THIS AGREEMENT is made the 18th day of June 2002
BETWEEN:
AMERICAN WAGERING, INC. a company incorporated in the state of Nevada, United
States of America and having its principal office at 000 Xxxxx Xxxxx, Xxx Xxxxx,
Xxxxxx, Xxxxxx Xxxxxx of America (Vendor);
AND
MEGASPORTS (ACT) PTY LTD (ABN 54 081 251 470) of 00 Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx Xxxxxxx Xxxxxxxxx (Company);
AND
EURAUST LIMITED (ABN 62 009 423 189) of Mezzanine Level, 00 Xxx Xxxxxxxxx,
Xxxxx, Xxxxxxx Xxxxxxxxx (Purchaser).
RECITALS:
A. The Company is a wholly owned subsidiary of the Vendor.
B. The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Vendor Shares pursuant to the terms of this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
Agreement means the agreement constituted by this document and includes the
recitals.
Assets means the current and non-current assets of the Company and each of its
Subsidiaries as at the Execution Date.
ASX means Australian Stock Exchange Limited.
Authorisation means any permit, approval, authorisation, consent, exemption,
filing, licence, notarisation, registration or waiver however described and any
renewal or variation to any of them.
Business means the business of the Company and each of its Subsidiaries as at
the Execution Date.
Business Contracts means all agreements, leases, contracts and arrangements to
which the Company is a party and which are, in whole or in part, executory as at
Settlement.
Business Day means a day that is not a Saturday, Sunday or public holiday in
Western Australia.
CBS means Computerized Bookmaking Systems, Inc., a company incorporated in the
state of Nevada, United States of America, and a wholly owned subsidiary of the
Vendor.
CBS Licence Agreement means the licence agreement entered into between the
Vendor, CBS and the Company.
CBS Software Support Agreement means the software support agreement between CBS
and the Company.
Claim means in relation to any person, a claim, action or proceeding, judgment,
damage, loss, cost, expense or liability incurred by or to or made or recovered
by or against the person, however arising and whether present, unascertained,
immediate, future or contingent.
Confidential Information means any trade secrets, lists of information
pertaining to clients of the Company or suppliers, specifications, drawings,
inventions, ideas, records, reports, software, patents, designs, copyright
material, secret processes or other information, whether in writing or
otherwise, relating to the Company or any of its Subsidiaries.
Consideration means the consideration described in clause 4.1.
Corporations Act means the Corporations Xxx 0000 (Cth).
Current Assets has the meaning ascribed to that expression for the purposes of
the Australian Accounting Standards.
Current Liabilities has the meaning ascribed to that expression for the purposes
of the Australian Accounting Standards.
Disclosure Material means material disclosed to the Purchaser by the Company
prior to the Execution Date as set out in Annexure "A".
Electronic Interface means the Vendor's new graphical user interface.
Encumbrance means any encumbrance, mortgage, pledge, charge, lien, assignment,
hypothecation, security interest, title retention, preferential right or trust
arrangement and any other security or agreement of any kind given or created and
including any possessory lien in the ordinary course of business whether arising
by operation of law or by contract.
Event of Insolvency means:
(a) a receiver, manager, receiver and manager, trustee, administrator,
controller or similar officer is appointed in respect of a person or any
asset of a person;
(b) a liquidator or provisional liquidator is appointed in respect of the
corporation;
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(c) any application (not being an application withdrawn or dismissed within 7
days) is made to a court for an order, or an order is made, or a meeting is
convened, or a resolution is passed, for the purposes of:
(i) appointing a person referred to in paragraphs (a) or (b);
(ii) winding up a corporation; or
(iii) proposing or implementing a scheme of arrangement;
(d) any event or conduct occurs which would enable a court to grant a petition,
or an order is made, for the bankruptcy of an individual or his estate
under any Insolvency Provision;
(e) a moratorium of any debts of a person, or an official assignment, or a
composition, or an arrangement (formal or informal) with a person's
creditors, or any similar proceeding or arrangement by which the assets of
a person are subjected conditionally or unconditionally to the control of
that person's creditors or a trustee, is ordered, declared, or agreed to,
or is applied for and the application is not withdrawn or dismissed within
7 days;
(f) a person becomes, or admits in writing that it is, is declared to be, or is
deemed under any applicable law to be, insolvent or unable to pay its
debts; or
(g) any writ of execution, garnishee order, mareva injunction or similar order,
attachment, distress or other process is made, levied or issued against or
in relation to any asset of a person.
Execution Date means the date of this Agreement.
Governmental Authority means a government or government department, a
governmental or semi-governmental or judicial person (whether autonomous or not)
charged with the administration of any applicable law.
Insolvency Provision means any law relating to insolvency, sequestration,
liquidation or bankruptcy (including any law relating to the avoidance of
conveyances in fraud of creditors or of preferences, and any law under which a
liquidator or trustee in bankruptcy may satisfy or avoid transactions), and any
provision of any agreement, arrangement or scheme, formal or informal, relating
to the administration of any of the assets of any person.
Last Accounts means the consolidated balance sheet and profit and loss account
of the Company for the year ended on the Last Accounts Balance Date, true copies
of which are annexed to this Agreement as Schedule 5.
Last Accounts Balance Date means 31 May 2002.
Leases means the leases of real property held by the Company.
Liabilities means and includes the Current Liabilities of the Company as at the
Settlement Date except for Tax.
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Moral Rights means any of the rights described in Article 6bis of the Berne
Convention for the Protection of Literary and Artistic Works 1886, being "droit
moral" or other analogous rights arising under the Copyright Xxx 0000 and any
other law of the commonwealth of Australia, that exist or that may come to
exist, anywhere in the world, including without limitation:
(a) a right of attribution of ownership; or
(b) a right not to have authorship falsely attributed; or
(c) a right of integrity of authorship.
Officer, in relation to a corporation, has the meaning given in Section 82A of
the Corporations Act.
Party means a party to this Agreement.
Permitted Encumbrance means each Encumbrance that the Parties agree in writing
prior to the Settlement Date may constitute a permitted encumbrance for the
purposes of this Agreement.
Premises means all the land and buildings owned, leased or occupied by the
Company as set out in Schedule 2.
Prescribed Occurrence means:
(a) the Company converting all or any of its shares into a larger or smaller
number of shares;
(b) the Company resolving to reduce its share capital in any way;
(c) the Company:
(i) entering into a buy back agreement; or
(ii) resolving to approve the terms of a buy back agreement under
Sub-Section 257C or 257D of the Corporations Act;
(d) the Company making an allotment of, or granting an option to subscribe for,
any of its shares or agreeing to make such an allotment or grant such an
option;
(e) the Company issuing, or agreeing to issue, convertible notes;
(f) the Company disposing, or agreeing to dispose, of the whole, or a
substantial part, of its business or property;
(g) the Company charging, agreeing to charge, the whole, or a substantial part,
of its business or property;
(h) the Company resolving that it be wound up;
(i) the appointment of a provisional liquidator of the Company;
(j) the making of an order by a court for the winding up of the Company;
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(k) an administrator of the Company being appointed under Section 436A, 436B or
436C of the Corporations Act;
(l) the Company executing a deed of company arrangement; or
(m) the appointment of a receiver, or a receiver and manager, in relation to
the whole, or a substantial part, of the property of the Company.
Revenue Authority means any Federal, State, Territory or local government
authority or instrumentality in respect of Tax.
SEC means the United States Securities and Exchange Commission.
Settlement means the settlement on the Settlement Date of the sale and purchase
of the Vendor Shares in accordance with the terms of this Agreement.
Settlement Date means that date which is 5 Business Days after the satisfaction
of the Conditions (or such other date as is agreed between the Parties).
Settlement Statement means the statement of adjustments set out in Schedule 6.
Share means a fully paid ordinary share in the capital of the Company.
Statutes means all legislation of any country, state or territory enforced at
any time, and any rule, regulation, ordinance, by law, statutory instrument,
order or notice at any time made under that legislation.
Subsidiary has the same meaning given to that term in Section 9 of the
Corporations Act.
Superannuation Commitment means any legal liability (whether arising under an
industrial award or agreement or otherwise) or voluntary commitment to make
contributions to any superannuation fund, pension scheme or other arrangement
which will provide directors or employees of the Company or their respective
dependents with pensions, annuities, lump sums or any other payments upon
retirement or earlier death or otherwise.
Tax means any tax, levy, charge, impost, duty, fee, deduction, compulsory loan,
withholding, stamp, transaction, registration, duty or similar charge which is
assessed, levied, imposed or collected by any government agency and includes,
but is not limited to, any interest, fine, penalty, charge, fee or any other
accounting imposed on, or in respect of any of the above.
Tax Act means the Income Tax Assessment Xxx 0000 and the Income Tax Assessment
Xxx 0000.
Vendor Loans means loans made by the Vendor to the Company totalling $2,695,008.
Vendor Shares means the 100% of the issued Shares which are beneficially and
legally owned by the Vendor (represented by 1,039,348 fully paid ordinary shares
in the capital of the Company).
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1.2 Interpretations
In this Agreement unless the context otherwise requires:
(a) headings are for convenience only and do not affect its interpretation;
(b) an obligation or liability assumed by, or a right conferred on, 2 or more
Parties binds or benefits all of them jointly and each of them severally;
(c) the expression person includes an individual, the estate of an individual,
a corporation, an authority, an association or joint venture (whether
incorporated or unincorporated), a partnership and a trust;
(d) a reference to any party includes that party's executors, administrators,
successors and permitted assigns, including any person taking by way of
novation;
(e) a reference to any document (including this Agreement) is to that document
as varied, novated, ratified or replaced from time to time;
(f) a reference to any statute or to any statutory provision includes any
statutory modification or re-enactment of it or any statutory provision
substituted for it, and all ordinances, by-laws, regulations, rules and
statutory instruments (however described) issued under it;
(g) words importing the singular include the plural (and vice versa) and words
indicating a gender include every other gender;
(h) reference to parties, clauses, schedules, exhibits or annexures are
references to parties, clauses, schedules, exhibits and annexures to or of
this Agreement and a reference to this Agreement includes any schedule,
exhibit or annexure to this Agreement;
(i) where a word or phrase is given a defined meaning, any other part of speech
or grammatical form of that word or phrase has a corresponding meaning;
(j) a reference to $ or dollar is to Australian currency
(k) a reference to a payment is to a payment by bank cheque unless the
recipient otherwise allows.
2. TRANSACTION
The Vendor, as legal and beneficial owner of the Vendor Shares, agrees to sell
free from Encumbrances and the Purchaser agrees to purchase, the Vendor Shares
for the Consideration and on the further terms and conditions set out in this
Agreement.
3. ASSIGNMENT OF LOANS
The Vendor hereby assigns to the Purchaser, with effect from the Settlement
Date, the benefit of all Vendor Loans in consideration for the Purchaser paying
to the Vendor an amount of $1 (receipt of which is hereby acknowledged).
6
4. CONSIDERATION
4.1 Consideration
In consideration of the Vendor transferring the Vendor Shares to the Purchaser,
the Purchaser shall pay to the Vendor the following amounts:
(a) $300,000 (three hundred thousand dollars), as adjusted in accordance with
clause 6, at Settlement (Initial Payment);
(b) $2,500,000 (two million five hundred thousand dollars) payable in monthly
instalments calculated as 0.1667% of the Company's previous month's
turnover and as further described in clause 4.2 (Monthly Payment).
4.2 Monthly Payments
The Monthly Payment shall be:
(a) 0.1667% of the turnover generated by the Company in the prior month. For
the avoidance of doubt and by way of example, if the Company's turnover
during the month of February 2003 is $1,000,000, the Monthly Payment shall
be $1,667 calculated as $1,000,000 multiplied by 0.1667%;
(b) paid no later than the fifteenth day of the following month. For the
avoidance of doubt and by way of example, the Monthly Payment for the month
of February 2003 shall be paid no later than 15 March 2003; and
(c) initially due and payable on 15 March 2003 based upon the Company's
turnover for the month of February 2003. Thereafter, Monthly Payments shall
continue to be paid until such time as the amount of $2,500,000 has been
paid in full and receipt acknowledged by the Vendor.
4.3 Binding Effect
The Purchaser and the Company understand and agree that this Agreement shall
remain in full force and effect until such time as the Vendor has received all
Consideration pursuant to Clause 4.1 and this Agreement shall bind and inure to
the benefit of each of the Parties and their respective heirs, successors,
administrators, executors and assigns. Subsequent sale of the Company and/or
other external factors shall not relieve the Purchaser and/or the Company from
its obligation to provide full and complete Consideration to the Vendor.
4.4 Default
In the event that the Purchaser defaults on any payment required pursuant to
Clauses 4.1 and 4.2 of this Agreement or is in breach of any covenant contained
in Clause 4.3 and does not correct such default within sixty (60) days of
receiving written notice under clause 15, the whole of the Consideration shall
become immediately due and payable.
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4.5 Monthly Reports
The Purchaser shall provide to the Vendor, by no later than the seventh day of
the following month, reports that indicate the Company's turnover for the
previous month including copies of any such reports provided to Governmental
Authorities.
5. SPORTS BETTING BOOKMAKERS LICENCE
5.1 Ownership of Licence and Compliance with the law
Until such time as the Consideration has been paid in full, the Purchaser and
the Company covenant with the Vendor as follows:
(a) that the Sports Betting Bookmakers Licence (Licence) held by the Company:
(i) will be owned absolutely by the Company;
(ii) will not be subject to any Encumbrance; and
(iii) will remain free from any security or third party interest;
(b) that the Company will maintain the Licence in good standing and fully
comply with all legislation both of the Australian Capital Territory and
the Commonwealth of Australia applicable to the Licence in particular, but
not limited, to the Race and Sports Bookmaking Act 2001 and the
determinations made pursuant thereto of the Australian Capital Territory
and the Interactive Gambling Xxx 0000 of the Commonwealth of Australia; and
(c) that should the Company cease operating the Business and/or cease accepting
xxxxxx, the Purchaser shall continue to pay Vendor one thousand dollars
($1,000.00) per month until such time as the Company has been sold to
another party under the same terms and conditions as contained in this
Agreement (refer to Section 4.3, "Binding Effect," above). In the event
that said sale to another party has not been completed within eighteen (18)
months from the cessation of business and/or acceptance of xxxxxx, the
Vendor shall have the right to repurchase the Company for a dollar amount
equal to the amount(s) actually paid to the Vendor by the Purchaser.
Failure to comply with this provision shall not constitute a default
hereunder if such failure shall be caused by fire, strike, boycott,
picketing, or other industrial disturbances, riot, civil commotion, theft,
vandalism, flood, lightning, tempest, storm, acts of God, war, acts of war
and defence, power failure, software failure, failure of any cable or
interference by any government or government agency, or any other reason
and/or event not within the direct control, power and authority of the
Purchaser and/or the Company.
5.2 Default
In the event that the Purchaser is in breach of any covenant contained in Clause
8
5.1 and does not correct such default within sixty (60) days of receiving
written notice under clause 15, the whole of the Consideration shall become
immediately due and payable.
6. ADJUSTMENTS
The Parties acknowledge and agree that due to the nature of the Business, it is
necessary to adjust the Consideration to take into account certain costs and
expenses up to, but not including, the Settlement Date, to ensure that the
Vendor and the Company pays all those costs and expenses for the period prior to
the Settlement Date and the Purchaser assumes the balance of those costs and
expenses from and including the Settlement Date. For the purposes of clarity
and certainty, the Parties agree that it will be necessary to make adjustments
to costs and expenses which adjustments shall be reflected in a Settlement
Statement in the form set out in Schedule 4 but to be finalised by the
Purchaser's solicitors immediately prior to the Settlement Date.
7. SOFTWARE
In consideration for the mutual promises contained in this Agreement, the Vendor
agrees to:
(a) implement the Electronic Interface as soon as reasonably practicable, but
in any event prior to 1 July 2002;
(b) provide software support pursuant to the terms and conditions of a separate
CBS Software Support Agreement; and
(c) provide the Purchaser a licence to utilize the CBS Software pursuant to the
terms and conditions of a separate CBS Licence Agreement.
8. PUNTER'S WAGERING ACCOUNTS
8.1 Vendor Covenants
The Vendor covenants with the Purchaser that the Company's cash bank account
balance as at the Settlement Date will be adjusted to be equal to the sum of all
punter's wagering account balances as at the Settlement Date.
8.2 Purchaser Covenants
Until such time as the Consideration has been paid in full, the Purchaser
covenants with the Vendor that it shall:
(a) at all times maintain the Company's cash bank account balance in an amount
sufficient to cover all punter's wagering account balances on an ongoing
basis; and
(b) provide a report to the Vendor on the basis set out in clause 0 that
demonstrates the Purchaser's compliance with clause 8.2(a).
8.3 Default
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Should the Company's cash bank account balance vary significantly in a negative
manner and not be corrected within 30 days of becoming aware of the variance,
then the Purchaser shall be in default of this Agreement and the Vendor may act
in accordance with clause 14 of this Agreement.
8.4 Indemnity
The Purchaser agrees to indemnify the Vendor against any loss or damage suffered
as a result of any defalcations or misappropriations of punter deposits.
8.5 Limitations
This clause 8 shall cease to have any operation and effect upon the Purchaser
fulfilling its obligations under clause 4.1.
9. APPROVALS
9.1 Nevada Gaming Authorities
(a) The Parties acknowledge that the Vendor is a company licenced and regulated
by the Nevada Gaming Commission and/or the Nevada Gaming Control Board
(collectively, the Nevada Gaming Authorities) and, accordingly, is required
to make certain disclosures in the ordinary course of business. The Parties
further acknowledge that the Nevada Gaming Authorities have the authority,
but not the obligation, to review and approve this Agreement.
(b) In the event that such approval is required, the Purchaser and the Company
shall fully assist the Vendor in obtaining such approval.
(c) In the event that any such approval is required but not granted prior to
the Settlement Date, the Purchaser has the right to terminate this
Agreement immediately without recourse by Company and/or Vendor.
(d) In the event that such approval is required but not granted, this Agreement
shall terminate immediately and have no further force or effect and without
recourse to any Party.
9.2 Compliance Committee
(a) The Parties acknowledge that the transactions of the Vendor, as a company
licensed and regulated by the Nevada Gaming Authorities, are subject to
review and approval by the Vendor's Compliance Committee.
(b) In the event that such approval is required, the Purchaser and the Company
shall fully assist the Vendor in obtaining such approval.
(c) In the event that any such approval is required but not granted prior to
the Settlement Date, the Purchaser has the right to terminate this
Agreement immediately without recourse by Company and/or Vendor.
10
(d) In the event that any such approval is required but not granted, this
Agreement shall terminate immediately and have no further force or effect
and without recourse to any Party.
10. SETTLEMENT
10.1 Time and Location of Settlement
Settlement shall take place on the Settlement Date at the offices of the
Purchaser in Perth or at such other offices as the Parties may otherwise agree
and at such time as shall be agreed by the Parties.
10.2 Vendor's obligations at Settlement
At Settlement, the Vendor must confer on the Purchaser title to the Vendor
Shares and place the Purchaser in effective possession and control of the
Company. To this end, at or prior to Settlement:
(a) the Vendor covenants to deliver or cause to be delivered to the Purchaser
in a form and substance satisfactory to the Purchaser:
(i) share certificates in respect of the Vendor Shares;
(ii) separate instruments of transfer in registrable form for the Vendor
Shares in favour of the Purchaser (as transferee) which has been duly
executed by the Vendor (as transferor);
(iii) the common seal (and any duplicate common seal, share seal or
official seal) of the Company;
(iv) all available copies of the constitution of the Company;
(v) the minute books and other records of meetings or resolutions of
members and directors of the Company;
(vi) all registers of the Company (including the register of members,
register of options, register of directors, register of charges) in
proper order and condition and fully entered up to the Settlement
Date;
(vii) all cheque books, financial and accounting books and records, copies
of tax returns and assessments, mortgages, leases, agreements,
insurance policies, title documents, licences, indicia of title,
contracts, certificates and all other records, papers, books and
documents of the Company;
(viii) a duly completed authority for the alteration of the signatories of
each bank account of the Company in the manner required by the
Purchaser by written notice before the Settlement Date; and
(ix) all current Authorisations and other documents issued to the Company
under any legislation or ordinance relating to its business
activities;
11
(b) procure that directors' meetings of the Company are held to attend to the
following matters (as applicable):
(i) the approval of the registration (subject to payment of stamp duty) of
the transfers of the Vendor Shares and the issue of a new share
certificate for the Vendor Shares in the name of the Purchaser;
(ii) the appointment as new directors and secretaries of the Company of
those persons nominated by the Purchaser by written notice before the
Settlement Date;
(iii) the retirement, by written notice, of the existing directors and
secretary of the Company with effect from the end of that meeting
acknowledging that each of them has no Claim of any kind whatsoever
against the Company by way of compensation or entitlement for loss of
office including (without limitation) in respect of his or her legal
entitlements to accrued long service leave and annual pay (if any);
(iv) the revocation of all existing authorities to operate bank accounts;
and
(v) the transaction of any other reasonable business of which the
Purchaser may give notice before the Settlement Date; and
(c) deliver possession and place the Purchaser in operating control of the
Company.
10.3 The Purchaser's obligations at Settlement
At Settlement, the Purchaser must provide the Vendor with a bank cheque made out
to the Vendor (or its nominee) in accordance with the Settlement Statement.
11. COVENANTS
11.1 Covenants about the Company
The Vendor and the Company jointly and severally covenant with the Purchaser
that during the period commencing on the Execution Date and expiring on the
Settlement Date, the Company will not, except as contemplated by this Agreement,
without the prior written consent of the Purchaser:
(a) enter into, terminate or alter any term of any material contract or
commitment;
(b) other than in the ordinary course of its Business, incur any material
liability;
(c) other than in the ordinary course of its Business, acquire any asset or
authorise any material capital expenditure;
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(d) other than in the ordinary course of its Business, dispose of, agree to
dispose of, assign, agree to assign, encumber or grant any option over any
of its assets or any interest in any of them;
(e) other than in the ordinary course of its business, hire or terminate the
employment of or pay or agree to pay any bonus or allowance to any employee
or alter the terms of employment (including the terms of superannuation or
any other benefit) of any employee;
(f) grant any option to subscribe for any security in the Company or allot or
issue or agree to allot or issue any security, share or loan capital or any
security convertible into any share or loan capital in the Company other
than as set out in this Agreement;
(g) resolve to reduce its share capital in any way;
(h) enter into a buy-back agreement or resolve to approve the terms of a
buy-back agreement;
(i) declare or pay any dividend or make any other distribution of its assets or
profits;
(j) alter or agree to alter its constitution other than as provided for in this
Agreement;
(k) pass any resolution other than in the ordinary course of business; or
(l) resolve any programs or budgets in relation to the Company.
11.2 Further Covenants by the Vendor
The Vendor covenants in favour of the Purchaser that during the period
commencing on the Execution Date and expiring on the Settlement Date they will:
(a) ensure that the approval of any third parties is obtained, including the
other shareholders of the Company to the transfer of the Vendor Shares
pursuant to this Agreement (if required); and
(b) provide confirmation from all third party financiers to the Company that
the change of control of the Company is not an event of default pursuant to
any financing arrangements.
11.3 Assistance by Vendor
For the purposes of this Agreement during the period commencing on the Execution
Date and expiring on the Settlement Date, the Vendor must use its best
endeavours to:
(a) give the Purchaser all such assistance and information in regard to the
property and affairs of the Company as they possess; and
(b) make available for access by the Purchaser or its representatives all
books, records and documents (whether in written, electronic or other form)
in its possession or under its control,
13
as it may require to enable the Purchaser to gain further knowledge about
the Company and its Business (and its operation and conduct) and take
control of the Company.
11.4 Event affecting value of Vendor Shares
If, before the Settlement Date, an event occurs which has or may have a material
effect on the profitability or value of the Vendor Shares, the Vendor must,
immediately upon becoming aware of that event, give written notice to the
Purchaser fully describing the event.
12. REPRESENTATIONS AND WARRANTIES BY THE VENDORS AND THE COMPANY
12.1 Representations and Warranties
Other than as disclosed to the Purchaser in the Disclosure Material, the Vendor
and the Company jointly and severally warrant and represent to the Purchaser, as
an inducement to the Purchaser to enter into this Agreement and it is a
condition of this Agreement that statements set out in Schedule 1 are true,
complete and accurate, both at the Execution Date and at the Settlement Date.
12.2 Indemnity by Vendor
The Vendor indemnifies and agrees to indemnify the Purchaser against any Claim
against the Purchaser to the extent that the Claim arises from or is connected
with any breach of any warranty by the Vendor set out in Schedule 1.
12.3 Repetition on Settlement Date
The matters set out in Schedule 1 will be taken to be repeated by the Vendor and
the Company on the Settlement Date with reference to the facts and circumstances
existing at that date.
13. CONFIDENTIALITY
13.1 Terms to remain confidential
Each Party is to keep confidential the terms of this Agreement, and any other
Confidential Information obtained in the course of furthering this Agreement, or
during the negotiations preceding this Agreement, and is not to disclose it to
any person except:
(a) to employees, legal advisers, auditors and other consultants requiring the
information for the purposes of this Agreement;
(b) with the consent of the other Parties;
(c) if the information is, at the date of this Agreement, lawfully in the
possession of the recipient of the information through sources other than
any of the other Parties;
(d) if required by law or a stock exchange;
14
(e) if strictly and necessarily required in connection with legal proceedings
relating to this Agreement;
(f) if the information is generally and publicly available other than as a
result of a breach of confidence; or
(g) to a financier or prospective financier (or its advisers) of a Party.
13.2 Disclosure of Information
A Party disclosing Confidential Information must use all reasonable endeavours
to ensure that persons receiving Confidential Information from it do not
disclose the information except in the circumstances permitted in clause 13.1.
13.3 Obligations continuing
The obligations under this clause 13 contain obligations, separate and
independent from the other obligations of the Parties and remain in existence
for a period of five (5) years from the Execution Date, regardless of any
termination of this Agreement.
13.4 ASX Listing Rules
The Parties acknowledge that the Purchaser is a company listed on ASX and
accordingly is required to make certain disclosures in the circumstances set out
in the ASX Listing Rules.
13.5 SEC Listing Rules
The Parties acknowledge that the Vendor is a company listed on the stock market
operated by NASDAQ Stock Market, Inc. and accordingly is required to make
certain disclosures in the circumstances set out in the SEC Listing Rules.
14. DEFAULT
If any of the Parties (Defaulting Party) shall make default in the due
observance or performance of any of its obligations under this Agreement the
observance or performance of which is or becomes essential and such default
shall continue for 7 days after the receipt of a notice in writing from any of
the other Parties (Non Defaulting Party) to remedy the default then the Non
Defaulting Party may, without further notice to the Defaulting Party:
(a) rescind this Agreement and be entitled to such damages as to which the Non
Defaulting Party would be entitled at common law or in equity; and/or
(b) xxx the Defaulting Party for specific performance.
15. NOTICES
15.1 Notices in Writing
Each notice authorised or required to be given to a Party shall be in writing
and may be delivered personally or sent by properly addressed and prepaid mail
or
15
facsimile in each case addressed to the Party at its address set out in clause
15.2, or as the case may be to such other address as it may from time to time
notify to the other Parties pursuant to clause 15.3.
15.2 Initial Address of Parties
The initial address of the Parties shall be as follows:
In the case of the Vendor:
000 Xxxxx Xxxxx
XXX XXXXX XXXXXX 00000
XXXXXX XXXXXX OF AMERICA
Facsimile: INT + 000 000 0000
Attention: Mr V Xxxxxxx
In the case of the Company:
Canberra Racecourse
Suite 1 Sports Betting Auditorium
Xxxxxxxx Xxxx
XXXXXXX XXX 0000
Facsimile: INT + (00 0) 0000 0000
Attention: Mr B Xxxxxx
In the case of the Purchaser:
Mezzanine Level,
00 Xxx Xxxxxxxxx
XXXXX XX 0000
Facsimile: INT + (00 0) 0000 0000
Attention: Mr J Asquith
15.3 Change of Address
Each Party may from time to time change its address by giving notice pursuant to
clause 15.1 to the other Parties.
15.4 Receipt of notice
Any notice given pursuant to clause 15.1 will be conclusively deemed to have
been received:
(a) in the case of personal delivery, on the actual day of delivery if
delivered prior to 5.00pm (local time) on a Business Day or on the next
following Business Day if delivered after 5.00pm (local time) on a Business
Day or on other than a Business Day;
(b) if sent by mail, on the second clear Business Day after the day of posting;
or
(c) if sent by facsimile, on the day after the facsimile was sent by clear
transmission.
16
16. NON-ASSIGNMENT
No Party may assign any or all of its rights and obligations under this
Agreement to any person except with the prior written consent of the other Party
which consent shall not unreasonably be withheld.
17. FURTHER ASSURANCE
Each Party shall sign, execute and do all deeds, acts, documents and things as
may reasonably be required by the other Party to effectively carry out and give
effect to the terms and intentions of this Agreement.
18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the law
from time to time in the State of Western Australia and the Parties agree to
submit to the non-exclusive jurisdiction of the courts of Western Australia and
the courts which hear appeals therefrom.
19. VARIATION
No modification or alteration of the terms of this Agreement shall be binding
unless made in writing dated subsequent to the date of this Agreement and duly
executed by the Parties.
20. COSTS
20.1 Stamp Duty
All stamp duty assessed on or in respect of this Agreement or any document or
transaction contemplated by this Agreement shall be paid by the Purchaser.
20.2 Legal Costs
Each Party shall bear their own legal costs of and incidental to the
preparation, negotiation and execution of this Agreement.
21. MISCELLANEOUS
21.1 Enforcement of Provisions
If any provision of this Agreement is invalid and not enforceable in accordance
with its terms, all other provisions which are self-sustaining and capable of
separate enforcement without regard to the invalid provision, shall be and
continue to be valid and forceful in accordance with their terms.
21.2 Sole Understanding
This Agreement shall constitute the sole understanding of the Parties with
respect to the subject matter and replaces all other agreements with respect
thereto.
21.3 Counterparts
This Agreement may be executed in any number of counterparts (including by way
of facsimile) each of which shall be deemed for all purposes to be an
17
original and all such counterparts taken together shall be deemed to constitute
one and the same instrument.
21.4 Time
Time shall be of the essence in this Agreement in all respects.
18
EXECUTED by the Parties as an Agreement.
EXECUTED BY )
AMERICAN WAGERING, INC )
acting by: )
)
/s/ Xxxxxx Xxxxxxx
----------------------------
Director
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Director/Secretary
EXECUTED BY )
MEGASPORTS (ACT) PTY LTD )
ABN 54 081 251 470 )
in accordance with )
the Corporations Act: )
/s/ Xxxxxx Xxxxxxx
----------------------------
Director
/s/ Xxxxx Xxxxxx
----------------------------
Director/Secretary
EXECUTED BY )
EURAUST LIMITED )
ABN 62 009 423 189 )
in accordance with )
the Corporations Act: )
/s/ Xxxxxxx X'Xxxxxxx
----------------------------
Director
/s/ Xxxxxxxx Xxxxxxx
----------------------------
Director/Secretary
19
SCHEDULE 1
WARRANTIES
Vendor's Warranties
1. Share capital
(a) (Entire issued capital): The Vendor Shares comprise 100% of the issued
share capital of the Company.
(b) (Shares fully paid): The Vendor Shares are fully paid up and have been duly
issued and allotted.
(c) (No right to subscribe): No person has any right or option to subscribe for
or otherwise to acquire any further shares in the Company.
(d) (No options): There are no outstanding options, contracts, calls, first
refusals, commitments, rights or demands of any kind relating to the issued
or unissued capital of the Company.
(e) (No other allotments): The Company is not under any obligation to allot any
shares to any person or persons, or otherwise to alter the structure of any
part of their respective unissued share capital, and the Company is not
under any obligation to give any option over any part of their respective
unissued shares capital nor has the Company offered to do any of the
matters stated in this sub-paragraph.
2. Vendor's qualifications
(a) (Duly registered): The Company is duly registered under the Corporations
Act.
(b) (Vendor is owner): The Vendor is the registered holder and beneficial owner
of the Vendor Shares which are free of any Encumbrance.
(c) (Right and power to sell): The Vendor has complete and unrestricted power
and right to sell, assign and transfer the Vendor Shares to the Purchaser
subject to the consent of the directors of the Company to the registration
of the transfers of the Vendor Shares and the approvals required pursuant
to clause 9.
(d) (Binding obligations created): The entry into and performance of this
Agreement by the Vendor does not constitute a breach of any obligation
(including any statutory, contractual or fiduciary obligation), or default
under any agreement or undertaking, by which the Vendor is bound.
(e) (No Event of Insolvency): No Event of Insolvency has occurred in relation
to the Vendor nor is there any act which has occurred or any omission made
which may result in an Event of Insolvency occurring in relation to the
Vendor.
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3. Effect of this Agreement
The entry into and performance of this Agreement and all documents executed
pursuant to this Agreement:
(a) will not relieve any person of any contractual or other obligation to the
Company or entitle any person to re-negotiate the terms or conditions of
any such obligation;
(b) do not and will not conflict with, violate or result in a breach by the
Company or the occurrence of an event of default under any agreement or any
law, undertaking to or judgment or Court order;
(c) will not result in any indebtedness, present or future, of the Company
becoming due or capable or being declared due and payable before the stated
maturity date;
(d) will not result in any indebtedness, present or future, of the Company
becoming due or capable or being declared due and payable before the stated
maturity date;
(e) will not give rise to any contractual or other obligation of the Company to
any person or entitle any person to require the performance of or
compliance with any existing contractual or other obligation of the
Company; and
(f) will not entitle any person with whom the Company has a contract or
arrangement of any kind to terminate that contract or arrangement or to
impose less favourable terms on the Company.
4. The Company
The Company:
(a) is duly registered, has full corporate power to own its assets and Business
and to carry on its Business as now conducted; and
(b) has done everything necessary to do business lawfully in all jurisdictions
in which its Business is carried on.
5. The Last Accounts
The Last Accounts:
(a) disclose a true and fair view of the state of the affairs, financial
position and assets and liabilities of the Company and its Subsidiaries as
at the Last Accounts Balance Date, and the income, expenses and results of
the operations of the Company for the year ended on that date;
(b) include in their respective balance sheets all such reserves and provisions
for Tax as are adequate to cover all Tax liabilities (whether or not
assessed and whether actual, contingent, deferred or otherwise) of the
Company up to the Last Accounts Balance Date;
21
(c) contain adequate provisions in respect of all other liabilities (whether
actual, contingent, deferred or otherwise) of the Company as at the Last
Accounts Balance Date and proper disclosure (in note form) of any
contingent or other liabilities not included or provided therein; and
(d) were prepared:
(i) in accordance with the Corporations Act and Australian accounting
standards applied on a consistent basis and without making any
revaluation of assets;
(ii) in the manner described in the notes to them and the accompanying
auditor's opinion; and
(iii) on a consistent basis with the audited accounts for the previous
financial year.
6. Period Since Last Accounts Balance Date
(a) (No material adverse change): There has not since the Last Accounts Balance
Date been:
(i) any material adverse change to the financial condition of or in the
trading operations of the Company from that shown in the Last
Accounts; or
(ii) any material change in the nature, amount, valuation or basis of
valuation of the assets or in the nature or amount of any liabilities
of the Company.
(b) (No material effect on operations): There has not arisen since the Last
Accounts Balance Date any item, transaction or event of a material or
unusual nature likely to affect substantially the operations or results or
state of affairs of the Company.
(c) (Business carried on in normal course): Since the Last Accounts Balance
Date the Company has carried on its Business in the ordinary regular and
normal course, no amount has been acquired or disposed of, no liability has
been incurred except in the ordinary course of business, and no contingent
liability has been incurred by the Company.
(d) (No debts released or settled): None of the debts shown in the Last
Accounts have been released or settled for an amount less than that
reflected for such debts in the Last Accounts, and to the best of the
Vendor's knowledge and belief all such debts owing to and accounts
receivable of the Company are now and on Settlement will be good and
collectable in the amount disclosed in the Last Accounts (other than for
any allowance in the Last Accounts in respect of doubtful debts). To the
best of the knowledge and belief of the Vendor all such accounts receivable
and debts are not and will not be subject to any counterclaim or set-off
except for moneys payable by persons also shown as creditors of the Company
in the amounts shown in the Last Accounts (as such
22
amounts may have been affected by transactions in the ordinary course of
business since the Last Accounts Balance Date).
(e) (Dividends): All dividends declared by the Company have been properly and
validly declared and no dividends have been declared by the Company or any
of its Subsidiaries since the Last Accounts Balance Date.
(f) (No Event of Insolvency): Since the Last Accounts Balance Date no Event of
Insolvency has occurred in respect of the Company nor has any act occurred
or any omission been made which may result in an Event of Insolvency
occurring in respect of the Company.
(g) (No Prescribed Occurrence): Since the Last Accounts Balance Date no
Prescribed Occurrence has occurred in respect of the Company nor has any
act occurred or any omission been made which may result in a Prescribed
Occurrence occurring in respect of the Company.
(h) (No additional remuneration): Since the Last Accounts Balance Date there
has not been material change in the remuneration or benefits paid to or
given or expected by the Officers or employees of the Company.
7. Records and systems
(Records properly kept): All books of accounts and other records of any kind of
the Company:
(a) have been fully, properly and accurately kept on a consistent basis and
completed in accordance with proper business and accounting practices and
all applicable Statutes;
(b) have not had any material records or information removed from them;
(c) do not contain or reflect any material inaccuracies or discrepancies; and
(d) give and reflect a true and fair view of the trading transactions, or the
financial and contractual position of the Company and of its assets and
liabilities; and
(e) are in the possession of the Company.
8. Contracts and Commitments
(a) (Contracts binding): Every contract, instrument or other commitment to
which the Company is a party (including all Business Contracts and Leases)
is valid and binding according to its terms and, without prejudice to any
other warranty, no party to any such commitment is in material default
under the terms of that commitment.
(b) (No contracts outside ordinary course of business): The Company is not
party to any contract or commitment entered into which:
(i) is in existence other than as disclosed in the Disclosure Material;
23
(ii) is outside the ordinary course of business;
(iii) even if entered into in the ordinary course of business, involves or
is likely to involve obligations or liabilities which by reason of
their magnitude or nature ought reasonably to be made known to an
intending purchaser of the Vendor Shares;
(iv) is not at arm's length or not on normal commercial terms; or
(v) is long term, substantial or onerous.
(c) (No sums owing): No sums are now owing or will at Settlement be owing by
the Company to the Vendor or to any company or person related to the
Vendor, other than as disclosed in the Disclosure Material.
(d) (No guarantees given): The Company has not guaranteed or indemnified or is
directly or indirectly obliged in any way to guarantee, assume or provide
funds to satisfy any obligation of any person, or has given a letter of
comfort to any person, or other than as disclosed in the Disclosure
Material.
(e) (No contract by unilateral act): No offer, tender, quotation or the like
given or made by the Company is capable of giving rise to a contract merely
by any unilateral act of a third party, other than in the ordinary course
of business.
(f) (Capital expenditure): There are no outstanding commitments of the Company
for capital expenditure other than replacements and normal purchases of
plant and equipment in the ordinary course of business.
(g) (No foreign exchange exposure): Other than as disclosed to the Purchaser,
there are no foreign exchange contracts binding the Company, and there are
no foreign exchange exposures of the Company.
(h) (No finder's fee): No-one is entitled to receive from the Company any
finder's fee, brokerage or other commission or benefit in connection with
the sale and purchase contemplated by this Agreement.
(i) (No profit sharing): The Company is not party to any agreement, arrangement
or understanding where it is or will be bound to share profits or waive or
abandon any rights.
(j) (No other payments): The Company is not subject to any agreement,
arrangement or understanding that involves directly or indirectly any offer
or payment to any government official or any other third party to influence
him or to assist in the obtaining or retaining of business, nor involves
any offer or payment to any other person while knowing or having reason to
know that all or a portion of the matter offered or any such payment would
be made available or paid to any government official or third party for the
same purpose.
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(k) (Securities enforceable): All security (including any guarantee or
indemnity) granted in favour of the Company is valid and enforceable by
that member against the grantor in accordance with the terms of that
security.
9. Permits and compliance with Statutes
(a) (All Permits obtained): The Company has all permits, licenses, authorities,
registrations and approvals necessary for properly carrying on its Business
and for the use of the Premises (Permits).
(b) (Permanent and unconditional): All Permits have been obtained on a
permanent and unconditional basis, or if the Permits are not permanent and
unconditional, the Vendor possesses all documents necessary to permit the
Purchaser to renew or transfer the Permits.
(c) (No revocation or variation): There is no circumstance or fact which may:
(i) result in the revocation or variation in any material respect of any
of the Permits;
(ii) hinder or prevent the transfer or grant of such Permits to the
Purchaser; or
(iii) prejudice the continuance or renewal of such Permits in favour of the
Purchaser.
(d) (Reports and returns): All reports, returns, payments and other information
required to be made or given in respect of any Permits have been duly made
or given.
(e) (Compliance with Statutes): The Business of the Company is conducted in
compliance with all Statutes and the Vendor is not aware of any allegation
of any contravention of any Statute by the Company.
10. Corporate matters
(a) (Assets owned by the Company): The Company is the legal and beneficial
owner of all of its assets, which are free of any Encumbrance, except as
disclosed in the Last Accounts.
(b) (Compliance with contracts): To the best of the Vendor's knowledge,
information and belief, and after due enquiry, the Company has complied in
all respects with:
(i) its Constitution;
(ii) any instrument to which it is a party or by which it is bound,
including all Business Contracts and Leases; and
(iii) all legal requirements and all judgments, orders, injunctions and
requirements of any Court or Government Authority,
25
and there has not occurred any event which, with the passing of time
or giving of notice, would constitute a material breach of default or
any of the above.
(c) (Capacity of the Company): The Company:
(i) will not at Settlement, hold or have agreed to acquire or take up any
shares in the capital of any company;
(ii) is not a member of any partnership, joint venture or unincorporated
association;
(iii) is not a trustee or manager of any trust estate or fund; and
(iv) does not have a permanent establishment (as that expression is defined
in the Tax Act) outside Australia.
(d) (No powers of attorney): There are no powers of attorney given by the
Company in favour of any person which are or may come to be in force in
relation to the Business or the Company.
(e) (Officers duly appointed): All of the directors and secretaries of the
Company have been duly appointed in accordance with the Corporations Act or
its predecessor, the Companies Code.
(f) (No name changes): The Vendor will not permit the name of the Company to be
changed before Settlement.
(g) (Plant and equipment): All plant, equipment and vehicles owned by the
Company are in good order and repair except for fair wear and tear.
(h) (All duties and taxes paid): All stamp duties and other taxes for which the
Company is primarily liable in respect of every deed, agreement or other
document to which the Company is or has been a party have been duly paid or
adequately provided for.
(i) (Constitution): The Constitutions of the Company and its Subsidiaries
produced to the Purchaser at the time of execution of this Agreement and
signed for the purposes of identification by the Company's secretary on
behalf of the Company are respectively true and correct copies of the
constitutions of the Company and its Subsidiaries and will remain so until
and as at Settlement.
(j) (Filings): The Company has filed all annual returns, resolutions,
particulars, other forms, returns and documents as and where required to be
filed or registered under the Corporations Act or its predecessor, the
Companies Code, such returns and forms were accurate in all material
respects, and the Company is not liable to be struck off the register of
companies.
11. Premises
(a) (List of all Premises): Schedule 3 accurately describes all the Premises
owned, leased or occupied by the Company.
26
(b) (Exclusive occupation): The Company has exclusive peaceful and undisturbed
occupation of the Premises free of any Encumbrance or third party right.
(c) (Compliance with obligations): The Company has properly performed and
observed all obligations affecting the Premises, whether set out in the
Leases or in any Statutes.
(d) (Leases valid and binding): Each Lease is valid and binding on the Parties
and enforceable in accordance with its terms and the Company named as
lessee of any Lease has complied with all its obligations under each
relevant Lease.
(e) (True copies): The Vendor has given the Purchaser true copies of each of
the Leases before the Execution Date. Those copies set out the full terms
of those Leases.
(f) (Disclosure of other lease commitments): The Vendor has disclosed to the
Purchaser before the Execution Date full and correct details of all
commitments (whether legally binding or otherwise) of the Company to take
lease of premises.
(g) (No disputes): There is no current material dispute relating to the
Premises or their use.
(h) (No notices): The Company has not received any notice from any Government
Authority (nor are any of them aware of any pending notice):
(i) requiring any work to be done or money expended on any of the
Premises; or
(ii) of proposed resumption, compulsory acquisition or any other matter
affecting any of the Premises.
(i) (State of Premises): The Premises:
(i) are used for purposes permitted under relevant planning or zoning
schemes and in compliance with all Statutes;
(ii) are not subject to any temporary or conditional planning permission;
(iii) are not subject to any restrictive covenant, exception or reservation
which adversely affects the ability to carry on the Business at those
Premises;
(iv) are suitable for the continued conduct of the Business as presently
conducted at those Premises; and
(v) and its improvements are, having regard to their age, in such
condition and state of repair as to be substantially fit for the
purpose for which they are currently used.
27
12. Environmental compliance
(a) (No environmental contamination): The Premises are free of all
environmental contamination, including without limitation, any patent or
latent environmental contamination of the atmosphere, air, soil, sub-soil,
ground water or surface waters within or adjacent to such premises.
(b) (No violation of environmental laws): No hazardous materials and no other
materials intended for use or generated in the Business have been or are
used, stored, treated or otherwise disposed of by the Company in violation
of applicable laws and regulations.
(c) (Compliance with environmental laws): All hazardous materials removed or
emitted from the Premises were and are documented, transported and disposed
of in compliance with all applicable laws and regulations.
(d) (No materials causing contamination): No materials, including without
limitation, effluence leachate, emissions or hazardous materials generated
on or emitted from any of the Premises have caused or will cause, in whole
or in part, any environmental contamination.
(e) (No agreement): There is no agreement or consent order to which the Company
is a party in relation to any environmental matter, and no such agreement
or order is necessary for the continued compliance of the Business with
applicable laws and regulations.
(f) (Orders): All orders issued by any Government Authority concerning
environmental matters on the Premises have been fully complied with and
cleared.
(g) (Notices): The Company has not received any written communications which
have not been fully complied with and cleared concerning alleged violations
of environmental legislation or claims with respect to environmental
matters with respect to the Business.
(h) (Business does not constitute nuisance): The conduct of the Business does
not constitute a nuisance, nor has any claim been made in respect of the
use or operation of the Premises by any adjourning landowner or other
party.
13. Assets
(Owned by the Company): Except as set out in the Disclosure Material, all the
fixed asset, current assets and other assets and property used in connection
with the Business are:
(a) legally and beneficially owned by the Company free of Encumbrances (and, in
particular, no such assets are the subject of any hire purchase agreement
or credit purchase agreement or any agreement for payment of deferred
terms); and
28
(b) not used by any other person.
14. Absence of Litigation
(a) (No current litigation): The Company nor any person for whom it may be
vicariously liable is engaged in any capacity in any prosecution,
litigation, arbitration proceedings or administrative or governmental
challenge or investigation (Litigation).
(b) (No pending Litigation): There is no Litigation pending, threatened,
anticipated or contemplated against the Company or any person for whom any
of them may be vicariously liable.
(c) (No facts giving rise to Litigation): No fact or circumstance exists which
may give rise to any Litigation which could materially affect the ability
of the Company continuing to operate its Business.
(d) (No outstanding judgments): There are no unsatisfied or outstanding
judgments, orders, decrees, stipulations, or notices affecting the Company
or any person for whom any of them may be vicariously liable.
16. Insurance
(a) (Assets adequately insured): The assets of the Company are adequately
insured in respect of the risks to which they are subject (including loss
or damage by fire, theft, storm and tempest) in such amounts as accord with
sound business principles and such insurances will not expire before the
Settlement Date.
(b) (Other insurance): The Company is adequately insured against public
liability, product liability, loss of profits and all other risks in such
amounts as accord with sound business principles, and such insurances will
not expire before the Settlement Date.
(c) (Insurance for employees and others): Any Claim which might be made against
the Company by an employee or third party in respect of any accident or
injury is fully covered by insurance.
(d) (Premiums paid): All premiums in respect of the insurances will have been
paid before the Settlement Date.
(e) (No claims remain unpaid): There are no material Claims made but unpaid any
insurance policies, and no material threatened or pending Claims, and there
are no events or circumstances which may give rise to any such Claim.
(f) (No failure to claim): The Company has not failed to give any notice or to
present any Claim with respect to the Business under any existing insurance
policy.
(g) (No outstanding requirements or recommendations): The Company has not been
notified by any insurer that it is required or that it is
29
advisable for it to carry out any maintenance, repairs or other work in
relation to any assets of any Business or on any Premises.
(h) (Insurance only relevant to Business): The insurances effected by the
Company do not cover or otherwise relate to any assets or premises other
than those owned and used by the Company or any risks or liabilities other
than those which may be incurred by the Company.
17. Taxation
(a) (Compliance): The Company has duly complied with all obligations imposed by
the Tax Act.
(b) (No dispute): The Company has not made a false or misleading statement to a
taxation officer within the meaning of the Tax Act in relation to any
income or franking year and there is no unresolved dispute with any Revenue
Authority involving the Company.
(c) (Other tax returns filed): All necessary information, declarations,
certificates, notices, returns and any other required lodgements in respect
of Taxes, other than Tax under the Tax Act, have been properly and duly
submitted by the Company to all relevant Revenue Authorities in respect of
Tax for all relevant periods up to the Execution Date and will continue to
be submitted until the Settlement Date. The Company has not made a false or
misleading statement in relation thereto and there is no unresolved dispute
with any Revenue Authority involving the Company, nor are there any facts
or circumstances which might give rise to any dispute.
(d) (All other taxes assessed and paid): All Taxes, other than Tax under the
Tax Act, which have been assessed or imposed or which are deemed to have
been assessed or imposed or which are lawfully assessable or payable by or
upon the Company and which were due and payable as at the Last Accounts
Balance Date have been paid or remitted to the relevant Revenue Authority
by the Company.
(e) (No penalty or fine paid or payable): The Company has not in the past five
years paid or become liable to pay, nor are there any circumstances by
reason of which the Company is likely to become liable to pay, any penalty,
fine or interest under the Tax Act or with respect to any Tax under that or
other legislation.
(f) (No tax audit or investigation conducted): The Company has not in the past
five years suffered any investigation, audit, visit or written request for
the production of information by any Revenue Authority and the Company has
not been notified of or is aware of any such proposed investigation, audit,
visit or request.
(g) (No non-arms length transactions): The Company has not been a party to or
has not participated in any non-arm's length transaction that could be
affected by the exercise of discretionary powers of the relevant Revenue
Authority, including, without limitation, transactions relating
30
to trading stock, plant and equipment, securities or assets subject to the
capital gains tax provisions of the Tax Act.
(h) (No tax avoidance): The Company has not been a party to or has not
participated in transactions or arrangements that could give rise to the
exercise by the Relevant Authority of its powers under the Tax Act in
relation to losses and outgoings incurred under tax avoidance schemes, or
in relation to international agreements or schemes to reduce income tax, or
any other discretionary powers of the relevant Revenue Authority under the
Tax Act by virtue of which transactions or arrangements entered into by the
Company may be re-opened, revised or given an interpretation different from
that adopted by the Company.
(i) (Inter-company dividends): There have not been and are no circumstances in
relation to the payment of any dividend by the Company to any person that
have given rise to or could give rise to the denial in whole or in party of
any inter-company dividend tax rebate available under the Tax Act.
(j) (Tax file numbers): The Company has duly complied with all obligations
imposed under the Tax Act in relation to the quotation of tax file numbers
by employees of the Company and the deduction by the Company of tax
instalments, including the guidelines under applicable privacy legislation;
the Company has not committed any offence in relation to the collection,
recording, use or disclosure of tax file numbers.
(k) (Income tax returns filed): The Company has filed all returns under the Tax
Act for the income year, franking year and tax periods covered by the Last
Accounts and for all previous years, together with any applicable
certificates, notices, declarations and any other lodgements whether
mandatory or otherwise in the interests of the Company; all such returns
were correct and on a proper basis, and no dispute exists in relation to
any of them, nor are there any facts or circumstances which might give rise
to any disputes.
(l) (All income tax assessed and paid): All Tax under the Tax Act for the
income year, franking year and tax periods covered by the Last Accounts and
all prior income, franking years and tax periods which have been assessed
or imposed or which is deemed to have been assessed or imposed or which is
lawfully assessable or payable by or upon the Company has been duly
assessed and paid.
(m) (Franking accounts properly maintained): In relation to the Company, all
credits and debits to any franking account maintained by each member have
been duly and properly recorded in accordance with the Tax Act giving rise
to a franking account balance in conformity with the Tax Act, and there are
no existing or pending statutory franking debits in relation to dividend
streaming arrangements, on-market share buy-back purchases or otherwise.
(n) (Franking debits): The Company has not lodged an application for the
determination of an estimated franking debit and no notice has been
31
received or is expected at the Execution Date that would give rise to a
franking debit based on an estimated debit determination under the Tax Act.
(o) (Proper records kept): All documents and records have been kept and
maintained in compliance with the Tax Act including, without limitation,
all records required in relation to the franking account balance of the
Company and records necessary to permit the ascertainment of all
information required in relation to capital gains and capital losses
including net capital gains and net capital losses under the Tax Act and
records necessary to attribute the goods and services tax paid and payable
on taxable supplies to a tax period and to attribute all creditable
acquisitions to a tax period and to claim an input tax credit, in respect
of all creditable acquisitions, for the purposes of the Tax Act.
(p) (Price adjusting for GST): All contracts for making taxable supplies
entered into by the Company provide for the cost of the goods and services
tax liability in respect of such supplies to be included in the price or
other consideration for the supply.
18. Staff and superannuation
(a) (Details of employees): The Vendor has disclosed to the Purchaser in
writing before the Execution Date full and correct details of:
(i) the employees of the Company and the employment conditions of all
employees of the Company; and
(ii) all contracts of service or for services and letters of appointment in
respect of any employees of, or consultants to, the Company which
cannot be terminated on less than 2 months' notice.
(b) (Contracts enforceable): Each of the contracts entered into by the Company
with employees or consultants is enforceable against the parties to it and
there is no party in breach of, or in default under, any such contract.
(c) (No change since Last Accounts Balance Date): Since the Last Accounts
Balance Date the Company has not paid any bonuses or increases in salary
(other than normal increases to employees in the ordinary course of
business or as imposed by industrial awards) or otherwise altered the
remuneration, emoluments or benefits or other conditions of employment of
any Officers or employees of the Company.
(d) (No collective agreements): Except as disclosed in the Disclosure Material,
the Company is not party to any collective agreement or enterprise bargain
agreement or other agreement or arrangement nor is it involved in or likely
to be involved in any industrial dispute with any trade union or other
organisation of employees.
(e) (No termination of employees): No present Officer, employee, agent or
consultant of or to the Company has given or received notice
32
terminating his employment or engagement and no Officer, employee, agent or
consultant is entitled to or intends or is likely as a result of this
Agreement to terminate his employment or engagement with the Company.
(f) (No changes to directors' benefits): Since the Last Accounts Balance Date
the Company has not paid any remuneration or fees to its directors other
than normal remuneration to executive directors.
(g) (Compliance with awards and agreements): In respect of its employees and
former employees the Company has complied with all applicable industrial
awards and agreements and all statutory requirements.
(h) (Compliance with Statutes): The Company has complied in all material
respects with all applicable Statutes directed at:
(i) avoiding all forms of discrimination with respect to employees;
(ii) providing long service leave benefits to employees;
(iii) providing training and career assistance to employees; and
(iv) providing for affirmative action programmes, and there are no
outstanding claims against or payments due from the Company under such
Statutes.
(i) (Compliance with Superannuation Commitments): The Company has complied, and
until the Settlement Date will continue to comply with all of its
Superannuation Commitments.
(j) (No increase to Superannuation Commitments): The Company will not increase
its Superannuation Commitments between the date of this Agreement and the
Settlement Date without the written consent of the Purchaser.
(k) (No other pension benefits): The Company is not under any present legal
liability or voluntary commitment (apart from a Superannuation Commitment)
to pay to any person any pension, superannuation allowance, retirement
gratuity or like benefit (other than legal liability to pay long service
leave or annual holiday pay) or any damages or compensation for loss of
office or employment or for unfair dismissal.
(l) (No other funds): There are no superannuation trusts or funds of which the
Company is a trustee, or to which the Company is required to make
contributions (apart from a Superannuation Commitment).
(m) (No superannuation guarantee charge payable): The Company has duly made all
necessary payments in order to avoid incurring any liability to pay the
training guarantee levy under the Training Xxxxxxxxx Xxx 0000 (Cth).
19. Material disclosure
33
(a) (All material information): Any information known or which should be known
to the Vendor concerning the Company which might reasonably be regarded as
material to a purchaser for value of the Vendor Shares has been disclosed
in writing to the Purchaser.
(b) (True, complete and accurate): All information concerning the Company or
concerning the Vendor Shares supplied to the Purchaser or its agents,
employees or advisers by the Vendor or its agents, employees or advisers is
true, complete and accurate in all respects, and is not misleading or
deceptive.
(c) (No material error or misstatement): No representation, warranty or
document made or furnished by the Vendor in connection with this Agreement
contains any material error or misstatement nor does it omit to state any
material fact.
(d) (No adverse acts): Nothing has been done or omitted to be done in relation
to the Vendor Shares or the Company which might materially adversely affect
the interests of the Purchaser as an intending purchaser of the Vendor
Shares.
(e) (No competing interests): The Vendor does not have any interest in any
company or business which has a close trading relationship with or which is
in competition with a business conducted by the Company.
(f) (Forecasts and projections): All the forecasts and projections (if any) in
the Disclosure Material:
(i) were made after due and careful consideration on the part of the
author;
(ii) are based on information which the author reasonably believed was
reliable; and
(iii) are fair and reasonable in the circumstances prevailing at the time
such forecasts and projections were made and in light of the
assumptions made which were in turn fair and reasonable. The Vendor is
not aware of any fact which might have a material adverse effect on
any such assumptions or which might necessitate a material adverse
revision to any of the forecasts or projections.
20. The Last Accounts
The Last Accounts:
(a) disclose a true and fair view of the state of the Current Assets and
Current Liabilities of the Company as at 31 May 2002;
(b) contain adequate provisions in respect of all other liabilities (whether
actual, contingent, deferred or otherwise) of the Company as at 31 May 2002
and proper disclosure (in note form) of any contingent or other liabilities
not included or provided therein; and
34
(c) were prepared:
(i) in accordance with the Corporations Act and Australian accounting
standards applied on a consistent basis and without making any
revaluation of assets; and
(ii) in the manner described in the notes to them.
35
SCHEDULE 2
PREMISES
Suite 1
Sports Betting Auditorium
Canberra Racecourse
Xxxxxxxx Xxxx
XXXXXXX XXX 0000
36
SCHEDULE 3
LAST ACCOUNTS
MEGASPORTS (ACT) PTY LIMITED
ABN 54 081 251 470
FINANCIAL STATEMENTS
37
STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD
1 MAY 2002 TO 31 MAY 2002
31/5/02 30/4/02 31/3/02
Note $ $ $
Net revenue from ordinary activities (66,467) 40,394 (76,316)
Employee benefits expense (33,695) (39,653) (30,629)
Depreciation and amortisation expense (4,247) (2,327) (2,412)
Other expenses from ordinary activities (47,558) (11,374) (25,181)
------------ ------------ ------------
Profit/(Loss) from ordinary activities
before income tax expense (151,967) (12,960) (134,538)
Income tax expense relating to
ordinary activities - - -
------------ ------------ ------------
Profit/(Loss) from ordinary activities
after income tax (151,967) (12,960) (134,538)
Accumulated losses at the beginning
of the financial period (3,652,923) (3,639,963) (3,505,425)
------------ ------------ ------------
Accumulated losses at the end of the
financial year $(3,804,890) $(3,652,923) $(3,639,963)
============ ============ ============
38
TRADING ACCOUNT
FOR THE PERIOD 1 MAY 2002 TO 31 MAY 2002
31/5/02 30/4/02 31/3/02
$ $ $
Telephone betting
Gaming receipts 137,329 190,944 163,345
Less: Gaming losses (181,055) (178,784) (163,415)
---------- ---------- -----------
(43,726) 12,160 (70)
---------- ---------- -----------
Internet betting
Gaming receipts 819,730 997,149 1,236,649
Less: Gaming losses (839,267) (977,253) (1,301,574)
---------- ---------- -----------
(19,537) 19,896 (64,925)
---------- ---------- -----------
Xxxxx Stadium Auditorium
Gaming receipts - - -
Less: Gaming losses - - -
---------- ---------- -----------
- - -
---------- ---------- -----------
$ (63,263) $ 32,056 $ (64,995)
========== ========== ===========
39
DETAILED PROFIT AND LOSS ACCOUNT FOR THE PERIOD
1 MAY 2002 TO 31 MAY 2002
31/5/02 30/4/02 31/3/02
$ $ $
Income
Gaming revenue/(loss) (63,263) 32,056 (64,995)
Exchange rate gain/(loss) (3,652) 7,884 (11,708)
Interest 448 454 387
---------- ---------- ----------
(66,467) 40,394 (76,316)
---------- ---------- ----------
40
DETAILED PROFIT AND LOSS ACCOUNT
FOR THE PERIOD 1 MAY 2002 TO 31 MAY 2002
31/5/02 30/4/02 31/3/02
$ $ $
Less expenses
Accounting fees 5,323 1,310 4,320
Advertising - - -
Amortisation 139 135 139
Bank charges 2,157 1,158 793
Cleaning 123 123 123
Computer consumables - - -
Consultants fees - - -
Depreciation 4,108 2,192 2,273
Donations 182 - -
Entertainment - - 91
Employee entitlements (1,952) 921 1,347
Freight and cartage - - -
Fringe benefits tax 1,725 175 -
Insurance - 8,595 4,151
Interest 130 - -
Licences and registrations 1,777 - -
Management fees 19,591 98 146
Motor vehicle expenses 2,316 1,558 2,110
Office expenses 183 816 183
Penalties and fines 240 - -
Postage, printing and stationery 417 77 445
Rent 1,414 507 986
Repairs and maintenance 8,636 2,245 5,113
Security 73 158 -
Subscriptions 726 1,268 2,394
Seminars and conference - - -
Superannuation 6,416 2,767 2,169
Telephone 1,110 507 480
Travelling expenses 480 (1,896) -
Turnover tax 2,680 3,445 3,846
Wages 27,506 27,195 27,113
---------- --------- ----------
85,500 53,354 58,222
---------- --------- ----------
Operating profit/(loss) $(151,967) $(12,960) $(134,538)
========== ========= ==========
41
STATEMENT OF FINANCIAL POSITION AS AT 31 MAY 2002
2003 2002
Note $ $
CURRENT ASSETS
Cash assets 2 407,563 1,021,327
Receivables 3 5,137 3,127
----------- -----------
TOTAL CURRENT ASSETS 412,700 1,024,454
----------- -----------
NON CURRENT ASSETS
Property, plant and equipment 4 61,924 72,551
Intangible assets 5 19,009 19,547
----------- -----------
TOTAL NON CURRENT ASSETS 80,933 92,098
----------- -----------
TOTAL ASSETS $ 493,633 $1,116,552
=========== ===========
CURRENT LIABILITIES
Payables 6 626,032 938,146
Provisions 7 25,640 25,594
----------- -----------
TOTAL CURRENT LIABILITIES 651,672 963,740
----------- -----------
NON CURRENT LIABILITIES
Payables 6 2,607,503 2,658,103
----------- -----------
TOTAL NON CURRENT LIABILITIES 2,607,503 2,658,103
----------- -----------
TOTAL LIABILITIES $ 3,259,175 $ 3,621,843
=========== ===========
NET ASSETS $(2,765,542) $(2,505,291)
=========== ===========
EQUITY
Contributed equity 8 1,039,348 1,039,348
Accumulated losses (3,804,890) (3,544,639)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY $(2,765,542) $(2,505,291)
=========== ===========
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MAY 2002
NOTE 1 SUMMARY OF ACCOUNTING POLICIES
The financial statements are a special purpose financial report which have been
prepared solely for use by directors and members of the company.
The financial statements have been prepared in accordance with the accrual basis
of accounting as set out in AASB 1001 and other applicable Accounting Standards,
except for:
(i) AASB 1004 "Disclosure of Operating Revenue"
(ii) AASB 1005 "Financial Reporting by Segments"
(iii) AASB 1017 "Related Party Disclosures"
(iv) AASB 1020 "Accounting for Income Tax (Tax Effect Accounting)"
(v) AASB 1021 "Depreciation"
(vi) AASB 1026 "Statement of Cash Flows"
(vii) AASB 1033 "Presentation and Disclosure of Financial Instruments"
Furthermore, other mandatory professional reporting requirements (Urgent Issues
Group Consensus Views) have not been adopted.
The company has applied Accounting Standard AASB 1025 "Application of Reporting
Entity Concept and other Amendments". Since the directors consider the company
is not a reporting entity as defined in AASB 1025, the company is not required
to comply with all Accounting Standards and other mandatory professional
reporting requirements.
The above Standards and Consensus Views have not been complied with since the
directors consider the cost of compliance outweighs the benefits to members of
the resulting information and that non-compliance with these Standards does not
affect the truth and fairness of the financial statements.
The financial statements have been prepared on the basis of historical costs and
do not take into account changing money values or, except where stated, current
valuations of non-current assets.
The following is a summary of the significant accounting policies adopted by the
company in the preparation of the financial statements. The accounting policies
have been consistently applied, unless stated otherwise.
a) Depreciation and amortisation
Depreciation and amortisation are provided on non-current assets by charges
against income at rates based on the estimated useful life of the respective
assets principally using the reducing value method.
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MAY 2002
NOTE 1 SUMMARY OF ACCOUNTING POLICIES (CONT'D)
b) Income Tax
The income tax expenses charged against operating profit is based on the
Liability method of tax effect accounting whereby the current liability and
future liability in respect of the year's profits are included at the rates
applicable at balance date in accordance with the law at that date and future
income tax benefits are brought to account when the future realisation of the
benefit can be regarded as assured beyond any reasonable doubt.
2003 2002
$ $
NOTE 2 CASH ASSETS
Cash at bank - Cheque account 3,013 2,621
Cash at bank - USD account 197,449 877,117
Term deposit - Guarantee account 116,802 116,802
Cash at bank - AUD account 90,158 24,236
Cash at bank - Xxxxx Stadium - -
Cash on hand 141 551
--------- ----------
$ $ 407,563 $1,021,327
========= ==========
NOTE 3 RECEIVABLES
Sundry debtors $ 5,137 $ 3,127
========= ==========
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MAY 2002
2003 2002
$ $
NOTE 4 PROPERTY, PLANT AND EQUIPMENT
Computer equipment - at cost 290,274 290,274
Less accumulated depreciation (236,813) (228,742)
---------- ----------
53,461 61,532
---------- ----------
Office furniture - at cost 9,257 9,257
Less accumulated depreciation (6,697) (4,554)
---------- ----------
2,560 4,703
---------- ----------
Furniture & fittings - at cost 12,930 12,930
Less accumulated depreciation (7,027) (6,614)
---------- ----------
5,903 6,316
---------- ----------
$ 61,924 $ 72,551
========== ==========
NOTE 5 INTANGIBLE ASSETS
Formation expenses 24,580 24,580
Less accumulated amortisation (5,571) (5,033)
---------- ----------
$ 19,009 $ 19,547
========== ==========
NOTE 6 PAYABLES
Current
Trade creditors and accruals 78,742 27,916
Customer deposits 539,056 890,110
Bets in advance 8,234 20,120
---------- ----------
$ 626,032 $ 938,146
========== ==========
Non-current
American Wagering Inc. $2,607,503 $2,658,103
========== ==========
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MAY 2002
2003 2002
$ $
NOTE 7 PROVISIONS
Annual leave $ 25,640 $ 25,594
========= =========
NOTE 8 CONTRIBUTED EQUITY
1,039,348 Ordinary shares fully paid $1,039,348 $1,039,348
========= =========
46
COMPILATION REPORT
TO
MEGASPORTS (ACT) PTY LIMITED
Scope
On the basis of information provided by the directors of the company we have
compiled in accordance with APS 9 "Statement on Compilation of Financial
Reports", the special purpose financial report of the company for the period
ended 31st May 2002, as set out in the attached Profit and Loss Accounts,
Balance Sheet and Notes to and Forming Part of the Financial Statements.
The specific purpose for which the special purpose financial report has been
prepared is set out in Note 1. The extent to which Accounting Standards and UIG
Consensus Views have been adopted in the preparation of the special purpose
financial report is set out in Note 1.
The directors are solely responsible for the information contained in the
special purpose financial report and have determined that the accounting
policies used are consistent with the financial reporting requirements of the
company's constitution and are appropriate to meet the needs of the members of
the company.
Our procedures use accounting expertise to collect, classify and summarise the
financial information, which the directors provided into a financial report. Our
procedures do not include verification or validation procedures. No audit or
review has been performed and accordingly no assurance is expressed.
To the extent permitted by law, we do not accept liability for any loss or
damage which any person, other than the company may suffer arising from any
negligence on our part. No person should rely on the special purpose financial
report without having an audit or review conducted.
The special purpose financial report was prepared for the benefit of the company
and the purpose identified above. We do not accept responsibility to any other
person for the contents of the special purpose financial report.
Duesburys
12 June 2002
47
SCHEDULE 4
SETTLEMENT STATEMENT
Purchase Consideration $300,000
Plus:
Company's operating cash bank account balance (*)
Punter wagering account bank balance (*)
TOTAL (*)
Less:
Punter wagering account balances (*)
Employee entitlements (*)
Trade creditors and accruals (*)
Tax instalments/GST (*)
TOTAL (*)
Net Settlement Amount (*)
48
ANNEXURE "A"
DISCLOSURE MATERIAL
CONTENTS
1. DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Interpretations 6
2. TRANSACTION 6
3. ASSIGNMENT OF LOANS 6
4. CONSIDERATION 7
4.1 Consideration 7
4.2 Monthly Payments 7
4.3 Binding Effect 7
4.4 Default 7
4.5 Monthly Reports 8
5. SPORTS BETTING BOOKMAKERS LICENCE 8
5.1 Ownership of Licence and Compliance with the law 8
5.2 Default 8
6. ADJUSTMENTS 9
7. SOFTWARE 9
8. PUNTER'S WAGERING ACCOUNTS 9
8.1 Vendor Covenants 9
8.2 Purchaser Covenants 9
8.3 Default 9
8.4 Indemnity 10
8.5 Limitations 10
9. APPROVALS 10
9.1 Nevada Gaming Authorities 10
9.2 Compliance Committee 10
10. SETTLEMENT 11
10.1 Time and Location of Settlement 11
10.2 Vendor's obligations at Settlement 11
10.3 The Purchaser's obligations at Settlement 12
11. COVENANTS 12
11.1 Covenants about the Company 12
11.2 Further Covenants by the Vendor 13
11.3 Assistance by Vendor 13
11.4 Event affecting value of Vendor Shares 14
12. REPRESENTATIONS AND WARRANTIES BY THE VENDORS AND THE COMPANY 14
12.1 Representations and Warranties 14
12.2 Indemnity by Vendor 14
12.3 Repetition on Settlement Date 14
13. CONFIDENTIALITY 14
2
13.1 Terms to remain confidential 14
13.2 Disclosure of Information 15
13.3 Obligations continuing 15
13.4 ASX Listing Rules 15
13.5 NASDAQ Stock Market Marketplace Rules 15
14. DEFAULT 15
15. NOTICES 15
15.1 Notices in Writing 15
15.2 Initial Address of Parties 16
15.3 Change of Address 16
15.4 Receipt of notice 16
16. NON-ASSIGNMENT 17
17. FURTHER ASSURANCE 17
18. GOVERNING LAW 17
19. VARIATION 17
20. COSTS 17
20.1 Stamp Duty 17
20.2 Legal Costs 17
21. MISCELLANEOUS 17
21.1 Enforcement of Provisions 17
21.2 Sole Understanding 17
21.3 Counterparts 17
21.4 Time 18
3
