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EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 29th day of March, 2001, by and among the persons and entities listed
on Exhibit A hereto and identified as Sellers (sometimes referred to herein
individually as a "Seller" and collectively as, "Sellers"), VASCO Data Security,
Inc., a Delaware corporation ("Buyer"), VASCO Data Security International, Inc.,
a Delaware corporation and parent of Buyer ("Parent"), and, for purposes of
consenting to the transactions contemplated hereunder, making the
representations and warranties contained in Section 4 hereof and agreeing to
certain covenants herein, Identikey Limited, a company registered under the
Corporations Law of Queensland, Australia (ACN 092 888 910) (the "Company").
Recitals:
A. Sellers own 100,500,000 ordinary shares (the "Ordinary Shares"), of
the Company (the 100,500,000 Ordinary Shares owned by Sellers are referred to
herein as the "Sale Shares").
B. The Sale Shares represent 90.2247% of the issued and outstanding
securities of the Company.
C. Buyer desires to purchase from Sellers, on the terms and conditions
hereinafter set forth, all of the Sale Shares.
X. Xxxxxxx desire to sell all of the Sale Shares to Buyer for the
consideration, and on the terms and conditions, hereinafter set forth.
E. It is the intention of Buyer to acquire from the Company's minority
shareholders (the "Minority Shareholders") the remaining 9.7753% of the
Company's issued and outstanding Ordinary Shares (the "Minority Shares"), in a
manner to be determined by Buyer.
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
respective covenants, representations, and agreements herein contained, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF SALE SHARES; CLOSING.
1.1 PURCHASE AND SALE OF SALE SHARES. Sellers, in reliance on the
representations, warranties, and covenants of Buyer contained herein and subject
to the terms and conditions of this Agreement, hereby agree to sell to Buyer all
of the Sale Shares which they own for the Purchase Consideration set forth in
Section 2 below; and Buyer, in reliance on the representations, warranties, and
covenants of Sellers contained herein and subject to the terms and conditions of
this Agreement, hereby agrees to purchase from Sellers, the Sale Shares for the
Purchase Consideration set forth in Section 2 below. Buyer shall pay any stamp
duty assessed by the State of Queensland, Australia in
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connection with the transfer of the Sale Shares to Sellers. Any other fees,
charges or taxes due and payable in connection with the delivery and transfer of
the Sale Shares shall be paid by Sellers.
1.2 CLOSING. The purchase and sale of the Sale Shares (the "Closing")
provided for in this Agreement will take place at the offices of Xxxxx Xxxxxxx
Xxxxxxx & Xxxxx LLP, 0000 00xx Xxxxxx, X.X., Xxxxxxxxxx, D.C., at 10:00 a.m.
(local time) within five business days after the satisfaction of all conditions
specified in Sections 9 and 10 hereof (the "Closing Date"), or at such other
time and place as the parties may agree. In lieu of an in-person Closing, the
Closing may take place via teleconference link and facsimile exchange of all
documents required to be delivered pursuant to Section 3 hereof.
2. CONSIDERATION FOR SALE SHARES. In consideration of the transfer, sale
and delivery of the Sale Shares to Buyer as provided hereunder, Buyer will
deliver and issue to Sellers the following (collectively, the "Purchase
Consideration"):
2.1 CLOSING CONSIDERATION. At Closing: (i) Sellers shall be
entitled to receive, subject to Section 2.2(c), an aggregate of 366,913 shares
of the common stock, par value $0.001 per share (the "Common Stock") of Parent
(the "Closing Payment") and (ii) Buyer shall deliver to each Seller a stock
certificate representing that portion of the Closing Payment that is payable to
such Seller. The Closing Payment shall be apportioned among Sellers on a pro
rata basis as specified on Exhibit A hereto. The shares of Common Stock to be
issued as Purchase Consideration shall be in the form of unregistered shares of
Common Stock and shall be free and clear of all liens, claims, charges,
encumbrances, security interests, pledges or other claims.
2.2 POST-CLOSING ADJUSTMENT.
(a) The parties agree that the amount of the Closing Payment was
determined as if the Company's tangible stockholders' equity was going to be
AUD$245,164 on the Closing Date. Accordingly, the parties agree that the amount
of the Closing Payment shall be adjusted (the "Adjustment") in the event that
the Company's actual tangible stockholders' equity on the Closing Date, as shown
on the audited balance sheet to be prepared in accordance with Section 2.2(b)
below, is less than AUD$245,164. If the tangible stockholders' equity so
reflected is less than AUD$245,164 on the Closing Date, then the amount of the
Closing Payment shall be decreased by one U.S. dollar (U.S.$1.00) for each
Australian dollar (AUD$1.00) by which the Company's actual tangible
stockholders' equity is below AUD$245,164. For purposes of this Agreement,
"tangible stockholders' equity," shall mean the total assets of the Company less
intangible assets and total liabilities, all determined in accordance with the
Accounting Standards (as defined in Section 4.4 below).
(b) For purposes of effecting the Adjustment, if any, pursuant to
Section 2.2(a), within ninety days following the Closing Date, Sellers (as
defined in Section 4 below) shall cause to be prepared and delivered to Buyer an
audited balance sheet of the Company as at the Closing Date, along with Sellers'
calculation of tangible stockholders' equity as at the Closing Date (the "Equity
Statement"). If within fifteen days following delivery of the Equity Statement,
the Buyer has not given Sellers notice of its objection to the Equity Statement
(such notice must contain a statement
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of the basis of the Buyer's objection), then the Equity Statement shall be
deemed accepted by Buyer and will be used to compute the Adjustment hereunder.
If the Buyer gives such notice of objection as to the calculation of "tangible
stockholders' equity," the parties will have thirty days to resolve the dispute
among themselves. If the parties have not resolved such dispute within such
thirty-day period, then the parties shall mutually select an independent expert
from one of the "big-five" accounting firms in Australia who shall decide the
dispute within thirty days after being selected. If the parties cannot agree on
an independent expert, then the independent expert shall be selected by the
President of the Institute of Chartered Accountants in Australia. The parties
hereto each agree to be bound by the decision of the independent expert in the
absence of manifest error. All costs of the independent expert in connection
with this Section 2.2 shall be split equally between Sellers and Buyer.
(c) At Closing, Buyer shall retain 40,667 shares (the "Retained
Shares") of Common Stock from the Closing Payment for purposes of satisfying any
Adjustment liability under this Section 2.2. Within ten days after the final
determination of "tangible stockholders' equity" and determination of the amount
of the Adjustment, if any, Buyer shall retain that portion of the Retained
Shares necessary to satisfy the Adjustment and thereafter release to Sellers the
remaining number of Retained Shares. For purposes of determining the number of
Retained Shares, if any, that Buyer is entitled to retain as a result of the
Adjustment, the per share value of the Common Stock will be deemed to be $7.50.
2.3 EARN-OUT.
(a) In addition to the Closing Payment, Sellers shall be entitled to
receive additional consideration (the "Earn Out Payment") for the sale of the
Sale Shares as follows: to the extent that, during the 15-month period
commencing February 1, 2001 and ending April 30, 2002 (the "Earn Out Period"),
the Net Revenues (as defined below) from the sale of the Company's Products (as
defined below) exceeds U.S. $3,050,000 (the "Threshold"), Sellers shall receive
additional shares of Common Stock with an aggregate value equal to the product
of (i) 90.2247% multiplied by (ii) six times the amount by which Net Revenues
from the sale of the Company's Products exceeds the Threshold, provided that the
maximum additional consideration that can be earned pursuant to this Section 2.3
is U.S. $11,503,649. For purposes of determining the number of shares of Common
Stock, if any, to which Sellers are entitled as a result of the Earn Out
Payment, the per share value of the Common Stock will be deemed to be the
greater of (x) eighty percent (80%) of the average closing price of Buyer's
Common Stock on the Nasdaq National Market for the ten trading days prior to the
expiration of the Earn Out Period, or (y) $7.50. Any Earn Out Payment made
pursuant to this Section 2.3 shall be apportioned among Sellers and in the
manner specified on Exhibit B hereto. In connection with Buyer's acquisition of
the Minority Shares, unless agreed otherwise between Buyer and the Minority
Shareholders, it is the present intention of Buyer to issue to the Minority
Shareholders an earn out payment comprised of additional shares of Common Stock
with an aggregate value equal to the product of (i) 9.7753% multiplied by (ii)
six times the amount by which Net Revenues from the sale of the Company's
Products exceeds the Threshold, provided that the maximum additional
consideration that can be earned by the Minority Shareholders is, in the
aggregate, U.S. $1,246,351. For purposes of this Section 2.3; (i) "Net Revenues"
shall mean revenues derived from sales of Company's Products, less all amounts
due to resellers of the
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Company's Products in connection with such sales, and (ii) "Company's Products"
shall mean products sold by Buyer or the Company (or any entity related to Buyer
or the Company) that are substantially based on source codes developed by
employees of the Company, even if such employees are employed by Buyer (or any
entity related to Buyer) after the Closing.
(b) For purposes of effecting the Earn Out Payment, within sixty
days following the end of the Earn Out Period, Buyer will cause its Chief
Financial Officer to prepare and deliver to Sellers a statement reflecting
Buyer's calculation of the Net Revenues from the sale of Company's Products
during the Earn Out Period (the "Revenue Statement"). If within fifteen days
following delivery of the Revenue Statement, Sellers have not given Buyer notice
of their objection to the Revenue Statement (such notice must contain a
statement of the basis of Sellers' objection), then the Revenue Statement shall
be deemed accepted by all Sellers and will be used to compute the Earn Out
Payment. If Sellers give such notice of objection as to the calculation of Net
Revenues the parties will have thirty days to resolve the dispute among
themselves. If the parties have not resolved such dispute within such thirty-day
period, then the parties shall select an independent expert in the manner
specified in Section 2.2(b) above who shall decide the dispute within thirty
days after being selected. The parties hereto each agree to be bound by the
decision of the independent expert in the absence of manifest error. All costs
of the independent expert in connection with this Section 2.3 shall be split
equally between Sellers and Buyer.
(c) Buyer and Parent will use commercially reasonable efforts to
promote and market the Company's Products, in accordance with prudent business
practice (as determined by Buyer and Parent), during the Earn Out Period;
provided, however, that nothing contained in this Section 2.3(c) shall obligate
Buyer or Parent to expend any minimum level of financial or other resources on
promotion and marketing of the Company's Products. For each calendar quarter
during the Earn Out Period, Buyer shall furnish to Sellers a report detailing
the number and dollar amount of Company's Products sold by Buyer during such
calendar quarter (each a "Quarterly Report"). Buyer shall deliver each Quarterly
Report to Sellers within ten business days after the last day of the calendar
quarter to which such Quarterly Report relates.
2.4 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued as Purchase Consideration hereunder. In lieu of any fractional shares
to which any Seller would be entitled, Parent will pay to such Seller cash equal
to the product of such fraction multiplied by (i) with respect to the Closing
Payment, $7.50, or (ii) with respect to the Earn Out Payment, the fair market
value of one share of Parent's Common Stock as determined in accordance with
Section 2.3(a) above.
3. DELIVERIES AT CLOSING.
3.1 DELIVERIES OF SELLERS. At Closing, Sellers shall deliver, or
cause to be delivered, to Buyer the following:
(a) certificates representing the Sale Shares in negotiable
form, duly endorsed in blank to Buyer or accompanied by appropriate share
powers, free and clear of all liens, claims, charges, encumbrances, security
interests, pledges or other claims of every kind;
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(b) written resignations of all directors and officers of
the Company whose resignation is requested by the Buyer, effective immediately
following the Closing;
(c) all minute books, share record books, books of account,
corporate seals, leases, contracts, agreements, securities, customer and
subscriber lists, files and other documents, instruments, and papers belonging
to the Company;
(d) full possession and control of all of the assets and
property of every kind and nature, tangible and intangible, of the Company and
of all other things and matters pertaining to the operation of the business of
the Company;
(e) a certificate executed by each Seller, in
substantially the form of Exhibit C hereto, certifying that all representations
and warranties of the Company and Sellers contained in this Agreement were
accurate in all respects as of the date of this Agreement and are accurate in
all respects as of the date of Closing as if made on the date of Closing;
(f) a Certificate of Good Standing or comparable document
for the Company and each of the following wholly-owned subsidiaries of the
Company: Identikey International Pte. Ltd., Identikey Holdings Pty. Ltd.,
Identikey Internet Security Limited, Identikey (Australia) Pty. Ltd., Identikey
(Europe) B.V. and Identikey Corporation (collectively, the "Subsidiaries"); and
(g) such other items as are required to be delivered by
Sellers to Buyer pursuant to Section 9 below.
3.2 DELIVERIES OF BUYER. At Closing, Buyer shall deliver, or cause to
be delivered, to Sellers the following:
(a) the Closing Payment in the manner set forth in
Section 2.1 hereof;
(b) such other items as are required to be delivered by
Buyer to Sellers pursuant to Section 10 below.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS. The
Company and Sellers, jointly and severally, hereby represent and warrant to
Buyer, as of the date hereof and again as of the Closing Date as if such
representations and warranties were made on the Closing Date, as follows:
4.1 ORGANIZATION AND GOOD STANDING; GOVERNING INSTRUMENTS. The
Company is a corporation duly organized, validly existing and in good standing
under the Corporations Law of Queensland, Australia and has all requisite
corporate power and authority to own and operate its properties and assets, and
to carry on its business as presently conducted and as proposed to be conducted
by Buyer. Each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it was
formed and has all requisite
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corporate power and authority to own and operate its properties and assets, and
to carry on its business as presently conducted and as proposed to be conducted
by Buyer. Each of the Company and each Subsidiary is duly qualified or licensed
as a foreign corporation to do business and is in good standing in each
jurisdiction in which the character of properties occupied, owned or held under
lease by the Company or any Subsidiary, or the nature of the business conducted
by the Company or any Subsidiary, makes such qualification or license necessary,
except where the failure to be so qualified or licensed would not have a
material adverse effect on the business, operations, assets, liabilities or
financial condition of the Company or any Subsidiary taken as a whole (a
"Material Adverse Effect"). The Company has furnished the Buyer or its counsel
copies of the Company's and each Subsidiary's organizational documents, as
amended to date, and said copies are true, correct and complete, and contain all
amendments through the date of this Agreement.
4.2 SUBSIDIARIES. Except for the Subsidiaries, the Company has no
subsidiaries or affiliated companies and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association,
joint venture or other business entity.
4.3 CAPITALIZATION. The capital shares of the Company consist of
111,388,600 Ordinary Shares, all of which Ordinary Shares are issued and
outstanding. There are no preferred shares outstanding. The outstanding Ordinary
Shares are validly issued, fully paid and nonassessable. All outstanding
securities of the Company were issued in compliance with all applicable
securities laws. There are no capital shares of the Company reserved for
issuance. Except as set forth on Schedule 4.3, there are no outstanding options,
warrants, calls, rights, commitments, convertible securities or other securities
pursuant to which any person or entity, directly or indirectly, has the right to
purchase or otherwise acquire any of the Company's capital shares or any
securities or instruments that are convertible into or exchangeable for any of
the Company's capital shares. There are no outstanding options, warrants,
agreements, convertible securities, exchangeable securities, commitments or
other rights, pursuant to which the Company may become obligated to purchase or
redeem any shares of capital shares or other securities.
4.4 FINANCIAL STATEMENTS. The Company has delivered to Buyer:
(a) an audited consolidated balance sheet of the Company as at June 30, 2000
(the "Balance Sheet") and the related audited consolidated statements of income,
changes in stockholders' equity and cash flow for the fiscal year then ended,
together with the report thereon of Ernst & Young, the Company's independent
certified public accountants; and (b) unaudited consolidated balance sheets of
the Company as at December 31, 2000 and February 28, 2001 and the related
consolidated statements of income, changes in stockholders' equity and cash flow
for the periods then ended (the financial statements in the foregoing
subsections (a) and (b) are referred to herein as the "Company's Financial
Statements"). The Company's Financial Statements and all notes thereto
accurately present the financial condition and the results of operations,
changes in stockholders' equity, and cash flow of the Company as of the
respective dates of and for the periods referred to in such financial
statements, all in accordance with Australian Accounting Standards (the
"Accounting Standards"), subject, in the case of interim financial statements,
to normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included in
the audited financial statements). The Company's Financial Statements reflect
the consistent application of such Accounting Standards
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throughout the periods involved. No financial statements of any person or entity
other than the Company and the Subsidiaries are required by the Accounting
Standards to be included in the consolidated financial statements of the
Company.
4.5 ABSENCE OF CERTAIN CHANGES. Except as identified on Schedule 4.5,
since December 31, 2000, the Company has not (a) entered into any transaction
which was not in the ordinary course of business; (b) suffered material damage
to, destruction of or loss of physical property (whether or not covered by
insurance); (c) declared or paid any dividend or made any distribution on its
shares, or redeemed, purchased or otherwise acquired any of its shares or other
securities; (d) increased the compensation of any of its officers, or the rate
of pay of its employees as a group, except as part of regular compensation
increases in the ordinary course of business; (e) had any key officer,
consultant or employee of the Company resign or have his or her employment
terminated for any reason; and the Company does not, nor do Sellers after
reasonable inquiry, know of the impending resignation or termination of
employment of any such officer, consultant or employee; (f) experienced any
labor dispute and no labor dispute is pending or, to the knowledge of the
Company or Sellers after reasonable inquiry, threatened; (g) experienced any
change, except in the ordinary course of business, in the contingent obligations
of the Company by way of guaranty, endorsement, indemnity, warranty or
otherwise; (h) made any loans to any of its employees, officers or directors,
other than travel advances and office advances made in the ordinary course of
business; or (i) experienced any other event or condition of any character
pertaining to the Company which has had, or could be expected to have, a
Material Adverse Effect.
4.6 MATERIAL LIABILITIES. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate), except
(a) the liabilities and obligations set forth in the Company's Financial
Statements and (b) liabilities and obligations which have been incurred
subsequent to February 28, 2001 in the ordinary course of business which,
individually or in the aggregate, have not had, and could not be expected to
have, a Material Adverse Effect.
4.7 RECEIVABLES. All of the Company's accounts receivable that are
reflected on the Balance Sheet (collectively, the "Company Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed by the Company in the ordinary course of
business. Unless paid prior to the date of Closing, the Company Accounts
Receivable are or will be as of the Closing Date current and collectible, net of
the respective reserves shown on the balance sheet as of the Closing Date (which
reserves are adequate and calculated consistent with Company's past practice)
and will not have a Material Adverse Effect on the composition of such Company
Accounts Receivable in terms of aging. Subject to such reserves, each of the
Accounts Receivable either has been or will be collected in full, without any
set-off, within ninety days after the day on which it first becomes due and
payable. To the knowledge of the Company or Sellers after reasonable inquiry,
there is no contest, claim, or right of set-off with any obligor of a Company
Accounts Receivable relating to the amount or validity of such Company Accounts
Receivable.
4.8 TITLE TO PROPERTIES AND ASSETS; LIENS AND ENCUMBRANCES.
Schedule 4.8 sets forth a list of all of the Company's assets, including, but
not limited to, tangible and intangible assets. The Company has good and
marketable title to its properties and assets, and has good title
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to all its leasehold interests, in each case not subject to any mortgage,
pledge, lien, lease, encumbrance or charge, other than the lien of current taxes
not yet due and payable.
4.9 NO VIOLATION; COMPLIANCE WITH LAWS AND INSTRUMENTS. The Company
is not in violation of any term of its Constitution, or, in any respect, of any
term or provision of any mortgage, indebtedness, indenture, contract, agreement,
instrument, judgment or decree, and is not in violation of any order, statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of, and compliance with, this Agreement, and the transfer of the
Sale Shares to Buyer will not result in any violation of, or conflict with, or
constitute a default under, the Constitution of the Company or any agreements to
which the Company is a party or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the Company's properties or assets.
Neither the consummation nor the performance of any of the transactions
contemplated by this Agreement will materially contravene or conflict with, or
result in a material violation of, any judgment, decree, order, statute, rule or
regulation applicable to the Company.
4.10 INTELLECTUAL PROPERTY.
(a) For purposes of this Agreement, "Company's Intellectual Property
Assets" shall include: (i) the name "Identikey", all of the Company's business
names, company names, trading names, registered and unregistered trademarks,
service marks, and applications (collectively, "Company Marks"); (ii) all
patents, patent applications, and inventions and discoveries that may be
patentable (collectively, "Company Patents"); (iii) all copyrights in the
published and unpublished works (including computer programs) and subject matter
other than works protected under Australia's Copyright Act (1968) (Cth)
specified on Schedule 4.10(a) hereto (collectively, "Company Copyrights"); (iv)
all Internet domain names owned, used or licensed by the Company as licensee or
licensor (the "Company Domain Names"); and (v) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Company
Trade Secrets"); owned, used, or licensed by the Company as licensee or licensor
anywhere in the world.
(b) Schedule 4.10(b) contains a complete and accurate list and
summary description, including any royalties paid or received by the Company, of
all contracts and agreements relating to the Company's Intellectual Property
Assets and to which the Company is a party or by which the Company is bound,
except for any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs under which the Company is the
licensee. There are no outstanding, and to the knowledge of the Company or
Sellers after reasonable inquiry, no threatened disputes or disagreements with
respect to any such agreement.
(c) The Company's Intellectual Property Assets are all those
necessary for the operation of, and protection of the intellectual property
rights associated with, the Company's businesses as they are currently
conducted. The Company is the owner of all right, title, and interest in and to
each of the Company's Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims,
and has the right to use without payment to any third party all of the Company's
Intellectual Property Assets. Except as set forth on Schedule 4.10(c), all
former and current employees and any former or current independent
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contractors of the Company, or other persons who have created or contributed
intellectual property for or to the Company, have executed written contracts
with the Company that assign to the Company all rights to any inventions,
improvements, discoveries, written works, copyright materials or information
relating to the business of the Company. No employee of the Company has entered
into any contract that restricts or limits in any way the scope or type of work
in which the employee may be engaged or requires the employee to transfer,
assign, or disclose information concerning his work to anyone other than the
Company.
(d) Schedule 4.10(d), contains a complete and accurate list and
summary description of all Company Patents. The Company is the owner of all
right, title, and interest in and to each of the Company Patents, free and clear
of all liens, security interests, charges, encumbrances, equities, and other
adverse claims. All of the issued Company Patents are currently in compliance
with formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable, and
are not subject to any maintenance fees or taxes or actions falling due within
ninety days after the Closing Date. No Company Patent has been or is now
involved in or the subject of any interference, reissue, reexamination, or
opposition proceeding. To the knowledge of the Company or Sellers after
reasonable inquiry, each of the inventions that is the subject of a Company
Patent constitutes a patentable invention and there is no potentially
interfering invention, patent or patent application of any third party with
respect thereto. No Company Patent is infringed or, to the knowledge of the
Company or Sellers after reasonable inquiry, has been challenged or threatened
in any way. To the knowledge of the Company or Sellers after reasonable inquiry,
none of the products manufactured and sold, nor any process or know-how used, by
the Company infringes or is alleged to infringe any patent or other proprietary
right of any other person or entity. All products made, used, or sold under the
Company Patents have been marked with the proper patent notice.
(e) Schedule 4.10(e), contains a complete and accurate list and
summary description of all Company Marks. The Company is the owner of all right,
title, and interest in and to each of the Company Marks, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims. All Company Marks that have been registered with the Commonwealth of
Australia Trademarks Office, the United States Patent and Trademark Office or
the trademark office of any other government are currently in compliance with
all formal legal requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date. No Company Xxxx has been
or is now involved in or the subject of any opposition, invalidation, or
cancellation and, to the knowledge of the Company or Sellers after reasonable
inquiry, no such action is threatened with respect to any of the Company Marks.
Other than as set forth on Schedule 4.10(e), to the knowledge of the Company or
Sellers after reasonable inquiry, there is no potentially interfering trademark
or trademark application of any third party. No Company Xxxx is infringed or, to
the knowledge of the Company or Sellers after reasonable inquiry, has been
challenged or threatened in any way. None of the Company Marks infringes or is
alleged to infringe any trade name, trademark, or service xxxx of any third
party or any other intellectual property right of any third party, including,
but not limited to, copyright. All products and materials containing a Company
Xxxx xxxx the proper trademark registration notice where permitted by law.
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(f) The Company is the owner of all right, title, and interest in
and to each of the Company Copyrights, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims. Except as
set forth on Schedule 4.10(f), all Company Copyrights are enforceable by the
Company. No Company Copyright is infringed or, to the knowledge of the Company
or Sellers after reasonable inquiry, has been challenged or threatened in any
way. To the knowledge of the Company or Sellers after reasonable inquiry, none
of the subject matter of any of the Company Copyrights nor any material (whether
itself protected by copyright or otherwise) used or required by the Company for
operation of its businesses infringes or is alleged to infringe any copyright of
any third party, is a derivative work based on the work of a third party or
violates any moral rights protected under Part IX of Australia's Copyright Act
(1968) (Cth). All works encompassed by the Company Copyrights have been marked
with the proper copyright notice.
(g) Schedule 4.10(g) contains a complete and accurate list of all
all Company Domain Names. The Company is owner of all right, title and interest
in and to each of the Company Domain Names, free and clear of all liens,
security interests, charges, encumbrances, equities and other adverse claims.
The Company Domain Names have been registered in good faith and, where used,
used in good faith. None of the Company Domain Names is the subject of any
proceeding (including a non-judicial proceeding) challenging the validity of its
registration or infringes on any third party's trademark rights.
(h) With respect to each Company Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper use without
reliance on the knowledge or memory of any individual. The Company and Sellers
have taken all reasonable precautions to protect the secrecy, confidentiality,
and value of the Company Trade Secrets. The Company has good title and an
absolute right to use the Company Trade Secrets. The Company Trade Secrets are
not part of the public knowledge or literature, and, to the Company's and
Sellers' knowledge, have not been used, divulged, or appropriated either for the
benefit of any person or entity or to the detriment of the Company. No Company
Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
(i) The transactions contemplated by this Agreement will not violate
the terms and conditions of any agreements or contracts relating to the
Company's Intellectual Property Assets, nor will the transactions contemplated
by this Agreement require any consents or approvals in order to maintain the
validity and value of the Company's Intellectual Property Assets.
4.11 LITIGATION. Except as set forth on Schedule 4.11, there are no
actions, suits, proceedings or investigations pending, or to the knowledge of
the Company or the knowledge of Sellers after reasonable inquiry, threatened,
against the Company or its assets or properties before any court or governmental
agency, nor is there any reasonable basis therefor or threat thereof.
Furthermore, there are no actions, suits or proceedings initiated by the Company
or that the Company intends to initiate. The Company is not subject to any
order, writ, injunction or decree.
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4.12 LABOR AND EMPLOYEE MATTERS.
(a) Schedule 4.12 contains a complete and accurate list of the
following information for each employee or director of the Company and each Key
Employee (as defined below) or director of each Subsidiary, including each
employee or Key Employee, as the case may be, on leave of absence or layoff
status: name; job title; current compensation paid or payable and any change in
compensation since December 31, 2000; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under any Company pension,
retirement, profit-sharing, thrift-savings, deferred compensation, share bonus,
share option, cash bonus, employee share ownership (including investment credit
or payroll share ownership), severance pay, insurance, medical, welfare, or
vacation plan, or any other employee benefit plan. For purposes of this
Agreement, "Key Employee" shall mean any employee of a Subsidiary in a position
of Vice President or higher.
(b) Except as set forth on Schedule 4.12(b), there are no
controversies pending, or to the knowledge of the Company or Sellers after
reasonable inquiry, threatened between the Company and any of its employees. The
Company is not a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company. To the knowledge
of the Company or Sellers after reasonable inquiry, no employee of the Company
is in violation of any term of any employment contract, non-disclosure agreement
or any other contract or agreement relating to the relationship between an
employee and the Company or any other party because of the nature of the
business conducted or to be conducted by the Company.
4.13 CERTAIN TRANSACTIONS. Except as disclosed on Schedule 4.13, the
Company is not indebted, directly or indirectly, to any of its officers,
directors or shareholders or to their respective spouses or children, in any
amount whatsoever; none of such officers, directors or, to the knowledge of the
Company or Sellers after reasonable inquiry, shareholders, or any members of
their immediate families, are indebted to the Company or have any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company. Except as disclosed on Schedule
4.13, no officer, director or shareholder of the Company, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
4.14 MATERIAL CONTRACTS AND COMMITMENTS. Schedule 4.14 sets forth a
list of all agreements, contracts, indebtedness, liabilities and other
obligations of any nature: (a) to which the Company is a party or by which it is
bound that are material to the conduct and operations of its business and
properties; (b) which provide for payments to or by the Company in excess of
U.S. $5,000 (whether such contracts or agreements are with customers, vendors,
lenders or otherwise); (c) which obligate the Company to share, license or
develop any product or technology; (d) which relate to or affect the ownership
of, leasing of, title to, use of, or any leasehold or other interest in, any
real or personal property; (e) which contain covenants that in any way purport
to restrict the business activity of the Company or limit the freedom of the
Company to engage in any line of
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business or to compete with any person or entity; or (f) which involve
transactions or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof. Copies of such
agreements and contracts and documentation evidencing such liabilities and other
obligations have been furnished to Buyer and its counsel. All of such agreements
and contracts are valid, binding and in full force and effect in all material
respects.
4.15 [Reserved].
4.16 REGULATORY CONSENTS AND APPROVALS. Except as set forth on
Schedule 4.16, no consent, approval or order or authorization of, or filing
with, any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, or the
consummation of any of the transactions contemplated by this Agreement.
4.17 NO BROKERS OR FINDERS. Neither the Company nor the Seller has,
nor will any of them incur, directly or indirectly, as a result of any action
taken by the Company or any Seller, any liability for brokerage or finder's fees
or commissions or any similar charges in connection with this Agreement and the
offer and sale of the Sale Shares.
4.18 ABSENCE OF CHANGES. Except as set forth on Schedule 4.18, since
December 31, 2000, the Company has conducted its business only in the ordinary
course and there has not been any: (a) change in the Company's issued capital
shares; grant of any share option or right to purchase capital shares of the
Company; issuance of any security convertible into such capital shares, grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Company of any shares of any such capital shares; or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital shares; (b) amendment to the Company's Constitution; (c) payment or
increase by the Company of any bonuses, salaries, or other compensation to any
stockholder, director, officer, or (except in the ordinary course of business)
employee or entry into any employment, severance, or similar contract with any
director, officer, or employee; (d) adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of the Company; (e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance; (f) entry into,
termination of, or receipt of notice of termination of (i) any license,
distributorship, dealer, sales representative, joint venture, credit, or similar
agreement, or (ii) any contract or transaction involving a total remaining
commitment by the Company of U.S.$10,000 or more; (g) sale (other than sales of
inventory in the ordinary course of business), lease, or other disposition of
any asset or property of the Company or mortgage, pledge, or imposition of any
lien or other encumbrance on any material asset or property of the Company,
including the sale, lease, or other disposition of any of the Company's
Intellectual Property Assets; (h) cancellation or waiver of any claims or rights
with a value to the Company of U.S.$10,000 or more; (i) material change in the
accounting methods used by the Company; or (j) agreement, whether oral or
written, by the Company to do any of the foregoing.
4.19 TAX MATTERS. Except as set forth on Schedule 4.19, the Company
has: (a) timely filed all tax returns that were required to have been filed by
it with all appropriate federal, state, county, local and other governmental
agencies (and all such returns fairly and accurately reflect the
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Company's operations for tax purposes); (b) timely paid all taxes owed by it for
which it is obligated to withhold from amounts owing to any employee (including
without limitation social security taxes), creditor or third party (other than
taxes the validity of which are being contested in good faith by appropriate
proceedings); and (c) not waived any statute of limitations with respect to
taxes or agreed to any extension of time with respect to a tax assessment or
deficiency. The assessment of any additional taxes for periods for which returns
have been filed will not exceed the recorded liability therefor, and there are
no unresolved questions or claims concerning the tax liability of the Company.
The tax returns of the Company have not been reviewed or audited by any federal,
state, county, local or other taxing authority. There is no pending dispute with
any taxing authority relating to any of said returns which, if determined
adversely to the Company, would result in the assertion by any taxing authority
of any valid deficiency in any amount for taxes. Since December 31, 2000, the
Company has made adequate provisions on its books of account for all taxes,
assessments and governmental charges with respect to its business, properties
and operations for such period. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories. As used in this Agreement, "tax"
or "taxes" means any and all Federal, state, local and foreign taxes and other
assessments of a similar nature (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) whether
imposed directly or through withholding, including, without limitation, income,
franchise, property, sales, use, payroll, employment, excise, ad valorem and
stamp taxes.
4.20 INSURANCE. Schedule 4.20 contains a true and complete schedule
of all insurance policies or binders of fire, liability, product liability,
vehicular and other insurance held by or on behalf of the Company or relating to
its business or any of its assets or properties (specifying the insurer, the
amount of the coverage, the type of insurance, the risks insured, the policy
number, if any, and any pending claims thereunder). All insurance coverage
applicable to the Company or relating to its business or any of its assets or
properties is in full force and effect, is valid, binding and enforceable in
accordance with its terms against the respective insurers and has been issued by
insurers of recognized responsibility. There is no default under any such
coverage nor has any notice of cancellation or non-renewal for any such policy
been received by the Company.
4.21 ENVIRONMENTAL AND SAFETY MATTERS. The Company is, and at all
times has been, in compliance in all material respects with, and has not been
and is not in violation of or liable under, any federal, state, local or other
governmental environmental or safety statute, law or regulation (together
"Environmental Laws"). Neither Sellers nor the Company has any basis to expect,
nor has either of them or any other person or entity for whose conduct either of
them is or may be held responsible received, any actual or threatened order,
notice, or other communication from (a) any governmental body or private citizen
acting in the public interest, or (b) the current or prior owner or operator of
any properties or facilities, of any actual or potential violation or failure by
the Company to comply with any Environmental Law, or of any actual or threatened
obligation to undertake or bear the cost of any liabilities arising under any
Environmental Law with respect to any of the Company's properties or facilities
or any other properties or assets (whether real, personal, or mixed) in which
the Company has had an interest, or with respect to any property or facility at
or to which Hazardous Materials (as defined below) were generated, manufactured,
refined, transferred, imported, used, or processed by the Company or any other
person or entity for whose conduct they
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are or may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received. There is no fact or circumstance which could involve the Company in
any environmental litigation or impose any environmental liability upon the
Company. To the knowledge of the Company or Sellers after reasonable inquiry, no
Hazardous Material is present on any facility of the Company and, to the
knowledge of the Company or Sellers after reasonable inquiry, no reasonable
likelihood exists that any Hazardous Material present on other property will
come to be present on a facility of the Company. To the knowledge of the Company
or Sellers after reasonable inquiry, there are no underground storage tanks,
asbestos or PCBs present on any facility of the Company. For the purposes of
this Agreement the term "Hazardous Material" means any material or substance
that is prohibited or regulated by any environmental law or that has been
designated by any governmental authority to be radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment.
4.22 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority (collectively, "Permits") necessary for the conduct of its
business as now being conducted by it; and the Company can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted, except where the failure to so have or obtain would not
have a Material Adverse Effect. The Company is not in default in any material
respect under any of such Permits. The Company has furnished to Buyer and its
counsel copies of any and all Permits applicable to the Company and its
business.
4.23 EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. The Company does
not have, and has never had, any Employee Benefit Plan, as defined in the United
States Employee Retirement Income Security Act of 1974, as amended, or under any
similar law in any other country in which the Company operates. Attached hereto
as Schedule 4.23 is a list of all employment and consulting agreements, bonus,
pension, profit sharing, share option, share purchase, benefit or similar plans
or arrangements which are now or have been maintained by the Company or under
which the Company has any obligation or liability, whether actual or contingent.
Copies of such agreements and documents have been furnished to Buyer and its
counsel.
4.24 IMMIGRATION MATTERS. The Company has complied with all laws and
regulations relating to verification of employment eligibility of its employees,
including, but not limited to verification of the employment eligibility of
Company's employees in accordance with Section 274A of the Immigration and
Nationality Act, as amended (8 U.S.C. Section 1324(a)) and similar laws in any
country in which the Company operates.
4.25 MINUTE BOOKS AND COMPANY RECORDS. The books of account, minute
books, share record books, and other records of the Company, all of which have
been furnished to Buyer and its counsel, are complete and correct and have been
maintained in accordance with sound business practices and the requirements of
applicable state and federal laws, including the maintenance of an adequate
system of internal controls. The minute books of the Company contain accurate
and complete records of all meetings held of, and corporate action taken by, the
shareholders and directors of the Company or any committee thereof, and no
meeting of any such stockholders, directors or committee thereof has been held
for which minutes have not been prepared and are not contained in such minute
books.
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4.26 DIRECTORS, OFFICERS, AND AUTHORIZED PERSONS. Schedule 4.26 sets
forth a complete and accurate list of the names and addresses of all directors
and officers of the Company and each Subsidiary, all persons authorized to
borrow on behalf of the Company or any Subsidiary, all persons authorized to
make withdrawals from bank or checking accounts of the Company and all persons
having access to safes, vaults, or safety deposit boxes in any bank in the name
of the Company or a Subsidiary. Schedule 4.26 also contains a complete and
accurate list, including the address or location, of all such bank and checking
accounts, safes, vaults, and safety deposit boxes.
4.27 CERTAIN PAYMENTS. Neither the Company nor any director, officer,
agent, or employee of the Company, or any other person or entity associated with
or acting for or on behalf of the Company, has directly or indirectly: (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or
other payment to any person or entity, private or public, regardless of form,
whether in money, property, or services (i) to obtain favorable treatment in
securing business, (ii) to pay for favorable treatment for business secured,
(iii) to obtain special concessions or for special concessions already obtained,
for or in respect of the Company or (iv) in violation of any legal requirement;
or (b) established or maintained any fund or asset that has not been recorded in
the books and records of the Company.
4.28 REAL PROPERTY. All real property (including, without limitation,
all interests and rights to real property) and improvements located thereon
which are owned or leased by the Company are listed on the attached Schedule
4.28 (the "Company Real Property"). The Company owns outright, and has good and
marketable title to, all of the owned Company Real Property or valid and
enforceable leasehold interest in all of the leased Company Real Property, free
and clear of all liens, except the defects, liens, adverse claims and other
matters affecting the Company's title to, possession of, or leasehold interest
in the Company Real Property, expressly set forth on Schedule 4.28.
4.29 DISCLOSURE. This Agreement and the exhibits and schedules hereto,
when taken as a whole, do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
For purposes of the foregoing representations and warranties in this
Section 4, except where context requires otherwise, "Company" shall be deemed to
include the Company and each of the Subsidiaries.
5. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller, individually,
and not jointly, hereby represents and warrants to Buyer as follows:
5.1 SHARE OWNERSHIP. Seller is the lawful and beneficial and record
owner of the number of Ordinary Shares set forth opposite his name on Exhibit A
hereto. Such Ordinary Shares are free and clear of all liens, encumbrances,
claims, and other charges of every kind and Seller has full legal power and all
authorization required by law to transfer and deliver the Ordinary Shares in
accordance with this Agreement.
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5.2 AUTHORIZATION. Seller has the full power and authority to
execute, deliver and perform this Agreement and has taken all actions necessary
to secure all approvals required in connection therewith. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated will not contravene or violate any agreement, resolution or other
document applicable to Seller. This Agreement constitutes the legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms. Seller is not now a party to, or bound by, any written or oral contract
or agreement which grants to any person an option or right of first refusal or
other right of any character to acquire at any time or upon the happening of any
stated events, any equity securities of the Company held by Seller or any
security convertible into or exchangeable for any equity security of the Company
held by Seller, whether or not presently issued or outstanding. Neither the
execution and delivery of this Agreement by Seller, nor the consummation of the
transactions contemplated hereby, will contravene or violate any regulation or
court order which is applicable to Seller, or will result in a default under, or
require the consent or approval of any party to, any contract relating to Seller
or to which Seller is a party or otherwise bound or affected, or require Seller
to notify or obtain any license or consent from any federal, state, local or
other court or governmental agency or body or from any other regulatory
authority.
5.3 REGULATORY CONSENTS AND APPROVALS. No consent, approval or order
or authorization of, or filing with, any governmental authority on the part of
Seller is required in connection with the valid execution and delivery of this
Agreement, or the consummation of any of the transactions contemplated by this
Agreement.
5.4 NO BROKERS OR FINDERS. Seller does not have, nor will Seller
incur, directly or indirectly, as a result of any action taken by Seller, any
liability for brokerage or finder's fees or commissions or any similar charges
in connection with this Agreement and the offer and sale of the Sale Shares.
Further, Seller agrees to indemnify and hold harmless Buyer from and against any
and all claims, liabilities or obligations with respect to any brokerage or
finder's fees or similar charges in connection with this Agreement asserted by
any person on the basis of any statement or representation alleged to have been
made by Seller or any of Seller's officers, directors or representatives.
5.5 RECEIPT OF BUYER'S COMMON STOCK.
(a) The financial situation of Seller is such that Seller can afford
to bear the economic risk of holding unregistered securities for an indefinite
period of time. Seller can afford to suffer the complete loss of its investment
in the Common Stock.
(b) Seller is acquiring the Common Stock as an investment for his or
its own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. Seller understands that
such securities have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "Securities Act"), or under the
provisions of any foreign or state securities law. Accordingly, Seller agrees
not to sell, pledge, transfer or otherwise dispose of his or its shares of
Common Stock except (i) in a transaction otherwise exempt (in the written
opinion of counsel for Seller satisfactory to Buyer) from the
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registration requirements of the Securities Act and all applicable foreign and
state securities laws or (ii) pursuant to a registration of the shares of the
Common Stock under the Securities Act of 1933, as amended and all applicable
foreign and state securities laws. Seller consents to the endorsement of his or
its shares of Common Stock evidencing the foregoing restrictions on
transferability. Seller acknowledges and agrees that the certificates or
certificates representing the Common Stock will bear a legend in substantially
the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) Seller is not an "affiliate" (as defined in Rule 144 under the
Securities Act) of the Buyer or Parent or acting on behalf of the Buyer or
Parent and, at the time of agreeing to acquire the shares of Common Stock as
consideration for the Sale Shares, was outside the United States and was not a
U.S. person (and was not purchasing for the account or benefit of a U.S. person)
within the meaning of Regulation S under the Securities Act. No offer to
purchase the shares of Common Stock was made by Seller in the United States.
(d) Seller is acquiring the Common Stock pursuant to an exemption
from registration under Regulation S of the Securities Act. Seller acknowledges
and agrees that the certificate or certificates representing the Common Stock
will bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE OFFERED,
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF OR DISTRIBUTED DIRECTLY OR INDIRECTLY, WITHIN
THE UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS UNLESS
THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE ACT OR SUCH TRANSACTION IS MADE IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S OF THE ACT. HOLDER AGREES THAT
ANY HEDGING TRANSACTIONS INVOLVING THE SECURITIES WILL BE CONDUCTED
IN COMPLIANCE WITH THE ACT AND AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. THE COMPANY SHALL HAVE THE RIGHT
PRIOR TO ANY SUCH SALE OR TRANSFER, IN EACH OF THE FOREGOING CASES,
TO REQUIRE DELIVERY OF A CERTIFICATION OF TRANSFER IN FORM
SATISFACTORY TO IT. AS USED HEREIN, THE TERMS "UNITED
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STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE ACT."
6. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Sellers as follows:
6.1 ORGANIZATION. Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Buyer has
all requisite corporate power and authority to own, operate and lease its
property and to carry on its business as now being conducted. Buyer is duly
qualified or licensed as a foreign corporation to do business and is in good
standing in each jurisdiction in which the character of properties occupied,
owned or held under lease by Buyer, or the nature of the business conducted by
the Buyer, makes such qualification or license necessary, except where the
failure to be so qualified or licensed would not have a Material Adverse Effect
on the business, operations, assets, liabilities or financial condition of Buyer
and its subsidiaries taken as a whole.
6.2 VALID ISSUANCE. The Common Stock, when issued and paid for in
accordance with this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and (assuming the accuracy of Sellers' representation set
forth in Section 5.5 hereof) issued in compliance with all applicable U.S.
securities laws and will not be subject to any preemptive or other similar
rights.
6.3 AUTHORITY. Buyer has all requisite corporate power and authority
to enter into this Agreement. Parent has all requisite corporate power and
authority to sell and issue the Common Stock and to consummate the other
transactions contemplated by this Agreement. The execution and delivery of this
Agreement, the issuance and sale of the Common Stock and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer or Parent, as the case may be.
This Agreement has been duly executed and delivered by Buyer and Parent, and
constitutes the valid and binding obligation of Buyer or Parent, as the case may
be, enforceable in accordance with its terms, except to the extent limited by
(a) the effect of bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium, fraudulent transfer or other laws
affecting or relating to the rights of creditors generally, (b) the rules
governing the availability of specific performance, injunctive relief or other
equitable remedies and general principles of equity, regardless of whether
arising prior to, or after, the date hereof or considered in a proceeding in
equity or at law, or (c) the effect of federal and state securities laws and
principles of public policy on rights of indemnity and contribution.
6.4 NO CONFLICT. The execution and delivery by Buyer and Parent of
this Agreement does not, and the sale and issuance of the Common Stock and
consummation of the other transactions contemplated by this Agreement will not,
conflict with, or result in any violation or breach of any provision of, the
charter or bylaws of Buyer or Parent, as the case may be.
6.5 REQUIRED FILINGS AND CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality is required by or with respect to Buyer
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or Parent in connection with the execution and delivery of this Agreement, the
sale and issuance of the Common Stock or the consummation of the other
transactions contemplated hereby or thereby, except for such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable U.S., state and foreign securities laws.
6.6 COMMISSION FILINGS. Parent has filed, pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all SEC Documents (as
defined below) required to be filed with respect to the business and operations
of Parent under the Exchange Act, and the rules and regulations thereunder, and
all of the SEC Documents complied in all material respects with all applicable
requirements of the Exchange Act, and the appropriate act and the rules and
regulations thereunder in effect on the date each such report was filed. At the
respective dates they were filed, none off the SEC Documents contained any
untrue statement of material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of Parent included in the SEC Documents complied as to the
form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles consistently applied throughout the period involved (except as may be
indicated therein or in the notes thereto) and fairly present the consolidated
financial position, results of operations and cash flows of Parent as of the
dates or for the periods indicated therein, subject, in the case of the
unaudited statements, to normal year-end adjustments and the absence of certain
footnote disclosures. "SEC Documents" means all material forms, statements,
reports and documents (including exhibits, amendments and supplements thereto)
required to be filed with respect to the business and operations of Parent under
the Exchange Act, and the rules and regulations thereunder. Prior to the date
hereof, Parent has delivered to Sellers its annual report on Form 10-K for the
year ended December 31, 1999 and its quarterly report on Form 10-Q for the
Quarter ended September 30, 2000. Such reports contain Parent's consolidated
financial statements as of December 31, 1999 and September 30, 2000,
respectively. There is no information pertaining to Parent that would have a
Material Adverse Effect on the business operations, assets, liabilities or
financial position of Parent that has not been publicly disclosed because of an
exception to Parent's disclosure obligations under the Exchange Act.
6.7 DISCLOSURE. The representations and warranties made or contained
in this Agreement when taken together, do not contain any untrue statement of a
material fact and do not omit to state a material fact required to be stated
herein or therein or necessary in order to make such representations and
warranties and other material not misleading.
7. COVENANTS OF THE COMPANY AND SELLERS PRIOR TO CLOSING DATE.
7.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date (the "Executory Period"), the Company will, and Sellers will
cause the Company to: (a) afford Buyer and its representatives (collectively,
"Buyer's Advisors") full and free access to the Company's personnel, properties,
contracts, books and records, and other documents and data; (b) furnish Buyer
and Buyer's Advisors with copies of all such contracts, books and records, and
other existing documents and data as Buyer may reasonably request; and (c)
furnish Buyer and Buyer's
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Advisors with such additional financial, operating, and other data and
information as Buyer may reasonably request.
7.2 OPERATION OF THE COMPANY'S BUSINESS. During the Executory Period,
the Company will, and Sellers will cause the Company to: (a) conduct its
business in the ordinary course and consistent with the conduct of the Company's
business prior to the date of this Agreement; (b) use its best efforts to
preserve intact the current business organization of the Company, keep available
the services of the current officers, employees, and agents of the Company, and
maintain the relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with the
Company; (c) confer with Buyer concerning operational matters of a material
nature; and (d) otherwise report periodically to Buyer concerning the status of
the business, operations, and finances of the Company.
7.3 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, the Company will, and Sellers will cause the Company to, make
all legally required filings to be made by them in order to consummate the
transactions contemplated by this Agreement. During the Executory Period, the
Company and each Seller will: (a) cooperate with Buyer with respect to all
filings that Buyer elects to make or is legally required to make in connection
with the transaction contemplated by this Agreement; and (b) cooperate with
Buyer in obtaining all required consents.
7.4 NOTIFICATION. During the Executory Period, the Company and each
Seller will promptly notify Buyer in writing if the Company or such Seller, as
the case may be, becomes aware of any fact or condition that causes or
constitutes a breach of any of the Company's or any Seller's representations and
warranties as of the date of this Agreement, or if the Company or such Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the Executory Period, the Company or Sellers
shall promptly notify Buyer of the occurrence of any breach of any covenant
contained in this Section 7 or of the occurrence of any event that may make the
satisfaction of the conditions set forth Section 9 impossible or unlikely.
7.5 NO NEGOTIATION.
(a) Until such time, if any, as this Agreement is terminated pursuant
to Section 10, or the conditions set forth in Section 7.5(b) of this Agreement
occur, neither the Company nor any of the Sellers will, or cause their
respective representatives to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any inquiries or
proposals from, any person or entity (other than Buyer) relating to any
transaction involving the sale of the business or assets of the Company, or any
of the capital shares of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company. The activities
described in this Section 7.5(a) shall be referred to as "Sellers'
Negotiations."
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(b) If the Closing does not occur, and such failure is due to a breach
by any Seller of Section 7.5(a) above, then Seller shall promptly (and in any
event within two days of receipt of written notice from Buyer) pay to Buyer by
wire transfer of immediately available funds to an account or accounts
designated by Buyer (i) a break-up fee of U.S.$1,000,000, plus (ii) all actual
out-of-pocket expenses (including all fees and expenses of Buyer's counsel,
advisors, accountants and consultants) incurred by Buyer or on its behalf in
connection with the transactions contemplated by this Agreement (the payments
due under subsections (i) and (ii) hereof shall collectively be referred to
herein as the "Break-Up Fee"). The Break-Up Fee shall be Buyer's sole remedy in
the event of a breach by Seller of Section 7.5(a) above; provided, however, that
neither the exercise of nor the failure to exercise Buyer's right to payment
under this Section 7.5(b) will limit Buyer in any manner in the enforcement of
any other remedies available to it in the event of a breach by any Seller of any
other provision of this Agreement.
(c) Notwithstanding anything to the contrary in this Section 7.5, the
Company and Sellers and their representatives shall continue to comply with all
of the terms of this Agreement and all agreements incorporated by reference,
including, but not limited to Section 11 of this Agreement, regarding
termination of this Agreement and the Confidentiality Agreement dated February
2, 2001, by and between the Company and Buyer.
7.6 BEST EFFORTS. During the Executory Period, Sellers will use their
best efforts to cause the conditions in Sections 9 and 10 to be satisfied, to
the extent such conditions are within their control.
7.7 NO PRESS RELEASES. Neither the Company nor any Seller shall issue
any publicity release or announcement concerning this Agreement or the
transactions contemplated hereby without the prior written approval of Buyer,
which approval shall not be unreasonably withheld in the case of required
disclosures, made pursuant to a requirement of law or the rules and regulations
of the Australian Stock Exchange.
8. COVENANTS OF BUYER PRIOR TO CLOSING
8.1 ACCESS AND INVESTIGATION. During the Executory Period, Buyer will:
(a) afford Sellers and their representatives (collectively, "Sellers' Advisors")
full and free access to the Buyer's personnel, properties, contracts, books and
records, and other documents and data; (b) furnish Sellers and Sellers' Advisors
with copies of all such contracts, books and records, and other existing
documents and data as Sellers may reasonably request; and (c) furnish Sellers
and Sellers' Advisors with such additional financial, operating, and other data
and information as Sellers may reasonably request.
8.2 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, Buyer will make all legally required filings to be made by it in
order to consummate the transactions contemplated by this Agreement. During the
Executory Period, Buyer will: (a) cooperate with Sellers with respect to all
filings that Sellers elect to make or are legally required to make in connection
with the transactions contemplated by this Agreement; and (b) cooperate with
Sellers in obtaining all required Consents.
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8.3 NOTIFICATION. During the Executory Period, Buyer will promptly
notify the Company and Sellers in writing if Buyer becomes aware of any fact or
condition that causes or constitutes a breach of any of Buyer's representations
and warranties as of the date of this Agreement, or if Buyer becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the Schedules
hereto or discovery of any such fact or condition, Buyer will promptly deliver
to the Company and Sellers a supplement to the disclosure Schedules specifying
such change. During the same period, Buyer will promptly notify Sellers of the
occurrence of any breach of any covenant of Buyer in this Section 8 or of the
occurrence of any event that may make the satisfaction of the conditions in
Section 10 impossible or unlikely.
8.4 BEST EFFORTS. Between the date of this Agreement and the date of
Closing, Buyer will use its best efforts to cause the conditions in Sections 9
and 10 to be satisfied, to the extent such conditions are within its control.
8.5 NO PRESS RELEASES. Buyer shall not issue any publicity release or
announcement concerning this Agreement or the transactions contemplated hereby
without the prior written approval of Sellers; provided, however, that the
prohibition contained in this Section 8.5 shall not apply to required
disclosures made pursuant to a requirement of law or the rules and regulations
of the Securities Act, the Exchange Act or any U.S. or foreign securities
exchange.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's
obligation to purchase the Sale Shares and to take the other actions required to
be taken by Buyer at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part):
9.1 ACCURACY OF REPRESENTATIONS. All of the Company's and Sellers'
representations and warranties contained in Section 4, and each Seller's
representations and warranties contained in Section 5, of this Agreement
(considered collectively), and each of those representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the date of Closing.
9.2 DUE DILIGENCE REVIEW. Buyer shall have completed its due diligence
review of the Company in a manner that is satisfactory to Buyer.
9.3 ACQUISITION OF MINORITY SHARES. Buyer shall have entered into
agreements with the Minority Shareholders (the "Minority Shareholder Purchase
Agreements"), pursuant to which Buyer shall have the right to acquire the
Minority Shares, such that, upon the consummation of this Agreement and the
Minority Shareholder Purchase Agreements, Buyer shall be entitled to own at
least 95% of the Company.
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9.4 DELIVERY OF FINANCIAL STATEMENTS. Sellers shall have delivered to
Buyer the Company's unaudited financial statements (including consolidated
balance sheet and the related consolidated statements of income, changes in
stockholders' equity and cash flow) for the period ended February 28, 2001 and
such financial statements shall be acceptable to the Company.
9.5 COMPANY'S AND SELLERS' PERFORMANCE. (a) All of the covenants and
obligations that the Company and Sellers are required to perform or to comply
with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects.
9.6 CONSENTS. All consents that are necessary or appropriate to
consummate the transactions contemplated by this Agreement (including, without
limitation, those identified in Schedule 4.16), must have been obtained and must
be in full force and effect; provided, however, that, to the extent that the
sale of the Sale Shares hereunder shall constitute an indirect assignment of a
contract, lease or other agreement of the Company, if any, requiring the consent
of any third party to the sale of the Sale Shares to Buyer, neither this
Agreement nor any action taken pursuant to its provisions shall constitute an
indirect assignment or an agreement to assign if such indirect assignment or
attempted assignment would constitute a breach thereof or result in the loss or
diminution thereof; provided, however, that in each such case, Sellers shall use
reasonable efforts to assist Buyer to obtain the consent of such other party to
such indirect assignment to Buyer.
9.7 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to Buyer: (a) all documents required to be delivered by Sellers
pursuant Section 3.1 hereof; and (b) such other documents as Buyer may
reasonably request for the purpose of facilitating the consummation or
performance of the transactions contemplated by this Agreement.
9.8 EMPLOYMENT AGREEMENT. Buyer shall have entered into an Employment
Agreement, in substantially the form attached hereto as Exhibit D, with Kefford.
9.9 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened any lawsuit or proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, the
transactions contemplated by this Agreement, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with transactions
contemplated by this Agreement.
9.10 NO CLAIM REGARDING SHARE OWNERSHIP. There must not have been made
or threatened by any person or entity any claim asserting that such person or
entity (a) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any share of, or any other voting, equity,
or ownership interest in, the Company, or (b) is entitled to all or any portion
of the Purchase Consideration payable for the Sale Shares.
9.11 CORPORATE APPROVALS. The transactions contemplated by this
Agreement shall have been approved by Parent's and Buyer's Board of Directors.
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9.12 COMPLIANCE WITH LAWS; REGULATORY APPROVALS. Sellers shall have
(a) complied with all applicable federal, state and foreign securities laws in
connection with the delivery of the Sale Shares in accordance with Section
3.1(a) hereof and (b) received all federal, state and foreign regulatory
approvals applicable to this Agreement and the transactions contemplated
hereunder.
9.13 APPLICABLE EXEMPTION. There shall be available to Buyer an
exemption from registration under the Securities Act of 1933, as amended, and
under all applicable state securities laws, with respect to the offer, sale and
issuance of Buyer's Common Stock to Sellers hereunder.
10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE. Sellers'
obligation to sell the Sale Shares and to take the other actions required to be
taken by Sellers at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Sellers, in whole or in part):
10.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
10.2 CLOSING DELIVERIES. Buyer shall have delivered to Sellers all
items required to be delivered by Buyer pursuant Section 3.2 hereof.
10.2 BUYER'S PERFORMANCE. All covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
10.3 EMPLOYMENT AGREEMENT. Buyer shall have entered into an Employment
Agreement, in substantially the form attached hereto as Exhibit D, with Kefford.
10.4 COMPLIANCE WITH LAWS; Regulatory Approvals. Buyer shall have (a)
complied with all applicable federal, state and foreign securities laws in
connection with the delivery of shares of Buyer's Common Stock in accordance
with Section 3.2(a) hereof and (b) received all federal, state and foreign
regulatory approvals applicable to this Agreement and the transactions
contemplated hereunder.
11. TERMINATION.
11.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated: (a) by either Buyer or Sellers if a material
breach of any provision of this Agreement has been committed by the other party
and such breach has not been waived; (b) (i) by Buyer if any of the conditions
set forth in Section 9 hereof has not been satisfied as of the Closing Deadline
(as defined below) or if satisfaction of such a condition is or becomes
impossible prior to
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the Closing Deadline (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions set forth
in Section 10 hereof has not been satisfied as of the Closing Deadline or if
satisfaction of such a condition is or becomes impossible prior to the Closing
Deadline (other than through the failure of Sellers or Sellers to comply with
their obligations under this Agreement) and Sellers have not waived such
condition on or before the Closing Date; (c) by mutual consent of Buyer and
Sellers; or (d) by Buyer or Sellers if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before March 31, 2001.
11.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 11.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 11.1, all
further obligations of the parties under this Agreement will terminate;
provided, however, that if this Agreement is terminated by a party because of
the breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
12. INDEMNIFICATION.
12.1 Sellers shall, jointly and severally, indemnify and hold harmless
Buyer as to the following matters: (a) any and all damages, losses,
deficiencies, liabilities, costs and expenses resulting from, relating to or
arising out of any breach of representation or warranty, non-fulfillment of any
agreement or covenant, omission or misrepresentation by the Company or Sellers
hereunder; (b) any and all claims, demands, causes of action or proceeding
against the Company, whether arising before or after the date hereof, but
relating to facts, events or circumstances in existence or occurring on or prior
to the date hereof, except to the extent disclosed in this Agreement; and (c)
any and all actions, suits, proceedings, demands, judgments, costs, and related
legal expenses reasonably incurred, incident to any of the foregoing or to
enforce this Section 12.1. Each Seller, individually, shall indemnify and hold
harmless Buyer as to any and all damages, losses, deficiencies, liabilities,
costs and expenses resulting from, relating to or arising out of any breach of a
representation or warranty made by such Seller individually in Section 5 above.
12.2 Buyer shall indemnify and hold harmless Sellers as to the
following matters: (a) any and all damages, losses, deficiencies, liabilities,
costs and expenses resulting from, relating to or arising out of any breach of
representation or warranty, non-fulfillment of any agreement or covenant,
omission or misrepresentation hereunder; and (b) any and all actions, suits,
proceedings, demands, judgments, costs, and related legal expenses reasonably
incurred, incident to any of the foregoing or to enforce this Section 12.
12.3 With respect to indemnification hereunder relating to third party
claims, promptly after receipt by an indemnified party under Section 12.1 or
12.2 of notice of the commencement of any proceeding against it, such
indemnified party will, if a claim is to be made
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against an indemnifying party under such section, give notice to the
indemnifying party of the commencement of such claim, but the failure to notify
the indemnifying party will not relieve the indemnifying party of any liability
that it may have to any indemnified party, except to the extent that the
indemnifying party demonstrates that the defense of such action is prejudiced by
the indemnifying party's failure to give such notice. If any such proceeding is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such proceeding, the indemnifying party will be
entitled to participate in such proceeding and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
proceeding and provide indemnification with respect to such proceeding), to
assume the defense of such proceeding with counsel satisfactory to the
indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 12 for any fees of other
counsel or any other expenses with respect to the defense of such proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a proceeding: (a) it will be
conclusively established for purposes of this Agreement that the claims made in
that proceeding are within the scope of and subject to indemnification; (b) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (i) there is no finding or
admission of any violation of any legal requirements or any violation of the
rights of any person or entity and no effect on any other claims that may be
made against the indemnified party, and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (c) the
indemnified party will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any proceeding and the indemnifying
party does not, within fifteen (15) days after the indemnified party's notice is
given, give notice to the indemnified party of its election to assume the
defense of such proceeding, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or settlement effected
by the indemnified party. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such proceeding, but
the indemnifying party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld). Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a proceeding is brought against any
indemnified party for purposes of any claim that an indemnified party may have
under this Agreement with respect to such proceeding or the matters alleged
therein, and agree that process may be served on Sellers with respect to such a
claim anywhere in the world.
12.4 A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.
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12.5 Notwithstanding any other provision of this Agreement, the total
sums to be paid by an indemnifying party pursuant to the indemnification
obligations under this Agreement shall not, in the aggregate, exceed: (a) if the
indemnifying party is a Seller, the amount of the Purchase Consideration
received by such Seller; or (b) if the indemnifying party is Buyer, the Purchase
Consideration.
12.6 Upon notice to Sellers specifying in reasonable detail the basis
for such set-off, Buyer may set off any amount to which it may be entitled under
this Section 12 against consideration otherwise payable to Sellers pursuant to
Section 2.3. The exercise of such right of set-off by Buyer in good faith,
whether or not ultimately determined to be justified, will not constitute an
event of default hereunder. Neither the exercise of nor the failure to exercise
such right of set-off will constitute an election of remedies or limit Buyer in
any manner in the enforcement of any other remedies that may be available to it.
13. POST-CLOSING COVENANTS.
13.1 To the extent that Buyer has not acquired 100% of the issued and
outstanding shares of the Company at Closing, Xxxx X. Xxxxxxx shall use his best
efforts to cause all of the Minority Shareholders to sell all of the Ordinary
Shares owned by such Minority Shareholders to Buyer, in any lawful manner of
sale deemed desirable by Buyer, such that Buyer shall own 100% of the Company
within 30 days following the Closing.
13.2 Following Closing, each of the parties hereto agrees that it will
keep confidential and will not use, disclose or divulge, the terms and
conditions of this Agreement and the transactions contemplated hereby; provided,
however, that each party may disclose such matters as required by law or by the
rules or regulations of any stock exchange applicable to such party, and such
matters as are required to be disclosed in connection with consummating all of
the transactions and actions contemplated by this Agreement. Notwithstanding the
foregoing, Buyer may issue a press release (or releases) regarding the
transactions contemplated hereby, the content of which must be approved in
advance by Sellers, which approval shall not be unreasonably withheld.
13.3 Within ninety days following the determination of the amount of
the Earn Out Payment, if any, payable by Buyer to Sellers, Parent shall file a
registration statement on either Form S-3 or such other appropriate form, the
choice of which will be at Parent's sole election, with the Securities and
Exchange Commission for resale of the Common Stock under the Securities Act and
use commercially reasonable efforts to cause such registration statement to
become effective as soon as practicable following such filing.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) All representations, indemnifications, warranties, and agreements
made by Buyer and Sellers in this Agreement or pursuant hereto shall survive the
date of this Agreement.
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(b) Notwithstanding any investigation or audit conducted before or
after the date hereof, the parties shall be entitled to rely upon the
representations and warranties set forth in this Agreement.
15. EXPENSES. Each of Sellers and Buyer shall pay their own respective
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement, including, without limitation, legal and
accounting fees and expenses, and the fees and expenses of any investment banker
or financial advisor engaged in connection with the sale of the Sale Shares.
16. FURTHER ACTIONS AND ASSURANCES. Sellers and Buyer shall execute and
deliver any and all documents, and shall cause any and all other action to be
taken after the date hereof, which may be necessary or proper to effect or
evidence the provisions of this Agreement and the transactions contemplated
hereby.
17. COUNTERPARTS. This Agreement may be executed in several counterparts
each of which is an original and any Seller may become a party hereto by
executing a counterpart hereof. This Agreement and any counterpart so executed
shall be deemed to be one and the same instrument.
18. CONTENTS OF AGREEMENT; PARTIES IN INTEREST. This Agreement sets forth
the entire understanding of the parties. Any previous agreements or
understandings between the parties regarding the subject matter hereof are
merged into and superseded by this Agreement. This Agreement may not be amended
except by a writing executed by the party to be charged with the amendment. All
representations, warranties, covenants, terms conditions, and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, legal representatives, successors, and permitted
assigns of Sellers and Buyer.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF
ILLINOIS, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. ALL
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENT TO SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES LOCATED IN THE STATE OF ILLINOIS (THE "ILLINOIS COURTS"), FOR ANY
LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT, WAIVE ANY OBJECTION TO
THE LAYING OF VENUE OF ANY SUCH LITIGATION IN THE ILLINOIS COURTS AND AGREES NOT
TO PLEAD OR CLAIM THAT SUCH LITIGATION BROUGHT IN ANY ILLINOIS COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY AGREES TO ACCEPT SERVICE OF PROCESS
IN THE MANNER OF THE GIVING OF NOTICES STATED HEREIN IN SECTION 24 AND CONSENTS
TO THE IN PERSONAM JURISDICTION OF THE ILLINOIS COURTS TO HEAR AND RESOLVE ANY
DISPUTE INVOLVING OR ARISING FROM THIS AGREEMENT.
20. SECTION HEADINGS AND GENDER. The section headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. The use of the masculine pronoun
herein when referring to any party has been for convenience
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only and shall be deemed to refer to the particular party intended regardless of
the actual gender of such party.
21. SCHEDULES. All exhibits and schedules referred to in this Agreement
are intended to be and are hereby specifically made a part of this Agreement.
22. SEVERABILITY. Any provision of this Agreement which is found to be
invalid or unenforceable by a court of competent jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such invalidity or unenforceability shall not invalidate or render unenforceable
such provision in any other jurisdiction.
23. CURRENCY AMOUNTS. Unless otherwise specified in this Agreement, all
dollar amounts are in United States dollars.
24. NOTICES. All notices which are required or permitted hereunder shall
be sufficient if given in writing and delivered personally, by registered or
certified mail, postage prepaid or via facsimile, as follows (or to such other
addressee as shall be set forth in a notice given in the same manner):
If to Buyer or Parent to:
VASCO Data Security International, Inc.
0000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxx Xxxxxx, Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
0000 00xx Xxxxxx XX
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to Sellers or the Company to:
Xxxx X. Xxxxxxx
c/- Xxxxx 0
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XXX 0000
Fax: x0 0000 0000
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25. ASSIGNMENT. The rights and obligations of Sellers under this Agreement
may not be assigned without the consent of Buyer. Buyer may assign its rights
and obligations under this Agreement to any affiliate or direct or indirectly
owned subsidiary.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereby acknowledge that they have read the
foregoing Agreement and each has been independently advised as to the terms
hereof by their own separate counsel and by the execution hereof below, consent
to be bound by the terms of this Agreement.
BUYER:
VASCO DATA SECURITY, INC.
By: ___________________________
Name:
Title:
PARENT:
VASCO DATA SECURITY INTERNATIONAL, INC.
By: ___________________________
Name:
Title:
COMPANY:
IDENTIKEY LIMITED
By:__________________________
Xxxx X. Xxxxxxx
Chief Executive Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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SELLERS:
XXXX X. XXXXXXX
-----------------------------
XXXX XXXXXXX
-----------------------------
UNION TECHNOLOGIES LIMITED
By: ___________________________
Name:
Title:
MURANA INVESTMENTS PTY LTD
By: ___________________________
Name: Xxxx X. Xxxxxxx
Title:
XXXXX XXXXX
-----------------------------
XXXXXX XXXXXXX
-----------------------------
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List of Exhibits
Exhibit A - List of Sellers and Allocation of Closing Payment
Exhibit B - Allocation of Earn Out Payment
Exhibit C - Seller Closing Certificate
Exhibit D - Xxxx Xxxxxxx Employment Agreement
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EXHIBIT A
LIST OF SELLERS AND ALLOCATION OF CLOSING PAYMENT
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NUMBER OF VASCO SHARES
NAME OF SHAREHOLDER TO BE RECEIVED AS CLOSING
PAYMENT*
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Xxxx X. Xxxxxxx 113,177.4437
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Xxxx Xxxxxxx 127,780.9848
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Union Technologies Limited 109,526.5584
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Murana Investments Pty Ltd 1,825.4426
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Xxxxx Xxxxx 7,301.7706
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Xxxxxx Xxxxxxx 7,301.7706
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TOTAL 366,913.9705
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* Fractional shares will not be issued. Sellers will receive cash in lieu of
fractional shares as specified in Section 2.4 of this Agreement.
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EXHIBIT B
ALLOCATION OF EARN OUT PAYMENT
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NAME OF SHAREHOLDER SHARE OF
EARN OUT PAYMENT
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Xxxx X. Xxxxxxx 27.8305%
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Xxxx Xxxxxxx 31.4215%
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Union Technologies Limited 26.9327%
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Murana Investments Pty Ltd 0.4489%
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Xxxxx Xxxxx 1.7955%
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Xxxxxx Xxxxxxx 1.7955%
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TOTAL 90.2247%
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EXHIBIT C
CLOSING CERTIFICATE OF SELLERS
(To be provided)
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EXHIBIT D
XXXX XXXXXXX EMPLOYMENT AGREEMENT
(See attached)
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