMINEES PTY LIMITED AS
TRUSTEE OF THE TVP NO 3 FUND
By: Xxxx Xxxxxxxx
------------------------------------------------
Title: Authorized Attorney
By: A. E. Cochineas
------------------------------------------------
Title: Witness
SIGNED BY STARFISH VENTURES LTD. AS
AGENT AND ATTORNEY FOR STARFISH
FUND I, LP (AN INCORPORATED LIMITED
PARTNERSHIP UNDER THE PARTNERSHIP
ACT 1958 (VIC)):
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------------------
Title: Director
Xxxxxxx Xxxxxxxx
---------------------------------------------------
Name of Director (print)
/s/ Xxxx Xxxxxxx Xxxxx
---------------------------------------------------
Xxxx Xxxxxxx Xxxxx
---------------------------------------------------
Name of Director (print)
Signed by Xxxxxx X Xxxxxxx in the presence of:
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------------
Xxxxxx X. Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxxxx Xxxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signed for and on behalf of Xxx Xxxxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signed for and on behalf of Xxxxxx Xxxxxx by his
duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxxxxxx Xxxxxxx by his
duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signed for and on behalf of Xxxxxx Xxxxxxxxx by
his duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxxx Xxxxxxx by his
duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signed for and on behalf of Xxxxx Xxxxxx by his
duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
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Witness
A.E. Cochineas
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Name of Witness (print)
Signed for and on behalf of Xxxxxx Xxxxxxx by his
duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxx Xxxxxxx by is duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
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Witness
A.E. Cochineas
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Name of Witness (print)
/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
COMPANY OPTIONEES:
Signed for and on behalf of Xxx Xxxxxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxxx Xxxxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
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Name of Witness (print)
Signed for and on behalf of Pierre De L'Epine by
his duly authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signed for and on behalf of Xxx Xxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
---------------------------------------------------
Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
Signature Page to Optium/Engana
Stock Exchange Agreement
Signed for and on behalf of Xxxxx Xxxxx by his duly
authorized attorney Xxxxxx Xxxxxxx:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
/s/ A.E. Cochineas
---------------------------------------------------
Witness
A.E. Cochineas
---------------------------------------------------
Name of Witness (print)
SIGNED BY SELLER'S REPRESENTATIVE:
(in its capacity as such) IN THE PRESENCE OF:
By: /s/ Xxxx Xxxxxxxx
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Title: Seller's Representative
/s/ A.E. Cochineas
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Witness
A.E. Cochineas
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Name of Witness (print)
Signature Page to Optium/Engana Stock Exchange Agreement
EXHIBIT A
Share Transfer Form
EXHIBIT B
Statutory Declaration and Indemnity for Lost Stock Certificate
EXHIBIT C
Option Transfer Form
EXHIBIT D
Stockholders Agreement
EXHIBIT E
Registration Rights Agreement
EXHIBIT F
Reserved
EXHIBIT G
Optium Secretary's Certificate
EXHIBIT H
Optium Charter
EXHIBIT I
Definition of U.S. Person as defined under Rule 902 of the Securities Act
EXHIBIT J-1 AND J-2
Forms of Notice Option Grants
