EXHIBIT 10(x)
SHARE SALE AGREEMENT BETWEEN
CATUITY INC. AND THE SHAREHOLDERS OF LOYALTY MAGIC PTY. LTD.
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TABLE OF CONTENTS
Page no.
1 DEFINITIONS AND INTERPRETATION ......................................... 6
1.1 Definitions ..................................................... 6
1.2 Words and expressions ........................................... 14
1.3 Other rules of interpretation ................................... 14
2 CONDITIONS ............................................................. 15
2.1 Conditions ...................................................... 15
2.2 Reasonable endeavours ........................................... 17
2.3 Waiver of conditions ............................................ 17
2.4 Non-satisfaction ................................................ 17
2.5 Notice of satisfaction .......................................... 17
3 SALE AND PURCHASE OF SHARES ............................................ 17
3.1 Sale and purchase ............................................... 17
3.2 Free from Encumbrances .......................................... 17
3.3 Title and property .............................................. 17
3.4 Waiver .......................................................... 18
3.5 Employee Options ................................................ 18
4 PURCHASE CONSIDERATION ................................................. 18
4.1 Purchase Consideration .......................................... 18
4.2 Apportionment of Purchase Consideration ......................... 18
5 PROVISION OF THE PURCHASE CONSIDERATION ................................ 19
5.1 Satisfaction of Purchase Consideration .......................... 19
5.2 Adjustment of Consideration Securities .......................... 19
5.3 Hold Back Amounts ............................................... 21
5.4 Hold Back Securities ............................................ 21
5.5 Release of Hold Back Securities and payment of Hold Back
Amounts ......................................................... 22
5.6 Downside Protection ............................................. 22
5.7 Public Announcement ............................................. 24
5.8 No limitation ................................................... 24
6 COMPLETION ............................................................. 24
6.1 Time and place of Completion .................................... 24
6.2 Items to be delivered by the Vendors and Optionholders at
Completion ...................................................... 24
6.3 Board meeting of the Company .................................... 25
6.4 Obligations of the Purchaser .................................... 25
6.5 Simultaneous Completion ......................................... 26
6.6 Interdependence ................................................. 26
6.7 Listing of Consideration Securities ............................. 26
6.8 Agreement Not To Trade Consideration Securities ................. 26
7 CONDUCT OF BUSINESS PENDING COMPLETION ................................. 26
7.1 Conduct of Business ............................................. 26
7.2 Undertakings .................................................... 27
8 COMPLETION ADJUSTMENT .................................................. 28
8.1 Adjustment Amount ............................................... 28
8.2 Calculation of Cash and Cash Equivalents ........................ 28
8.3 Supporting Documents ............................................ 28
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8.4 Definitions ..................................................... 28
8.5 Proportional Mix ................................................ 29
9 PURCHASER'S WARRANTIES, REPRESENTATIONS AND INDEMNITY .................. 29
9.1 Representations and warranties .................................. 29
9.2 Indemnity ....................................................... 30
10 MAJOR VENDORS' WARRANTIES, REPRESENTATIONS AND INDEMNITIES ............. 30
10.1 Major Vendor Qualifications ..................................... 30
10.2 Major Vendor Warranties ......................................... 30
10.3 Independent warranties .......................................... 30
10.4 Disclosures ..................................................... 31
10.5 Meaning of "fairly and accurately disclosed" .................... 31
10.6 Knowledge and belief ............................................ 31
10.7 Reliance ........................................................ 31
10.8 Indemnity ....................................................... 31
11 LIMITATIONS OF LIABILITY ............................................... 32
11.1 Notice of Claims ................................................ 32
11.2 Major Vendors not liable ........................................ 32
11.3 Time limit on Claim ............................................. 32
11.4 Limits on the amount of Claim ................................... 33
11.5 Satisfaction of a Claim ......................................... 33
11.6 Disputes regarding Warranty Claims .............................. 33
12 ADJUSTMENT FOR TAX LIABILITY ........................................... 35
12.1 Tax Claims ...................................................... 35
12.2 Reduction in Purchase Consideration ............................. 35
12.3 Obligations excluded ............................................ 35
12.4 Payments ........................................................ 35
12.5 Payment of interest ............................................. 36
12.6 Assessable income ............................................... 36
12.7 Written notice of Tax Claim ..................................... 36
12.8 Refund by Purchaser ............................................. 36
12.9 Dispute resolution .............................................. 36
12.10 Time ............................................................ 37
12.11 Limitations ..................................................... 37
13 ACCESS TO RECORDS AFTER COMPLETION ..................................... 37
13.1 Vendors' access to Records ...................................... 37
13.2 Purchaser's access to records ................................... 37
14 PROTECTIVE COVENANTS ................................................... 38
14.1 Restriction ..................................................... 38
14.2 Restricted Activities ........................................... 38
14.3 Restriction Area ................................................ 38
14.4 Restriction Period .............................................. 38
14.5 Effective Restriction Area and Restriction Period ............... 38
14.6 Severability .................................................... 39
14.7 Injunction ...................................................... 39
14.8 Survival ........................................................ 39
14.9 Exceptions ...................................................... 39
15 CONFIDENTIALITY ........................................................ 40
15.1 Confidentiality ................................................. 40
15.2 Legal requirements .............................................. 40
15.3 Permitted disclosure to officers and professional advisers ...... 40
15.4 Damages inadequate .............................................. 41
15.5 After termination ............................................... 41
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15.6 Confidentiality survives termination ............................ 41
16 PUBLICITY .............................................................. 41
16.1 No public announcements ......................................... 41
16.2 Joint statement ................................................. 41
17 COSTS AND STAMP DUTY ................................................... 41
17.1 Costs ........................................................... 41
17.2 Stamp duty ...................................................... 41
18 GST .................................................................... 42
18.1 Definitions ..................................................... 42
18.2 GST on claims ................................................... 42
19 SURVIVAL OF REPRESENTATIONS AND INDEMNITIES ............................ 42
19.1 Representations and warranties .................................. 42
19.2 Indemnities ..................................................... 42
20 OBSERVER AND INFORMATION RIGHTS ........................................ 42
21 NOTICES ................................................................ 43
21.1 Method .......................................................... 43
21.2 Receipt ......................................................... 43
21.3 Notice to/from Vendors .......................................... 43
21.4 Address of parties .............................................. 43
22 SUPERVENING LEGISLATION ................................................ 44
23 GENERAL ................................................................ 44
23.1 Entire Agreement ................................................ 44
23.2 Paramountcy of agreement ........................................ 44
23.3 No merger ....................................................... 44
23.4 Attorneys ....................................................... 44
23.5 Amendment ....................................................... 44
23.6 Assignment ...................................................... 44
23.7 Severability .................................................... 44
23.8 Waiver .......................................................... 44
23.9 Rights, remedies additional ..................................... 45
23.10 Further assurances .............................................. 45
23.11 Governing law ................................................... 45
23.12 Jurisdiction .................................................... 45
SCHEDULE 3 - WARRANTIES ................................................ 46
1 Vendor's Qualifications ......................................... 46
2 Corporate standing and authority ................................ 46
3 Financial Position .............................................. 47
4 Financial Warranties ............................................ 47
5 Business ........................................................ 47
6 Records ......................................................... 48
7 Litigation ...................................................... 48
8 Insurance ....................................................... 48
9 Intellectual Property ........................................... 48
10 Software ........................................................ 49
11 Plant and Equipment ............................................. 49
12 Business Premises and Property Leases ........................... 50
13 Environment ..................................................... 51
14 Material Contracts .............................................. 51
15 Suppliers and customers ......................................... 52
16 Litigation ...................................................... 52
17 Employees ....................................................... 52
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18 Superannuation 52
19 Information 53
20 Tax and Duty 53
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THIS AGREEMENT is made on March 2005
PARTIES
Each party set out in schedule 1
and
CATUITY INC
of Xxxxx 0, Xxxxxxxx Xxxxx
00-00 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx, XXX 0000
(" PURCHASER")
BACKGROUND
A The Shares comprise all of the issued share capital in the Company.
B The Vendors are the registered holders of all of the Shares. Each of the
Vendors hold the number of Shares as set out in schedule 1 opposite their
respective names in their capacity as described in Schedule 1.
C The Vendors have agreed to sell the Shares and the Purchaser has agreed to
buy the Shares on the terms and conditions of this agreement.
AGREED TERMS
1 DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, unless the context requires otherwise:
"1936 ACT " means the Income Tax Assessment Xxx 0000 (Cth).
"1997 ACT " means the Income Tax Assessment Xxx 0000 (Cth).
" 2005 BUSINESS PLAN" means the budget and business plan of the Company
for the 2004/2005 fiscal year.
"A&B OBSERVER" means any observer appointed by A&B Venture Fund Company
Pty Ltd under clause 20.
"ACCOUNTING STANDARDS" means:
(a) the accounting standards from time to time approved under the law of
the Australia;
(b) the requirements of the law of Australia in relation to the
preparation and content of the accounts; and
(c) if and to the extent that any matter is not covered by the
accounting standards means other relevant accounting standards and
generally accepted accounting principles
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applied from time to time in Australia for a company similar to the
relevant Group Entity, except those principles and practices which
are inconsistent with the standards or requirements referred to in
paragraph (a) or (b).
"ASIC" means the Australian Securities and Investment Commission.
"ASSETS" means, in respect of each Group Entity, all of the assets used to
conduct the Business.
"ASSOCIATE" has the meaning given to that term by section 9 of the
Corporations Act.
"ASX" means Australian Stock Exchange Limited.
"BUSINESS" means the business of providing loyalty and relationship
marketing solutions conducted by the Group.
"CAPITAL RAISING" means the creation, issue and allotment by the Purchaser
of additional securities to raise funds of at least $5.6 million.
"CLAIM" includes any allegation, debt, cause of action, Liability, claim,
proceeding, suit or demand of any nature howsoever arising and whether
present or future, fixed or unascertained, actual or contingent, whether
at law, in equity, under statute or otherwise.
"CLAIM AMOUNT" means the amount a person is required to pay in Tax to a
Tax Authority as a result of any Tax Claim.
"COMPANY" means Loyalty Magic Pty Ltd (ACN 075 350 239).
"COMPLETION" means completion of the sale and purchase of the Shares in
accordance with clause 6 and "COMPLETE" has a corresponding meaning.
"COMPLETION DATE" means the date that is 2 Business Days' after the date
on which the last of the Conditions is satisfied or waived or such later
date as the Purchaser and the Majority Vendors agree.
"COMPLETION PAYMENT" means the amount to be paid by the Purchaser to each
Vendor and to each Optionholder on Completion as listed opposite the name
of each Vendor or Optionholder as the case may be in the second column in
part 1 of Schedule 1 (as those amounts may be adjusted in accordance with
Condition 7 of clause 2.1 and clause 8 of this agreement).
"COMPLETION SECURITIES" means the number of fully paid ordinary shares in
the Purchaser to be issued by the Purchaser in partial satisfaction of the
Purchase Consideration as set out in the fourth column in part 1 of
Schedule 1 (as that number of fully paid ordinary shares may be adjusted
in accordance with Condition 7 of clause 2.1, clause 5 and/ or clause 8 of
this agreement.
"CONDITIONS" has the meaning given to that term in clause 2.1.
"CONFIDENTIALITY AGREEMENTS" means the confidentiality agreements between
each Employee and the Purchaser.
"CONFIDENTIAL INFORMATION" means all trade secrets, concepts, ideas,
know-how, processes, technology, techniques, research, data, plans,
materials, financial, marketing and technical information, product
development and other information, regardless of its form, relating to a
Group Entity or its affairs or the Business which is proprietary or
confidential in nature or which is treated by a Group Entity as
confidential except information that is in the public domain, otherwise
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than through a breach of confidentiality by the Group Entity or any person
to whom the Group Entity disclosed the information.
"CONSIDERATION SECURITIES" means the number of fully paid ordinary shares
in the Purchaser to be issued by the Purchaser in partial satisfaction of
the Purchase Consideration as set out in part 1 of Schedule 1, being the
aggregate of the Completion Securities and the aggregate of the Hold Back
Securities.
"CONSOLIDATED GROUP" has the same meaning ascribed to that term in section
995-1 of the 1997 Act.
"CONTROL" means the possession directly or indirectly of the power,
whether or not having statutory, legal or equitable force, and whether or
not based on statutory, legal or equitable rights, directly or indirectly
to control the membership of the controlling body of the relevant entity
or to otherwise directly or indirectly direct or influence the direction
of the management and policies of the relevant entity whether by means of
trust, agreements, arrangements, understandings, practices, the ownership
of Securities of the relevant entity or otherwise.
"CONTRACT" means every binding agreement and arrangement entered into by a
Group Entity.
"CORPORATIONS ACT" means the Corporations Xxx 0000 (Cth).
"DEPOSITHOLDER" means Computershare Investor Services Pty Ltd or such
other reputable share registrar or a reputable investment bank nominated
by the Purchaser.
"EMPLOYEES" means each of the existing employees of the Company as set out
in Schedule 5.
"EMPLOYMENT CONTRACTS" means the current employment contracts between the
Employees and the Company.
"ENCUMBRANCE" means an interest or power:
(a) reserved in or over any interest in any asset including, without
limitation, any retention of title; or
(b) created or otherwise arising in or over any interest in any asset
under a xxxx of sale, mortgage, charge, lien, pledge, trust or
power,
by way of security for the payment of debt or any other monetary
obligation or the performance of any other obligation and any interest,
right or power arising from any option, equity, preferential interest,
adverse interest or third party claim or right of any kind and whether
existing or agreed to be granted or created.
"END DATE" means 30 June 2005.
"ESCROW AGREEMENTS" means each agreement entered into between the Major
Vendors and the Purchaser dated on or about the date of this Agreement.
"ESCROW PERIOD" means a period of 6 months from the date of Completion.
"EQUITY SECURITIES" means shares, preference shares, options, convertible
notes, warrants or other securities or instruments convertible or
exercisable into shares or other securities in the Purchaser.
"EXPERT" means an independent accountant appointed by the Vendors and the
Purchaser, or if they do not agree on the person to be appointed within 5
days of one party requesting the
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appointment, an independent accountant appointed by the President for the
time being of the Australian Institute of Chartered Accountants (Xxxxxxxx
xxxxxx) at the request of any of the Vendors or the Purchaser.
"FINANCIAL INDEBTEDNESS" means any debt or other monetary liability
(whether actual or contingent) in respect of moneys borrowed or raised or
any financial accommodation whatsoever and irrespective of whether the
debt is owned or incurred by a person alone or severally or jointly or
both with any other person.
"GOVERNMENT AGENCY" means:
(a) a government or government department;
(b) a governmental, semi-governmental, regulatory or judicial entity or
government agency; or
(c) a person (whether autonomous or not) who is charged with the
administration of a law.
"GROUP" means, from time to time, the group of companies and trusts
comprising the Group Entities.
"GROUP ENTITY" means any of the Company and any:
(a) company the shares of which is wholly owned by the Company or
ultimately wholly beneficially owned by the Company from time to
time;
(b) unit trust the units of which is wholly owned by the Company or
ultimately wholly beneficially owned by the Company (and, where
relevant, a reference to such unit trust includes a reference to the
trustee of that trust) from time to time,
and "GROUP ENTITIES" means all of them.
"HOLD BACK AMOUNT" means the amount to be paid by the Purchaser to the
Depositholder in accordance with Clause 5.3 as listed opposite the name of
each Vendor in the third column in Schedule 1.
"HOLD BACK PERCENTAGE" in respect of a Major Vendor means the percentage
that the number of Hold Back Securities listed opposite the name of that
Major Vendor in the fifth column in Schedule 1 bears to the aggregate of
the total number of Completion Securities and Hold Back Securities listed
opposite the name of that Major Vendor in the fourth and fifth columns in
Schedule 1.
"HOLD BACK SECURITIES" means the number of fully paid ordinary shares in
the Purchaser to be issued by the Purchaser in partial satisfaction of the
Purchase Consideration as listed opposite the name of each Vendor and each
applicable Optionholder in the fifth column in Schedule 1 (if any) that
are actually issued to each Vendor or Optionholder and released from
holdback in accordance with Clause 5.4.
"HEAD COMPANY" has the same meaning as is ascribed that term in section
995-1 of the 1997 Act.
"IMMEDIATELY AVAILABLE FUNDS" has the meaning given to that term in clause
1.3(a).
"INSOLVENCY EVENT" means the occurrence of any of the following events in
relation to any person:
(a) the person becomes insolvent as defined in the Corporations Act,
states that it is insolvent or is presumed to be insolvent under an
applicable law;
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(b) the person is wound up, dissolved or declared bankrupt;
(c) the person becomes an insolvent under administration as defined in
the Corporations Act;
(d) a liquidator, provisional liquidator, controller, receiver, receiver
and manager (or any one else who is in possession or has control of
the person's property to enforce an Encumbrance) administrator,
trustee for creditors, trustee in bankruptcy or other similar person
is appointed to, or takes possession or control of, any or all of
the person's assets or undertaking;
(e) the person enters into or becomes subject to:
(i) any arrangement or composition with one or more of its
creditors or any assignment for the benefit of one or more of
its creditors; or
(ii) any re-organisation (other than solvent reconstructions or
re-organisations), moratorium, deed of company arrangement or
other administration involving one or more of its creditors;
(f) an application or order is made (and, in the case of an application,
it is not stayed, withdrawn or dismissed within 30 days), resolution
passed, proposal put forward, or any other action taken which is
preparatory to or could result in any of (b), (c), (d) or (e) above;
(g) the person is taken, under section 459F(1) of the Corporations
Act, to have failed to comply with a statutory demand;
(h) the person suspends payment of its debts, ceases or threatens to
cease to carry on all or a material part of its business or becomes
unable to pays its debts when they fall due; or
(i) anything occurs under the law of any jurisdiction which has a
substantially similar effect to any of the other paragraphs of this
definition.
"INTELLECTUAL PROPERTY RIGHTS" means:
(a) any patents, utility models, copyrights, registered and unregistered
trade marks or service marks, trade names, brand names, business
names, indications of source or appellations of origin, eligible
layout rights, plant variety rights, registered designs and
commercial names and designations;
(b) any invention, discovery, trade secret, know-how, computer software
and confidential, scientific, technical and product information;
(c) any other rights resulting from intellectual activity in the
industrial, scientific, literary and artistic fields whether
industrial, commercial, agricultural or extractive and whether
dealing with manufactured or natural products; and
(d) any letters patent, deed of grant, certificate or document of title
for any thing referred to in paragraphs (a), (b), or (c) and any
medium in which a thing referred to in those paragraphs is stored or
embodied.
"KEY EMPLOYMENT CONTRACT" means the employment contract between the
Purchaser and Xxxxx Xxxxx.
"LAST ACCOUNTS" means the balance sheet and profit and loss statement of
the Company for the period ending 31 January 2005 prepared in accordance
with Accounting Standards which is annexed as Schedule 4.
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"LIABILITY" includes all liabilities (whether actual, contingent or
prospective), losses, damages, costs and expenses of whatsoever nature or
description irrespective of when the acts, events or things giving rise to
the liability occurred.
"LOSS" includes any damage, loss, cost, Claim, Liability or expense
(including legal costs and expenses).
"MAJOR VENDORS" means A&B Venture Fund Company Pty Ltd as trustee of the
Xxxxx & Xxxxxxxxxx II Trust, Xxxxxx Course as trustee of the Course Family
Trust, Xxxxxx Xxxx as trustee of the Xxxxxxxxx Xxx Family Trust and Antony
Course, Xxxxxxxxx Xxx and Xxxxx Xxxxx (who are regarded as Vendors for the
purpose of this definition), Warana Grange Pty Ltd and Navon Pty Ltd as
trustee of the Shemesh Trust.
"MAJORITY VENDORS" means such of the Major Vendors who between them hold
more than 50% of the Shares held by all Major Vendors. The options held by
Xxxxx Xxxxx will be counted as Shares for the purpose of this definition.
"MATERIAL ADVERSE CHANGE" means any one or more changes, effects, events,
occurrences, state of facts or developments that resulted in, or could
reasonably be expected to result in, an adverse change of more than 10% of
net assets, occurring between the date of this agreement and the
Completion Date.
"OPTION PLAN" means the employee share option plan entered into by the
Company and in force on 1 January 2005.
"OPTIONHOLDER" mean a holder of employee options over ordinary shares
issued under and in accordance with the Option Plan and Xxxxxxxx Xxxxxx in
respect of the amount of the Purchase Consideration that the Vendors have
agreed to pay to her (as detailed in Schedule 1) in consideration for her
services to the Company prior to the date of this Agreement.
"PROTECTED VENDORS" means:
(a) A&B Venture Fund Company Pty Ltd;
(b) Xxxxx Xxxxx (who is regarded as a Vendor for the purpose of this
definition); and
(c) each other Major Vendor listed on the list of Major Vendors that is
provided to the Purchaser prior to Completion pursuant to clause 5.6
who is accepted by the Purchaser.
"PURCHASE CONSIDERATION" means the purchase price payable and the
Consideration Securities to be issued as consideration for the sale of the
Shares as specified in clause 4.1.
"PURCHASER'S GROUP ENTITY" means any of the Purchaser and any:
(a) company the shares of which is wholly owned by the Purchaser or
ultimately wholly beneficially owned by the Purchaser from time to
time;
(b) unit trust the units of which is wholly owned by the Purchaser or
ultimately wholly beneficially owned by the Purchaser (and, where
relevant, a reference to such unit trust includes a reference to the
trustee of that trust) from time to time,
and PURCHASER'S GROUP ENTITIES means all of them.
"RECORDS" means originals and copies, in machine readable or printed form,
of all books, files, reports, records, correspondence, documents, data and
other material of or relating to or used in connection with a Group Entity
or the Business including:
(a) minute books, records of meetings or resolutions of shareholders and
directors, statutory books and registers, books of account,
journals, copies of tax returns, assessments,
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 11
notices and all other such records required by law to be kept by a
Group Entity, tax advice provided and tax position papers;
(b) all financial statements, books of accounts, accounts, trading and
financial records, title documents, records with respect to
employees and superannuation entitlements of employees, leases,
Contracts, agreements and insurance policies;
(c) sales literature, market research reports, brochures and other
promotional material (including printing blocks, negatives, sound
tracks and associated material);
(d) all sales and purchasing records, technical and business records,
databases, lists of all regular suppliers and customers and customer
and supplier files and correspondence; and
(e) all other records, data, documents and papers relating to the
Business, its Assets and operations and liabilities of the Group
Entity kept by or for it.
"REGULATORY APPROVALS" means:
(a) any consent, authorisation, registration, filing, lodgement, permit,
franchise, agreement, notarisation, certificate, permission,
licence, approval, direction, declaration, authority, ruling or
exemption from, by or with a Government Agency; or
(b) in relation to anything that would be fully or partly prohibited or
restricted by law if a Government Agency intervened or acted in any
way within a specified period after lodgement, filing, registration
or notification, the expiry of that period without intervention or
action,
as may be necessary to satisfy the condition precedent in condition 2 in
clause 2.1.
"RELATED BODY CORPORATE" has the meaning given to that term in section 9
of the Corporations Act.
"RELATED DIRECTOR" means, in relation to a Vendor that is a company or
corporate trustee, each person who is or in the last six months has been a
director of that Vendor.
"RELATED ENTITY" has the meaning given to that term in the Corporations
Act.
"RESPECTIVE VENDOR LIABILITY" means each Major Vendor's respective
proportional liability to any Claims made by the Purchaser against the
Major Vendors under this agreement which is an amount equivalent to the
relevant Major Vendor's proportion of the Purchase Consideration provided
to all Major Vendors (including, for the avoidance of doubt, Xxxxx Xxxxx),
which for convenience is set out opposite the name of each Major Vendor as
a percentage in the ninth column of Schedule 1 of this agreement. Xxxxx
Xxxxx'x Respective Vendor Liability is to be calculated as though he had
exercised his options and had been paid in the same manner as the Vendors.
Each Major Vendors' liability is subject to the maximum cap and other
limitations set out in clause 11.
"RESTRICTED ACTIVITIES" has the meaning given to that term in clause 14.2.
"RESTRICTION AREA" has the meaning given to that term in clause 14.3.
"RESTRICTION PERIOD" has the meaning given to that term in clause 14.4.
"RETIRING OFFICERS" means each person named in Schedule 2.
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"REQUIRED APPROVALS" means each of the following as may be required:
(a) an ordinary resolution of the Purchaser's members to approve the
issue of the Consideration Securities to the Vendors pursuant to the
terms of this agreement;
(b) approvals by necessary legal, securities and regulatory authorities
in the United States, Australia and other jurisdictions, as
necessary;
(c) approval by shareholders of the Purchaser of the acquisition of the
Company and the Capital Raising including without limitation:
(i) a shareholder resolution in accordance with ASX listing rule
7.1 in connection with the issue of more than 15% of the share
capital of the Purchaser in a 12 month period;
(ii) a shareholder resolution in accordance with ASX listing rule
11.1 in connection with a significant change in the scale of
the activities of the Purchaser.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means shares, debentures, stocks, bonds, notes, interests,
units, warranty, options, derivative instruments or any other securities.
"SHARES" means all of the shares in the capital of the Company and, in
respect of each Vendor, means the shares in the capital of the Company
held by that Vendor on the Completion Date.
"SOFTWARE" means the software described in Part B of Schedule 6.
"TAX" means any present or future tax, levy, impost, deduction, charge,
duty, compulsory loan or withholding of whatever kind and whether direct
or indirect, including but not limited to income tax, capital gains tax,
recoupment tax, land tax, sales tax, goods and services tax, payroll tax,
tax instalment deduction, fringe benefits tax, group tax, profit tax,
interest tax, property tax, undistributed profits tax, withholding tax,
municipal rates, stamp duty, import duty (and any related interest,
penalty, fine or expense in connection with any of them) levied or imposed
by any Tax Authority, whether accruing before or after Completion.
"TAX AUTHORITY" means the Australian Taxation Office or any Australian
state authority responsible for Tax, wherever situated.
"TAX CLAIM" means an assessment (including a Tax return deemed to be an
assessment), notice, demand or other document issued or action taken by or
on behalf of a Tax Authority, whether before or after the date of this
agreement, as a result of which the Company is liable to make a payment
for Tax or is deprived of any Tax credit, rebate, refund, relief,
allowance, deduction, or loss carried forward subject to the time limit on
any claim as described in Section 10.3 (ii).
"TAX PROVISION" means at any time, the sum of:
(a) the provision for current Tax; and
(b) the deferred tax provision,
each as stated in the Last Accounts.
"VENDOR" means each person named as a vendor in Schedule 1. For the
purposes of Clauses 5.1 and 5.2, each of Xxxxx Xxxxx, Xxxxxxxxx Xxx and
Xxxxxxxx Xxxxxx will also be deemed to be a Vendor.
"VENDOR QUALIFICATIONS" means the warranties provided in part A of
schedule 3.
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" WARRANTIES" means the Major Vendors' warranties set out in schedule 3
excluding the Vendor Qualifications.
1.2 WORDS AND EXPRESSIONS
In this agreement, unless the context requires otherwise:
(a) the singular includes the plural and vice versa;
(b) words denoting any gender include all genders;
(c) where a word or phrase is defined, its other grammatical forms have
a corresponding meaning;
(d) a reference to a party, clause, paragraph, schedule or annexure is a
reference to a party, clause, paragraph, schedule or annexure to or
of this agreement;
(e) a reference to this agreement includes any schedules or annexures;
(f) the background or recitals to this agreement are adopted as and form
part of this agreement;
(g) a reference to any document or agreement includes a reference to
that document or agreement as amended, novated, supplemented, varied
or replaced from time to time;
(h) a reference to "$", "A$" or "dollar" is a reference to Australian
currency;
(i) a reference to a time is a reference to Australian Eastern Standard
Time;
(j) a reference to a party includes its executors, administrators,
successors, substitutes (including persons taking by novation) and
permitted assigns;
(k) a reference to writing includes any method of representing words,
figures or symbols in a permanent and visible form;
(l) words and expressions denoting natural persons include bodies
corporate, partnerships, associations, firms, governments and
governmental authorities and agencies and vice versa;
(m) a reference to any legislation or to any provision of any
legislation includes:
(i) any modification or re-enactment of the legislation;
(ii) any legislative provision substituted for, and all
legislation, statutory instruments and regulations issued
under, the legislation or provision; and
(iii) where relevant, corresponding legislation in any State or
Territory of Australia or the United States of America;
(n) no rule of construction applies to the disadvantage of a party
because that party was responsible for the preparation of this
agreement or any part of it; and
(o) the words "including", "for example", "such as" or other similar
expressions (in any form) are not words of limitation.
1.3 OTHER RULES OF INTERPRETATION
In this agreement, unless expressly provided otherwise:
(a) (METHOD OF PAYMENT) any payment of money by one party to another
will be made in Australian currency in cash, by bank cheque or by
credit of cleared funds to a bank account specified by the recipient
(" IMMEDIATELY AVAILABLE FUNDS");
(b) (CLAIM PAYMENTS IN WHOLE) all payments required to be made by the
Major Vendors or the Depositholder under this agreement must be made
in accordance with any award made by an Arbitrator under clause
11.5(a) without set-off or counter claim;
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 14
(c) (HEADINGS) headings are for convenience and do not affect
interpretation;
(d) (BUSINESS DAYS) if:
(i) the day on or by which any act, matter or thing is to be done
is a day other than a Business Day, the act, matter or thing
will be done on the next Business Day; and
(ii) any money falls due for payment on a date other than a
Business Day, that money will be paid on the next Business Day
(without interest or any other amount being payable in respect
of the intervening period);
(e) (INCONSISTENCY WITHIN AGREEMENT) if a clause of this agreement is
inconsistent with a schedule or annexure of this agreement, the
clause prevails to the extent of the inconsistency;
(f) (MATERIALITY THRESHOLD) without limitation, any Claim that is made
in respect of an amount in excess of the minimum amount specified in
clause 11.4(a)(ii) will be deemed to be material.
2 CONDITIONS
2.1 CONDITIONS
The obligations of each party to complete the sale and purchase of the
Shares under this agreement is subject to the satisfaction of each of the
following conditions:
NO. CONDITION PARTY ENTITLED TO THE BENEFIT
---- ----------------------------------------------- ------------------------------
1 (REQUIRED APPROVALS) the passing of the Majority Vendors and Purchaser
Required Approvals.
2 (REGULATORY APPROVALS) All Regulatory Majority Vendors and Purchaser
Approvals required to implement the
transaction contemplated by this agreement
are granted or obtained.
3 (LISTING) As at the Completion Date, the Majority Vendors and Purchaser
Purchaser's main class of securities are
quoted on the NASDAQ & ASX.
4 (COMPANY DUE DILIGENCE) Completion of Purchaser
business, operational and financial due
diligence of the Company by the Purchaser
and the Purchaser is satisfied that no Material
Adverse Change has occurred since the date
of this agreement.
5 (PURCHASER DUE DILIGENCE) Completion of Vendors
business, operational and financial due
diligence of the Purchaser by the Vendors
and the Vendors are satisfied that no Material
Adverse Change has occurred since the date
of this agreement.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 15
NO. CONDITION PARTY ENTITLED TO THE BENEFIT
---- ----------------------------------------------- ------------------------------
6 (LEGAL DUE DILIGENCE) Completion of the Purchaser
legal due diligence of the Company by the
Purchaser and the Purchaser is satisfied that
no Material Adverse Change has occurred
since the date of this agreement.
7 (BALANCE SHEET) The Vendors written Purchaser
confirmation of the cash and cash equivalents
(as determined under the Accounting
Standards and in the manner specified in
Clause 8.2) on the balance sheet of the
Company as at the Completion Date. Any
shortfall below $300,000 can be deducted
from the Purchase Consideration payable to
each Vendor (proportionately from the
Completion Payment and the Completion
Securities).
8 (INTELLECTUAL PROPERTY) The Major Vendors Purchaser
providing written confirmation by executing
this agreement that the Company's
Intellectual Property Rights listed in
Schedule 6 are not subject to any third party
ownership claims, are not subject to third
party infringement claims and completion of a
technical and product audit.
9 (KEY EMPLOYMENT CONTRACT) Execution of Purchaser
the Key Employment Contract.
10 (ESCROW AGREEMENTS) Execution of the Purchaser
Escrow Agreements.
11 (MATERIAL CONTRACTS) Review of the Material Purchaser
Contracts is completed and the Purchaser is
satisfied that if any of the Material Contracts
are capable of being terminated by any other
party to those Material Contracts as a
consequence of the change in control of the
Company that, the Vendors have obtained the
consent of those parties to the sale by the
Vendors of the Shares to the Purchaser.
12 (CONFIDENTIALITY AGREEMENTS) Execution of Purchaser
the Confidentiality Agreements.
13 (CAPITAL RAISING) Successful closing of the Majority Vendors and Purchaser
Capital Raising.
14 (DEPOSIT AGREEMENT) Execution of an Majority Vendors and Purchaser
agreement with the Depositholder.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 16
NO. CONDITION PARTY ENTITLED TO THE BENEFIT
---- ----------------------------------------------- ------------------------------
15 (KEY EMPLOYMENT CONTRACT) Execution of Majority Vendors and Purchaser
the Key Employment Contract.
16 (REPRESENTATIONS AND WARRANTIES) Any of Purchaser
the Warranties is not true and correct in all
material respects at the date that it is made,
unless the Purchaser has accepted a written
notification from the Major Vendors regarding
that Warranty.
2.2 REASONABLE ENDEAVOURS
The parties agree to use all reasonable endeavours to ensure that the
Conditions are satisfied by the End Date.
2.3 WAIVER OF CONDITIONS
A Condition may only be waived in writing by each party entitled to the
benefit of that Condition and the waiver will only be effective to the
extent specifically set out in that waiver.
2.4 NON-SATISFACTION
If any of the conditions under clause 2.1 is not satisfied by the End
Date, then at the option of a party entitled to the benefit under the
condition precedent, this agreement may be terminated with immediate
effect by giving written notice to the other parties. In the case of a
condition to the benefit of the Vendors, only Majority Vendors may
terminate. For the avoidance of doubt, if this Agreement is terminated
pursuant to this clause 2.4, none of the parties have any liability to any
other party.
2.5 NOTICE OF SATISFACTION
Each party must notify the other parties in writing as soon as practicable
after it becomes aware that any Condition is satisfied or that any
Condition is incapable of being satisfied.
3 SALE AND PURCHASE OF SHARES
3.1 SALE AND PURCHASE
(a) Subject to clause 2, on the Completion Date each Vendor will sell
the Shares set out opposite the name of that Vendor in schedule 1 to
the Purchaser and the Purchaser will buy those Shares for the
Purchase Consideration on and subject to the terms and conditions of
this agreement.
(b) The Vendors will do all things necessary to ensure the transfer of
the legal and beneficial title of the Shares to the Purchaser on the
terms and conditions of this agreement.
3.2 FREE FROM ENCUMBRANCES
The Shares must be transferred to the Purchaser under clause 3.1 on and
from Completion free from all Encumbrances (but excluding any Encumbrance
created by or on behalf of the Purchaser) and with all rights, including
dividend rights, attached or accruing to them.
3.3 TITLE AND PROPERTY
Title to and risk in the Shares passes to the Purchaser on Completion.
Until Completion, the Vendors remain the owners of and bear all risk in
connection with the Shares.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 17
3.4 WAIVER
By executing this agreement, each Vendor waives any pre-emptive rights
they may have in respect of the sale or transfer of the Shares, including,
without limitation, under the constitution or shareholders agreement of
the Company.
3.5 EMPLOYEE OPTIONS
The Optionholders are as set out in part 2 of Schedule 1. In accordance
with the terms of the Option Plan of the Company, the board of the Company
has resolved that all the options on issue over ordinary shares which are
not exercised prior to the date of this agreement will be cancelled in
exchange for the difference between the amount of cash consideration
payable for each Share in the Company and the exercise price of the
relevant options. For this purpose, on the Completion Date, the Purchaser
on behalf of the Company must pay to each of the Optionholders an amount
being the difference between the amount of cash consideration payable for
each Share in the Company and the exercise price of the relevant options.
All Optionholders other than Xxxxx Xxxxx will be paid in cash only. The
consideration payable to Xxxxx Xxxxx will be apportioned between the
Completion Payments and Completion Securities as set out in Schedule 1. If
any Optionholder exercises any of his options prior to the date on which
they are due to be cancelled, the parties will make such adjustments
between them to ensure that the Optionholder is treated as a Vendor for
the purposes of this Agreement and the Purchase Consideration shall be
reapportioned amongst all of the Vendors (including the Optionholder) and
Schedule 1 shall be amended accordingly.
4 PURCHASE CONSIDERATION
4.1 PURCHASE CONSIDERATION
The Purchase Consideration for the Shares is:
(a) $3,600,000 less any amount that is deducted pursuant to Condition 7
in clause 2.1 plus any additional amount calculated in accordance
with clause 8; and
(b) the issue by the Purchaser of the Consideration Securities less any
number of Consideration Securities deducted pursuant to Condition 7
in clause 2.1 plus any additional Consideration Securities issued in
accordance with clause 5.2 or clause 8.
For illustrative purposes, assuming a price of $5.10 for each of the
Consideration Securities, the Purchaser is issuing $1,900,000 worth
of Consideration Securities. The aggregate value and number of the
Consideration Securities may be reduced pursuant to Condition 7 of
clause 2.1. Likewise, the number of Consideration Securities may be
increased pursuant to clause 5.2 or clause 8.
4.2 APPORTIONMENT OF PURCHASE CONSIDERATION
(a) The Purchase Consideration will be apportioned between the Vendors
and the Optionholders in the proportions set out in Schedule 1. Each
of the Vendors and the Optionholders unequivocally and irrevocably
agrees to the apportionment set out in Schedule 1 and confirms to
the Purchaser that this apportionment accurately reflects the
arrangements between them (including, without limitation, the rights
of each person to whom an option has been granted by the Company and
the rights of Xxxxx Xxxxx, Xxxxxxxxx Xxx and Xxxxxxxx Xxxxxx under
an incentive arrangement agreed between the Vendors, the Company and
each of them).
(b) If there is an adjustment to the Purchase Consideration as a result
of Condition 7 in clause 2.1 or clause 8:
(i) each Vendors' Completion Payment and Completion Securities (as
applicable) will proportionately adjusted to reflect the
adjusted Purchase Consideration; and
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 18
(ii) the details set out in Schedule 1 of this agreement are deemed
to be varied automatically (without the need for any action on
the part of any party) to reflect the adjustment.
5 PROVISION OF THE PURCHASE CONSIDERATION
5.1 SATISFACTION OF PURCHASE CONSIDERATION
As has been agreed with each Vendor and set out in Schedule 1, the
Purchase Consideration will be satisfied on Completion:
(a) in respect of each Vendor who has elected to receive its
consideration in cash, by the payment by the Purchaser to that
Vendor of the Completion Payment set out opposite the name of that
Vendor in Schedule 1 with the applicable Hold Back Amount to be held
by the Depositholder in accordance with this agreement; or
(b) in respect of each Vendor who has elected to receive its
consideration in part in cash and in part by the issue of
Consideration Securities, in part by the payment by the Purchaser to
that Vendor of the Completion Payment set out opposite the name of
that Vendor in Schedule 1 and in part by the Purchaser issuing or
procuring the issue to that Vendor of the number of Completion
Securities set out opposite the name of that Vendor in Schedule 1
with the applicable Hold Back Amount and Hold Back Securities to be
held by the Depositholder in accordance with this agreement;
(c) in respect of each Vendor who has elected to receive its
consideration solely by the issue of Consideration Securities, by
the issue by the Purchaser to that Vendor of the number of
Completion Securities set out opposite the name of that Vendor in
Schedule 1 with the applicable Hold Back Securities to be held by
the Depositholder in accordance with this agreement;
(d) in respect of each Optionholder other than Xxxxx Xxxxx, by the
payment by the Purchaser to that Optionholder of the Completion
Payment set out opposite the name of that Optionholder in
Schedule 1;
(e) in respect of Xxxxx Xxxxx, in part by the payment by the Purchaser
to that Optionholder of the Completion Payment set out opposite the
name of that Optionholder in Schedule 1 and in part by the Purchaser
issuing or procuring the issue to that Optionholder of the number of
Completion Securities set out opposite the name of that Optionholder
in Schedule 1 with the applicable Hold Back Amount and Hold Back
Securities to be held by the Depositholder in accordance with this
agreement.
If applicable, after Completion, the Purchase Consideration will be
satisfied by the issue of such additional Completion Securities calculated
in accordance with clause 5.2 of this agreement with additional Hold Back
Securities (if any) to be held by the Depositholder in accordance with
clause 5.4 of this agreement.
5.2 ADJUSTMENT OF CONSIDERATION SECURITIES
(a) Subject to clauses 5.2(c), and (e), for the period from the date of
this agreement until 6 months from Completion Date and including the
Capital Raising, if the Purchaser issues or agrees to issue
additional ordinary shares in itself unattached to any other Equity
Securities in itself and the effective issue price for those
ordinary shares is less than A$5.10, the Purchaser agrees to
immediately issue to the Vendors who received Consideration
Securities (in whole or as a portion of the Purchase Consideration
for their Shares) such number of additional ordinary shares in the
Purchaser calculated as follows:
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 19
(NP)
S = ----- x (NCS) - NCS
(LIP)
where:
S is the number of further shares to be issued to that Vendor;
LIP is the lower issue price of the ordinary shares issued by the
Purchaser during the Escrow Period;
NCS is the number of Consideration Securities set out opposite the
name of that Vendor in Schedule 1 (as may be adjusted by previous
application of this clause).
NP is A$5.10 or such lower price at which ordinary shares may
previously have been issued by the Purchaser during the Escrow
Period and in respect of which issue this clause 5.2 was previously
applied.
(b) Subject to clauses 5.2(b)(ii), and (e), for the period from the date
of this agreement until 6 months from the Completion Date and
including the Capital Raising, if the Purchaser issues or agrees to
issue additional ordinary shares in itself ("Additional Shares")
attached to any other Equity Securities in itself and the effective
issue price for the acquisition of a minimum parcel of those
Additional Shares and Equity Securities is less than A$5.10, the
Purchaser agrees to immediately issue to the Vendors who received
Consideration Securities (in whole or as a portion of the Purchase
Consideration for their Shares):
(i) such number of additional ordinary shares in the Purchaser
calculated as follows:
(NP)
S = ----- x (NCS) - NCS
(LIP)
where:
S is the number of further ordinary shares to be issued to
that Vendor;
LIP is the lower effective issue price of each ordinary share
in the parcel of ordinary shares and Equity Securities that
are issued by the Purchaser during the Escrow Period;
NCS is the number of Consideration Securities set out opposite
the name of that Vendor in Schedule 1 (as may be adjusted by
previous application of this clause).
NP is A$5.10 or such lower price at which ordinary shares may
previously have been issued by the Purchaser during the Escrow
Period and in respect of which issue this clause 5.2 was
previously applied.
(ii) such number of Equity Securities calculated as follows:
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 20
ES = CS x AS
where:
ES is the number of Equity Securities to be issued to that
Vendor.
S is the number of Consideration Securities that will be held
by that that Vendor after the further issue of ordinary shares
under clause 5.2(b)(i).
AS is the number of Equity Securities attached to each
Additional Share in a minimum parcel of those Additional
Shares and Equity Securities to be issued by the Purchaser.
(c) In any particular circumstances, the Major Vendors by unanimous
decision may waive or agree to vary the operation of the provisions
of clause 5.2(a) or 5.2(b) (as applicable).
(d) For the avoidance of doubt, no Vendor will be required to pay any
additional amount for the issue to it of any Additional Shares or
Equity Securities pursuant to clause 5.2(b) unless the amount
payable by a third party to acquire a minimum parcel of Additional
Shares and attached Equity Securities exceeds A$5.90. If the amount
payable by a third party to acquire a minimum parcel of Additional
Shares and attached Equity Securities exceeds A$5.90, the Vendor is
entitled to such whole number of Additional Shares and thereafter
such whole number of Equity Securities that are able to be acquired
for an amount not exceeding A$5.90. The relevant Vendor may also
elect to pay the difference between A$5.90 and the higher actual
third party subscription price above A$5.90 in order to receive all
of the Additional Shares and attached Equity Securities in the
parcel offered to the third parties.
(e) If any additional ordinary shares or Equity Securities are to be
issued by the Purchaser to a Major Vendor pursuant to clauses 5.2(a)
or (b), the Hold Back Percentage of those additional ordinary shares
will be held back by the Depositholder in accordance with clause 5.4
of this agreement.
5.3 HOLD BACK AMOUNTS
(a) The Major Vendors and the Purchaser will jointly instruct the
Depositholder to hold the Hold Back Amounts in an interest bearing
account in the names of the Major Vendors and the Purchaser and to
pay the aggregate Hold Back Amount together with accrued interest on
the date that is six months after the Completion Date unless the
Purchaser has given notice of a Claim pursuant to clause 11.1.
(b) If the Purchaser has given notice of a Claim pursuant to clause
11.1, the Hold Back Amounts will be paid in accordance with any
agreement reached by the Purchaser and the Major Vendors who, but
for the Claim, would have been entitled to that Hold Back Amount and
otherwise in accordance with the decision of any Mediator or
Arbitrator appointed pursuant to clause 11.6.
(c) Interest on the Hold Back Amounts (or any portion of the Hold Back
Amounts) must be paid to whichever of the Purchaser or the Major
Vendors is entitled to the Hold Back Amounts (or that portion of
those Hold Back Amounts) under this clause 5.3.
(d) The party who is entitled to the Hold Back Amount bears the risk of
losing the Hold Back Amount if the Depositholder defaults in paying
the Hold Back Amount to that party when required to do so under the
terms of the joint instructions given to the Depositholder by the
Major Vendors and the Purchaser.
5.4 HOLD BACK SECURITIES
If the Purchaser has given notice of a Claim pursuant to clause 11.1, the
Hold Back Securities will be delivered to the Vendors or the required
number of Hold Back Securities will be returned to the Purchaser in
accordance with any agreement reached by the Purchaser and the Major
Vendors
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 21
who, but for the Claim, would have been entitled to be issued the Hold
Back Securities and otherwise in accordance with the decision of any
Mediator or Arbitrator appointed pursuant to clause 11.6.
5.5 RELEASE OF HOLD BACK SECURITIES AND PAYMENT OF HOLD BACK AMOUNTS
Any release of Hold Back Securities pursuant to clause 5.4 or payment of
the Hold Back Amounts pursuant to clause 5.3 will be done in accordance
with clause 11.5.
5.6 DOWNSIDE PROTECTION
(a) Prior to Completion A&B Venture Fund Company Pty Ltd shall deliver
to the Purchaser a list of the Protected Vendors and the number of
Consideration Securities (including the share certificate number or
other identifying number) held by each such Protected Vendor to
which the succeeding provisions of this clause 5.6 applies
("Protected Securities"). The number of Protected Securities
referred to on the list must not exceed 150,000. Upon any additional
ordinary shares or Equity Securities being issued by the Purchaser
pursuant to clauses 5.2(a) or (b), the number of Protected
Securities shall be recalculated accordingly and the Major Vendors
shall deliver to the Purchaser a revised list specifying the revised
number of Protected Securities (including the share certificate
number or other identifying number) held by each Protected Vendor,
which revised numbers shall be in the same proportions as the
numbers specified on the original list.
(b) If the Purchaser is able to arrange or approves a placement, the
number of Protected Securities will be reduced as follows:
DV
NCS = ( 1 - ------- ) x OCS
BV
where:
NCS is the revised number of Protected Securities;
DV is the aggregate amount (in Australian Dollars) payable by a
purchaser of the Consideration Securities under the placement;
BV is A$775,000 (as that amount may have been reduced by the amount
payable by a purchaser of Consideration Securities under any prior
placement to which this clause applied;
OCS is the number of Protected Securities prior to the placement,
being as the date of this Agreement, 150,000.
For the avoidance of doubt, this clause 5.6 will cease to apply once
the revised number of Protected Securities is reduced to zero.
(c) The succeeding provisions of this clause 5.6 will apply if at the
close of trading on NASDAQ on the last business day immediately
before the day that is 6 months from the Completion Date
("Protection Date") the weighted average share price (as converted
into Australian Dollars in the manner specified in paragraph 5.6(g))
of the ordinary shares in the Purchaser traded on NASDAQ for the 20
trading days immediately preceding and ending on (and including) the
Protection Date is less than A$5.10 or such lower price at which
ordinary shares may previously have been issued by the Purchaser
during the Escrow Period and in respect of which issue clause 5.2
was previously applied.
(d) Subject to the succeeding provisions of this clause 5.6, within 14
days of the date that is the first anniversary of the Completion
Date (or if later, the date that is six months after the relevant
Protected Securities are released from any further escrow imposed by
the ASX or NASDAQ) each Protected Vendor may request the Purchaser
to pay to it and the
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 22
Purchaser is required to pay an amount in Immediately Available
Funds calculated as follow
AA = ( LIP - LTP ) x PCS
Where:
AA is the additional amount to be paid to that Protected Vendor;
LIP is the lower A$5.10 or such lower price at which ordinary shares
may previously have been issued by the Purchaser during the Escrow
Period and in respect of which issue clause 5.2 was previously
applied;
LTP is the higher of:
(i) the weighted average share price (as converted into Australian
Dollars in the manner specified in paragraph 5.6(g)) of the
ordinary shares in the Purchaser traded on NASDAQ for the 20
trading days immediately preceding and ending on (and
including) the Protection Date: and
(ii) the average price that that Protected Vendor sold its
Protected Securities during the period:
(A) from the date that is 6 months after the Completion Date
to, but not, including the first anniversary of the
Completion Date; or
(B) if the relevant Protected Securities are subject to
escrow by NASDAQ or ASX for a continuous period of
longer than 6 months after the Completion Date, from the
date that is 6 months after the Completion Date to, but
not, including, the date that is six months after the
relevant Protected Securities are released from that
escrow.
PCS is the number of Protected Securities sold by that Protected
Vendor during the applicable period referred to in subclause (ii) of
the definition of LTP.
Any such request must contain such reasonable details as the
Purchaser may require including details of all sales of shares made
by that Protected Vendor during that period, the sale price of those
shares (exclusive of the cost of that transaction) and the details
of each sale that relates to Protected Securities.
(e) The maximum aggregate amount that the Purchaser may be required to
pay to the Protected Vendors pursuant to clause 5.6(d) is A$510,000.
(f) The provisions of this clause 5.6 cease to apply immediately upon
the Protected Vendors having received A$775,000 from the sale of any
Protected Securities (whether under any placement or otherwise) or
pursuant to the operation of this clause 5.6.
(g) The exchange rate applicable to this clause 5.6 will be the average
of the USD/AUD exchange rates for the 20 trading days immediately
preceding and ending on (and including) the Protection Date as
published in the Australian Financial Review.
(h) In consideration for the obligations agreed to by the Purchaser
pursuant to this clause 5.6, each of the Protected Vendors agrees to
dispose of their Consideration Securities and other Equity
Securities in the Purchaser in a fair and reasonable manner so as to
ensure that at all times there is an orderly and efficient market
for the Purchaser's shares and that there is not undue downward
pressure on or fluctuations in the traded price of the Purchaser's
securities.
(i) In the event that the ordinary shares of the Purchaser are not
quoted on NASDAQ during the periods required to give effect to this
clause 5.6, the references to "NASDAQ" in this clause 5.6 are to be
replaced by "ASX" and the clause is to be otherwise varied to give
effect to the intention of the clause.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 23
5.7 PUBLIC ANNOUNCEMENT
During the applicable period referred to in subclause (ii) of the
definition of LTP in clause 5.6, no Protected Vendor may make or authorise
any other person to make any public announcement or communication relating
to a sale or proposed sale of any of their Consideration Securities or
other Equity Securities in the Purchaser prior to the sale of those
securities.
5.8 NO LIMITATION
For the avoidance of doubt, nothing in this clause 5 limits the amount of
any Claim that the Purchaser is otherwise entitled to make under clause
11.
6 COMPLETION
6.1 TIME AND PLACE OF COMPLETION
Completion will take place on the Completion Date at the Melbourne offices
of Xxxxxx Xxxxx Leibler or such other time and place as the Purchaser and
the Vendors agree.
6.2 ITEMS TO BE DELIVERED BY THE VENDORS AND OPTIONHOLDERS AT COMPLETION
On or before the Completion Date, the Vendors must:
(a) deliver to the Purchaser:
(i) (CONSENTS OR WAIVERS) copies of any consents or waivers
required under clause 2.1 and 2.3;
(ii) (SHARE CERTIFICATES) original share certificates for all of
the Shares or an indemnity in lieu thereof;
(iii) (TRANSFERS OF SHARES) share transfer forms duly executed and
completed by the Vendors in favour of the Purchaser for all of
the Shares;
(iv) (CERTIFICATES OF INCORPORATION) the certificates of
incorporation of the Group Entities;
(v) (CONSTITUTION AND RECORDS) all constitutions and the Records
of the Group Entities;
(v) (RESIGNATIONS) written resignations of each of the Retiring
Officers as officers of the Company, to be effective on the
appointment of the officers appointed at the board meeting to
be convened pursuant to clause 6.3;
(vii) (ACKNOWLEDGMENTS) written acknowledgments from all of the
Retiring Officers that:
(A) they have no claim for fees, entitlements, salary or
compensation for loss of office, breach of contract,
redundancy, bonus payment, repayment of loans or
otherwise against the Company; and
(B) there is no agreement, arrangement or understanding
(whether written or unwritten) under which the Company
has, or could have, any obligation to them, other than
in respect of any continuing employment or consulting
arrangements with the Company or other obligations
disclosed in this agreement as being obligations that
continue after the Completion Date;
(viii)(APPLICATION FOR CONSIDERATION SECURITIES) an application for
the Consideration Securities which will contain an agreement
to be bound by the Purchaser's constitution; and
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 24
(b) execute all documents and do all other things necessary or desirable
to transfer the Shares to the Purchaser free from all Encumbrances
(excluding any encumbrance created by or on behalf of the
Purchaser).
On or before the Completion Date, the Vendors must procure that the
Optionholders:
(a) deliver to the Purchaser original option certificates for all of
their employee options or an indemnity in lieu thereof; and
(b) execute all documents and do all other things necessary or desirable
to effect the cancellation of the employee options free from all
Encumbrances (excluding any encumbrance created by or on behalf of
the Purchaser).
6.3 BOARD MEETING OF THE COMPANY
The Vendors must ensure that at or prior to Completion, a meeting of the
directors of the Company is convened and conducts the following business:
(a) (APPROVAL REGISTRATION) approval of the transfer of the Shares to
the Purchaser under this agreement and to the recording of the
Purchaser as the registered holder of the Shares in the books of the
Company with effect from Completion;
(b) (CANCELLATION OF OPTIONS) approval of the cancellation of all
employee options that are not exercised prior to the date of this
agreement and the variation of the Option Plan to the extent
necessary to vary the timing of the cancellation of such options to
accord with the terms of this agreement;
(c) (SHARE CERTIFICATES) approval of the issue of a new share
certificate for the Shares in the name of the Purchaser;
(d) (APPOINT OFFICERS) appointment of the nominees of the Purchaser as
directors, secretary, auditors and public officer of the Company
and, effective on those appointments, acceptance of the resignation
of the Retiring Officers and auditors and public officer of the
Company; and
(e) (REVOKE BANKING MANDATES) revoke existing mandates to operate bank
accounts of the Company and approve new mandates in favour of
officers of the Company nominated by the Purchaser.
6.4 OBLIGATIONS OF THE PURCHASER
Subject to the Vendor's performance of its obligations under clauses 6.2
and 6.3, at Completion the Purchaser must:
(a) (CONFIRMATION) deliver to the Vendors written confirmation of the
satisfaction of all the Conditions applicable to the Purchaser;
(b) (PAYMENT) pay $3,600,000 (less any amount that is deducted pursuant
to condition 7 in clause 2.1 plus any amount calculated under clause
8) to the Vendors and Optionholders in the proportions set out in
Schedule 1 with the Hold Back Amount to be held by the Depositholder
in accordance with this agreement;
(c) (CONSIDERATION SECURITIES) do or cause to be done any act or thing
that is necessary to issue the Consideration Securities to the
Vendors in the proportions set out in Schedule 1 with the Hold Back
Securities to be initially issued as treasury stock in the capital
of the Purchaser and held by the Depositholder in accordance with
this agreement and converted into ordinary shares in the capital of
the Purchaser at the end of the Escrow Period; and
(d) (CONSENTS OF NEW OFFICERS) deliver to the Company written consents
to act from the persons nominated by the Purchaser as the directors,
secretaries, and public officers of the Company.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 25
6.5 SIMULTANEOUS COMPLETION
(a) Notwithstanding any other term of this agreement, neither the
Vendors on the one hand nor the Purchaser on the other is required
to Complete unless the other is ready, willing and able to Complete
simultaneously.
(b) If any Vendor does not comply with its obligations under this clause
6 the Purchaser:
(i) will be under no obligation to Complete or to purchase any of
the Shares from any of the Vendors;
(ii) will not be liable for any Liability suffered or incurred by
any Vendor or any other person as a result of not Completing;
and
(iii) may elect to terminate this agreement.
(c) Notwithstanding clause 10.8, no Vendor (other than the defaulting
Vendor) will be liable for any Liability suffered or incurred by any
party for a failure to comply with its obligations to Complete under
clause 3 or this clause 6.
(d) If any of the parties fail to fully comply with their obligations
under this clause 6 and the parties do not Complete then:
(i) each party must return to the other parties all documents
delivered to it under this clause 6;
(ii) each party must repay to the other parties all payments or
benefits received by it under this clause 6 (including any
Consideration Securities issued to any Vendors); and
(iii) each party must do everything reasonably required by the other
parties to reverse any action taken under this clause 6.
6.6 INTERDEPENDENCE
In respect of Completion:
(a) the obligations of the parties under this clause 6 are
interdependent; and
(b) all actions performed are taken to have occurred simultaneously on
the Completion Date.
6.7 LISTING OF CONSIDERATION SECURITIES
Prior to Completion, the Purchaser will notify NASDAQ and the ASX and seek
quotation of the Consideration Securities. Purchaser shall begin work on
the necessary SEC registration filing in order for the Consideration
Securities to be freely tradeable as soon as reasonably practicable
following Completion.
6.8 AGREEMENT NOT TO TRADE CONSIDERATION SECURITIES
All Major Vendors that receive Consideration Securities agree not to trade
Consideration Securities issued to them during the Escrow Period without
the consent of the Purchaser, which Consideration Securities will be held
in escrow in accordance with the Escrow Agreements.
7 CONDUCT OF BUSINESS PENDING COMPLETION
7.1 CONDUCT OF BUSINESS
The Vendors must cause the directors of the Company to ensure that from
the date of this agreement to Completion, unless the Purchaser first
consents in writing, the Company:
(a) (PRESERVE GOODWILL) will use its best endeavours to preserve the
goodwill of the Business;
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 26
(b) (OPERATION OF BUSINESS) will operate and account for the Business in
the ordinary and usual course of business, consistent with past
practice;
(c) (COMPLIANCE WITH LAWS) will conduct the Business so as to comply in
all material respects will all applicable laws and regulations;
(d) (ACCESS TO RECORDS) will give reasonable access to the Purchaser,
its solicitors, accountants and other authorised representatives
during normal business hours to all available Records.
7.2 UNDERTAKINGS
In addition to the undertakings contained in clause 7.1, the Vendors must
ensure that from the date of this agreement to Completion, unless the
Purchaser first consents in writing, the Company:
(a) (ASSET DISPOSAL) will not dispose of any of its assets other than in
the normal course of business and for arm's length value;
(b) (NO ENCUMBRANCES) will not Encumber any assets beneficially owned by
it;
(c) (NO FINANCIAL INDEBTEDNESS) will not incur any Financial
Indebtedness in excess of $10,000 except in the usual course of
business or provided in the 2005 Business Plan;
(d) (EMPLOYMENT CONTRACTS) will not enter into any employment contract,
or renew or amend any existing employment contract (including
superannuation benefits) except in the usual course of business or
provided in the 2005 Business Plan;
(e) (BUSINESS RELATIONSHIPS) will use its best endeavours to preserve
intact its current business relationships;
(f) (TAX MATTERS) will not make any Tax election (including an election
to enter into any consolidation effective at any time prior to
Completion) or settle or compromise any income tax liability, unless
that election, settlement or compromise is required by law, is
supported by an opinion of counsel, and is reasonably acceptable to
the Purchaser;
(g) (ACCOUNTING PRACTICES) will not make any change in accounting
methods, principles or practices used by it except if required by a
change in the Accounting Standards;
(h) (NO LEASE OF ASSETS) will not lease, licence or otherwise dispose of
any of its assets, except in the ordinary course of business
consistent with past practices and at fair value;
(i) (CAPITAL EXPENDITURE) will not make any capital expenditure in
excess of the amounts specified in the 2005 Business Plan;
(j) (MAINTAIN INSURANCES) will maintain (and where necessary use
reasonable efforts to renew) each of the insurance policies in force
on 30 November 2004 and will promptly notify the Purchaser if any
renewal proposal is not accepted by the relevant insurer;
(k) (BUSINESS PLAN) will continue to make expenditures in the amounts
and at the times provided for in its 2005 Business Plan for the
purpose of growing the Business;
(l) (EXISTING CUSTOMERS) will not voluntarily cease to do business with
an existing customer without obtaining the prior written consent of
the Purchaser prior to doing so;
(m) (CORPORATE ACTIONS) will not without the prior written consent of
the Purchaser:
(i) increase, reduce or otherwise alter its capital or issue any
Securities except for Securities issued under the Option Plan
(as approved by the Board of the Company);
(ii) declare or pay any dividends or distributions to its members;
(iii) distribute or return any capital to its members;
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 27
(iv) make a distribution or revaluation of assets;
(v) alter its constitution;
(v) buy back or redeem any of its shares; or
(vii) pay any bonuses to executives or employees except in
accordance with past practices and timing and unless
previously disclosed to and approved by the Purchaser prior to
the date of signing this Agreement.
8 COMPLETION ADJUSTMENT
8.1 ADJUSTMENT AMOUNT
At Completion, if the cash or cash equivalents (as determined under the
Accounting Standards) on the balance sheet of the Company as at the
Completion Date exceeds $300,000 as a consequence of the entry by the
Company of a Qualifying Agreement, the Purchase Price is to be increased
by the Qualifying Amount attributable to that Qualifying Agreement.
8.2 CALCULATION OF CASH AND CASH EQUIVALENTS
For the purposes of this Agreement, in calculating the amount of the cash
or cash equivalents (as determined under the Accounting Standards) on the
balance sheet of the Company as at the Completion Date:
(a) any liabilities of the Company that were due for payment on or
before the Completion Date;
(b) the proportional amount of any liabilities which had accrued prior
to the Completion Date, and
(c) the amounts paid to the Optionholders by the Purchaser on behalf of
the Company under this Agreement,
will be deducted from the amount of the cash or cash equivalents
calculated under the Accounting Standards.
8.3 SUPPORTING DOCUMENTS
To support the calculation of the cash or cash equivalents (as determined
under the Accounting Standards) on the balance sheet of the Company as at
the Completion Date, the Company must provide a balance sheet, profit and
loss statement, cash flow statement (including details of all actual and
accrued liabilities) as at the Business Day immediately before the
Completion Date.
8.4 DEFINITIONS
For the purposes of this clause:
"Qualifying Agreement" means an agreement that had not been executed prior
to the date of this Agreement and which the chief executive officers of
the Purchaser and the Company acting reasonably agree is be treated as a
"Qualifying Agreement" for the purpose of this clause.
"Qualifying Amount" in respect of a Qualifying Agreement means the
proportion of the amounts paid by the other party under that Qualifying
Agreement prior to the Completion Date which the chief executive officers
of the Purchaser and the Company acting reasonably agree has caused the
cash or cash equivalents of the Company as at the Completion Date to
exceed A$300,000. In making this assessment the chief executive officers
of the Purchaser and the Company must take into account the past practices
of the Company, usual industry practice, the extent to which the amounts
paid represent a prepayment of amounts due under that Qualifying Agreement
or any other agreement between the Company and that other party or any of
their respective related bodies corporate, the extent to which amounts
will be foregone or otherwise not paid to the
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 28
Company under that Qualifying Agreement or any other agreement between the
Company and that other party or any of their respective related bodies
corporate, and the extent to which the amounts paid are required to be
retained by the Company to enable it or any of its related bodies
corporate to satisfy any obligation or liability (actual or contingent)
under, in respect of or as a consequence of entering into that Qualifying
Agreement or any other agreement between the Company and that other party
or any of their respective related bodies corporate.
8.5 PROPORTIONAL MIX
The Purchase Price will be paid in the proportional mix of Consideration
securities and cash as set out in schedule 1.
9 PURCHASER'S WARRANTIES, REPRESENTATIONS AND INDEMNITY
9.1 REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Vendors that each of the
following statements are true and correct as at the date of this agreement
and will be as at the Completion Date:
(a) (AUTHORISATIONS) the Purchaser has taken all necessary action to
authorise the execution, delivery and performance of this agreement
in accordance with its terms and to carry out the transactions
contemplated by this agreement. At the date of this Agreement, this
warranty is qualified by the need to obtain the Required Approvals;
(b) (GOVERNMENT AGENCY) the Purchaser has full power and authority to
enter into and perform its obligations under this agreement;
(c) (BINDING OBLIGATIONS) this agreement constitutes legal, valid and
binding obligations and is enforceable in accordance with its terms;
(d) (TRANSACTION PERMITTED) the execution, delivery and performance by
the Purchaser of this agreement does not and will not violate:
(i) any law, regulation, authorisation, ruling, consent, judgment,
order or decree of any Governmental Agency;
(ii) the Constitution of the Purchaser or any other of its
constituent documents; or
(iii) any Encumbrance or document which is binding upon the
Purchaser;
(e) (GOOD TITLE) the Vendors will receive good and marketable title and
full beneficial title to the Consideration Securities issued to them
under clause 5 regardless of whether they are held by the
Depositholder. For the avoidance of doubt, all documents of title to
the Consideration Securities issues to the Major Vendors will be
held by the Major Vendors. The Purchaser will do all things
necessary to register the Consideration Securities that are not Hold
Back Securities with the SEC in a timely manner following Completion
or, in respect of the Hold Back Securities, will do all things
necessary to register the Hold Back Securities with the SEC in a
timely manner after the completion of the Escrow Period. All of the
Consideration Securities will be validly issued, fully paid and free
from all Encumbrances (excluding any Encumbrance created by or on
behalf of the relevant Vendor). The Consideration Securities issued
to the Major Vendors will not be freely transferable and tradeable
during the Escrow Period and will be held in escrow in accordance
with the Escrow Agreements;
(f) (COMPLIANCE) the issue of the Consideration Securities to the
Vendors will not contravene:
(i) any provisions of the General Corporation Law of Delaware or
any other applicable law; or
(ii) any direction, ruling or request of the SEC properly given to
it.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 29
(g) (DUE DILIGENCE AND OWN INQUIRIES) the Purchaser acknowledges that it
has had the opportunity to conduct due diligence on the Company and
that it has undertaken such due diligence that it considers prudent
in light of the Purchaser's circumstances and the conduct of and
statements made by the Company and of its officers, employees,
agents or professional advisers. In conducting its due diligence and
in determining the extent of its due diligence, the Purchaser has
been guided by the views expressed by the Company or any of its
officers, employees, agents or professional advisers in relation to
operational matters, the performance and importance of key
personnel, the policies and procedures adopted by the Company, and
the Company's view of the prospects of new business from present and
prospective customers.
(h) (ACCURACY OF PAST FILINGS) Each of the Purchaser's Group Entities
has filed all of the forms required by any Tax Authority. The
Purchaser has also made a number of public filings which have been
made available to the Vendors prior to the Completion Date and
attest to the compliance by the Purchaser's Group Entities with all
Tax laws, the absence of any residual liability on the part of the
Purchaser's Group Entities to meet any tax liability owed to a Tax
Authority, do not reveal any unresolved Tax disputes with a Tax
Authority, tax audits or investigations or failures on the part of a
Purchaser Group Entity to comply with any tax ruling issued by a Tax
Authority, confirm that each Purchaser Group Entity has made
adequate provisions for any tax liability which it is aware is owed
by it to a Tax Authority and has made all required deductions from
all amounts that it has received that it is required to pay to any
Tax Authority, and that all Taxes assessed or imposed on a
Purchaser's Group Entity have been paid by the final date for
payment.
9.2 INDEMNITY
The Purchaser indemnifies the Vendors from all Liability which the Vendors
suffer or incur by reason of:
(a) any of the statements in clause 9.1 being untrue or inaccurate;
(b) any other covenant or representation of the Purchaser in this
agreement being untrue or inaccurate; or
(c) any failure by the Purchaser to fulfil its obligations under this
agreement.
10 MAJOR VENDORS' WARRANTIES, REPRESENTATIONS AND INDEMNITIES
10.1 MAJOR VENDOR QUALIFICATIONS
The Major Vendors severally represent and warrant to the Purchaser that,
except as provided in this agreement, each of the Vendor Qualifications
are true and correct as at the date of this Agreement and on each date to
and including the Completion Date. In respect of Xxxxx Xxxxx, the Vendor
Qualifications are varied as applicable to reflect the fact that Xxxxx
Xxxxx holds options and that those options will be cancelled by the
Company.
10.2 MAJOR VENDOR WARRANTIES
The Major Vendors severally represent and warrant to the Purchaser that,
except as provided in this agreement, to the best of their knowledge and
belief, each of the Warranties are true and correct in all material
respects as at the date of this Agreement and on each date to and
including the Completion Date.
10.3 INDEPENDENT WARRANTIES
Each of the Warranties is to be treated as a separate representation and
warranty and the interpretation of any Warranty made may not be restricted
by reference to, or inference from, any other Warranty.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 30
10.4 DISCLOSURES
Each of the Warranties is qualified by, and the Major Vendors are not
liable to make any payment (whether by way of damages, indemnity or
otherwise) for any breach of any Warranty to the extent that that breach
is based on any fact, matter or circumstance:
(a) fairly and accurately disclosed in this agreement, including without
limitation, in the disclosure schedule set out in Schedule 15; or
(b) is within the Purchaser's knowledge at the date of this Agreement
(provided, however, that for the purposes of this clause 10.4(b) and
clause 11.2 the Purchaser will only be deemed to know information
which is known to any of its executive directors non- executive
directors, management, employees, consultants or advisers);
(c) fairly and accurately disclosed in writing to the Purchaser, in the
course of any due diligence investigation the Purchaser undertakes
into the affairs of the Group; or
(d) that was not known and ought not to have been known to the Vendors
prior to the date of this Agreement and became known to the Vendors
and was fairly and accurately disclosed in writing by the Major
Vendors to the Purchaser after the date of this Agreement but before
Completion. (For the avoidance of doubt, nothing in this clause
limits the rights of the Purchaser under Condition 16 in clause 2.1
to terminate this Agreement on receipt of such notification.)
10.5 MEANING OF "FAIRLY AND ACCURATELY DISCLOSED"
For the purpose of this agreement "fairly and accurately disclosed" means
a disclosure in such detail as to enable a reasonable person in the
position of the Purchaser to make a reasonable and informed assessment of
the matter concerned.
10.6 KNOWLEDGE AND BELIEF
The Warranties or other statements made by a Major Vendor on the basis of
the best of their knowledge, information, belief or awareness, are made on
the basis that that Major Vendor has, in order to establish that the
Warranty or statement is accurate and not misleading in any material
respect, made all reasonable enquiries of their and each relevant Group
Entity's officers, managers and employees who could reasonably be expected
to have information relevant to matters to which the Warranty or statement
relates.
10.7 RELIANCE
The Purchaser has undertaken its own due diligence in relation to the
Company. The Major Vendors acknowledge that the Purchaser has entered into
this agreement in reliance on the Warranties and that the Warranties have
been given with the intention of inducing the Purchaser to enter into this
agreement. To the maximum extent permitted by law any representation or
warranty not expressly set out in this agreement is hereby excluded.
10.8 INDEMNITY
Subject to the same limitations set out in clauses 11.2(b) to 11.2(f)
inclusive, clause 11.3, clause 11.4 and clause 11.5, each Major Vendor
indemnifies the Purchaser to the extent of its Respective Vendor Liability
against:
(a) Liability which the Purchaser suffers or incurs by reason of any of
the Vendor Qualifications and Warranties made by it being untrue or
inaccurate in a material respect; and
(b) any failure by that Major Vendor to fulfil any of its material
obligations under this agreement, including, without limitation,
under clauses 3 and 6 (subject to clause 6.1(c)), 7, 10, 12, 14 and
15.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 31
11 LIMITATIONS OF LIABILITY
11.1 NOTICE OF CLAIMS
If a Claim is made against the Purchaser or a Group Entity which relates
to a Warranty being untrue or inaccurate:
(a) the Purchaser must give written notice of the Claim to the Major
Vendors within a reasonable time of becoming aware of that Claim or
instituting the Claim against the Major Vendors;
(b) the notice must contain such details of the facts, matters or
circumstances of that Claim as are known to the Purchaser at the
date the notice is given; and
(c) in case of a Claim by a third party against the Purchaser or a Group
Entity, neither the Purchaser nor that Group Entity may settle, make
any admission of liability or compromise any Claim, or any matter
which gives or may give rise to that Claim, without the prior
consent of the Major Vendors (which consent must not be unreasonably
withheld). The consent of the Major Vendors will be deemed to have
been given if the Purchaser has made a request for such consent and
the Major Vendors have not responded to that request within 15
Business Days of the day on which the request was made.
11.2 MAJOR VENDORS NOT LIABLE
The Major Vendors are not liable to the Purchaser (or any person deriving
title from the Purchaser) for any Claim under clause 10 in connection with
this agreement to the extent that:
(a) the Claim does not relate to a Liability which the Purchaser suffers
or incurs by reason of any of the Vendor Qualifications and
Warranties made by them being untrue or inaccurate in a material
respect or any failure by a Major Vendor to fulfil any of its
material obligations under this agreement, including, without
limitation, under clauses 3, 6, 7, 10, 12, 14 and 15.
(b) the Claim relates to a thing done or not done after the date of this
agreement at the request or with the approval of the Purchaser;
(c) the Claim is caused, created or increased by any act or omission
(including delay) after Completion by the Purchaser or any Group
Entity;
(d) the Claim has been fairly and accurately disclosed to the Purchaser
or is within the Purchaser's knowledge at the date of this
Agreement;
(e) to the extent that the Claim is recovered under insurance (or would
have been recovered under insurance if notified to the insurers in a
timely manner);
(f) in respect of each specific Major Vendor, for any amount in excess
of the Major Vendor's Respective Vendor Liability.
No Optionholder (other than Xxxxx Xxxxx in his capacity as a Major Vendor)
and none of the Vendors who are not Major Vendors are liable to the
Purchaser for any Claim.
11.3 TIME LIMIT ON CLAIM
The Purchaser may not claim for a breach of Warranty unless the Purchaser
has given notice of the Claim to the Major Vendors in accordance with
clause 11.6(a), which must contain such details of the facts, matters or
circumstances of that Claim as are known to the Purchaser at the date the
notice is given together with a statement that the Purchaser considers
that the quantum of the Claim will exceed the monetary thresholds
specified in clause 11.4 within:
(i) in respect of a Claim for breach of a Warranty not relating to
Tax: 6 months of the Completion Date; or
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 32
(ii) in respect of a Claim for breach of a Warranty relating to
Tax, the period in which the Australian Tax Office is able to
make a Claim against the Company, but in no event greater than
7 years from the date of the relevant rebate or other tax
event.
11.4 LIMITS ON THE AMOUNT OF CLAIM
(a) The Purchaser may not Claim:
(i) subject to clause 10.4(b), if the amount finally adjudicated
or agreed against the Vendors in respect of the breach or a
series of breaches relating to the same or substantially
similar facts, matters or circumstances is less than $50,000;
and
(ii) unless and until the aggregate of all amounts finally
adjudicated or agreed against the Vendors in respect of all
breaches exceeds $200,000;
(b) The maximum liability of each Major Vendor is the aggregate of all
Completion Payments and the value of all Consideration Securities
(calculated as having a value of $A5.10) as set out opposite the
name of that Major Vendor in Schedule 1 to this Agreement. The
Purchaser may not make a Claim against any Major Vendor in excess of
this maximum liability.
11.5 SATISFACTION OF A CLAIM
(a) Subject to clause 11.5(c), once determined by agreement between the
Purchaser and the Major Vendors or by mediation or arbitration
pursuant to clause 11.6, a Claim will be satisfied by each Major
Vendor in respect of its Respective Vendor Liability in cash and
Consideration Securities in the same proportions as cash and
Consideration Securities were provided to that Major Vendor under
clause 5.1.
For example, if a Claim of $1 million is determined against the
Major Vendors, a Major Vendor who has a Respective Vendor Liability
of 10% and who has received 60% of its proportion of the Purchaser
Consideration in cash and 40% of its proportion in Consideration
Securities will be required to pay the Purchaser $60,000 in cash and
permit to be cancelled Consideration Securities that have a value of
$40,000 (which value will be determined in the manner specified in
clause 11.5(b).
(b) In respect of any Claim notified in the 6 months after the
Completion Date, the value ascribed to each Holdback Security is
taken to be $5.10 or such lower price at which ordinary shares may
previously have been issued by the Purchaser during the Escrow
Period and in respect of which issue the provisions of clause 5.2
was applied
(c) In respect of any Claim notified more than 6 months after the
Completion Date, , the Major Vendors must satisfy that Claim in
cash.
11.6 DISPUTES REGARDING WARRANTY CLAIMS
(a) If the Purchaser wishes to make a Claim against Major Vendors in
respect of a breach of Warranty the Purchaser shall give written
notice of that Claim to the Major Vendors containing the details
referred to in Clause 11.3. If the Major Vendors dispute that Claim
then the dispute may be referred by the Purchaser or the Major
Vendor for resolution in accordance with the succeeding provisions
of this Clause 11.6. Each Major Vendor must nominate one person to
represent themself in the processes outlined in the succeeding
provisions of this Clause 11.6, which person shall have the
authority to represent and bind the relevant Major Vendor to the
outcome of those processes.
(b) Matters referred to mediation pursuant to paragraph (a) of this
Clause 11.6 shall be referred to mediation administered by a person
("the Mediator") to be mutually agreed upon by the parties in
dispute or, if they are unable to agree on the appointment of the
Mediator within 3 Business Days of a referral pursuant to Clause
11.6, by a person
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 33
nominated (within 2 Business Days of a request for such nomination)
by the President for the time being of the Institute of Arbitrators
and Mediators Australia.
(c) The parties in dispute will procure that their nominated
representatives will attend at any conference arranged by the
Mediator for the purpose of the attempted resolution of the dispute.
At any mediation conference arranged by the Mediator the mediation
will be conducted under and in accordance with such procedures and
rules as may be agreed between the parties and failing agreement, in
accordance with the rules set down by the Mediator and advised to
the parties in dispute.
(d) Evidence of anything said, documents presented to, admissions made
or matters raised in the course of any conference with the Mediator
will be confidential to the parties and the Mediator and will not,
unless all parties consent, be admissible at any subsequent hearing,
arbitration or litigation proceedings.
(e) Failing any agreement to the contrary between the parties to the
mediation, the costs of the Mediator shall be borne 50% by Purchaser
and the balance equally by the Major Vendors who are parties to the
mediation.
(f) If the mediation procedures referred to in the preceding provisions
of this Clause 11.6, are unable to resolve the dispute, then the
Purchaser or the Major Vendors may commence court proceedings in
Victoria, unless within 14 days of the date on which the mediation
conference is held the Major Vendors unanimously agree to refer the
matter to arbitration in accordance with the following provisions of
this Clause 11.6.
(g) Matters referred to arbitration shall be referred for determination
by a person ("the Arbitrator") to be mutually agreed upon by the
parties in dispute or, if they are unable to agree on the
appointment of the Arbitrator within 3 Business Days of referral
pursuant to paragraph (f) of this Clause 11.6, by a person nominated
(within 2 Business Days of request) by the President of the
Institute of Arbitrators Australia.
(h) Any such dispute shall be determined by the Arbitrator in accordance
with and subject to the Institute of Arbitrators Rules for the
Conduct of Commercial Arbitrations. The Arbitrator may obtain or
refer to any documents, information or material and undertake any
inspections or enquiries as he or she determines appropriate. The
Arbitrator must provide the parties with a draft of his or her
determination and must give the parties an opportunity to comment on
the draft determination before it is finalised.
(i) The determination made by the Arbitrator shall be final and binding
on the parties to the arbitration as to questions of both fact and
law.
(j) The costs of the arbitration shall be borne 50% by the Purchaser and
the balance equally by the Major Vendors who are parties to the
Arbitration.
(k) The Purchaser and each Major Vendor shall comply with the
Arbitrator's determination as soon as practicable after the delivery
of that determination and in any event within 14 days of delivery of
the determination.
(l) If arbitration is commenced pursuant to this Clause 11.6, then
subject to the provisions of the Commercial Arbitration Act 1984
(Victoria), no party to the dispute shall be entitled to commence or
maintain any action or court proceedings upon the dispute until such
matter has been referred and determined as provided for in this
Clause 11.6.
(m) If a party breaches the terms of this Clause 11.6 and does not
rectify that breach within 2 Business Days of receipt of notice from
another party to that dispute (which notice expressly refers to the
consequences of such breach as set out in this paragraph), the other
parties to the dispute are not required to continue to comply with
the dispute resolution procedures set out in this Clause 11.6, and
may take other actions including initiating court proceedings.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 34
(n) Nothing in this Clause 11.6, (including paragraph (l), prevents a
party from seeking or obtaining interlocutory relief.
12 ADJUSTMENT FOR TAX LIABILITY
12.1 TAX CLAIMS
If a Group Entity, or the Head Company of a Consolidated Group of which
the Group Entity is a member, receives or suffers a Tax Claim that relates
to an act or omission of, or occurrence affecting, that Group Entity
before the close of business on the Completion Date, then the Major
Vendors must pay to the Purchaser the amount by which the sum of:
(a) the Claim Amount for that Tax Claim; and
(b) all other Loss in respect of the Tax Claims that relate to an act or
omission of, or occurrence affecting a Group Entity before the close
of business on the Completion Date,
exceeds the Tax Provision.
12.2 REDUCTION IN PURCHASE CONSIDERATION
Any payment under clause 12.1 is to be treated as a reduction in the
Purchase Consideration.
12.3 OBLIGATIONS EXCLUDED
The obligations of the Major Vendors under clause 12.1 do not apply in
respect of a Tax Claim:
(a) to the extent that the Tax Claim arises from the failure by the
Purchaser to supply to the Major Vendors on a timely basis
information which is reasonably requested by the Major Vendors in
relation to the Tax Claim;
(b) to the extent that the Tax Claim represents the disallowance of any
deduction, and the disallowance results from:
(i) any Group Entity not carrying on the same business after
Completion as the Business immediately before Completion;
(ii) any Group Entity, after Completion, deriving income from a
business that it did not carry on or from a transaction of a
kind that it had not entered into in the course of its
business operations before Completion; or
(iii) a change of control of any Group Entity.
12.4 PAYMENTS
Payments under clause 12.1 must be made to the Purchaser as follows:
(a) if a Group Entity, or the Head Company of a Consolidated Group of
which the Group Entity is a member, must make a payment of Tax in
respect of a Tax Claim or any related Loss to which clause 12.1
applies - seven days before the latest date on which that payment is
required to be paid; and
(b) if a Group Entity, or the Head Company of a Consolidated Group of
which the Group Entity is a member, is deprived of any credit,
rebate, refund, relief, allowance, deduction, loss carried forward -
seven days before the latest date on which Tax is required to be
paid without incurring any penalty or additional tax for late
payment, being Tax which would not have been payable were it not for
the Tax Claim.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 35
12.5 PAYMENT OF INTEREST
The Major Vendors must pay interest to the Purchaser on any moneys due
under this clause 12.4(a) but unpaid, from the date payment is due until
paid in full, at a rate equal to as prescribed in Division 1 of Part IIA
of the Taxation Administration Xxx 0000.
12.6 ASSESSABLE INCOME
If for any reason an amount received by the Purchaser under clause 12.1 is
treated as assessable income of the Purchaser, or the Head Company of a
Consolidated Group of which the Purchaser is a member, under any law
relating to Tax the Major Vendors agree to pay to the Purchaser an
increased amount so that, after deducting from that amount all Tax paid or
payable in respect of the receipt, the balance remaining is equal to the
amount due under the relevant clause.
12.7 WRITTEN NOTICE OF TAX CLAIM
(a) If the Purchaser becomes aware of a Tax Claim the Purchaser must
give written notice of it to the Major Vendors within a reasonable
time of becoming so aware.
(b) The Purchaser must ensure the Major Vendors and their professional
advisers have reasonable access to the personnel of the Purchaser
and the Group Entities and to any relevant premises, assets and
Records within the custody, power, possession or control of the
Purchaser to enable the Major Vendors and their professional
advisers to examine the Tax Claim and Records and to take copies of
them, at the expense of the Major Vendors, provided the Major
Vendors and their professional advisers give to the Purchaser such
undertakings as to confidentiality as the Purchaser may reasonably
require.
(c) The Purchaser must take any proper and reasonable action (provided
that such action is not detrimental to a Group Entity) that the
Major Vendors request to avoid, resist, compromise or defend a
demand or notice issued by a Government Agency which gives rise to
the Tax Claim, provided the Major Vendors indemnify the Purchaser
and the Group Entities to the reasonable satisfaction of the
Purchaser against any Liability or loss which may be suffered or
costs, damages or expenses which may be incurred as a result of
compliance with the Major Vendor's request.
(d) The Major Vendors may request the Group Entities make appeals and
objections, in respect of a Tax Claim provided that all other
avenues of review have been exhausted.
(e) The Major Vendors must give the Purchaser immediate notice of any
investigation or communications relating to Tax from a Tax Authority
in respect of the Business (prior to Completion).
(f) Any action required under this clause 12.7 must be taken in a timely
manner.
12.8 REFUND BY PURCHASER
If, following the making of a payment under clause 12.1 for a Tax Claim,
all or part of the Claim Amount or any related Loss is refunded either in
cash or by credit to a Group Entity, or the Head Company of a Consolidated
Group of which the Group Entity is a member, (including, but not limited
to, any amount or credit received following a successful objection or
appeal), the Purchaser must immediately pay to the Major Vendors the
lesser of the refund and the amount of the payment paid under clause 12.1.
12.9 DISPUTE RESOLUTION
(a) If the Major Vendors and the Purchaser cannot agree under this
clause 12 within 21 days of a dispute arising between the Major
Vendors and Purchaser, then the dispute will be determined by an
Expert, such Expert to be a person with over ten years experience in
Tax. The Expert is to be mutually agreed upon by the parties in
dispute or, if they are
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 36
unable to agree on the appointment of the Expert within 3 Business
Days after the end of the 21 day period, the Expert will be a person
nominated (within 2 Business Days of a request for such nomination)
by the President of The Institute of Chartered Accountants in
Australia.
(b) The decision of the Expert is to be conclusive and binding on the
parties in the absence of manifest error. Unless otherwise
determined by the Expert, the Major Vendors and the Purchaser will
each pay one half of the Expert's costs and expenses in connection
with the reference. The Expert is appointed as an expert and not as
an arbitrator. The procedures for the settlement of the dispute are
to be decided by the Expert in its absolute discretion.
12.10 TIME
A Claim may be brought by the Purchaser under this clause 12 in respect of
Tax matters relating to the relevant Group Entity in any period up to and
including Completion only during the period referred to in clause
11.3(ii).
12.11 LIMITATIONS
For the avoidance of doubt, the liability of the Major Vendors under this
clause 12 is subject to the same limitations as set out in clauses 11.2(b)
to 11.2(f) (inclusive), 11.4 and 11.5.
13 ACCESS TO RECORDS AFTER COMPLETION
13.1 VENDORS' ACCESS TO RECORDS
At any time after the Completion Date, the Purchaser will, upon request of
any of the Vendors, give the Vendors reasonable access (at the Vendors'
expense) to the Records handed over to the Purchaser at Completion which
relate to the period before the Completion Date:
(a) subject to clause 13.1(b) in the case of a dispute with a statutory
or Government Agency and for the purpose of prosecuting or dealing
with such dispute, for a period of 5 years after the Completion
Date;
(b) in the case of a dispute in relation to any Tax or revenue related
matters, for the statutory period during which such a matter may
arise; and
(c) in all other cases, for a period of 5 years after the Completion
Date.
13.2 PURCHASER'S ACCESS TO RECORDS
At any time after the Completion Date, the Vendors will, upon request of
the Purchaser, give the Purchaser reasonable access (at the Purchaser's
expense) to the books, records and other documents relating to the Group
Entities required to be kept or maintained by the Vendors which relate to
the period before the Completion Date:
(a) subject to clause 13.2(b) in the case of a dispute with a statutory
or Government Agency and for the purpose of prosecuting or dealing
with such dispute, for a period of 5 years after the Completion
Date;
(b) in the case of a dispute in relation to any Tax or revenue related
matters, for the statutory period during which such a matter may
arise; and
(c) in all other cases, for a period of 5 years after the Completion
Date.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 37
14 PROTECTIVE COVENANTS
14.1 RESTRICTION
In consideration of the Purchaser entering into this agreement each Major
Vendor agrees and undertakes that it will not and will procure that none
of the other Vendors nor any Vendor's respective Related Bodies Corporate
or Related Director will:
(a) directly or indirectly;
(b) by themselves or jointly with or on behalf of any other person,
corporation or trust;
(c) through an agent, independent contractor or employee; or
(d) on any account or pretext or by any means whatsoever,
conduct any of the Restricted Activities within the Restriction Area for
the Restriction Period.
14.2 RESTRICTED ACTIVITIES
The Restricted Activities are:
(a) carrying on, assisting, promoting or otherwise being engaged or
concerned in any business or activity which is or may be competitive
with the Business (whether as a member, shareholder, optionholder,
unitholder, director, adviser, financier, contractor, manager,
employee, associate, proprietor, landlord, trustee, beneficiary,
servant, agent, principal, partner or in any other capacity
whatsoever);
(b) engaging or employing any person who at any time during the 12
months immediately preceding the Completion Date was employed or
engaged in the Business;
(c) interfering with the relationship between the Purchaser and its
employees, contractors, suppliers or customers; and
(d) using or disclosing to any third party any Confidential Information.
14.3 RESTRICTION AREA
Subject to clause 14.5, the Restriction Area is any of the following
areas:
(a) United States of America, Australia and Canada;
(b) United States of America and Australia;
(c) Australia;
(d) Victoria and New South Wales;
(e) Victoria; and
(f) Melbourne.
14.4 RESTRICTION PERIOD
Subject to clause 14.5, the Restriction Period is any of the following
periods:
(a) 1 year from the Completion Date; and
(b) 6 months from the Completion Date.
14.5 EFFECTIVE RESTRICTION AREA AND RESTRICTION PERIOD
Unless the resulting covenants and restrictions are or become invalid or
unenforceable for any reason, the Restriction Area and Restriction Period
that will be effective between the parties in relation to any Restricted
Activity will be those referred to in clauses 14.3(a) and 14.4. If a
covenant and restriction is or becomes invalid or unenforceable because
the Restriction Area or
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 38
Restriction Period applying to a Restricted Activity is considered
unreasonably large or long, the Restriction Area or Restriction Period
will be reduced to the subsequent area or period listed in clause 14.3 or
14.4.
14.6 SEVERABILITY
In this clause 14:
(a) each of the restrictions resulting from the various combinations of
a Restricted Activity, Restriction Area and Restriction Period has
effect as a separate and independent covenant and restriction;
(b) the Vendor agrees and acknowledges that each covenant and
restriction is reasonable in the circumstances and necessary to
protect the goodwill of the Business; and
(c) if any of those covenants and restrictions are or become invalid or
unenforceable for any reason, they will be severed from this
agreement without effecting the validity or enforceability of any
other covenant and restriction.
14.7 INJUNCTION
The Major Vendors acknowledge that monetary damages alone would not be
adequate compensation to the Purchaser for the Major Vendor's breach
(including breach of a procurement obligation) of this clause 14 and that
the Purchaser is entitled to seek an injunction from a court of competent
jurisdiction if:
(a) a Major Vendor fails to comply or threatens to fail to comply with
this clause 14; or
(b) the Purchaser or the Company has reasonable grounds to believe that
the Major Vendor will not comply with this clause 14.
14.8 SURVIVAL
The Vendors' obligations under this clause 14 survive the Completion of
this agreement.
14.9 EXCEPTIONS
(a) Nothing in this clause 14 will prevent a Vendor and its respective
Related Bodies Corporate (each a " RESTRICTED PARTY") from
collectively holding:
(i) any number of shares or other securities in the Purchaser; or
(ii) up to 20% (in aggregate) of the issued share capital or any
debentures or other securities of any company or other entity
the securities of which are listed on the ASX or NASDAQ.
(b) Nothing in this clause 14 will prevent:
(i) A&B Venture Fund Company Pty Ltd (as trustee for Xxxxx &
Buckeridge II trust), Warana Grange Pty Ltd, Navon Pty Ltd and
their respective Related Bodies Corporate from conducting any
of the Restricted Activities in the Restricted Area in
relation to the companies listed in schedule 13; or
(ii) any of the companies listed in schedule 13 and their
respective Related Bodies Corporate from conducting any of the
Restricted Activities in the Restricted Area.
(c) Nothing in this clause 14 will prevent Navon Pty Ltd or Xxxxx
Xxxxxxx nor any of their Related Bodies Corporate (the "Advisor")
from:
(i) providing any advisory services to any company, trust, entity
or person of the kind that it has provided to other companies
in the past; or
(ii) from taking fee or any equity interest (in lieu of a fee) in
such company, trust, entity or person,
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 39
if any such company, trust, entity or person is a Competitor, except
in the circumstances described in the next paragraph.
If the Advisor wishes to provide advisory services to a Competitor
that the Advisor (acting reasonably) considers conducts a business
that is a strategic fit with the Business, the Advisor must
introduce that Competitor to the Purchaser on an exclusive basis
(which exclusivity shall continue for as long as the Purchaser and
the Competitor are in active negotiation) before introducing the
Competitor to any other person and if the Purchaser acquires an
equity interest in or provides a loan to or enters into an alliance
or commercial arrangement with that Competitor, then the Advisor
shall be entitled to retain any fee and/or equity interest from that
Competitor that the Advisor may have negotiated with that
Competitor. If the Purchaser does not acquire an equity interest in
or provide a loan to or enters into an alliance or commercial
arrangement with that Competitor during the exclusivity period
referred to above, then the Purchaser may by notice in writing to
the Advisor require the Advisor to refund the fee or have its equity
cancelled for a nominal consideration. The Advisor shall be entitled
to recover any such fee or have its equity interest restored if the
Purchaser subsequently acquires an equity interest in or provides a
loan to or enters into an alliance or commercial arrangement with
that Competitor.
For the purposes of this clause (c), a "Competitor" is a company,
trust, entity or person that develops, sells, licences, provides or
supports loyalty software for use other than in the course of its
own business of providing other goods or services.
(d) Nothing in this clause 14 will prevent Advisor from continuing to
employ Xxxx Xxxx and Xxxxxxxx Xxxxxx on substantially the same terms
as they have been employed prior to the date of this Agreement by
Advisor or entities to whom they have been introduced by Advisor.
15 CONFIDENTIALITY
15.1 CONFIDENTIALITY
Subject to clauses 15.2 and 15.3;
(a) no party may disclose the provisions of this agreement or any
transactions the subject of this agreement unless the other parties
have first agreed in writing;
(b) each party must keep secret and confidential all confidential
information obtained from any other party or any Group Entity in
connection with this agreement or any transactions the subject of
this agreement and use its best endeavours to ensure that
information remains secret and confidential; and
(c) each party must ensure that its directors, officers, employees,
agents and advisers comply in all respects with this clause 15 as if
they were parties to this agreement.
15.2 LEGAL REQUIREMENTS
A party may disclose anything in respect of this agreement as required by:
(a) an applicable law; or
(b) the ASX or any other recognised stock exchange on which its shares
or the shares of any Related Body Corporate is listed.
15.3 PERMITTED DISCLOSURE TO OFFICERS AND PROFESSIONAL ADVISERS
A party may disclose anything in respect of this agreement or the terms of
the sale of the Shares to its officers, employees and professional
advisers on a "need to know" and confidential basis.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 40
15.4 DAMAGES INADEQUATE
The parties each acknowledge that damages may be inadequate compensation
for breach of this clause 15, and that each of the other parties are
entitled to specific performance or injunctive relief as a remedy for any
conduct or threatened conduct that is or will be a breach of this clause
15 in addition to any other remedies available at law or in equity to the
other parties.
15.5 AFTER TERMINATION
On termination of this agreement for any reason, each party must stop, and
must ensure that its permitted disclosees stop, using confidential
information of another party and, at the other party's option:
(a) return to the other party;
(b) destroy and certify in writing to the other party the destruction
of; or
(c) destroy and permit a representative of the other party to witness
the destruction of,
all confidential information in its possession or control.
15.6 CONFIDENTIALITY SURVIVES TERMINATION
The provisions of this clause 15 apply without time limitation and survive
termination of this agreement, regardless of whether termination occurs
before or after Completion.
16 PUBLICITY
16.1 NO PUBLIC ANNOUNCEMENTS
No party may make any press or other announcement or release relating to
this agreement or any transaction the subject of this agreement without
the prior written approval of the other parties as to the form and manner
of the announcement or release, unless and to the extent that the
announcement or release is required to be made by the party by law or by
the ASX or NASDAQ.
16.2 JOINT STATEMENT
The parties will make a joint public statement on or after the Completion
Date in relation to the sale of the Shares in a form approved in writing
by the Purchaser and the Managing Director of the Company.
17 COSTS AND STAMP DUTY
17.1 COSTS
Subject to clause 17.2, the parties will each bear their own legal,
accounting and other costs and expenses in connection with the preparation
and execution of this agreement and the transactions contemplated under
this agreement. The Vendors will collectively use one legal counsel of the
Company and those legal costs and expenses will not exceed $25,000
exclusive of GST and will be borne by the Company to that amount.
17.2 STAMP DUTY
The Purchaser will bear all stamp duty payable or assessed in connection
with this agreement and any accounting or legal expenses of preparing or
restating Company or Group Entity accounts to comply with Generally
Accepted Accounting Principles of the United States of America.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 41
18 GST
18.1 DEFINITIONS
Terms defined in the A New Tax System (Goods and Services Tax) Xxx 0000
(Cth) have the same meaning in this clause 18 unless provided otherwise.
18.2 GST ON CLAIMS
(a) If a payment to satisfy a claim or a right to claim under or in
connection with this agreement gives rise to a liability to pay GST,
the payer must pay, and indemnify the payee on demand against, the
amount of that GST.
(b) The payment of any amounts in respect of GST is subject to the
receipt of a valid tax invoice.
(c) If a party has a claim under or in connection with this agreement
for a cost on which that party must pay GST, the claim is for the
cost plus all GST (except any GST for which that party is entitled
to an input tax credit).
19 SURVIVAL OF REPRESENTATIONS AND INDEMNITIES
19.1 REPRESENTATIONS AND WARRANTIES
All representations and warranties in this agreement:
(a) will survive the execution and delivery of this agreement;
(b) will remain in full force and effect for the term of this agreement
(subject to the limitations on time on the ability to make a Claim
on the warranties); and
(c) are and will be given with the intent that liability under the
representations and warranties will not be confined to breaches
discovered prior to the date of this agreement.
19.2 INDEMNITIES
Each indemnity in this agreement:
(a) constitutes a separate and independent obligation of the party
giving the indemnity from its other obligations under this
agreement; and
(b) will survive termination of this agreement.
20 OBSERVER AND INFORMATION RIGHTS
(a) While they hold Consideration Securities, A&B Venture Fund Company
Pty Ltd are entitled to nominate one observer to attend all meetings
of the board of any of Purchaser's Group Entities and all committees
of the board of the Purchaser's Group Entities at their own cost and
in a non-voting observer capacity.
(b) The A&B Observer must be sent all communications sent to the board
of any of the Purchaser's Group Entities at the same time and in the
same manner as they are sent to the applicable board.
(c) The A&B Observer has the right to access, inspect and copy:
(i) all written communications tabled to the board of any of
Purchaser's Group Entities including, without limitation, all
accounts, budgets, plans, forecasts, reports, presentations,
contracts and all minutes of meetings; and
(ii) the financial books and financial records of the Purchaser's
Group Entities,
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 42
at any time during usual business hours.
21 NOTICES
21.1 METHOD
All notices, requests, demands, consents, approvals, offers, agreements or
other communications (" NOTICES") given by a party under or in connection
with this agreement must be:
(a) in writing;
(b) signed by a person duly authorised by the sending party;
(c) directed to the recipient's address (as specified in clause 21.4 or
as varied by any notice); and
(d) hand delivered, sent by prepaid post or transmitted by facsimile to
that address.
21.2 RECEIPT
A notice given in accordance with this clause is taken as having been
given and received:
(a) if hand delivered at or before 4.30pm on a Business Day, on
delivery, otherwise at 9.30am on the next Business Day;
(b) if sent by prepaid post:
(i) within Australia, on the second Business Day after the date of
posting;
(ii) to or from a place outside Australia, on the seventh Business
Day after the date of posting;
(c) if transmitted by facsimile at or before 4.30pm on a Business Day,
at the time recorded on the transmission report indicating
successful transmission of the entire notice, otherwise at 9.30am on
the next Business Day.
21.3 NOTICE TO/FROM VENDORS
(a) Notice to a Vendor must be given to the Managing Director of the Company
with a copy to A&B Venture Fund Company Pty Ltd. A notice to the Vendors
in accordance with this clause 21 will be deemed to be validly given to
all Vendors.
(b) Notice from a Vendor must be given jointly by all Vendors. Notice given by
the Majority Vendors must be given by such number of Major Vendors that
comprise the Majority Vendors. Notice given by the Major Vendors must be
given by the Major Vendors. A notice to the Purchaser in accordance with
this clause 21 will be deemed to be validly given if expressed to be given
by all Vendors, the Majority Vendors or the Major Vendors (as the case may
be).
21.4 ADDRESS OF PARTIES
Unless varied by notice in accordance with this clause 21, the parties'
addresses and other details are:
Party: Vendors
Details: As set out in Schedule 12
Party: Purchaser
Attention: President, CEO and Director
Address: Xxxxx 00 (Xxxxx 0), 00-00 Xxxxx Xx. Xxxxxx XXX 0000
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 43
Facsimile: x00 0 0000 0000
With a copy to: 0000 X. Xxxxxxxxx, Xxxxxxx, XX 00000
Facsimile: 0011 1 313 567 4734
22 SUPERVENING LEGISLATION
Any present or future legislation which operates to vary the obligations
of a party in connection with this agreement with the result that another
party's rights, powers or remedies are adversely affected (including, by
way of delay or postponement) is excluded except to the extent that its
exclusion is prohibited or rendered ineffective by law.
23 GENERAL
23.1 ENTIRE AGREEMENT
This agreement constitutes the entire agreement between the parties in
relation to its subject matter. All prior discussions, undertakings,
agreements, representations, warranties and indemnities in relation to
that subject matter are replaced by this agreement and have no further
effect.
23.2 PARAMOUNTCY OF AGREEMENT
If this agreement conflicts with any other document, agreement or
arrangement, this agreement prevails to the extent of the inconsistency.
23.3 NO MERGER
The provisions of this agreement will not merge on completion of any
transaction contemplated in this agreement and, to the extent any
provision has not been fulfilled, will remain in force.
23.4 ATTORNEYS
Each person who executes this agreement on behalf of a party under a power
of attorney warrants that he or she has no notice of the revocation of
that power or of any fact or circumstance that might affect his or her
authority to execute this agreement under that power.
23.5 AMENDMENT
This agreement may not be amended or varied unless the amendment or
variation is in writing signed by all parties.
23.6 ASSIGNMENT
No party may assign, transfer or otherwise deal with this agreement or any
right or obligation under this agreement without the prior written consent
of each other party which consent must not be unreasonably withheld.
23.7 SEVERABILITY
Part or all of any provision of this agreement that is illegal or
unenforceable will be severed from this agreement and will not affect the
continued operation of the remaining provisions of this agreement.
23.8 WAIVER
(a) The failure, delay or omission by a party to exercise any power or
right under this agreement does not operate as a waiver of that
power or right.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 44
(b) The single or partial exercise by a party of any power or right
under this agreement does not preclude any other or future exercise
of that or any other power or right under this agreement.
(c) Waiver of any power or right under this agreement:
(i) must be in writing signed by the party entitled to the benefit
of that power or right; and
(ii) is effective only to the extent set out in that written
waiver.
23.9 RIGHTS, REMEDIES ADDITIONAL
Any rights and remedies that a person may have under this agreement are in
addition to and do not replace or limit any other rights or remedies that
the person may have.
23.10 FURTHER ASSURANCES
Each party must do or cause to be done all things necessary or reasonably
desirable to give full effect to this agreement and the transactions
contemplated by it (including, but not limited to, the execution of
documents).
23.11 GOVERNING LAW
This agreement will be governed by and construed in accordance with the
laws in force in the State of Victoria.
23.12 JURISDICTION
Each party:
(a) submits to the exclusive jurisdiction of the courts of Victoria and
any court that may hear appeals from those courts; and
(b) waives any right it might have to object to an action being brought
in those courts including, but not limited to, that those courts are
an inconvenient forum.
XXXXXX XXXXX LEIBLER SHARE SALE AGREEMENT - PAGE 45
SCHEDULE 3 - WARRANTIES
PART A
1 VENDOR'S QUALIFICATIONS
1.1 (TITLE) Vendor is the legal holder of the Shares as set out beside its
name in schedule 1.
1.2 (NO ENCUMBRANCE) There is no Encumbrance over its Shares (excluding any
encumbrance created by or on behalf of the Purchaser).
1.3 (POWER) Vendor has the power, without any further consents of any other
person, to enter into and perform its obligations under this agreement.
1.4 (AUTHORITY) Vendor has taken all action necessary to authorise the entry
into and performance of its obligation under this agreement.
1.5 (NO BREACH) The transfer of the Shares does not breach any obligation or
agreement binding on the Vendor.
1.6 (FINANCIAL STANDING) Vendor is not affected by and is not the subject of
any Insolvency Event and it is able to pay its debts as and when they fall
due.
PART B
2 CORPORATE STANDING AND AUTHORITY
2.1 (INCORPORATION AND POWER) Each Group Entity which is a company:
(a) has been validly incorporated as a company limited by shares;
(b) so far as each Major Vendor is aware, has done everything necessary
to do business lawfully; and
(c) has the power to own its assets and conduct its business activities
as presently conducted.
2.2 (PROPORTION OF CAPITAL) The Shares comprise all of the issued capital of
the Company and are fully paid.
2.3 (NOT INSOLVENT) Each Group Entity is able to pay its debts as and when
they fall due.
2.4 (OWNERSHIP OF GROUP COMPANIES) The Company is the legal and beneficial
owner of the shares and units in each of the Group Companies (other than
the Company).
2.5 (ACQUISITION OF SUBSIDIARIES) No Group Entity has any Liability (actual
or contingent) in respect of the acquisition of shares in any other Group
Entity.
2.6 (FULLY PAID) All shares in the capital of each Group Entity which is a
company are fully paid up.
2.7 (OBLIGATIONS TO ISSUE SHARES) No Group Entity is under any obligation,
whether or not subject to any condition, to:
(a) issue, allot, create, sell, transfer or otherwise dispose of any
Securities;
(b) enter into any agreement in respect of the rights to vote which are
conferred in respect of any Securities; or
(c) grant any option or right of first refusal or offer in respect of
any Securities,
3 FINANCIAL POSITION
3.1 (PREPARATION OF ACCOUNTS) The Last Accounts:
(a) were prepared in accordance with:
(i) the Accounting Standards, the Corporations Act and all other
applicable laws; and
(ii) except as disclosed in the Accounts, the same accounting
policies as were applied in the corresponding accounts for the
previous financial year;
(b) give a true and fair view of:
(i) the assets and liabilities (including contingent liabilities),
financial position and state of affairs of each Group Entity
and the Business as at its balance date of the Last Accounts;
and
(ii) the profit of each Group Entity and the Business and the
operation of the relevant Group Entity for the twelve month
period ended on its balance date of the Last Accounts; and
4 FINANCIAL WARRANTIES
4.1 (OUTSTANDING LIABILITIES) No Group Entity owes any money or has any
outstanding liabilities to any of its directors, or any of its existing or
former shareholders and no director or any existing or former shareholder
of the Company will owe any money to or have any outstanding liability to
the Company.
4.2 (NO GUARANTEE) No Group Entity is directly or indirectly obliged in any
way to guarantee, assume or provide funds to satisfy any obligation of any
person.
4.3 (GUARANTEE TO A GROUP ENTITY) No person has given or entered into any
guarantee, indemnity or letter of comfort in respect of a Group Entity.
4.4 (BANK ACCOUNTS) The names and locations of all banks in which a Group
Entity has an account and the names of all persons authorised to sign on
the accounts are listed in schedule 7.
4.5 (BILLS OF EXCHANGE) There is no promissory note or xxxx of exchange
outstanding which has been drawn, accepted or endorsed by the Major
Vendors or a Group Entity other than cheques drawn in favour of creditors
in respect of obligations incurred in relation to a Group Entity in the
ordinary course of business.
5 BUSINESS
5.1 (OWNERSHIP OF ASSETS) Each Group Entity is the sole beneficial owner of
its Assets.
5.2 (NO BREACH OF CONSTITUENT DOCUMENT) So far as each Major Vendor is aware,
there has not been any breach of or default by any Group Entity of any
term or provision of its respective constitution or trust deed (as
relevant).
5.3 (NO THIRD PARTY RIGHTS) No third party, has any right to use a Group
Entity's Asset.
5.4 (APPLICABLE LAWS) The Business has been and is conducted in accordance
with all applicable laws, the conduct of the Business by any Group Entity
does not contravene any laws and no
allegation of any contravention of any applicable laws is known to a Major
Vendor or a Group Entity.
6 RECORDS
6.1 (MAINTENANCE AND ACCURACY OF RECORDS)
(a) The Company has prepared and maintained adequate, suitable,
materially complete and materially accurate and up to date records
regarding the transactions conducted by it, its assets, liabilities,
finances, operations and activities.
(b) Where applicable, as far as necessary, the Records have been
prepared in accordance with the requirements of the Corporations Act
and the Accounting Standards.
6.2 (TAX RECORDS) Each Group Entity maintains and has retained for the period
required by law all records that the Group Entity is required to maintain
under any law relating to Taxes.
6.3 (POSSESSION OF RECORDS) The originals of all material Records which ought
to be in the possession of a Group Entity are in its possession and
control.
7 LITIGATION
7.1 (NO LITIGATION) No Group Entity is involved in any prosecution,
litigation or arbitration proceedings relating to the Business, there are
no such proceedings pending or, to the best of the Major Vendors'
knowledge and belief, threatened and, to the best of the Major Vendors'
knowledge and belief, there are no facts likely to give rise to any such
proceedings.
7.2 (UNSATISFIED JUDGMENTS, ETC) The operation of the Business is not subject
to any unsatisfied judgment or any order, award or decision handed down in
any litigation or arbitration proceedings.
8 INSURANCE
8.1 (DISCLOSURE) The Company has disclosed complete and accurate particulars
of all insurance policies taken out by or for the benefit of each Group
Entity, and a claims history of all claims made under those insurance
policies.
8.2 (CURRENCY) Each insurance policy held by a Group Entity is currently in
full force and effect and all applicable premiums have been paid. To the
best of each Major Vendors' knowledge and belief, nothing has been done or
omitted to be done which would make any policy of insurance void or
voidable or which would permit an insurer to cancel the policy or refuse
or reduce a claim or materially increase the premiums payable under the
policies.
8.3 (NO OUTSTANDING CLAIMS) No claim has been made in the past 3 years which
is outstanding under any contract of insurance and, to the best of the
Major Vendors' knowledge and belief, no fact or circumstance exists which
might give rise to a claim under a contract of insurance.
8.4 (PREMIUM INCREASES) To the best of the Major Vendors' knowledge and
belief, no Group Entity has done or omitted to do anything which might
result in an increase in the premium payable under any contract of
insurance.
9 INTELLECTUAL PROPERTY
9.1 (OWNERSHIP) The Company beneficially owns or has an enforceable right to
use all the Company Intellectual Property Rights listed in Part A of
Schedule 6.
9.2 (NO INFRINGEMENT OF THIRD PARTY RIGHTS) So far as each Major Vendor is
aware, neither the carrying on of the Business by a Group Entity, nor the
use of the Company Intellectual Property Rights:
(a) infringes, or is alleged to infringe, the Intellectual Property
Rights of any third party; or
(b) is, or is alleged to be, in breach of any obligation of confidence
owed to any third party.
9.3 (NO INFRINGEMENT) So far as each Major Vendor is aware, there has not
been:
(a) any infringement of any of the Company Intellectual Property Rights;
(b) any misuse or unauthorised disclosure of the Confidential
Information; or
(c) any other act which may affect the validity or enforceability of the
Intellectual Property.
9.4 (LIST COMPLETE) The Company does not own, use, or require in its Business
any Intellectual Property Rights other than those listed in Schedule 6.
9.5 (NO CLAIMS) Neither the Company nor the Major Vendors have made any
claims or commenced or threatened to commence proceedings or settled any
claims or proceedings alleging infringement of the Intellectual Property
Rights listed in Part A of Schedule 6.
10 SOFTWARE
10.1 (OWNERSHIP) Part B of Schedule 6 sets out a complete and accurate list of
all Software which was developed by each Group Entity and what Software is
owned, licensed, or leased by that Group Entity as the case may be.
10.2 (NO DEFECTS) Other than errors through data entry or coding or
communication protocols that may be faulty at the time, all information,
statements and representations made or which appear in the Software
developed and licensed to clients by the Group Entity are true, correct,
accurate and are not misleading or deceptive.
10.3 (NO VIRUS) The Software and the information technology developed by each
Group Entity and licensed to clients by that Group Entity has not been
infected by any virus.
10.4 (VALID AND BINDING) All software licences entered into by a Group Entity
are valid, binding and enforceable against the parties to it in accordance
with their terms.
10.5 (COMPUTERS) All the computers, servers and computer systems owned or used
by or on behalf of a Group Entity are, except for any software licensed to
the Group Entity, owned by the Group Entity, are under its sole control
and are not shared with or used by or on behalf of or accessible by any
other person.
10.6 (COMPUTER SYSTEM) The computer systems and servers used by a Group Entity
to operate its Business:
(a) so far as each Major Vendor is aware, are sufficient for its
Business and has operated to a level acceptable for the adequate
operation of the Business; and
(b) can be run without undue reliance on persons other than employees of
the Group Entity.
11 PLANT AND EQUIPMENT
11.1 (MATERIAL PLANT & EQUIPMENT) The Last Accounts includes all items of
plant and equipment owned by a Group Entity with a written down value in
excess of $10,000.
11.2 (CONDITION) So far as each Major Vendor is aware, each item of plant and
equipment owned or used by a Group Entity:
(a) is in reasonable condition taking into account normal wear and tear;
(b) is in satisfactory working condition and capable of doing the work
for which it is designed subject to unknown possible breakdowns; and
(d) has been maintained in a manner that does not prejudice any rights
under any maintenance contract in connection with any of that plant
and equipment.
11.3 (ALL PLANT AND EQUIPMENT LEASES) Schedule 8 accurately describes all of
the Plant and Equipment Leases.
11.4 (NO CLAIM) So far as each Major Vendor is aware there is no claim
outstanding against any supplier of the plant and equipment owned or used
by a Group Entity or of maintenance services for that plant and equipment
in connection with any defect in that plant and equipment.
11.5 (POSSESSION) Each item of plant and equipment owned or used by a Group
Entity, is in the physical possession of that Group Entity or a client of
the Group Entity in the ordinary course of business.
12 BUSINESS PREMISES AND PROPERTY LEASES
12.1 (ALL BUSINESS PREMISES) Schedule 9 accurately describes all the business
premises leased or occupied by each Group Entity in respect of its
Business.
12.2 (EXCLUSIVE OCCUPATION) Each Group Entity has exclusive
occupation of its Business Premises free from all Encumbrances or third
party rights.
12.3 (PERFORMANCE OF COVENANTS) There has been no Claim, breach or circumstance
likely to give rise to any Claim or breach in respect of any material
covenant affecting the Business Premises.
12.4 (NO UNUSUAL RESTRICTIONS) There are no restrictions, stipulations or
outgoings affecting the Business Premises which are of an unusual nature
or conflict with the present use. The use of the Business Premises by each
Group Entity does not constitute a breach of any of the lease or any
applicable law.
12.5 (ALL PROPERTY LEASES) Schedule 10 accurately describes all of the leases
of real property to any Group Entity. Each Group Entity has made all
payments required by and has otherwise complied with the terms of each of
the property leases to which it is a party.
12.6 (NO ALTERATION) So far as each Major Vendor is aware, no development,
alterations or works have been carried out in relation to the Business
Premises which would require any permission or consent under any statute
or regulation which has not been obtained and all conditions attaching to
any such permission or consent have been fully complied with.
12.7 (NO PROPOSALS) So far as each Major Vendor is aware, there are no
proposals by any competent authority or other person which would adversely
affect the Business Premises.
12.8 (NO DISPUTES) So far as each Major Vendor is aware, there are no current
disputes relating to any of the Business Premises or their use.
13 ENVIRONMENT
13.1 (ENVIRONMENTAL LAWS) So far as each Major Vendor is aware, there has been
no Claim, breach or circumstance likely to give rise to any Claim or
breach in respect of any Environmental Law relating to any Group Entity or
its Business.
14 MATERIAL CONTRACTS
14.1 (LIST OF MATERIAL CONTRACTS) Schedule 11 is a complete list of all
Material Contracts of each Group Entity that are in place as at the
Closing Date.
14.2 (VALID AND BINDING) So far as each Major Vendor is aware:
(e) each Material Contract is valid, binding and enforceable against the
parties to it in accordance with its terms; and
(f) the Company is not in breach of, or in default under, any such
Material Contract, and no fact or circumstance exists which might
give rise to such a breach.
14.3 (NO LOSS) No Material Contract entered into by a Group Entity is known to
any Major Vendor to be likely to result in a loss for any Group Entity's
Business (having regard to the revenue to be generated under the Material
Contract and the costs and expenses required over the period of the
Material Contract in order to generate that revenue).
14.4 (OUTSTANDING OFFERS OR TENDERS) No Group Entity has made any offers,
tenders or quotations which are still outstanding and capable of giving
rise to a contract by the unilateral act of a third party, other than in
the ordinary course of business.
14.5 (UNUSUAL CONTRACTS) No Material Contract entered into by a Group Entity:
(a) was entered into by a Group Entity other than in the usual course of
its Business or by way of a bargain at arm's length;
(b) restricts any Group Entity's freedom to operate the whole or part of
the Business or to use or exploit any of the Assets as it decides;
(c) constitutes a sale or purchase, option or similar arrangement,
arrangement or obligation affecting the Business or any of the
Assets;
(d) is one with which a Group Entity cannot comply on time or otherwise
in accordance with its terms in all material respects which contract
involves expenditure of more than $10,000; or
(e) is one by which a Group Entity is a member of a joint venture,
consortium, partnership or association.
14.6 (RELATED PARTY CONTRACTS) Other than as disclosed in writing to the
Purchaser, no contract has been entered into by a Group Entity with any
`related entity' and no `financial benefit' has been given by a Group
Entity to a `related entity'. For the purpose of this warranty, the terms
`related entity' and `financial benefit' will have the same meaning given
to those terms in sections 228 and 229 of the Corporations Act, but as if
references to `public company' are to `company'. For the avoidance of
doubt, the term `related entity' in respect of a Group Entity does not
include another Group Entity.
14.7 (AMENDMENTS) So far as each Major Vendor is aware as at the date of this
Agreement, no Group Entity has been notified of an actual or intended
material amendment to the prices or other terms of a Material Contract,
other than in the usual course of business.
14.8 (SET OFFS) So far as each Major Vendor is aware no party to a Material
Contract entered into by a Group Entity is entitled to exercise a set off
or counterclaim or delay without payment of any
money due under that Material Contract or to effect payment to a person
other than the person specified in that Material Contract or otherwise to
perform its obligations in a different manner to that provided in that
Material Contract.
14.9 (MARKETING ADVERTISING AND PROMOTIONAL AGREEMENTS) So far as each Major
Vendor is aware the Group has no current or future commitment under
sponsorship or marketing agreements of an amount in excess of $10,000 for
each commitment.
15 SUPPLIERS AND CUSTOMERS
15.1 (CHANGE OF TRADING RELATIONSHIPS) During the 12 months ending on the date
of this agreement no customer from which the Group has generated revenue
of more than $100,000 (" SUBSTANTIAL CUSTOMER"):
(a) stopped, or indicated an intention to stop, trading with or
supplying the Business;
(b) reduced, or indicated an intention to reduce, substantially its
trading with the Business; or
(c) changed, or indicated an intention to change, substantially the
terms on which it is prepared to trade with or supply the Business
(other than normal price and quota changes).
15.2 (CHANGE OF CONTROL) As far as each Major Vendor is aware, there is no
existing Substantial Customer of any Group Entity Business who will or is
likely to:
(a) cease trading with the Business; or
(b) materially reduce its trading with the Business, as a result of the
acquisition of the shares in the Company by the Purchaser.
16 LITIGATION
16.1 (TRADE PRACTICES) No Group Entity has breached the provisions of the Trade
Practices Act or any equivalent state or territory legislation or the
requirements of any consumer product safety standard or consumer product
information standard prescribed by law.
17 EMPLOYEES
17.1 (EMPLOYEES) The Employees are the only employees of the Company.
17.2 (TERMS OF EMPLOYMENT) All of the contractual terms of employment of the
Employees are set out in the Employment Agreements.
18 SUPERANNUATION
18.1 (CONTRIBUTIONS UP TO DATE) Each Group Entity has made all superannuation
contributions which they are obliged to make in respect of its employees.
18.2 (SUPERANNUATION SUPPORT) Each Group Entity has provided at least the
prescribed minimum level of superannuation support for each of its
employees so as not to incur a shortfall amount under the Superannuation
Guarantee (Administration) Xxx 0000 (Cth).
19 INFORMATION
19.1 (ACCURACY) To the best of the Major Vendors' knowledge and belief, all
information disclosed to the Purchaser and the facts set out in the
schedules to this agreement is true and correct in all material respects
and is not, whether by omission of information or otherwise materially
misleading or deceptive or likely to mislead or deceive.
19.2 (ALL INFORMATION): To the best of the knowledge and belief of the Major
Vendors, they have disclosed to the Purchaser all of the information
relating to the Group Entity which a prudent intending purchaser of the
Shares would want to know. So far as the Vendors are aware, there are no
facts or circumstances which might reasonably be expected materially and
adversely to affect the financial position, operations, profitability or
prospects of any Group Entity other than facts and circumstances affecting
as a whole the industry in which the Business is carried on.
19.3 (NO REPRESENTATIONS OR WARRANTIES IN RELATION TO FUTURE MATTERS) The
Major Vendors make no representations or warranties in relation to any
projections or forecasts concerning future matters to the extent that they
are dependant on the future actions of present or prospective customers,
suppliers or other third parties or to the extent that they are based on
disclosed assumptions that prove to be incorrect as a consequence of any
uncertainties and contingencies, which are outside the control of the
Company or not known to the Major Vendors to be incorrect on the date of
this Agreement or likely to become incorrect after that date and in these
circumstances, the Major Vendors are not liable for any discrepancy
between actual (on the one hand) and projected, forecast, or forward
stated (on the other hand) results, performance or achievements. To the
extent that the assumptions are clearly set out in any documents provided
by the Major Vendors or in the business plan set out in Schedule 14 which
will be incorporated into any information memorandum, prospectus or
similar document prepared in connection with the Capital Raising, and are
considered by the Major Vendors on the date of this Agreement to be fair
and reasonable, the Major Vendors are not liable for any discrepancy
between actual (on the one hand) and projected, forecast, or forward
stated (on the other hand) results, performance or achievements.
PART C
20 TAX AND DUTY
20.1 (COMPLIANCE WITH TAX LAWS) Each of the Group Entities has complied with
all Tax laws.
20.2 (NO THIRD PARTY LIABILITY) None of the Group Entities is liable to pay,
reimburse or indemnify any person or Tax Authority in respect of any Tax
liability of a person.
20.3 (RULINGS, DISPUTES AND AUDITS) There are no current disputes between any
Tax Authority and any Group Entity which will or may affect calculation of
the liability to Tax of any Group Entity after Completion. To the best of
the Major Vendors' knowledge and belief, there is no unresolved Tax
dispute or current Tax audit or investigation of any Group Entity by any
Tax Authority and there is no reason why any such investigation may be
initiated, nor has any Group Entity sought or obtained any rulings,
consents, clearance or opinions from any Tax Authority prior to the date
of this agreement which will or may affect calculation of the liability to
Tax of any Group Entity after Completion.
20.4 (DEBT FORGIVENESS) None of the Group Entities has been "forgiven" any
"commercial debts" (as those terms are defined in schedule 2C of the 1936
Act).
20.5 (REPUDIATION ACTION) So far as each Vendor is aware, none of the Group
Entities has done or failed to do any act or thing which has or might
alter or prejudice in a material way any arrangement, agreement or tax
ruling which has previously been negotiated with or obtained from any Tax
Authority or other person under any Tax law.
20.6 (DISCLOSURE OF TAXES IN LAST ACCOUNTS) The Last Accounts contain
provisions adequate to cover Taxes for or in respect of the Group Entities
for all periods up to the balance date of the relevant accounts. No
additional or other Taxes are or will be payable (whether on, before or
after Completion) by any Group Entity.
20.7 (DEDUCTIONS) Each Group Entity has deducted all Tax required to be
deducted from any payments made by it. When necessary, the Company has
accounted for that Tax in accordance with relevant law.
20.8 (PAYMENT OF TAX) All Taxes which have been or deemed to have been
assessed or imposed on a Group Entity, or have been required to be
withheld from any payment made by a Group Entity to another person:
(a) which are due and payable, have been paid by the final date for
payment by the relevant Group Entity;
(b) which are not yet payable but become payable before Completion, will
be paid in the usual course.
No Group Entity has entered into any agreement or arrangement which
extends the period for assessment or payment of any Tax.
20.9 (AUSINDUSTRY RESEARCH AND DEVELOPMENT TAX CONCESSION) The AusIndustry
Research and Development Tax Concessions received by the Company prior to
Completion were applied for in accordance with all applicable regulations
and guidelines applicable to the Company and the eligibility of the tax
concessions has been accepted by the auditor of the Company.
