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EXHIBIT 2.5A
[BAKER & MCKENZIE LETTERHEAD]
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FLEX INFORMATION TECHNOLOGY SHARE SALE AND SUBSCRIPTION AGREEMENT
AMONG
ASIA ONLINE-AUSTRALIA PTY LTD
(ACN 089 444 691)
AND
THE PARTIES LISTED IN EXHIBIT D HERETO
AND
FLEX INFORMATION TECHNOLOGY PTY LTD
(ACN 089 587 753)
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DATED AS OF OCTOBER 14, 1999
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[BAKER & MCKENZIE LETTERHEAD]
TABLE OF CONTENTS
Clauses and Headings Page
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1. Agreement to Sell and Subscribe for Shares..........................................................1
1.1 Sale and Subscription of Shares............................................................1
1.2 Purchase Price of Sale Shares and Subscription Price of Subscription Shares................1
1.3 Closing....................................................................................2
1.4 Meetings...................................................................................4
2. Representations and Warranties......................................................................5
2.1 Organization; Good Standing and Qualification..............................................5
2.2 Certificate of Incorporation and Constitution Records......................................5
2.3 Capitalization.............................................................................6
2.4 No Conflict................................................................................7
2.5 Proprietary Rights; Proprietary Information and Inventions Agreement.......................7
2.6 Actions Pending............................................................................8
2.7 Offering Valid.............................................................................8
2.8 Financial Position.........................................................................8
2.9 Absence of Changes Since 30 June 1999.....................................................10
2.10 Title to Assets...........................................................................12
2.11 Bank Accounts.............................................................................13
2.12 Receivables; Major Customers..............................................................13
2.13 Equipment, Etc............................................................................14
2.14 Real Property.............................................................................15
2.15 Proprietary Assets........................................................................15
2.16 Year 2000.................................................................................15
2.17 Contracts.................................................................................16
2.18 Liabilities; Major Suppliers..............................................................17
2.19 Compliance with Legal Requirements........................................................17
2.20 Governmental Authorisations...............................................................18
2.21 Governmental Action.......................................................................19
2.22 Employee and Labor Matters................................................................19
2.23 Benefit Plans.............................................................................20
2.24 Sale of Products; Performance of Services.................................................20
2.25 Insurance.................................................................................21
2.26 Related Party Transactions................................................................22
2.27 Certain Payments, Etc.....................................................................23
2.28 Proceedings...............................................................................23
2.29 Brokers...................................................................................24
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Clauses and Headings Page
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2.30 The Vendors...............................................................................24
2.31 Full Disclosure...........................................................................25
2.32 Insolvency Events.........................................................................26
2.33 The Company...............................................................................28
2.34 Reorganisation Transactions...............................................................28
2.35 Effect of Sale............................................................................29
3. Representations and Warranties of Purchaser........................................................29
3.1 Acquisition of Shares.....................................................................29
3.2 Authority; Binding Nature of Agreement....................................................29
4. Pre-Closing Covenants of the Vendors...............................................................29
4.1 Access and Investigation..................................................................29
4.2 Operation of Business.....................................................................30
4.3 Filings and Consents......................................................................32
4.4 Payment of Indebtedness by Related Parties................................................33
4.5 No Negotiation............................................................................33
4.6 Best Efforts..............................................................................33
4.7 Confidentiality...........................................................................33
5. Conditions Precedent to Purchaser's Obligation to Close............................................34
5.1 Accuracy of Representations...............................................................34
5.2 Performance of Obligations................................................................34
5.3 Consents..................................................................................35
5.4 No Adverse Change.........................................................................35
5.5 Additional Documents......................................................................35
5.6 No Proceedings............................................................................35
5.7 No Claim Regarding Stock Ownership or Sale Proceeds.......................................35
5.8 No Prohibition............................................................................35
5.9 Resignation of Barry Assaf................................................................36
5.10 Reorganisation Transactions...............................................................36
6. Conditions Precedent to the Vendors' Obligations to Close..........................................36
6.1 Accuracy of Representations...............................................................36
6.2 No Injunction.............................................................................36
7. Termination........................................................................................36
7.1 Termination Events........................................................................36
7.2 Termination Procedures....................................................................37
7.3 Effect of Termination.....................................................................38
7.4 Non-exclusivity of Termination Rights.....................................................38
8. Indemnification, Etc...............................................................................38
8.1 Survival of Representation and Covenants..................................................38
8.2 Indemnification by the Vendors............................................................38
8.3 No Contribution...........................................................................39
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8.4 Interest..................................................................................39
8.5 Set-off...................................................................................40
8.6 Non-exclusivity of Indemnification Remedies...............................................40
8.7 Defence of Third Party Claims.............................................................40
8.8 Expiration of the Representations and Covenants...........................................41
8.9 Extent of the Warranties..................................................................42
8.10 Limitations on the Vendors Liability......................................................43
9. Restriction of the Vendors.........................................................................43
9.1 Restraints................................................................................43
9.2 Obligation to Procure.....................................................................45
9.3 Severance.................................................................................45
9.4 Restraints Fair and Reasonable............................................................45
9.5 Exceptions................................................................................45
10. Miscellaneous Provisions...........................................................................46
10.1 Further Assurances........................................................................46
10.2 Fees, Expenses and Stamp Duty.............................................................46
10.3 Attorneys' Fees...........................................................................46
10.4 Notices...................................................................................46
10.5 Time of the Essence.......................................................................47
10.6 Headings..................................................................................47
10.7 Counterparts..............................................................................47
10.8 Governing Law; Venue......................................................................47
10.9 Successors and Assigns....................................................................48
10.10 Remedies Cumulative; Specific Performance.................................................48
10.11 Waiver....................................................................................48
10.12 Amendments................................................................................49
10.13 Severability..............................................................................49
10.14 Parties in Interest.......................................................................49
10.15 Entire Agreement..........................................................................49
10.16 Construction..............................................................................49
EXHIBITS
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EXHIBIT A Certain Definitions......................................................................54
EXHIBIT B Not Used.................................................................................*
EXHIBIT C Proprietary Information and Inventions Deed..............................................*
EXHIBIT D List of Shareholders and Covenantors.....................................................67
EXHIBIT E [Not Used]...............................................................................*
* Exhibit omitted -- will be provided supplementally to the Commission upon
request.
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EXHIBITS
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EXHIBIT F List of Consultants and Independent Contractors............................................*
EXHIBIT G List of Governmental Licenses, Permits, Orders, Etc........................................*
EXHIBIT H Form of Employment Agreement...............................................................*
EXHIBIT I Designated Senior Officers and Employees...................................................*
EXHIBIT J Shareholders Deed..........................................................................*
EXHIBIT K New Constitution...........................................................................*
* Exhibit omitted -- will be provided supplementally to the Commission upon
request.
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SHARE SALE AND SUBSCRIPTION AGREEMENT RELATING TO
[FLEX INFORMATION TECHNOLOGY PTY LTD] (ACN 089 587 753)
This Share Sale and Subscription Agreement (the "Agreement") is entered into as
of ____________________, 1999, by and among the parties listed in Part I of
Exhibit D hereto (collectively referred to as the "Vendors") the parties listed
in Part II of Exhibit D (collectively referred to as the "Covenantors"), Flex
Information Technology Pty Ltd (ACN 089 587 753 (the "Company") and Asia
Online-Australia Pty Ltd (ACN 089 444 691) (the "Purchaser").
RECITALS:
WHEREAS, the Vendors own the entire issued share capital of the Company.
WHEREAS, the Vendors wish to sell and the Purchaser wishes to purchase 39% of
all the issued shares in the capital of the Company (the "Sale Shares") and the
Purchaser wishes to subscribe for a further 12% of the shares in the capital of
the Company.
Now, therefore, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND SUBSCRIBE FOR SHARES
1.1 Sale and Subscription of Shares
(a) At the Closing, each of the Vendors shall sell,
assign, transfer and deliver to the Purchaser, and
the Purchaser shall purchase, the shares in the
Company listed beside each Vendor's name in Exhibit
D, on the terms and subject to the conditions set
forth in this Agreement.
(b) At the Closing, the Purchaser shall subscribe for
the shares in the Company listed in Part III of
Exhibit D (the "Subscription Shares"), and the
Vendors shall cause the Company to allot and issue
the Subscription Shares, on the terms and subject to
the conditions set forth in this Agreement.
1.2 Purchase Price of Sale Shares and Subscription Price of
Subscription Shares
The purchase price for the Sale Shares and the subscription
price for the Subscription Shares shall be paid and satisfied
at Closing as follows:
(a) in respect of the Sale Shares, (A$3,488,940) to be
paid to the Vendors (or as they may direct) at
Closing in the proportions set out beside their
respective names in Exhibit D by telegraphic transfer
to the bank
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accounts nominated in writing by each of the Vendors
to the Purchaser not less than four business days
prior to Closing; and
(b) in respect of the Subscription Shares, by the
Purchaser undertaking certain ongoing funding
obligations of the Company as set out in clause 9 of
the Shareholders Deed.
1.3 Closing
(a) The closing of the sale of the Sale Shares to the
Purchaser and the issue of the Subscription Shares
to the Purchaser (the "Closing") shall take place at
the offices of the Purchaser's Australian counsel,
Baker & McKenzie, Level 26 A.M.P. Centre, 50 Bridge
Street, Sydney, New South Wales, Australia at 10:00
a.m. (Sydney Time) on the later of 8 October, 1999
or the date two business days following the
satisfaction of the Closing Conditions set forth in
Section 5, (excluding the Closing Condition in
Section 5.2 which may be satisfied by the Vendors at
Closing) and Section 6. For the 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:
(i) the Vendors shall 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 Boards of Directors of those Vendors
which are corporations authorising the
transfer of the Sale Shares registered in
their names and giving authority to execute
the relevant instrument(s) of transfer on
behalf of the relevant Vendor to the party
who executed them;
(ii) the Vendors shall deliver duly executed
powers of attorney (in deed form) from each
Vendor in favour of the Purchaser (or its
nominee(s)) generally in respect of the
Sale Shares sold by that Vendor under this
Agreement enabling the Purchaser (or its
nominee(s)) to attend and vote at general
meetings of the Company;
(iii) the Vendors shall deliver 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) the Vendors shall deliver the common seal
(if any) of the Company and any of its
subsidiaries, and each register, minute
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book and other book required to be kept by
the Company and any of its subsidiaries
under any Legal Requirement up to the date
of Closing and each certificate of
incorporation of the Company and any of its
subsidiaries (including certificates issued
upon any change of name);
(v) the Company shall (and the Vendors shall
cause the Company) to allot and issue
600,000 fully paid ordinary shares in the
Company to the Purchaser (or its
nominees(s)) (representing, when aggregated
with the Sale Shares, 51% of the total
number of shares on issue immediately
following such issue) and deliver to the
Purchaser (or its nominees(s)) a share
certificate in respect of those shares;
(vi) the Vendors shall deliver to the Purchaser:
(A) employment contracts in the form
of the drafts annexed as Exhibit
H, entered into between the
Company and the senior officers
and employees designated in
Exhibit I;
(B) copies of the Proprietary
Information and Inventions Deed
executed by each of the senior
officers and employees designated
in Exhibit I;
(vii) the Vendors shall execute and deliver to
the Purchaser a certificate (the "Closing
Certificate") setting forth the Vendors'
and the Covenantors' representations and
warranties that (A) each of the
representations and warranties made by the
Vendors and the Covenantors 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 Vendors and the
Covenantors 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
Vendors and the Covenantors are 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;
(viii) subject to the Shareholders Deed, the
Vendors shall procure that each of its
nominees as the Purchaser notifies to the
Vendors resigns from their positions as
directors and officers of the Company and
any subsidiary, in each case formally
resigning their respective office (with
effect from the end of the meetings held
pursuant to Section 1.4) and acknowledging
in a
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form reasonably acceptable to the Purchaser
that the writer has no claim against the
Company or any of its subsidiaries for
compensation for loss of office or
otherwise;
(ix) the Vendors shall procure the revocation of
the relevant bank signing mandates and
authorities and powers of attorney given by
the Company as notified by the Purchaser.
(c) Subject to the Vendors duly complying with the
requirements of Section 1.3(b), at the Closing, the
Purchaser shall pay each Vendor the portion of the
Purchase Price specified beside each such Vendor's
name in Part I of Exhibit D, in each case through
telegraphic transfer to the bank account nominated
by each Vendor in writing not less than four
business days prior to Closing.
(d) At the Closing, the Vendors and the Purchaser shall
execute and deliver to each other counterpart copies
of the Shareholders Deed. The Vendors shall procure
execution and delivery of the Shareholders Deed by
the Company.
1.4 Meetings
On or before Closing, the Vendors 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) approve and authorise the allotment and issue of the
shares referred to in Section 1.3(b)(v) in favour of
the Purchaser (or its nominees(s));
(c) subject to the Shareholders Deed, appoint persons
nominated by the Purchaser as directors, secretary
and auditor of the Company with effect from the end
of the meeting;
(d) the cancellation of the existing share certificates
for the Sale Shares;
(e) the issue of new certificates for the Sale Shares in
favour of the Purchaser (or its nominee(s)); and
(f) the issue of a certificate for the Subscription
Shares in favour of the Purchaser (or its
nominee(s)).
(g) the approval and adoption of the Constitution as a
replacement of the existing constitution of the
Company.
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2. REPRESENTATIONS AND WARRANTIES
In this Section 2, references to the Company shall be treated in all
respects as meaning :
(a) the Company;
(b) Flex IT Pty Ltd ("Flex") at all relevant times prior to the
Reorganisation Transactions being completed in accordance
with their terms; and
(c) Morse Corporation (Australia) Pty Limited ("Morse") at all
relevant times prior to the Reorganisation Transactions being
completed in accordance with their terms.
The Vendors and each of Charles Peter Assaf and Barry Joseph Assaf
jointly and severally and Farmax Electronic Components Pty Ltd and TV
Corporation Pty Ltd severally in the proportions of 5% and 3.75%
respectively, hereby represent and warrant (except where this Section
expressly provides for the representations and warranties to be given
severally in a different manner in which case they are to be given in
that manner) 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 and as
presently proposed to be 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 names "Flex
IT Pty Ltd" and "Morse Corporation (Australia) Pty
Ltd" respectively.
(c) The Company is not required to be qualified,
authorized, registered or licensed to do business in
any jurisdiction other than Australia.
(d) 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.
2.2 Certificate of Incorporation and Constitution Records
(a) There has not been any violation 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
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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.
(b) 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 business practices. All of the
records of the Company are in the actual possession
or direct control of the Company. The Company has in
place an adequate and appropriate system of internal
controls in respect of each of its businesses.
2.3 Capitalization
(a) The issued share capital of the Company, immediately
prior to the Closing, will consist of 4,400,000
fully paid ordinary shares. All issued and
outstanding shares of the Company's issued capital
(a) have been validly issued to the persons listed
on Exhibit D hereto, (b) are fully paid and
non-assessable, 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 Vendors severally warrant that they each have,
and the Purchaser will acquire at the Closing, good
and valid title to the Sale Shares listed beside the
name of each Vendor in Exhibit D free and clear of
any Encumbrances subject only to the payment of any
applicable stamp duty.
(c) 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;
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(d) The Company has never repurchased, redeemed or
otherwise reacquired any shares or other securities.
2.4 No Conflict
Neither the execution and delivery of this Agreement by the
Vendors nor the consummation by the Vendors 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 its business
or any material license agreement, lease or other
material contract, instrument or obligation related
to the Company or its business to which it is a
party or by which it may be bound;
(ii) violate any statute, rule, regulation, order, writ,
injunction, decree or arbitration award applicable
to the Company;
(iii) result in the loss of, or in a violation or breach
of any Governmental Authorisation;
(iv) result in the creation or imposition of, or subject
the Purchaser to any liability for, any conveyance
or transfer tax or any similar tax except for the
payment of any applicable stamp duty; or
(v) 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.
2.5 Proprietary Rights; Proprietary Information and Inventions
Agreement
(a) Neither the Company nor the Vendors have received
any communications alleging that they have violated
or, by conducting their businesses as proposed would
violate, any proprietary rights of any other person,
nor are the Company or the Vendors aware of any
basis for the foregoing.
(b) The Vendors do not believe it is or will be
necessary for the Company to utilize any inventions,
trade secrets or proprietary information of any of
the Company's employees made prior to their
employment by the Company, except for inventions,
trade secrets or proprietary information that have
been assigned to the Company.
(c) The Company owns, licenses or has rights to all of
the (i) patents, patent applications, registrations
and applications for registration thereof; (ii)
trademarks, tradenames, service marks and
registrations
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and applications for registrations thereof; (iii)
copyrights and registrations and applications for
registration thereof; (iv) mask works and
registrations and applications for registration
thereof; (v) computer software, data and
documentation; (vi) trade secrets and confidential
business information, know-how, research and
development information, copyrightable works,
financial, marketing and business data, pricing and
cost information, marketing plans and customer lists
and information; and (vii) other proprietary rights
relating to any of the foregoing owned or used by the
Company (collectively, "Intellectual Property").
(d) 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 businesses or assets of the
Company. To the Knowledge of the Vendors, 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
There is no action, suit or proceeding pending or, to the
Knowledge of the Vendors (but without having made any enquiry
of any Person who is not engaged or employed by the Company),
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.
2.7 Offering Valid
None of the Vendors, nor any agent on their behalf, have
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 so as to bring the offer or
sale of the Sale Shares by the Vendors to the Purchaser (or
its nominee(s)) within the registration provisions of the
United States of America's Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder
(the "Securities Act") or any US state securities laws or the
provisions of Division 2 of Part 7.12 of the Corporations
Law.
2.8 Financial Position
(a) The Vendors have delivered to the Purchaser the
following financial statements and notes
(collectively, the "the Vendors Financial
Statements"):
(i) for each of the Vendors in respect of the
financial year ended 30 June 1998 (the "
1998 Accounts Date"), its unaudited profit
and loss statement for the financial year
ending on the 1998
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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 or balance sheet;
(ii) for each of the Vendors in respect of the
financial year ended 30 June 1999 (the
"1999 Accounts Date"), its unaudited profit
and loss statement for the financial year
ending on the 1999 Accounts Date and its
unaudited balance sheet (the "Unaudited
Balance Sheet") as at the 1999 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 or balance sheet; and
(iii) for the Company, its unaudited proforma
balance sheet as at 30 September 1999
(assuming the Reorganisation Transactions
are effective as at that date), together
with all statements, reports and notes
attached to or intended to be read with
that balance sheet.
(b) All of the Vendors Financial Statements are true,
fair and complete in all material respects, and the
dollar amount of each line item included in the
Vendors Financial Statements is accurate. The
financial statements and notes referred to in
Section 2.8(a)(i) present fairly the financial
position of the Vendors for the period to which they
relate and the results of operations, changes in
shareholders' equity and cash flows of the Vendors
for the year then ended. The financial statements
and notes referred to in Section 2.8(a)(ii) present
fairly the financial position of the Vendors as of
the respective dates thereof and the results of
operations, changes in shareholders' equity and cash
flows of the Vendors for the periods covered
thereby. The Vendors Financial Statements have been
prepared in accordance with GAAP, applied on a
consistent basis throughout the periods covered.
(c) As at the 1999 Accounts Date (i) the Company had no
Liabilities required by GAAP to be provided for in
the Unaudited Balance Sheet or described in the
notes thereto which were not provided for in the
Unaudited Balance Sheet or described in the notes
thereto and (ii) all reserves established by the
Company and set forth in the Unaudited 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 1999 Accounts Date:
(i) the Company has not increased the
compensation of any of its officers, or the
rate of pay of its employees as a group,
except
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as part of regular compensation increases
in the Ordinary Course of its Business;
(ii) neither the number of subscribers for the
services offered by the Company nor the
revenues generated therefrom have
decreased;
(iii) there has been no resignation or
termination of employment of any officer or
key employee of the Company;
(iv) there has been no labor dispute or
industrial disruption involving the Company
or its employees and none is pending or, to
the Knowledge of any Vendor, threatened;
(v) 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;
(vi) 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;
(vii) 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; and
(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 which 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 Vendors'
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 are
useable in the ordinary course of business having
regard to their age and ordinary wear and tear, and
the Company owns, 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 in the Ordinary Course of Business since 30 June 1999:
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16
(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,
recapitalisation, 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$30,000;
(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;
(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;
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17
(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 that (i) are
reflected as current liabilities in the
"liabilities" column of the Unaudited Balance Sheet
or have been incurred by the Company since 30 June
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;
(s) the Company has not changed any of its methods of
accounting or accounting practices in any respect in
respect of its businesses;
(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:
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18
(i) all assets reflected on the Unaudited
Balance Sheet (except for inventory sold by
the Company since 30 June 1999 in the
Ordinary Course of Business);
(ii) all assets acquired by the Company since 30
June 1999 (except for inventory sold by the
Company since 30 June 1999 in the Ordinary
Course of Business);
(iii) all equipment 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.
All such 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; and
(c) 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) 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 Balance Sheet that 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
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19
(ii) subject to appropriate provisioning, there
is no reason to believe that all such
accounts receivable will not be collected
by the Company in the Ordinary Course of
Business.
(b) 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 for the financial year to 30
June 1998,
(ii) more than A$25,000 of the Company's gross
revenues for the financial year to 30 June
1999, or
(iii) more than A$10,000 of the Company's gross
revenues for the first quarter of the 2000
financial year.
Neither the Company nor the Vendors have received
any notice or other communication in writing
indicating that any customer or other Person
identified in Part 2.12 of the Disclosure Schedule
may cease dealing with the Company.
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, having a written
down value exceeding A$5,000. Part 2.13 also
accurately identifies all tangible assets leased to
the Company or used in any of its businesses.
(b) Each asset identified or required to be identified
in Part 2.13 of the Disclosure Schedule:
(i) is 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.
The assets of the Vendors to be transferred to the
Company pursuant to the Reorganisation Transactions
are adequate for the conduct of the Company's
businesses in the manner in which such businesses
are currently being conducted and in the manner in
which such businesses are proposed to be conducted.
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20
2.14 Real Property
The Company does not own any real property or any interest in
real property, except for the leaseholds created under any
real property leases. 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
measures and precautions necessary to protect the
confidentiality and value of each Proprietary Asset
.
(b) Neither the Company nor the Vendors are infringing,
and have not at any time infringed or received any
notice or other 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 Knowledge
of each of the Vendors but without separate inquiry
having been made, 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 constitute all of the
Proprietary Assets necessary to enable the Company
to conduct its businesses in the manner in which its
businesses are currently being conducted and in the
manner in which its businesses are proposed to be
conducted.
2.16 Year 2000
(i) 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, 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 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
-15-
21
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 $10,000 or which otherwise is material to
the business or prospects of the Company
(collectively, the "Material Contracts"), except for
any Excluded Contract.
(b) Each Company Contract is valid and in full force and
effect, and is enforceable by the Company in
accordance with its terms.
(c) (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) neither the Company nor the Vendors have
received any notice or other communication
in writing regarding any actual or alleged
violation or breach of, or default under,
any Company Contract; and
(iv) neither the Company nor the Vendors have
waived any of their rights under any
Company Contract.
(d) To the Knowledge of the Vendors but without any
separate inquiry having been made, each Person
against whom 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.
-16-
22
(e) Neither the Company nor the Vendors has ever
guaranteed or otherwise agreed to cause, insure or
become liable for, and has never pledged any of
their assets to secure, the performance or payment
of any obligation or other Liability of any other
Person.
(f) Neither the Company nor the Vendors has ever 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.
(g) The performance of the Company Contracts will not
result in any violation of or failure to comply with
any Legal Requirement.
(h) The Contracts identified in Part 2.17 of the
Disclosure Schedule and the Excluded Contracts
collectively constitute all of the material
Contracts necessary to enable the Company to conduct
its business in the manner in which its business is
currently being conducted.
2.18 Liabilities; Major Suppliers
The Company has no Liabilities, except for the Company's obligations
under the Company Contracts and under Excluded Contracts, to the extent
that the existence of such obligations is ascertainable solely by
reference to such Contracts.
2.19 Compliance with Legal Requirements
(a) (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 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
-17-
23
obligation on the part of the Company to
undertake, or to bear all or any portion of
the cost of, any cleanup or any remedial,
corrective or response action of any
nature.
2.20 Governmental Authorisations
(a) Part 2.20 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is
held by the Company or is used in its
businesses; and
(ii) each other Governmental Authorization that,
to the Knowledge of the Vendors, is held by
any of the Company's employees and relates
to the Company's business.
The Vendors have delivered to the Purchaser accurate
and complete copies of all of the Governmental
Authorisations necessary for the conduct of the
businesses of the Company including all renewals
thereof and all amendments thereto. Each
Governmental Authorisation is valid and in full
force and effect.
(b) 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 Authorisation;
(c) 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 Authorisation, or (B) result
directly or indirectly in the revocation,
withdrawal, suspension, cancellation, termination or
modification of any Governmental Authorisation;
(d) the Company has never received, and, to the
Knowledge of the Vendors, no employee of the Company
has ever received, any notice or other communication
in writing 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
Authorisation, or (B) any actual, proposed, possible
or potential revocation, withdrawal, suspension,
cancellation, termination or modification of any
Governmental Authorisation; and
(e) all applications required to have been filed for the
renewal of the Governmental Authorisations 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 Authorisations has been duly given
or made on a timely basis with the appropriate
Governmental Body.
-18-
24
(f) The Governmental Authorisations delivered or
disclosed to the Purchaser constitute all of the
Governmental Authorisations necessary (i) to enable
the Company to conduct its businesses in the manner
in which they are 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.
(g) The Company will not 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.
2.21 Governmental Action
No authorisation, 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 Employee and Labor Matters
(a) Exhibit F contains a list of individuals who are
currently performing services for the Company
related to its businesses and are classified as
"consultants" or "independent contractors".
(b) 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.
(c) The Vendors have 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 and
requested by the Purchaser.
(d) To the Knowledge of the Vendors but without making
any separate inquiries:
(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 businesses;
and
-19-
25
(iii) no employee of the Company is a party to or
is bound by any confidentiality agreement,
non-competition 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 businesses or
operations.
(e) the Company is not engaged, and has never been
engaged, in any unfair labour practice of any
nature. There has never been any slowdown, work
stoppage, labour dispute or union organising
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, labour
dispute or union organising 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, labour dispute or union organising
activity or any similar activity or dispute.
(f) 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 three 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.
2.23 Benefit Plans
(a) The Company does not have any accrued liability,
unfunded or contingent obligations in relation to
any Relevant Scheme.
(b) The Company has made all occupational superannuation
contributions required under any award or prescribed
industrial agreement for its employees and has
satisfied all laws.
(c) 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.
2.24 Sale of Products; Performance of Services
(a) Each product or service that has been sold or
performed by the Company to or for any Person:
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26
(i) conformed and complied 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.
All repair services and other services that have
been performed by the Company were performed
properly with the terms and requirements of all
applicable warranties and other Contracts and with
all applicable Legal Requirements.
(b) 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 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) No customer or other Person has ever asserted or
threatened to assert in writing 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 Knowledge of the
Vendors, 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) The Company has an adequate and appropriate quality
control system in respect of its businesses.
2.25 Insurance
(a) Part 2.25 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 or its
businesses:
(i) the name of the insurance carrier that
issued such policy and the policy number of
such policy; and
(ii) a description of any claims pending, and
any claims that have been asserted in the
past, with respect to such policy.
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27
(b) Each of the policies identified in Part 2.25 of the
Disclosure Schedule is valid, enforceable and in
full force and effect, and has been issued by an
insurance carrier that, to the Knowledge of the
Vendors, 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. 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.
(c) There is no pending claim under or based upon any of
the policies and 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) Neither the Company nor the Vendors have received:
(i) any notice or other communication in
writing regarding the actual or possible
cancellation or invalidation of any of the
policies or regarding any actual or
possible adjustment in the amount of the
premiums payable with respect to any of
said policies;
(ii) any notice or other communication in
writing regarding any actual or possible
refusal of coverage under, or any actual or
possible rejection of any claim under, any
of the policies; or
(iii) any indication that the issuer of any of
the policies may be unwilling or unable to
perform any of its obligations thereunder.
2.26 Related Party Transactions
(a) No Related Party has, and no Related Party has at
any time since incorporation of the Vendors or the
Company had, any direct or indirect interest of any
nature in any asset used in or otherwise relating to
the businesses of the Vendors or the Company;
(b) no Related Party is, or has at any time since
incorporation of the Vendors or the Company been,
indebted to the Vendors or the Company;
(c) since the incorporation of the Vendors or the
Company, no Related Party has entered into, or has
had any direct or indirect financial
-22-
28
interest in, any Contract, transaction or business
dealing of any nature involving the Vendors or the
Company;
(d) no Related Party is competing, or has at any time
since incorporation of the Vendors or the Company
competed, directly or indirectly, with the Vendors
or the Company in any market served by the Vendors
or the Company;
(e) no Related Party has any claim or right against the
Vendors or the Company; and
(f) 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 favour of any Related Party against the Vendors
or the Company.
2.27 Certain Payments, Etc.
Neither the Company, nor any officer, employee, agent or
other Person associated with or acting for or on behalf of
the Company, has at any time, directly or indirectly:
(a) 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;
(b) made any pay-off, influence payment, bribe, rebate,
kickback or unlawful payment to any Person;
(c) made any payment (whether or not lawful) to any
Person, or provided (whether lawfully or unlawfully)
any favour or anything of value (whether in the form
of property or services, or in any other form) to
any Person, for the purpose of obtaining or paying
for (i) favourable treatment in securing business,
or (ii) any other special concession; or
(d) agreed, committed, offered or attempted to take any
of the actions described in clauses "(a)" through
"(c)" above.
2.28 Proceedings
(a) There is no pending Proceeding or investigation, and
no Person has threatened to commence any Proceeding:
(i) that involves the Company or relates to its
businesses or that otherwise relates to or
might affect the Company's businesses or
any of the assets owned or used by the
Company (whether or not the Company is
named as a party thereto); or
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29
(ii) that challenges, or that may have the
effect of preventing, delaying, making
illegal or otherwise interfering with, any
of the Transactions.
Within the Knowledge of the Vendors (but without
having made any enquiry of any Person who is not
engaged or employed by the Company), 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 Vendors have delivered to the Purchaser accurate
and complete copies of all pleadings and
correspondence to which the Vendors or the Company
have access that relate to the Proceedings.
(c) There is no Order to which the Vendors or the
Company, or any of the assets owned or used by the
Vendors or the Company is subject that (i) may have
an adverse effect on the Company's businesses,
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 the Vendors 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.
(d) To the Knowledge of the Vendors (but without having
made any enquiry of any Person who is not engaged or
employed by the Company), 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 businesses.
2.29 Brokers
Neither the Company nor any of the Vendors have 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.
2.30 The Vendors
(a) In respect of each of the Vendors who are
incorporated, they severally warrant that they are
corporations duly organised, validly existing and in
good standing under the laws of New South Wales and
have 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. Each of the Vendors
severally warrants that they have the capacity and
financial capability to comply
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30
with and perform all of their covenants and
obligations under each of the Transactional
Agreements to which they are or may become a party.
(b) None of the Vendors:
(i) has 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) is 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
Vendors to comply with or perform any of its
covenants or obligations under any of the
Transactional Agreements. Within the knowledge of
the Vendors 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) Those of the Vendors that are corporations severally
warrant that all corporate action on the part of the
relevant Vendor, its officers, directors and
shareholders necessary for the authorisation 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 will be taken prior
to the Closing. Each Vendor severally warrants that
this Agreement constitutes the legal, valid and
binding obligation of each of the Vendors,
enforceable against each of the Vendors 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.
2.31 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
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representations, warranties or other statements or
information contained therein not misleading.
(b) There is no fact within the Knowledge of any of the
Vendors (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 businesses, condition,
assets, liabilities, operations, financial
performance, net income or prospects (or on any
aspect or portion thereof) or on the ability of the
Vendors 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 and
net income that has been furnished by the Vendors to
the Purchaser or any of its Representatives is
accurate and complete in all material respects.
(d) The Vendors have 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.
2.32 Insolvency Events
(a) Liquidation/winding up/appointment of administrator
or receiver etc.
Neither the Vendors nor the Company have 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 businesses, 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.
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(b) Execution
No execution, distress or similar process has been
levied upon or against all or any part of the
businesses, assets or revenues of the Vendors or the
Company.
(c) Schemes of arrangement
Neither the Vendors nor the Company has:
(i) entered into or resolved to enter into any
scheme of arrangement, composition,
assignment for the benefit of, or other
arrangement with their creditors or any
class of creditors; or
(ii) proposed or had proposed on their behalf a
reorganisation, moratorium, deed of company
arrangement or other administration
involving one or more of their creditors,
or their winding up or dissolution.
(d) Statutory demands
Neither the Vendors nor the Company have 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 Vendors and the Company:
(i) are able to pay their debts as and when
they fall due;
(ii) are not insolvent or presumed to be
insolvent under any law; and
(iii) are not insolvent under administration as
defined in Section 9 of the Corporations
Law or have not taken any action which
could result in that event.
(f) Striking off
Neither the Vendors nor the Company:
(i) have received a notice under sections 601AA
or 601AB of the Corporations Law; and
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(ii) have been struck off the register of
companies or dissolved and there is no
action proposed by the Australian
Securities and Investments Commission to do
so.
2.33 The Company
The Company:
(a) was incorporated on 16 September 1999;
(b) subject to the Reorganisation Transaction, since
incorporation it has not traded and has incurred no
liabilities.
2.34 Reorganisation Transactions
Notwithstanding the Reorganisation Transactions:
(a) the Company owns or has the use of all assets,
property, rights and interest (previously held by
Flex IT Pty Ltd and Morse Corporation (Australia)
Pty Ltd) necessary to carry on the business in the
same manner as it was conducted immediately prior to
the Reorganisation Transactions;
(b) the Reorganisation Transactions have been completed
and consummated in accordance with their terms and
in accordance with all Legal Requirements;
(c) the Company has no claim against any of the parties
to the Reorganisation Transactions in respect of the
Reorganisation Transactions;
(d) neither the execution nor performance of the
Reorganisation Transactions (or any document
contemplated as part of the Reorganisation
Transactions) has or could:
(i) result in the Company losing the benefit of
any Governmental Authorisation or an asset,
licence, grant, right or privilege which
was used in or enjoyed by the business
immediately prior to the Reorganisation
Transactions;
(ii) conflict with or result in a breach or give
rise to an event of default under, or
require the consent of a person under, or
enable a person to terminate or relieve a
person from an obligation under, an
agreement or arrangement relating to the
Company's business.
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2.35 Effect of Sale
(a) Except as disclosed in Part 2.35 of the Disclosure
Schedule, neither the execution nor performance of
this Agreement or a document to be executed at or
before Closing will:
(i) result in the Company losing the benefit of
any Governmental Authorisation or an asset,
licence, grant, subsidy, right or privilege
which it enjoys at the date of this
Agreement and any jurisdiction; or
(ii) conflict with, or result in a breach of, or
give rise to an event of default under, or
require the consent of a person under, or
enable a person to terminate or relieve a
person from an obligation under, an
agreement, arrangement or obligation to
which the Company is a party or a legal or
administrative requirement in any
jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants, to and for the benefit of the
Vendors, 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;
(b) The execution, delivery and performance of this
Agreement by the Purchaser has been duly authorised
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 VENDORS
4.1 Access and Investigation
The Vendors shall jointly and severally, ensure that, at all
times during the Pre-Closing Period:
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(a) the Company and its Representatives provide the
Purchaser and its Representatives with reasonable
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 (at the
Purchaser's expense) and provide the Purchaser and
its Representatives 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 Vendors shall jointly and severally ensure that, except
with the approval of the Purchaser, 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) they do 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;
(c) the Company conducts its operations 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 its reasonable endeavours to
preserve intact its current business organisation,
keep available the services of its current officers
and employees and maintains its relations and
goodwill 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 ;
(f) the Company's officers confer regularly with the
Purchaser concerning operational matters and
otherwise report regularly to the Purchaser
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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
maximise 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) the Company does not amend its constitution, and
does not effect or become a party to any Acquisition
Transaction, recapitalisation, 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
Company during the Pre-Closing Period, 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;
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(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 except
for collection of debts in the Ordinary Course of
Business;
(t) the Company does not enter into any transaction or
take any other action of the type referred to in
Section 2.9 except as set out in Part 2.9 of the
Disclosure Schedule;
(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 Vendors 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 Vendors shall ensure that:
(a) each filing or notice required to be made or given
(pursuant to any applicable Legal Requirement,
Government Authorisation, Order or Contract, or
otherwise) by the Company or the Vendors 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 is made or given as soon as reasonably
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 Vendors 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 is obtained as soon as reasonably
possible after the date of this Agreement and
remains in full force and effect through the Closing
Date;
(c) the Company and the Vendors promptly deliver to the
Purchaser a copy of each filing made, each notice
given and each Consent obtained by them during the
Pre-Closing Period; and
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(d) during the Pre-Closing Period, the Vendors, 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 Payment of Indebtedness by Related Parties
The Vendors shall cause all indebtedness and other
Liabilities of each Related Party to the Company to be
discharged and paid in full prior to the Closing.
4.5 No Negotiation
The Vendors 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.
4.6 Best Efforts
During the Pre-Closing Period, each of the Vendors shall use
its Best Efforts to cause the conditions set forth in Section
5 to be satisfied on a timely basis.
4.7 Confidentiality
Each party shall ensure that, during the Pre-Closing Period,
and at all times after Closing, without the consent of the
other party:
(a) subject to paragraph (d) below, it shall keep
strictly confidential the existence and terms of
this Agreement;
(b) it shall not issue or disseminate any press release
or other publicity or otherwise make 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 that party is required by
law to make any such disclosure regarding the
Transactions; and
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(c) except in the case of urgent interlocutory
applications, if a party is required by law to make
any disclosure regarding the Transactions, that
party shall advise the other party, a reasonable
period before making such disclosure, of the nature
and content of the intended disclosure and take into
account the other party's reasonable requirements
relating to the preservation of confidentiality;
(d) A party may make any disclosures in relation to this
Agreement:
(i) its professional advisers, bankers,
financial advisers and financiers, provided
that those persons agree to keep
information disclosed confidential;
(ii) comply with any applicable law or
requirement of any regulatory body
(including any relevant stock exchange); or
(iii) any of its employees to whom it is
necessary to disclose the information, on
receipt of an undertaking from that
employee to keep the information
confidential.
Notwithstanding anything else contained in this
Section 4.7, a party shall not be in breach of its
obligations if it makes a disclosure of confidential
information which has become available to the public
generally, other than directly or indirectly through
the actions of the party making such disclosure.
5. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
The Purchaser's obligation to purchase the Sale Shares and to
subscribe for the Subscription Shares and to take the other actions
required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Purchaser, in whole or
in part, in accordance with Section 10.11):
5.1 Accuracy of Representations
All of the representations and warranties made by the Vendors
in this Agreement (considered collectively), and each of said
representations and warranties (considered individually),
shall be accurate in all material respects as of the date of
this Agreement, and as of the Scheduled Closing Time as if
made at the Scheduled Closing Time, subject only to the
contents of the Disclosure Schedule.
5.2 Performance of Obligations
The Vendors 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
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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
51% issued share capital of the Company.
5.3 Consents
Each of the Consents shall have been obtained and shall be in
full force and effect.
5.4 No Adverse Change
There shall have been no 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
which would have a Material Adverse Effect.
5.5 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 Vendors or the Covenantors, (ii) evidencing the
compliance by the Vendors or the Covenantors with, or the
performance by the Vendors 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.:
5.6 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.
5.7 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.
5.8 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
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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.
5.9 Resignation of Barry Assaf
Mr. Barry Assaf shall have resigned from his position as an
employee of Telstra and shall have entered into the agreement
referred to in Section 1.3(b)(vi)(A).
5.10 Reorganisation Transactions
The Reorganisation Transactions shall have been entered into
and completed on terms reasonably satisfactory to the
Purchaser.
6. CONDITIONS PRECEDENT TO THE VENDORS' OBLIGATIONS TO CLOSE
The Vendors' obligations to sell the Sale Shares and to take the other
actions required to be taken by each of them at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Vendors, 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 as qualified by
disclosures (if any) under this Agreement.
6.2 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 that prohibits the sale of the Sale
Shares by the Vendors to the Purchaser or the subscription of
the Subscription Shares by the Purchaser.
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 any of the Vendors
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
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of any failure on the part of the Purchaser to
comply with or perform its covenants and obligations
under this Agreement);
(b) by the Vendors if (i) there is a material Breach of
any covenant or obligation of the Purchaser, or (ii)
the Vendors reasonably determine 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 any of the
Vendors to comply with or perform any covenant or
obligation set forth in this Agreement);
(c) by the Purchaser at or after the Scheduled Closing
Time if any condition set forth in Section 5 has not
been satisfied by the Scheduled Closing Time;
(d) by the Vendors at or after the Scheduled Closing
Time if any condition set forth in Section 6 has not
been satisfied by the Scheduled Closing Time;
(e) by the Purchaser if the Closing has not taken place
on or before 8 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);
(f) by the Vendors if the Closing has not taken place on
or before 8 October, 1999 (other than as a result of
the failure on the part of the Vendors to comply
with or perform any covenant or obligation set forth
in this Agreement); or
(g) by the mutual consent of the Purchaser and the
Vendors.
The Purchaser will consider in good faith any bona fide and
reasonable request by the Vendors for an extension of the
date referred to in Section 7.1(e) if the request relates
solely to an inability to satisfy the Closing Condition
referred to in Section 5.10 and the Vendors have used their
Best Efforts to satisfy the Condition prior to 8 October
1999.
7.2 Termination Procedures
If the Purchaser wishes to terminate this Agreement pursuant
to Section 7.1(a), Section 7.1(c), or Section 7.1(e), 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 Vendors wish
to terminate this Agreement pursuant to Section 7.1(b),
Section 7.1(d) or Section 7.1(f), the Vendors shall deliver
to the Purchaser a written notice stating that the Vendors
are terminating this Agreement and setting forth a brief
description of the basis on which the Vendors are 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 parties shall, in all events, remain bound by
and continue to be subject to Section 4.7.
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 Sale Shares
to the Purchaser and the subscription by
the Purchaser of the Subscription Shares;
(iii) any Acquisition Transaction effected by or
otherwise involving the Purchaser, the
Vendors or the Company.
All of said representations, warranties, covenants
and obligations shall remain in full force and
effect and shall survive in accordance with this
clause.
(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
Disclosure Schedule shall be deemed to be a
representation and warranty made by the Vendors in
this Agreement.
8.2 Indemnification by the Vendors
(a) The Vendors 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 suffered or incurred by
any of the Indemnitees or to which any of the
Indemnitees
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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 connected with:
(i) any Breach of any representation or
warranty made by the Vendors in this
Agreement (giving full 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 or in
any other document delivered or otherwise
made available to the Purchaser or any of
its Representatives by or on behalf of the
Vendors or any of its Representatives;
(iii) any Breach of any covenant or obligation of
the Vendors;
(iv) any Liability to which the Company or any
of the other Indemnitees may become subject
and that arises directly from or relates
directly 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; or
(v) any Proceeding relating to any Breach,
alleged Breach, Liability or matter of the
type referred to in clause "(i)", "(ii)",
"(iii)" or "(iv)", above (including any
Proceeding commenced by any Indemnitee for
the purpose of enforcing any of its rights
under this Section 8).
8.3 No Contribution
Each of the Vendors 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 any of the Vendors may become subject under any of the
Transactional Agreements or otherwise in connection with any
of the Transactions.
8.4 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 on 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
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percentage points above the rate of interest publicly
announced by Bank of America, N.T. & S.A. from time to time
as its prime, base or reference rate.
8.5 Set-off
In addition to any rights of set-off 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.
8.6 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).
8.7 Defence of Third Party Claims
In the event of the assertion or commencement by any Person
of any claim or Proceeding (whether against the Company,
against any other Indemnitee or against any other Person)
with respect to which the Vendors may become obligated to
indemnify, hold harmless, compensate or reimburse any
Indemnitee pursuant to this Section 8, the Vendors shall have
the right, in the first instance to assume the defence of
such claim or Proceeding at the sole expense of the Vendors.
If the Vendors so elect to assume the defence of any such
claim or Proceeding:
(a) the Vendors shall proceed to defend such claim or
Proceeding in a diligent manner with counsel
reasonably satisfactory to the Purchaser;
(b) the Purchaser shall make available to the Vendors
any non-privileged documents and materials in the
possession of the Purchaser that may be necessary to
the defence of such claim or Proceeding;
(c) the Vendors shall keep the Purchaser informed of all
material developments and events relating to such
claim or Proceeding;
(d) the Purchaser shall have the right to participate in
the defence of such claim or Proceeding;
(e) the Vendors shall not settle, adjust or compromise
such claim or Proceeding without the prior written
consent of the Purchaser provided,
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however, that the Purchaser shall not unreasonably
withhold such consent; and
(f) the Purchaser may at any time (notwithstanding the
prior designation of the Vendors to assume the
defence of such claim or Proceeding) assume the
defence of such claim or Proceedings after giving
the Vendors written notice of the Purchaser's
reasonable dissatisfaction of the manner of the
defence being conducted, and the Vendors failing to
rectify such matters within 30 days of receiving
such notice.
If the Vendors do not elect to assume the defence of any such
claim or Proceeding (or if, after initially assuming such
defence, the Purchaser elects to assume such defence in
accordance with Section 8.7(f)), the Purchaser may proceed
with the defence of such claim or Proceeding on its own. If
the Purchaser so proceeds with the defence of any such claim
or Proceeding on its own:
(i) all reasonable expenses relating to the defence of
such claim or Proceeding incurred by the Purchaser
shall be borne and paid exclusively by the Vendors;
(ii) the Vendors shall make available to the Purchaser
any documents and materials in the possession or
control of any of the Vendors that may be necessary
to the defence of such claim or Proceeding;
(iii) the Purchaser shall keep the Vendors informed of all
material developments and events relating to such
claim or Proceeding; and
(iv) the Purchaser shall have the right to settle, adjust
or compromise such claim or Proceeding with the
consent of the Vendors; provided, however, that the
Vendors shall not unreasonably withhold such
consent.
8.8 Expiration of the Representations and Covenants
The Vendors shall not be liable to the Indemnitees in
connection with any representation, warranty, obligation or
covenant under this Agreement unless:
(a) the Indemnitees have given notice as soon as
reasonably practicable, after becoming aware, of any
fact or circumstance which gives or may reasonably
be expected to give rise to Damages by the
Indemnitees, to the Vendors of such fact or
circumstance and have allowed the Vendors at least a
14 day period from the giving of such notice at the
Vendors' expense to investigate the same even though
such fact or circumstance may not at the date of
such notification give rise to any Damages on the
part of the Indemnitees;
(b) the Indemnitees have given written notice to the
Vendors setting out
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details of the matter in respect of which
indemnification is sought on or before 31 March
2001; and
(c) within three months after the giving of written
notice under Section 8.8 (b), the Indemnitees'
Damages have been admitted by the Vendors or settled
between the Vendors and the Indemnitees or the
Indemnitees have instituted and served legal
proceedings on the Vendors.
8.9 Extent of the Warranties
(a) No Damages can be made, brought or raised by the
Indemnitees against the Vendors in respect of the
Warranties or any covenant under this Agreement
unless the aggregate of those Damages exceeds
$30,000 whereupon the Vendors are liable for the
entirety of those Damages and not just the excess
over $30,000. The maximum aggregate liability of the
Vendors for any breach of this Agreement or under
the representations, warranties, covenants and
obligations is limited to A$8,946,000.
(b) If the Vendors are liable for Damages in respect of
any breach of the Warranties, the Vendors may, by
notice in writing to the Indemnitees, require the
Purchaser to accept a transfer of some or all of the
shares that they hold in the Company, or, if they
have chosen to exchange their shares in the Company
for Class C Non-Voting Common Shares in Asia Online,
Ltd., some or all of those shares (in each case,
with full title and free of Encumbrance) in or
towards payment of any Damages which may be due in
respect of such breach, provided that the Purchaser
may continue to claim monetary Damages over and
above the Value of the Shares so transferred (less
any reasonable costs, expenses and any stamp duty
incurred by the Purchaser in respect of such a
transfer), subject to the maximum cap on damages in
Section 8.9(a). For the purpose of this Section
8.9(b), the "Value" of any such shares shall be
their fair market value determined as agreed between
the Vendors and the Purchaser within 15 days of the
Purchaser receiving the Vendors notice and, failing
agreement, as determined by the Company's auditor
acting as an expert and not as an arbitrator. In
determining the fair market value of any shares to
be transferred under this Section 8.9(b):
(i) the auditor shall take account of any
diminution in the value of the shares as a
result of the breach which gives rise to
the relevant claim for Damages;
(ii) the auditor's determination shall be
binding in the absence of manifest error;
and
(iii) the auditor's fees are to be shared and
paid equally by the Purchaser and the
Vendors.
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8.10 Limitations on the Vendors Liability
(a) The Vendors are not liable for any loss in respect
of any breach of the representations, warranties,
covenants and obligations to the extent that it has
been caused by an act or omission after Closing, but
are only liable to the extent that it has been
caused by an act or omission before Closing.
(b) The Vendors will not be liable to the Indemnitees
for any Damages under a representation, warranty,
obligation or covenant under this Agreement:
(i) where the Damages are due to any change of
law or any imposition or increase of any
Tax after Closing Date; or
(ii) [where the Damages are as a result of or in
respect of a judicial interpretation of the
law in any jurisdiction after the date of
this Agreement unless such interpretation
avoids this Agreement or any transaction
contemplated hereby, in which event and
without prejudice to any other remedy
available to the Indemnitees, the Vendors
shall refund the moneys received under this
Agreement or the moneys otherwise paid by
the Indemnitees as required by the Vendors
for this transaction, or the part thereof
applicable to the transaction affected, and
the Indemnitees shall restore the Shares;
or]
(c) The Vendors will not be liable to the Indemnitees for
any Damages under any representation or warranty under
this Agreement to the extent that any matter or
transaction has been fully and fairly disclosed in the
Disclosure Schedule. For the avoidance of doubt, the
Purchaser waives its rights to make any claim in
respect of any representation or warranty to the
extent that such representation or warranty has been
the subject of a full and fair disclosure in the
Disclosure Schedule.
9. RESTRICTION OF THE VENDORS
9.1 Restraints
Each of the Vendors and the Covenantors undertakes with the
Purchaser (for itself and as trustee for the Company) that,
except with the consent in writing of the Purchaser:
(a) until the later of two years after Closing or, if
applicable, two years after a Covenantor ceases to
be employed or otherwise engaged by the Company, 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,
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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) until the later of two years after Completion or, if
applicable, two years after a Covenantor ceases to
be employed or otherwise engaged by the Company, 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, representative, agent, or
correspondent of the Company or in the habit of
dealing with the Company or enter into any contract
for sale and purchase or accept business from any
such person, firm, company or organisation in a
business area in which the Company competes;
(c) until the later of two years after Completion or, if
applicable, two years after a Covenantor ceases to
be employed or otherwise engaged by the Company, 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;
(e) if, in connection with the business or affairs of
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 Company 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 "FLEXIT" 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 or
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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 or Covenantor is connected.
9.2 Obligation to Procure
The Vendors and the Covenantors shall procure that each of
their subsidiaries, holding companies and any other
affiliated companies will observe the restrictions contained
in the foregoing provisions of this Section and that their
respective employees will observe the restrictions contained
in this Section.
9.3 Severance
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 Restraints Fair and Reasonable
The Vendors and the Covenantors acknowledge that:
(a) the covenants given in Section 9.1 are material to
the Purchaser's decision to enter into this
Agreement; and
(b) the restraints contained in Section 9.1 are:
(i) fair and reasonable regarding the subject
matter, area and duration; and
(ii) reasonably required by the Purchaser to
protect the business, financial and
proprietary interests of the Company.
9.5 Exceptions
The provisions of this clause 9 shall not prevent the Vendors
or the Covenantors, after the first anniversary of them
ceasing to be engaged or employed by the Company, being
engaged as a bona fide employee or a bona fide independent
consultant in any business that does not directly compete
with the business of the Company (or its successors and
assigns) .
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10. 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 or this Agreement 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
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 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
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If to the Vendors : 97 Wattle Street
Punchbowl NSW 2196
Attention : Mr Charles Assaf
Facsimile : 9796 2728
If to the Covenantors : 97 Wattle Street
Punchbowl NSW 2196
Attention : Mr Charles Assaf
Facsimile : 9796 2728
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.
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.
(b) Each party irrevocably and unconditionally submits
to the non-exclusive jurisdiction of the courts of
New South Wales.
(c) The Vendors agree 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
Vendors 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
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legal proceeding or otherwise proceed against the
Vendors in any other forum or jurisdiction.
(e) Each of the Vendors irrevocably waives the right to
a jury trial in connection with any legal proceeding
relating to this Agreement or the enforcement of any
provision of this Agreement.
10.9 Successors and Assigns
This Agreement shall be binding upon: the Vendors and the
Purchaser and their respective successors and assigns (if
any). This Agreement shall inure to the benefit of the
Purchaser; 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 body corporate within the Asia Online Ltd group of
companies or to any other Person if the written consent or
approval of the Vendors is obtained with respect to the
relevant Person, such consent or approval not to be
unreasonably withheld.
10.10 Remedies Cumulative; Specific Performance
The rights and remedies of the parties hereto shall be
cumulative (and not alternative). The Vendors agree that:
(a) in the event of any Breach or threatened Breach by
any one or more of the Vendors 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.
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(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.
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
Vendors.
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.
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(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".
(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.
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/ JOHN G. STARK /s/ KEVIN H. RANDOLPH
- ---------------------------------------- ----------------------------------------
Signature of witness Signature of authorised representative
John G. Stark Kevin H. Randolph
- ---------------------------------------- ----------------------------------------
Name of witness (please print) Name of authorised representative
(please print)
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SIGNED for and on behalf of )
FLEX IT PTY LTD (ACN 071 079 199) )
by its duly authorised representatives: )
)
/s/ BARRY ASSAF /s/ CHARLES ASSAF
- ---------------------------------------- ----------------------------------------
Signature of secretary/director Signature of director
Barry Assaf Charles Assaf
- ---------------------------------------- ----------------------------------------
Name of secretary/director (please print) Name of director
(please print)
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SIGNED for and on behalf of )
MORSE CORPORATION (AUSTRALIA) PTY )
LTD (ACN 055 262 167) )
by its duly authorised representatives: )
)
/s/ CHARLES ASSAF /s/ BARRY ASSAF
- ---------------------------------------- ----------------------------------------
Signature of secretary/director Signature of director
Charles Assaf Barry Assaf
- ---------------------------------------- ----------------------------------------
Name of secretary/director (please print) Name of director
(please print)
SIGNED for and on behalf of )
FLEX INFORMATION TECHNOLOGY PTY )
LTD (ACN 089 587 753) )
by its duly authorised representatives: )
)
/s/ CHARLES ASSAF /s/ BARRY ASSAF
- ---------------------------------------- ----------------------------------------
Signature of secretary/director Signature of director
Charles Assaf Barry Assaf
- ---------------------------------------- ----------------------------------------
Name of secretary/director (please print) Name of director
(please print)
SIGNED by CHARLES PETER ASSAF )
In the presence of: )
/s/ JOSHUA THEUNISSEN /s/ CHARLES ASSAF
- ---------------------------------------- ----------------------------------------
Signature of witness Signature of Charles Peter Assaf
Joshua Theunissen CHARLES PETER ASSAF
- ---------------------------------------- ----------------------------------------
Name of witness (please print)
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SIGNED by BARRY JOSEPH ASSAF )
In the presence of: )
/s/ JOSHUA THEUNISSEN /s/ BARRY JOSEPH ASSAF
- ---------------------------------------- ----------------------------------------
Signature of witness Signature of Barry Joseph Assaf
Joshua Theunissen Barry Joseph Assaf
- ---------------------------------------- ----------------------------------------
Name of witness (please print)
SIGNED for and on behalf of )
FARMAX ELECTRONIC COMPONENTS PTY )
LTD (ACN 064 152 003) )
by its duly authorised representative )
in the presence of: )
/s/ JOSHUA THEUNISSEN /s/ Vincent Chow
- ---------------------------------------- ----------------------------------------
Signature of witness Signature of authorised representative
Joshua Theunissen Vincent Chow
- ---------------------------------------- ----------------------------------------
Name of witness (please print) Name of authorised representative
(please print)
SIGNED for and on behalf of )
TV CORPORATION PTY LTD )
(ACN 081 834 451) )
by its duly authorised representative )
in the presence of: )
/s/ JOSHUA THEUNISSEN /s/ TIM VOUTIANITIS
- ---------------------------------------- ----------------------------------------
Signature of witness Signature of authorised representative
Joshua Theunissen Tim Voutianitis
- ---------------------------------------- ----------------------------------------
Name of witness (please print) Name of authorised representative
(please print)
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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, reorganisation
or similar transaction involving the
Company.
AGREEMENT "Agreement" shall mean the Share Sale and
Subscription 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, but
without incurring any additional liability to pay
any amount of money.
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
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refer to any such inaccuracy, breach, failure, claim
or circumstance.
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)(vii) 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 PLAN "Company Plan" shall mean any Current Benefit Plan
or Past Benefit Plan.
COMPARABLE ENTITIES "Comparable Entities" shall mean Entities
(other than the Company) that are engaged in
businesses substantially similar to the Company's
business.
CONSENT "Consent" shall mean any approval, consent,
ratification, permission, waiver or authorisation
(including any Governmental Authorisation).
CONSTITUTION "Constitution" means the constitution in the form
attached at Exhibit K.
CONTRACT "Contract" shall mean any written, oral, implied or
other agreement, contract, understanding,
arrangement, instrument, note, guaranty, indemnity,
deed, assignment, power of attorney, certificate,
purchase order, work order, insurance policy,
benefit plan, commitment, covenant or undertaking of
any nature.
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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, 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, but
excludes consequential loss (including loss of
profits, loss of reputation or loss of opportunity).
DISCLOSURE SCHEDULE "Disclosure Schedule" shall mean the
schedule (dated as of the date of the Agreement)
delivered to the Purchaser on behalf of the Vendors,
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, Order, proxy, option,
right of first refusal, pre-emptive 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).
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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, organisation 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;
if applicable 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
AUTHORISATION "Governmental Authorisation" shall mean any:
(a) permit, license, certificate, franchise,
concession, approval, consent,
ratification, permission, clearance,
confirmation, endorsement, waiver,
certification, designation, rating,
registration, qualification or
authorisation 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
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(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, organisation, unit, body or
Entity and any court or other tribunal); 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.
INDEMNITEES "Indemnitees" shall mean the Purchaser
KNOWLEDGE An individual shall be deemed to have "Knowledge" of
a particular fact or other matter if:
(a) such individual is actually aware of such
fact or other matter; or
(b) a reasonably prudent individual could be
expected to discover or otherwise become
aware of such fact or other matter in the
course of conducting a reasonably diligent
investigation concerning the truth or
existence of such fact or other matter.
The Vendors shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or
employee of the Vendors has Knowledge of such fact or
other matter.
LEGAL REQUIREMENT "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute,
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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
GAAP 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$50,000 (or equivalent in any
other currency) individually or when
aggregated with other Purchaser Damages
incurred due to a breach of a
representation or warranty by the Vendors
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
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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 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
authorised 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 authorisation
of any nature; and
(d) such action is similar in nature
and magnitude to actions
customarily taken, without any
separate or special authorisation,
in the ordinary course of the
normal day-to-day operations of
other 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.
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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 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 as
Exhibit C.
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 Vendors;
(b) each individual who is an officer
of the Vendors;
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(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;
REORGANISATION TRANSACTIONS "Reorganisation Transactions" means the
disposal by the Vendors of their respective
businesses and assets to the Company
pursuant to the Agreement for Sale of Assets
between the Vendors and the Company executed
and completed on or about the date hereof.
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.
SHAREHOLDERS DEED "Shareholders Deed" means the shareholders
deed in the form attached in Exhibit J.
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 or goods and services tax,
surtax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use
tax, land or property tax, business tax,
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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 Shareholders Deed;
(c) the Proprietary Information and
Inventions Deed;
(d) the Employment Agreements referred
to in Section 1.3(b)(vi)(A) of the
Agreement;
(e) 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:
(i) the sale of the Sale Shares by the
Vendors to the Purchaser in
accordance with the Agreement; and
(ii) the performance by the Vendors and
the Purchaser of their respective
obligations under the
Transactional Agreements and the
exercise
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by the Vendors and the Purchaser of
their respective rights under the
Transactional Agreements.
VENDORS FINANCIAL STATEMENTS "Vendors Financial Statements" shall have
the meaning specified in Section 2.8(a) of
the Agreement.
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EXHIBIT D
LIST OF SHAREHOLDERS AND COVENANTORS
PART I
SHAREHOLDER PROPORTION % SHARES
- ----------------------- ----------------------- -----------------------
Flex IT Pty Ltd 50 975,000
97 Wattle St
Punchbowl NSW 2196
Morse Corporation 50 975,000
(Australia) Pty Limited
97 Wattle Street
Punchbowl NSW 2196
PART II
Charles Assaf
97 Wattle Street
Punchbowl NSW 2196
Barry Assaf
97 Wattle Street
Punchbowl NSW 2196
Farmax Electronic Components Pty Ltd
(ACN 064 152 003)
17/28 Vore Street
Silverwater NSW 2141
TV Corporation Pty Ltd
(ACN 081 834 451)
18 Mellor Street
West Ryde NSW 2114
PART III
600,000 fully paid ordinary shares in the capital of the Company representing,
when aggregated with the Sale Shares, 51% of the total outstanding voting
equity of the Company on a fully diluted basis immediately following the issue
of such shares.
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