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EXHIBIT 2.8
[BAKER & MCKENZIE LETTERHEAD]
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TMX SHARE SALE AND PURCHASE AGREEMENT
BETWEEN
ASIA ONLINE - AUSTRALIA PTY LTD
(ACN 089 444 691)
AND
THE PARTIES LISTED IN EXHIBIT C HERETO
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DATED AS OF OCTOBER 1, 1999
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[BAKER & MCKENZIE LETTERHEAD]
TABLE OF CONTENTS
Clauses and Headings Page
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1. Agreement to Sell and Purchase the Shares...........................................................1
1.1 Sale and Purchase of Shares from the Vendor................................................1
1.2 Purchase Price of Sale Shares..............................................................1
1.3 Closing....................................................................................1
1.4 Meetings...................................................................................3
2. Representations and Warranties of the Vendor........................................................4
2.1 Organization; Good Standing and Qualification..............................................4
2.2 Certificate of Incorporation and Constitution Records......................................5
2.3 Capitalization.............................................................................5
2.4 No Conflict................................................................................6
2.5 Proprietary Rights; Proprietary Information and Inventions Agreement.......................7
2.6 Actions Pending............................................................................7
2.7 Offering Valid.............................................................................8
2.8 Financial Position.........................................................................8
2.9 Absence of Changes Since 30 June 1999.....................................................11
2.10 Title to Assets...........................................................................13
2.11 Bank Accounts.............................................................................13
2.12 Receivables; Major Customers..............................................................14
2.13 Equipment, Etc............................................................................15
2.14 Real Property.............................................................................15
2.15 Proprietary Assets........................................................................15
2.16 Year 2000.................................................................................16
2.17 Contracts.................................................................................16
2.18 Liabilities; Major Suppliers..............................................................18
2.19 Compliance with Legal Requirements........................................................19
2.20 Governmental Authorizations...............................................................20
2.21 Governmental Action.......................................................................22
2.22 Tax Matters...............................................................................22
2.23 Employee and Labor Matters................................................................24
2.24 Benefit Plans.............................................................................26
2.25 Sale of Products; Performance of Services.................................................26
2.26 Insurance.................................................................................27
2.27 Related Party Transactions................................................................29
2.28 Certain Payments, Etc.....................................................................29
2.29 Proceedings...............................................................................30
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2.30 Brokers...................................................................................31
2.31 The Vendor................................................................................31
2.32 Full Disclosure...........................................................................32
2.33 Insolvency Events.........................................................................33
3. Representations and Warranties of Purchaser........................................................34
3.1 Acquisition of Shares.....................................................................34
3.2 Authority; Binding Nature of Agreement....................................................34
4. Pre-Closing Covenants of the Vendor................................................................35
4.1 Access and Investigation..................................................................35
4.2 Operation of Business.....................................................................35
4.3 Filings and Consents......................................................................37
4.4 Notification; Updates to Disclosure Schedule..............................................38
4.5 Payment of Indebtedness by Related Parties................................................39
4.6 No Negotiation............................................................................39
4.7 Best Efforts..............................................................................40
4.8 Confidentiality - Vendor..................................................................40
4.9 Confidentiality - Purchaser...............................................................40
5. Conditions Precedent to Purchaser's Obligation to Close............................................41
5.1 [intentionally left blank]................................................................41
5.2 Accuracy of Representations...............................................................41
5.3 Performance of Obligations................................................................41
5.4 Consents..................................................................................42
5.5 No Adverse Change.........................................................................42
5.6 Additional Documents......................................................................42
5.7 No Proceedings............................................................................42
5.8 No Claim Regarding Stock Ownership or Sale Proceeds.......................................42
5.9 No Prohibition............................................................................43
5.10 Board Approval............................................................................43
6. Conditions Precedent to the Vendor's Obligations to Close..........................................43
6.1 Accuracy of Representations...............................................................43
6.2 Purchaser's Performance...................................................................43
6.3 No Injunction.............................................................................43
7. Termination........................................................................................44
7.1 Termination Events........................................................................44
7.2 Termination Procedures....................................................................44
7.3 Effect of Termination.....................................................................45
7.4 Non-exclusivity of Termination Rights.....................................................45
8. Indemnification, Etc...............................................................................45
8.1 Survival of Representation and Covenants..................................................45
8.2 Indemnification by the Vendor.............................................................46
8.3 Right to Require Cure of Breach...........................................................47
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8.4 No Contribution...........................................................................47
8.5 Interest..................................................................................47
8.6 Setoff....................................................................................47
8.7 Non-exclusivity of Indemnification Remedies...............................................48
8.8 Defence of Third Party Claims.............................................................48
8.9 Limit of Liability........................................................................48
9. Restriction of the Vendor..........................................................................48
10. To Miscellaneous Provisions........................................................................50
10.1 Further Assurances........................................................................50
10.2 Fees, Expenses and Stamp Duty.............................................................50
10.3 Attorneys' Fees...........................................................................50
10.4 Notices...................................................................................51
10.5 Time of the Essence.......................................................................51
10.6 Headings..................................................................................51
10.7 Counterparts..............................................................................52
10.8 Governing Law; Venue......................................................................52
10.9 Successors and Assigns....................................................................53
10.10 Remedies Cumulative; Specific Performance.................................................53
10.11 Waiver....................................................................................53
10.12 Amendments................................................................................54
10.13 Severability..............................................................................54
10.14 Parties in Interest.......................................................................54
10.15 Entire Agreement..........................................................................54
10.16 Construction..............................................................................54
Exhibits
EXHIBIT A Certain Definitions......................................................................A-1
EXHIBIT B Proprietary Information and Inventions Deed..............................................*
EXHIBIT C List of Shareholders.....................................................................C-1
EXHIBIT D List of Consultants and Independent Contractors..........................................*
EXHIBIT E List of Governmental Licenses, Permits, Orders, Etc......................................*
EXHIBIT F Form of Employment Agreement.............................................................*
EXHIBIT G Designated Senior Officers and Employees.................................................*
EXHIBIT H Constitution.............................................................................*
* Exhibit omitted -- will be provided supplementally to the Commission upon
request.
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SHARE SALE AND PURCHASE AGREEMENT RELATING TO
THE MESSAGE EXCHANGE PTY LTD (ACN 053 463 291)
This Share Sale and Purchase Agreement (the "Agreement") is entered into as of
1st October, 1999, by the party listed in Exhibit C hereto (the "Vendor"), and
Asia Online - Australia Pty Ltd (ACN 089 444 691) of Level 26, 50 Bridge Street,
Sydney NSW 2000 (the Purchaser).
RECITALS:
WHEREAS, the Vendor owns the entire issued share capital of THE MESSAGE EXCHANGE
PTY LTD (ACN 053 463 291) (the Company).
WHEREAS, the Vendor wish to sell and the Purchaser wishes to purchase all the
issued shares in the capital of the Company (the Sale Shares) on the terms
hereof.
Now, therefore, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE THE SHARES
1.1 Sale and Purchase of Shares from the Vendor
At the Closing, the Vendor shall sell, assign, transfer and
deliver to the Purchaser, and the Purchaser shall purchase,
the shares in the Company listed the Vendor's name in Exhibit
C, on the terms and subject to the conditions set forth in
this Agreement.
1.2 Purchase Price of Sale Shares
The purchase price for the Sale Shares shall be TWO MILLION
FOUR HUNDRED AND SEVENTY THOUSAND AUSTRALIAN DOLLARS
(A$2,470,000) to be paid to the Vendor at Closing by
telegraphic transfer to the bank account nominated in writing
by the Vendor to the Purchaser not less than four business
days prior to Closing.
1.3 Closing
(a) The Closing shall take place at the offices of the
Vendor's Australian counsel, Phillips Fox, 255
Elizabeth Street, Sydney, New South Wales, Australia
at 10:00 a.m. (Sydney Time) on the earlier of
9 October, 1999 or the date two business days
following the satisfaction of the Closing Conditions
set forth in Section 5 and Section 6. For the
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purposes of this Agreement "Scheduled Closing Time"
shall mean the time and date as of which the Closing
is required to take place pursuant to this Section
1.3(a); and "Closing Date" shall mean the time and
date as of which the Closing actually takes place.
(b) At the Closing the Vendor shall:
(i) deliver to the Purchaser the certificates
representing the Sale Shares, duly executed
instruments of transfer to transfer title to
the Sale Shares to the Purchaser (or its
nominees) and certified copies of the
resolutions of the Board of Directors of the
Vendor authorising the transfer of the Sale
Shares registered in its name and giving
authority to execute the relevant
instrument(s) of transfer on behalf of the
Vendor to the party who executed them;
(ii) deliver to the Purchaser a duly executed
power of attorney (in deed form) from the
Vendor in favour of the Purchaser (or its
nominee(s)) generally in respect of the Sale
Shares sold by the Vendor under this
Agreement enabling the Purchaser (or its
nominee(s)) to attend and vote at general
meetings of the Company;
(iii) deliver to the Purchaser any waiver, consent
or other document necessary to give the
Purchaser (or its nominee(s)) full legal and
beneficial ownership of the Sale Shares;
(iv) deliver to the Purchaser the common seal (if
any) of the Company and each register,
minute book and other book required to be
kept by the Company under any Legal
Requirement up to the date of Closing and
each certificate of incorporation of the
Company (including certificates issued upon
any change of name);
(v) deliver to the Purchaser employment
contracts in the form of the drafts annexed
as Exhibit F, entered into between the
Company and the senior officers and
employees designated in Exhibit G;
(vi) deliver to the Purchaser copies of the
Proprietary Information and Inventions Deed
executed by each of the senior officers and
employees designated in Exhibit G
(vii) deliver to the Purchaser a copy of a special
resolution of the shareholders of the
Company adopting the Constitution in the
form set out in Exhibit H;
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(viii) execute and deliver to the Purchaser a
certificate (the "Closing Certificate")
setting forth the Vendor's representations
and warranties that (A) each of the
representations and warranties made by the
Vendor in this Agreement was accurate in all
respects as of the date of this Agreement,
(B) except as expressly set forth in the
Closing Certificate, each of the
representations and warranties made by the
Vendor in this Agreement is accurate in all
respects as of the Closing Date as if made
on the Closing Date, (C) each of the
covenants and obligations that the Vendor is
required to have complied with or performed
pursuant to this Agreement at or prior to
the Closing has been duly complied with and
performed in all respects, and (D) except as
expressly set forth in the Closing
Certificate, each of the conditions set
forth in Sections 5.3, 5.4, 5.7 and 5.8 has
been satisfied in all respects;
(ix) the Vendor shall procure that each of its
nominees as the Purchaser notifies to the
Vendor resigns from their positions as
directors and officers of the Company, in
each case formally resigning their
respective office (with effect from the end
of the meetings held pursuant to clause 1.4)
and acknowledging in a form reasonably
acceptable to the Purchaser that the writer
has no claim against the Company for
compensation for loss of office or
otherwise;
(x) the Vendor shall procure that the bank
signing mandates and authorities and any
powers of attorney given by the Company as
the Purchaser notifies to the Vendors shall
be revoked.
(c) Subject to the Vendor duly complying with the
requirements of clause 1.3(b), at the Closing, the
Purchaser must pay the Purchase by telegraphic
transfer to the bank account nominated by the Vendor
in writing not less than four business days prior to
Closing.
1.4 Meetings
On or before the Closing the Vendor shall cause to be held a
meeting of the directors and/or shareholders of the Company at
which the following resolutions are passed:
(a) subject to payment of stamp duty (if any), the
approval of the registration of the transfers of the
Sale Shares;
(b) appoint persons nominated by the Purchaser as
directors, secretary and auditor of the Company with
effect from the end of the meeting;
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(c) the cancellation of the existing share certificates
for the Sales Shares;
(d) the issue of new certificates for the Sale Shares in
favour of the Purchaser (or its nominee(s));
(e) the appointment of new signatories to the Company's
bank accounts and the revocation of existing
authorities to operate those bank accounts, as
notified under Section 1.3(b)(x);
(f) the approval and adoption of the Constitution as a
replacement to the existing constitution of the
company.
2. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor hereby represents and warrants to and for the benefit of the
Purchaser, as follows:
2.1 Organization; Good Standing and Qualification
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of New
South Wales, Australia. The Company has all requisite
corporate power and authority to own and operate its
properties and assets, to perform its obligations
under all material contracts, and to carry on its
business as presently conducted.
(b) The Company has never conducted any business under or
otherwise used, for any purpose or in any
jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the name "The
Message Exchange Pty Ltd" ,"TMX" and previously,
"Berkeley Software Design International Pty Limited".
(c) Part 2.1 of the Disclosure Schedule accurately sets
forth (i) the names of the members of the Company's
board of directors, (ii) the names of the members of
each committee of the Company's board of directors,
and (iii) the names and titles of the Company's
officers.
(d) Neither the Company nor any of its shareholders has
ever approved, or commenced any proceeding or made
any election contemplating, the dissolution or
liquidation of the Company or the winding up or
cessation of the Company's business or affairs.
(e) The Company has no subsidiaries, and has never owned,
beneficially or otherwise, any shares or other
securities of, or any direct or indirect interest of
any nature in, any Entity.
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2.2 Certificate of Incorporation and Constitution Records
(a) The Vendor has delivered to the Purchaser accurate
and complete copies of:
(i) the Company's certificate of incorporation
and constitution, including all amendments
thereto;
(ii) the shareholding records of the Company; and
(iii) the minutes and other records of the
meetings and other proceedings (including
any actions taken by written consent or
otherwise without a meeting) of the
shareholders of the Company, the board of
directors of the Company and all committees
of the board of directors of the Company.
To the best of the Vendor's Knowledge there have been
no meetings or other proceedings of the shareholders
of the Company, the board of directors of the Company
or any committee of the board of directors of the
Company that are not fully reflected in such minutes
or other records.
(b) There has not been any violation which would be
considered material by a reasonable purchaser for
value of the Sale Shares of any of the provisions of
the Company's constitution or of any resolution
adopted by the Company's shareholders, the Company's
board of directors or any committee of the Company's
board of directors; and no event has occurred, and no
condition or circumstance exists, that might (with or
without notice or lapse of time) constitute or result
directly or indirectly in such a violation.
(c) To the best of the Vendor's Knowledge the books of
account, shareholder records, minute books and other
records of the Company are accurate, up-to-date and
complete, and have been maintained in accordance with
sound and prudent business practices. All of the
records of the Company are in the actual possession
and direct control of the Company. To the best of the
Vendor's Knowledge the Company has in place an
adequate and appropriate system of internal controls.
2.3 Capitalization
(a) The issued share capital of the Company, immediately
prior to the Closing, will consist of 2 fully paid
ordinary shares. All issued and outstanding shares of
the Company's issued capital (a) have been validly
issued to the person listed on Exhibit C hereto, (b)
are fully
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paid and (c) were issued in compliance with all
applicable Legal Requirements concerning the issuance
of securities. The rights, preferences, privileges
and restrictions of the Shares are as stated in the
constitution.
(b) The Vendor warrants that it has, and the Purchaser
will acquire at the Closing, good and valid title to
the Sale Shares listed beside the name of the Vendor
in Exhibit C free and clear of any Encumbrances.
(c) The Vendor has delivered to the Purchaser accurate
and complete copies of the certificates evidencing
their respective title to the Sale Shares.
(d) There is no:
(i) outstanding subscription, option, call,
warrant or right (whether or not currently
exercisable) to acquire any shares or other
securities of the Company;
(ii) outstanding security, instrument or
obligation that is or may become convertible
into or exchangeable for any shares or other
securities of the Company;
(iii) Contract under which the Company is or may
become obligated to sell or otherwise issue
any shares of its capital stock or any other
securities; or
(iv) condition or circumstance that may directly
or indirectly give rise to or provide a
basis for the assertion of a claim by any
Person to the effect that such Person is
entitled to acquire or receive any shares or
other securities of the Company;
(e) The Company has never repurchased, redeemed or
otherwise reacquired any shares or other securities.
2.4 No Conflict
(a) Neither the execution and delivery of this Agreement
by the Vendor nor the consummation by the Vendor of
the transactions contemplated by this Agreement will
(i) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any note,
bond, mortgage, indenture, or other evidence of
indebtedness related to the Company or any material
license agreement, lease or other material contract,
instrument or obligation related to the Company to
which it is a party or by which it may be bound; (ii)
violate any statute, rule, regulation, order, writ,
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injunction, decree or arbitration award applicable to
the Company; (iii) result in the loss of, or in a
violation or breach of any Government Authorisation;
or (iv) result in the creation of any material
(individually or in the aggregate) lien, including
any claims, mortgages, pledges, liens, security
interests, encumbrances or charges of any kind
(collectively, "Lien") on any of the assets owned or
used by the Company.
(b) The Vendor will provide all reasonable assistance to
the Purchaser to determine whether the execution and
delivery of this Agreement by the Vendor or the
consummation by the Vendor of the transactions
contemplated by this Agreement will result in a
default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms,
conditions or provisions of any material license
agreement or other material contract, instrument or
obligation related to the Company to which it is a
party or by which it may be bound. If default will
result the Vendor shall use all reasonable endeavours
to procure the rectification of the relevant
contract, instrument or obligation or procure an
alternative solution which will negate the effect of
the default.
2.5 Proprietary Rights; Proprietary Information and Inventions
Agreement
(a) The Company has not received any communications
alleging that it has violated or, by conducting its
business as proposed would violate, any proprietary
rights of any other person, nor is the Vendor aware
of any basis for the foregoing.
(b) The Company owns, licenses or has rights to the
intellectual property as indicated in Item 2.5 of the
Disclosure Schedule (collectively, "Intellectual
Property").
(c) To the best of the Vendor's Knowledge the Company has
conducted its business without infringement or claim
of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or
other intellectual property right of others that
would have a material adverse effect on the business
or assets of the Company. To the knowledge of the
Vendor, there is no claim of infringement by others
of any license, patent, copyright, service mark,
trademark, trade name, trade secret or other
Intellectual Property right of the Company.
2.6 Actions Pending
To the best of the Vendor's Knowledge there is no action, suit
or proceeding pending or, to the best knowledge of the Vendor,
threatened against or affecting the Company or any of its
respective properties or rights before any court or by or
before any governmental body or arbitration board or tribunal.
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2.7 Offering Valid
Neither the Vendor, nor any agent on its behalf, has solicited
or will solicit any offers to sell or has offered to sell or
will offer to sell all or any part of the Sale Shares to any
person or persons.
2.8 Financial Position
(a) The Vendor has delivered to the Purchaser the
following financial statements and notes for the
Company (collectively, the "Company Financial
Statements"):
(i) in respect of the financial year ended June
30, 1998 (the "1998 Accounts Date"), its
unaudited profit and loss statement for the
financial year ending on the 1998 Accounts
Date and its unaudited balance sheet as at
the 1998 Accounts Date, together with all
statements, reports and notes attached to or
intended to be read with any or all of the
profit and loss statement and balance sheet;
and
(ii) in respect of the financial year ended June
30, 1999 (the "Unaudited Accounts Date"),
its unaudited profit and loss statement for
the financial year ending on the Unaudited
Accounts Date and its unaudited balance
sheet (the "Unaudited Interim Balance
Sheet") together with all statements,
reports and notes attached to or intended to
be read with any or all of the profit and
loss statement or balance sheet.
(b) Except as disclosed in Part 2.8(b) of the Disclosure
Schedule:
(i) all of the Company Financial Statements are
true, fair and complete in all material
respects, and the dollar amount of each line
item included in the Company Financial
Statements is accurate in all material
respects. The financial statements and notes
referred to in Section 2.8(a)(i) present
fairly the financial position of the Company
since the inception of the Company (the
"Inception") and the results of operations,
changes in shareholders' equity of the
Company for the year then ended;
(ii) the financial statements and notes referred
to in Section 2.8(a)(ii) present fairly the
financial position of the Company as of the
respective dates thereof and the results of
operations and changes in shareholders'
equity of the Company for the periods covered
thereby; and
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(iii) the Company Financial Statements have been
prepared in accordance with GAAP, applied on
a consistent basis throughout the periods
covered.
(c) At the date of the Unaudited Interim Balance Sheet,
(i) the Company had no Liabilities required by GAAP
to be provided for in the Unaudited Interim Balance
Sheet or described in the notes thereto which were
not provided for in the Unaudited Interim Balance
Sheet or described in the notes thereto and (ii) all
reserves and provisions established by the Company
and set forth in the Unaudited Interim Balance Sheet
were adequate for the purposes for which they were
established.
(d) Except as disclosed in Part 2.8(d) in the Disclosure
Schedule since the date of the Unaudited Interim
Balance Sheet:
(i) the Company has not entered into any
transaction that was not in the Ordinary
Course of its Business;
(ii) there has been no material adverse change in
the condition (financial or otherwise) of
the Company;
(iii) there has been no damage to, or destruction
or loss of, physical property (whether or
not covered by insurance) which may have a
Material Adverse Effect on the business or
operations of the Company;
(iv) the Company has not declared or paid any
dividend or made any distribution on its
securities, redeemed, purchased or otherwise
acquired any of its securities, granted any
options to purchase or subscribe for any
securities, or issued any securities;
(v) the Company has not increased the
compensation of any of its officers, or the
rate of pay of its employees as a group,
except as part of regular compensation
increases in the Ordinary Course of its
Business;
(vi) neither the number of subscribers for the
services offered by the Company nor the
revenues generated therefrom have decreased;
(vii) there has been no resignation or termination
of employment of any officer or key employee
of the Company;
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(viii) there has been no labor dispute or
industrial disruption involving the Company
or its employees and none is pending or, to
the best of the knowledge of the Vendor,
threatened;
(ix) there has been no borrowing or agreement to
borrow by the Company or change in the
contingent obligations of the Company by way
of guarantee, endorsement, indemnity,
warranty or otherwise or grant of a mortgage
or security interest in any property of the
Company;
(x) there have been no loans made by the Company
to its shareholders, employees, officers and
directors other than travel advances and
office advances made in the Ordinary Course
of Business;
(xi) there has not been any payment of any
obligation or liability of the Company other
than current liabilities paid in the
Ordinary Course of Business other than the
Directors Loans which are to be repaid
before Closing
(xii) there has been no sale, assignment or
transfer of any tangible asset of the
Company except in the Ordinary Course of
Business and no sale, assignment or transfer
of any patent, trademark, trade secret or
other intangible asset of the Company;
(xiii) the Company has not incurred any Liabilities
that (i) individually exceed A$10,000 or
(ii) in the aggregate exceed A$100,000; and
(xiv) the Company has not (i) declared, accrued,
set aside or paid any dividend or made any
other distribution in respect of any shares
or (ii) repurchased, redeemed or otherwise
reacquired any shares or other securities.
(e) The Company has good and marketable title to its
properties and assets. Such properties and assets are
not subject to Encumbrance except liens for current
taxes and assessments not delinquent or those that
are not material in scope or amount and do not
materially interfere with the conduct of the
Company's business. All leases pursuant to which the
Company leases real or personal property are in good
standing and are valid and effective in accordance
with their respective terms and, to the Vendor's
knowledge, there exists no default thereunder or
occurrence or condition which could result in a
default thereunder or termination thereof. The
Company's buildings, equipment and other tangible
assets are in good operating condition and
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are useable in the ordinary course of business, and
the Company owns, rents, or has a valid leasehold
interest in, all assets necessary for the conduct of
its business as presently conducted.
2.9 Absence of Changes Since 30 June 1999
Except as set forth in Part 2.9 of the Disclosure Schedule,
since June 30, 1999:
(a) there has not been any adverse change in the
Company's business, condition, assets, liabilities,
operations, financial performance, net income or
prospects (or in any aspect or portion thereof), and
no event has occurred that might have an adverse
effect on the Company's business, condition, assets,
liabilities, operations, financial performance, net
income or prospects (or on any aspect or portion
thereof);
(b) there has not been any loss, damage or destruction
to, or any interruption in the use of, any of the
Company's assets (whether or not covered by
insurance);
(c) the Company has not (i) declared, accrued, set aside
or paid any dividend or made any other distribution
in respect of any shares or (ii) repurchased,
redeemed or otherwise reacquired any shares or other
securities;
(d) the Company has not sold or otherwise issued any
shares or any other securities;
(e) the Company has not amended its certificate of
incorporation or constitution and has not effected or
been a party to any Acquisition Transaction,
re-capitalization, reclassification of shares, share
consolidation or division, capital reduction, share
buy back or similar transaction;
(f) the Company has not purchased or otherwise acquired
any asset from any other Person, except for supplies
acquired by the Company in the Ordinary Course of
Business;
(g) the Company has not leased or licensed any asset from
any other Person;
(h) the Company has not made any capital expenditure over
A$10,000;
(i) the Company has not sold or otherwise transferred,
and has not leased or licensed, any asset to any
other Person except for products sold by the Company
from its inventory in the Ordinary Course of
Business;
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(j) the Company has not written off as uncollectable, or
established any extraordinary reserve with respect
to, any account receivable or other indebtedness;
(k) the Company has not pledged or hypothecated any of
its assets or otherwise permitted any of its assets
to become subject to any Encumbrance;
(l) the Company has not made any loan or advance to any
other Person
(m) the Company has not (i) established or adopted any
Employee Benefit Plan, or (ii) paid any bonus or made
any profit-sharing or similar payment to, or
increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors,
officers or employees;
(n) the Company has not entered into, and neither the
Company nor any of the assets owned or used by the
Company has become bound by, any Contract that is not
an Excluded Contract;
(o) no Contract by which the Company or any of the assets
owned or used by the Company is or was bound, or
under which the Company has or had any rights or
interest, has been amended or terminated;
(p) the Company has not incurred, assumed or otherwise
become subject to any Liability, other than accounts
payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a
balance sheet prepared in accordance with GAAP)
incurred by the Company in the Ordinary Course of
Business;
(q) the Company has not discharged any Encumbrance or
discharged or paid any indebtedness or other
Liability, (except for accounts payable and repayment
of the Directors Loans) that (i) are reflected as
current liabilities in the "liabilities" column of
the Unaudited Interim Balance Sheet or have been
incurred by the Company since June 30, 1999 in the
Ordinary Course of Business, and (ii) have been
discharged or paid in the Ordinary Course of
Business;
(r) the Company has not forgiven any debt or otherwise
released or waived any right or claim other than bad
debts written off in the ordinary course of business;
(s) the Company has not changed any of its methods of
accounting or accounting practices in any respect;
-12-
17
(t) the Company has not entered into any transaction or
taken any other action outside the Ordinary Course of
Business; and
(u) the Company has not agreed, committed or offered (in
writing or otherwise), and has not attempted, to take
any of the actions referred to in clauses "(c)"
through "(t)" above.
2.10 Title to Assets
(a) The Company owns, and has good, valid and marketable
title to, all assets purported to be owned by it,
including:
(i) all assets reflected on the Unaudited
Interim Balance Sheet (except for inventory
sold by the Company since June 30, 1999 in
the Ordinary Course of Business);
(ii) all assets acquired by the Company since
June 30, 1999 (except for inventory sold by
the Company, since June 30, 1999 in the
Ordinary Course of Business);
(iii) all assets referred to in Parts 2.11, 2.12,
2.13 and Part 2.15 of the Disclosure
Schedule and all of the Company's rights
under the Company Contracts; and
(iv) all other assets reflected in the Company's
books and records as being owned by the
Company.
Except as set forth in Part 2.10 of the Disclosure
Schedule, all of said assets are owned by the Company
free and clear of any Encumbrances.
(b) Part 2.10 of the Disclosure Schedule identifies all
assets that are being leased or licensed to the
Company.
2.11 Bank Accounts
Part 2.11 of the Disclosure Schedule accurately sets forth,
with respect to each account maintained by or for the benefit
of the Company at any bank or other financial institution:
(a) the name and location of the institution at which
such account is maintained;
(b) the name in which such account is maintained and the
account number of such account;
-13-
18
(c) a description of such account and the purpose for
which such account is used;
(d) the current balance in such account;
(e) the rate of interest being earned on the funds in
such account; and
(f) the names of all individuals authorized to draw on or
make withdrawals from such account.
There are no safe deposit boxes or similar arrangements
maintained by or for the benefit of the Company.
2.12 Receivables; Major Customers
(a) Part 2.12 of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all
accounts receivable and other receivables of the
Company as of June 30, 1999.
(b) Except as set forth in Part 2.12 of the Disclosure
Schedule, all existing accounts receivable of the
Company (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that
have not yet been collected and those accounts
receivable that have arisen since Inception and have
not yet been collected):
(i) represent valid obligations of customers of
the Company arising from bona fide
transactions entered into in the Ordinary
Course of Business; and
(ii) are current and will be collected in full
(without any counterclaim or setoff) on or
before September 30, 1999.
(c) To the best of the Vendor's Knowledge Part 2.12 of
the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the
revenues received from, each customer or other Person
that accounted for (i) more than A$25,000 of the
gross revenues of the Company since the Inception,
(ii) more than A$25,000 of the Company's gross
revenues in financial year 1998-1999, or (iii) more
than A$10,000 of the Company's gross revenues since
30 June 1999. To the best of the Vendor's Knowledge
the Company has not received any notice or other
communication (in writing or otherwise), and has not
received any other information, indicating that any
customer or other Person identified in Part 2.12 of
the Disclosure Schedule may cease dealing with the
Company or may otherwise reduce the volume of
business transacted by such Person with the Company
below historical levels.
-14-
19
2.13 Equipment, Etc.
(a) Part 2.13 of the Disclosure Schedule accurately
identifies all equipment, furniture, fixtures,
improvements and other tangible assets (other than
inventory) owned by the Company, and accurately sets
forth the date of acquisition, original cost and book
value of each of said assets. Part 2.13 also
accurately identifies all tangible assets leased to
the Company.
(b) To the best of the Vendor's knowledge each asset
identified or required to be identified in Part 2.13
of the Disclosure Schedule:
(i) is structurally sound, free of defects and
deficiencies and in good condition and
repair (ordinary wear and tear excepted);
(ii) complies in all respects with, and is being
operated and otherwise used in full
compliance with, all applicable Legal
Requirements; and
(iii) is adequate for the uses to which it is
being put.
The assets identified in Part 2.13 of the Disclosure
Schedule are adequate for the conduct of the
Company's business in the manner in which such
business is currently being conducted.
2.14 Real Property
The Company does not own any real property or any interest in
real property, except for the leaseholds created under the
real property leases identified in Part 2.14 of the Disclosure
Schedule. Part 2.14 of the Disclosure Schedule provides an
accurate description of the premises covered by said leases
and the facilities located on such premises. The Company
enjoys peaceful and undisturbed possession of such premises.
2.15 Proprietary Assets
(a) Except as set forth in Part 2.15 of the Disclosure
Schedule, there is no Proprietary Asset that is owned
by or licensed to the Company or that is otherwise
used or useful in connection with the Company's
business. The Company has taken all reasonable
measures and precautions necessary to protect the
confidentiality and value of each Proprietary Asset
identified or required to be identified in Part 2.15
of the Disclosure Schedule.
(b) To the best of the Vendor's Knowledge the Company is
not infringing, and has not at any time infringed or
received any notice or other
-15-
20
communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement
of, any Proprietary Asset owned or used by any other
Person. To the best of the Knowledge of the Vendor,
no other Person is infringing, and no Proprietary
Asset owned or used by any other Person infringes or
conflicts with, any Proprietary Asset owned or used
by the Company.
(c) The Proprietary Assets identified in Part 2.15 of the
Disclosure Schedule constitute all of the Proprietary
Assets necessary to enable the Company to conduct its
business in the manner in which its business is
currently being conducted.
2.16 Year 2000
To the best of the Vendor's Knowledge the Company's products
and services are "Year 2000 Compliant", meaning that (i) date
data from at least 1900 through 2001 will process without
error or interruption (other than an error or interruption not
expected to have a material adverse effect on the Company) in
any level of computer hardware, software or services the
Company provides, including but not limited to, microcode,
firmware, system or application programs, files, databases and
computer services, (ii) there will be no loss of functionality
of the Company's products and services (other than any loss
not expected to have a material adverse effect on the Company)
with respect to the introduction, processing or output of
records containing dates on or after January 1, 2000 and (iii)
the Company's products and services will be interoperable with
other software/hardware which may deliver records to, receive
records from or interact with the Company's products and
services in the course of processing data; provided, however,
that the foregoing shall not apply to any adverse effects
caused by any products and services (including any third party
software or hardware) not developed by the Company or by any
modification to the Company's products and services which are
made by a party other than the Company. Further, the Company
has tested all of its products and services and determined
that they are Year 2000 Compliant. To its knowledge, third
party software used by the Company in its products and
services and the Company's internal hardware and software is
also Year 2000 Compliant.
2.17 Contracts
(a) Part 2.17 of the Disclosure Schedule identifies and
provides an accurate and complete description of all
contracts, agreements, commitments and undertakings
of any nature, written or oral, of the Company, each
of which involves future payments, performance of
services or delivery of goods or materials to or by
the Company of an aggregate amount or value in excess
of A$10,000 or which otherwise is material to the
business or prospects of the Company (collectively,
the "Material
-16-
21
Contracts"), except for any Excluded Contract. The
Company has delivered to the Purchaser accurate and
complete copies of all the Company Contracts
identified in Part 2.17 of the Disclosure Schedule,
including all amendments, supplements, modifications
and waivers thereto.
(b) Each Company Contract is valid and in full force and
effect, and is enforceable by the Company in
accordance with its terms. No Company Contract
contains any term or provision that is extraordinary
or that is otherwise not customarily found in
Contracts entered into by Comparable Entities.
(c) To the best of the Vendor's Knowledge and except as
set forth in Part 2.17 of the Disclosure Schedule:
(i) no Person has violated or breached, or
declared or committed any default under, any
Company Contract;
(ii) no event has occurred, and no circumstance
or condition exists, that might (with or
without notice or lapse of time) (A) result
in a violation or breach of any of the
provisions of any Company Contract, (B) give
any Person the right to declare a default or
exercise any remedy under any Company
Contract, (C) give any Person the right to
accelerate the maturity or performance of
any Company Contract, or (D) give any Person
the right to cancel, terminate or modify any
Company Contract;
(iii) the Company has not received any notice or
other communication (in writing or
otherwise) regarding any actual, alleged,
possible or potential violation or breach
of, or default under, any Company Contract;
and
(iv) the Company has not waived any of its rights
under any Company Contract.
(d) To the best of the knowledge of the Vendor, each
Person against which the Company has or may acquire
any rights under any Company Contract is solvent and
is able to satisfy all of such Person's current and
future monetary obligations and other obligations and
Liabilities to the Company.
(e) Except as set forth in Part 2.17 of the Disclosure
Schedule:
(i) the Company has never guaranteed or
otherwise agreed to cause, insure or become
liable for, and has never pledged any of
-17-
22
its assets to secure, the performance or
payment of any obligation or other Liability
of any other Person; and
(ii) the Company has never been a party to or
bound by (A) any joint venture agreement,
partnership agreement, profit-sharing
agreement, cost-sharing agreement,
loss-sharing agreement or similar Contract,
or (B) any Contract that creates or grants
to any Person, or provides for the creation
or grant of, any stock appreciation right,
phantom stock right or similar right or
interest.
(f) To the best of the Knowledge of the Vendor the
performance of the Company Contracts will not result
in any violation of or failure to comply with any
Legal Requirement.
(g) No Person is renegotiating any amount paid or
payable to the Company under any Company Contract or
any other term or provision of any Company Contract.
(h) The Contracts identified in Part 2.17 of the
Disclosure Schedule and the Excluded Contracts
collectively constitute all of the Contracts
necessary to enable the Company to conduct its
business in the manner in which its business is
currently being conducted.
(i) Part 2.17 of the Disclosure Schedule identifies and
provides an accurate and complete description of each
proposed Contract as to which any bid, offer, written
proposal, term sheet or similar document has been
submitted or received by the Company.
2.18 Liabilities; Major Suppliers
(a) The Company has no Liabilities, except for:
(i) liabilities identified as such in the
"liabilities" column of the Unaudited
Interim Balance Sheet;
(ii) accounts payable (of the type required to be
reflected as current liabilities in the
"liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred
by the Company in the Ordinary Course of
Business since June 30, 1999; and
(iii) the Company's obligations under the
Contracts listed in Part 2.18 of the
Disclosure Schedule and under Excluded
Contracts, to the extent that the existence
of such obligations is ascertainable solely
by reference to such Contracts.
-18-
23
(b) Part 2.18 of the Disclosure Schedule:
(i) provides an accurate and complete breakdown
and aging of the Company's accounts payable
as of June 30, 1999;
(ii) provides an accurate and complete breakdown
of all customer deposits and other deposits
held by the Company as of the date of this
Agreement; and
(iii) provides an accurate and complete breakdown
of the Company's long-term debt as of the
date of this Agreement.
(c) Part 2.18 of the Disclosure Schedule accurately
identifies, and provides an accurate and complete
breakdown of the amounts paid to, each supplier or
other Person that received (i) more than A$25,000
from the Company in 1998, (ii) more than A$25,000
from the Company between 1 January 1999 and 30 June
1999, or (iii) more than A$10,000 from the Company
since 30 June 1999.
2.19 Compliance with Legal Requirements
(a) To the best of the Vendor's Knowledge and except as
set forth in Part 2.19 of the Disclosure Schedule:
(i) the Company is in full compliance with each
Legal Requirement that is applicable to it
or to the conduct of its business or the
ownership or use of any of its assets;
(ii) the Company has at all times been in full
compliance with each Legal Requirement that
is or was applicable to it or to the conduct
of its business or the ownership or use of
any of its assets;
(iii) no event has occurred, and no condition or
circumstance exists, that might (with or
without notice or lapse of time) constitute
or result directly or indirectly in a
violation by the Company of, or a failure on
the part of the Company to comply with, any
Legal Requirement; and
(iv) the Company has not received, at any time,
any notice or other communication (in
writing or otherwise) from any Governmental
Body or any other Person regarding (i) any
actual, alleged, possible or potential
violation of, or failure to comply with, any
Legal Requirement, or (ii) any actual,
alleged, possible or potential obligation on
the part of the Company to undertake, or to
bear all or any portion of the cost of, any
-19-
24
cleanup or any remedial, corrective or
response action of any nature.
(b) The Company has delivered to the Purchaser an
accurate and complete copy of each report, study,
survey or other document to which the Company has
access that addresses or otherwise relates to the
compliance of the Company with, or the applicability
to the Company of, any Legal Requirement.
(c) To the best of the knowledge of the Vendor, no
Governmental Body has proposed or is considering any
Legal Requirement that, if adopted or otherwise put
into effect, (i) may have an adverse effect on the
Company's business, condition, assets, liabilities,
operations, financial performance, net income or
prospects or on the ability of the Vendor to comply
with or perform any covenant or obligation under this
Agreement, or (ii) may have the effect of preventing,
delaying, making illegal or otherwise interfering
with any of the Transactions.
2.20 Governmental Authorizations
(a) Part 2.20 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is held
by the Company; and
(ii) each other Governmental Authorization that,
to the best of the Knowledge of the Vendor,
is held by any of the Company's employees
and relates to or is useful in connection
with the Company's business.
The Vendor has delivered to the Purchaser accurate
and complete copies of all of the Governmental
Authorizations identified in Part 2.20 of the
Disclosure Schedule, including all renewals thereof
and all amendments thereto. Each Governmental
Authorization identified or required to be identified
in Part 2.20 of the Disclosure Schedule is valid and
in full force and effect.
(b) Except as set forth in Part 2.20 of the Disclosure
Schedule:
(i) and to the best of the Vendor's Knowledge
the Company and its employees are, and have
at all times been, in full compliance with
all of the terms and requirements of each
Governmental Authorization identified or
required to be identified in Part 2.20 of
the Disclosure Schedule;
-20-
25
(ii) and to the best of the Vendor's Knowledge no
event has occurred, and no condition or
circumstance exists, that might (with or
without notice or lapse of time) (A)
constitute or result directly or indirectly
in a violation of or a failure to comply
with any term or requirement of any
Governmental Authorization identified or
required to be identified in Part 2.20 of
the Disclosure Schedule, or (B) result
directly or indirectly in the revocation,
withdrawal, suspension, cancellation,
termination or modification of any
Governmental Authorization identified or
required to be identified in Part 2.20 of
the Disclosure Schedule;
(iii) the Company has never received, and, to the
best of the knowledge of the Vendor, no
employee of the Company has ever received,
any notice or other communication (in
writing or otherwise) from any Governmental
Body or any other Person regarding (A) any
actual, alleged, possible or potential
violation of or failure to comply with any
term or requirement of any Governmental
Authorization, or (B) any actual, proposed,
possible or potential revocation,
withdrawal, suspension, cancellation,
termination or modification of any
Governmental Authorization; and
(iv) all applications required to have been filed
for the renewal of the Governmental
Authorizations required to be identified in
Part 2.20 of the Disclosure Schedule have
been duly filed on a timely basis with the
appropriate Governmental Bodies, and each
other notice or filing required to have been
given or made with respect to such
Governmental Authorizations has been duly
given or made on a timely basis with the
appropriate Governmental Body.
(c) To the best of the Vendor's Knowledge the
Governmental Authorizations identified in Part 2.20
of the Disclosure Schedule constitute all of the
Governmental Authorizations necessary (i) to enable
the Company to conduct its business in the manner in
which its business is currently being conducted, and
(ii) to permit the Company to own and use its assets
in the manner in which they are currently owned and
used.
(d) Except as set forth in Part 2.20 of the Disclosure
Schedule, neither the Company nor the Vendor was, is
or will be required to make any filing with or give
any notice to, or to obtain any Consent from, any
Person in connection with the execution and delivery
of any of the Transactional Agreements or the
consummation or performance of any of the
Transactions.
-21-
26
2.21 Governmental Action
Except for such lodgement as may be necessary for the payment
of Stamp Duty, to the best of the Vendor's Knowledge no
authorization, consent or approval of, or filing with, any
court or any federal, state or local governmental authority or
agency is required in connection with the execution and
delivery of this Agreement and the issuance and sale of the
Sale Shares other than those that have been or will be made or
obtained prior to the Closing.
2.22 Tax Matters
(a) To the best of the Vendor's Knowledge each Tax
required to have been paid, or claimed by any
Governmental Body to be payable, by the Company
(whether pursuant to any Tax Return or otherwise) has
been duly paid in full or on a timely basis. Any Tax
required to have been withheld or collected by the
Company has been duly withheld and collected; and (to
the extent required) each such Tax has been paid to
the appropriate Governmental Body.
(b) Part 2.22 of the Disclosure Schedule accurately
identifies all Tax Returns required to be filed by or
on behalf of the Company with any Governmental Body
with respect to any taxable period ending on or
before the Closing Date ("the Company Returns"). All
the Company Returns (i) have been or will be filed
when due, and (ii) have been, or will be when filed,
accurately and completely prepared in full compliance
with all applicable Legal Requirements. All amounts
shown on the Company Returns to be due on or before
the Closing Date, and all amounts otherwise payable
in connection with the Company Returns on or before
the Closing Date, have been or will be paid on or
before the Closing Date. The Company has delivered to
the Purchaser accurate and complete copies of all the
Company Returns filed since the Inception.
(c) The Company Financial Statements fully accrue all
actual and contingent material liabilities for Taxes
with respect to all periods through the dates thereof
in accordance with Section 2.22. The Company will
establish, in the Ordinary Course of Business,
reserves adequate for the payment of all Taxes for
the period from the Inception through the Closing
Date, and the Company will disclose the dollar amount
of such reserves to the Purchaser on or prior to the
Closing Date.
(d) The cessation of the relationship between the Company
and a Related Party will not give rise to a
crystallisation of tax liability to the Company.
-22-
27
(e) Except as set forth in Part 2.22 of the Disclosure
Schedule, no claim or other Proceeding is pending or
has been threatened against or with respect to the
Company in respect of any Tax. There are no
unsatisfied Liabilities for Taxes (including
liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect
to any notice of deficiency or similar document
received by the Company.
(f) To the best of the Vendor's Knowledge there is no
agreement, plan, arrangement or other Contract
covering any employee or independent contractor or
former employee or independent contractor of the
Company that, individually or collectively, could
give rise directly or indirectly to the payment of
any amount that would not be deductible pursuant to
Australian tax legislation. The Company is not, and
has never been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
(g) The Company: has not lodged a private ruling request;
is not and has not been the subject of any Tax audit;
is not a party to any action or proceeding for the
assessment or collection of Tax; does not have any
dispute or disagreement with any Governmental Body
for Tax; and has not made any agreement with or
undertaking to any Governmental Body for Tax and
there is no fact or matter known to the Vendor which
might give rise to any of the above.
(h) The Company has not entered into any agreement which
now or in the future may extend the period of
assessment or collection of any Tax.
(i) To the best of the Vendor's Knowledge since the
Unaudited Accounts Date no additional liability for
Tax has accrued to the Company other than as a result
of trading activities in the Ordinary Course of
Business and no payment or expenditure has been made
or incurred or committed which will not be wholly
deductible in computing the Company's Taxable income.
(j) To the best of the Vendor's Knowledge the Company has
complied with the provisions of Part IIIAA of the
Income Tax Assessment Act, and has maintained proper
records of franking debits and franking credits for
the purposes of that Act.
(k) The Company does not have any permanent establishment
(as that expression is defined in any relevant Double
Taxation Agreement current at the date of this
Agreement) outside Australia.
-23-
28
(l) To the best of the Vendor's Knowledge all documents
to which the Company is a party or may be interested
in the enforcement of, and all transfers of any
issued shares (other than as contemplated by this
Agreement), have been properly stamped under
applicable stamp duty legislation.
2.23 Employee and Labor Matters
(a) Part 2.23 of the Disclosure Schedule accurately sets
forth, with respect to each employee of the Company
(including any employee of the Company who is on a
leave of absence or on layoff status):
(i) the name of such employee and the date as of
which such employee was originally hired by
the Company;
(ii) such employee's title, and a description of
such employee's duties and responsibilities;
(iii) the aggregate dollar amount of the
compensation (including wages, salary,
commissions, director's fees, fringe
benefits, bonuses, allowances, share
options, profit-sharing payments and other
payments or benefits of any type) received
by such employee from the Company with
respect to services performed in 1999;
(iv) such employee's annualized compensation as
of the date of this Agreement;
(v) particulars of accrued long service leave,
annual leave, sick leave and rostered days
off for each employee;
(vi) particulars of any redundancy or severance
pay owing as at the execution date of this
Agreement;
(vii) each Current Benefit Plan in which such
employee participates or is eligible to
participate; and
(viii) any Governmental Authorization that is held
by such employee and that relates to or is
useful in connection with the Company's
business.
(b) Part 2.23 of the Disclosure Schedule accurately
identifies each former employee of the Company who is
receiving or is scheduled to receive (or whose spouse
or other dependent is receiving or is scheduled to
receive) any benefits (whether from the Company or
otherwise) relating to such former employee's
employment with the Company;
-24-
29
and Part 2.23 of the Disclosure Schedule accurately
describes such benefits.
(c) Exhibit D contains a list of individuals who are
currently performing services for the Company related
to its business and are classified as "consultants"
or "independent contractors".
(d) Except as set forth in Part 2.23 of the Disclosure
Schedule, the Company is not a party to or bound by,
and has never been a party to or bound by, any
employment agreement or any union contract,
industrial award or determination collective
bargaining agreement or similar Contract.
(e) The Vendor has delivered to the Purchaser accurate
and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements
and other materials relating to the employment of the
current and former employees of the Company.
(f) To the best of the Knowledge of the Vendor:
(i) no employee of the Company intends to
terminate his employment with the Company;
(ii) no employee of the Company has received an
offer to join a business that may be
competitive with the Company's business; and
(iii) no employee of the Company is a party to or
is bound by any confidentiality agreement,
noncompetition agreement or other Contract
(with any Person) that may have an adverse
effect on (A) the performance by such
employee of any of his duties or
responsibilities as an employee of the
Company, or (B) the Company's business or
operations.
(g) To the best of the Vendor's Knowledge the Company is
not engaged, and has never been engaged, in any
unfair labor practice of any nature. There has never
been any slowdown, work stoppage, labor dispute or
union organizing activity, or any similar activity or
dispute, affecting the Company or any of its
employees. There is not now pending, and no Person
has threatened to commence, any such slowdown, work
stoppage, labor dispute or union organizing activity
or any similar activity or dispute. No event has
occurred, and no condition or circumstance exists,
that might directly or indirectly give rise to or
provide a basis for the commencement of any such
slowdown, work stoppage, labor dispute or union
organizing activity or any similar activity or
dispute.
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30
(h) The Company does not have: any existing service or
other agreements with any officers, consultants or
employees of the Company which cannot be fairly
terminated by one months' notice or less without
giving rise to a claim for damages or compensation;
liability for compensation to ex-employees or
ex-consultants; obligation to re-instate or re-employ
any ex-officer, ex-consultant or ex-employee of the
Company; policy, practice or obligation regarding
redundancy payments to employees which is more
generous than the applicable award(s) or legislation;
or any industrial agreement or enterprise agreement
(whether registered or not) or plans to introduce any
such agreement, that applies to any employee or
officer of the Company.
2.24 Benefit Plans
(a) Part 2.24 of the Disclosure Schedule sets out
complete and accurate material details of all
Relevant Schemes.
(b) The Company does not have any accrued liability,
unfunded or contingent obligations in relation to any
Relevant Scheme.
(c) The Company has made all occupational superannuation
contributions required under any award or prescribed
industrial agreement for its employees and has
satisfied all laws. There is no superannuation
guarantee charge or liability accrued or payable for
employees.
(d) Each Relevant Scheme has at all times been
administered under the relevant rules and/or trust
document and (in the case of superannuation schemes)
for the Relevant Scheme to qualify for the maximum
income Tax concessions available to superannuation
funds.
2.25 Sale of Products; Performance of Services
(a) To the best of the Vendor's Knowledge each product or
service that has been sold or performed by the
Company to or for any Person:
(i) conformed and complied in all respects with
the terms and requirements of any applicable
warranty or other Contract and with all
applicable Legal Requirements; and
(ii) was free of any design defects, construction
defects or other defects or deficiencies at
the time of sale.
To the best of the Vendor's Knowledge all repair
services and other services that have been performed
by the Company were performed properly and in full
conformity with the terms and requirements of all
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31
applicable warranties and other Contracts and with
all applicable Legal Requirements.
(b) To the best of the Vendor's Knowledge the Company
will not incur or otherwise become subject to any
Liability arising directly or indirectly from any
product sold, or any services performed by, the
Company on or at any time prior to the Closing Date.
(c) No product developed or sold by the Company has been
the subject of any recall or other similar action;
and to the best of the Vendor's Knowledge no event
has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse
of time) directly or indirectly give rise to or serve
as a basis for any such recall or other similar
action relating to any such product.
(d) To the best of the Vendor's Knowledge except as set
forth in Part 2.25 of the Disclosure Schedule, no
customer or other Person has ever asserted or
threatened to assert any claim against the Company
(i) under or based upon any warranty provided by or
on behalf of the Company, or (ii) under or based upon
any other warranty relating to any product sold by
the Company or any services performed by the Company.
To the best of the Knowledge of the Vendor, no event
has occurred, and no condition or circumstance
exists, that might (with or without notice or lapse
of time) directly or indirectly give rise to or serve
as a basis for the assertion of any such claim.
(e) To the best of the Vendor's Knowledge the Company has
in place, and has at all times had in place, an
adequate and appropriate quality control system that
is at least as comprehensive and effective as the
quality control systems customarily maintained by
Comparable Entities.
2.26 Insurance
(a) Part 2.26 of the Disclosure Schedule accurately sets
forth, with respect to each insurance policy
maintained by or at the expense of, or for the direct
or indirect benefit of the Company:
(i) the name of the insurance carrier that
issued such policy and the policy number of
such policy;
(ii) whether such policy is a "claims made" or an
"occurrences" policy;
(iii) a description of the coverage provided by
such policy and the material terms and
provisions of such policy (including all
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applicable coverage limits, deductible
amounts and co-insurance arrangements and
any non-customary exclusions from coverage);
(iv) the annual premium payable with respect to
such policy, and the cash value (if any) of
such policy; and
(v) a description of any claims pending, and any
claims that have been asserted in the past,
with respect to such policy.
Part 2.26 of the Disclosure Schedule also identifies
(1) each pending application for insurance that has
been submitted by or on behalf of the Company, and
(2) each self-insurance or risk-sharing arrangement
affecting the Company or any of its assets. The
Company has delivered to the Purchaser accurate and
complete copies of all of the insurance policies
identified in Part 2.26 of the Disclosure Schedule
(including all renewals thereof and endorsements
thereto) and all of the pending applications
identified in Part 2.26 of the Disclosure Schedule.
(b) Each of the policies identified in Part 2.26 of the
Disclosure Schedule is valid, enforceable and in full
force and effect, and has been issued by an insurance
carrier that, to the best of the Knowledge of the
Vendor, is solvent, financially sound and reputable.
All of the information contained in the applications
submitted in connection with said policies was (at
the times said applications were submitted) accurate
and complete, and all premiums and other amounts
owing with respect to said policies have been paid in
full on a timely basis. The nature, scope and dollar
amounts of the insurance coverage provided by said
policies are sufficient to adequately insure the
Company's business, assets, operations, key
employees, services and potential liabilities; and
said insurance coverage is at least as comprehensive
as the insurance coverage customarily maintained by
Comparable Entities.
(c) Except as set forth in Part 2.26 of the Disclosure
Schedule, there is no pending claim under or based
upon any of the policies identified in Part 2.26 of
the Disclosure Schedule; and to the best of the
Vendor's Knowledge no event has occurred, and no
condition or circumstance exists, that might (with or
without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for any
such claim.
(d) To the best of the Vendor's Knowledge the Company has
not received:
(i) any notice or other communication (in
writing or otherwise) regarding the actual
or possible cancellation or invalidation of
any of the policies identified in Part 2.26
of the Disclosure Schedule or regarding any
actual or possible adjustment in the
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amount of the premiums payable with respect
to any of said policies;
(ii) any notice or other communication (in
writing or otherwise) regarding any actual
or possible refusal of coverage under, or
any actual or possible rejection of any
claim under, any of the policies identified
in Part 2.26 of the Disclosure Schedule; or
(iii) any indication that the issuer of any of the
policies identified in Part 2.26 of the
Disclosure Schedule may be unwilling or
unable to perform any of its obligations
thereunder.
2.27 Related Party Transactions
Except as set forth in Part 2.27 of the Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any
time since the Inception had, any direct or indirect
interest of any nature in any asset used in or
otherwise relating to the business of the Company;
(b) no Related Party is, or has at any time since the
Inception been, indebted to the Company;
(c) since the Inception, no Related Party has entered
into, or has had any direct or indirect financial
interest in, any Contract, transaction or business
dealing of any nature involving the Company;
(d) no Related Party is competing, or has at any time the
Inception competed, directly or indirectly, with the
Company in any market served by the Company;
(e) no Related Party has any claim or right against the
Company; and
(f) to the best of the Vendor's Knowledge no event has
occurred, and no condition or circumstance exists,
that might (with or without notice or lapse of time)
directly or indirectly give rise to or serve as a
basis for any claim or right in favor of any Related
Party against the Company.
2.28 Certain Payments, Etc.
To the best of the Vendor's Knowledge neither the Company, nor
any officer, employee or agent, has at any time, directly or
indirectly:
(a) used any corporate funds (i) to make any unlawful
political contribution or gift or for any other
unlawful purpose relating to any political activity,
(ii) to make any unlawful payment to any
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governmental official or employee, or (iii) to
establish or maintain any unlawful or unrecorded fund
or account of any nature;
(b) made any false or fictitious entry, or failed to make
any entry that should have been made, in any of the
books of account or other records of the Company;
(c) made any, bribe or other unlawful payment to any
Person;
(d) agreed, committed, offered or attempted to take any
of the actions described in clauses "(a)" through
"(c)" above.
2.29 Proceedings
(a) Except as set forth in Part 2.29 of the Disclosure
Schedule, there is no pending Proceeding or
investigation, and no Person has threatened to
commence any Proceeding:
(i) that involves the Company or that otherwise
relates to or might affect the Company's
business or any of the assets owned or used
by the Company (whether or not the Company
is named as a party thereto); or
(ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or
otherwise interfering with, any of the
Transactions.
To the best of the Vendor's Knowledge and except as
set forth in Part 2.29 of the Disclosure Schedule, no
event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly
or indirectly give rise to or serve as a basis for
the commencement of any such Proceeding.
(b) The Vendor has delivered to the Purchaser accurate
and complete copies of all pleadings, correspondence
and other written materials to which the Company has
access that relate to the Proceedings identified in
Part 2.29.
(c) To the best of the Vendor's Knowledge there is no
Order to which the Company, or any of the assets
owned or used by the Company, is subject that (i) may
have an adverse effect on the Company's business,
condition, assets, liabilities, operations, financial
performance, net income or prospects (or on any
aspect or portion thereof) or on the ability of the
Company or any of the Selling Shareholders to comply
with or perform any covenant or obligation under any
of the Transactional Agreements, or (ii) may have the
effect of preventing,
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35
delaying, making illegal or otherwise interfering
with any of the Transactions.
(d) To the best of the Knowledge of the Vendor, no
officer or employee of the Company is subject to any
Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or
practice relating to the Company's business.
2.30 Brokers
Neither the Company nor the Vendor has agreed or become
obligated to pay, or has taken any action that might result in
any Person claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in
connection with any of the Transactions.
2.31 The Vendor
(a) The Vendor warrants that it is a corporation duly
organised, validly existing and in good standing
under the laws of New South Wales and has all
requisite corporate powers and authority to execute
and deliver this Agreement and to carry out and
perform their obligations under the Agreement and the
Closing Certificate. The Vendor warrants that it has
the capacity and financial capability to comply with
and perform all of its covenants and obligations
under each of the Transactional Agreements to which
it is or may become a party.
(b) The Vendor has not:
(i) at any time, (A) made a general assignment
for the benefit of creditors, (B) filed, or
had filed against it, any bankruptcy
petition or similar filing, (C) suffered the
attachment or other judicial seizure of all
or a substantial portion of its assets, (D)
admitted in writing its inability to pay its
debts as they become due, (E) been convicted
of, or pleaded guilty to, any felony, or (F)
taken or been the subject of any action that
may have an adverse effect on its ability to
comply with or perform any of its covenants
or obligations under any of the
Transactional Agreements; or
(ii) becomes subject to any Order that may have
an adverse effect on its ability to comply
with or perform any of its covenants or
obligations under any of the Transactional
Agreements.
(c) There is no Proceeding pending, and no Person has
threatened to commence any Proceeding, that may have
an adverse effect on the ability of any of the Vendor
to comply with or perform any of its
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covenants or obligations under any of the
Transactional Agreements. To the best of the Vendor's
Knowledge no event has occurred, and no claim,
dispute or other condition or circumstance exists,
that might directly or indirectly give rise to or
serve as a basis for the commencement of any such
Proceeding.
(d) The Vendor warrants that all corporate action on the
part of the Vendor, its officers, directors and
shareholders necessary for the authorization of this
Agreement, the performance of all its obligations
hereunder at the Closing and the sale and delivery of
the Sale Shares it is selling has been taken or will
be taken prior to the Closing. The Vendor warrants
that this Agreement constitutes the legal, valid and
binding obligation of the Vendor, enforceable against
the Vendor in accordance with its terms except to the
extent that enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the
rights of creditors generally and except to the
extent that enforcement may be limited by the
application of general equitable principles.
2.32 Full Disclosure
(a) None of the Transactional Agreements contains or will
contain any untrue statement of fact; and none of the
Transactional Agreements omits or will omit to state
any fact necessary to make any of the
representations, warranties or other statements or
information contained therein not misleading.
(b) To the best of the Vendor's Knowledge except as set
forth in Part 2.32 of the Disclosure Schedule, there
is no fact within the Knowledge of any of the Vendor
(other than publicly known facts relating exclusively
to political or economic matters of general
applicability that will adversely affect all
Comparable Entities) that (i) may have an adverse
effect on the Company's business, condition, assets,
liabilities, operations, financial performance, net
income or prospects (or on any aspect or portion
thereof) or on the ability of any or all of the
Vendor to comply with or perform any covenant or
obligation under any of the Transactional Agreements,
or (ii) may have the effect of preventing, delaying,
making illegal or otherwise interfering with any of
the Transactions.
(c) All of the information set forth in the Disclosure
Schedule , and all other information regarding the
Company and its business, condition, assets,
liabilities, operations, financial performance, net
income and prospects that has been furnished to the
Purchaser or any of its Representatives by or on
behalf of the Vendor or any of the Vendor's
Representatives, is accurate and complete in all
material respects.
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37
(d) The Vendor has provided the Purchaser and the
Purchaser's Representatives with full and complete
access to all of the Company's records and other
documents and data.
2.33 Insolvency Events
(a) Liquidation/winding up/appointment of administrator
or receiver etc.
The Company has not had:
(i) a liquidator or provisional liquidator appointed;
(ii) a receiver, receiver and manager, trustee,
controller, official manager or similar officer
appointed;
(iii) an administrator appointed, whether under Part 5.3A
of the Corporations Law or otherwise; or
(iv) an application made for the appointment of an
administrator, liquidator or provisional liquidator;
over all or part of the business, Assets or revenues of the
Company and neither the Company nor its directors have passed
a resolution for any such appointment; or
(v) an application made for the winding up of the
Company.
(b) Execution
No execution, distress or similar process has been
levied upon or against all or any part of the
business, assets or revenues of the Company.
(c) Schemes of arrangement
The Company has not:
(i) entered into or resolved to enter into any scheme of
arrangement, composition, assignment for the benefit
of, or other arrangement with its creditors or any
class of creditors; or
(ii) proposed or had proposed on its behalf a
reorganisation, moratorium, deed of company
arrangement or other administration involving one or
more of its creditors, or its winding up or
dissolution.
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38
(d) Statutory demands
The Company has not received any demand under section 459E of
the Corporations Law, or been taken to have failed to comply
with a statutory demand as a result of the operation of
section 459F(1) of the Corporations Law.
(e) Solvency
The Company:
(i) is able to pay its debts as and when they fall due;
(ii) is not insolvent or presumed to be insolvent under
any law; and
(iii) is not insolvent under administration as defined in
section of the Corporations Law or has not taken any
action which could result in that event.
(f) Striking off
The Company:
(i) has not received a notice under sections 601AA or
601AB of the Corporations Law; and
(ii) has not been struck off the register of Companies or
dissolved and there is no action proposed by the
Australian Securities Commission to do so.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants, to and for the benefit of the
Vendor, as follows:
3.1 Acquisition of Shares
The Purchaser is not acquiring the Sale Shares with the
current intention of making a public distribution thereof.
3.2 Authority; Binding Nature of Agreement
(a) The Purchaser has the absolute and unrestricted
right, power and authority to enter into and perform
its obligations under this Agreement;
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39
(b) The execution, delivery and performance of this
Agreement by the Purchaser has been duly authorized
by all necessary action on the part of the Purchaser
and its board of directors; and
(c) This Agreement constitutes the legal, valid and
binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms.
4. PRE-CLOSING COVENANTS OF THE VENDOR
4.1 Access and Investigation
The Vendor shall ensure that, at all times during the
Pre-Closing Period:
(a) the Company and its Representatives provide the
Purchaser and its Representatives with free and
complete access to the Company's Representatives,
personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents
and information relating to the Company to enable the
Purchaser to conduct its due diligence enquiries;
(b) the Company and its Representatives provide the
Purchaser and its Representatives with such copies of
existing books, records, Tax Returns, work papers and
other documents and information relating to the
Company as the Purchaser may request in good faith to
enable the Purchaser to conduct its due diligence
enquiries; and
(c) the Company and its Representatives compile and
provide the Purchaser and its Representations with
such additional financial, operating and other data
and information regarding the Company as the
Purchaser may request in good faith to enable the
Purchaser to conduct its due diligence enquiries.
4.2 Operation of Business
The Vendor shall ensure that, during the Pre-Closing Period:
(a) none of the Sale Shares are sold or otherwise
transferred, or offered for sale, and thus no
agreement or commitment is entered into (in writing
or otherwise) to sell or otherwise transfer, any of
the Sale Shares or any interest in or right relating
thereto;
(b) it does not permit offer, agree or commit (in writing
or otherwise) to permit, any of the Sale Shares to
become subject, directly or indirectly, to any
Encumbrance;
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40
(c) the Company conducts its operations exclusively in
the Ordinary Course of Business and in the same
manner as such operations have been conducted prior
to the date of this Agreement;
(d) the Company uses reasonable endeavours to preserve
intact its current business organization, keeps
available the services of its current officers and
employees and maintains its relations and good will
with all suppliers, customers, landlords, creditors,
licensors, licensees, employees and other Persons
having business relationships with the Company;
(e) the Company keeps in full force all insurance
policies identified in Part 2.26 of the Disclosure
Schedule;
(f) the Company's officers confer regularly with the
Purchaser concerning operational matters and
otherwise report regularly to the Purchaser
concerning the status of the Company's business,
condition, assets, liabilities, operations, financial
performance and prospects;
(g) the Company immediately notifies the Purchaser of any
inquiry, proposal or offer from any Person relating
to any Acquisition Transaction;
(h) the Company and its officers use their Best Efforts
to cause the Company to operate profitably and to
maximize its net income;
(i) the Company does not declare, accrue, set aside or
pay any dividend or make any other distribution in
respect of any shares, and does not repurchase,
redeem or otherwise reacquire any shares or other
securities;
(j) the Company does not sell or otherwise issue any
shares or any other securities;
(k) except as contemplated in this Agreement, the Company
does not amend its constitution, and does not effect
or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, share
consolidation or division, capital reduction or share
buy back or similar transaction;
(l) the Company does not form any subsidiary or acquire
any equity interest or other interest in any other
Entity;
(m) the Company does not make any capital expenditure,
except for capital expenditures that are made in the
Ordinary Course of Business and that, when added to
all other capital expenditures made on behalf of the
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41
Company during the Pre-Closing Period, do not exceed
A$10,000 in the aggregate;
(n) the Company does not enter into or permit any of the
assets owned or used by the Company to become bound
by any Contract, except for any Excluded Contract;
(o) the Company does not incur, assume or otherwise
become subject to any Liability, except for current
liabilities (of the type required to be reflected in
the "liabilities" column of a balance sheet prepared
in accordance with GAAP) incurred in the Ordinary
Course of Business;
(p) the Company does not establish or adopt any Employee
Benefit Plan, and does not pay any bonus or make any
profit-sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration
payable to, any of its directors, officers or
employees;
(q) the Company does not change any of its methods of
accounting or accounting practices in any respect;
(r) the Company does not make any Tax election;
(s) the Company does not commence any Proceeding;
(t) the Company does not enter into any transaction or
take any other action of the type referred to in
Section 2.9;
(u) the Company does not enter into any transaction or
take any other action outside the Ordinary Course of
Business;
(v) the Company does not enter into any transaction or
take any other action that might cause or constitute
a Breach of any representation or warranty made by
the Vendor in this Agreement or in the Closing
Certificate; and
(w) the Company does not agree, commit or offer (in
writing or otherwise), and does not attempt, to take
any of the actions described in clauses "(a)" through
"(v)" of this Section 4.2.
4.3 Filings and Consents
The Vendor shall ensure that:
(a) each filing or notice required to be made or given
(pursuant to any applicable Legal Requirement,
Government Authorisation, Order or
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42
Contract, or otherwise) by the Company or the Vendor
in connection with the execution and delivery of any
of the Transactional Agreements or in connection with
the consummation or performance of any of the
Transactions (including each of the filings and
notices identified in Part 2.20 of the Disclosure
Schedule) is made or given as soon as possible after
the date of this Agreement;
(b) each Consent required to be obtained (pursuant to any
applicable Legal Requirement, Order or Contract, or
otherwise) by the Company or the Vendor in connection
with the execution and delivery of any of the
Transactional Agreements or in connection with the
consummation or performance of any of the
Transactions (including each of the Consents
identified in Part 2.20 of the Disclosure Schedule)
is obtained as soon as possible after the date of
this Agreement and remains in full force and effect
through the Closing Date;
(c) the Company and the Vendor promptly delivers to the
Purchaser a copy of each filing made, each notice
given and each Consent obtained by them during the
Pre-Closing Period; and
(d) during the Pre-Closing Period, the Vendor, the
Company and their Representatives cooperate with the
Purchaser and with the Purchaser's Representatives,
and prepare and make available such documents and
take such other actions as the Purchaser may request
in good faith, in connection with any filing, notice
or Consent that the Purchaser is required or elects
to make, give or obtain.
4.4 Notification; Updates to Disclosure Schedule
(a) During the Pre-Closing Period, the Vendor shall
promptly notify the Purchaser in writing of:
(i) the discovery of any event, condition, fact
or circumstance that occurred or existed on
or prior to the date of this Agreement and
that caused or constitutes a Breach of any
representation or warranty made by the
Vendor in this Agreement;
(ii) any event, condition, fact or circumstance
that occurs, arises or exists after the date
of this Agreement and that would cause or
constitute a Breach of any representation or
warranty made by the Vendor in this
Agreement if (A) such representation or
warranty had been made as of the time of the
occurrence, existence or discovery of such
event, condition, fact or circumstance, or
(B) such event, condition, fact or
circumstance had occurred, arisen or existed
on or prior to the date of this Agreement;
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43
(iii) any Breach of any covenant or obligation of
the Vendor; and
(iv) any event, condition, fact or circumstance
that may make the timely satisfaction of any
of the conditions set forth in Section 5 or
Section 6 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.4(a)
requires any change in the Disclosure Schedule, or if
any such event, condition, fact or circumstance would
require such a change assuming the Disclosure
Schedule were dated as of the date of the occurrence,
existence or discovery of such event, condition, fact
or circumstance, then the Vendor shall promptly
deliver to the Purchaser an update to the Disclosure
Schedule specifying such change. No such update shall
be deemed to supplement or amend the Disclosure
Schedule for the purpose of (i) determining the
accuracy of any of the representations and warranties
made by the Vendor in this Agreement or in the
Closing Certificate, or (ii) determining whether any
of the conditions set forth in Section 5 has been
satisfied.
4.5 Payment of Indebtedness by Related Parties
The Vendor shall cause all indebtedness and other Liabilities
of each Related Party to the Company (including any such
indebtedness or other Liability identified in Part 2.27 of the
Disclosure Schedule) to be discharged and paid in full prior
to the Closing.
4.6 No Negotiation
The Vendor shall ensure that, during the Pre-Closing Period,
neither the Company nor any of the Company's Representatives
directly or indirectly:
(a) solicits or encourages the initiation of any inquiry,
proposal or offer from any Person (other than the
Purchaser) relating to any Acquisition Transaction;
(b) participates in any discussions or negotiations with,
or provides any non-public information to, any Person
(other than the Purchaser) relating to any
Acquisition Proposal; or
(c) considers the merits of any unsolicited inquiry,
proposal or offer from any Person (other than the
Purchaser) relating to any Acquisition Transaction.
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44
4.7 Best Efforts
During the Pre-Closing Period, the Vendor shall use its Best
Efforts to cause the conditions set forth in Sections 5 and
6.3 to be satisfied on a timely basis.
4.8 Confidentiality - Vendor
The Vendor shall ensure that, during the Pre-Closing Period,
and, in so far as the obligations relate to the Vendor alone,
at all times after Closing:
(a) the Vendor, the Company and their Representatives
keep strictly confidential the existence and terms of
this Agreement;
(b) neither the Vendor, the Company nor any of their
Representatives issues or disseminates any press
release or other publicity or otherwise makes any
disclosure of any nature (to any of the Company's
suppliers, customers, landlords, creditors or
employees or to any other Person) regarding any of
the Transactions, except to the extent that the
Company or the Vendor are required by law to make any
such disclosure regarding the Transactions; and
(c) if the Company or the Vendor are required by law to
make any disclosure regarding the Transactions, the
Vendor advises the Purchaser, at least five business
days before making such disclosure, of the nature and
content of the intended disclosure and take into
account the Purchaser's reasonable requirements
relating to the preservation of confidentiality.
4.9 Confidentiality - Purchaser
The Purchaser shall ensure that, during the Pre-Closing Period
and at all times thereafter if this agreement is terminated
prior to Closing:
(a) the Purchaser and its Representatives keep strictly
confidential the existence and terms of this
Agreement;
(b) the Purchaser and its Representatives will keep as
confidential and will not disclose or use the
information it has acquired from the Vendor and their
Representatives in relation to the Company, its
business, condition, assets, liabilities, operations,
financial performance, customers and suppliers
without the prior written approval of the Vendor,
except:
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(i) as specifically contemplated by this
agreement;
(ii) to the extent required by law;
(iii) to the extent required by that party's
financiers or intended financiers in
relation to the provision of finance for
completion of the transactions contemplated
by this agreement; or
(iv) to the extent required to instruct the
party's professional advisers in relation to
the preparation and Closing of this
agreement; or
(v) to the extent that the information is
properly available to the public.
5. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to purchase the Sale Shares and to take the
other actions required to be taken by the Purchaser at the Closing is
subject to its reasonable satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by the
Purchaser, in whole or in part, in accordance with Section 10.11):
5.1 [intentionally left blank]
5.2 Accuracy of Representations
All of the representations and warranties made by the Vendor
in this Agreement (considered collectively), and each of said
representations and warranties (considered individually),
shall have been accurate in all material respects as of the
date of this Agreement, and shall be accurate in all material
respects as of the Scheduled Closing Time as if made at the
Scheduled Closing Time, without giving effect to any update to
the Disclosure Schedule.
5.3 Performance of Obligations
(a) The Vendor shall have delivered to the Purchaser the
certificates representing all (and not less than all)
of the Sale Shares as required by Section 1.3(b)(i),
and shall have executed and/or delivered each of the
other documents required to be executed and/or
delivered by it pursuant to Section 1.3(b) such that
subject only to payment of stamp duty and the
registration of the transfers of the Sale Shares by
the Company, the Purchaser shall upon Closing become
the registered holder of the entire issued share
capital of the Company.
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46
(b) All of the other covenants and obligations that the
Vendor is required to comply with or to perform at or
prior to the Closing (considered collectively), and
each of said covenants and obligations (considered
individually), shall have been duly complied with and
performed in all material respects.
5.4 Consents
Each of the Consents identified in Part 2.20 of the Disclosure
Schedule shall have been obtained and shall be in full force
and effect.
5.5 No Adverse Change
There shall have been no material adverse change in the
Company's business, condition, assets, liabilities,
operations, financial performance, net income or prospects (or
in any aspect or portion thereof) since the date of this
Agreement.
5.6 Additional Documents
The Purchaser may request in good faith such other materials
or evidence as it may reasonably require for the purpose of
(i) evidencing the accuracy of any representation or warranty
made by the Vendor, (ii) evidencing the compliance by the
Vendor with, or the performance by the Vendor of, any covenant
or obligation set forth in this Agreement, (iii) evidencing
the satisfaction of any condition set forth in this Section 5,
or (iv) otherwise facilitating the consummation or performance
of any of the Transactions.
5.7 No Proceedings
Since the date of this Agreement, there shall not have been
commenced or threatened against the Purchaser, or against any
Person affiliated with the Purchaser, any Proceeding (a)
involving any challenge to, or seeking damages or other relief
in connection with, any of the Transactions, or (b) that may
have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
5.8 No Claim Regarding Stock Ownership or Sale Proceeds
No Person shall have made or threatened any claim asserting
that such Person (a) may be the holder or the beneficial owner
of, or may have the right to acquire or to obtain beneficial
ownership of, any capital stock or other securities of the
Company, or (b) may be entitled to all or any portion of the
Purchase Price.
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5.9 No Prohibition
Neither the consummation nor the performance of any of the
Transactions will, directly or indirectly (with or without
notice or lapse of time), contravene or conflict with or
result in a violation of, or cause the Purchaser or any Person
affiliated with the Purchaser to suffer any adverse
consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been
proposed by or before any Governmental Body.
5.10 Board Approval
The board of directors (or any duly authorised committee
appointed by the board) of the Purchaser's ultimate parent
company, Asia Online, Ltd. has approved the terms of the
transactions contemplated or referred to in this Agreement and
the other Transactional Agreements.
6. CONDITIONS PRECEDENT TO THE VENDOR'S OBLIGATIONS TO CLOSE
The Vendor's obligations to sell the Sale Shares and to take the other
actions required to be taken by it at the Closing is subject to the
reasonable satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Vendor, in
whole or in part, in accordance with Section 10.11):
6.1 Accuracy of Representations
All of the representations and warranties made by the
Purchaser in this Agreement (considered collectively), and
each of said representations and warranties (considered
individually), shall have been accurate in all material
respects as of the date of this Agreement and shall be
accurate in all material respects as of the Scheduled Closing
Time as if made at the Scheduled Closing Time.
6.2 Purchaser's Performance
All of the other covenants and obligations that the Purchaser
is required to comply with or to perform pursuant to this
Agreement at or prior to the Closing (considered
collectively), and each of said covenants and obligations
(considered individually), shall have been complied with and
performed in all material respects.
6.3 No Injunction
There shall not be in effect any injunction that shall have
been entered by a court of competent jurisdiction since the
date of this Agreement and that prohibits the sale of the Sale
Shares by the Vendor to the Purchaser.
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7. TERMINATION
7.1 Termination Events
This Agreement may be terminated prior to the Closing:
(a) by the Purchaser if (i) there is a material Breach of
any covenant or obligation of the Vendor or (ii) the
Purchaser reasonably determines that the timely
satisfaction of any condition set forth in Section 5
has become impossible or impractical (other than as a
result of any failure on the part of the Purchaser
comply with or perform its covenants and obligations
under this Agreement);
(b) by the Vendor if (i) there is a material Breach of
any covenant or obligation of the Purchaser, or (ii)
the Vendor reasonably determines that the timely
satisfaction of any condition set forth in Section 6
has become impossible or impractical (other than as a
result of any failure on the part of the Vendor to
comply with or perform any covenant or obligation set
forth in this Agreement);
(c) by the Purchaser if the Closing has not taken place
on or before 9 October, 1999 (other than as a result
of any failure on the part of the Purchaser to comply
with or perform its covenants and obligations under
this Agreement);
(d) by the Vendor if the Closing has not taken place on
or before 9 October 1999 (other than as a result of
the failure on the part of the Vendor to comply with
or perform any covenant or obligation set forth in
this Agreement); or
(e) by the mutual consent of the Purchaser and the
Vendor.
7.2 Termination Procedures
If the Purchaser wishes to terminate this Agreement pursuant
to Section 7.1(a) or Section 7.1(c), the Purchaser shall
deliver to any Vendor a written notice stating that the
Purchaser is terminating this Agreement and setting forth a
brief description of the basis on which the Purchaser is
terminating this Agreement. If the Vendor wishes to terminate
this Agreement pursuant to Section 7.1(b)or Section 7.1(d),
the Vendor shall deliver to the Purchaser a written notice
stating that the Vendor is terminating this Agreement and
setting forth a brief description of the basis on which the
Vendor is terminating this Agreement.
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7.3 Effect of Termination
If this Agreement is terminated pursuant to Section 7.1, all
further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(a) no party shall be relieved of any obligation or other
Liability arising from any Breach by such party of
any provision of this Agreement;
(b) the Vendor shall, in all events, remain bound by and
continue to be subject to Section 4.8.
7.4 Non-exclusivity of Termination Rights
The termination rights provided in Section 7.1 shall not be
deemed to be exclusive. Accordingly, the exercise by any party
of its right to terminate this Agreement pursuant to Section
7.1 shall not be deemed to be an election of remedies and
shall not be deemed to prejudice, or to constitute or operate
as a waiver of, any other right or remedy that such party may
be entitled to exercise (whether under this Agreement, under
any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
8. INDEMNIFICATION, ETC.
8.1 Survival of Representation and Covenants
(a) The representations, warranties, covenants and
obligations of each party shall survive (without
limitation):
(i) the Closing and the sale of the Shares to
the Purchaser;
(ii) any sale or other disposition of any or all
of the Shares by the Purchaser; and
(iii) any Acquisition Transaction effected by or
otherwise involving the Purchaser, the
Vendor or the Company.
All of said representations, warranties, covenants
and obligations shall remain in full force and effect
and shall survive until the second anniversary of the
Closing Date.
(b) The representations, warranties, covenants and
obligations of the Vendor, and the rights and
remedies that may be exercised by the Indemnitees,
shall not be limited or otherwise affected by or as a
result of any information furnished to, or any
investigation made by or Knowledge of, any of the
Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or
other item of information set forth in the Disclosure
Schedule or in any update to the
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Disclosure Schedule shall be deemed to be a
representation and warranty made by the Vendor in
this Agreement.
8.2 Indemnification by the Vendor
(a) The Vendor shall hold harmless and indemnify each of
the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for,
any Damages which are directly or indirectly suffered
or incurred by any of the Indemnitees or to which any
of the Indemnitees may otherwise become subject at
any time (regardless of whether or not such Damages
relate to any third-party claim) and which arise
directly or indirectly from or as a direct or
indirect result of, or are directly or indirectly
connected with:
(i) any Breach of any representation or warranty
made by the Vendor in this Agreement
(without giving effect to any update to the
Disclosure Schedule) or in the Closing
Certificate;
(ii) any Breach of any representation, warranty,
statement, information or provision
contained in the Disclosure Schedule;
(iii) any Breach of any covenant or obligation of
the Vendor;
(iv) any Liability to which the Company or any of
the other Indemnitees may become subject and
that arises directly or indirectly from or
relates directly or indirectly to any
product manufactured or sold, or any service
performed, by or on behalf of the Company on
or at any time prior to the Closing Date;
(v) any matter identified or referred to in Part
2.21 or Part 2.29 of the Disclosure
Schedule; or
(vi) any Proceeding relating directly or
indirectly to any Breach, alleged Breach,
Liability or matter of the type referred to
in clause "(i)", "(ii)", "(iii)", "(iv)", or
"(v)" above (including any Proceeding
commenced by any Indemnitee for the purpose
of enforcing any of its rights under this
Section 8).
(b) The Vendor acknowledges and agrees that, if there is
any Breach of any representation, warranty or other
provision relating to the Company or the Company's
business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or
any aspect or portion thereof), or if the Company
becomes subject to any Liability of the type referred
to in clause "(iv)" of Section 8.2(a), then the
Purchaser itself shall be deemed, by virtue of its
ownership of shares in the Company, to have incurred
Damages as a result of such Breach or
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Liability. Nothing contained in this Section 8.2(b)
shall have the effect of (i) limiting the
circumstances under which the Purchaser may otherwise
be deemed to have incurred Damages for purposes of
this Agreement, (ii) limiting the other types of
Damages that the Purchaser may be deemed to have
incurred (whether in connection with any such Breach
or Liability or otherwise), or (iii) limiting the
rights of the Company or any of the other Indemnitees
under this Section 8.2.
8.3 Right to Require Cure of Breach
Without limiting the generality of anything contained in
Section 8.2, if there is any Breach of any representation or
warranty made by the Vendor, then the Vendor shall be
obligated to pay such amounts to the Company and take such
other actions as it may reasonably consider necessary for
purpose of causing such Breach to be corrected, cured and
eliminated in all respects (at no cost to the Company or the
Purchaser).
8.4 No Contribution
The Vendor waives and acknowledges and agrees that it shall
not have and shall not exercise or assert or attempt to
exercise or assert, any right of contribution or right of
indemnity or any other right or remedy against the Company or
any of its employees, officers or agents in connection with
any indemnification obligation or any other Liability to which
the Vendor may become subject under any of the Transactional
Agreements or otherwise in connection with any of the
Transactions.
8.5 Interest
Any party that is required to indemnify any other Person
pursuant to this Section 8 with respect to any Damages shall
also be required to pay such other Person interest on the
amount of such Damages (for the period commencing as of the
date on which such other Person first incurred or otherwise
became subject to such Damages and ending on the date on which
the applicable indemnification payment is made by such party)
at a floating rate three percentage points above the rate of
interest publicly announced by The Reserve Bank of Australia
from time to time as its prime, base or reference rate.
8.6 Setoff
In addition to any rights of setoff or other rights that the
Purchaser or any of the other Indemnitees may have at common
law or otherwise, the Purchaser shall have the right to set
off any amount that may be owed to any Indemnitee under this
Section 8 against any amount otherwise payable by any
Indemnitee to the Vendor.
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8.7 Non-exclusivity of Indemnification Remedies
The indemnification remedies and other remedies provided in
this Section 8 shall not be deemed to be exclusive.
Accordingly, the exercise by any Person of any of its rights
under this Section 8 shall not be deemed to be an election of
remedies and shall not be deemed to prejudice, or to
constitute or operate as a waiver of, any other right or
remedy that such Person may be entitled to exercise (whether
under this Agreement, under any other Contract, under any
statute, rule or other Legal Requirement, at common law, in
equity or otherwise).
8.8 Defence of Third Party Claims
The Vendor, at its cost, shall provide all reasonable
assistance to the Purchaser with respect to the defence of a
claim or Proceeding.
8.9 Limit of Liability
Notwithstanding any other provision of this Agreement,
including without limitation any express indemnity, the
Vendor's maximum liability to the Purchaser arising from or
associated with a Breach of this Agreement (whether in
contract or tort) shall not in any circumstances exceed the
purchase price specified in Section 1.2.
9. RESTRICTION OF THE VENDOR
9.1 The Vendor undertakes with the Purchaser (for itself and as
trustee for the Company) that, except with the consent in
writing of the Purchaser:
(a) for the period of two years after Closing it will not
within any country or place in which the Company has
carried on business during the year preceding the
date of this Agreement either on its own account or
in conjunction with or on behalf of any person, firm
or company carry on or be engaged, concerned or
interested, directly or indirectly, whether as
shareholder, director, employee, partner, agent or
otherwise in carrying on any business carried on by
the Company within such preceding year (other than as
a holder of not more than 5 per cent (5%) of the
issued shares or debentures of any company listed on
a recognised stock exchange);
(b) for the period of two years after Closing it will not
either on its own account or in conjunction with or
on behalf of any other person, firm or company
solicit or entice away or attempt to solicit or
entice away from the Company the custom of any
person, firm, company or organisation who shall at
any time within the year preceding the date hereof
have been a customer, identified prospective
customer,
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representative, agent, or correspondent of the
Company or in the habit of dealing with the Company
or accept business from any such person, firm,
company or organisation in a business area in which
the Company was engaged in during the year preceding
the date of this Agreement;
(c) Except as provided in the Disclosure Statement, for
the period of two years after Closing it will not
either on its own account or in conjunction with or
on behalf of any other person, firm or company
employ, solicit, entice away or attempt to employ,
solicit or entice away from the Company any person
who at the date hereof is or at the date of or within
the year preceding such employment, solicitation,
enticement or attempt shall have been an officer,
manager, consultant or employee of the Company
whether or not such person would commit a breach of
contract by reason of leaving such employment;
(d) it will not at any time hereafter make use of or
disclose or divulge to any person (other than to
officers or employees of the Company whose province
it is to know the same) any information (other than
any information properly available to the public or
disclosed or divulged pursuant to an order of a court
of competent jurisdiction) relating to the Company,
the identity of its customers and suppliers, its
products, finance, contractual arrangements, business
or methods of business and shall use its best
endeavours to prevent the publication or disclosure
of any such information;
(e) if, in connection with the business or affairs the
Company, it shall have obtained trade secrets or
other confidential information belonging to any third
party under an agreement purporting to bind the
Company which contained restrictions on disclosure it
will not without the previous written consent of the
board of directors of the Purchaser at any time
infringe or take any action which would or might
result in an infringement of such restrictions;
(f) it will not at any time hereafter in relation to any
trade, business or company use a name or trade mark
including the word "The Message Exchange" or "TMX" or
any word or symbol confusingly similar thereto in
such a way as to be capable of or likely to be
confused with the name or any trade mark the Company
and shall use its best endeavours to procure that no
such name or trade mark shall be used by any person,
firm or company with which the Vendor is connected.
9.2 The Vendor shall procure that each of its subsidiaries,
holding companies and any other affiliated companies will
observe the restrictions contained in the foregoing provisions
of this Section 9 and that their respective directors will
observe the restrictions contained in this Section 9.
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9.3 While the restrictions contained in this Clause are considered
by the parties to be reasonable in all the circumstances, it
is recognised that restrictions of the nature in question may
fail for technical reasons and accordingly it is hereby agreed
and declared that if any of such restrictions shall be
adjudged to be void as going beyond what is reasonable in all
the circumstances for the protection of the interests of the
Purchaser but would be valid if part of the wording thereof
were deleted or the periods thereof reduced or the range of
activities or area dealt with thereby reduced in scope the
said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
9.4 Nothing in this Section 9 shall require the Vendor (or Richard
Cousins, Robert James Kummerfeld or Piers Robert Dick-Lauder)
to procure that:
(a) Robert James Kummerfeld or Piers Robert Dick-Lauder
discontinue or limit in anyway their bona fide
research activities at the University of Sydney
(b) its subsidiaries, holding companies and other
affiliated companies and each of their respective
directors discontinue any business, office or
occupation in which they were engaged in at the date
of this Agreement and that is associated with
Intracom Australia Pty Ltd.
10. TO MISCELLANEOUS PROVISIONS
10.1 Further Assurances
Each party hereto shall execute and/or cause to be delivered
to each other party hereto such instruments and other
documents, and shall take such other lawful actions within its
power, as such other party may reasonably request (prior to,
at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.
10.2 Fees, Expenses and Stamp Duty
Each party shall bear its own expenses of and incidental to
the negotiation leading to the entering into of this Agreement
all the Transaction Agreement, and the preparation, execution
and performance of such agreement. All stamp duties assessed
or assessable on the transfer of the Sale Shares to the
Purchaser shall be borne by Purchaser.
10.3 Attorneys' Fees
If any legal action or other legal proceeding relating to any
of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought
against any party hereto, the prevailing party shall be
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entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the
prevailing party may be entitled).
10.4 Notices
Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by
courier or express delivery service or by facsimile) to the
address or facsimile number set forth beneath the name of such
party below (or to such other address or facsimile number as
such party shall have specified in a written notice given to
the other parties hereto):
If to the Vendor : Message Handling Systems Pty Limited
1st Floor
2 King Street
Newtown NSW 2042
Australia
Attention : MR. RICHARD COUSINS
Facsimile : (612) 9519-2551
If to the Purchaser : Asia Online - Australia Pty Ltd
23rd Floor, Citicorp Centre
18 Whitfield Road
Causeway Bay
Hong Kong
Attention : MR. ED. ROBERTO
Facsimile : (852) 2882 4468
10.5 Time of the Essence
Time is of the essence of this Agreement.
10.6 Headings
The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this
Agreement.
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10.7 Counterparts
This Agreement may be executed in several counterparts, each
of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.8 Governing Law; Venue
(a) This Agreement and all definitive Agreements
contained herein shall be construed in accordance
with, and governed in all respects by, the laws of
New South Wales, Australia
(b) Any legal action or other legal proceeding relating
to this Agreement or the enforcement of any provision
of this Agreement may be brought or otherwise
commenced in any state or federal court located in
New South Wales, Australia. Each party to this
Agreement:
(i) expressly and irrevocably consents and
submits to the jurisdiction of each state
and federal court located New South Wales,
Australia (and each appellate court located
in New South Wales, Australia) in connection
with any such legal proceeding;
(ii) agrees that each state and federal court
located in New South Wales, Australia shall
be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal
proceeding commenced in any state or federal
court located in New South Wales, Australia,
any claim that such party is not subject
personally to the jurisdiction of such
court, that such legal proceeding has been
brought in an inconvenient forum, that the
venue of such proceeding is improper or that
this Agreement or the subject matter of this
Agreement may not be enforced in or by such
court.
(c) The Vendor agrees that, if any Proceeding is
commenced against any Indemnitee by any Person in or
before any court or other tribunal anywhere in the
world, then such Indemnitee may proceed against the
Vendor in such court or other tribunal with respect
to any indemnification claim or other claim arising
directly or indirectly from or relating directly or
indirectly to such Proceeding or any of the matters
alleged therein or any of the circumstances giving
rise thereto.
(d) Nothing contained in Section 10.8(b) or 10.8 (c)
shall be deemed to limit or otherwise affect the
right of any Indemnitee to commence any legal
proceeding or otherwise proceed against the Vendor in
any other forum or jurisdiction.
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10.9 Successors and Assigns
This Agreement shall be binding upon: the Vendor and the
Purchaser and their respective successors and assigns (if
any). This Agreement shall inure to the benefit of the
Purchaser; the other Indemnitees (subject to Section 8.9); and
the respective successors and assigns (if any) of the
foregoing. The Purchaser may freely assign any or all of its
rights under this Agreement (including its indemnification
rights under Section 8), in whole or in part, to any other
Person without obtaining the consent or approval of any other
party hereto or of any other Person.
10.10 Remedies Cumulative; Specific Performance
The rights and remedies of the parties hereto shall be
cumulative (and not alternative). The Vendor agrees that:
(a) in the event of any Breach or threatened Breach by
the Vendor of any covenant, obligation or other
provision set forth in this Agreement, the Purchaser
shall be entitled (in addition to any other remedy
that may be available to it) to (i) a decree or order
of specific performance or mandamus to enforce the
observance and performance of such covenant,
obligation or other provision, and (ii) an injunction
restraining such Breach or threatened Breach; and
(b) neither the Purchaser nor any other Indemnitee shall
be required to provide any bond or other security in
connection with any such decree, order or injunction
or in connection with any related action or
Proceeding.
10.11 Waiver
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this
Agreement, and no delay on the part of any Person in
exercising any power, right, privilege or remedy
under this Agreement, shall operate as a waiver of
such power, right, privilege or remedy; and no single
or partial exercise of any such power, right,
privilege or remedy shall preclude any other or
further exercise thereof or of any other power,
right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right,
privilege or remedy under this Agreement, unless the
waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such Person;
and any such waiver shall not be applicable or have
any effect except in the specific instance in which
it is given.
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10.12 Amendments
This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly
executed and delivered on behalf of the Purchaser and the
Vendor.
10.13 Severability
In the event that any provision of this Agreement, or the
application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful,
void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or
circumstances other than those as to which it is determined to
be invalid, unlawful, void or unenforceable, shall not be
impaired or otherwise affected and shall continue to be valid
and enforceable to the fullest extent permitted by law.
10.14 Parties in Interest
Except for the provisions of Section 8 hereof, none of the
provisions of this Agreement is intended to provide any rights
or remedies to any Person other than the parties hereto and
their respective successors and assigns (if any).
10.15 Entire Agreement
The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter
thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject
matter thereof.
10.16 Construction
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the
plural, and vice versa; the masculine gender shall
include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter
genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be
resolved against the drafting party shall not be
applied in the construction or interpretation of this
Agreement.
(c) As used in this Agreement, the words "include" and
"including", and variations thereof, shall not be
deemed to be terms of limitation, but rather shall be
deemed to be followed by the words "without
limitation".
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(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended
to refer to Sections of this Agreement and Exhibits
to this Agreement.
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The parties hereto have caused this Agreement to be executed and delivered as of
the date stated at the commencement hereof.
SIGNED for and on behalf of )
ASIA ONLINE - AUSTRALIA PTY LTD )
by its duly authorised representative )
in the presence of: )
/s/ KELLI SUZANNE LONGWORTH /s/ KEVIN H. RANDOLPH
- -------------------------------------- --------------------------------------
Signature of witness Signature of authorised representative
KELLI SUZANNE LONGWORTH KEVIN H. RANDOLPH
- -------------------------------------- --------------------------------------
Name of witness (please print) Name of authorised representative
(please print)
SIGNED for and on behalf of )
MESSAGE HANDLING SYSTEMS PTY LTD )
by its duly authorised representative )
in the presence of: )
/s/ JAMES D. CONVERSE /s/ P.R. DICK-LAUDER
- -------------------------------------- --------------------------------------
Signature of Director Signature of authorised representative
JAMES D. CONVERSE P.R. DICK-LAUDER
- -------------------------------------- --------------------------------------
Name of Director (please print) Name of authorised representative
(please print)
/s/ ANDREW C. DAWSON ANDREW C. DAWSON
- -------------------------------------- --------------------------------------
Signature of witness Name of witness
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of
all or any portion of the Company's
business or assets (other than in
the Ordinary Course of Business);
(b) the issuance, sale or other
disposition of (i) any capital
stock of the Company, (ii) any
option, call, warrant or right
(whether or not immediately
exercisable) to acquire any capital
stock of the Company, or (iii) any
security, instrument or obligation
that is or may become convertible
into or exchangeable for any
capital stock of the Company; or
(c) any merger, consolidation, business
combination, share exchange,
reorganization or similar
transaction involving the Company.
AGREEMENT "Agreement" shall mean the Share Sale and
Purchase Agreement to which this Exhibit A
is attached (including the Disclosure
Schedule), as it may be amended from time to
time.
BEST EFFORTS "Best Efforts" shall mean the efforts that a
prudent Person desiring to achieve a
particular result would use in order to
ensure that such result is achieved as
expeditiously as possible.
BREACH There shall be deemed to be a "Breach" of a
representation, warranty, covenant,
obligation or other provision if there is or
has been (a) any inaccuracy in or breach of,
or any failure to comply with or perform,
such representation, warranty, covenant,
obligation or other provision, or (b) any
claim (by any Person) or other circumstance
that is inconsistent with such
representation, warranty, covenant,
obligation or other provision; and the term
"Breach" shall be deemed to refer to any
such inaccuracy, breach, failure, claim or
circumstance.
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BUSINESS DAY "Business day" means a day (excluding
Saturday) when banks are open for business
in both Hong Kong and New South Wales.
CLOSING "Closing" shall have the meaning specified
in Section 1.3(a) of the Agreement.
CLOSING CERTIFICATE "Closing Certificate" shall have the meaning
specified in Section 1.3(b)(viii) of the
Agreement.
CLOSING DATE "Closing Date" shall have the meaning
specified in Section 1.3(a) of the
Agreement.
COMPANY CONTRACT "Company Contract" shall mean any Contract:
(a) to which the Company is a party;
(b) by which the Company or any of its
assets is or may become bound or
under which the Company has, or may
become subject to, any obligation;
or
(c) under which the Company has or may
acquire any right or interest.
COMPANY FINANCIAL STATEMENTS "Company Financial Statements" shall have
the meaning specified in Section 2.8(a) of
the Agreement.
COMPANY PLAN "Company Plan" shall mean any Current
Benefit Plan or Past Benefit Plan.
COMPANY RETURNS "Company Returns" shall have the meaning
specified in Section 2.22(b) of the
Agreement.
COMPARABLE ENTITIES "Comparable Entities" shall mean Entities
(other than the Company) that are engaged in
businesses similar to the Company's
business.
CONSENT "Consent" shall mean any approval, consent,
ratification, permission, waiver or
authorization (including any Governmental
Authorization).
CONSTITUTION "Constitution" means the constitution in the
form attached as Exhibit H.
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CONTRACT "Contract" shall mean any written, oral,
implied or other agreement, contract,
understanding, arrangement, instrument,
note, guaranty, indemnity, representation,
warranty, deed, assignment, power of
attorney, certificate, purchase order, work
order, insurance policy, benefit plan,
commitment, covenant, assurance or
undertaking of any nature.
CURRENT BENEFIT PLAN "Current Benefit Plan" shall mean any
Employee Benefit Plan that is currently in
effect and:
(a) that was established or adopted by
the Company or is maintained or
sponsored by the Company;
(b) in which the Company participates;
(c) with respect to which the Company
is or may be required or permitted
to make any contribution; or
(d) with respect to which the Company
is or may become subject to any
Liability.
DAMAGES "Damages" shall include any loss, damage,
injury, decline in value, lost opportunity,
Liability, claim, demand, settlement,
judgment, award, fine, penalty, Tax, fee
(including any legal fee, expert fee,
accounting fee or advisory fee), charge,
cost (including any cost of investigation)
or expense of any nature.
DIRECTORS' LOANS means the loans made to the Company by
Robert Kummerfeld, Piers Lauder and Cousins
& Associates Pty Ltd totalling A$45,000 as
listed in the Disclosure Schedule which were
repaid by the Company prior to Closing.
DISCLOSURE SCHEDULE "Disclosure Schedule" shall mean the
schedule (dated as of the date of the
Agreement) delivered to the Purchaser on
behalf of the Vendor, a copy of which is
attached to the Agreement and incorporated
in the Agreement by reference.
ENCUMBRANCE "Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security
interest, encumbrance, equity, trust,
equitable interest, claim, preference, right
of possession, lease, tenancy, license,
encroachment, covenant, infringement,
interference,
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Order, proxy, option, right of first
refusal, preemptive right, community
property interest, legend, defect,
impediment, exception, reservation,
limitation, impairment, imperfection or
retention of title, condition or restriction
of any nature (including any restriction on
the voting of any security, any restriction
on the transfer of any security or other
asset, any restriction on the receipt of any
income derived from any asset, any
restriction on the use of any asset and any
restriction on the possession, exercise or
transfer of any other attribute of ownership
of any asset).
ENTITY "Entity" shall mean any corporation
(including any non-profit corporation),
general partnership, limited partnership,
limited liability partnership, joint
venture, estate, trust, cooperative,
foundation, society, political party, union,
company (including any limited liability
company or joint stock company), firm or
other enterprise, association, organization
or entity.
EXCLUDED CONTRACT "Excluded Contract" shall mean any Company
Contract that:
(a) the Company has entered into in the
Ordinary Course of Business;
(b) has a term of less than 90 days or
may be terminated by the Company
(without penalty) within 90 days
after the delivery of a termination
notice by the Company; and
(c) does not contemplate or involve the
payment of cash or other
consideration in an amount or
having a value in excess of
A$10,000.
GAAP "GAAP" shall mean the accounting standards
applicable for the purposes of the
Corporations Law; the requirements of the
Corporations Law for the preparation and
content of financial statements, directors'
reports and auditor's reports; and generally
accepted and consistently applied accounting
principles and practices in Australia;
except those inconsistent with any of the
foregoing; and for any company incorporated
outside Australia, the equivalent accounting
standards in that company's jurisdiction of
incorporation.
GOVERNMENTAL AUTHORIZATION "Governmental Authorization" shall mean any:
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(a) permit, license, certificate,
franchise, concession, approval,
consent, ratification, permission,
clearance, confirmation,
endorsement, waiver, certification,
designation, rating, registration,
qualification or authorization that
is, has been or may in the future
be issued, granted, given or
otherwise made available by or
under the authority of any
Governmental Body or pursuant to
any Legal Requirement; or
(b) right under any Contract with any
Governmental Body.
GOVERNMENTAL BODY "Governmental Body" shall mean any:
(a) commonwealth, state, province,
nation, principality, territory,
county, municipality, district or
other jurisdiction of any nature;
(b) federal, state, local, municipal,
foreign or other government;
(c) governmental or quasi-governmental
authority of any nature (including
any governmental division,
subdivision, department, agency,
bureau, branch, office, commission,
council, board, instrumentality,
officer, official, representative,
organization, unit, body or Entity
and any court or other tribunal);
(d) multi-national organization or
body; or
(e) individual, Entity or body
exercising, or entitled to
exercise, any executive,
legislative, judicial,
administrative, regulatory, police,
military or taxing authority or
power of any nature.
INCEPTION "Inception" has the meaning given to it by
Section 2.8(b).
INDEMNITEES The Purchaser, its shareholders and
subsidiaries and after Closing, the Company,
and their respective directors officers and
agents.
KNOWLEDGE An individual shall be deemed to have
"Knowledge" of a particular fact or other
matter if:
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(a) such individual is actually aware
of such fact or other matter; or
(b) a prudent individual could be
expected to discover or otherwise
become aware of such fact or other
matter in the course of conducting
an investigation that is reasonable
to undertake in all the
circumstances.
The Vendor shall be deemed to have
"Knowledge" of a particular fact or other
matter if any director or executive officer,
has Knowledge of such fact or other matter.
LEGAL REQUIREMENT "Legal Requirement" shall mean any federal,
state, local, municipal, foreign or other
law, statute, legislation, constitution,
principle of common law, resolution,
ordinance, code, edict, decree,
proclamation, treaty, convention, rule,
regulation, ruling, directive,
pronouncement, requirement, specification,
determination, decision, opinion or
interpretation that is, has been or may in
the future be issued, enacted, adopted,
passed, approved, promulgated, made,
implemented or otherwise put into effect by
or under the authority of any Governmental
Body.
LIABILITY "Liability" shall mean any debt, obligation,
duty or liability of any nature (including
any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect,
conditional, implied, vicarious, derivative,
joint, several or secondary liability),
regardless of whether such debt, obligation,
duty or liability would be required to be
disclosed on a balance sheet prepared in
accordance with generally accepted
accounting principles and regardless of
whether such debt, obligation, duty or
liability is immediately due and payable.
MATERIAL ADVERSE EFFECT For the purposes of the Agreement, "Material
Adverse Effect" as it applies to the Company
or Purchaser means an adverse effect on the
business, operations, condition (financial
or otherwise), assets or prospects of the
Company or Purchaser, taken as a whole,
which is material. For purposes of this
Agreement, documents, objects, effects,
conditions, events or occurrences shall be
deemed "material" if they involve amounts,
or result in Purchaser Damages (as
hereinafter defined), in excess of A$100,000
(or equivalent in any other currency)
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individually or when aggregated with other
Purchaser Damages incurred due to a breach
of a representation or warranty by the
Vendor or if they in any way materially and
adversely affect the value of, or the
Company's rights, title or interest in, any
of its assets. For purposes of this
Agreement, "Purchaser Damages" means any
material loss, expense, liability, or other
damages, including the reasonable costs of
investigation, interest, penalties and
attorney's and accountant's fees.
ORDER "Order" shall mean any:
(a) order, judgment, injunction, edict,
decree, ruling, pronouncement,
determination, decision, opinion,
verdict, sentence, subpoena, writ
or award that is, has been or may
in the future be issued, made,
entered, rendered or otherwise put
into effect by or under the
authority of any court,
administrative agency or other
Governmental Body or any arbitrator
or arbitration panel; or
(b) Contract with any Governmental Body
that is, has been or may in the
future be entered into in
connection with any Proceeding.
ORDINARY COURSE OF BUSINESS An action taken by or on behalf of the
Company shall not be deemed to have been
taken in the "Ordinary Course of Business"
unless:
(a) such action is recurring in nature,
is consistent with the Company's
past practices and is taken in the
ordinary course of the Company's
normal day-to-day operations;
(b) such action is taken in accordance
with sound and prudent business
practices;
(c) such action is not required to be
authorized by the Company's
shareholders, the Company's board
of directors or any committee of
the Company's board of directors
and does not require any other
separate or special authorization
of any nature; and
(d) such action is similar in nature
and magnitude to actions
customarily taken, without any
separate or special authorization,
in the ordinary course of the
normal day-to-day operations of
other
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Entities that are engaged in
businesses similar to the Company's
business.
PAST BENEFIT PLAN "Past Benefit Plan" shall mean any Employee
Benefit Plan (other than a Current Benefit
Plan):
(a) which the Company has at any time
established, adopted, maintained or
sponsored;
(b) in which the Company has ever
participated;
(c) with respect to which the Company
has ever made, or has ever been
required or permitted to make, any
contribution; or
(d) with respect to which the Company
has ever been subject to any
Liability.
PERSON "Person" shall mean any individual, Entity
or Governmental Body.
PRE-CLOSING PERIOD "Pre-Closing Period" shall mean the period
commencing as of the date of the Agreement
and ending on the Closing Date.
PROCEEDING "Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding
(including any civil, criminal,
administrative, investigative or appellate
proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry,
inquest, audit, examination or investigation
that is, has been or may in the future be
commenced, brought, conducted or heard by or
before, or that otherwise has involved or
may involve, any Governmental Body or any
arbitrator or arbitration panel.
PROPRIETARY ASSET "Proprietary Asset" shall mean any patent,
patent application, trademark (whether
registered or unregistered and whether or
not relating to a published work), trademark
application, trade name, fictitious business
name, service mark (whether registered or
unregistered), service mark application,
copyright (whether registered or
unregistered), copyright application,
maskwork, maskwork application, trade
secret, know-how, franchise, system, domain
name or internet address, computer software,
invention, design, blueprint, proprietary
product, technology, proprietary
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right or other intellectual property right
or intangible asset.
PROPRIETARY INFORMATION AND
INVENTIONS DEED "Proprietary Information and Inventions
Deed" means the proprietary information and
inventions deed in the form attached at
Exhibit B.
PURCHASE PRICE "Purchase Price" shall have the meaning
specified in Section 1.2 of the Agreement.
RELATED PARTY Each of the following shall be deemed to be
a "Related Party":
(a) the Vendor;
(b) each individual who is, or who has
at any time been, an officer of the
Vendor;
(c) each member of the family of each
of the parties who are individuals
referred to in clauses "(a)" and
"(b)" above; and
(d) any Entity in which any one of the
parties referred to in clauses
"(a)", "(b)" and "(c)" above holds
(or in which more than one of such
parties collectively hold),
beneficially or otherwise, a
material voting, proprietary or
equity interest.
RELEVANT SCHEME shall mean: all superannuation schemes,
retirement benefit schemes or other pension
schemes or arrangements; and all employment
benefit plans, programs or arrangements
including medical, dental or life insurance
to which the Company or any of its
subsidiaries is a party or which the Company
or any of its subsidiaries makes available
or obtains for its officers or employees or
former officers or employees;
REPRESENTATIVES "Representatives" shall mean officers,
directors, employees, agents, attorneys,
accountants, advisors and representatives.
SALE SHARES "Sale Shares" shall have the meaning as
specified in the Recitals to the Agreement.
SCHEDULED CLOSING TIME "Scheduled Closing Time" shall have the
meaning specified in Section 1.3(a) of the
Agreement.
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"SUBSIDIARY" "Subsidiary" has the meaning given to that
term in Division 6 of part 1.2 of the
Corporations Law.
TAX "Tax" shall mean any tax (including any
income tax, franchise tax, capital gains
tax, estimated tax, gross receipts tax,
value-added goods and services tax, tax,
surtax, excise tax, ad valorem tax, transfer
tax, stamp tax, sales tax, use tax, land or
property tax, business tax, occupation tax,
inventory tax, occupancy tax, withholding
tax or payroll tax), levy, assessment,
tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or
fee, and any related charge or amount
(including any fine, penalty or interest),
that is, has been or may in the future be
(a) imposed, assessed or collected by or
under the authority of any Governmental
Body, or (b) payable pursuant to any
tax-sharing agreement or similar Contract.
TAX RETURN "Tax Return" shall mean any return
(including any information return), report,
statement, declaration, estimate, schedule,
notice, notification, form, election,
certificate or other document or information
that is, has been or may in the future be
filed with or submitted to, or required to
be filed with or submitted to, any
Governmental Body in connection with the
determination, assessment, collection or
payment of any Tax or in connection with the
administration, implementation or
enforcement of or compliance with any Legal
Requirement relating to any Tax.
TRANSACTIONAL AGREEMENTS "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Employment Agreements referred
to in Section 1.3(b)(v) of the
Agreement;
(c) the Proprietary Information and
Inventions Deed referred to in
Section 1.3(b)(vi) of the
Agreement;
(d) the Closing Certificate.
TRANSACTIONS "Transactions" shall mean (a) the execution
and delivery of the respective Transactional
Agreements, and (b) all of the transactions
contemplated by the respective Transactional
Agreements, including:
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(i) the sale of the Sale Shares by the
Vendor to the Purchaser in
accordance with the Agreement; and
(ii) the performance by the Vendor and
the Purchaser of their respective
obligations under the Transactional
Agreements and the exercise by the
Vendor and the Purchaser of their
respective rights under the
Transactional Agreements.
UNAUDITED INTERIM BALANCE SHEET "Unaudited Interim Balance Sheet" shall have
the meaning specified in Section 2.8(a)(ii)
of the Agreement.
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EXHIBIT C
LIST OF SHAREHOLDERS
SHAREHOLDER SHARES
Message Handling Systems Pty Limited 2
(ACN 003 606 899)
1st Floor
2 King Street
Newtown NSW 2042
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