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EXHIBIT 2.1
BETWEEN
FUNCTIONAL SOFTWARE PTY LIMITED
of the one part
AND
SENTO CORPORATION
of the other part
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INTELLECTUAL PROPERTY BUSINESS ASSETS AGREEMENT
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and Associates
LAWYERS
▇▇▇▇▇ ▇▇, ▇ ▇'▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
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Telephone: ▇▇ ▇▇▇▇ ▇▇▇▇ Facsimile: 02 9221 8364 DX: ▇▇▇▇ ▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇.▇▇ Ref: 985122
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THIS DEED dated September 30, 1998
BETWEEN: FUNCTIONAL SOFTWARE PTY LIMITED (A.C.N. 009 421 194) of ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ in the State of Western Australia (hereinafter called
"the Vendor") of the one part
AND: SENTO CORPORATION of ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ("the Purchaser") of the other part
WHEREAS:
A. The Vendor is the proprietor of a software house business known as
"Functional Software" whose principal place of business is located at
Suite 7, ▇▇▇▇▇▇ Court, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ in the State
of Western Australia.
B. The Purchaser has agreed to purchase and the Vendor has agreed to sell
the Intellectual Property Assets of the Business of the Vendor on the
terms and conditions contained in this agreement.
DEFINITIONS
1.1 In this Deed the following expressions have the following meanings:
(a) "Agreement" or "this Agreement" means this deed;
(b) "Agreements for Services" means the agreements of even date between
Sento Australia and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ Main for
the provision of personal services to the Purchaser.
(c) "Authority" means any Government or semi-Government body;
(d) "Business" means all of the computer software business trading under
the name of "Functional Software" including without limitation the
Business Assets and the Intellectual Property Business Assets;
(e) (e) "Business Assets" means all of the computer software
business owned by the Vendor including without limitation:-
(i) the goodwill of the Business;
(ii) all plant, fittings, chattels and fixtures and other
property used by the Vendor in connection with the
Business including the property listed in Schedule One
and the Vendor's interest in the Amended Contracts;
(iii) all good and saleable stock in trade of the Business;
(iv) the Vendor's interest in the Distribution Agreements;
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(v) the Vendor's interest in the Licence Agreements;
(vi) the Vendor's consultancy business;
(vii) all client lists, suppliers lists, data bases, records
information and other intellectual property of the Vendor
used in connection with the Business;
but shall exclude:-
(A) the Intellectual Property Business Assets;
(B) the Vendor's property listed in Schedule Seven;
(C) The Vendor's cash on hand;
(D) The Freeware;
(E) The consultancy agreement between the Vendor and
Wycombe Pty Limited (A.C.N. 009 297 983);
(f) "Business Assets Agreement" means the agreement of even date between
Sento Australia and the Vendor for the sale to Sento Australia by
the Vendor of the Business Assets;
(g) "Business day" means any day which is not Saturday, Sunday or a
public holiday;
(h) "Claim" means, as against a person, any claim, notice, demand,
action, proceeding, litigation, investigation, requisition,
judgement, damage, loss, cost, expense or liability incurred or
suffered by or brought or made or recovered against the person
howsoever arising;
(i) "Completion Date" means the date of completion of this agreement
which it is anticipated will be the same day as the making of this
agreement;
(j) "Consultant" means NorthPoint Software Ventures PTE Limited;
(k) "Consultancy Agreement" means the Agreement between the Company and
NorthPoint Software Ventures PTE Limited;
(l) "Disclosure Statement" means the statement from the Vendor dated the
date of this Agreement delivered to the Purchaser and which contains
disclosures about the warranties in this Agreement and the Other
Transaction Documents and about other matters pertaining to the
Business Assets and the Intellectual Property Business Assets and
which statement is contained in Schedule Three;
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(m) "Distribution Agreements" means those agreements entered into by the
Vendor for the distribution of the Intellectual Property Business
Assets more fully particularised in the Business Assets Agreement;
(n) "Freeware" means the includes software and components of software
which is available at no cost or nominal cost specified in the
Disclosure Statement;
(o) "Gross Annual Revenue of the Business" means the total revenue of
Sento Australia for a twelve month period after completion of this
agreement and shall include the revenue of the Business Assets and
the Intellectual Property Business Assets but shall exclude any
amount received by Sento Australia on account of any Tax or on
account of the sale of assets;
(p) "Guarantee" means the Deed of even date between the Vendor, the
Purchaser, Sento Australia and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Main whereby ▇▇▇▇▇ and Main guarantee the obligations of the Vendor.
(q) "Improvements" means any modification, adaption or enhancement to
the Intellectual Property Business Assets including research and
development in progress or any part thereof prior to the date of
this Agreement including, but not limited to, derivatives or
adaptations;
(r) "Intellectual Property" includes:-
(i) Any patent, trademark, copyright, registered design or
other design right or right under the laws of any
jurisdiction throughout the world to apply for the grant
of registration of a patent, trademark, copyright or other
design right;
(ii) any rights throughout the world in respect of an
invention, discovery, trade secret, know how, concept,
idea, information or formula;
(s) "Intellectual Property Business Assets" means the software specified
in Schedule Two and includes the Improvements and the Materials but
excludes the Freeware;
(t) "Licence Agreements" means those agreements entered into by the
Vendor for the licence to end users and Support and Maintenance of
the Intellectual Property Business Assets more fully particularised
in the Business Assets Agreement;
(u) "Materials" means the documentation, user manuals and technical
specifications relating to the software specified in Schedule 2;
(v) "Non-Compete Deeds" means the four Deeds between the Vendor, the
Purchaser, Sento Australia, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ Main
and
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, whereby the Vendor, Main, ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ agree not to compete against the Purchaser;
(w) "Other Transaction Documents" means the Agreements for Services, the
Business Assets Agreement, the Consultancy Agreement, the Guarantee
and the Non-Compete Deeds;
(x) "Sento Australia" means Sento Australia Pty Limited (A.C.N. 074 678
774) of ▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ in the State of New South
Wales;
(y) "Stock" means unregistered shares of the common stock of the
Purchaser;
(z) "Tax" means any federal, national, state, territorial, local or
foreign income, gross receipts, payroll, employment, excise,
severance, stamp, occupation, environmental or customs duties,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales,
use, transfer, registration, valued added, fringe benefits or other
tax or assessment of any nature whatsoever, including without
limitation any customs duty, municipal rates, stamp duties and all
other charges and levies which may be imposed by an Authority
(including any interest penalties and additions thereto) and may
arise in connection therewith;
(aa) "Total Consideration" means the aggregate sum actually paid by the
Purchaser and Sento Australia to the Vendor or any other party to
the Other Transaction Documents whether on the making of this
Agreement or after the making of this Agreement in consideration of
the purchase of the Intellectual Property Business Assets, the
Business Assets, the Consultancy Agreement and the Non Compete
Deeds, but excludes any amount payable under the Agreements for
Services.
INTERPRETATION
1.2 (a) Words expressed in the singular include the plural and vice versa.
(b) Words expressed in one gender include the other genders, as is
appropriate in the context.
(c) A reference to "person" includes a corporation.
(d) This Agreement is governed and construed in accordance with the law
of Western Australia.
(e) If any provision contained in this Agreement is or becomes legally
ineffective, under the general law or by force of legislation, the
ineffective provision shall be severed from this Agreement which
otherwise continues to be valid and operative.
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(f) Two or more parties to this Agreement who represent the same
interest, as Vendor or Purchaser, assume the liability to comply
with their obligations under this Agreement jointly, and in addition
each of them assumes those obligations severally.
(g) If under the provisions of this Agreement or under any notice or
demand anything is required to be done on a day which is not a
Business day, the day or the last day for compliance is deemed to be
the immediately following Business day.
(h) Headings are for guidance only and shall not form part of this
Agreement.
(i) Reference to "$" or "Dollars" is reference to Australian dollars.
2. SALE OF INTELLECTUAL PROPERTY BUSINESS ASSETS
2.1 The Purchaser agrees to buy and the Vendor agrees to sell the
Intellectual Property Business Assets in accordance with the terms and
conditions of this Agreement.
2.2 The Intellectual Property Business Assets are sold free from
encumbrances, charges and liens but are subject to the matters referred
to in the Disclosure Statement.
2.3 Title to the Intellectual Property Business Assets shall pass from the
Vendor to the Purchaser on the completion of this Agreement and the
Vendor shall on completion deliver to the Purchaser such documents
transferring the Vendor's interest in the Intellectual Property Business
Assets as the Purchaser shall reasonably require including, without
limitation, a Deed of Assignment in the form set out in Schedule Four.
3. PAYMENT OF CONSIDERATION
3.1 On completion of this Agreement the Purchaser shall pay to the Vendor in
consideration of the sale of the Intellectual Property Business Assets:-
(a) As to an amount of $409,430.00 in cash or by unendorsed bank
cheque; and
(b) as to an amount of $759,642.00, by the issue or transfer to the
Vendor of the Stock valued in accordance with clause 3.2.
3.2 For the purposes of determining the value of the Stock pursuant to
clause 3.1, the value shall be the closing selling price of the Stock in
the United States on the NASDAQ Stock Market on the day being the date
of this Agreement (or if no sales are made on that day - the next day on
which a sale is made) less 10%. The conversion rate to be applied from
US dollars to Australian dollars shall be
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the average of the purchase price and the selling price of US dollars
as quoted by National Australia Bank Limited on the date of completion
of this agreement.
4. FURTHER PAYMENTS AFTER COMPLETION
4.1 In addition to the consideration payable by the Purchaser to the Vendor
pursuant to clause 3 a further amount may be payable in accordance with
this clause 4.
4.2 During the twelve month period commencing on the first day of the month
immediately following completion of this agreement (called in this
clause 4 "Year 1"):-
(a) If the Gross Annual Revenue of the Business is less than
$3,000,000.00 then no amount shall be payable by the Purchaser to
the Vendor pursuant to this clause 4.2.
(b) If the Gross Annual Revenue of the Business exceeds $3,000,000.00
then for every dollar of Gross Annual Revenue of the Business in
excess of that amount the Vendor shall be paid $0.249596 provided
that no additional amounts shall be payable by the Purchaser to
the Vendor for the Gross Annual Revenue of the Business to the
extent that it exceeds $6,000,000.00 except as provided in clause
4.4 and the parties acknowledge that it is their intention that
the maximum payment by the Purchaser to the Vendor under this
clause 4.2(b) shall be $748,788.00.
4.3 During the twelve month period commencing immediately after the end of
Year 1 (called in this clause 4 "Year 2"):-
(a) If the Gross Annual Revenue of the Business is less than
$4,500,000.00 then no amount shall be payable by the Purchaser to
the Vendor pursuant to this clause 4.3.
(b) If the Gross Annual Revenue of the Business exceeds $4,500,000.00
then for every dollar of Gross Annual Revenue of the Business in
excess of that amount the Vendor shall be paid $0.187197 provided
that no additional amounts shall be payable by the Purchaser to
the Vendor for the Gross Annual Revenue of the Business to the
extent that it exceeds $8,500,000.00 and the parties acknowledge
that it is their intention that the maximum payment by the
Purchaser to the Vendor under this clause 4.3 shall be
$748,788.00.
4.4. For the purpose only of calculating the Gross Annual Revenue of the
Business for Year 2 and calculating the amount payable by the Purchaser
to the Vendor pursuant to clause 4.3, the parties agree that if the
Gross Annual Revenue of the Business in Year 1 exceeds $6,000,000.00
then the amount of such excess shall be added to the Gross Annual
Revenue of the Business for Year 2 provided that nothing in this clause
4.4 will impose on the Purchaser any liability to pay to
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the Vendor an amount in excess of the maximum payment referred to in
clause 4.3 in the sum of $748,788.00.
4.5 In the event that the Purchaser is required to pay any amount to the
Vendor pursuant to clause 4.2 then all of such payment shall be made by
Stock in lieu of cash and for the purposes of determining the value of
the Stock, the value will be the lower of:-
(a) The average of the selling price of the Stock in the United
States on the NASDAQ Stock Market for the preceding twelve months
immediately prior to the last day of Year 1 less 10%; or
(b) the lowest selling price of the Stock in the United States on the
NASDAQ Stock Market on the last day of Year 1 (or if no sales are
made on that day - the next day on which a sale is made) less
10%.
The conversion rate to be applied from U.S. Dollars to Australian
Dollars shall be the average of the purchase price and the selling price
of U.S. Dollars as quoted by National Australia Bank Limited for the day
being the last day of Year 1. The Vendor shall not, in the thirty days
before the end of Year 1, sell any of its stock or seek to influence or
cause any other person to sell that person's stock. The Purchaser agrees
it will not itself directly or indirectly manipulate the price of the
Stock with the intention of affecting the valuation of Stock pursuant to
the terms of this Agreement or seek to influence or cause any other
person to manipulate the price of the Stock with the intention of
affecting the valuation of Stock pursuant to the terms of this
Agreement.
4.6 In the event the Purchaser is required to pay any amount to the Vendor
pursuant to clause 4.3, then in respect of that payment, the Purchaser
shall pay cash.
4.7 Within thirty days of the end of Year 1 and within thirty days of the
end of Year 2, the Purchaser shall serve on the Vendor a written
statement setting out the Gross Annual Revenue of the Business for the
relevant year and the amount payable to the Vendor pursuant to clause
4.2 or 4.3. The Statement served upon the Vendor by the Purchaser shall
be prima facie evidence of the matters set out therein. The Purchaser
shall immediately provide to the Vendor all information reasonably
requested by the Vendor to verify the statement.
4.8 Subject to clause 4.13, the transfer of Stock to the Vendor pursuant to
clause 4.2 shall be effected within thirty days from the end of Year 1
and the payment of cash pursuant to clause 4.3 shall be made within
thirty days from the end of Year 2.
4.9 The Purchaser shall throughout Year 1 and Year 2 do such acts as shall
be reasonably practicable under the circumstances to ensure that
sufficient records and accounts of Sento Australia are maintained to
enable the Purchaser to determine the Gross Annual Revenue of the
Business for the particular year.
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4.10 Notwithstanding clause 4.9, nothing shall prevent the Purchaser or Sento
Australia from acquiring during Year 1 or Year 2 any new business and
merging such new business with the then existing business of Sento
Australia provided that in the case of such acquisition for the purpose
of determining the Gross Annual Revenue of the Business the Purchaser,
acting reasonably, shall determine the revenue of such new business and
exclude that revenue from the calculation of the Gross Annual Revenue of
the Business for the particular year or part thereof, as the case may
be.
4.11 Once in each six month period, the Vendor may appoint independent
auditors who shall, upon giving reasonable notice to the Purchaser,
inspect, take copies of and arrange for the audit of the records and
accounts maintained by Sento Australia pursuant to clause 4.9. Such
audit shall be undertaken for the sole purpose of verifying the
Purchaser's determination of the Gross Annual Revenue of the Business.
The audit shall be undertaken at the Vendor's cost on the premises of
Sento Australia and the Vendor shall ensure that the auditors cause as
little disturbance to the Purchaser's business as is reasonably
practicable under the circumstances.
4.12 Subject to clause 4.14, if during Year 1 or Year 2, Sento Australia
enters any transaction with the Purchaser or any Associate (as defined
in the Corporations Law) of the Purchaser where the income payable to
Sento Australia in respect of that transaction is less than Sento
Australia would normally receive in an arm's length transaction, then
for the purpose of determining the Gross Annual Revenue of the Business
the Purchaser shall add to the Gross Annual Revenue of the Business for
that particular twelve month period an amount being the difference
between the amount Sento Australia would normally receive as income in
an arm's length transaction and the amount Sento Australia actually
received in respect of the transaction.
4.13 In the event of a bona fide dispute between the parties as to the Gross
Annual Revenue of the Business for any particular twelve month period
(including any dispute arising out of any adjustment made pursuant to
clause 4.10 or 4.12), then such dispute will be referred for
determination to a third party acting as an expert as is agreed by the
parties and, failing agreement by the parties within a period of seven
days, by an Accountant of at least ten years' standing who has
experience in the computer industry appointed by the President of the
Australian Institute of Chartered Accountants who shall act as an expert
in determining the Gross Annual Revenue of the Business for the
particular twelve month period. The determination of the expert shall be
final and binding on the parties. The costs of the expert shall be paid
for by the parties in equal shares. In the event of such dispute the
Purchaser shall pay any amount due to the Vendor pursuant to clause 4.2
or 4.3 within twenty one days after the determination of the Gross
Annual Revenue of the Business by the expert.
4.14 For the purposes of determining the Gross Annual Revenue of the Business
as between the Purchaser and Sento Australia, there shall be deemed to
exist between the Purchaser as Licensor and Sento Australia as Licensee
an exclusive
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licence to distribute, market, maintain and support the Intellectual
Property Business Assets for a period of two years after the date of
this Agreement for a consideration of $1.00.
5. POSSESSION AND ADJUSTMENTS
5.1 The Vendor shall on completion of this Agreement give possession of the
Intellectual Property Business Assets to the Purchaser and deliver to
the Purchaser the Materials.
5.2 The Vendor shall not between the date of this Agreement and completion
thereof dispose or part with possession of any of the Intellectual
Property Business Assets without the prior written consent of the
Purchaser.
6. COMPLETION
6.1 Completion of this agreement shall take place immediately upon entering
this Agreement or on such other date as may be mutually agreed in
writing.
6.2 A party entitled to serve a notice to complete may serve a notice
requiring completion of this agreement on a day being not less than
fourteen (14) days after the date of service of the notice. The notice
is to be deemed both at law and in equity sufficient notice to make time
of the essence of this contract notwithstanding that the party serving
the notice has not made any previous request or demand for completion.
6.3 Completion of this agreement shall take place in Perth, Western
Australia.
7. RISK
Until the completion of this Agreement the Intellectual Property
Business Assets shall be at the risk of the Vendor.
8. NET-WEST
8.1 The parties acknowledge Net-West owns the intellectual property in
Enterprise Backup Client.
8.2 The Vendor warrants that it has entered an enforceable agreement with
Net-West for the transfer of the intellectual property rights in
Enterprise Backup Client dated 6 February, 1998, the terms of which are
attached to the Disclosure Statement.
8.3 The Vendor shall at its cost complete the Net-West agreement in
accordance with the terms of that agreement.
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8.4 On completion of the Net-West agreement the Vendor shall obtain an
assignment in favour of the Purchaser for the intellectual property
rights in Enterprise Backup Client.
8.5 The Vendor as at the date of this agreement has no knowledge of any
Claim by or against Net-West in respect of its ownership of Enterprise
Backup Client or the agreement of 6 February, 1998 between Net-West and
the Vendor.
9. INTERDEPENDENT AGREEMENTS
9.1 Completion of this Agreement is conditional upon the simultaneous
completion of the Other Transaction Documents.
10. CAPACITY OF PURCHASER
10.1 The Purchaser warrants:-
(a) It has the unrestricted right, power, authority and capacity to
enter into and complete this Agreement and to perform its
obligations under this Agreement;
(b) it is a proprietary limited company duly organised, validly
existing and in good standing under the Corporations Law and has
full power and authority to carry on its business now being
conducted, to own and operate its properties and assets and to
perform its obligations under this Agreement; and
(c) the entering into or completion of this Agreement will not, as at
the date of completion, conflict or violate with any provisions
of its Memorandum and Articles of Association.
11. CAPACITY OF VENDOR
11.1 Despite any other provision of this Agreement, every warranty, condition
and obligation of the Vendor is subject to the Disclosure Statement.
11.2 The Vendor warrants:-
(a) It has the unrestricted right, power, authority and capacity to
enter into and complete this Agreement and to perform its
obligations under this Agreement;
(b) it is a proprietary limited company duly organised, validly
existing and in good standing under the Corporations Law and has
full power and authority to carry on its business now being
conducted, to own and operate its properties and assets and to
perform its obligations under this Agreement; and
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(c) the entering into or completion of this Agreement will not, as at
the date of completion, conflict or violate with any provisions
of its Memorandum and Articles of Association.
(d) The Vendor has not made any assignment for the benefit of its
creditors, nor to the best of the knowledge of the Vendor have
any proceedings been commenced for the winding up of the Vendor
nor, to the best knowledge of the Vendor, do any facts or
circumstances exist which would give rise to a person commencing
proceedings against the Vendor to wind the Vendor up.
(e) Except as specifically disclosed in this Agreement, the
Disclosure Statement or in the Other Transaction Documents to the
best of the knowledge of the Vendor the Vendor is not a party to
or subject to any proceedings of a Court or Arbitrator involving,
affecting or relating to the ownership or actual use of the
Intellectual Property Business Assets and to the best of the
knowledge of the Vendor there are no proceedings pending or
threatened against, involving, effecting or relating to the
Vendor or the Intellectual Property Business Assets and, to the
best knowledge of the Vendor, there exists no facts to serve as a
basis for the institution of any proceedings or any claim which
would adversely affect the Intellectual Property Business Assets.
(f) There is no agreement, arrangement or activity whether by
commission or omission in which the Vendor has been knowingly
concerned which infringes or has been or which is required to be
authorised under Part IV of the Trade Practices Act, 1974 or any
anti-trust legislation in relation to the Business.
(g) Except as specifically disclosed in this Agreement, the
Disclosure Statement or in the Other Transaction Documents, the
Vendor is the beneficial owner of the Intellectual Property
Business Assets and none of the Intellectual Property Business
Assets are subject to any trust.
12. AGENT
12.1 The Vendor warrants that no person acting as agent or broker or
investment banker has acted directly or indirectly on behalf of the
Vendor in connection with the sale of the Business and to the best of
the knowledge of the Vendor no person will be entitled to any fee in the
nature of commission in respect of the sale of the Business.
13. DISCLOSURE TO PURCHASER
13.1 Prior to the entering of this Agreement the books of account and other
business records of the Vendor regarding the Intellectual Property
Business Assets have all been made available to the Purchaser and to the
best of the knowledge of the Vendor such books and records are
materially complete and correct records of the Intellectual Property
Business Assets.
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13.2 Prior to the date of this Agreement, to the best of the knowledge of the
Vendor the Vendor has made available to the Purchaser true, correct and
complete copies of all material contracts, agreements, leases and
commitments relating to or affecting the Intellectual Property Business
Assets.
13.3 To the best knowledge of the Vendor no representations or warranties of
the Vendor contained in this Agreement or in any of the books and
records and other documents of the Vendor produced to the Purchaser
contain any untrue statement of material fact, nor has the Vendor
omitted to disclose any material fact to the Vendor in relation to the
operation and nature of the Intellectual Property Business Assets. There
is no fact known to the Vendor which has specific application to the
Vendor or the Intellectual Property Business Assets (other than general
economic or industry conditions) and which would materially and
adversely affect the Intellectual Property Business Assets or the
ability of the Vendor to carry out its obligations under this Agreement
other than as set out in the Disclosure Statement.
14. MATERIAL CHANGE PRIOR TO COMPLETION
14.1 The Vendor warrants to the Purchaser:-
(a) that the representations and warranties made in this Agreement
are true and correct and complete as at the date of this
Agreement and will be true, correct and complete as at the date
of completion of this Agreement;
(b) there is no dispute or any other occurrence, event or condition
known to the Vendor (other than general economic or industry
conditions) as at the date of this Agreement which could
reasonably be anticipated to give rise to any legal or
administrative action or to a material adverse change affecting
the Intellectual Property Business Assets or the Vendor's ability
to carry out its obligations under this Agreement.
15. SPECIFIC WARRANTIES OF VENDOR
15.1 Except as otherwise expressly disclosed in this Agreement or in the
Disclosure Statement or in the Other Transaction Documents the Vendor
warrants to the Purchaser that the following representations and
warranties are true, correct and complete as at the date of this
Agreement and will be true, correct and complete as at the date of
completion of this Agreement:-
(a) There is no asset, right, interest, property or agreement of any
nature whatsoever in connection with the Business which is not
owned by the Vendor;
(b) none of the Intellectual Property Business Assets are subject
to any encumbrance;
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(c) as far as the Vendor is aware none of the Intellectual Property
Business Assets are subject to any Claim.
15.2 Except as otherwise expressly disclosed in this Agreement or in the
Disclosure Statement or in the Other Transaction Documents, the entering
of this Agreement by the Vendor will not conflict with or be a breach of
or a default under the terms of any contract, agreement, pledge or
instrument.
15.3 Except as otherwise expressly disclosed in this Agreement or in the
Disclosure Statement or in the Other Transaction Documents, there are no
other contracts or agreements conferring rights in or in respect of the
Intellectual Property Business Assets other than the matters disclosed
in the Disclosure Statement.
15.4 The Vendor warrants that none of the Intellectual Property Business
Assets infringe any copyright of any third party.
15.5 Despite any other provision of this Agreement, every warranty, condition
and obligation of the Vendor is subject to the Disclosure Statement.
16. VENDOR'S INDEMNITY AND LIMITATION ON LIABILITY
16.1 The Vendor agrees to indemnify the Purchaser from and against any Claim
against the Purchaser, before or after completion of this Agreement, to
the extent that the Claim arises directly from the breach of any
warranty, representation or obligation on the part of the Vendor under
this Agreement.
16.2 Despite any other provision of either this Agreement or any Other
Transaction Document, the Vendor will only be liable to the Purchaser
for a breach of any warranty, representation or obligation on the part
of the Vendor under this Agreement or any Other Transaction Document or
liable in tort (including but not limited to negligence), under statute
or on any other basis in connection with this Agreement or any Other
Transaction Document if the Vendor receives written notice of the
Purchaser's claim against the Vendor within three years of the date of
completion of this Agreement.
16.3 Despite any other provision of this Agreement or any Other Transaction
Document, the Vendor's liability for a breach of any warranty,
representation or obligation on the part of the Vendor under this
Agreement or any Other Transaction Document and liability in tort
(including but not limited to negligence), under statute and on any
other basis in connection with this Agreement or any Other Transaction
Document, other than fraud, shall be limited in the aggregate for all
Claims to a maximum aggregate amount equivalent to the Total
Consideration.
16.4 For the purpose of determining the Total Consideration any Stock
transferred to the Vendor or any other party to the Other Transaction
Documents shall have ascribed to it the same value as was ascribed to in
accordance with this
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Agreement or the Consultancy Agreement at the time the Vendor or any
other party to the Other Transaction Documents became entitled to
receive the Stock.
17. ONSALE OF SOFTWARE
17.1 The Vendor acknowledges that at any time after completion of this
Agreement, the Purchaser may sell the Intellectual Property Business
Assets.
17.2 If any of the following events should occur in the first twenty five
months after the date of this Agreement:-
(a) The Purchaser enters into and completes a sale of the
Intellectual Property Business Assets;
(b) There is a change in effective control of Sento Australia for
purposes other than internal reconstruction; or
(c) The Purchaser adopts a deliberate policy not to actively market
and promote the Intellectual Property Business Assets
then
(d) The Purchaser shall pay to the Vendor $1,497,576.00 and shall pay
to the Consultant $121,423.00, subject to paragraph (g).
(e) Such amount shall be paid within thirty days from the happening
of the first event referred to in clause 17.2(a), (b) or (c) to
occur.
(f) Subject to paragraph (g), payment shall be made:
(i) As to an amount of $809,500.00 by cash or by unendorsed
bank cheque;
(ii) as to an amount of $8,094.99, by the issue or transfer to
the Vendor of Stock, the value of the Stock to be
determined in accordance with the procedure for valuing
Stock set out in clause 4.5 provided that the date of the
happening of the event referred to in clause 17.2(a)-(c)
shall be substituted for the last day of Year 1 referred
to in clause 4.5.
(g) The Purchaser's liability pursuant to paragraphs (d) and (f)
shall be reduced by the amount of any payments made pursuant to
clauses 4.2 and 4.3 of this Agreement and clause 3.2 and clause
3.3 of the Consultancy Agreement and it is agreed that:-
(i) Any payment by the Purchaser pursuant to clause 4.2 of
this Agreement and clause 3.2 of the Consultancy Agreement
shall be applied to reduce the amount payable under clause
17.2(f)(ii) and
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any Stock transferred pursuant to clause 4.2 and
clause 3.2 shall have attributed to it the same
value as was attributed to it at the time the Vendor or
the Consultant became entitled to receive the Stock.
(ii) Any payment by the Purchaser pursuant to clause 4.3 of
this Agreement and clause 3.3 of the Consultancy Agreement
shall be applied to reduce the amount payable under clause
17.2(f)(i).
17.3 In the event the Purchaser completes a sale of the Intellectual Property
Business Assets during the period being twelve months after the date of
this Agreement, then in addition to the other amounts payable to the
Vendor hereunder, the Purchaser shall pay to the Vendor an amount equal
to 5% of the difference value (as defined).
17.4 In the event the Purchaser completes a sale of the Intellectual Property
Business Assets during the period commencing on the day after the day
being twelve months after the date of this Agreement and ending twenty
four months after the date of this Agreement, then in addition to the
other amounts payable by the Purchaser hereunder, the Purchaser shall
pay to the Vendor an amount equal to 4% of the difference value (as
defined).
17.5 In the event the Purchaser completes a sale of the Intellectual Property
Business Assets during the period commencing on the day after the day
being twenty four months after the date of this Agreement and ending
thirty six months after the date of this Agreement, then in addition to
the other amounts payable to the Vendor hereunder, the Purchaser shall
pay to the Vendor an amount equal to 3% of the difference value (as
defined).
17.6 In clauses 17.3, 17.4 and 17.5 "difference value" means the sum which
equals the consideration actually received by the Purchaser in respect
of such sale less the Total Consideration.
17.7 Any amount payable by the Purchaser to the Vendor pursuant to clause
17.3, 17.4 or 17.5 shall be paid on completion of the agreement for sale
or on receipt by the Purchaser of the consideration for such sale,
whichever is the later.
17.8 In the event the Purchaser completes a sale of the Intellectual Property
Business Assets as contemplated by clauses 17.3, 17.4 or 17.5 then the
Vendor shall enter into a Deed with the purchaser of the Intellectual
Property Business Assets (and shall cause the guarantors under the
Guarantee to enter such Deed) on such terms and conditions and giving
such representations and warranties as the Purchaser shall, acting
reasonably, require and the parties agree without limiting the
generality of the foregoing it shall be reasonable to ask the Vendor to
give the same representations and warranties as contained in this
Agreement.
17.9 For the purpose of determining the Total Consideration any Stock
transferred to the Vendor or any other party to the Other Transaction
Documents shall have
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ascribed to it the same value as was ascribed to in accordance with
this Agreement or the Consultancy Agreement at the time the Vendor or
any other party to the Other Transaction Documents became entitled to
receive the Stock.
18. SERVICE OF NOTICES
18.1 Any notice, document or demand (called "notice") under this Agreement
may be served in accordance with this clause.
18.2 The notice shall be in writing, signed by the party giving it or by that
party's solicitor.
18.3 The notice shall be served on the other party or on that party's
solicitor.
18.4 Particulars for the service of notices are:
▇▇▇▇▇▇-- ▇▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
Vendor's solicitor-- ▇▇▇▇▇▇▇ & ▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: (▇▇) ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇) ▇▇▇▇ ▇▇▇▇
DX: ▇▇▇▇▇ ▇▇▇▇▇▇ STOCK EXCHANGE
Purchaser-- Sento Corporation
Address: ▇▇▇▇▇ ▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Purchaser's Solicitor ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Associates
Address: ▇▇▇▇▇ ▇▇, ▇ ▇'▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: (▇▇) ▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇) ▇▇▇▇ ▇▇▇▇
DX: ▇▇▇▇ ▇▇▇▇▇▇
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18.5 Either party may advise the other party of an additional or an altered
address for the service of notices, which is within the State of New
South Wales or Western Australia and is not a post office box or poste
restante.
18.6 Notice may be served:
(a) by delivering it to the party or to the party's solicitor at the
address shown in clause 18.4 or notified under clause 18.5 (called
"the party's address") and leaving it with the party, the solicitor
or some other person accepting the notice on behalf of either of
them;
(b) by sending it by pre-paid post, correctly addressed, to the party's
address;
(c) by transmitting it on a Business day by facsimile to the party's
solicitor's facsimile receiving facility indicated in clause 18.4;
18.7 A notice is considered to have been served:
(a) at the time of delivery;
(b) on the third Business day after the day on which it is posted, the
first Business day being the day of posting;
(c) on the Business day on which the notice is received by the
recipient's facsimile receiving facility.
19. COSTS AND STAMP DUTY
Each party shall pay their own costs in respect of this Agreement and
the Purchaser shall pay stamp duty on the Agreement.
20. ESCROW
20.1 Within thirty (30) days after the Completion Date:-
(a) The parties and an independent escrow agent approved by the
Vendor ("Escrow Agent") must enter into an escrow agreement on
terms satisfactory to the Vendor and the Purchaser ("Escrow
Agreement" for the purpose of enabling the materials in paragraph
(b) to be held in escrow by the Escrow Agent; and
(b) the Purchaser must place into escrow with the Escrow Agent one
soft copy of:-
(i) the object and source code of the Intellectual Property
Business Assets; and
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(ii) without limiting subparagraph (i), the full source code
control system referred to in Schedule 2.
20.2 The Escrow Agreement must provide that the materials deposited with the
Escrow Agent shall be immediately released to the Vendor upon:-
(a) The failure of the Purchaser to perform any material obligation
under this Agreement or any Other Transaction Document;
(b) the Purchaser being the subject of a resolution for its winding
up or being insolvent, being deemed to be insolvent or stating
that it is insolvent.
20.3 Upon release of any material in the circumstances in clause 20.2, the
Vendor shall receive an irrevocable, royalty-free, perpetual and
exclusive licence to use that material.
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SCHEDULE ONE
EXCLUDED ASSETS
Vendor to describe its interests in the following Businesses:-
(a) The Vendor's preference shares and any other security or investment in
RAMA Technologies Pty Limited (A.C.N. 078 448 165) [but not the Vendor's
interest in the Distribution Agreement with RAMA dated 30 June, 1998];
(b) The Vendor's shareholding in Functional Software Asia Pacific PTE
Limited.
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SCHEDULE TWO
INTELLECTUAL PROPERTY BUSINESS ASSETS
Core Technology:-
o COSMOS Framework 3.2.1 for Unix
o COSMOS Framework 3.2.2 for NT4 (requires Interix 2.2 or higher)
o PC GUI Server 3.2.2
Application Software:-
o COS/Manager 2.7 (obsolete)
o COSadmin 4.1
o COSbackup 3.2
o COSbackup 3.2.1
o COSduty 3.0
o COSreport 2.0
o COSsecure 2.1
o COSsentinel 1.1
o COSstacker 1.1
o COSstacker 2.1 (pre-release)
o COStask 3.1 (pre-release)
o EBC 1.93 (owned by Net-West, until paid out)
o EBC 2.1 (pre-release, portions based on Net-West Software)
o ORABACK 1.1
Internal FS-developed applications:-
o COSdistrib 1.1 (for distributors to release COSMOS S/W to
customers)
o COSrelease 1.1 (releasing COSMOS S/W from FS to distributors)
o COSdealer 1.1 (tape/CD Rom manufacturing)
o COSliq 1.1 (create COSMOS S/W licences)
o Call logging software (used by our helpdesk)
o Contracts and client database
o DR (Development Request) System
o Change Log System (used by our developers to
track changes)
Documentation:-
o COS/Manager 2.7 (obsolete)
- User Guide
- Release notes
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o COSMOS Framework 3.2.1
- User Guide
- Release notes
o COSadmin 4.1
- User guide
- Release notes
o COSbackup 3.2
- User guide
- Release notes
o COSduty 3.0
- User guide
- Release notes
o COSreport 2.0
- User guide
o COSsecure 2.1
- User guide
- Release notes
o COStask 2.0 (beta)
- User guide
o COSsentinel 1.1
- User guide
o ORABACK 1.1
- User guide
- Release notes
o Miscellaneous
Where it exists, also included is:
- All obsolete versions of the above software
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- the full Source Code Control System (SCCS) files for the
software
- "Makefiles" to build and port the software
- Internal technical and porting notes
- Distributions of the above software for various platforms
- All R & D source code, and work in progress
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SCHEDULE THREE
DISCLOSURE STATEMENT
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DISCLOSURE STATEMENT
From: Functional Software Pty Limited (ACB 009 421 194)
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
To: Sento Australia Pty Limited (ACN 074 678 774)
▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Sento Corporation
[ ] UTAH, UNITED STATES OF AMERICA
Date: [ ] September 1998
This Disclosure Statement is provided pursuant to the Intellectual Property
Business Assets Agreement of even date between Functional Software Pty Limited
(Vendor), Sento Australia Pty Limited (Sento) and Sento Corporation (Sento US)
(IP Assets Agreement) and pursuant to the Business Assets Agreement of even
date between the Vendor, Sento and Sento US (Business Assets Agreement).
Terms used in this Disclosure Statement which are defined in the IP Assets
Agreement or in the Business Assets Agreement have the meaning given in those
agreements. The Dictionary in Attachment A sets out additional definitions.
The Vendor discloses:
1. The entire content of the Assumed Contracts and the Distribution
Agreements are disclosed, including without limitation, Open Systems Management
Limited's Joint Ownership of the Software and Materials and of all Intellectual
Property in the Software and Materials (as the terms "Joint Ownership",
"Software", "Materials" and "Intellectual Property Rights" are defined in the
Deed of Joint Ownership between the Vendor and Open Systems Management Limited
dated 14 October 1997).
2. The proprietary rights of Net-West in the software described as
"Enterprise Backup Client software" in the Contract Between Net-West and
Functional Software for the Transfer of Ownership of Intellectual Property
Rights for Enterprise Backup Client dated 6 February 1998, attached hereto as
Attachment A.
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3. The Vendor is not the proprietor or beneficial owner of Intellectual
Property Rights in the Freeware listed in Attachment B which is comprised
within the Intellectual Property Business Assets.
4. Use of Freeware which may constitute part of the Intellectual Property
Business Assets may be subject to the terms and conditions of applicable
licenses.
5. Use of and rights in respect of the Intellectual Property Business Assets
may be subject to the matters pertaining to third party proprietary
software referred to in Attachment C.
6. Property in connection with the Business referred to in Attachment D is
not owned by the Vendor.
7. Licenses granted in the ordinary course of business of the Business are
contracts or agreements conferring rights in or in respect of the
Intellectual Property Business Assets.
Signed by:
------------------------------------------------
Functional Software Pty Limited (ACN 009 421 194)
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SCHEDULE FOUR
DEED OF ASSIGNMENT
THIS DEED dated , 1998
BETWEEN: FUNCTIONAL SOFTWARE PTY LIMITED (A.C.N. 009 421 194) of ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ in the State of Western Australia (hereinafter called
"the Vendor") of the one part
AND: SENTO CORPORATION of ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ("the Purchaser") of the other part
WHEREAS:-
A. This Deed of Assignment is made pursuant to a Deed for the sale of
Intellectual Property Business Assets Agreement between the parties
dated ("the Intellectual Property Business Assets Agreement").
B. Pursuant to clause 2 of the Intellectual Property Business Agreement,
the Vendor has agreed to assign to the Purchaser, all its right, title
and interests in certain software and the Materials.
NOW THIS DEED WITNESSES AS FOLLOWS:
1. The terms defined in the Intellectual Property Business Agreement shall
have the same meaning in this Deed.
2. Pursuant to the Deed and in consideration of the sum of $ , the Vendor
hereby assigns to the Purchaser all its right, title and interest in the
Intellectual Property Business Assets including, without limitation, all
source and object codes related thereto.
3. This Deed is governed by the Laws of Western Australia.
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EXECUTED AS A DEED
THE COMMON SEAL of
FUNCTIONAL SOFTWARE
PTY LIMITED was hereunto
affixed in accordance with its Articles
of Association in the presence of: ...................................
Director
..................................
Director/Secretary
EXECUTED BY SENTO CORPORATION
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EXECUTED AS A DEED
THE COMMON SEAL of
FUNCTIONAL SOFTWARE
PTY LIMITED was hereunto
affixed in accordance with its Articles
of Association in the presence of: ...................................
Director
..................................
Director/Secretary
EXECUTED BY SENTO CORPORATION
