1
EXHIBIT 99
PURCHASE AND SALE AGREEMENT
BY AND AMONG
SOFTWARE SPECTRUM, INC., SOFTWARE SPECTRUM (NZ) LIMITED
AND
ESSENTIALLY GROUP LIMITED,
ESSENTIALLY GROUP (NZ) LIMITED,
ESSENTIALLY SOFTWARE (WELLINGTON) LIMITED,
THE MCNABB FAMILY TRUST,
MCNABB NO. 2 FAMILY TRUST,
MCNABB NO. 3 FAMILY TRUST,
RMAD TRUST, DAVID COLVIN AND GARY MCNABB
APRIL 2, 1996
2
TABLE OF CONTENTS
Page
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ARTICLE I
PURCHASE AND SALE . . . . . . . . 2
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1.1 Purchase Transaction . . . . . . . . . . . . . . . . . . . . . . . . 2
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1.2 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . 2
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1.3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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1.4 Transfer and Conveyance . . . . . . . . . . . . . . . . . . . . . . 4
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1.5 Assumption of Certain Obligations . . . . . . . . . . . . . . . . . 4
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ARTICLE II
CONSIDERATION . . . . . . . . . . . 5
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2.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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2.2 Sellers' Representative . . . . . . . . . . . . . . . . . . . . . . 7
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2.3 Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING GROUP . . . . . . . 9
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3.1 Organization and Authorization . . . . . . . . . . . . . . . . . . . 9
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3.2 Existence and Good Standing . . . . . . . . . . . . . . . . . . . . 9
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3.3 Capital Stock of . . . . . . . . . . . . . . . . . . . . . . . . . 10
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3.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 12
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3.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.7 Assets and Properties . . . . . . . . . . . . . . . . . . . . . . . 13
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3.8 Environmental Laws and Regulations. . . . . . . . . . . . . . . . . 15
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3.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.10 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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3.12 Litigation and Related Matters . . . . . . . . . . . . . . . . . . . 17
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3.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.14 Trademarks, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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3.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 18
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3.16 Employees; Employee Relations . . . . . . . . . . . . . . . . . . . 20
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3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.18 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.19 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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3.20 Interests in Customers, Suppliers, Etc. . . . . . . . . . . . . . . 23
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3.21 Business Relations . . . . . . . . . . . . . . . . . . . . . . . . . 23
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3.22 Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . 23
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3.23 Bank Accounts and Powers of Attorney . . . . . . . . . . . . . . . . 23
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3.24 Accuracy of Information Furnished . . . . . . . . . . . . . . . . . 23
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3.25 Availability of Documents . . . . . . . . . . . . . . . . . . . . . 23
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3.26 Brokerage, Financial Advisor or Finder Fees . . . . . . . . . . . . 24
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3.27 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 24
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3.28 Security Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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ARTICLE IV
(i)
3
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . 26
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4.1 Organization and Authorization . . . . . . . . . . . . . . . . . . . 26
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4.2 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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4.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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4.4 Brokerage, Financial Advisor or Finder Fees . . . . . . . . . . . . 27
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4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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4.6 Title to Common Stock . . . . . . . . . . . . . . . . . . . . . . . 27
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4.7 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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4.8 Financial Statements of SSI . . . . . . . . . . . . . . . . . . . . 28
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4.9 Operations of SSI . . . . . . . . . . . . . . . . . . . . . . . . . 28
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4.10 Litigation or Investigation of SSI . . . . . . . . . . . . . . . . . 28
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ARTICLE V
COVENANTS; REGISTRATION OF SHARES . . . . . . . . . . . . . . . . 28
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5.1 Course of Conduct by the Company and each Subsidiary . . . . . . . . 28
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5.2 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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5.3 Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . 33
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5.4 Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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5.5 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.6 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.7 Registration of Purchase Shares . . . . . . . . . . . . . . . . . . 34
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5.8 Information in Registration Statement . . . . . . . . . . . . . . . 36
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5.9 Holding the Purchase Shares . . . . . . . . . . . . . . . . . . . . 36
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5.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . 36
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5.11 Release from Guarantees . . . . . . . . . . . . . . . . . . . . . . 37
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5.12 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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5.13 Access to Books and Records . . . . . . . . . . . . . . . . . . . . 37
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5.14 Change of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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5.15 Assignment of Contracts and Rights . . . . . . . . . . . . . . . . . 38
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . 38
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6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 38
------------------------------
6.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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6.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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6.4 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . 39
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6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 39
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6.6 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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6.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 39
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6.8 No Transfers to Affiliates . . . . . . . . . . . . . . . . . . . . . 39
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6.9 Compliance with Section 5.1 . . . . . . . . . . . . . . . . . . . . 39
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6.10 Deliveries Relating to Stock . . . . . . . . . . . . . . . . . . . . 39
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6.11 Additional Deliveries Relating to the Assets . . . . . . . . . . . . 40
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6.12 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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6.13 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 41
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6.14 Satisfaction of Indebtedness; Repayment of Advances . . . . . . . . 41
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6.15 Government Filings . . . . . . . . . . . . . . . . . . . . . . . . . 41
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6.16 Bank Account Reconciliation. . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE VII
(ii)
4
CONDITIONS TO OBLIGATIONS OF THE SELLING GROUP . . . . . . . . . . 41
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7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . 41
------------------------------
7.2 Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 42
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7.3 Certificate of Buyer . . . . . . . . . . . . . . . . . . . . . . . . 42
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7.4 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . 42
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7.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 42
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7.6 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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7.7 Bill of Sale, Assignment and Assumption Agreement . . . . . . . . . 42
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7.8 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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7.9 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 42
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7.10 Total Consideration . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE VIII
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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8.2 Delivery of the Shares . . . . . . . . . . . . . . . . . . . . . . . 43
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8.3 Conveyance of the Assets . . . . . . . . . . . . . . . . . . . . . . 43
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8.4 Payments to the Selling Group . . . . . . . . . . . . . . . . . . . 43
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8.5 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE IX
TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . 44
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9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 44
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10.1 Buyer's Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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10.2 Selling Group's Losses . . . . . . . . . . . . . . . . . . . . . . . 45
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10.3 Notice of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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10.4 Right to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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10.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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10.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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10.7 Satisfaction of Claims from Escrow . . . . . . . . . . . . . . . . . 48
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10.8 Waiver of Contribution and Indemnification . . . . . . . . . . . . . 48
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ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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11.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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11.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 48
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11.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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11.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.5 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.6 Modification and Waiver . . . . . . . . . . . . . . . . . . . . . . 49
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11.7 Schedules, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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11.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 51
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11.11 Expenses and Finders' Fees . . . . . . . . . . . . . . . . . . . . . 51
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11.12 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . 51
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11.13 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . 51
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11.14 New Zealand Currency . . . . . . . . . . . . . . . . . . . . . . . . 52
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11.15 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 52
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(iv)
6
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of the 2nd day of April 1996, by and among Software Spectrum,
Inc., a Texas corporation ("SSI"), Software Spectrum (NZ) Limited, duly
incorporated under the laws of New Zealand ("Hybrid") (SSI and Hybrid are,
jointly and severally, referred to herein as "Buyer"), Essentially Group
Limited, duly incorporated under the laws of New Zealand (the "Company"),
Essentially Group (NZ) Limited, duly incorporated under the laws of New Zealand
and a wholly-owned subsidiary of the Company ("NZ"), Essentially Software
(Wellington) Limited, duly incorporated under the laws of New Zealand and a
wholly-owned subsidiary of NZ ("Wgtn"), McNabb No. 2 Family Trust dated
November 1, 1990, McNabb No. 3 Family Trust dated November 1, 1990, The McNabb
Family Trust dated July 1, 1986 (collectively, the "McNabb Family Trusts"),
RMAD Trust dated May 23, 1993 ("RMAD"), David Colvin, individually ("Colvin"),
Gary McNabb, individually ("McNabb") (the Company, NZ and Wgtn are sometimes
referred to herein individually as a "Seller" and collectively as the
"Sellers") (the Company, NZ, Wgtn, the McNabb Family Trusts, RMAD, Colvin and
McNabb are sometimes referred to herein collectively as the "Selling Group").
The Trustees of the McNabb Family Trusts and the RMAD Trust join in this
Agreement as part of the Selling Group not in their personal capacities but
solely for the purpose of binding the assets of the McNabb Family Trusts and
the RMAD Trust and in their capacities as trustees thereof and with the intent
to bind only the individuals for the time being serving in the office of
Trustee or Trustees of the said Trusts during the respective periods that he,
she or they hold that office and not thereafter and all the liabilities and
obligations of the Trustees shall for all purposes be construed not as
unlimited personal liabilities but only as liabilities to perform and observe
the covenants and provisions of this agreement out of and so far as will extend
the property and funds of the Trustees or their successors as Trustees in the
proper and normal course of their administration of the Trust and properly
applicable to the purpose of the Trusts. All references to the Selling Group
in this Agreement shall refer to such Trustees in their capacities as trustees
and not in their personal capacities, however, nothing herein shall limit Anna
McNabb's liability insofar as her marital assets would otherwise be bound as
the spouse of Gary McNabb. McNabb and Colvin are executing this Agreement in
consideration of the benefits to be derived by them through their interests in
the Sellers.
W I T N E S S E T H :
WHEREAS, the McNabb Family Trusts and RMAD currently own all of the
issued ordinary shares of the Company; and
WHEREAS, the Company currently owns 1,000 ordinary shares of
Essentially Group (Australia) Limited, duly incorporated under the laws of New
Zealand ("Australia") (the "Australia Shares"); and
WHEREAS, the Company desires to sell to SSI, and SSI desires to buy
from the Company, the Australia Shares; and
WHEREAS, the Company currently owns all of the issued ordinary shares
of share capital of NZ and Wgtn; and
7
WHEREAS, the Sellers desire to sell to Hybrid, and Hybrid
desires to buy from the Sellers, substantially all of the assets of the
business operations of the Sellers in New Zealand;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase Transaction. On Closing Date (as defined below), (a)
SSI agrees to purchase from the Company, and the Company agrees to sell to SSI,
the Australia Shares and (b) Hybrid agrees to purchase from the Sellers, and
the Sellers agree to sell to Hybrid, the Assets (as defined below) for the
Total Consideration (as defined below).
1.2 Purchase and Sale of Assets. The Company, NZ and Wgtn shall,
and the McNabb Family Trusts, RMAD, McNabb and Colvin shall cause the Company,
NZ and Wgtn to sell, convey, transfer, assign and deliver to Hybrid, and Hybrid
will acquire and accept from the Company, NZ and Wgtn, at the Closing (as
defined below), the following assets and properties, free and clear of any and
all Liens (as herein defined) (collectively the "Assets"):
(a) All of the interest in real property of the Company,
NZ and Wgtn subject to Real Property Leases (as defined in Section
3.7) listed on Schedule 1.2(a), including, without limitation, all
buildings, improvements, rights-of-way, easements, rights, liberties,
privileges, hereditaments and appurtenances therefor and located
thereon.
(b) All equipment, supplies, furniture, computer
hardware, telephone equipment, copiers, fixtures, improvements and
other tangible personal property, wherever located, owned by the
Company, NZ and Wgtn for use or used in the operation of their
respective businesses, and otherwise including, without limitation,
the equipment, supplies, furniture, computer hardware, telephone
equipment, copiers, fixtures, improvements and other tangible property
described in Schedule 1.2(b) and, to the extent actually assignable or
transferable, all rights to the agreements with and warranties
received from the manufacturers and distributors of all such personal
property and fixtures and any related contract rights, choses in
action, claims, credits, rights of recovery and setoffs with respect
to such personal property and fixtures.
(c) All of the Company's, NZ's and Wgtn's right, title
and interest in, to and under the leases and rental agreements in
respect of equipment or other tangible personal property for use or
used in the operation of their respective businesses listed in
Schedule 1.2(c) (the "Personal Property Leases"). Schedule 1.2(c)
sets forth the material terms of each Personal Property Lease,
including lease term, cancellation rights, monthly rental and renewal
terms.
(d) All Intellectual Property (has herein defined)
possessed or owned by the Company, NZ and Wgtn and used in the
operation of their respective businesses
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or necessary for the operation of their respective businesses, and all
right, title and interest of the Company, NZ and Wgtn in, to and under
licenses, sublicenses or like agreements providing the Company, NZ and
Wgtn any right or concession to use any software, information or other
intellectual property, and, in each case, for use or used in the
operation of their respective businesses or necessary for the
operation of their respective businesses, including all technology,
know-how, trade secrets, formulae, drawings, designs, systems, forms,
technical manuals, data, computer programs, product information and
development work-in-progress and all documentary evidence thereof
(including the rights of the Company, NZ and Wgtn to prevent the use
by others), and otherwise including, but not limited to, the
Intellectual Property described in Schedule 1.2(d). All right, title
and interest of the Company, NZ and Wgtn in, to and under those
trademarks, trademark registrations, trademark registration
applications, servicemarks, trade names, all other names and slogans
embodying business, product or service goodwill and copyrights and
copyrighted material described in Schedule 1.2(d), and which is a true
and complete list of all such rights that are primarily related to the
operation of their respective businesses.
(e) All licenses, franchises, permits and governmental
authorizations (including any of the foregoing issued or granted by
any federal, state or local government) relating to the conduct of the
Company's, NZ's and Wgtn's business, to the extent assignable or
transferable, including, without limitation, the licenses, franchises,
permits and governmental authorizations described in Schedule 1.2(e).
(f) All of the Company's, NZ's and Wgtn's right, title
and interest in, to and under all contracts and agreements, customer
purchase orders, customer sales orders, sale and distribution
agreements, volume license and maintenance agreements, joint venture
interests, rights to rebates and allowances of any kind and other
instruments and agreements relating to the operation of their
respective businesses, and all goodwill associated with their
respective businesses, including, without limitation, the other
contracts, agreements and other assets described in Schedule 1.2(f).
(g) All of the Company's, NZ's and Wgtn's books and
records (including all disks, tapes and other media-storage data and
information), mailing lists, pricing files and formulae, vendor data,
equipment maintenance records, warranty information, records of
facilities operations, business plans, standard forms of documents,
manuals of operations or business procedures for use or used in the
operation of their respective businesses, wherever located, relating
to the their current operations, except Sellers shall be entitled to
retain the minute books and other records required by law to be
retained by Sellers, provided that Sellers will provide Buyer with
full and complete copies thereof.
(h) All insurance proceeds paid or payable to the
Company, NZ and Wgtn in respect of any damage to or destruction or
loss of any assets or rights of the Company, NZ and Wgtn relating to
their respective businesses whether or not reflected on the Schedules
referred to in this Section 1.2.
(i) All cash, bank deposits or similar cash and cash
equivalent items of the Company, NZ and Wgtn.
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(j) All of the Company's, NZ's and Wgtn's right, title
and interest in and to (a) the trade accounts receivable accrued in
accordance with GAAP (as defined below) arising from the operation of
their respective businesses listed in Schedule 1.2(j) or otherwise
arising in connection with their respective businesses, and (b) all
other accounts receivable listed in Schedule 1.2(j) or otherwise
arising from the operation of their respective businesses, including,
without limitation, advertising and promotional expenditures
reimbursable from suppliers under cooperative advertising and other
promotional and market development fund arrangements, amounts due from
vendors for returned inventory, vendor rebates, marketing expenses
payable by vendors and other programs.
(k) All stock in trade and inventories of the Company, NZ
and Wgtn wherever located listed on Schedule 1.2(k) or otherwise
existing or on hand at the Closing Date;
(l) All customer lists and prospective customer lists of
the Company, NZ and Wgtn wherever located;
(m) Any other asset for use or used in connection with
the Company's, NZ's and Wgtn's business (including, without
limitation, rights in telephone and facsimile numbers or communication
codes used by the Company, NZ and Wgtn) used in or necessary for the
conduct of their respective businesses.
All Schedules provided for in Section 1.2 will reflect the Assets as of the
most recent practicable date prior to the Closing Date and will be supplemented
and updated as of March 31, 1996 to reflect changes in such Schedules resulting
from the operations in the ordinary course of business consistent with past
practice of Sellers in New Zealand. Such updated Schedules are to be provided,
reviewed and agreed upon by Sellers and Buyer not later than April 30, 1996,
subject only to any changes to such Schedules to be reviewed and approved by
Buyer not later than June 30, 1996 in connection with the completion of the
Audit (as defined below) whereupon such Schedules shall become the definitive
Schedules under Section 1.2 of this Agreement.
1.3 Excluded Assets. The Company, NZ and Wgtn will not sell,
convey, transfer, assign or deliver to Hybrid, and Hybrid will not acquire from
the Company, NZ and Wgtn the assets, properties and rights listed on Schedule
1.3.
1.4 Transfer and Conveyance. The Company, NZ and Wgtn shall
execute and deliver to Hybrid at the Closing a Bill of Sale, Assignment and
Assumption Agreement in the form attached hereto as Exhibit A, and all such
other assignments, endorsements and instruments of transfer as shall be
necessary or appropriate to carry out the intent of this Agreement and as shall
be sufficient to vest in Hybrid title to all of the Assets and all right, title
and interest of the Company, NZ and Wgtn thereto.
1.5 Assumption of Certain Obligations. Hybrid will assume and
will be liable for the Company's, NZ's and Wgtn's obligations to render
performance arising after the Closing Date under the agreements and assets
specifically described on Schedules 1.2(a), 1.2(c), 1.2(d), 1.2(f), 1.2(k) and
Schedule 1.5 (but not any obligation for performance or obligation or liability
of the Company, NZ and Wgtn for default or nonperformance under any of the
assets or agreements listed on Schedules 1.2(a), 1.2(c), 1.2(d), 1.2(f), 1.2(k)
and Schedule
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1.5 arising prior to the Closing Date). Except as expressly provided herein,
Hybrid will not assume and will not be liable for any other debts, contracts,
leases, liabilities, licenses, agreements, instruments, arrangements,
commitments, obligations, restrictions, disabilities or duties of the Company,
NZ or Wgtn (including, but not limited to, any and all of the obligations of
the Company and any member of the Selling Group to Bancorp Investments
Limited), other than those arising after the Closing Date under the assets and
agreements listed on Schedules 1.2(c), 1.2(d), 1.2(f), 1.2(k) and Schedule 1.5.
Hybrid shall execute and deliver to the Company, NZ and Wgtn at the Closing the
Bill of Sale, Assignment and Assumption Agreement in the form attached hereto
as Exhibit A.
ARTICLE II
CONSIDERATION
2.1 Consideration.
(a) The aggregate consideration for the Australia Shares
and the Assets (the "Total Consideration") shall be the product of (i)
ten (10) times (ii) the Company's consolidated "net earnings" (as
defined herein) for the Company's fiscal year ending March 31, 1996,
subject to adjustment as provided in Section 2.1(c) below. At
Closing, the Cash Portion (as defined herein) to be paid and the
Purchase Shares (as defined herein) to be issued will be based upon
the most current reasonable estimate of net earnings of the Company
(not to exceed $1,370,000 (New Zealand)) for the fiscal year ending
March 31, 1996, prepared by the Company and reviewed by SSI. The
Total Consideration shall be paid by Buyer to Sellers as follows:
(i) as consideration for the Assets, Buyer shall pay to
the Sellers the sum of cash equal to the product of
(A) .75 times (B) the Total Consideration (the "Cash
Portion"); and
(ii) as consideration for the Australia Shares, SSI shall
issue to Company in the aggregate that number of
shares of common stock, par value $.01 per share, of
Buyer ("Buyer Common Stock") determined by (A) (1)
multiplying the Total Consideration by (2) .25 and
(B) taking the product therefrom and dividing such
amount by the average of the closing bid and ask
prices of Buyer Common Stock (the "Average Share
Price") as reported on the National Association of
Securities Dealers - National Market System for ten
(10) consecutive trading days ending three (3)
business days prior to the Closing Date. No
fractional shares shall be issued in connection with
this transaction. The Company will receive the
largest whole number of shares of Buyer Common Stock
deliverable pursuant to this Section 2.1(a)(ii) (the
"Purchase Shares") and an amount in cash equal to the
Average Share Price multiplied by the fractional
shares deliverable pursuant to the computation set
forth in this Section 2.1(a)(ii).
(b) At the Closing Buyer shall deliver:
(i) $5.0 million (New Zealand) of the Total
Consideration, allocated between the Cash Portion and
the Purchase Shares as set forth below
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(the "Escrowed Amount"), to such escrow agent as
shall be chosen by mutual agreement of the Sellers'
Representative (as defined herein) and Buyer prior to
the Closing (the "Escrow Agent") to be held and
disbursed pursuant to the Escrow Agreement (as
defined below). The Escrowed Amount shall include an
Audit Escrow consisting of $3.0 million of the Cash
Portion and $1.0 million (New Zealand) of the
Purchase Shares (the "Audit Escrow"), to be held
pending any adjustment in the Total Consideration as
a result of the audit of the Company's financial
statements in accordance with the provisions of
Section 2.1(c) of this Agreement and the Escrow
Agreement. The balance of the Escrowed Amount of
$1.0 million (New Zealand) shall be retained from the
Cash Portion to be held by the Escrow Agent to
satisfy claims and expenses, if any, of Buyer arising
under this Agreement pursuant to Article X hereof.
The Cash Portion of the Escrowed Amount will be
invested in interest-bearing securities pursuant to
the terms of the Escrow Agreement attached hereto as
Exhibit B, with such changes or additions thereon as
may be requested by the Escrow Agent and mutually
agreeable to Sellers' Representative and Buyer (the
"Escrow Agreement"). Buyer and Sellers'
Representative agree to enter into the Escrow
Agreement at the Closing;
(ii) to the Sellers the balance of the Cash Portion of the
Total Consideration by check or wire transfer to an
account designated by Sellers; and
(iii) to the Company, the balance of the Purchase Shares.
(c) The Total Consideration shall be subject to
adjustment based on the actual net earnings of the Company on a
consolidated basis as reflected in the Company's audited financial
statements for the fiscal year ending March 31, 1996, such audit to be
performed by Coopers & Lybrand and shall be completed within sixty
(60) days following the Company's fiscal year ending March 31, 1996
(the "Audit"). As used in this Agreement, "net earnings" shall mean
the consolidated net after tax earnings of the Company as reflected on
the Company's statements of earnings for the fiscal year ended March
31, 1996 prepared in conformity with GAAP (as defined herein)
consistently applied, without any adjustment thereto (either upwards
or downwards) for extraordinary or nonrecurring items or events. The
Company shall deliver the Audit to Buyer within one day after receipt
thereof by the Company. Buyer shall have thirty (30) days to have the
Audit reviewed by Buyer and an independent accounting firm of its
choosing. In connection with such review, Buyer shall have complete
access to the Company's auditors and the audit workpapers. If Buyer's
auditors disagree with any aspect of the audit, Buyer and Sellers'
Representative shall mutually agree upon an independent accounting
firm to resolve such dispute. The fees of such third independent
accounting firm shall be paid one-half from the Cash Portion of the
Audit Escrow and one-half by Buyer. If, based on such audited
financial statements, the Total Consideration (as calculated pursuant
to Section 2.1(a) above) should be adjusted upward, Buyer shall pay to
the Sellers in cash the aggregate amount of the increased
consideration, to be allocated among the Sellers in accordance with
the percentages set forth on the signature page
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of this Agreement; provided, however, that in no event shall the Total
Consideration, as adjusted, exceed $16.4 million (New Zealand). If,
based on such audited financial statements, the Total Consideration
(as calculated pursuant to Section 2.1(a) above) should be adjusted
downward, the Buyer shall send written instruction to the Escrow
Agent, with a copy to the Sellers' Representative, of the aggregate
amount of the consideration to be returned to Buyer which shall be
allocated among the Sellers in accordance with the percentages set
forth on the signature page of this Agreement. The Escrow Agent shall
promptly disburse such amount to Buyer, up to the Audit Escrow
balance. If the Total Consideration is adjusted downward by an amount
exceeding the Audit Escrow, in addition to the return of the full
amount of the Audit Escrow to Buyer, the Selling Group will cause the
amount of such excess consideration paid by Buyer to be returned to
Buyer within ten (10) days following such Audit. If the related party
advances set forth in Schedule 3.16 are less than the amount of such
advances determined by the Audit, the net difference will be paid to
the Buyer either from the Escrowed Amount or directly by the Selling
Group, at Buyer's option, within ten (10) days following such Audit.
(d) Payment and performance by the Buyer of liabilities
and obligations assumed under Section 1.5 shall be in addition to
payment of the Total Consideration by the Buyer under this Agreement.
2.2 Sellers' Representative.
(a) In order to efficiently administer (i) the waiver of
any condition to the obligations of the Sellers to consummate the
transactions contemplated hereby, and (ii) the defense and/or
settlement of any claims for which the Sellers may be required to
indemnify the Buyer and/or the Company pursuant to Article X hereof,
the Selling Group hereby designate Robert Parkinson, accountant, of
Auckland, as their representative (the "Sellers' Representative").
(b) The Selling Group hereby authorizes the Sellers'
Representative (i) to take all action necessary in connection with the
waiver of any condition to the obligations of the Selling Group to
consummate the transactions contemplated hereby, or the defense and/or
settlement of any claims for which the Selling Group may be required
to indemnify Buyer and/or the Company pursuant to Article X hereof,
(ii) to give and receive all notices required to be given under the
Agreement, and (iii) to take any and all additional action as is
contemplated to be taken by or on behalf of the Selling Group by the
terms of this Agreement.
(c) In the event that the Sellers' Representative dies,
becomes unable to perform his responsibilities hereunder or resigns
from such position, Gary McNabb, of Auckland, shall fill such vacancy
and shall be deemed to be the Sellers' Representative for all purposes
of this Agreement.
(d) All decisions and actions by the Sellers'
Representative, including without limitation any agreement between the
Sellers' Representative and Buyer relating to the defense or
settlement of any claims for which the Selling Group may be required
to indemnify Buyer and/or the Company pursuant to Article X hereof,
shall be binding upon all of the Selling Group, and no member of the
Selling Group shall have the right to object, dissent, protest or
otherwise contest the same.
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(e) By their execution of this Agreement, each member of
the Selling Group agrees with Buyer and with each other that:
(i) Buyer shall be able to rely conclusively on the
instructions and decisions of Sellers' Representative
as to the settlement of any claims for
indemnification by Buyer and/or the Company pursuant
to Article X hereof or any other actions required to
be taken by the Sellers' Representative hereunder,
and no party hereunder shall have any cause of action
against Buyer for any action taken by the Buyer in
reliance upon the instructions or decisions of the
Sellers' Representative;
(ii) all actions, decisions and instructions of the
Sellers' Representative shall be conclusive and
binding upon all of the Selling Group and no member
of the Selling Group shall have any cause of action
against the Sellers' Representative for any action
taken, decision made or instruction given by the
Sellers' Representative under this Agreement, except
for fraud or wilful breach of this Agreement by the
Sellers' Representative;
(iii) the provisions of this Section 2.2 are independent
and severable, are irrevocable and coupled with an
interest and shall be enforceable notwithstanding any
rights or remedies that any member of the Selling
Group may have in connection with the transactions
contemplated by this Agreement;
(iv) remedies available at law for any breach of the
provisions of this Section 2.2 are inadequate;
therefore, Buyer, the Selling Group and the Sellers'
Representative shall be entitled to temporary and
permanent injunctive relief without the necessity of
proving damages if Buyer, the Selling Group or the
Sellers' Representative brings an action to enforce
the provisions of this Section 2.2; and
(v) the provisions of this Section 2.2 shall be binding
upon the executors, heirs, legal representatives and
successors of each member of the Selling Group, and
any references in this Agreement to a member of the
Selling Group or the Selling Group shall mean and
include the successors to the Selling Group, rights
hereunder, whether pursuant to testamentary
disposition, the laws of descent and distribution or
otherwise.
(f) All fees and expenses incurred by the Sellers'
Representative shall be paid by the Selling Group.
2.3 Tax Considerations.
(a) The parties intend that the sale of the Assets is a
sale of a going concern and that Section 11(1)(c) of the New Zealand
Goods and Services Tax Act of 1985 (the "Act") shall apply to the sale
and purchase contemplated by this Agreement and that the purchase
price of the Assets has been determined on the basis
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that under the Act the sale is a supply to a registered person of a
taxable activity as a going concern and accordingly Goods and Services
Tax is charged to the Sellers at the rate of zero percent.
Accordingly, the Buyer warrants and represents to the Sellers that the
Buyer is and will be on Closing Date a registered person within the
meaning of that Act and undertakes to preserve all records referred to
in Section 75 of the Act which may be transferred to the Buyer
pursuant to this Agreement for such periods as may be required by law
and to make such records available to them and the Seller's
representatives as and when they shall reasonably require them.
(b) For the purposes of Part EH of the New Zealand Income
Tax Act of 1994, the parties agree and confirm that, for the purposes
of the definition of "core acquisition price" in Part EH of the Income
Tax Act, the consideration for the Assets is the lowest price, that
the parties would have agreed upon at which the Assets could be
purchased had the full purchase price for the Assets been paid on
Closing Date and that the consideration for the Assets does not
include any capitalized interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLING GROUP
Each member of the Selling Group hereby jointly and severally
represents and warrants to Buyer as follows:
3.1 Organization and Authorization. This Agreement has been duly
executed and delivered by the Selling Group and constitutes a valid and binding
obligation of each member of the Selling Group, enforceable in accordance with
its terms, except to the extent such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally.
3.2 Existence and Good Standing. The Company is a company duly
incorporated, validly existing and capable of suing and being sued under the
laws of New Zealand with all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The Company does not have any subsidiaries except for NZ, Wgtn,
Australia, The Essentially Group Pty Limited, duly incorporated under the
Corporations Law of Australia (company no. 058 645 677) ("Pty"), and
Essentially - Electronic Services Group Pty Ltd., duly incorporated under the
Corporations Law of Australia (company no. 071 264 492) ("Electronic") (each
individually, a "Subsidiary" and collectively the "Subsidiaries"). The
Subsidiaries are companies duly incorporated, validly existing and capable of
suing and being sued under the laws of New Zealand and/or Australia,
respectively, with all requisite corporate power and authority to own, lease
and operate their respective properties and to carry on their respective
businesses as now being conducted. Each of the Company and the Subsidiaries is
duly qualified or licensed as a foreign corporation and in good standing in
each jurisdiction in which the character or location of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary. Set forth on Schedule 3.2 is a list of the
jurisdictions in which the Company and each of the Subsidiaries is qualified or
licensed to do business as a foreign corporation.
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3.3 Capital Stock of Subsidiaries
(a) Australia has issued 1,000 ordinary shares. No other
shares have been issued. All of the Australia Shares have been
validly issued and are fully paid and nonassessable and no holder
thereof is entitled to any preemptive rights. There are no outstanding
conversion or exchange rights, subscriptions, options, warrants or
other arrangements or commitments obligating Australia to issue any
shares or other securities.
(b) At Closing, the Company will (i) own of record and
beneficially have good and marketable title to 1,000 of the Australia
Shares, representing all of the issued ordinary shares of Australia,
free and clear of any and all liens, security interests, encumbrances,
charges, adverse claims, options, rights, contracts, calls or
commitments of any character whatsoever and (ii) have the right to
vote the Australia Shares on any matters as to which any ordinary
shares of Australia are entitled to be voted under the laws of New
Zealand and Australia's Constitution, free of any right of any other
person.
(c) Pty's authorized share capital consists of (i)
500,000 ordinary shares, par value $1.00 per share, 100,000 "A" Class
Shares, par value $1.00 per share, 100,000 "B" Class Shares, par value
$1.00 per share, 100,000 "C" Class Shares, par value $1.00 per share,
100,000 "D" Class Shares, par value $1.00 per share, and 100,000
Redeemable Preference Shares, par value $1.00 per share, of which
three (3) shares are issued ordinary shares (the "Pty Shares"). No
other shares of share capital have been issued. All of the Pty Shares
have been validly issued and are fully paid and nonassessable and no
holder thereof is entitled to any preemptive rights. There are no
outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating Pty to issue
any shares or other securities.
(d) At Closing, Australia will (i) own of record and
beneficially have good and marketable title to three (3) of the Pty
Shares, representing all of the issued ordinary shares of Pty, free
and clear of any and all liens, security interests, encumbrances,
charges, adverse claims, options, rights, contracts, calls or
commitments of any character whatsoever and (ii) have the right to
vote the Pty Shares on any matters as to which any ordinary shares of
Pty are entitled to be voted under the laws of Australia and Pty's
Articles of Association, Memorandum of Association (or Constitution as
the case may be), free of any right of any other person.
(e) Electronic's authorized share capital consists of (i)
100,000,000 shares of ordinary capital stock, par value $1.00 per
share, of which two (2) shares are issued ordinary shares (the
"Electronic Shares"). No other shares of share capital have been
issued. All of the Electronic Shares have been validly issued and are
fully paid and nonassessable and no holder thereof is entitled to any
preemptive rights. There are no outstanding conversion or exchange
rights, subscriptions, options, warrants or other arrangements or
commitments obligating Electronic to issue any shares or other
securities.
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(f) At Closing, Pty will (i) own of record and
beneficially have good and marketable title to two (2) of the
Electronic Shares, representing all of the issued ordinary shares of
Electronic, free and clear of any and all liens, security interests,
encumbrances, charges, adverse claims, options, rights, contracts,
calls or commitments of any character whatsoever and (ii) have the
right to vote the Electronic Shares on any matters as to which any
ordinary shares of Electronic are entitled to be voted under the laws
of Australia and Electronic's Articles of Association, Memorandum of
Association (or Constitution as the case may be), free of any right of
any other person.
(g) NZ's authorized share capital consists of (i) 50,000
shares of ordinary capital stock, par value $1.00 per share, of which
50,000 shares are issued and fully paid ordinary shares (the "NZ
Shares"). No other shares of share capital are issued or outstanding.
All of the NZ Shares have been validly issued and are fully paid and
nonassessable and no holder thereof is entitled to any preemptive
rights. There are no outstanding conversion or exchange rights,
subscriptions, options, warrants or other arrangements or commitments
obligating Auckland to issue any shares or other securities.
(h) At Closing, the Company will (i) own of record and
beneficially have good and marketable title to 49,999 of the NZ Shares
(with the remaining one (1) share owned by McNabb Family Trust No. 2),
representing all of the issued and outstanding shares of NZ, free and
clear of any and all liens, security interests, encumbrances, charges,
adverse claims, options, rights, contracts, calls or commitments of
any character whatsoever and (ii) have the right to vote the NZ Shares
on any matters as to which any ordinary shares of NZ are entitled to
be voted under the laws of New Zealand and NZ's Articles of
Association, Memorandum of Association (or Constitution as the case
may be), free of any right of any other person.
(i) Wgtn's authorized share capital consists of (i) 1,000
shares of ordinary capital stock, par value $1.00 per share, of which
1,000 shares are issued ordinary shares (the "Wgtn Shares"). No other
shares of share capital are issued or outstanding. All of the Wgtn
Shares have been validly issued and are fully paid and nonassessable
and no holder thereof is entitled to any preemptive rights. There are
no outstanding conversion or exchange rights, subscriptions, options,
warrants or other arrangements or commitments obligating Wgtn to issue
any shares or other securities.
(j) At Closing, the Company will (i) own of record and
beneficially have good and marketable title to 999 of the Wgtn Shares
(with the remaining one (1) share owned by McNabb), representing all
of the issued and outstanding shares of Wgtn, free and clear of any
and all liens, security interests, encumbrances, charges, adverse
claims, options, rights, contracts, calls or commitments of any
character whatsoever and (ii) have the right to vote the Wgtn Shares
on any matters as to which any ordinary shares of Wgtn are entitled to
be voted under the laws of New Zealand and Wgtn's Articles of
Association, Memorandum of Association (or Constitution as the case
may be), free of any right of any other person.
3.4 Authorization.
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(a) Each of the Sellers has full corporate power, capacity
and authority to execute this Agreement and all other agreements and
documents contemplated hereby. The execution and delivery of this
Agreement and such other agreements and documents by the Sellers and
the consummation by the Sellers of the transactions contemplated
hereby have been duly authorized by the Sellers and no other corporate
action on the part of the Sellers is necessary to authorize and
perform the transactions contemplated hereby.
(b) Each member of the Selling Group (other than the
Sellers) has the full power, right, capacity and authority to execute
this Agreement and all other agreements and documents contemplated
hereby. No other action on the part of any member of the Selling
Group (other than the Sellers) is necessary to authorize and perform
the transactions contemplated hereby.
3.5 Financial Statements.
(a) The Selling Group has previously furnished to Buyer
(i) the audited balance sheet of the Company and the audited combined
balance sheet of the Subsidiaries as of March 31, 1995, (the "Audited
Balance Sheets") and the related combined and separate statements of
earnings, shareholders' funds and cash flows of the Subsidiaries for
the fiscal year then ended (collectively the "1995 Financial
Statements") and (ii) the unaudited balance sheet of the Company and
the Subsidiaries on a combined basis as of January 31, 1996, and the
related statements of earnings, shareholders' funds and cash flows of
the Company and the Subsidiaries on a combined basis for the ten month
period then ended (collectively the "Current Financial Statements").
The Audited Balance Sheets and the 1995 Financial Statements have been
prepared in conformity with generally accepted accounting practice (as
defined in the Financial Reporting Act 1993 (NZ)) consistently applied
("GAAP") and, in the case of the Audited Balance Sheets, have been
certified without qualification by Coopers & Lybrand. The Audited
Balance Sheets, the 1995 Financial Statements and the Current
Financial Statements (collectively the "Financial Statements") have
been delivered to the Buyer prior to the date of this Agreement.
(b) The 1995 Financial Statements present fairly the
financial condition, retained earnings, assets and liabilities of the
Company as of the date indicated therein and the results of operations
and cash flows of the Company for the period covered thereby in
conformity with GAAP. The Current Financial Statements present
fairly, in all material respects, the financial condition, retained
earnings, assets and liabilities of the Company as of the dates
indicated therein and the results of operation and cash flows of the
Company for the periods covered thereby and in the opinion of and to
the best knowledge and belief of management of Sellers, there are no
material adjustments necessary to be made to the Current Financial
Statements in order to conform such financial statements to GAAP.
(c) Except to the extent (and not in excess of the
amounts) reflected in the January 31, 1996 balance sheet included in
the Current Financial Statements or as disclosed on Schedule 3.5, the
Company has no liabilities or obligations whether accrued, absolute,
contingent, unasserted or otherwise (including, without limitation,
taxes payable and deferred taxes and interest accrued required to be
reflected in the
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Financial Statements or the notes thereto) other than current
liabilities incurred in the ordinary course of business, consistent
with past practice.
(d) The Selling Group has delivered to Buyer the audited
financial statements of each of the Subsidiaries as of and for the
fiscal year ended March 31, 1995, and interim financial statements for
each of the Subsidiaries as of January 31, 1996 (collectively the
"Subsidiary Financial Statements"). Except as reflected in the
Subsidiary Financial Statements, none of the Subsidiaries has any
liabilities or obligations whether accrued, absolute, contingent,
unasserted or otherwise (including without limitation, taxes payable
and deferred taxes and interest accrued required to be reflected in
the Subsidiary Financial Statements in the notes thereto).
3.6 Tax Matters. Each of the Company and the Subsidiaries has
correctly filed all income tax returns required to be filed by it and all
returns of other Taxes (as defined below) required to be filed by it and has
paid or properly has accrued in the Financial Statements all Taxes. Except as
set forth on Schedule 3.6, (i) no action or proceeding for the assessment or
collection of any Taxes is pending against the Company or any Subsidiary; (ii)
no deficiency, assessment or other claim for any Taxes has been asserted or
made against the Company or any Subsidiary that has not been fully paid or
finally settled; and (iii) no issue has been raised by any taxing authority in
connection with an audit or examination of any return of Taxes. To the extent,
if any, such Taxes are not due and payable, will be assessed following the date
of this Agreement for the current fiscal year, or are being contested in good
faith by appropriate proceedings, appropriate reserves have been established
(segregated to the extent required by GAAP) as required for the payment or
settlement thereof. No federal, state or provincial income tax returns of the
Company or any Subsidiary has been examined, and there are no outstanding
agreements or waivers extending the applicable statutory periods of limitation
for such Taxes for any period. All Taxes which the Company and any Subsidiary
has been required to collect or withhold have been duly withheld or collected
and, to the extent required, have been paid to the proper taxing authority. No
Taxes will be assessed on or after the Closing Date against the Company or any
Subsidiary for any tax period ending on or prior to the Closing Date, or for
any period ending after the Closing Date with respect to any portion of such
tax period that includes or is prior to the Closing Date other than for Taxes
disclosed on Schedule 3.6. "Taxes" shall mean all taxes, charges, fees,
duties, levies or other assessments including, without limitation, income,
excise, property, withholding, value added, sales, use and franchise taxes,
imposed by the New Zealand Government or the Australian Government, or any
province, county, local or foreign government or subdivision or agency thereof,
and including any interest, penalties or additions attributable thereto and,
without limiting the above, shall include PAYE tax, sales tax, income tax,
employment taxes, land tax, goods and services tax, local authority taxes,
levies and rates, customer levies and charges and taxes.
3.7 Assets and Properties.
(a) Personal Property. Except as set forth on Schedule
3.7 and except for inventory and supplies disposed of or consumed, and
accounts receivable collected and cash utilized, all in the ordinary
course of business consistent with past practice, each of the Company
and the Subsidiaries owns good, valid and marketable title to all of
its inventory, equipment and other personal property (both tangible
and intangible) reflected on the latest balance sheet included in the
Financial Statements or acquired since March 31, 1995, free and clear
of any lien, mortgage, deed of trust,
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pledge, security interest, charge, option or other encumbrance or
restriction of any kind or character (collectively, "Liens"), except
for (i) statutory Liens for current taxes, assessments or governmental
charges or levies on property not yet due and payable, (ii)
mechanics', carriers', workers', repairers' and other similar liens
imposed by law arising or incurred in the ordinary course of business
for obligations not yet due and payable and (iii) title retention
arrangement by vendors of inventory until such items of inventory are
paid for or sold to third parties; provided that in any such case,
appropriate reserves or accruals to discharge such liens, rights and
claims of third parties have been included in the Financial
Statements.
(b) Real Property. Neither the Company nor any
Subsidiary owns a fee simple interest in any real property.
(c) Condition of Properties. Except as set forth on
Schedule 3.7, the leasehold estates the subject of the Real Property
Leases (as defined below) and the tangible personal property owned or
leased by the Company and the Subsidiaries are in good operating
condition and repair, ordinary wear and tear excepted; and none of the
members of the Selling Group has any knowledge of any condition or
defect, not disclosed herein, of or any such leasehold estate or the
improvements thereto that would materially affect the fair market
value, use or operation of the property subject to the Real Property
Leases, such improvements or otherwise have a material adverse effect
on the Company or any Subsidiary or their respective businesses or
operations.
(d) Compliance. The continued ownership, operation, use
and occupancy of the leasehold estates that are the subject of the
Real Property Leases and the improvements thereto, as currently
operated, used and occupied will not violate any zoning, building,
health, flood control, safety or other law, ordinance, order or
regulation or any restrictive covenant. There are no violations of
any federal, state, county or municipal law, ordinance, order,
regulation or requirement affecting any portion of the leasehold
estates subject to any of the Real Property Leases and the
improvements thereto and no written notice of any such violation has
been issued by any governmental authority.
(e) Utilities. To the best knowledge and belief of the
Selling Group, all utilities (including, without limitation, water,
sewer, gas, electricity, trash removal and telephone service) are
available to the leasehold estates the subject of Real Property Leases
in sufficient quantities to adequately serve the leasehold estates.
(f) Real Property Leases; Options. Schedule 3.7 sets
forth a list of (i) all leases and subleases under which the Company
or any Subsidiary is lessor or lessee or sublessor or sublessee of any
real property, together with all amendments, supplements,
nondisturbance agreements, brokerage and commission agreements and
other agreements pertaining thereto ("Real Property Leases"); (ii) all
material options held by the Company or any Subsidiary or contractual
obligations on the part of the Company or any Subsidiary to purchase
or acquire any interest in real property; and (iii) all options
granted by the Company or any Subsidiary or contractual obligations on
the part of the Company or any Subsidiary to sell or dispose of any
material interest in real property. Copies of all Real Property
Leases and such options and contractual obligations have been
delivered to Buyer. Neither the Company nor any Subsidiary has
assigned any Real Property Leases or any such options or obligations.
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There are no Liens on the Company's or any Subsidiary's interest in
the Real Property Leases, subject only to (i) Liens for taxes and
assessments not yet due and payable and (ii) those matters set forth
on Schedule 3.7. The Real Property Leases and options and contractual
obligations listed on Schedule 3.7 are in full force and effect and
constitute binding obligations of the Company and the Subsidiaries and
the other parties thereto and (x) there are no defaults thereunder and
(y) no event has occurred which with notice, lapse of time or both
would constitute a default by the Company or any Subsidiary or, to the
knowledge of the Selling Group by any other party thereto.
3.8 Environmental Laws and Regulations.
(a)(i) Neither the Company nor any Subsidiary engages in, or
has engaged in the use, storage, treatment, disposal, or
transportation of "Hazardous Substances" (as defined below), (ii) no
release, leak, discharge, spill, disposal, or emission of Hazardous
Substances has occurred as a result of the operations of the Company
or any Subsidiary, and there is no Hazardous Substance present at any
facility owned or operated by the Company or any Subsidiary which, in
either event, is in a quantity or manner that violates or requires
further investigation or remediation under Environmental Requirements
(as defined below); (iii) there is no pending or threatened litigation
or administrative investigation or proceeding concerning the Company
or any Subsidiary involving Hazardous Substances or Environmental
Requirements; (iv) the Company and the Subsidiaries are, and have been
at all times, in compliance with Environmental Requirements and have,
and are in compliance with, all of the permits they are required to
have for their respective operations under Environmental Requirements;
and (v) the real property subject to the Real Property Leases is not
contaminated nor is it in such condition as justifies or may cause any
government or semi-government body to issue any notice, direction or
order requiring clean-up, decontamination, remedial action or making
good under any Environmental Requirement.
(b) As used in this Agreement, the following terms shall
have the following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees,
orders, agreements and other restrictions and requirements (whether
now or hereafter in effect) of any governmental authority, including,
without limitation, federal, provincial, and local authorities,
relating to the regulation or protection of human health and safety,
natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling, or other management of
industrial or solid waste, hazardous waste, hazardous or toxic
substances or chemicals, or pollutants.
"Hazardous Substance" means substances or materials which are
or have been regulated, controlled or prohibited under any
Environmental Requirements.
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3.9 Contracts.
(a) Set forth on Schedule 3.9 is a list of all material
contracts, arrangements and commitments (whether oral or written) to
which the Company or any Subsidiary is a party or by which the
Company's or any Subsidiary's assets or business are bound including,
without limitation, contracts, arrangements or commitments which
relate to (i) the sale, lease or other disposition by the Company or
any Subsidiary of all or any substantial part of the business or
assets of the Company or any Subsidiary, (ii) the purchase or lease by
the Company or any Subsidiary of a substantial amount of assets, (iii)
the supply by the Company or any Subsidiary of any customer's
requirements for any item or the purchase by the Company or any
Subsidiary of its requirements for any item or of a vendor's output of
any item, (iv) lending or advancing funds by the Company or any
Subsidiary, (v) borrowing or raising of funds or guarantying the
borrowing of funds by any other person, whether under an indenture,
note, loan agreement or otherwise, (vi) any transaction or matter with
any affiliate of the Company or any Subsidiary, (vii) noncompetition
or employment, (viii) licenses and grants to or from the Company or
any Subsidiary relating to any intangible property, (ix) the
acquisition by the Company or any Subsidiary of any operating business
or the capital stock of any person, or (x) any other matter which is
material to the business, assets or operations of the Company or any
Subsidiary "Contracts").
(b) Except as set forth in Schedule 3.9, each Contract is
in full force and effect on the date hereof, neither the Company nor
any Subsidiary is in default under any Contract, neither the Company
nor any Subsidiary has given or received notice of any default under
any Contract, and, to the best knowledge and belief of the Selling
Group, no other party to any Contract is in default thereunder.
3.10 No Violations. The execution, delivery and performance of
this Agreement and the other agreements and documents contemplated hereby by
the Selling Group and the consummation of the transactions contemplated hereby
will not (a) violate any provision of the Articles of Association, Memorandum
of Association (or Constitution as the case may be) of the Company or any
Subsidiary, (b) violate any statute, rule, regulation, order or decree of any
public body or authority by which the Company, any Subsidiary or the Selling
Group or their respective properties or assets are bound, or (c) result in a
violation or breach of, or constitute a default under, or result in the
creation of any encumbrance upon, or create any rights of termination,
cancellation or acceleration in any person with respect to any Contract or any
material license, franchise or permit of the Company or any Subsidiary or any
other agreement, contract, indenture, mortgage or instrument to which the
Company or any Subsidiary is a party or by which any of their respective
properties or assets is bound.
3.11 Consents. Except as set forth on Schedule 3.11, no consent,
approval or other authorization of or notice to any governmental authority or
any person under any Contract or other material agreement or commitment to
which the Company, any Subsidiary or the Selling Group are a party or by which
their respective assets are bound is required as a result of or in connection
with the execution or delivery of this Agreement and the other agreements and
documents to be executed by the Company, any Subsidiary and the Selling Group
or the consummation by the Company, any Subsidiary and the Selling Group of the
transactions contemplated hereby.
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3.12 Litigation and Related Matters. Set forth on Schedule 3.12 is
a list of all actions, suits, proceedings, investigations or grievances pending
against the Company or any Subsidiary, or, to the knowledge of the Selling
Group, threatened against the Company or any Subsidiary, the Company's or any
Subsidiary's business or any property or rights of the Company or any
Subsidiary, at law or in equity, before or by any court or federal, provincial,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign ("Agencies"). None of the actions,
suits, proceedings or investigations listed on Schedule 3.12 either (i) results
or would, if adversely determined, result in any material adverse change in the
business, operations or assets or the condition, financial or otherwise, or
results of operations or prospects of the Company or any Subsidiary or (ii)
affects or would, if adversely determined, affect the right or ability of the
Company or any Subsidiary to carry on its business substantially as now
conducted. Neither the Company nor any Subsidiary is subject to any continuing
court or Agency order, writ, injunction or decree applicable specifically to
its business, operations, assets or employees nor in default with respect to
any order, writ, injunction or decree of any court or Agency with respect to
its assets, business, operations or employees. Schedule 3.12 lists (a) all
worker's compensation claims outstanding against the Company or any Subsidiary
as of the date hereof and (b) all actions, suits or proceedings filed by or
against the Company or any Subsidiary since January 1, 1993.
3.13 Compliance with Laws. Each of the Company and the
Subsidiaries (a) is in compliance with all applicable laws, regulations
(including federal, provincial and local procurement and other regulations),
orders, judgments and decrees except where the failure to so comply would not
have an adverse effect on the business, prospects, financial condition or
results of operation or prospects of the Company or any Subsidiary and (b)
possesses all necessary licenses, franchises, permits and governmental
authorizations to conduct its business in the manner in which and in the
jurisdictions and places where such business is now conducted. To the best of
the knowledge and belief of the Selling Group, all of the provisions of the
Corporations Law of Australia, Companies Act 1955 (NZ) (or Companies Act 1993
(NZ) as the case may be) relating to the Company and the Subsidiaries have been
complied with or will be complied with on or before the Closing Date. Set
forth on Schedule 3.13 is a list of all material licenses, franchises, permits
and governmental authorizations and all applications pending before any agency
or authority for the issuance of any licenses, franchises, permits or
governmental authorizations or the renewal thereof.
3.14 Trademarks, Etc. Schedule 3.14 lists any (a) domestic and
foreign software licenses "Licenses", (b) trade names, trademarks, service
marks, trademark registrations and applications and service mark registrations
and applications and such unregistered rights as may exist through use
(including trademarks, service marks, trade dress, brand names, logos and other
names and slogans embodying goodwill) "Trademarks", (c) copyright registrations
and applications "Copyright", (d) patents (including all reissues, division,
continuations, continuations in part and extensions of any such patents) patent
applications and patent disclosures and all other patent rights whether
registered or not "Patents", (e) journals, knowhow (including proprietary
knowhow and use and application knowhow), formulas, processes, product designs,
manufacturing, engineering and other drawings, computer data bases and software
technology, technical information, safety information, engineering data and
design and engineering specifications, research records, market surveys and all
promotional literature, customer and supplier lists and similar data and all
derivatives of such material and improvements to such material "Knowhow" and
(f) other industrial and intellectual property owned by the Company and the
Subsidiaries or used in the operation of
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the business of the Company or any Subsidiary (collectively, the "Intellectual
Property") which Schedule indicates (i) the term and exclusivity of its rights
with respect to the Intellectual Property and (ii) whether each item of
Intellectual Property is owned or licensed by the Company or any Subsidiary,
and if licensed, the licensor and the license fees therefor. Unless otherwise
indicated in Schedule 3.14, the Company and the Subsidiaries have the right to
use and license the Intellectual Property, and the consummation of the
transactions contemplated hereby will not result in the loss or material
impairment of any rights of the Company or any Subsidiary in the Intellectual
Property. Each item constituting part of the Intellectual Property has been,
to the extent indicated in Schedule 3.14, registered with, filed in or issued
by, as the case may be, such government entity, domestic or foreign, as is
indicated in Schedule 3.14; all such registrations, filings and issuances
remain in full force and effect; and all fees and other charges with respect
thereto are current. Except as stated in Schedule 3.14, there are no pending
proceedings or adverse claims made or, to the knowledge of the Selling Group,
threatened against the Company or any Subsidiary with respect to the
Intellectual Property; there has been no litigation commenced or threatened in
writing within the past five (5) years with respect to the Intellectual
Property or the rights of the Company or any Subsidiary therein; and the
Selling Group has no knowledge that (i) the Intellectual Property or the use
thereof by the Company or any Subsidiary conflicts with any trade names,
trademarks, service marks, trademark or service mark registrations or
applications or copyright registrations or applications of others ("Third Party
Intellectual Property"), or (ii) such Third Party Intellectual Property or its
use by others or any other conduct of a third party conflicts with or infringes
upon the Intellectual Property or its use by the Company or any Subsidiary.
3.15 Employee Benefit Plans.
(a) Each employee benefit plan of any type, maintained
or contributed to by the Company or any Subsidiary (collectively, the
"Plans") is listed on Schedule 3.15, and has been administered and
operated in all material respects in accordance with its terms and in
compliance with applicable laws. Neither the Company nor any
Subsidiary maintains any pension or retirement plan for its employees,
and none of the Plans are required to be registered under the Income
Tax Act or applicable provincial pension legislation. Except as set
forth in Schedule 3.15, neither the execution and delivery of this
Agreement by the Company and the Sellers or the consummation of the
transactions contemplated hereby will (A) entitle any current or
former employee of the Company or any Subsidiary to severance pay,
unemployment compensation or any similar payment, or (B) accelerate
the time of payment or vesting, or increase the amount of, any
compensation due to any such employee or former employee. Neither the
Company nor any Subsidiary has any formal plan or commitment to create
any additional Plan or to modify or amend any existing Plan that would
affect any employee. With respect to each of the Plans, the Company
has delivered to Buyer true and complete copies of each of the
following documents:
(i) a copy of the most current text of the Plan,
including all amendments made thereto;
(ii) a copy of all employee communications relating to the
Plan;
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(iii) a copy of the trust or other funding agreement,
including all amendments made thereto in respect of
any of the Plans which are funded, and the latest
financial statements prepared in respect of such
funds; and
(iv) each contract relating to the Plan pursuant to which
the Company or any Subsidiary may have any liability,
including insurance contracts, investment management
agreements, administration or record-keeping
agreements and the like.
Except as disclosed in Schedule 3.15, none of the Plans provide
benefits, including, without limitation, life insurance or medical
benefits to employees following their retirement or other termination
of service. There are no pending, threatened or anticipated claims
against, or otherwise involving, any of the Plans by an Employee or a
beneficiary, or otherwise, other than routine claims for benefits
payable under a Plan.
(b) Other than the Plans, there are no retirement benefit
schemes, pension schemes or other pension arrangements whether legally
enforceable or not relating to the Company or any Subsidiary in
operation.
(c) If the services of all of the employees of the
Company or any Subsidiary had been terminated on the date of this
Agreement, then the amount provided for in the Financial Statements as
at that date for long- service leave and holiday pay would have been
sufficient to provide for all long-service leave and holiday pay which
would have then been due to (or properly accrued in favor of) such
employees.
(d) Except as disclosed on Schedule 3.15, since the date
of this Agreement, no emoluments, remuneration or fees have been paid
or agreed by the Company to be paid to any director save for
remuneration for the services of full time executive directors.
(e) Other than with respect to the Plans, the Company and
each Subsidiary is not under any liability whatsoever for any
superannuation payment or benefit, pension, retiring or other
allowance or deferred compensation, nor is there any contract,
agreement or arrangement whatsoever whereby or pursuant to which the
Company or any Subsidiary is liable to be or become bound now or at
any time in the future to pay any superannuation payment or benefit,
pension, retiring or other allowance or deferred compensation to any
person.
(f) There is no liability outstanding against the Company
or any Subsidiary in relation to employer contributions to the Plans.
Each Plan is fully funded by moneys on deposit sufficient to meet all
claims against such Plan for the benefit of employees of the Company
and the Subsidiaries or their dependents.
(g) The trustee of each Plan is the sole trustee of the
Plan and has at all times complied with its obligations under the deed
constituting the Plan and there are no outstanding claims or disputes
between the Company and the Subsidiaries and any of their respective
employees or any trade union with respect to such Plan.
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(h) Each Plan and the trustee of the Plan has at all
times complied with all legislation applicable to superannuation funds
including (but without limitation) the Income Tax Assessment Act 1936
(Australia) and the Occupational Superannuation Standards Act of 1987.
(i) The deed constituting each Plan complies with all the
relevant requirements contained in the Occupational Superannuation
Standards Regulations.
(j) Each Plan has been properly constituted and any and
all amendments to the trust deed constituting such Plan are valid and
effective.
(k) Financial statements of each Plan have been properly
kept and maintained and accurately disclose all liabilities of the
such Plan.
(l) Each Plan has since July 1, 1988 been a complying
superannuation fund for the purposes of Part IX of the Income Tax
Assessment Act 1936 (Australia).
(m) The trustee of each Plan has not paid or transferred
any amount, including without limitation any excess contributions or
surplus funds, to the Company or any Subsidiary, prior to the Closing
Date.
(n) All amounts of Tax required by law to be deducted by
the Company or any Subsidiary from the salary or wages of employees
have been duly deducted and, where appropriate, duly paid.
3.16 Employees; Employee Relations.
(a) Schedule 3.16 sets forth (i) the name, date of hiring
and current annual salary (or rate of pay) and other compensation
(including, without limitation, normal bonus, profit-sharing and other
compensation) now payable by the Company or any Subsidiary, directly
or indirectly, to each person who is an employee under applicable
laws, (ii) any increase to become effective after the date of this
Agreement in the total compensation or rate of total compensation
payable by the Company or any Subsidiary to each such person, (iii)
all presently outstanding loans and advances (other than routine
travel advances to be repaid or formally accounted for within sixty
(60) days) made by the Company or any Subsidiary to, or made to the
Company or any Subsidiary by, any director, officer or employee, (iv)
all other transactions between the Company or any Subsidiary and any
director, officer or employee of the Company or any Subsidiary, (v)
all accrued but unpaid vacation pay owing to any officer or employee
which is not disclosed on the Financial Statements, and (vi)
particulars of all other material terms and conditions of employment
of such persons including benefits and positions held. None of the
advances represent amounts that, in accordance with GAAP, should have
been expended by the Company or any Subsidiary.
(b) Except as disclosed on Schedule 3.16, neither the
Company nor any Subsidiary is a party to, nor bound by, the terms of
any collective bargaining agreement, and neither the Company nor any
Subsidiary has experienced any labor difficulties during the last five
(5) years. Except as set forth on Schedule 3.16, there are no labor
disputes existing, or to the best knowledge of the Selling Group,
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threatened involving, by way of example, strikes, work stoppages,
slowdowns, picketing, or any other interference with work or
production, or any other concerted action by employees. No grievance
or other legal action arising out of any collective bargaining
agreement or relationship exists, or to the best knowledge of the
Selling Group, is threatened. No charges or proceedings before the
Labor Relations Board, or similar agency, exist, or to the best
knowledge of the Selling Group, are threatened.
(c) The Company's and each Subsidiary's relationship with
each of its employees is good and the Selling Group has no knowledge
of any facts which would indicate that the Company's or any
Subsidiary's employees will not continue in its employ on a basis
acceptable to Buyer following the Closing. Except as disclosed on
Schedule 3.16, neither the Company nor any Subsidiary is a party to
any written contracts of employment or any oral contracts of
employment which are not terminable on the giving of reasonable notice
or pay in lieu of notice in accordance with applicable law and no
inducements to accept employment with the Company or any Subsidiary
were offered to any employees which have the effect of increasing the
period of notice of termination to which any such employee is
entitled. No legal proceedings, charges, complaints, or similar
actions exist under any federal, provincial or local laws affecting
the employment relationship including, but not limited to: (i)
anti-discrimination statutes, including provincial or local laws
prohibiting discrimination because of race, sex, religion, national
origin, age and the like; (ii) the Employment Standards Act or other
federal, state, provincial or local laws regulating hours of work,
wages, overtime and other working conditions; (iii) requirements
imposed by federal, state, provincial or local governmental contracts;
(iv) provincial laws with respect to tortious employment conduct, such
as slander, false light, invasion of privacy, negligent hiring or
retention, intentional infliction of emotional distress, assault and
battery, or loss of consortium; or (v) any occupational safety and
health act, as well as any similar provincial laws, or other
regulations respecting safety in the workplace; and to the best
knowledge of the Selling Group, no proceedings, charges, or complaints
are threatened under any such laws or regulations and no facts or
circumstances exist which would give rise to any such proceedings,
charges, complaints, or claims, whether valid or not. Neither the
Company nor any Subsidiary is subject to any settlement or consent
decree with any present or former employee, employee representative or
any government or Agency relating to claims of discrimination or other
claims in respect to employment practices and policies; no government
or Agency has issued a judgment, order, decree or finding with respect
to the labor and employment practices (including practices relating to
discrimination) of the Company or any Subsidiary.
(d) With respect to each person employed by the Company
or any Subsidiary (i) the Company or such Subsidiary hired such person
in compliance with all applicable immigration and naturalization laws
and (ii) the Company and the Subsidiaries have complied with all
recordkeeping and other regulatory requirements under any immigration
and naturalization laws.
(e) Except as disclosed on Schedule 3.16, neither the
Company nor any Subsidiary has incurred any liability or obligation
under any federal, state or provincial laws relating to the closure of
facilities or the termination or lay off of employees.
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(f) The Company and the Subsidiaries have complied with
all applicable employment legislation, regulations, programs or
policies, including, without limitation, worker's compensation
legislation, human rights legislation, health and safety legislation,
and employment equity legislation and has made all deductions and
remittances to governmental authorities under applicable laws.
(g) The Company and the Subsidiaries have complied with
all fair wages, hours of work and employment equity requirements
applicable to any contracts for work which it obtained from any
government.
(h) The Company and the Subsidiaries are in compliance
with their obligations under the Employer's Health Tax Act and there
are no unpaid taxes, penalties, interest, garnishment orders or other
court proceedings outstanding or pending pursuant to the Employer's
Health Tax Act.
3.17 Insurance. Schedule 3.17 contains a list of the policies
and contracts (including insurer, named insured, type of coverage, limits of
insurance, required deductibles or co-payments, annual premiums and expiration
date) for fire, casualty, liability and other forms of insurance maintained by,
or for the benefit of, the Company and the Subsidiaries. All such policies are
in full force and effect and are adequate for the business in which the Company
and the Subsidiaries engage. Neither the Company nor the Sellers has received
any notice of cancellation or non-renewal or of significant premium increases
with respect to any such policy. Except as disclosed on Schedule 3.17, no
pending claims made by or on behalf of the Company or any Subsidiary under such
policies have been denied or are being defended against third parties under a
reservation of rights by an insurer of the Company or any Subsidiary. All
premiums due prior to the date hereof for periods prior to the date hereof with
respect to such policies have been timely paid, and all premiums due before the
Closing Date for periods between the date hereof and the Closing Date will be
timely paid.
3.18 Accounts Receivable. The accounts receivable set forth in
the Financial Statements, the accounts receivable listed on Schedule 1.2(j) and
those accounts receivable accruing through the Closing Date represent valid and
bona fide sales to third parties incurred in the ordinary course of business,
collectible in accordance with their terms, subject to no defenses, set-offs or
counterclaims, except to the extent of any reserves for doubtful accounts
reflected in the January 31, 1996 balance sheet included in the Current
Financial Statements and the Subsidiary Financial Statements.
3.19 Inventories. The inventories reflected in the Financial
Statements and the Subsidiary Financial Statements, the inventory listed on
Schedule 1.2(k) and inventories acquired since January 31, 1996 consist of items
of a quality and quantity which are useable or saleable in the ordinary course
of business of the Company and the Subsidiaries, and inventories of below
standard quality or not useable in the business of the Company and the
Subsidiaries have been written down in value in accordance with good business
practices to estimated net realizable market values or adequate reserves have
been provided therefor in the Financial Statements and the Subsidiary Financial
Statements. Since March 31, 1995, all of the inventories have been maintained
at adequate levels for the business of the Company and the Subsidiaries in the
normal course consistent with past practice and taking into account normal
seasonality, no change has occurred in such inventories which affects or will
affect their useability or salability, no writedown of the value of such
inventories has
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occurred or is required under the Company's or any Subsidiary's normal
valuation policy or GAAP, and no additional amounts have been reserved with
respect to such inventories. Except as disclosed on Schedule 3.19, no
inventory is held by the Company or any Subsidiary pursuant to consignment,
sale or return, sale on approval or similar arrangements.
3.20 Interests in Customers, Suppliers, Etc. Except as disclosed
on Schedule 3.20, no shareholder, officer, director or affiliate of the Company
or any Subsidiary possesses, directly or indirectly, any financial interest in,
or is a director, officer, employee or affiliate of, any corporation, firm,
association or business organization which is a client, supplier, customer,
lessor, lessee, sublessor, sublessee or competitor of the Company or any
Subsidiary.
3.21 Business Relations. Except as set forth in Schedule 3.21,
to the best knowledge and belief of the Selling Group, no customer or supplier
of the Company or any Subsidiary will cease to do business with the Company or
any Subsidiary after the consummation of the transactions contemplated hereby.
Except as set forth in Schedule 3.21, neither the Company nor any Subsidiary has
experienced any difficulties in obtaining any inventory items necessary to the
operation of its business. Neither the Company nor any Subsidiary is required
to provide any bonding or other financial security arrangements in any material
amount in connection with any transactions with any of its customers or
suppliers.
3.22 Officers and Directors. Set forth on Schedule 3.22 is a list
of the current officers and directors of the Company and each Subsidiary.
3.23 Bank Accounts and Powers of Attorney. Schedule 3.23 sets
forth each bank, savings institution and other financial institution with which
the Company or any Subsidiary has an account or safe deposit box and the names
of all persons authorized to draw thereon or to have access thereto. Each person
holding a power of attorney or similar grant of authority on behalf of the
Company or any Subsidiary is identified on Schedule 3.23. Except as disclosed
on such Schedule, neither the Company nor any Subsidiary has given any revocable
or irrevocable powers of attorney to any person, firm, corporation or
organization relating to its business for any purpose whatsoever.
3.24 Accuracy of Information Furnished. Any information furnished
to Buyer by the Company or the Sellers prior to, at or after the date of this
Agreement, in the Schedules hereto, or otherwise is, or when furnished will be,
true and correct in all material respects. Such information states, or when
furnished will state, all material facts required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which the statements are made, not misleading.
3.25 Availability of Documents. The Selling Group has made
available for inspection by Buyer and its representatives true, correct, and
complete copies of the Articles of Association, Memorandum of Association (or
Constitution as the case may be) of the Company and the Subsidiaries, all
written agreements, arrangements, commitments, and documents referred to in the
Schedules attached hereto, and the corporate minute books of the Company and the
Subsidiaries. Such corporate minute books contain the minutes of all of the
meetings of shareholders, board of directors, and any committees of the Company
and the Subsidiaries that have been held preceding the date hereof and all
written consents to action executed in lieu thereof.
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3.26 Brokerage, Financial Advisor or Finder Fees. No agent,
advisor, broker, person or firm acting on behalf of the Selling Group is, or
will be, entitled to any commission or broker's, advisor's or finder's fees from
any of the parties hereto, or from any of their respective affiliates in
connection with any of the transactions contemplated hereby.
3.27 Absence of Certain Changes or Events. Except as set forth in
Schedule 3.27 or in another Schedule to this Agreement, or as otherwise
contemplated by this Agreement, since March 31, 1995, there has not been (a) any
damage, destruction or casualty loss to the physical properties of the Company
or any Subsidiary (whether or not covered by insurance), materially and
adversely affecting the business, operations, prospects or financial condition
of the Company or any Subsidiary, (b) any material adverse change in the
business, operations, financial condition or results of operations or prospects
of the Company or any Subsidiary, (c) any entry into any transaction, commitment
or agreement (including, without limitation, any borrowing) material to the
Company or any Subsidiary, except transactions, commitments or agreements in the
ordinary course of business consistent with past practice, and which, if
occurring after the date hereof, would be in compliance with Section 5.1, (d)
any declaration, setting aside or payment of any dividend or other distribution
in cash, stock or property with respect to the Company's or any Subsidiary's
capital stock or other securities, any repurchase, redemption or other
acquisition by the Company or any Subsidiary of any capital stock or other
securities, or any agreement, arrangement or commitment by the Company or any
Subsidiary to do so, (e) any increase in the compensation payable or to become
payable by the Company or any Subsidiary to its directors, officers, employee or
agents or any increase in the rate or terms of any bonus, pension or other
employee benefit plan, payment or arrangement made to, for or with any such
directors, officers, employees or agents, (f) any sale, transfer or other
disposition of, or the creation of any Lien upon, any part of the Company's or
any Subsidiary's assets, tangible or intangible, except for sales of inventory
and use of supplies and collections of accounts receivables in the ordinary
course of business consistent with past practice, or any cancellation or
forgiveness of any debts or claims by the Company or any Subsidiary, (g) any
change in the relations of the Company or any Subsidiary with or loss of its
customers or suppliers, or any loss of business or increase in the cost of
inventory items or change in the terms offered to customers, which would
materially and adversely affect the business, operations or financial condition
of the Company or any Subsidiary, or (h) any capital expenditure (including any
capital leases) or commitment therefor by the Company or any Subsidiary in
excess of $50,000 (New Zealand).
3.28 Security Matters.
(a) The Selling Group understands and acknowledges that
the Purchase Shares have not been registered for sale under the United
States Securities Act of 1933, as amended (the "Securities Act"), or
any applicable securities laws, and such Purchase Shares are being
offered and sold by SSI in reliance upon exemptions from the
registration requirements of such applicable acts. Accordingly, the
Selling Group recognizes that, until the Purchase Shares may be sold
pursuant to an exemption from registration (a minimum of two years
after the sale of the Purchase Shares) or are registered under the
Securities Act and any applicable securities laws as provided in
Section 5.7 hereof, the Purchase Shares will not be freely transferable
and that the Selling Group must continue to bear the economic risk of
the investment in the
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Purchase Shares until the Purchase Shares are registered in accordance
with Section 5.7 hereof.
(b) The Selling Group further understands and agrees that
this Agreement is made with SSI in reliance upon the Selling Group's
representations to SSI, which by the Selling Group's execution of this
Agreement, the Selling Group hereby confirms, that each member of the
Selling Group is not a citizen or resident of the United States of
America, is acquiring the Purchase Shares for investment for their own
account and not with a view to the resale or distribution of the
Purchase Shares within, or to citizens or residents of, the United
States of America, and except as disclosed to SSI in writing is not
purchasing the Purchase Shares for the account or benefit of a citizen
or resident of the United States of America or any partnership or
corporation organized or incorporated under the laws of any
jurisdiction in the United States of America and at the time it is
executing this Agreement, is outside the United States of America. By
executing this Agreement, each member of the Selling Group further
represents that they have no present intention of selling,
transferring, granting any participation in, or otherwise distributing
any of the Purchase Shares otherwise than pursuant to an effective
registration statement under the Securities Act as contemplated by
Section 5.7 hereof. Each member of the Selling Group represents that
they have no contract, undertaking, agreement, arrangement or
understanding with any person to sell, transfer, grant any
participation in, or otherwise distribute any of the Purchase Shares to
any person.
(c) Each member of the Selling Group represents and
warrants to SSI that (i) such member of the Selling Group is an
"accredited investor" as that term is defined in Regulation D
promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act and has such knowledge and
experience in financial and business matters to be capable of
evaluating the merits and risks of their prospective investment in the
Purchase Shares; (ii) such member of the Selling Group has received and
reviewed all such financial and other information and records of SSI as
they considered necessary or appropriate in deciding whether to
purchase the Purchase Shares, and SSI has made available to such member
of the Selling Group the opportunity to ask questions of, and to
receive answers and to obtain additional information from,
representatives of SSI; (iii) all such additional information has been
provided to and reviewed by such member of the Selling Group; and (iv)
such member of the Selling Group has the ability to bear the economic
risks of its investment in the Purchase Shares. Such member of the
Selling Group is not acquiring the Purchase Shares based upon any
representation, oral or written, by SSI, or any representative of SSI
with respect to the future value of, income from, or tax consequences
relating to the Purchase Shares, but rather upon an independent
examination and judgement as to the prospects of SSI. Further, such
member of the Selling Group acknowledges that no federal or state
administrative entity responsible for securities registration or
enforcement has made any recommendation or endorsement of the Purchase
Shares or any findings as to the fairness of an investment in the
Purchase Shares.
(d) Until the Purchase Shares have been registered under
the Securities Act pursuant to the registration contemplated by Section
5.7 hereof, all certificates for the Purchase Shares shall bear
substantially the following legends and any additional legend required
pursuant to applicable laws governing the Purchase Shares.
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THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), THE SECURITIES ACT OF TEXAS,
AS AMENDED (THE "TEXAS ACT"), OR ANY OTHER DOMESTIC OR FOREIGN
SECURITIES LAWS (COLLECTIVELY, THE "SECURITIES ACTS"), AND
HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACTS. THE SHARES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN ANY
MANNER, NOR MAY THEY BE SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF TO A NATIONAL OF THE UNITED STATES OF
AMERICA OR IN THE UNITED STATES OF AMERICA, EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND ANY APPLICABLE SECURITIES ACTS OR (ii) UPON
THE ISSUANCE TO THE COMPANY OR ITS TRANSFER AGENT OF AN
OPINION OF COUNSEL, BOTH OPINION AND COUNSEL SATISFACTORY TO
THE COMPANY, OR THE SUBMISSION TO THE COMPANY OR ITS TRANSFER
AGENT OF SUCH OTHER EVIDENCE, AS MAY BE SATISFACTORY TO THE
COMPANY OR ITS TRANSFER AGENT, THAT SUCH PROPOSED SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION WILL NOT BE IN VIOLATION
OF THE SECURITIES ACT OR ANY APPLICABLE SECURITIES ACTS.
Any assignment or endorsement of the certificates representing the
Purchase Shares which is in violation of the restrictions on transfer provided
above will not be recognized by SSI, nor will any assignee or endorsee of such
shares be recognized as the owner thereof by SSI.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Selling Group as follows:
4.1 Organization and Authorization. SSI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Texas, United States of America, with all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Hybrid is a corporation duly organized,
validly existing and capable of suing and being sued under the laws of New
Zealand, with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
Buyer has full corporate power, capacity and authority to execute and deliver
this Agreement and all other agreements and documents contemplated hereby. The
execution and delivery of this Agreement and such other agreements and
documents by Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by Buyer and no other corporate
action on the part of Buyer is necessary to authorize the transactions
contemplated hereby. This
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Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its terms
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.
4.2 No Violations. The execution and delivery of this Agreement
and the other agreements and documents contemplated hereby by Buyer and the
consummation of the transactions contemplated hereby will not (a) violate any
provision of the articles of incorporation or bylaws of SSI or the Constitution
of Hybrid, (b) violate any statute, rule, regulation, order or decree of any
public body or authority by which Buyer or its properties or assets are bound,
or (c) result in a violation or breach of, or constitute a default under or
result in the creation of any encumbrance upon, or create any rights of
termination, cancellation or acceleration in any person with respect to any
agreement, contract, indenture, mortgage or instrument to which Buyer is
a party or any of its properties or assets is bound.
4.3 Consents. Except as set forth in Schedule 4.3, no consent,
approval or other authorization of any governmental authority or third party is
required as a result of or in connection with the execution and delivery of this
Agreement and the other agreements and documents to be executed by Buyer or the
consummation by Buyer of the transactions contemplated hereby.
4.4 Brokerage, Financial Advisor or Finder Fees. No agent,
advisor, broker, person or firm acting on behalf of the Buyer is or will be
entitled to any commission or broker's, advisor's or finder's fees from any of
the parties hereto, or from any of their respective affiliates, in
connection with any of the transactions contemplated hereby.
4.5 Capitalization. The authorized capital stock of SSI consists
of (a) 10,000,000 shares of Buyer Common Stock, par value $.01 per share, of
which 4,205,035 shares were issued and outstanding at February 7, 1996 and (b)
400,000 shares of Buyer Preferred Stock, par value $.01 per share, of which no
shares were issued and outstanding at February 7, 1996.
4.6 Title to Common Stock. SSI has the requisite corporate power
and authority to issue and deliver the Purchase Shares to the Selling Group
subject to limitations imposed by state and federal securities laws. Upon
conveyance of the Australia Shares pursuant to and in accordance with the terms
of this Agreement, the Purchase Shares to be delivered to the Selling Group as
herein contemplated will be duly authorized, validly issued, fully paid and
nonassessable and upon such delivery will vest in the Selling Group good and
marketable title to such shares, free and clear of all liens, security
interests, encumbrances, preemptive rights, charges, adverse claims, options,
rights, contracts, calls or commitments whatsoever, except for limitations
imposed by state and federal securities laws. Neither this Agreement nor
consummation of the transactions contemplated hereby will trigger any
registration rights or similar obligations in favor of any person with respect
to Buyer Common Stock.
4.7 Information. SSI delivered to the Selling Group copies of the
following Commission filings and press releases of SSI: (a) Annual Report on
Form 10-K, as filed with the Commission, for the fiscal year ended March 31,
1995; (b) proxy statement, as filed with the Commission, relating to the annual
meeting of stockholders held on August 10, 1995; (c) 1995 annual report, as
filed with the Commission; (d) all other reports and registration statements
filed by SSI with the Commission since April 1, 1995; and (e) copies of all
press
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releases issued by SSI during the period from April 1, 1995 to the date of this
Agreement. All reports and proxy statements furnished to the Selling Group
pursuant to this Section 4.7 conform in all material respects to the
requirements of the rules and regulations promulgated by the Commission, and do
not contain any untrue statement of a material fact or omit to state a 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.
4.8 Financial Statements of SSI. The audited balance sheet of SSI
as of March 31, 1995 and the related statement of earnings, stockholders' equity
and cash flows for the year then ended (the "Audited Statements"), copies of
which have been furnished to the Selling Group, have been prepared in conformity
with generally accepted accounting principles ("U.S. GAAP") consistently applied
and have been certified without qualification by Grant Thornton. The Audited
Statements present fairly the financial condition, retained earnings, assets and
liabilities of SSI as of the date set forth therein and the results of
operations and cash flows of SSI for the period covered thereby in conformity
with U.S. GAAP. Except to the extent (and not in excess of the amounts)
reflected on the Audited Statements, SSI has no liabilities or obligations
whether accrued, absolute, contingent, unasserted or otherwise (including,
without limitation, taxes payable and deferred taxes and interest accrued
required to be reflected in the Audited Statements or the notes thereto) other
than accrued liabilities incurred in the ordinary course of business
consistent with past practice.
4.9 Operations of SSI. Since March 31, 1995:
(a) The operations of SSI have been conducted in the
usual and customary manner;
(b) No extraordinary losses have been sustained by SSI;
and
(c) There has been no material adverse change in the
business, financial condition or operations of SSI and its
consolidated subsidiaries taken as a whole.
4.10 Litigation or Investigation of SSI. Except as described in
the documents referred to in Section 4.7, there is no material action, suit,
proceeding or investigation pending or, to SSI's knowledge, threatened against
SSI, either at law or in equity, before or by any Agency. SSI is not the subject
of any injunction, stop order, judgment or consent decree or any kind.
ARTICLE V
COVENANTS; REGISTRATION OF SHARES
5.1 Course of Conduct by the Company and each Subsidiary. From
the date hereof through and until the Closing Date, except as approved in
writing by Buyer or as otherwise permitted or contemplated by this Agreement,
the Company's and each Subsidiary's business shall be conducted only in the
ordinary course of business consistent with past practice, and the Selling Group
shall cause the Company and each Subsidiary to comply with the following
covenants:
(a) Capital Expenditures. Neither the Company nor any
Subsidiary shall make any capital expenditures or commitments therefor
which, when combined with
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capital expenditures or commitments therefor after January 31, 1996,
would exceed $25,000 (New Zealand).
(b) Articles of Association, Etc. Neither the Company
nor any Subsidiary shall make any change in its Articles of
Association, Memorandum of Association (or Constitution as the case
may be).
(c) Stock Issuance; Redemptions; Reorganizations.
Neither the Company nor any Subsidiary shall (i) issue, grant, or
dispose of, or make any agreement, arrangement, or commitment
obligating the Company or any Subsidiary to issue, grant, or dispose
of any capital shares or other securities of the Company or any
Subsidiary, (ii) redeem or acquire, or make any agreement,
arrangement, or commitment obligating the Company or any Subsidiary to
redeem or acquire, any shares of capital stock or other securities of
the Company or any Subsidiary, or (iii) authorize or effect or make
any agreement, arrangement or commitment obligating the Company or any
Subsidiary to effect, any reorganization, recapitalization, or
split-up of such capital stock of the Company or any Subsidiary.
(d) Employee Matters. Neither the Company nor any
Subsidiary shall make any increase in the compensation payable or to
become payable to any of the officers of the Company or any
Subsidiary. Except in the ordinary course of business consistent with
past practice, neither the Company nor any Subsidiary shall (i) make
any increase in the compensation payable or to become payable to any
of the employees, or agents of the Company or any Subsidiary, or (ii)
make, amend, or enter into any employment contract or any bonus,
incentive, stock option, profit sharing, pension, retirement, stock
purchase, hospitalization, medical reimbursement, insurance, severance
benefit, or other similar plan or arrangement or make any voluntary
contribution to any such plan or arrangement.
(e) Insurance Coverage. The Company and each Subsidiary
shall maintain, or have maintained on its behalf, insurance coverage
for the benefit of the Company on the same basis as, or on a
substantially equivalent basis to, the current insurance coverage
described in Schedule 3.17.
(f) Business Organization. The Company and each
Subsidiary shall use commercially reasonable efforts to preserve
intact its business organization and to keep available the services of
its present officers and employees as a group.
(g) Maintenance of Property. The Company and each
Subsidiary shall maintain its real property, equipment and other
tangible personal property in its present operating condition and
repair, ordinary wear and tear excepted. The Company and each
Subsidiary will fully perform and pay for all maintenance, painting,
repairs, alterations and other work required to be performed by the
Company and each Subsidiary as lessee under the Real Property Leases
listed on Schedule 3.7.
(h) Relations with Suppliers, Customers, Etc. The
Company and each Subsidiary will use commercially reasonable efforts
to preserve its relationships with its material suppliers, customers
and others having material business dealings with it and shall not
change or modify or commit to change or modify any terms offered to
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customers. The Company promptly shall notify Buyer if the Company or
any Subsidiary is informed by any of its customers or suppliers that
such customer or supplier will or may cease to do business with the
Company or any Subsidiary either prior to or following the Closing.
(i) Incurrence of Debt. Neither the Company nor any
Subsidiary will voluntarily incur or assume, whether directly or by
way of guaranty or otherwise, any material obligation or liability,
except obligations and liabilities incurred in the ordinary course of
business, consistent with past practice.
(j) Liens. Neither the Company nor any Subsidiary will
mortgage, pledge, encumber, create or allow any Liens not existing on
the date hereof upon any properties or assets, tangible or intangible,
except Liens created in the ordinary course of business, consistent
with past practice.
(k) Disposition of Assets. Neither the Company nor any
Subsidiary will sell, transfer or otherwise dispose of any of its
tangible property or assets, except for inventory and supplies sold,
disposed of or consumed and accounts receivable collected or written
off in the ordinary course of business, consistent with past practice.
Neither the Company nor any Subsidiary will cancel or forgive any
debts or claims except or in the ordinary course of business,
consistent with past practice.
(l) Agreements, Leases and Licenses. Neither the Company
nor any Subsidiary will amend, terminate before the end of its term,
or allow to lapse any material agreement, lease, license or permit to
which it is a party or of which it is the holder.
(m) Accounting Practices. Neither the Company nor any
Subsidiary will make any material changes in its accounting methods,
principles or practices, except as required by GAAP.
(n) Changes in Business Practice. Neither the Company
nor any Subsidiary will take any action, the purpose or effect of
which is to shift income from post-closing periods to the pre-closing
period or to defer expenses from the pre-closing period to
post-closing periods which action is not in the ordinary course of
business, consistent with past practice.
(o) Transactions with Affiliates. Neither the Company
nor any Subsidiary will enter into any agreement, arrangement or
transaction with, or make any payment, distribution, loan or advance
to, any affiliate of the Company or any Subsidiary or any officer,
director or shareholder of the Company or any Subsidiary, except for
salaries and travel advances consistent with past practices or as
otherwise specifically permitted by this Agreement.
(p) Material Transactions. Neither the Company nor any
Subsidiary will enter into any other agreement, course of action or
transaction material to it, except in the ordinary course of business,
consistent with past practice.
(q) Dividends. Neither the Company nor any Subsidiary
shall declare, make or pay any dividend or other distribution upon or
in respect of its share capital.
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(r) Name Changes. Neither the Company nor any Subsidiary
shall change its name or grant to any party the right to use the name
of Company or the Subsidiary (as the case may be).
5.2 Noncompetition. Each member of the Selling Group
acknowledges that they possess the experience and capabilities to own, manage,
operate, join, control or participate in the ownership, management, operation
or control of, a business that, or a business organization a part of which,
engages in the hardware or software reseller or technical services businesses,
and that the noncompetition provisions of Section 5.2 below will not prevent
each member of the Selling Group from earning a livelihood. Each member of the
Selling Group understands and acknowledges that (a) Buyer shall be entitled to
protect the going concern value of the Company to the full extent permitted by
law, (b) the restrictions set forth herein are reasonable given the nature of
the Company's and each Subsidiary's business, (c) the only effective fair and
reasonable manner in which the interests of the Buyer can be protected is by
the restraints set forth in this Agreement, (d) each member of the Selling
Group has received adequate consideration for the restraint obligations
undertaken in this Agreement, and (e) Buyer would not have entered into this
Agreement absent the provisions of this Section 5.2.
(a) For the purpose of protecting the Buyer in respect of
the goodwill of the Company and the Subsidiaries and for consideration
set out in this Agreement, the Selling Group covenants with Buyer that
the members of the Selling Group shall not, without first obtaining
the written consent of Buyer, do any of the following:
(i) within a period of 3 years from the Closing Date
carry on the Restricted Activities anywhere in
Australia;
(ii) within a period of 2 years from the Closing Date
carry on the Restricted Activities anywhere in
Australia;
(iii) within a period of 1 year from the Closing Date carry
on the Restricted Activities anywhere in Australia;
(iv) within a period of 3 years from the Closing Date
carry on the Restricted Activities anywhere in New
Zealand;
(v) within a period of 2 years from the Closing Date
carry on the Restricted Activities anywhere in New
Zealand;
(vi) within a period of 1 year from the Closing Date carry
on the Restricted Activities anywhere in New Zealand;
(vii) within a period of 3 years from the Closing Date
carry on the Restricted Activities anywhere in New
South Wales;
(viii) within a period of 2 years from the Closing Date
carry on the Restricted Activities anywhere in New
South Wales;
(ix) within a period of 1 year from the Closing Date carry
on the Restricted Activities anywhere in New South
Wales;
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(x) within a period of 3 years from the Closing Date
carry on the Restricted Activities anywhere in
metropolitan Auckland;
(xi) within a period of 2 years from the Closing Date
carry on the Restricted Activities anywhere in
metropolitan Auckland;
(xii) within a period of 1 year from the Closing Date carry
on the Restricted Activities anywhere in metropolitan
Auckland;
(xiii) within a period of 3 years from the Closing Date
carry on the Restricted Activities anywhere in
metropolitan Sydney;
(xiv) within a period of 2 years from the Closing Date
carry on the Restricted Activities anywhere in
metropolitan Sydney; or
(xv) within a period of 1 year from the Closing Date carry
on the Restricted Activities anywhere in metropolitan
Sydney.
(b) During the three (3) years following the Closing
Date, the Selling Group shall not induce or attempt to induce any
employee of the Buyer, Company or any Subsidiary to leave employment
with the Company or Buyer or to enter into employment with any other
person, firm or corporation other than the Buyer.
(c) Each of the covenants contained in Section 5.2(a) is
to be construed as a separate independent covenant severable from all
other covenants contained in Section 5.2(a). If any of the separate
covenants is found to be void, invalid or otherwise unenforceable,
such unenforceability does not affect the validity of enforceability
of any of the other separate covenants.
(d) It is intended by the parties that the restraints
contained in this clause operate to the maximum extent permitted by
applicable law. Each member of the Selling Group acknowledges that
the duration, extent and application of the respective restrictions
contained in this clause are not greater than is reasonably necessary
for the protection of the interests of Buyer and the preservation of
the goodwill relating to the business of the Company and its
Subsidiaries but that, if such restriction is adduced by any court of
competent jurisdiction to be void or unenforceable but would be valid
if part of the wording of this clause was deleted and/or the period
was reduced, those restrictions apply with such modifications as may
be necessary to make this clause valid and effective.
(e) Except as set forth in the Schedules to this
Agreement, the Selling Group has not allowed or consented to:
(i) the use by any other person; or
(ii) the registration as a business name,
of a name the same or similar to any name used by the Company or any
Subsidiary, or done or failed to do anything that may affect the
continued use of any such name by the Company or any Subsidiary and
pending the Closing shall not do so.
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(f) As used in this Agreement, "Restricted Activities"
means:
(i) supplying or canvassing or soliciting orders for the
supply of any goods or services of the general
description of those supplied by the business
conducted by the Company or any Subsidiary before the
Closing Date from any person, firm or company who or
which has at any time within twelve (12) months
before the Closing Date transacted business with the
Company or any Subsidiary in connection with the
business conducted by the Company or any Subsidiary
or been identified as a prospective customer of the
business conducted by the Company or any Subsidiary;
(ii) conducting any business of a type similar to or
substitutable for the business conducted by the
Company or any Subsidiary; and
(iii) communicating or divulging any confidential, secret
or non-public information, knowledge or data relating
to the Company or any Subsidiary, their respective
customers, prospects, marketing plans or business to
any other person other than Buyer;
whether directly or indirectly and whether alone or with any other
person or party in any capacity including, without limitation, as a
consultant, a sales representative, an agent, a director or officer,
an adviser, an employee (other than as an employee of Buyer), for any
person, or a partner or jointly with any other person, or a member,
shareholder and unitholder in any company, trust or business
enterprise.
(g) The remedy at law for any breach or attempted breach by
any member of the Selling Group of the provisions of this Section 5.2
will be inadequate and Buyer shall be entitled to temporary or
permanent injunctive relief against any breach or attempted breach of
such provision without the necessity of posting bond or proving actual
damages. It is the express intention of the parties hereto to comply
with all laws that may be applicable to this Section 5.2. Should any
restriction contained in this Section 5.2 be found to exceed in
duration or scope the restriction permitted by law, it is expressly
agreed that the covenant not to compete contained in this Section 5.2
shall be reformed or modified by the final judgment of a court of
competent jurisdiction to reflect a lawful and enforceable duration or
scope.
5.3 Approvals and Consents. The Selling Group shall use their
respective best efforts (a) to cause all conditions to the obligations of Buyer
under this Agreement over which they are able to exercise influence or control
to be satisfied prior to the Closing Date and (b) to obtain promptly and to
comply with all requisite statutory, regulatory or court approvals, third party
releases and consents, and other requirements necessary for the valid and legal
consummation of the transactions contemplated hereby.
5.4 Investigations. The Selling Group shall provide Buyer, its
representatives and agents, such access to the books and records of the Company
and the Subsidiaries and furnish to Buyer, its representatives and agents, such
financial and operating data and other information with respect to the
businesses and properties of the Company and the Subsidiaries as they may
reasonably request from time to time, and permit Buyer, its representatives and
agents, to make such inspections of the Company's and each Subsidiary's
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real and personal properties as they may reasonably request. The Selling Group
shall promptly arrange for Buyer, and its representatives and agents, to meet
with such directors, officers, employees and agents of the Company and the
Subsidiaries as requested.
5.5 Tax Elections. No new elections with respect to Taxes or any
changes in current elections with respect to Taxes affecting the Company or any
Subsidiary shall be made after the date of this Agreement without prior written
consent of Buyer.
5.6 No Solicitation. Except with respect to Buyer and its
affiliates, from the date hereof and until the earlier of the Closing or
earlier termination, the Selling Group shall not, and the Selling Group shall
cause the Company, the Subsidiaries and the respective officers, directors,
employees, agents and representatives of the Selling Group, the Company and the
Subsidiaries (including, without limitation, any investment banker, attorney or
accountant retained by any of them) not to (a) initiate or solicit, directly or
indirectly, any inquiries or the making of any proposal with respect to a
merger, consolidation, sale of share capital or similar transaction involving,
or any purchase of all or any significant portion of the assets (other than in
the ordinary course of business) of, or any equity interest in, the Company or
any Subsidiary (an "Acquisition Transaction"), or (b) engage in any
negotiations concerning, or provide to any other person any information or data
relating to the Company or any Subsidiary for the purposes of or have any
discussions with any person relating to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage any effort or
attempt by any other person to seek or effect, an Acquisition Transaction. The
Selling Group shall promptly advise Buyer of, and communicate to Buyer the
terms of, any such inquiry or proposal the Selling Group may receive.
5.7 Registration of Purchase Shares.
(a) SSI meets the requirements for use of Form S-3 under
the Securities Act and the rules and regulations of the Commission
thereunder in connection with sales of Buyer Common Stock by
shareholders of SSI.
(b) On the date the Registration Statement (as
hereinafter defined and contemplated by this Section 5.7 shall become
effective (the "Effective Date"), the Registration Statement and all
documents incorporated therein by reference pursuant to Item 12 of
Form S-3 (the "Incorporated Documents") shall conform in all material
respects with the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder, and neither the Registration
Statement nor any Incorporated Documents will, as of the Effective
Date of the Registration Statement and any amendment thereto and as of
the applicable filing date of the prospectus included therein, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which the statements were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished to SSI by
any member of the Selling Group for use in the Registration Statement
or in Incorporated Documents.
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(c) At any time during the period commencing on June 30,
1997 and ending on June 30, 1998, the Selling Group may make a written
request to SSI for registration under the Securities Act of all of the
Purchase Shares.
(d) Upon receipt of the Selling Group's written request
for registration of the Purchase Shares, SSI shall as expeditiously as
possible:
(i) file with the Commission a registration
statement on Form S-3 (the "Registration
Statement") to register under the Securities
Act all of the Purchase Shares for sale by
the Selling Group, and thereafter shall use
its reasonable best efforts to cause such
Registration Statement to become and remain
effective as provided in this Section 5.7;
and
(ii) furnish to the Selling Group such number of
copies of the prospectus constituting a part
of the Registration Statement as the Selling
Group may reasonably request in order to
facilitate the public sale of the Purchase
Shares during the Registration Period;
(iii) use its reasonable best efforts to cause the
Purchase Shares to be listed on each
securities exchange or other securities
trading market on which similar securities
issued by SSI are then listed. Further, SSI
shall prepare and file with the Commission
such amendments and supplements to the
Registration Statement and the prospectus
used in connection therewith as may be
reasonably necessary to keep such
Registration Statement effective until the
earlier of (A) such time as the Selling Group
has sold all of the Purchase Shares or (B)
180 days after the effective date of the
Registration Statement (the period during
which SSI is obligated to keep the
Registration Statement effective hereinafter
is referred to as the "Registration Period");
and
(iv) use its reasonable best efforts to register
or qualify the Purchase Shares under such
other securities or blue sky laws of any
state or other applicable laws of such
jurisdictions as the Selling Group shall
reasonably request in writing to enable the
Selling Group to consummate the public sale
or other disposition of the Purchase Shares;
provided that SSI shall not be required in
connection therewith or as an election
thereto to qualify to do business or to file
a general consent to service of process in
any such jurisdiction and SSI shall not be
required to register such shares in any
foreign jurisdiction.
(e) SSI's obligations under Section 5.7 shall terminate
unless the Selling Group shall furnish to SSI such information as SSI
may reasonably request from the Selling Group for use in preparing the
Registration Statement (and the prospectus included therein) and
performing its other obligations under this Section 5.7.
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(f) If within two (2) years following the Closing Date
SSI files a registration statement in connection with an underwritten
public offering, SSI will promptly give to each member of the Selling
Group written notice thereof (which shall include the number of shares
SSI proposes to register and, if known, the name of the proposed
underwriter). SSI will use its commercially reasonable efforts to
include in such registration all of the Purchase Shares specified in a
written request from any member of the Selling Group within twenty
(20) days after the date of delivery of written notice from SSI of the
proposed offering. The Selling Group shall have no right to
participate in the selection of an underwriter for an offering made by
SSI.
(g) Subject to the satisfaction by SSI of its obligations
pursuant to Section 5.7(d)(i) hereof, the refusal of the Commission to
declare effective a Registration Statement on Form S-3 with respect to
the Purchase Shares shall not in any way affect the validity or
enforceability of any other provision of this Agreement.
(h) Except as set forth below, SSI will pay all
reasonable and customary expenses of a registrant in connection with
the registration of the Purchase Shares, including fees and expenses
of counsel to SSI and of its independent public accountants, filing
fees and other expenses charged by the Commission or by the securities
regulatory authority of any state or other jurisdiction in which
Purchase Shares are to be qualified and which are attributable to the
registration or qualification of such shares, and printing expenses.
Notwithstanding the foregoing, the Selling Group shall bear their own
expenses in connection with the registration and sale of the Purchase
Shares, including, without limitation, expenses of their own counsel,
broker or dealer fees, discounts and expenses, and all transfer and
other taxes on the sale of Purchase Shares.
5.8 Information in Registration Statement. To the extent that
any statements or omissions made in the Registration Statement or any
Incorporated Documents are made in reliance upon and in conformity with
information furnished to SSI by the Selling Group (including, without
limitation, information concerning the method of sale of Purchase Shares), such
Registration Statement, Incorporated Documents and amendments or supplements
thereto will, when they become effective or are filed with the Commission,
conform in all material respects to the requirements of the Securities Act and
the rules and regulations of the Commission thereunder, and will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were or are made, not misleading.
5.9 Holding the Purchase Shares. Each member of the Selling
Group covenants and agrees that the Purchase Shares may not be offered for
sale, sold or otherwise disposed of within the United States of America or to
United States citizens or residents unless the Purchase Shares are subsequently
registered under the Securities Act or an exemption from registration is
available.
5.10 Public Announcements. Without consent of all parties hereto,
prior to the Closing, no party shall make any press release or public
announcement with respect to the transactions contemplated by this Agreement.
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5.11 Release from Guarantees. After the Closing, Buyer will use
its commercially reasonable best efforts to obtain the release of any member of
the Selling Group from any outstanding guaranties which any such member of the
Selling Group has provided to trade suppliers or lessors and will indemnify any
member of the Selling Group from any liability relating thereto arising after
the Closing Date.
5.12 Employees. On the Closing Date, Buyer shall offer to employ
all employees of the Sellers in New Zealand, engaged in the business of Sellers
at the date hereof, at the wages or salaries paid by the Sellers as set forth
in the Schedules to this Agreement on similar terms and conditions to those on
which the employees are presently employed and with the same benefits (so far
as reasonably possible); provided that the Sellers have made a full, fair and
accurate disclosure of all such matters to the Buyer in writing prior to the
date hereof. Buyer hereby acknowledges and covenants with the Sellers that in
respect of those employees in New Zealand who accept the Buyer's offer, each of
the employee's periods of service shall be deemed to have commenced on the date
of employment by the Sellers and shall, notwithstanding the sale of the
business evidenced by this Agreement, be deemed to be a continuous period of
service which is not broken by the transfer of the business from the Sellers to
the Buyer.
The parties agree to cooperate and arrange such offers, the offers to
be subject only to the condition that this sale and purchase is settled on the
Closing Date in accordance with its terms and such offers shall become
effective from Closing Date.
Except as expressly provided elsewhere in this Agreement, other than
in respect of the Sellers' employees who accept any offer made under this
Section, Buyer shall have no liability or responsibility in respect of the
Seller's employees whether for redundancy, holiday pay, or otherwise in respect
of matters due or to become due to any such employee.
5.13 Access to Books and Records. Buyer agrees to provide
Sellers, and Sellers agree to provide Buyer, their respective accountants,
counsel and other representatives during normal business hours and upon
reasonable notice, for a period of six (6) years after the Closing Date, access
to the books, records, tax returns, contracts and other underlying data and
documentation relating to the Assets and the Australia Shares relating to the
period prior to the Closing Date and to make available to the other party,
personnel reasonably necessary for the purpose of enabling such party to review
any records for such period. Buyer and Sellers agree that, for such six (6)
year period, it will preserve and keep intact all such books and records.
5.14 Change of Name. Within ten (10) days following the Closing
Date, Sellers agree to file an amendment to their respective organizational
documents in order to change the name of the Sellers to one that does not use
the word "Essentially Group" or "Essentially Solutions" or any name similar to
the foregoing names. Sellers shall do or cause to be done all other acts,
including without limitation the payment of any fees required in connection
with such change of names, to cause such amendments to become effective in New
Zealand and all other jurisdictions in which Sellers transact business. After
the Closing Date, Sellers shall not transact business as, or use in the conduct
of its businesses or otherwise, the name "Essentially Group" or "Essentially
Solutions" or any other similar name. None of the Sellers shall take any
action to liquidate, wind up or dissolve until on or after September 1, 1997.
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5.15 Assignment of Contracts and Rights. Notwithstanding anything
in this Agreement to the contrary, this Agreement shall not constitute an
agreement to assign any claim, contract, license, real property lease, personal
property lease, commitment, sales order or purchase order or any claim, right
or benefit arising thereunder or resulting therefrom if the agreement to assign
or attempt to assign, without the consent of a third party, would constitute a
breach thereof or in any way adversely affect the rights of Buyer thereunder
(the "Nonassignable Assets"). Sellers will use their best efforts to obtain
consents to assignment of the Nonassignable Assets from all such third parties
prior to the Closing Date, and following the Closing Date, will cooperate with
Buyer and take all such other action as Buyer may reasonably request to obtain
consents to assignment. Until such consent is obtained, or if an attempted
assignment thereof would be ineffective or would adversely affect the rights of
Sellers or Buyer thereunder so that Buyer would not in fact receive all such
rights, Buyer and Sellers will cooperate with each other in any arrangement
designed to provide for Buyer the benefits of any such claim, contract,
license, lease, commitment, sales order or purchase order. Such arrangements,
to the extent provided in Section 1.5 in respect of liabilities or obligations
thereunder arising or to be performed after the Closing Date, shall be subject
to Buyer's obligation to undertake and perform Sellers' obligations under the
Nonassignable Assets, arising or to be performed after the Closing Date. To
the extent permitted by applicable law, in the event consents to the assignment
thereof cannot be obtained, such Nonassignable Assets shall be held, as of and
from the Closing Date, by Sellers in trust for Buyer, and the covenants and
obligations thereunder shall be performed by Buyer in Sellers' name and all
benefits and obligations existing thereunder shall be for Buyer's account. At
all times prior to and following the Closing, Sellers shall take or cause to be
taken such action in its name or otherwise as Buyer may reasonably request so
as to provide Buyer the benefits of the Nonassignable Assets and to effect
collection of money or other consideration to become due and payable under the
Nonassignable Assets, and Sellers shall promptly pay over to Buyer all money or
other consideration received by it in respect to all Nonassignable Assets. As
of and from the Closing Date, Sellers authorize Buyer, to the extent permitted
by applicable law and the terms of the Nonassignable Assets, at Buyer's
expense, to perform all the obligations and receive all of Seller's benefits
under the Nonassignable Assets, and appoints Buyer its attorney-in-fact to act
in its name and on its behalf with respect thereto.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Assets and the Australia
Shares, and to cause the other transactions contemplated hereby to occur at the
Closing, shall be subject to the satisfaction of each of the following
conditions at or prior to the Closing:
6.1 Representations and Warranties. Each representation and
warranty of the Selling Group contained in this Agreement and in any Schedule
or other disclosure in writing from the Selling Group shall be true and correct
when made, and shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representation and
warranty had been made on and as of the Closing Date.
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6.2 Covenants. All of the covenants and agreements herein on the
part of the Selling Group to be complied with or performed on or before the
Closing Date shall have been fully complied with and performed.
6.3 Certificate. There shall be delivered to Buyer a certificate
dated the Closing Date and signed by each member of the Selling Group to the
effect set forth in Sections 6.1 and 6.2, which certificate shall have the
effect of a representation and warranty made by the Selling Group on and as of
the Closing Date.
6.4 Absence of Litigation. No inquiry, action, suit, or
proceeding shall have been asserted, threatened, or instituted (a) in which it
is sought to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such
transactions or any part thereof, (b) which could, if adversely determined,
result in any material adverse change in the business, operations or assets or
the condition, financial or otherwise, or results of operations or prospects of
the Company or any Subsidiary, or (c) which could, if adversely determined,
have a material adverse effect on the right or ability of the Company or any
Subsidiary to carry on its business as now conducted.
6.5 Consents and Approvals. All material authorizations,
consents, approvals, waivers and releases, if any, necessary for the Company,
any Subsidiary and the Selling Group to consummate the transactions
contemplated hereby shall have been obtained (including, without limitation,
those consents and approvals set forth on Schedule 3.11 hereto) and copies
thereof shall be delivered to Buyer.
6.6 Certificates. The Selling Group shall have delivered to
Buyer (a) an original or certified copy of the Certificate of Incorporation of
the Company and each Subsidiary; and (b) a copy certified by the respective
directors of the Company and each Subsidiary, dated the Closing Date, of the
respective Articles of Association and Memorandum of Association (or
Constitution as the case may be) of the Company and each Subsidiary.
6.7 No Material Adverse Change. There shall not have been any
material adverse change since March 31, 1995 in respect of the financial
condition, results of operations, business, assets or prospects of the Company
or any Subsidiary and neither the Company nor any Subsidiary shall have
suffered any loss (whether or not insured) by reason of physical damage caused
by fire, earthquake, flood, wind, accident or other calamity which could have a
material adverse effect on the condition, financial or otherwise, results of
operations or business, assets or prospects of the Company or any Subsidiary.
6.8 No Transfers to Affiliates. Except as otherwise expressly
contemplated by this Agreement, neither the Company nor any Subsidiary shall
have distributed or transferred any of its assets or properties, or made any
payments, to or for the benefit of any of its affiliates.
6.9 Compliance with Section 5.1. Neither the Company nor any
Subsidiary shall have entered into any agreement, commitment or transaction nor
shall have taken any other action which would not be in compliance with each
provision of Section 5.1.
6.10 Deliveries Relating to Stock. The Company shall have
tendered to SSI:
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(a) Duly executed share transfers in respect of the
Australia Shares, effecting the transfer of the same to SSI and/or the
nominee of SSI.
(b) A resolution signed by the directors of Australia
approving the said share transfers in terms of the Articles of
Association (if the same shall be required) and directing that the
same be registered by the Company forthwith upon the same being duly
lodged at the registered office of the Company.
(c) A duly signed waiver by the Selling Group and any
necessary other parties in respect of all rights of pre-emption
conferred by the Constitution of Australia in respect of the Australia
Shares.
(d) A duly signed withdrawal by any officers of Australia
or any of its subsidiaries which officers have been appointed by the
Selling Group revoking all existing authorities to banks in respect of
the operation of any bank account or accounts in the name of Australia
relating to the affairs of Australia or any of its subsidiaries in
respect of any such officers appointed by the Selling Group.
(e) Duly signed resignations by any directors and
secretary of Australia or any of its subsidiaries and confirmation
that none of them have any claim upon any of such companies in respect
of directors' fees, reimbursements of expenses, or remuneration or
emoluments of any nature either relating to such resignation or in
respect of any matter antecedent to the date of such resignations;
provided that the directors of Australia serving immediately prior to
the Closing Date shall agree to certify to any matters required in
connection with the audit of the Company on a consolidated basis for
the fiscal year ended March 31, 1996.
(f) The share certificates for the Australia Shares (or,
if there are no certificates, written confirmation from the directors
of the Company to that effect).
(g) In respect of Australia and each of its subsidiaries,
originals or copies of each of the documents required to be held by
Australia pursuant to section 189 of the Companies Act 1993,
Australia's annual report and annual return (or, in each case, the
equivalent documents under the Corporations Law of Australia) last
income tax return, share certificates (if any), insurance policies in
respect of unencumbered assets, accounting and taxation records, bank
statements and check books, all correspondence and files and other
records of the company, motor vehicle authorities and registration
papers and all industrial, intellectual and commercial property rights
including all trade names and agencies and all other industrial or
technical know how with all appurtenant rights, and all books or
records, documents of title and other documents pertaining to the
affairs of Australia and its subsidiaries.
6.11 Additional Deliveries Relating to the Assets. The Sellers
shall have executed and delivered to Hybrid the conveyance documents,
assignments, endorsements and instruments described in Section 8.3.
6.12 Escrow Agreement. The Selling Group shall have executed and
delivered to Buyer the Escrow Agreement in the form attached hereto as Exhibit
B.
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6.13 Employment Agreements. Gary McNabb and David Colvin shall
have executed and delivered to Buyer the employment agreements in the forms
attached hereto and Exhibit C and Exhibit D, respectively (the "Employment
Agreements").
6.14 Satisfaction of Indebtedness; Repayment of Advances. The
Selling Group shall have delivered to Buyer or shall be caused to be delivered
to Buyer:
(a) evidence satisfactory to Buyer in its sole discretion
regarding (i) the satisfaction in full of all indebtedness owed by the
Company to Bancorp Investments Limited under that certain Loan and
Debenture Agreement in the original principal amount of $2.4 million
(New Zealand) dated August 18, 1995 and (ii) the complete release by
Bancorp Investments Limited and its related parties (including but not
limited to Bancorp Advisory Services Limited) of all of their right,
title and interest in and to any shareholders agreement, contract,
option or other agreement relating to the acquisition by Bancorp of
any interest in any share capital or assets of the Company or any
Subsidiary or any other right to compensation.
(b) evidence of the repayment of all advances included in
the Assets that were made by Sellers to affiliates or associates of
the Selling Group (other than Tony Clement), including those advances
set forth in Schedules 3.16(4) and 3.16(5) and Buyer shall have
received good funds representing all such payments at Closing.
6.15 Government Filings. Buyer shall obtain on terms acceptable
to the parties (reasonable conditions normally imposed will be deemed
acceptable) all requisite consents under the Overseas Investment Regulations
1995 (New Zealand) for the implementation of this Agreement prior to 4:00 p.m.
on April 2, 1996. Buyer shall use its commercially reasonable best endeavors
to satisfy the foregoing condition by its due date. The Selling Group shall
use their best commercially reasonable endeavors to comply with all requests
for information or assistance which Buyer may reasonably require to enable it
to satisfy the foregoing condition by the specified time.
6.16 Bank Account Reconciliation. The Selling Group shall have
delivered documentation satisfactory to Buyer verifying the outstanding balance
on a date immediately prior to the Closing Date of each of the accounts in any
bank or other depository institution or similar entity in which any of the
Sellers or their subsidiaries maintain any deposits or securities, together
with a listing of all checks or drafts outstanding and a reconciliation of the
balances in such accounts as of the Closing Date.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE SELLING GROUP
The obligations of the Selling Group to cause the transactions
contemplated hereby to occur at the Closing shall be subject, except as the
Selling Group may waive in writing, to the satisfaction of each of the
following conditions at or prior to the Closing:
7.1 Representations and Warranties. Each representation and
warranty of Buyer contained in this Agreement and in any Schedule or other
disclosure in writing from Buyer shall be true and correct when made, and shall
be true and correct in all material respects
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on and as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of the Closing Date.
7.2 Covenants of Buyer. All of the covenants and agreements
herein on the part of Buyer to be complied with or performed on or before the
Closing Date shall have been fully complied with and performed.
7.3 Certificate of Buyer. Buyer shall have delivered to the
Selling Group a certificate dated the Closing Date and signed by the Chief
Executive Officer, President or a Vice President of Buyer to the effect set
forth in Sections 7.1 and 7.2, which certificate shall have the effect of a
representation and warranty made by Buyer on and as of the Closing Date.
7.4 Absence of Litigation. No inquiry, action, suit or
proceeding shall have been asserted, threatened, or instituted in which it is
sought to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such
transactions or any part thereof.
7.5 Consents and Approvals. All material authorizations,
consents, approvals, waivers and releases, if any, necessary for Buyer to
consummate the transactions contemplated hereby shall have been obtained
(including, without limitation, those set forth in Schedule 4.3) and delivered
to the Selling Group.
7.6 Certificates. Buyer shall have delivered to the Selling
Group (a) a certificate of the appropriate governmental authority, dated as of
a date not more than ten (10) days prior to the Closing Date, attesting to the
existence and good standing of SSI in the State of Texas; (b) copies, certified
by the Secretary of SSI, of the articles of incorporation and all amendments
thereto of SSI; (c) a copy, certified by the Secretary of SSI, dated the
Closing Date, of the bylaws of SSI; (iv) a certificate, dated the Closing Date,
of the Secretary of SSI relating to the incumbency and corporate proceedings in
connection with the consummation of the transactions contemplated hereby; (v)
an original or certified copy of the Certificate of Incorporation of Hybrid;
and (vi) a copy certified by a director of Hybrid, dated the Closing Date, of
the Articles of Association, Memorandum of Association (or Constitution as the
case may be) of Hybrid.
7.7 Bill of Sale, Assignment and Assumption Agreement. Hybrid
shall have executed and delivered to the Sellers the Bill of Sale, Assignment
and Assumption Agreement in the form attached hereto as Exhibit A.
7.8 Escrow Agreement. Buyer shall have executed and delivered to
the Selling Group the Escrow Agreement in the form attached hereto as Exhibit
B.
7.9 Employment Agreements. Buyer shall have executed and
delivered to Gary McNabb and David Colvin the Employment Agreements in the
forms attached hereto as Exhibits C and D, respectively.
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7.10 Total Consideration. Buyer shall deliver the Total
Consideration to the Sellers and the Escrow Agent in the manner provided by
Section 2.1 of this Agreement.
ARTICLE VIII
CLOSING
8.1 Closing. Unless this Agreement is first terminated as
provided in Section 9.1, and subject to the satisfaction or waiver of all the
conditions set forth in Articles VI and VII, the closing of the transactions
contemplated hereby (the "Closing") shall occur simultaneously as follows: the
consummation of the purchase and sale of the Australia Shares and the Assets
shall take place at the offices of Buddle Findlay, Auckland, New Zealand, or at
such other location as is agreed to by Buyer and the Selling Group, on (i)
April 2, 1996, or (ii) such other date as the parties may agree upon in writing
(the "Closing Date").
8.2 Delivery of the Shares. At the Closing, the Company shall
deliver or cause to be delivered to SSI the stock certificate(s), if any,
evidencing all of the Australia Shares, duly endorsed or accompanied by duly
executed stock powers assigning all such Shares to SSI and otherwise in good
form for transfer.
8.3 Conveyance of the Assets. At the Closing, the Company, NZ
and Wgtn shall execute and deliver to Hybrid, in form and substance acceptable
to Hybrid (a) appropriate forms of assignments of the Real Property Leases,
together with any consents to such assignment required under the terms of the
Real Property Leases, (b) a Bill of Sale, Assignment and Assumption Agreement
in the form attached hereto as Exhibit A conveying to Hybrid all items of
personalty included among the Assets, (c) assignments of each of the Personal
Property Leases listed on Schedule 1.2(c) and the licenses, agreements and
instruments listed on Schedule 1.2(d) and Schedule 1.2(f) and (d) all other
assignments, endorsements and instruments of transfer as shall be necessary or
appropriate to carry out the intent of this Agreement and as shall be
sufficient to vest in Hybrid title to all of the Assets and all right, title
and interest of the Company, NZ and Wgtn thereto. If requested by Hybrid, such
documents shall be in a form suitable for recording.
8.4 Payments to the Selling Group. At the Closing, Buyer shall
deliver the Total Consideration in accordance with Section 2.1 of this
Agreement.
8.5 Prorations. All expenses and outgoings and incomings of a
periodical or recurring nature in respect of the Assets, (including lease
rentals and rates for the current year and utility charges for the billing
periods including the Closing Date) shall be apportioned pro rata among the
Company, NZ and Wgtn, on the one hand, and Hybrid, on the other hand, as of the
Closing Date. If the amount of real estate taxes for the current year and the
amount of utility charges for the billing periods including the Closing Date
are not ascertainable on the Closing Date, such taxes and utility charges shall
be apportioned based on the immediately preceding tax year and billing periods;
provided, however, that such taxes and utility charges shall be reapportioned
based on actual taxes and charges promptly after such amounts are ascertained.
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ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.1 Termination.
(a) This Agreement may be terminated and abandoned at any
time prior to the Closing Date;
(i) By the written mutual consent of Buyer and
the Selling Group;
(ii) By Buyer on the Closing Date if any of the
conditions set forth in Article VI shall
not have been fulfilled on or prior to the
Closing Date;
(iii) By the Selling Group on the Closing Date if
any of the conditions set forth in Article
VII shall not have been fulfilled on or
prior to the Closing Date;
(iv) By either Buyer or the Selling Group if the
Closing shall not have occurred on or
before June 30, 1996; and
(v) By Buyer, upon written notice to Selling
Group, if the examination of the Company
and the Subsidiaries, including its assets,
liabilities, operations, business and
prospects, by Buyer, or its representatives
or agents, discloses the existence or
nonexistence of any matters or things that,
in the sole judgment of Buyer, would be
reasonably likely to result in a material
loss or damage to Buyer, the Company or any
Subsidiary or a material diminution in
value of the Company or any Subsidiary.
(b) Any termination pursuant to this Article IX shall not
affect the obligations of the parties under Section 5.10 hereof and
shall be without prejudice to the terminating party's rights and
remedies under this Agreement by reason of any violation of this
Agreement occurring prior to such termination. In the event of a
termination pursuant to this Article IX, each party shall bear its own
costs and expenses incurred with respect to the transactions
contemplated hereby.
ARTICLE X
INDEMNIFICATION
10.1 Buyer's Losses.
(a) Each member of the Selling Group jointly and
severally agrees to indemnify and hold harmless Buyer and Australia
and their respective directors, officers, employees, representatives,
agents, and attorneys from, against, for and in respect of any and all
Buyer's Losses (as defined below) suffered, sustained, incurred or
required to be paid by any of them by reason of (i) any representation
or warranty made by the Selling Group in or pursuant to this Agreement
(including, without limitation, the representations and warranties
contained in any certificate delivered
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pursuant to Section 6.3) being untrue or incorrect in any respect;
(ii) any failure by the Selling Group to observe or perform their
covenants and agreements set forth in this Agreement or any other
agreement or document executed by them in connection with the
transactions contemplated hereby; (iii) the violation of any law prior
to the Closing; (iv) the presence on the Closing Date of any Hazardous
Substances in, on, under, at, or emanating from, any property
currently or formerly owned or operated by the Company or any
Subsidiary; (v) any violation of Environmental Requirements by the
Company or any Subsidiary or any other third party in connection with
any property owned or operated by the Company occurring prior to the
Closing Date; or (vi) any on-site or off-site transport or disposal of
Hazardous Substances by or on behalf of the Company or any Subsidiary
occurring prior to the Closing Date. Buyer's Losses associated with
any matter described in subsections (v)-(vi) or under subsection (i)
in connection with a breach of the representation and warranty
contained in Section 3.8 shall include, without limitation, any and
all costs incurred due to any investigation of any property or any
remediation, response, cleanup, removal, or restoration required by a
federal, provincial, or local agency or political subdivision or by
Environmental Requirements (collectively referred to as
"Remediation"); any claim for damages or personal injury or death
arising from the handling, storage, treatment, incineration, release,
spill, or disposal of Hazardous Substances or the environmental
condition of any such property; and the costs of repairing or
restoring any damaged property after the performance of any
Remediation. The term "Buyer's Losses" expressly includes those
Buyer's Losses that arise as a result of strict liability, whether
arising under Environmental Requirements or otherwise. This
indemnification thus is intended to include, and does include any
Buyer's Losses arising as a result of any strict liability imposed or
threatened to be imposed on the parties covered by this
indemnification in connection with any of the indemnified events
described in Section 10.1(a).
(b) "Buyer's Losses" shall mean all damages (including,
without limitation, amounts paid in settlement with the Selling
Group's consent, which consent may not be unreasonably withheld),
losses, obligations, liabilities, liens, deficiencies, costs
(including, without limitation, reasonable attorneys' fees),
penalties, fines, interest, monetary sanctions and expenses,
including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and agency orders,
and other costs and expenses incident to any suit, action,
investigation, claim or proceeding or to establish or enforce Buyer's
or such other persons' right to indemnification hereunder.
THE FOREGOING INDEMNIFICATION OF BUYER SHALL APPLY WHETHER OR
NOT ANY NEGLIGENCE OF BUYER IS ALLEGED OR PROVEN.
10.2 Selling Group's Losses.
(a) Buyer agrees to indemnify and hold harmless the
Selling Group, and their respective directors, officers, employees,
representatives, agents, and attorneys from, against, for and in
respect of any and all Selling Group's Losses (as defined below)
suffered, sustained, incurred or required to be paid by the Selling
Group by reason of (i) any representation or warranty made by Buyer in
or pursuant to this Agreement (including, without limitation, the
representations and warranties contained
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in any certificate delivered pursuant to Section 7.3) being untrue or
incorrect in any respect; or (ii) any failure by Buyer to observe or
perform its covenants and agreements set forth in this Agreement or
any other agreement or document executed by it in connection with the
transactions contemplated hereby.
(b) "Selling Group's Losses" shall mean all damages
(including, without limitation, amounts paid in settlement with
Buyer's consent, which consent may not be reasonably withheld),
losses, obligations, liabilities, claims, deficiencies, costs
(including, without limitation, reasonable attorneys' fees) and
expenses, including, without limitation, reasonable attorneys' fees
and costs incurred to comply with injunctions and other court and
agency orders, and other costs and expenses incident to any suit,
action, investigation, claim or proceeding or to establish or enforce
the Selling Group's or such other persons' right to indemnification
hereunder.
THE FOREGOING INDEMNIFICATION OF THE SELLING GROUP SHALL APPLY
WHETHER OR NOT ANY NEGLIGENCE OF THE SELLERS IS ALLEGED OR PROVEN.
(c) Notwithstanding any other provision of this Agreement
to the contrary:
(i) Buyer hereby agrees to indemnify the Sellers, and each of
them against (A) any income taxes required to be paid by Sellers which
directly relate to the structure of this transaction as a
purchase of the Assets in New Zealand rather than the acquisition of
the shares of capital stock of Sellers, and which would not have
otherwise been incurred or paid if shares of stock of Sellers had been
sold to Buyer, and in connection therewith, Buyer agrees that the
value of the intangible assets included in the Assets will be
allocated by Buyer only to goodwill and customer lists (the "Structure
Losses") and (B) all direct costs and expenses incurred and paid by
Sellers within six (6) months following the Closing Date arising out
of any claims by employees of Sellers for technical redundancy caused
by the transactions contemplated hereby. Sellers shall immediately
notify Buyer of the pendency of any such claims as soon as Sellers
become aware of any such claims;
(ii) Buyer agrees that if the value of inventory included in
the Assets as reflected in the Audit is equal to or less than
$1,500,000 (New Zealand) Buyer will not write-up the value of the
inventory acquired, and if the value of the inventory reflected in the
Audit is greater than $1,500,000 (New Zealand), and Buyer elects to
write-up such inventory, Buyer agrees to indemnify the Sellers, and
each of them against any income taxes required to be paid by Sellers
that relate directly to the write-up of such inventory ("Inventory
Losses").
(iii) Buyer acknowledges and agrees that the indemnity
provided in this Section 10.2(c) is in addition to any other remedies
in favor of the Sellers contained in this Agreement; provided,
however, that the indemnification by Buyer with respect to Structure
Losses and Inventory Losses, respectively, shall not exceed in total
for each of Structure Losses and Inventory Losses, respectively, the
sum of the first $50,000 (New Zealand) of either Structure Losses or
Inventory Losses plus 50% of the next $150,000 (New Zealand) of either
Structure Losses or Inventory Losses. Any claim for indemnification
relating to Structure Losses or Inventory Losses shall not be made or
asserted after August 31, 1998.
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10.3 Notice of Loss. Except to the extent set forth in the next
sentence, Buyer and the Selling Group will not have any liability under the
indemnity provisions of this Agreement with respect to a particular matter
unless a notice setting forth in reasonable detail the breach or other matter
which is asserted has been given to the Indemnifying Party (as defined below)
and, in addition, if such matter arises out of a suit, action, investigation,
proceeding or claim, such notice is given promptly, but in any event within
thirty (30) days after the Indemnified Party (as defined below) is given notice
of the claim or the commencement of the suit, action, investigation or
proceeding. Notwithstanding the preceding sentence, failure of the Indemnified
Party to give notice hereunder shall not release the Indemnifying Party from
its obligations under this Article X, except to the extent the Indemnifying
Party is actually prejudiced by such failure to give notice. With respect to
Buyer's Losses and Remediation, the Selling Group shall be the Indemnifying
Party and Buyer, Australia and their respective directors, officers, employees,
representatives, agents and attorneys shall be the Indemnified Parties. With
respect to the Selling Group's Losses, Buyer shall be the Indemnifying Party
and the Selling Group and their respective directors, officers, employees,
representatives, agents and attorneys shall be the Indemnified Party.
10.4 Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed
by an Indemnified Party, the Indemnifying Party shall be entitled to defend,
contest or otherwise protect against any such suit, action, investigation,
claim or proceeding at its own cost and expense, and the Indemnified Party must
cooperate in any such defense or other action. The Indemnified Party shall
have the right, but not the obligation, to participate at its own expense in
defense thereof by counsel of its own choosing, but the Indemnifying Party
shall be entitled to control the defense unless the Indemnified Party has
relieved the Indemnifying Party from liability with respect to the particular
matter or the Indemnifying Party fails to assume defense of the matter. In the
event the Indemnifying Party shall fail to defend, contest or otherwise protect
in a timely manner against any such suit, action, investigation, claim or
proceeding, the Indemnified Party shall have the right, but not the obligation,
thereafter to defend, contest or otherwise protect against the same and make
any compromise or settlement thereof and recover the entire cost thereof from
the Indemnifying Party including, without limitation, reasonable attorneys'
fees, disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or the compromise or settlement thereof;
provided, however, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty (30) days of receipt of such notice. Failure to reject
such notice within such thirty (30) day period shall be deemed an acceptance of
such settlement or compromise. The Indemnified Party shall have the right to
effect a settlement or compromise over the objection of the Indemnifying Party;
provided, that if (a) the Indemnifying Party is contesting such claim in good
faith or (b) the Indemnifying Party has assumed the defense from the
Indemnified Party, the Indemnified Party waives any right to indemnity
therefor. If the Indemnifying Party undertakes the defense of such matters,
the Indemnified Party shall not, so long as the Indemnifying Party does not
abandon the defense thereof, be entitled to recover from the Indemnifying Party
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party with the prior written
consent of the Indemnifying Party.
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10.5 Cooperation. The Selling Group, Buyer and each of their
affiliates, successors and assigns shall cooperate with each other in the
defense of any suit, action, investigation, proceeding or claim by a third
party and, during normal business hours, shall afford each other access to
their books and records and employees relating to such suit, action,
investigation, proceeding or claim and shall furnish each other all such
further information that they have the right and power to furnish as may
reasonably be necessary to defend such suit, action, investigation, proceeding
or claim, including, without limitation, reports, studies, correspondence and
other documentation relating to any governmental agency or administrative
matters.
10.6 Survival. All representations and warranties and all
covenants, agreements and obligations made by the Selling Group or Buyer in
this Agreement, or in any instrument or document furnished in connection with
this Agreement or the transactions contemplated hereby, shall survive the
Closing and any investigation at any time made by or on behalf of any
Indemnified Party.
10.7 Satisfaction of Claims from Escrow. Buyer shall have the
right and option of recovering amounts owed pursuant to Section 10.1 for
Buyer's Losses and Remediation from the Selling Group or from the funds held in
escrow in accordance with the Escrow Agreement.
10.8 Waiver of Contribution and Indemnification. Each member of
the Selling Group hereby waives and releases any rights of indemnification or
contribution such member of the Selling Group may have against the Australia as
a result of any payment made by the member of the Selling Group under this
Article X.
ARTICLE XI
MISCELLANEOUS
11.1 Entire Agreement. This Agreement (including the exhibits and
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof, and no party shall be liable or bound
to the other in any manner by any representations or warranties not set forth
herein.
11.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Neither this Agreement
nor any rights, interests, or obligations hereunder may be assigned by any
party hereto without the prior written consent of all other parties hereto, and
any purported assignment in violation of this Section 11.2 shall be null and
void, provided, however, that Buyer may assign, in its sole discretion, without
consent of the other parties hereto, any or all of its rights, interests and
obligations hereunder to any direct or indirect parent or majority owned
subsidiary of Buyer.
11.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
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54
11.4 Headings. The headings of the articles and sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
11.5 Construction. As used in this Agreement, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular article, section, paragraph, or
other subdivision.
11.6 Modification and Waiver. Any of the terms or conditions of
this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof, and this Agreement may be modified or amended
by a written instrument executed by Buyer and the Selling Group. No
supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by all of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
11.7 Schedules, Etc. All exhibits and schedules annexed hereto are
expressly made a part of this Agreement as though fully set forth herein, and
all references to this Agreement herein or in any such exhibits or schedules
shall refer to and include all such exhibits and schedules.
11.8 Notices. Any notice, request, instruction, document or other
communication to be given hereunder by any party hereto to any other party
hereto shall be in writing and validly given if (a) delivered personally, (b)
sent by facsimile, (c) delivered by overnight express, or (d) sent by
registered or certified mail, postage prepaid, as follows:
If to Buyer:
Software Spectrum, Inc.
2140 Merritt Drive
Garland, Texas U.S.A. 75041
Attention: President
Facsimile No.: (214) 864-7889
If to the Selling Group:
The Essentially Group Limited
33 College Hill
Ponsonby
Auckland, New Zealand
Facsimile No.: 0064 9 3074 097
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally, or sent by telecopy or overnight express
in the manner provided herein shall be deemed to have been duly given to the
party to whom it is directed upon actual receipt by such party. Any notice
which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been given to the party to whom it is addressed
at the close of business, local time of the recipient, on the third day after
the day it is so placed in the mail.
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11.9 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF NEW ZEALAND.
(b) IF A DISPUTE ARISES OUT OF THIS AGREEMENT AND IF THE
DISPUTE CANNOT BE RESOLVED THROUGH NEGOTIATION, THE PARTIES AGREE TO
SUBMIT ANY SUCH DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT
TO NON- BINDING MEDIATION PRIOR TO BRINGING SUCH CLAIM, CONTROVERSY OR
DISPUTE IN AN ARBITRAL TRIBUNAL, COURT OR ANY OTHER TRIBUNAL. THE
MEDIATION SHALL BE CONDUCTED IN AUCKLAND, NEW ZEALAND THROUGH EITHER
AN INDIVIDUAL MEDIATOR OR A MEDIATOR APPOINTED BY A MEDIATION SERVICES
ORGANIZATION, THE AUCKLAND DISTRICT LAW SOCIETY OR OTHER BODY
EXPERIENCED IN THE MEDIATION OF GENERAL BUSINESS DISPUTES, AGREED UPON
BY SELLERS' REPRESENTATIVE AND BUYER AND, FAILING SUCH AGREEMENT
WITHIN A REASONABLE PERIOD OF TIME AFTER EITHER PARTY HAS NOTIFIED THE
OTHER OF ITS DESIRE TO SEEK MEDIATION OF ANY CLAIM, CONTROVERSY OR
DISPUTE (NOT TO EXCEED FIFTEEN (15) DAYS), BY THE AMERICAN ARBITRATION
ASSOCIATION IN ACCORDANCE WITH ITS RULES GOVERNING MEDIATION. THE
COSTS AND EXPENSES OF MEDIATION, INCLUDING COMPENSATION AND EXPENSES
OF THE MEDIATOR (AND EXCEPT FOR THE ATTORNEYS' FEES INCURRED BY EITHER
PARTY), SHALL BE BORNE BY THE PARTIES EQUALLY.
(c) IF THE SELLERS' REPRESENTATIVE AND BUYER ARE UNABLE
TO RESOLVE THE CLAIM, CONTROVERSY OR DISPUTE WITHIN SIXTY (60) DAYS
AFTER THE MEDIATOR HAS BEEN CHOSEN, THEN ANY SUCH CONTROVERSY OR
DISPUTE SHALL BE FINALLY SETTLED BY ARBITRATION IN ACCORDANCE WITH THE
TERMS HEREOF. SUCH ARBITRATION MAY BE INITIATED BY EITHER PARTY
SERVING UPON THE OTHER NOTICE (I) STATING THAT THE NOTIFYING PARTY
DESIRES TO HAVE SUCH CONTROVERSY REVIEWED BY A BOARD OF THREE
ARBITRATORS, AND (II) NAMING ONE PERSON WHOM SUCH PARTY CHOOSES TO ACT
AS ONE OF THE THREE ARBITRATORS. WITHIN FIFTEEN (15) DAYS AFTER
RECEIPT OF SUCH A NOTICE, THE OTHER PARTY SHALL DESIGNATE ONE PERSON
TO ACT AS ARBITRATOR AND SHALL NOTIFY THE PARTY REQUESTING ARBITRATION
OF SUCH DESIGNATION AND THE NAME OF THE PERSON SO DESIGNATED. IF THE
PARTY UPON WHOM A REQUEST FOR ARBITRATION IS SERVED SHALL FAIL TO
DESIGNATE ITS ARBITRATOR WITHIN FIFTEEN (15) DAYS AFTER RECEIPT OF
SUCH A NOTICE, THEN THE ARBITRATOR DESIGNATED BY THE PARTY REQUESTING
ARBITRATION SHALL ACT AS THE SOLE ARBITRATOR TO RESOLVE THE
CONTROVERSY AT HAND.
(d) IF BOTH PARTIES HAVE DESIGNATED AN ARBITRATOR, THE
TWO ARBITRATORS DESIGNATED AS AFORESAID SHALL PROMPTLY SELECT A THIRD
ARBITRATOR. IF THE TWO ARBITRATORS CHOSEN BY THE PARTIES HERETO ARE
NOT ABLE TO AGREE ON SUCH THIRD
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ARBITRATOR WITHIN THIRTY (30) DAYS AFTER THE SECOND ARBITRATOR IS
DESIGNATED, UNLESS SUCH TIME IS EXTENDED BY THE PARTIES, THEN EITHER
ARBITRATOR, ON FIVE (5) DAYS' NOTICE TO THE OTHER, SHALL APPLY TO THE
AMERICAN ARBITRATION ASSOCIATION TO DESIGNATE AND APPOINT SUCH THIRD
ARBITRATOR AS PROMPTLY AS PRACTICABLE.
(e) THE PARTIES AGREE THAT ALL ARBITRATORS CHOSEN
PURSUANT TO SECTION 11.9(c) AND (d) ABOVE SHALL NOT IN ANY MANNER BE
RELATED TO OR AFFILIATED WITH BUYER OR SELLERS.
(f) EXCEPT AS OTHERWISE SET FORTH HEREIN, THE ARBITRAL
PROCEEDINGS SHALL BE CONDUCTED IN AUCKLAND, NEW ZEALAND IN THE ENGLISH
LANGUAGE AND IN ACCORDANCE WITH AND SUBJECT TO THE INTERNATIONAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN EFFECT
FROM TIME TO TIME.
(g) THE DECISION IN WRITING OF THE ARBITRATOR(S) SO
SELECTED OR APPOINTED SHALL BE FINAL AND CONCLUSIVE UPON BOTH PARTIES.
THE COSTS AND EXPENSES OF ARBITRATION, INCLUDING THE COMPENSATION AND
EXPENSES OF THE ARBITRATOR(S), SHALL BE BORNE BY THE PARTIES AS THE
ARBITRATOR(S) MAY DETERMINE. EITHER PARTY MAY APPLY TO ANY COURT
WHICH HAS JURISDICTION FOR AN ORDER CONFIRMING THE AWARD. ANY RIGHT
OF EITHER PARTY TO JUDICIAL ACTION ON ANY MATTER SUBJECT TO
ARBITRATION HEREUNDER IS HEREBY WAIVED, EXCEPT SUIT TO ENFORCE THE
ARBITRATION AWARD.
11.10 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws,
such provision shall be fully severable, this Agreement shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
11.11 Expenses and Finders' Fees. The Selling Group and Buyer will
bear their own costs and expenses associated with the transactions contemplated
hereby, including the payment of any agents' or finders' fees due in connection
with the transactions contemplated hereby.
11.12 Third Party Beneficiaries. Except as otherwise specifically
provided in the Agreement, no individual or firm, corporation, partnership, or
other entity shall be a third-party beneficiary of the representations,
warranties, covenants, and agreements made by any party hereto.
11.13 Number and Gender of Words. Whenever the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
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57
11.14 New Zealand Currency. All currency amounts set forth herein,
or in any document executed in connection with this Agreement, except as
otherwise noted, shall refer to New Zealand currency.
11.15 Further Assurances. From time to time after the Closing, at
the request of any other party but at the expense of the requesting party,
Buyer or the Selling Group, as the case may be, will execute and deliver any
such other instruments of conveyance, assignment and transfer, and take such
other action as the other party may reasonably request in order to consummate
the transactions contemplated hereby.
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58
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ESSENTIALLY GROUP LIMITED
By: /s/ Gary McNabb
------------------------------------
Name: Gary McNabb
----------------------------------
Title: Director
---------------------------------
By: /s/ R. Parkinson
------------------------------------
Name: R. Parkinson
----------------------------------
Title: Director
---------------------------------
ESSENTIALLY GROUP (NZ) LIMITED
By: /s/ Gary McNabb
------------------------------------
Name: Gary McNabb
----------------------------------
Title: Director
---------------------------------
By: /s/ R. Parkinson
------------------------------------
Name: R. Parkinson
----------------------------------
Title: Director
---------------------------------
ESSENTIALLY SOFTWARE
(WELLINGTON)
LIMITED
By: /s/ Gary McNabb
------------------------------------
Name: Gary McNabb
----------------------------------
Title: Director
---------------------------------
By: /s/ R. Parkinson
------------------------------------
Name: R. Parkinson
----------------------------------
Title: Director
---------------------------------
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59
THE MCNABB FAMILY TRUST
By: /s/ R. Parkinson
------------------------------------
Robert Parkinson, Trustee
By: /s/ Gary John McNabb
------------------------------------
Gary John McNabb, Trustee
MCNABB NO. 2 FAMILY TRUST
By: /s/ A. L. McNabb
------------------------------------
Anna Louise McNabb, Trustee
By: /s/ R. Parkinson
------------------------------------
Robert Parkinson, Trustee
By: /s/ Gary John McNabb
-------------------------------------
Gary John McNabb, Trustee
MCNABB NO. 3 FAMILY TRUST
By: /s/ A. L. McNabb
------------------------------------
Anna Louise McNabb, Trustee
By: /s/ Gary John McNabb
------------------------------------
Gary John McNabb, Trustee
By: /s/ R. Parkinson
------------------------------------
Robert Parkinson, Trustee
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RMAD TRUST
By: /s/ Gary John McNabb
------------------------------------
Gary John McNabb, Trustee
By: /s/ R. Parkinson
------------------------------------
Robert Parkinson, Trustee
/s/ David Colvin
---------------------------------------
David Colvin, Individually
/s/ Gary John McNabb
---------------------------------------
Gary John McNabb, Individually
SOFTWARE SPECTRUM, INC.
By: /s/ Richard Sims
------------------------------------
Name: Richard Sims
----------------------------------
Title: President
---------------------------------
SOFTWARE SPECTRUM (NZ) LIMITED
By: /s/ Richard Sims
------------------------------------
Name: Richard Sims
----------------------------------
Title: Director
---------------------------------
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61
- - ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER:
MARSH & MOLENNAN, INC. CERTIFICATE OF INSURANCE BAM #8139
- - ------------------------------------------------------------------------------------------------------------------------------------
PRODUCER
Marsh & McLennan, Incorporated THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO
2200 Ross Avenue RIGHTS UPON THE CERTIFICATE HOLDER OTHER THAN THOSE PROVIDED IN THE POLICY.
3300 Texas Commerce Tower THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE
Dallas, TX 75201-7988 POLICIES LISTED HEREIN.
Sally Dillenback ------------------------------------------------------------------------------
COMPANIES AFFORDING COVERAGE
------------------------------------------------------------------------------
COMPANY A VIGILANT INSURANCE CO
LETTER
- - ------------------------------------------------------------------------------------------------------------------------------------
INSURED COMPANY B TEXAS PACIFIC INDEMNITY CO
LETTER
Software Spectrum, Inc. ------------------------------------------------------------------------------
Attn: Karen Meador COMPANY C
2140 Merritt Drive LETTER
Garland, TX 75041 ------------------------------------------------------------------------------
COMPANY
LETTER D
- - ------------------------------------------------------------------------------------------------------------------------------------
COVERAGES
- - ------------------------------------------------------------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT POLICIES OF INSURANCE LISTED HEREIN HAVE BEEN ISSUED TO THE INSURED NAMED HEREIN FOR THE POLICY PERIOD
INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THE
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES LISTED HEREIN IS SUBJECT TO ALL THE TERMS,
CONDITIONS AND EXCLUSIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- - ------------------------------------------------------------------------------------------------------------------------------------
CO TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION LIMITS
LTR DATE (MM/DD/YY) DATE (MM/DD/YY)
- - ------------------------------------------------------------------------------------------------------------------------------------
A GENERAL LIABILITY (96)3531-14-59 4/30/95 4/30/96 GENERAL AGGREGATE $ 2000000
/X/ COMMERCIAL GENERAL LIABILTY PRODUCTS-COMP/OP AGG $ 2000000
/ / / / CLAIMS MADE /X/ OCCUR. PERSONAL & ADV INJURY $ 1000000
/ / OWNER'S CONTRACTOR'S PROT. EACH OCCURRENCE $ 1000000
/ / __________________________ FIRE DAMAGE (ANY ONE FIRE) $ 100000
/ / __________________________ MED. EXPENSE (ANY ONE PERSON) $ 10000
- - ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
/ / ANY AUTO COMBINED SINGLE LIMIT $
/ / ALL OWNED AUTOS BODILY INJURY (PER PERSON) $
/ / SCHEDULED AUTOS BODILY INJURY (PER ACCIDENT) $
/ / HIRED AUTOS PROPERTY DAMAGE $
/ / NON-OWNED AUTOS
- - ------------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY
/ / ANY AUTO AUTO ONLY - EA ACCIDENT $
/ / OTHER THAN AUTO ONLY $
/ / EACH ACCIDENT $
/ / AGGREGATE $
/ /
- - ------------------------------------------------------------------------------------------------------------------------------------
B EXCESS LIABILITY (96)7972-04-17 4/30/95 4/30/96 EACH OCCURRENCE $ 5000000
/X/ UMBRELLA FORM AGGREGATE $ 5000000
/ / OTHER THAN UMBRELLA FORM
- - ------------------------------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION AND STATUTORY LIMITS $
EMPLOYERS LIABILITY EACH ACCIDENT $
DISEASE - POLICY LIMIT $
DISEASE - EACH EMPLOYEE $
- - ------------------------------------------------------------------------------------------------------------------------------------
OTHER
- - ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
- - ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER CACELLATION
Riverport Commerce Center, Inc SHOULD ANY OF THE POLICIES LISTED HEREIN BE CANCELLED BEFORE THE
Attn: Reed Boone EXPIRATION DATE THEREOF, THE INSURER AFFORDING COVERAGE WILL ENDEAVOR TO
P.O. Box 58098 MAIL 30 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED HEREIN, BUT
Louisville, KY 40258 FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABILITY OF
ANY KIND UPON THE INSURER AFFORDING COVERAGE, ITS AGENTS OR
REPRESENTATIVES, OR THE ISSUER OF THIS CERTIFICATE.
--------------------------------------------------------------------------
MARSH & MCLENNAN, INCORPORATED
BY: /s/ RONALD J. BROTHERS
--------------------------------------------------------------------------
MMI 1 (8/95) VALID AS OF: 3/07/96
- - ------------------------------------------------------------------------------------------------------------------------------------
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