SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JULY 9, 1997
SENTO TECHNICAL INNOVATIONS CORPORATION
_______________________________________
(Exact name of registrant as specified in its charter)
Utah 0-6425 87-0284979
__________________ ____________ ___________________
(State or other (Commission
jurisdiction of File No.) (IRS Employer
incorporation) Identification No.)
311 North State Street
Orem, Utah 84057
_______________________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 226 3355
______________
<PAGE>
TABLE OF CONTENTS
Item 2. ACQUISITION OR DISPOSITION OF ASSETS . . . . . . . . . . . . . . . 1
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS 3
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ASI ACQUISITION
On July 9, 1997, the Registrant exercised its option under an Option
Agreement dated September 10, 1996 by and among the Registrant, Australian
Software Innovations (Services) Pty Ltd ("ASI"), Kilat Holdings Pty. Limited
("Kilat"), Eng Lee and Mary Lee (the "Option Agreement") and acquired
substantially all of the assets, and assumed certain liabilities, of ASI, a
software developer located in Sydney, Australia (the "ASI Acquisition"). The
principal ASI assets acquired by the Registrant consist of the OPEN AVIATOR
(SYSMON), CONTROL TOWER (LOGMAN) and FLIGHT LOG (ASI Accounting) software
products. Except as otherwise indicated below, all dollar amounts indicate
United States Dollars. In connection with the ASI Acquisition, the Registrant
undertook the following actions:
(a) The Registrant, ASI, Kilat and Eng and Mary Lee entered into an Asset
Purchase Agreement, pursuant to which the Registrant and Centerpost
Innovations Pty. Ltd., a wholly-owned subsidiary of the Registrant
("Centerpost"), will pay the aggregate amount of $750,000 to acquire
all of the tangible assets and goodwill of ASI. Of the total amount
paid, $130,000 was paid previously pursuant to the terms of the Option
Agreement, $170,000 was paid by the Registrant at closing, $100,000
was paid by Centerpost at closing and $350,000 will be paid by the
Registrant in seven monthly installments commencing on August 1, 1997.
(b) The Registrant, ASI, Kilat and Eng and Mary Lee entered into an
Intellectual Property Purchase Agreement, pursuant to which the
Registrant paid $455,000 to acquire all of the intellectual property
and other intangible assets of ASI.
(c) The Registrant, ASI, Kilat and Eng and Mary Lee entered into a Deed of
Restraint of Trade, pursuant to which the Registrant paid $78,000 in
exchange for the covenants of ASI, Kilat and Eng and Mary Lee to
refrain from engaging in any business or activity that is competitive
with the Registrant's business for a period of three years from the
closing date of the ASI Acquisition.
(d) Centerpost and ASI entered into a Services Agreement, pursuant to
which ASI will provide transition and consulting services to
Centerpost for a period of one year from the closing date of the ASI
Acquisition, subject to annual renewals thereafter if neither party
elects to terminate the agreement, in exchange for Centerpost's
obligation to pay an annual consulting fee of 200,000 Australian
Dollars, paid in equal monthly installments.
(e) The Registrant and Eng Lee entered into a Consulting Agreement,
pursuant to which Mr. Lee, the founder and Managing Director of ASI,
will provide to the Registrant consulting services for a period of
five months from the closing date of the ASI Acquisition in exchange
for a total payment in the amount $500,000, paid in five equal monthly
installments of $100,000.
(f) The Registrant and ASI entered into a Consulting Agreement, pursuant
to which ASI will provide to the Registrant consulting services for a
period of three years from the closing date of the ASI Acquisition in
exchange for an annual consulting fee of $50,000, paid quarterly.
Copies of each of the agreements described above and of a press release
announcing the consummation of the ASI Acquisition are attached to this Report
as Exhibits 1 through 6 and 8, respectively.
The amounts paid by the Registrant in connection with the ASI Acquisition
were determined through negotiations between the Registrant and the other
parties to the ASI Acquisition, based upon the business, assets, liabilities,
operations and prospects of ASI. Mr. Eng Lee is Vice President, Chief Technical
Officer and a director of the Registrant. The ASI Acquisition was funded
through the registrant's working capital without additional borrowing.
The principal ASI assets acquired by the Registrant in the ASI Acquisition,
consisting of the software products described above, will not be used in the
Registrant's business, but were subsequently sold to BMC Software Inc. and BMC
Software (Cayman) LDC in the transactions described below. The remaining ASI
assets acquired in the ASI Acquisition, consisting principally of distributer
and customer lists, goodwill, computer hardware, office equipment and furniture
and several vehicles, will be used by the Registrant and Centerpost in
continuing their existing operations in Australia and Asia.
BMC TRANSACTION.
On July 10, 1997, the Registrant completed an asset sale contemplated by an
Asset Purchase and Services Agreement among BMC Software, Inc. and BMC Software
(Cayman) LDC (collectively, "BMC"), certain principal stockholders of the
Registrant, ASI and Eng Lee (the "BMC Agreement"), pursuant to which the
Registrant sold to BMC the OPEN AVIATOR (SYSMON), CONTROL TOWER (LOGMAN) and
FLIGHT LOG software products acquired by the Registrant in the ASI Acquisition
described above (the "Products") and assigned to BMC all of the Registrant's
rights to distribute the Products in the United States as well as other rights
under certain domestic and international distribution and license agreements
relating to the Products. In addition, BMC assumed certain liabilities and
obligations relating to the distribution and license agreements assigned to BMC
by the Registrant. The BMC Agreement also obligates the Registrant to provide
certain transition and maintenance services for a period of six months following
the closing of the BMC transactions. The total amount paid by BMC in exchange
for the Products, the Registrant's U.S. distribution rights, the Registrant's
rights under the assigned distribution and license agreements and the transition
and maintenance services to be provided by the Registrant was approximately
$7,000,000. A copy of the BMC Agreement and a press release announcing the
consummation of the asset sale are attached to the Report as Exhibits 7 and 9,
respectively.
The price paid by BMC in connection with the transactions contemplated by
the BMC Agreement was determined through arms-length negotiations between BMC
and the Registrant based upon the parties' perceived value of the Products and
related rights and services transferred pursuant to the terms of the BMC
Agreement. There was no material relationship between BMC and the Registrant or
any of its affiliates, any officer or director of the Registrant or any
associate of any such officer or director.
Pursuant to the terms of the BMC Agreement, six individual officers,
directors and/or shareholders of the Company agreed to indemnify and hold
harmless BMC with respect to certain representations and warranties set forth in
the BMC Agreement. The Company has agreed to indemnify and hold harmless these
individuals for certain claims if they are asserted by BMC against such
individuals under the BMC Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
As of the date of this filing, the registrant has been unable to
determine if the financial statements specified in Item 7(a) of this
Current Report on Form 8-K are required to be filed with this Report.
If such financial statements are required to be filed, the Registrant
intends to file an amendment to this Current report on Form 8-K to
include such financial statements not later than September 26, 1997.
(b) PRO FORMA FINANCIAL INFORMATION.
As of the date of this filing, the registrant has been unable to
determine if the pro forma financial information specified in Item
7(b) of this Current Report on Form 8-K are required to be filed with
this Report. If such financial information is required to be filed,
the Registrant intends to file an amendment to this Current report on
Form 8-K to include such information not later than September 26,
1997.
(c) EXHIBITS.
The following exhibits are included herein:
REG S-K EXHI
EXHIBIT BIT
NO. DESCRIPTION NO.
10.1 Asset Purchase Agreement dated as of July
9, 1997 1
10.2 Intellectual Property Purchase Agreement
dated as of July 9, 1997 2
10.3 Deed of Restraint of Trade dated as of July
9, 1997 3
10.4 Services Agreement dated as of July 9, 1997 4
10.5 Consulting Agreement dated as of July 9,
1997 5
10.6 Consulting Agreement (II) dated as of July
9, 1997 6
10.7 Asset Purchase and Services Agreement 7
99.1 Press Release dated July 14, 1997 8
99.2 Press Release dated July 17, 1997 9
____________________
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned thereunto duly authorized.
SENTO TECHNICAL INNOVATIONS CORPORATION
By: /s/ Robert K. Bench
_____________________________________________
Robert K. Bench, President
Date: July 28, 1997
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
SENTO TECHNICAL INNOVATIONS CORPORATION,
CENTERPOST INNOVATIONS PTY. LTD.,
KILAT HOLDINGS PTY. LIMITED,
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY LTD,
AND
ENG LEE AND MARY LEE, INDIVIDUALLY
DATED AS OF JULY 9, 1997
<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into in Orem,
Utah effective as of the 9th day of July, 1997, by and among Sento Technical
Innovations Corporation, a Utah corporation (the "BUYER"), Centerpost
Innovations Pty. Ltd. ACN 074-678-774, a limited company organized under the
laws of New South Wales, Australia ("CENTERPOST"), Australian Software
Innovations (Services) Pty. Ltd ACN 050-053-355, a limited company organized
under the laws of Australia (the "SELLER"), Kilat Holdings Pty. Limited ACN 003-
982-616, a limited company organized under the laws of Australia ("KILAT"), and
Eng Lee and Mary Lee (collectively, the "SHAREHOLDERS"), individually.
RECITALS
A. Pursuant to an Option Agreement (the "OPTION AGREEMENT") dated as of
the 10th day of September, 1996 between Buyer, Seller, Kilat and the
Shareholders, Seller granted to Buyer and its nominee, Centerpost, an option
(the "OPTION") to purchase the Assets and the Intellectual Property Assets,
Kilat and the Shareholders agreed to facilitate Buyer's purchase of Assets and
Seller, Kilat and the Shareholders agreed to execute the Deed of Restraint of
Trade.
B. Eng Lee is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital stock
of Kilat.
C. Buyer has elected pursuant to Section 1.6 of the Option Agreement to
exercise the Option with respect to the Assets and the Intellectual Property
Assets.
D. Centerpost, as Buyer's nominee, desires to purchase the Tangible
Assets from Seller, and Buyer desires to purchase the Intangible Assets and the
Intellectual Property Assets from Seller, and Seller is obligated pursuant to
the Option Agreement to sell the Assets and the Intellectual Property Assets to
Buyer and Centerpost, respectively, in accordance with the terms and conditions
of the Option Agreement. All capitalized terms used herein without definition
shall have the meanings set forth in ARTICLE 9.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, Buyer, Centerpost, Seller, Kilat and the Shareholders hereby agree
as follows:
ARTICLE 1
SALE OF ASSETS; ADDITIONAL AGREEMENTS; CLOSING
1.1 ACQUISITION. Subject to the terms and conditions of the Transaction
Agreements, at the Closing, Seller shall sell, transfer and deliver (a) to
Buyer, and Buyer shall purchase, all of Seller's right, title and interest in
and to the Intangible Assets and the Intellectual Property Assets and (b) to
Centerpost, and Centerpost shall purchase, all of Seller's right, title and
interest in and to the Tangible Assets (collectively, the "ACQUISITION").
1.2 ADDITIONAL UNDERSTANDINGS. In connection with the Acquisition, the
parties hereto agree as follows:
(a) Buyer and Centerpost will not, pursuant to this Agreement,
acquire any property of Seller other than the Assets except as specifically set
forth in this Agreement or the Intellectual Property Assets to be acquired by
Buyer from Seller pursuant to the terms of the Intellectual Property Purchase
Agreement; nor will Buyer or Centerpost assume or be bound by any contract or
agreement other than the Contracts and the Deed of Restraint of Trade (PROVIDED,
HOWEVER, that Buyer shall not assume any obligation of Seller thereunder); nor
will Buyer or Centerpost assume any other debt, claim, Liability, Tax, judgment
or obligation whatsoever of Seller except for those obligations under the
Contracts to be performed after the Closing Date. Except as set forth on
EXHIBIT B, neither Buyer nor Centerpost will recognize or assume any obligations
of Seller to employees of Seller or any collective bargaining agreements between
Seller and any labor organizations. Except as set forth on EXHIBIT B, neither
Buyer nor Centerpost will assume or be obligated to pay any debts, obligations,
responsibilities, Liabilities, claims, damages, judgments or settlements arising
from any such labor contracts or agreements or any other employment-related
matter involving Seller.
(b) In connection with the Acquisition, Seller, Kilat and each of the
Shareholders shall, from the date of this Agreement until the Closing Date,
afford the employees, auditors, legal counsel and other authorized
representatives of Buyer and Centerpost reasonable access to the properties,
records and personnel of Seller in order to inspect, investigate and audit the
Assets, the Intellectual Property Assets and the operations and business of
Seller. Buyer and Centerpost agree to conduct any such inspection,
investigation or audit in a reasonable manner, during regular business hours, so
as not to disrupt the normal functioning of Seller's business. Seller, Kilat
and the Shareholders agree to cooperate fully with Buyer and to make Seller's
books and records, the Assets, the Intellectual Property Assets and the
employees of Seller available to Buyer and Centerpost as reasonably required by
Buyer in order for Buyer to complete its due diligence in a timely fashion.
(c) The parties agree to allocate those portions of the Purchase
Price attributable to various components of the Assets for all purposes
(including accounting and tax purposes) in accordance with the allocation
schedule (the "ALLOCATION SCHEDULE") set forth on EXHIBIT C.
(d) Except as set forth on EXHIBIT B, neither Buyer nor Centerpost
will have any obligation for, and the parties specifically understand and
acknowledge that neither Buyer nor Centerpost will be assuming any
responsibility for or liability under any Employee Benefit Plan of Seller.
Except as set forth on EXHIBIT B, Buyer and Centerpost do not and shall not
recognize or assume any Liability with respect to any Employee Benefit Plan of
Seller, nor shall the inclusion by Buyer or Centerpost, or an Affiliate of Buyer
or Centerpost, of a former employee of Seller in an Employee Benefit Plan of
Buyer, Centerpost or an Affiliate of either, be deemed to constitute the
adoption or continuation by Buyer or Centerpost of any Employee Benefit Plan of
Seller except as set forth on EXHIBIT B.
(e) Seller, Kilat and the Shareholders covenant and agree that upon
Buyer's request they will do all acts and execute or cause Seller to execute all
such documents as are necessary to cause the name of Seller to be changed as of
the Closing Date to a name that does not include the words "Australian Software
Innovations" or the acronym "ASI" or any similar name and will on or before the
Closing Date deliver to Buyer appropriate signed notices to the Australian
Securities Commission having such effect and all other materials reasonably
requested by Buyer in connection therewith, together with all filing fees
payable in respect of lodging such notices. Seller, Kilat and the Shareholders
consent to Buyer causing a company controlled by Buyer or its Affiliates to
change its name to "Australian Software Innovations Pty. Ltd." on or after the
Closing Date.
(f) Pursuant to the Option Agreement, Buyer has elected to acquire,
as part of the Acquisition, the rights of Seller under the Contracts. In
connection with Buyer's acquisition of Seller's rights under the Contracts,
Buyer agrees to assume all of Seller's obligations under the Contracts which
arise on or after the Closing Date.
1.3 PURCHASE PRICE. The price to be paid by Buyer for the purchase of the
Assets (the "PURCHASE PRICE") shall be Seven Hundred Fifty Thousand Dollars
($750,000), which equals Eight Hundred Seventy-Two Thousand Dollars ($872,000)
less the amount of One Hundred Twenty-Two Thousand Dollars ($122,000), which
constitutes the Exercise Price Adjustment described in the Option Agreement.
1.4 PAYMENT OF PURCHASE PRICE. Payment of the Purchase Price shall be
made by Buyer and Centerpost to Seller as follows:
(a) Seller acknowledges the receipt of cash in the amount of One
Hundred Thirty Thousand Dollars ($130,000) (the "OPTION PURCHASE PAYMENT") paid
by Buyer in conjunction with the execution and delivery of the Option Agreement.
At the Closing, Seller shall credit the full amount of the Option Purchase
Payment against Buyer's payment of the Purchase Price.
(b) At the Closing, Centerpost shall pay to Seller One Hundred
Thousand Dollars ($100,000), in the form of cash, certified funds or wire
transferred funds, with the transfer of such funds to be initiated by Centerpost
within twenty-four hours of the Closing.
(c) At the Closing, Buyer shall pay to Seller One Hundred Seventy
Thousand Dollars ($170,000), in the form of cash, certified funds or wire
transferred funds, with the transfer of such funds to be initiated by Buyer
within twenty-four hours of the Closing.
(d) At the Closing, Buyer shall issue and deliver to Seller the Note
in the principal amount of Three Hundred Fifty Thousand Dollars ($350,000),
payable in seven monthly installments of $50,000 each.
1.5 CLOSING. Upon satisfaction or waiver of the conditions to Closing
contained in ARTICLE 4 and ARTICLE 5 hereof, the parties hereto agree to close
the Acquisition contemporaneously with the consummation of the transactions
described in the Intellectual Property Purchase Agreement and the Deed of
Restraint of Trade (the "CLOSING"). The Closing shall take place at the
principal offices of Buyer, or such other place as may be agreed to by the
parties, on the date agreed to by the parties, but in all events on or before
thirty (30) days from the date hereof. It is the intent of the parties to
consummate the Closing as soon as possible after the execution of this
Agreement. The parties agree to use their good faith and reasonable efforts to
close the Acquisition as soon as possible and to cooperate fully with each other
to complete the Closing.
1.6 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver to Buyer (or to Centerpost
or both, respectively, as indicated):
(i) To Centerpost, the Tangible Assets, free and clear of all
Encumbrances except as expressly assumed by Centerpost and described on EXHIBIT
B;
(ii) To Buyer, the Intangible Assets, free and clear of all
Encumbrances except as expressly assumed by Buyer and described on EXHIBIT B;
(iii) An Assignment Agreement assigning to Buyer the
Contracts, free and clear of all Encumbrances except as expressly assumed by
Buyer and described on EXHIBIT B;
(iv) To Buyer or Centerpost, as the case may be, titles to all
titled properties constituting part of the Assets being transferred by Seller to
Buyer and Centerpost, such titles duly executed for transfer to Buyer or
Centerpost, respectively, free and clear of all Encumbrances except as expressly
assumed by Buyer and described on EXHIBIT B;
(v) Complete and accurate Disclosure Schedules;
(vi) To Centerpost, an executed services agreement, in form
acceptable to Centerpost in its discretion;
(vii) An executed Intellectual Property Purchase Agreement,
in form acceptable to Buyer in its discretion;
(viii) An executed Deed of Restraint of Trade, in form
acceptable to Buyer in its discretion;
(ix) To Centerpost and Buyer, such other documents, including
certificates of independent legal advice and appropriate statutory declarations,
as may be required by the Transaction Agreements, or the Intellectual Property
Purchase Agreement or reasonably requested by Buyer or Centerpost to carry out
the transactions contemplated hereby or thereby; and
(x) To Centerpost and Buyer according to the terms hereof,
possession of the Assets.
(b) At the Closing, Buyer shall deliver to Seller:
(i) The amount of One Hundred Seventy Thousand Dollars
($170,000) in the form of cash, certified funds or wire transferred funds, with
the transfer of such funds to be initiated by Buyer within twenty-four hours of
the Closing;
(ii) An executed Note, substantially in the form of EXHIBIT D,
acceptable to Buyer in its discretion;
(iii) An executed Intellectual Property Purchase Agreement,
in form acceptable to Buyer in its discretion;
(iv) An executed Deed of Restraint of Trade, in form acceptable
to Buyer in its discretion;
(v) An Assignment Agreement accepting assignment of all Seller's
rights under the Contracts and assuming the obligations arising under the
Contracts to be performed after the Closing Date; and
(vi) Such other documents, including officers' certificates, as
may be required by the Transaction Agreements, or as reasonably requested by
Seller to carry out the transactions contemplated hereby.
(c) At the Closing, Centerpost shall deliver to Seller:
(i) The amount of One Hundred Thousand Dollars ($100,000) in the
form of cash, certified funds or wire transferred funds, with the transfer of
such funds to be initiated by Buyer within twenty-four hours of the Closing;
(ii) An executed services agreement, in form acceptable to
Centerpost in its discretion; and
(iii) Such other documents, including officers' certificates,
as may be required by the Transaction Agreements, or as reasonably requested by
Seller to carry out the transactions contemplated hereby.
1.7 PAYMENT OF TAXES; STAMP DATA. Seller shall pay any and all Taxes
payable to Governmental Authorities of the Commonwealth of Australia or any
political subdivision thereof which are related in any manner to the grant and
exercise of the Option or the execution and performance of the Transaction
Agreements, including, without limitation, the full amount of any stamp duty
payable to Governmental Authorities of the Commonwealth of Australia or any
political subdivision thereof. Seller, Kilat and each of the Shareholders shall
jointly and severally indemnify, defend and hold harmless Buyer and Centerpost
from any and all Tax liabilities associated with the grant and exercise of the
Option and the execution and performance of the Transaction Agreements. To
facilitate Seller's performance of the obligations set forth in this SECTION
1.7, at the Closing Buyer and Centerpost shall withhold from the Purchase Price
an amount equal to Thirty-three Thousand One Hundred Seventy-Five and 50/100
Australian Dollars (AUS $33,175.50), representing the estimated amount of Taxes
payable in connection with the execution and performance of the Transaction
Agreements. The amount so withheld by Buyer and Centerpost shall be paid to
Michael Osborne, Esq., counsel to Seller, to be held in trust by Mr. Osborne and
released solely for the purpose of fulfilling Seller s Tax obligations under the
terms of this SECTION 1.7.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER,
KILAT AND THE SHAREHOLDERS
Except as otherwise indicated, Seller, Kilat and each of the Shareholders
jointly and severally represent and warrant to Buyer and Centerpost that the
following representations and warranties are true, correct and complete as of
the date of this Agreement and will be true, correct and complete as of the
Closing Date:
2.1 AUTHORITY. Seller, Kilat and each of the Shareholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver the Transaction Agreements, as applicable, to perform his, her or its
obligations thereunder and to consummate the transactions contemplated thereby.
This Agreement has been, and each of the Transaction Agreements will be, when
executed, duly and validly executed and delivered by Seller, Kilat and each of
the Shareholders, and each of the Transaction Agreements, as applicable,
constitutes, or will, when executed, constitute, the legal, valid and binding
agreement of Seller, Kilat and each of the Shareholders, enforceable against
Seller, Kilat and each of the Shareholders in accordance with its terms except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF SELLER AND KILAT. Seller
is a limited company duly organized, validly existing and in good standing under
the laws of Australia and has full power and authority to carry on its business
as now being conducted, to own and operate its properties and assets, and to
perform all its obligations under the Transaction Agreements and the Contracts.
Kilat is a limited company duly organized, validly existing and in good standing
under the laws of Australia and has full power and authority to carry on its
business as now being conducted, to own and operate its properties and assets,
and to perform all its obligations under the Transaction Agreements.
2.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Disclosure Schedules, neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor the
compliance by Seller and Kilat with any of the provisions thereof will, as of
the Closing Date, (i) conflict with or violate any provision of the Memorandum
and Articles of Association or other charter or governing documents of Seller or
Kilat, respectively, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, contract, agreement, commitment, bond,
mortgage, indenture, license, lease, pledge agreement or other instrument or
obligation to which Seller or Kilat is a party or by which Seller or Kilat or
any of their respective properties or assets may be bound, including, without
limitation, any other agreement with respect to the sale by Seller of any of its
properties or assets, (iii) to the best knowledge of Seller, Kilat and the
Shareholders, violate or conflict with any provision of any Legal Requirement
binding upon Seller or Kilat, or (iv) to the best knowledge of Seller, Kilat and
the Shareholders, result in, or require, the creation or imposition of, any
Encumbrance upon or with respect to any properties of Seller or Kilat,
including, without limitation, the Assets or the Intellectual Property Assets,
or impair the ability of Seller, Kilat or the Shareholders to carry out their
respective obligations under the Transaction Agreements.
2.4 BOOKS AND RECORDS. The books of account and other business records of
Seller regarding the Assets and the business and operations of Seller have all
been made available to Buyer and Centerpost and such books and records are
complete and correct with regard to the matters which are the subject of the
Transaction Agreements.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent fully
disclosed in writing to Buyer and Centerpost in the Disclosure Schedules, as of
the Closing Date, Seller will have no Liabilities, including, without
limitation, any Liabilities resulting from failure to comply with any Legal
Requirement applicable to Seller, its business or operations, the Assets or the
Intellectual Property Assets due or to become due and whether incurred in
respect of or measured by the income or sales of Seller for any period or
arising out of any transactions entered into, or any state of facts existing, on
or before the Closing Date which could, as of or after the Closing Date,
materially adversely affect Seller's business or operations, the Assets or the
Intellectual Property Assets, give rise to an Encumbrance against the Assets or
the Intellectual Property Assets or materially adversely affect Seller's ability
to carry out the transactions contemplated by the Transaction Agreements.
2.6 ABSENCE OF CHANGES. Between the date of this Agreement and the
Closing Date, there will not have been (i) any material adverse change, or any
event, condition or contingency that is likely to result in a material adverse
change in the condition of Seller's business or operations, the Assets or the
Intellectual Property Assets; (ii) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely affecting Seller's
business or operations, the Assets or the Intellectual Property Assets; (iii)
any termination or receipt of notice of termination of one or more of the
Contracts; (iv) any dispute or any other occurrence, event or condition of any
character, which reasonably could be anticipated to give rise to a legal or
administrative action or to a material adverse change affecting the Assets or
the Intellectual Property Assets or Seller's ability to carry out its
obligations hereunder; or (v) any agreement to do any of the foregoing.
2.7 CONTRACTS. Except as set forth on the Disclosure Schedules or as
otherwise described in this Agreement:
(a) Complete and accurate copies, including all amendments, of the
Contracts have been delivered to Buyer.
(b) All of the Contracts are in full force and effect and are valid
and enforceable in accordance with their terms, there are no material defaults
thereunder or breaches thereof, and no condition exists or event has occurred
which, with notice or lapse of time or both, would constitute a default
thereunder.
(c) Seller has the right to assign its rights and obligations under
the Contracts to Buyer, and such assignment will not result in a default, breach
or right of termination thereunder.
(d) Set forth in the Disclosure Schedules is a complete and accurate
description of all obligations or commitments of Seller with respect to any
asset of any nature whatsoever that is used in whole or in part for the personal
use or benefit of any shareholder, officer, director or employee of Seller or
any Affiliate thereof.
2.8 PERSONAL PROPERTY.
(a) Except as set forth in the Disclosure Schedules, there is no
asset, property, right or interest of any nature whatsoever necessary to or
currently utilized in the operation of Seller's business which is not included
in the Assets or the Intellectual Property Assets and Buyer has been given,
pursuant to the Option, an opportunity to acquire all of such assets,
properties, rights and interests.
(b) Seller has made available to the Buyer true, correct and complete
copies of all material contracts, agreements, mortgages, leases and commitments
relating to or affecting any interest in the Assets or the Intellectual Property
Assets.
(c) Other than the Contracts, there are no agreements, whether verbal
or written, affecting any of the Assets or the Intellectual Property Assets
which have not been disclosed in writing to Buyer. Other than the Contracts or
as authorized by Buyer in writing prior to the Closing, all such agreements
affecting the Assets or the Intellectual Property Assets will be terminated
prior to or at the Closing.
2.9 TITLE TO ASSETS AND RELATED MATTERS. Seller owns all of the Assets
and Intellectual Property Assets free and clear of all Encumbrances and the
claims or rights of any other party. Seller has the power, authority and right
to sell the Assets and Intellectual Property Assets to Buyer and Centerpost free
and clear of any Encumbrances.
2.10 COMPLIANCE WITH LAWS. Seller is in compliance with all Legal
Requirements applicable to the ownership of the Assets and the Intellectual
Property Assets and the operation of its business where the failure so to comply
would have a material adverse effect on Seller's ability to carry out its
obligations under the Transaction Agreements, or the ability of Buyer and
Centerpost to carry on the business operations related to the Assets or the
Intellectual Property Assets after the Closing, and Seller does not have any
basis to expect, nor has it received, any Order, notice, or other communication
from any Governmental Authority of any alleged, actual, or potential violation
and/or failure to comply with any such Legal Requirement, except as disclosed on
the Disclosure Schedules.
2.11 LITIGATION. Except as set forth in the Disclosure Schedules, (i)
neither Seller, Kilat nor either of the Shareholders is subject to any Order in
which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Assets or the Intellectual Property Assets, the
operation of Seller's business or the matters covered by the Transaction
Agreements which would prevent, delay, or make illegal the transactions
contemplated by the Transaction Agreements, (ii) there are no Proceedings
pending or threatened against, involving, affecting, or relating to Seller,
Kilat or either of the Shareholders, the operation of Seller's business or to
Seller's ownership, operation or use of the Assets or the Intellectual Property
Assets before any arbitrator or Governmental Authority, and (iii) to the best
knowledge of Seller, Kilat and each of the Shareholders, there exist no facts to
serve as a basis for the institution of any Proceeding against Seller, Kilat,
either of the Shareholders or any of the Assets or Intellectual Property Assets
which would prohibit or adversely affect the Assets or the Intellectual Property
Assets or the ability of Seller, Kilat or the Shareholders to carry out their
respective obligations under the Transaction Agreements.
2.12 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or
similar Person has acted directly or indirectly on behalf of Seller in
connection with the Transaction Agreements or the transactions contemplated
hereby, and no Person, including Seller, Kilat or either of the Shareholders, is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee or expense, directly or indirectly, in connection with the
Transaction Agreements or the transactions contemplated thereby.
2.13 BANKRUPTCY. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator or
trustee of it or any of its property or assets, or commenced any proceeding
under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statute or any jurisdiction; and no such
action or proceeding has been commenced or threatened against Seller by any
creditor, claimant, Governmental Authority or any other person.
2.14 LABOR MATTERS. Except as set forth in the Disclosure Schedules,
(a) Seller has made all payments to its employees required by any
Legal Requirement or any Employee Benefit Plans;
(b) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
threatened, any Proceeding against Seller under any Legal Requirement governing
the conditions of Seller's employment of its employees, or any basis or ground
for any such claim;
(c) Seller has not been a party to any collective bargaining
agreement or other labor contract affecting the employees of Seller;
(d) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or existing
or threatened, any strike, slowdown, picketing, work stoppage, labor arbitration
or proceeding in respect of the grievance of any employee, an application or
complaint filed by an employee or union with any Governmental Authority, or
organizational activity or labor dispute against or affecting the business of
Seller; and
(e) Seller has complied with all its obligations under all relevant
superannuation legislation and has made all contributions required to be made in
respect of its employees for their period of employment up to and including the
Closing Date. Seller has established reserves and accruals (each of which is
accurately set forth in the Disclosure Schedules) in amounts sufficient to
satisfy all superannuation obligations in respect of its employees for their
period of employment up to and including the Closing Date.
2.15 DISCLOSURE. No representation or warranty of Seller, Kilat or the
Shareholders contained in this Agreement, the Exhibits hereto, or any other
Transaction Agreement contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to Seller, Kilat or either of the
Shareholders which has specific application to Seller (other than general
economic or industry conditions) and which materially and adversely affects or,
so far as Seller, Kilat or either of the Shareholders can reasonably foresee,
materially threatens, the Assets, the Intellectual Property Assets or the
ability of Seller, Kilat or the Shareholders to carry out their respective
obligations under the Transaction Agreements, which has not been set forth in
this Agreement or in the Disclosure Schedules.
2.16 TAX MATTERS. With respect to Taxes, including, without limitation,
Taxes imposed by the Income Tax Assessment Act of 1936 of the Commonwealth of
Australia (the "TAX ACT") and any other Australian national, state or
territorial law or regulation:
(a) Seller has lodged, or will lodge, at or before the correct time all
Tax Returns required by law to be lodged on or before the Closing Date and all
such Tax Returns have been, or will be, as the case may be, fully and accurately
completed;
(b) Seller has made, to the Commissioner of Taxation or the appropriate
Governmental Authority a full and true disclosure of all material facts
necessary for the proper assessment of Seller and each deduction, rebate or
credit claimed in those Tax Returns has been properly claimed and is duly
allowable;
(c) All other necessary information, documents and notices in respect of
Tax have been properly and duly submitted by Seller to all relevant Governmental
Authorities in respect of Tax for all periods up to the Closing Date and will
continue to be properly and duly submitted up to the Closing Date and there is
no unresolved dispute with any of those authorities nor is any such dispute
foreshadowed or contemplated;
(d) All Taxes which have been assessed or imposed or are lawfully
assessable upon or are payable by Seller and which are due and payable or which
may become due and payable subsequent to but are referable to the period ending
on the Closing Date have been paid by Seller or adequate provisions has been
made for them in Seller's accounts and such provisions have been fully disclosed
to Buyer and Centerpost; and
(e) All obligations imposed on Seller under all laws relating to Tax have
been complied with and, without limiting the generality of the foregoing, all
amounts of income tax and medicare levy required by law to be deducted by Seller
from salary or wages of Seller's employees (including, without limitation,
Seller's directors and officers) and from prescribed payments and all amounts of
withholding tax have been duly deducted and where payable to the relevant taxing
authority have been duly paid.
2.17 INSURANCE. The assets of Seller (including, without limitation, the
Assets) are adequately insured by respect of the risks to which they are subject
(including loss or damage by disease, fire, theft, storm and tempest) in such
amounts as accord with sound business principles and such policies will not
expire earlier than the Closing Date. Seller is adequately insured against
public liability in such amounts as accord with sound business principles and
such policies will not expire prior to the Closing Date. Seller is adequately
insured against workers' compensation liability and has complied with all
respects with the legislation relating to workers' compensation in all
jurisdictions where relevant. All premiums in respect of the insurance coverage
referred to in this Agreement will have been paid prior to the Closing Date,
Seller has complied with all the conditions of the associated policies and has
not made any false or misleading statement or done or omitted to do anything
which would entitle the insurers to avoid the policies or refuse to meet any
claim thereunder in full other than as disclosed by Seller to Buyer and
Centerpost in writing prior to the Closing Date. There is no fact or matter of
which Seller, Kilat or the Shareholders is aware which could lead to Seller's
insurance policies being vitiated or repudiated and neither Seller, Kilat nor
the Shareholders will permit any such policies to lapse prior to the Closing
Date, nor will Seller, Kilat or the Shareholders do or fail to do anything which
will render any of Seller's insurance policies void or voidable prior to the
Closing Date.
2.18 TRADE PRACTICES. There is no agreement, arrangement or activity
whether by commission or omission in which Seller has been or will be concerned
which infringes or which has been or which is required to be authorized under
the Trade Practices Act of 1974 of the Commonwealth of Australia or any other
anti-trust legislation in relation to the Assets or the Intellectual Property
Assets, including, without limitation, any Australian national, state or
territorial law or regulation.
2.19 ENVIRONMENTAL LIABILITIES. There are no Environmental Liabilities (as
defined below) affecting any of Seller's business premises. There are no
factors affecting any of Seller's business premises which are likely within the
next twelve months to give rise to any Environmental Liability. For the
purposes of this clause, the term "ENVIRONMENTAL LAW" means any planning,
environmental, health, toxic, hazardous substances, dangerous goods,
waste/disposal or pollution laws, regulations, orders, notices, ordinances or
requirements, and the term "ENVIRONMENTAL LIABILITY" means any obligation,
expense, penalty or fine under an Environmental Law which could be imposed on
any occupier in possession of Seller's business premises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER AND CENTERPOST
Buyer and Centerpost represent and warrant to Seller, Kilat and the
Shareholders as follows, each to the extent the following relate to Buyer or
Centerpost, respectively:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full power and authority to purchase the Intangible Assets
and the Intellectual Property Assets and to carry on its intended business
therewith. Centerpost is a limited company duly organized, validly existing and
in good standing under the laws of New South Wales, Australia and has full power
and authority to purchase the Tangible Assets and to carry on its intended
business therewith.
3.2 AUTHORITY. Each of Buyer and Centerpost has full power and authority
to execute and deliver the Transaction Agreements, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. This
Agreement has been, and each of Transaction Agreements will be, when executed,
duly and validly executed and delivered by each of Buyer and Centerpost, and
each of the Transaction Agreements to which Buyer or Centerpost is a party
constitutes or will, when executed, constitute, the legal, valid and binding
agreement of Buyer and Centerpost, as applicable, enforceable against Buyer and
Centerpost in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws affecting creditor's rights generally.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration with,
no notice to and no Governmental Authorization, consent or approval of any
Governmental Authority, creditor or other person in a contractual relationship
with Buyer or Centerpost is necessary in connection with the execution and
delivery of the Transaction Agreements by Buyer or Centerpost, the performance
of their obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby. Neither the execution and delivery
of the Transaction Agreements, the consummation of the transactions contemplated
thereby, nor the compliance by Buyer or Centerpost with any of the provisions
thereof will, as of the Closing Date, (i) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of the Articles of Incorporation, Bylaws
or other charter documents of Buyer and Centerpost, or of any note, contract,
agreement, commitment, bond, mortgage, indenture, license, lease, pledge
agreement or other instrument or obligation to which Buyer or Centerpost is a
party or by which Buyer, Centerpost or any of their properties or assets may be
bound, or (ii) violate or conflict with any provision of any Legal Requirement
binding upon Buyer or Centerpost.
3.4 BANKRUPTCY. Neither Buyer nor Centerpost has made any assignment for
the benefit of creditors, filed any petition in bankruptcy, been adjudicated
insolvent or bankrupt, petitioned or applied to any tribunal for any receiver,
conservator or trustee of it or any of its property or assets, or commenced any
proceeding under any reorganization arrangement, readjustment of debt,
conservation, dissolution or liquidation law or statute or any jurisdiction; and
no such action or proceeding has been commenced or threatened against Buyer or
Centerpost by any creditor, claimant, governmental authority or any other
person.
3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or
similar Person has acted directly or indirectly on behalf of Buyer or Centerpost
in connection with the Transaction Agreements or the transactions contemplated
thereby, and no Person, including Buyer or Centerpost, is or will be entitled to
any broker's or finder's fee or any other commission or similar fee or expense,
directly or indirectly, in connection with the Transaction Agreements or the
transactions contemplated thereby.
ARTICLE 4
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER AND CENTERPOST
The obligations of Buyer and Centerpost to consummate the transactions
contemplated by the Transaction Agreements at the Closing are subject to
fulfillment of the following conditions, any one or more of which may be waived
in whole or in part by Buyer and Centerpost in the manner provided for herein.
4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Seller, Kilat and the Shareholders contained in the
Transaction Agreements, including the Exhibits thereto, are true, correct and
complete in all material respects as of the Closing Date.
4.2 PERFORMANCE; COMPLIANCE WITH AGREEMENT. Seller, Kilat and each of the
Shareholders shall have performed and complied with all obligations, agreements,
covenants and conditions required by the Transaction Agreements to be performed
or complied with by them on or before the Closing Date, including without
limitation making all the deliveries required by SECTION 1.6.
4.3 AUTHORIZATION; THIRD-PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary in
connection with the execution and delivery of the Transaction Agreements by
Seller, Kilat and the Shareholders, the performance of their respective
obligations hereunder and thereunder, or the consummation of the transactions
contemplated hereby and thereby shall have been made or obtained. All corporate
actions necessary to authorize the execution, delivery and performance of the
Transaction Agreements by Seller and Kilat, and the consummation by Seller and
Kilat of the transactions contemplated by the Transaction Agreements shall have
been duly and validly taken, and Seller and Kilat shall have full right and
power to sell the Assets and the Intellectual Property Assets and to perform
their respective obligations upon the terms provided in the Transaction
Agreements. On or prior to the Closing Date, Seller, Kilat and the Shareholders
shall have furnished to the Buyer and Centerpost evidence of the foregoing
filings, notices, consents, stipulations and assignments.
4.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of this
Agreement through the Closing Date, there shall not have been any material
adverse change in the Assets or the Intellectual Property Assets, and none of
the events described in SECTION 2.6 shall have occurred.
4.5 COMPLETION OF INVESTIGATION. Buyer and Centerpost shall have
completed, to their sole satisfaction and at their expense, an investigation
into the condition of the Assets and the Intellectual Property Assets and the
business and operations of Seller. If Buyer or Centerpost is not satisfied with
any matter revealed during its investigation, or with any matter set forth on
the Disclosure Schedules, Buyer or Centerpost shall have the right to terminate
this Agreement if notice of termination is given to the Seller, Kilat and the
Shareholders prior to the Closing.
4.6 GOOD TITLE TO BUYER AND CENTERPOST. Seller shall have conveyed the
Assets and the Intellectual Property Assets to Buyer and Centerpost, free and
clear of all Encumbrances.
4.7 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the transactions
contemplated by the Transaction Agreements shall have been satisfactory in all
reasonable respects to Buyer, Centerpost and their counsel.
ARTICLE 5
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER, KILAT AND THE SHAREHOLDERS
The obligations of Seller, Kilat and the Shareholders to consummate the
transactions contemplated by the Transaction Agreements at the Closing are
subject to the fulfillment of the following conditions, any one or more of which
may be waived in whole or in part by Seller, Kilat or the Shareholders in the
manner provided for herein.
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Buyer and Centerpost contained in the Transaction Agreements
shall be true, correct and complete in all material respects as of the Closing
Date.
5.2 PERFORMANCE OF BUYER AND CENTERPOST; COMPLIANCE WITH AGREEMENT. Buyer
shall have performed and complied with all obligations, agreements, covenants
and conditions required by the Transaction Agreements to be performed or
complied with by Buyer and Centerpost on or before the Closing Date, including
without limitation making all the deliveries required by SECTION 1.6.
5.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary in
connection with the execution and delivery of the Transaction Agreements by
Buyer and Centerpost, the performance of its obligations thereunder, or the
consummation of the transactions contemplated thereby shall have been made or
obtained. All corporate action necessary to authorize the execution, delivery
and performance the Transaction Agreements by Buyer and Centerpost and the
consummation by Buyer and Centerpost of the transactions contemplated by the
Transaction Agreements shall have been duly and validly taken, and Buyer and
Centerpost shall have full right and power to purchase the Assets and the
Intellectual Property Assets and to perform their obligations upon the terms
provided in the Transaction Agreements. Buyer and Centerpost shall have
furnished to Seller, Kilat and the Shareholders evidence of the foregoing
consents and actions, if requested.
5.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing Date, there will not have been any material adverse change, or any
event, condition or contingency that results in a material adverse change
affecting the ability of Buyer or Centerpost to carry out its obligations under
the Transaction Agreements.
5.5 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the transactions
contemplated by the Transaction Agreements shall have been satisfactory in all
reasonable respects to Seller, Kilat and the Shareholders and their counsel.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 EXPENSES. Except as otherwise expressly provided herein, each party
to this Agreement shall bear its respective expenses incurred in connection with
the preparation, execution and performance of the Transaction Agreements and the
transactions contemplated hereby, including without limitation all fees and
expenses of agents, business brokers, legal counsel, accountants, tax and
financial advisors and other facilitators and advisors.
6.2 CONFIDENTIALITY.
(a) NON-DISCLOSURE AND USE. Each of Buyer, Centerpost, Seller, Kilat
and the Shareholders acknowledges that, in connection with the transactions
contemplated by the Option Agreement and the Transaction Agreements, each has
become or may become privy to the technical, marketing and other proprietary
information of another party, including, without limitation, information,
material, documents and data related to such other party, to the business
activities of such other party and/or to its customers, trade secrets and other
proprietary information (collectively, the "PROPRIETARY INFORMATION"). Each
agrees (i) to take at all times all reasonably necessary steps to safeguard the
confidentiality of any Proprietary Information; (ii) not to disclose, reveal,
make accessible or make available to any third Person any Proprietary
Information; and (iii) not to use any Proprietary Information for such party's
own benefit or for any other Person's benefit; PROVIDED, HOWEVER, that Buyer,
Centerpost, Seller, Kilat or the Shareholders may disclose (A) Proprietary
Information which at the time of the disclosure is part of the public knowledge
and readily accessible to such third party, (B) Proprietary Information which is
required by law to be disclosed, and (C) Proprietary Information required to be
disclosed to BMC by the terms of the BMC Agreement.
(b) RETURN. Buyer, Centerpost, Seller, Kilat and the Shareholders
agree that if the Acquisition is not consummated, each of them will return to
the other parties hereto any and all material containing or reflecting
Proprietary Information.
(c) REMEDIES. Each of Buyer, Centerpost, Seller, Kilat and the
Shareholders acknowledges and agrees that any breach of the terms of this
SECTION 6.2 would result in irreparable injury and damage to the injured party
for which such party would have no adequate remedy at law; each of Buyer,
Centerpost, Seller, Kilat and the Shareholders therefore also acknowledges and
agrees that in the event of such breach or any threat of breach, the injured or
threatened party shall be entitled, in addition to any other remedies to which
such party may be entitled at law or in equity, to an immediate injunction and
restraining order to prevent such breach and/or threatened breach by the
breaching or threatening party and/or any and all persons and/or entities acting
for and/or with such breaching or threatening party, without having to provide a
bond or other security or to prove actual damages.
6.3 OPERATION OF BUSINESS. Except pursuant to or in connection with the
BMC Agreement, neither Seller, Kilat nor either of the Shareholders will engage
in any practice, take any action or enter into any transaction outside the
Ordinary Course of Business with respect to the Assets, the Intellectual
Property Assets or the operation of Seller's business from the date of this
Agreement until the Closing Date without the prior written consent of Buyer and
Centerpost. Without in any manner limiting the foregoing, Seller, Kilat and the
Shareholders covenant and agree that during such period,
(i) The aggregate monthly remuneration (including, without
limitation, all salary, distributions, dividends, bonuses, deferred
compensation, automobile lease expense, superannuation payments and other
payments) paid to or for the benefit of Kilat and the Shareholders and all
Affiliates of Kilat and the Shareholders shall not exceed Sixteen Thousand
Six Hundred Sixty Seven Australian Dollars (AUS $16,667), and
(ii) Except as set forth in the Disclosure Schedules, Seller will
not, and Kilat and the Shareholders will not permit Seller to, make any
payment or incur any obligation with respect to any asset of any nature
whatsoever that is used in whole or in part for the personal use or benefit
of any shareholder, officer, director or employee of Seller or any
Affiliate thereof.
Seller, Kilat and the Shareholders will use their best commercially reasonable
efforts to preserve the Assets, the Intellectual Property Assets and the
goodwill and value of Seller's business, to comply with all laws applicable to
the Assets, the Intellectual Property Assets and Seller's business and to
maintain good working relationships with lessors, licensors, suppliers,
customers and employees. In addition, Seller will not sell or contract to sell
any interest in Seller or lease, license, transfer, pledge, mortgage,
hypothecate or otherwise dispose of any of the Assets or the Intellectual
Property Assets and Kilat and the Shareholders will not permit Seller to take
any such action, except as expressly required by the BMC Agreement. Seller will
not, and Kilat and the Shareholders will not permit Seller to, do any act or
thing or suffer or permit any omission which would make any policy of insurance
of Seller written with respect to the Assets or the Intellectual Property Assets
void or voidable or do anything that would mean that any existing insurance
policy of Seller is not materially in full force and effect at all times prior
to the Closing Date.
6.4 PUBLICITY. The parties hereto agree, subject to the provisions of
SECTION 6.2, to advise and confer with each other, to the maximum extent
possible, regarding and prior to the issuance of any reports, statements,
releases, public announcements or similar publicity with respect to this
Agreement or the transactions contemplated hereby; PROVIDED, HOWEVER, that any
of the parties may make such announcements, give such notices and provide such
information to Governmental Authorities, employees, creditors, affiliates and
the public as its counsel may advise is legally required.
6.5 EXCLUSIVITY. From and after the date of this Agreement until the
Closing:
(a) Except for dealings with BMC pursuant to the express terms of the
BMC Agreement, neither Seller nor any of its officers, directors, stockholders
or agents (including, without limitation, Kilat and the Shareholders) shall
directly or indirectly:
(i) Enter into any transaction with any party other than Buyer
or Centerpost relative to any disposition of the Assets, the Intellectual
Property Assets or Seller's business or operations or any part thereof; or
(ii) Solicit or encourage submission of inquiries, proposals or
offers from any other party relative to potential disposition of the Assets, the
Intellectual Property Assets or Seller's business or operations or any part
thereof; or
(iii) Provide further information to any party other than
Buyer or Centerpost relating to any possible disposition of the Assets, the
Intellectual Property Assets or Seller's business or operations or any part
thereof.
(b) Seller, Kilat and the Shareholders agree that if Seller, Kilat or
either of the Shareholders receives an offer or proposal (other than the BMC
Agreement) relating to the possible disposition of the Assets, the Intellectual
Property Assets or Seller's business or operations or any part thereof, Seller,
Kilat and the Shareholders will immediately notify Buyer of such offer or
proposal, the identity of the party making the offer or proposal and the
specific terms of the offer or proposal.
6.6 COOPERATION. Kilat and each of the Shareholders agrees to cause
Seller to take, or to refrain from taking, all actions necessary to fulfill
Seller's covenants and obligations under the Transaction Agreements.
ARTICLE 7
INDEMNIFICATION AND LIMITATION
7.1 INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS. Subject to the
limitations set forth in SECTION 7.4, Seller, Kilat and each of the
Shareholders, jointly and severally, unconditionally, absolutely and irrevocably
agree to and shall defend, indemnify and hold harmless Buyer, Centerpost, and
each of the officers, directors, employees, counsel, successors, assigns, and
legal representatives of Buyer and Centerpost (Buyer, Centerpost and such
persons are collectively referred to as the "BUYER'S INDEMNIFIED PERSONS") from
and against, and shall reimburse Buyer's Indemnified Persons for, each and every
Loss paid, imposed on or incurred by Buyer's Indemnified Persons, directly or
indirectly, relating to, resulting from or arising out of any inaccuracy in any
representation or warranty of Seller, Kilat or the Shareholders under the Option
Agreement, the Transaction Agreements or the Exhibits thereto or any agreement,
certificate or document delivered by Seller, Kilat or the Shareholders pursuant
hereto in any respect, or any breach or nonfulfillment of any covenant,
agreement or other obligation of Seller, Kilat or the Shareholders under the
Option Agreement, the Transaction Agreements or the Exhibits thereto or any
agreement, certificate or document to be delivered by Seller, Kilat or the
Shareholders pursuant hereto (including, without limitation, Seller s obligation
to pay Taxes pursuant to SECTION 1.7). With respect to matters not involving
Proceedings brought or asserted by third parties against Buyer's Indemnified
Persons, within thirty (30) days after notification from Buyer's Indemnified
Persons supported by reasonable documentation setting forth the nature of the
circumstances entitling Buyer's Indemnified Persons to indemnity hereunder,
Seller, Kilat and the Shareholders shall, at no cost or expense to Buyer's
Indemnified Persons, diligently commence resolution of such matters in a manner
reasonably acceptable to Buyer's Indemnified Persons and shall diligently and
timely prosecute such resolution to completion; PROVIDED, HOWEVER, with respect
to those valid claims that may be satisfied by payment of a liquidated sum of
money and which are not disputed reasonably and in good faith by Seller, Kilat
and the Shareholders, Seller, Kilat and the Shareholders shall promptly pay the
amount so claimed. If litigation or any other Proceeding is commenced or
threatened, the provisions of SECTION 7.3 shall control over the immediately
preceding sentence. Buyer and Centerpost shall be entitled to offset against
any amounts owed by Buyer or Centerpost, as the case may be, to Seller, Kilat or
the Shareholders under any Transaction Agreement any amounts owed by Seller,
Kilat or the Shareholders, respectively, to Buyer or Centerpost hereunder.
7.2 INDEMNIFICATION BY BUYER AND CENTERPOST. Each of Buyer and Centerpost
unconditionally, absolutely and irrevocably agrees to and shall defend,
indemnify and hold harmless Seller, Kilat, the Shareholders and the successors,
assigns, heirs and legal and personal representatives of Seller, Kilat and the
Shareholders (Seller, Kilat, the Shareholders and such persons are collectively
referred to as the "SELLER'S INDEMNIFIED PERSONS") from and against, and shall
reimburse Seller's Indemnified Persons for, each and every Loss paid, imposed on
or incurred by Seller's Indemnified Persons, directly or indirectly, relating
to, resulting from or arising out of any inaccuracy in any representation or
warranty of Buyer or Centerpost under the Option Agreement, the Transaction
Agreements or the Exhibits thereto or any agreement, certificate or other
document delivered or to be delivered by Buyer or Centerpost pursuant hereto in
any respect, or any breach or nonfulfillment of any covenant, agreement or other
obligation of Buyer or Centerpost under the Option Agreement, the Transaction
Agreements, the Exhibits thereto or any agreement, certificate or document to be
delivered by Buyer or Centerpost pursuant hereto. With respect to matters not
involving Proceedings brought or asserted by third parties against Seller's
Indemnified Persons, within thirty (30) days after notification from Seller's
Indemnified Persons supported by reasonable documentation setting forth the
nature of the circumstances entitling Seller's Indemnified Persons to indemnity
hereunder, the Buyer or Centerpost, at no cost or expense to Seller's
Indemnified Persons, shall diligently commence resolution of such matters in a
manner reasonably acceptable to Seller's Indemnified Persons and shall
diligently and timely prosecute such resolution to completion; PROVIDED,
HOWEVER, with respect to those valid claims that may be satisfied by payment of
a liquidated sum of money and which are not disputed reasonably and in good
faith by Buyer or Centerpost, Buyer or Centerpost shall promptly pay the amount
so claimed. If litigation or any other Proceeding is commenced or threatened,
the provisions of SECTION 7.3 shall control over the immediately preceding
sentence.
7.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any Proceeding shall be
brought or asserted against a party entitled to indemnification pursuant to
SECTIONS 7.1 or 7.2, or any successor thereto (the "INDEMNIFIED PERSON") in
respect of which indemnity may be sought under this Article from an indemnifying
person or any successor thereto (the "INDEMNIFYING PERSON"), the Indemnified
Person shall give prompt written notice of such Proceeding to the Indemnifying
Person who shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
expenses; provided, that any delay or failure to so notify the Indemnifying
Person shall relieve the Indemnifying Person of its obligations hereunder only
to the extent, if at all, that it is prejudiced by reason of such delay or
failure. In no event shall any Indemnified Person be required to make any
expenditure or bring any cause of action to enforce the Indemnifying Person's
obligations and liability under and pursuant to the indemnification obligations
set forth in this Article. In addition, actual or threatened action by a
Governmental Authority or other Person is not a condition or prerequisite to the
Indemnifying Person's obligations under this Article. The Indemnified Person
shall have the right to employ separate counsel in any of the foregoing
Proceedings and to participate in the defense thereof, but the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless the Indemnified Person shall in good faith determine that there exist
actual or potential conflicts of interest which make representation by the same
counsel inappropriate. The Indemnified Person's right to participate in the
defense or response to any Proceeding should not be deemed to limit or otherwise
modify its rights and obligations under this Article. In the event that the
Indemnifying Person, within fifteen (15) days after notice of any such
Proceeding, fails to assume the defense thereof, the Indemnified Person shall
have the right to undertake the defense, compromise or settlement of such
Proceeding for the account of the Indemnifying Person, subject to the right of
the Indemnifying Person to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Person at any time prior to the
settlement, compromise or final determination thereof. If the Indemnifying
Person assumes the defense of any Proceeding, the Indemnified Person shall,
reasonably and in good faith, assist and cooperate in the defense thereof.
Anything in this Article to the contrary notwithstanding, the Indemnifying
Person shall not, without the Indemnified Person's prior written consent, settle
or compromise any Proceeding or consent to the entry of any judgment with
respect to any Proceeding for anything other than money damages paid by the
Indemnifying Person. The Indemnifying Person may, without the Indemnified
Person's prior written consent, settle or compromise any such Proceeding or
consent to entry of any judgment with respect to any such Proceeding that
requires solely the payment of money damages by the Indemnifying Person and that
includes as an unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Person from all liability in respect of such
Proceeding.
7.4 LIMITATION OF LIABILITY. Notwithstanding the foregoing provisions of
this ARTICLE 7, each of Buyer and Centerpost agrees that the maximum monetary
amount for which the Shareholders shall be liable to Buyer's Indemnified Persons
in connection with the provisions of the Transaction Agreements, shall be
limited to the aggregate amount of One Million Eight Hundred Thousand Dollars
($1,800,000); PROVIDED, HOWEVER, that the foregoing limitation on the liability
of the Shareholders shall not apply to, and each of the Shareholders shall be
jointly and severally liable to Buyer's Indemnified Persons, and any of them,
for the aggregate amount of actual damages resulting from:
(a) any representation made by Seller, Kilat or either of the
Shareholders which any of Seller, Kilat or either of the Shareholders knows or
has reason to know is false or misleading at the Closing Date, or
(b) any fraudulent conduct of Seller, Kilat or either of the
Shareholders.
Furthermore, each of Seller, Kilat and the Shareholders acknowledges and agrees
that the foregoing limitation of liability shall not in any manner limit the
liability of Seller and Kilat for any reason whatsoever.
7.5 GUARANTEE.
(a) Kilat and each of the Shareholders gives the indemnity set forth
in SECTION 7.1 and the guarantee set forth in this SECTION 7.5 in consideration
of the agreement of Buyer and Centerpost to enter into the Transaction
Agreements. Kilat and each of the Shareholders acknowledges the receipt of
valuable consideration from Buyer and Centerpost for the agreement of Kilat and
the Shareholders to incur obligations and give rights under such indemnity and
guarantee.
(b) Kilat and each of the Shareholders unconditionally and
irrevocably guarantees to Buyer and Centerpost the due and punctual performance
and observance by Seller of its obligations under the Transaction Agreements
including, without limitation, any obligation to pay money.
(c) Kilat and each of the Shareholders waive any right it, he or she
have of first requiring Buyer or Centerpost to commence proceedings or enforce
any other right against Seller or any other person before claiming under such
indemnity and guarantee.
(d) This guarantee and the foregoing indemnity are continuing
security obligations and are not discharged by any one payment. Such guarantee
and indemnity do not merge on completion.
(e) The liabilities of Kilat and each of the Shareholders under such
guarantee and indemnity are as a guarantor, indemnifier and principal debtor and
the rights of Buyer and Centerpost under such guarantee and indemnity are not
affect by anything which might otherwise affect them at law or in equity
including, but not limited, one or more of the following:
(i) Buyer or Centerpost granting time or other indulgence to,
compounding or compromising with or releasing Seller, or any other
guarantor;
(ii) acquiescence, delay, acts, omissions or mistakes on the part
of Buyer or Centerpost;
(iii) any novation of a right of Buyer or Centerpost;
(iv) any variation of the Transaction Agreements, or any
agreement entered into in performance thereof; or
(v) the invalidity or unenforceability of an obligation or
liability of a person other than the relevant guarantor (being Kilat or one
of the Shareholders).
(f) Kilat and each of the Shareholders may not, without the consent
of Buyer and/or Centerpost, as the case may be:
(i) raise a set-off or counterclaim available to it or Seller
against Buyer or Centerpost in reduction of it's liability under such
guarantee and indemnity;
(ii) claim to be entitled by way of contribution, indemnity,
subrogation, marshaling or otherwise to the benefit of any security or
guarantee held by Buyer or Centerpost in connection with the Transaction
Agreements; or
(iii) prove in competition with Buyer or Centerpost, if a
liquidator, provisional liquidator, receiver, official manager or trustee
in bankruptcy is appointed in respect of Seller or Seller is otherwise
unable to pay its debts when they fall due, until all money payable to
Buyer or Centerpost in connection with the Transaction Agreements is paid.
(g) If a claim that a payment or transfer to Buyer or Centerpost in
connection with the Transaction Agreements is void or voidable (including, but
not limited to, a claim under laws relating to liquidation, insolvency or
protection of creditors) is upheld, conceded or compromised, then Buyer or
Centerpost, as the case may be, is entitled immediately as against Kilat and
each Shareholder to the rights to which it would have been entitled under such
guarantee and indemnity if the payment or transfer had not occurred.
(h) Kilat and each of the Shareholders agree to pay or reimburse each
of Buyer and Centerpost on demand for its costs, charges and expenses in making,
enforcing and doing anything in connection with such guarantee and indemnity
including, without limitation, legal costs and expenses on a full indemnity
basis. Any amounts paid to Buyer or Centerpost by Kilat or one of the
Shareholders must be applied first against payment of costs, charges and
expenses under this SECTION 7.5(H), then against other obligations under such
guarantee and indemnity.
(i) Kilat and each of the Shareholders acknowledges having been given
a copy of this Agreement and having had full opportunity to consider its
provisions before entering into such guarantee and indemnity.
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any investigation made at any time by or on behalf of the
parties hereto, all of the representations and warranties of the parties shall
survive the Closing of the transactions contemplated by the Transaction
Agreements (even if the other party knew or had reason to know of any
misrepresentation or breach of any warranty at the time of the Closing) and all
of the covenants of the parties shall survive the Closing, including but not
limited to the obligations of the parties set forth in SECTION 6.2 and the
indemnification obligations of the parties hereto. In addition, the covenants
and obligations set forth in SECTION 6.2 shall survive the termination of this
Agreement.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
terminated, rescinded or supplemented only by written agreement of the parties
hereto.
8.3 WAIVER; CONSENTS. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
each party affected thereby only by a written instrument signed by the party
granting such waiver. No waiver, or failure to insist upon strict compliance,
by any party of any condition or any breach of any obligation, term, covenant,
representation, warranty or agreement contained in this Agreement, in any one or
more instances, shall be construed to be a waiver of, or estoppel with respect
to, any other condition or any other breach of the same or any other obligation,
term, covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
8.4 FURTHER ASSURANCES; COOPERATION. The parties hereto agree (I) to
furnish upon request to each other such further information, (ii) to execute and
deliver to each other such other documents, and (iii) to do such other acts and
things, all as another party hereto may at any time reasonably request,
including before, at and after the Closing, for the purpose of carrying out the
intent of the Transaction Agreements and the documents referred to therein.
8.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when (I) delivered
personally, (ii) sent by telecopier (with receipt confirmed), or (iii) received
by the addressee, if sent by Express Mail, Federal Express or other express
delivery service (receipt requested) or (iv) three business days after being
sent by registered or certified mail, return receipt requested, in each case to
the other party at the following addresses and telecopier numbers (or to such
other address or telecopier number for a party as shall be specified by like
notice; provided that notices of a change of address or telecopier number shall
be effective only upon receipt thereof):
if to Seller, to:
Australian Software Innovations (Services) Pty Ltd
51 Rawson Street, Suite 301
Epping NSW 2121
Attn: Eng Lee, Managing Director
Telecopier: 61-2-869-0280
if to Kilat or the Shareholders, to:
Eng Lee
51 Rawson Street, Suite 301
Epping NSW 2121
Telecopier: 61-2-869-0280
if to Buyer, to:
Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
with copies to:
Brian G. Lloyd
Kimball, Parr, Waddoups, Brown & Gee
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Telecopier: (801) 532-7750
if to Centerpost, to:
Centerpost Innovations Pty. Ltd.
c/o Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
with copies to:
Brian G. Lloyd
Kimball, Parr, Waddoups, Brown & Gee
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Telecopier: (801) 532-7750
8.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. Buyer or
Centerpost may, in its discretion, assign its rights, interests and obligations
hereunder to any Person without the prior consent of any other party hereto.
Neither Seller, Kilat nor either of the Shareholders may assign any of their
respective rights, interests or obligations hereunder without the prior written
consent of Buyer and Centerpost. This Agreement is not intended to and shall
not confer upon any person other than the parties any rights or remedies
hereunder or with respect hereto.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New South Wales, Australia applicable to contracts
made and to be performed wholly therein.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
8.9 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. Unless otherwise provided, all references in this Agreement to
articles and sections refer to the corresponding articles and sections of this
Agreement. All words used herein shall be construed to be of such gender or
number as the circumstances require. Unless otherwise specifically noted, the
words "herein," "hereof," "hereby," "hereinabove," "hereinbelow," "hereunder,"
and words of similar import, refer to this Agreement as a whole and not to any
particular article, section, clause or other subdivision hereof. Whenever the
term "including" or a similar term is used in this Agreement, it shall be read
as if it were written "including by way of example only and without in any way
limiting the generality of the clause or concept to which reference is made."
This Agreement shall be construed as though all parties had drafted it.
8.10 ENTIRE AGREEMENT. This Agreement and the Transaction Agreements,
including the Exhibits and the documents, instruments and schedules referred to
herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants, or undertakings
other than those expressly set forth or referred to herein and in the
Transaction Agreements. The Transaction Agreements supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
8.11 ATTORNEYS' FEES. In the event a Proceeding is brought by any party
under this Agreement to enforce or construe any of its terms, the party that
prevails by enforcing this Agreement shall be entitled to recover, in addition
to all other amounts and relief, its reasonable costs and attorneys' fees
incurred in connection with such Proceeding.
8.12 SEVERABILITY. If any part of this Agreement is or becomes legally
ineffective, invalid or unenforceable in any jurisdiction, the effectiveness,
validity or enforceability of this Agreement in any other jurisdiction, or the
remainder of it in that jurisdiction, will not be affected.
8.13 JOINT AND SEVERAL. In this Agreement:
(a) any agreement, covenant, obligation, representation or warranty on
the part of two or more persons binds them jointly and severally; and
(b) any agreement, covenant, obligation, representation or warranty
in favor of two or more persons is for the benefit of them jointly and
severally.
ARTICLE 9
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified or referred to below when used in this Agreement. Any
reference or citation to a law, statute or regulation shall be deemed to include
any amendments to that law, statute or regulation and judicial and
administrative interpretations of it.
9.1 "ACQUISITION" shall have the meaning set forth in SECTION 1.1.
9.2 "AFFILIATE" means, with respect to any specified Person, each other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such specified Person (whether a general or limited
partner), each officer, director or general partner of such specified Person,
and each other Person who is the beneficial owner of five percent (5%) or more
of any class of the voting securities of such specified Person or five percent
(5%) or more in market value of the outstanding securities of such Person. For
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of all or any part of the management and policies
of a specified Person, whether through the ownership of voting securities, by
contract or otherwise.
9.3 "AGREEMENT" means this Asset Purchase Agreement, including the
Exhibits hereto, which are hereby incorporated herein.
9.4 "ALLOCATION SCHEDULE" shall have the meaning set forth in SECTION
1.2(C).
9.5 "ASSETS" means the assets of Seller identified more particularly on
EXHIBIT A, excluding any Intellectual Property Assets.
9.6 "BMC" means, collectively, BMC Software, Inc., a Delaware corporation,
BMC Software (Cayman) LDC, a Cayman unlimited liability company or any assignee
thereof under the BMC Agreement.
9.7 "BMC AGREEMENT" means that Asset Purchase and Services Agreement dated
as of June 30, 1997, among BMC Software, Inc., a Delaware corporation, BMC
Software (Cayman) LDC, a Cayman unlimited liability company or its assignee,
Buyer, certain shareholders of Buyer, ASI and Eng H. Lee.
9.8 "BUYER" means Sento Technical Innovations Corporation, a Utah
corporation, or any successor, transferee or assignee thereof.
9.9 "BUYER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.1.
9.10 "CENTERPOST" means Centerpost Innovations Pty. Ltd. ACN 074-678-774, a
limited company organized under the laws of New South Wales, Australia, or any
successor, transferee or assignee thereof.
9.11 "CLOSING" shall have the meaning set forth in SECTION 1.5(A).
9.12 "CLOSING DATE" means the date and time as of which the Closing
actually takes place.
9.13 "CONTRACTS" means those contracts and agreements identified more
particularly on EXHIBIT B, the rights of which Buyer has elected to acquire from
Seller hereunder.
9.14 "DEED OF RESTRAINT OF TRADE" shall mean that certain Deed of Restraint
of Trade to be executed by and among Buyer and the Shareholders
contemporaneously with the execution of this Agreement, in form acceptable to
Buyer in its discretion.
9.15 "DISCLOSURE SCHEDULES" means the disclosure schedules prepared and
delivered by Seller, Kilat and the Shareholders to Buyer prior to the Closing.
The Disclosure Schedules shall contain all information necessary to make the
representations and warranties set forth in ARTICLE 2 true and correct.
9.16 "DOLLARS" or "$" means United States dollars.
9.17 "EMPLOYEE BENEFIT PLAN" means any stock option, stock right, profit
sharing, thrift-savings, simplified employee pension plan, deferred compensation
plan, severance pay, golden parachute, cafeteria plan, flexible compensation
plan, life insurance, medical, dental, disability, welfare, superannuation or
vacation plans or any other similar plan or arrangement of any kind or
character.
9.18 "ENCUMBRANCE" means any lien, pledge, hypothecation, charge, mortgage,
deed of trust, security interest, encumbrance, equity, trust, equitable
interest, claim, easement, right-of-way, servitude, right of possession, lease
tenancy, license, encroachment, burden, intrusion, covenant, infringement,
interference, proxy, option, right of first refusal, community property
interest; or legend, defect, impediment, exception, condition, restriction,
reservation, limitation, impairment, imperfection of title; or restriction on or
condition to the voting of any security, restriction on the transfer of any
security or other asset, restriction on the receipt of any income derived from
any security or other asset, and restriction on the possession, use, exercise or
transfer of any other attribute of ownership, whether based on or arising from
common law, constitutional provision, statute or contract.
9.19 "ENTITY" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability company, joint
venture, joint stock association, estate, trust, cooperative, foundation, union,
syndicate, league, consortium, coalition, committee, society, firm, company or
other enterprise, association, organization or entity of any nature, other than
a Governmental Authority.
9.20 "GOVERNMENTAL AUTHORITY" means any Australian national, state,
territorial or local governmental authority or semi-governmental authority, any
foreign governmental authority, the United States of America, any State of the
United States, any local authority and any political subdivision of any of the
foregoing, any multi-national organization or body, any agency, department,
commission, board, bureau, court or other authority thereof, or any
quasi-governmental or private body exercising, or purporting to exercise, any
executive, legislative, judicial, administrative, police, regulatory or taxing
authority or power of any nature.
9.21 "GOVERNMENTAL AUTHORIZATION" means any permit (including without
limitation any Environmental Permit), license, franchise, approval, certificate,
consent, ratification, permission, confirmation, endorsement, waiver,
certification, registration, transfer, qualification or other authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any Legal Requirement.
9.22 "INTANGIBLE ASSETS" means all Assets which are not Tangible Assets.
9.23 "INTELLECTUAL PROPERTY" means any and all trademarks, trade names,
service marks, patents, copyrights (including any registrations, applications,
licenses or rights relating to any of the foregoing), technology, trade secrets,
inventions, know-how, names, logos, artwork, designs, discoveries, computer
programs, software products and related source code and documentation,
processes, and all other intangible assets, properties and rights.
9.24 "INTELLECTUAL PROPERTY ASSETS" means all Intellectual Property of
Seller, including, without limitation, all Intellectual Property necessary to or
currently utilized in Seller s business.
9.25 "INTELLECTUAL PROPERTY PURCHASE AGREEMENT" means that certain
Intellectual Property Purchase Agreement to be executed by and among Buyer,
Seller, Kilat and the Shareholders contemporaneously with the execution of this
Agreement, in form acceptable to Buyer in its discretion.
9.26 "KILAT" means Kilat Holding Pty. Limited ACN 003-982-616, a limited
company organized under the laws of Australia.
9.27 "KNOWLEDGE" or "KNOWN" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving or who has at any time served as an
officer, director, member, manager, trustee, or shareholder of such Entity (or
in any similar capacity) has, or at any time had, knowledge of such fact or
other matter.
9.28 "LEGAL REQUIREMENT" means any law (including without limitation any
Environmental Laws), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
9.29 "LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles.
9.30 "LOSS" means any loss, damage, injury, harm, detriment, decline in
value, lost opportunity, Liability, exposure, claim, demand, cost of any
Proceeding, settlement, judgment, award, punitive damage award, fine, penalty,
Tax, fee, charge, cost or expense (including, without limitation, costs of
attempting to avoid or in opposing the imposition thereof, interest, penalties,
costs of preparation and investigation, and the fees, disbursements and expenses
of attorneys, accountants and other professional advisors).
9.31 "NOTE" means the promissory note to be executed and delivered by Buyer
to Seller pursuant to SECTION 1.4(D), substantially in the form of EXHIBIT D.
9.32 "OPTION" shall have the meaning set forth in RECITAL A.
9.33 "OPTION AGREEMENT" shall have the meaning set forth in RECITAL A.
9.34 "OPTION PURCHASE PAYMENT" shall have the meaning set forth in SECTION
1.4(A).
9.35 "ORDER" means any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, consent
decree, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
9.36 "ORDINARY COURSE OF BUSINESS" means an action taken by a Person if:
(I) such action is recurring in nature, is consistent with the past
practices of such Person and is taken in the ordinary course of the normal day-
to-day operations of such Person;
(ii) the aggregate monetary amount associated with such action (or any
series of related actions) is less than Twenty-Five Thousand Dollars ($25,000),
unless prior to taking such action, the Person obtains from Buyer written
consent to the taking of such action; and
(iii) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other persons that are in
the same line of business as such Person.
9.37 "PERSON" means any individual, Entity or Governmental Authority.
9.38 "PROCEEDING" means any action, suit, litigation, arbitration, lawsuit,
claim, proceeding (including any civil, criminal, administrative, investigative
or appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination, investigation, challenge,
controversy or dispute commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Authority or any arbitrator.
9.39 "PROPRIETARY INFORMATION" shall have the meaning set forth in SECTION
6.2.
9.40 "PURCHASE PRICE" shall have the meaning set forth in SECTION 1.3.
9.41 "SELLER" means Australian Software Innovations (Services) Pty. Ltd.
ACN 050-053-355, a limited company organized under the laws of Australia.
9.42 "SELLER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.2.
9.43 "SHAREHOLDERS" refers collectively to Eng Lee and Mary Lee, in their
individual capacities.
9.44 "TANGIBLE ASSETS" means those Assets identified as "Tangible Assets"
on EXHIBIT A.
9.45 "TAX" means any federal, national, state, territorial, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, environmental, customs duties, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value 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 a Governmental Authority
(including any interest, penalties and additions thereto that may arise in
connection therewith), whether disputed or not.
9.46 "TAX RETURNS" means any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
9.47 "TRANSACTION AGREEMENTS" means this Agreement and such other documents
as are entered into in connection with this Agreement in order to complete the
transactions contemplated hereby, including, without limitation, the Option
Agreement, the Intellectual Property Purchase Agreement and the Deed of
Restraint of Trade.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By: __________________________________________________
Its: __________________________________________________
"CENTERPOST":
THE COMMON SEAL of CENTERPOST INNOVATIONS PTY. LTD.
ACN 074-678-774, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
____________________ _________________________
Signature of Director Signature of Director/Secretary
____________________ _________________________
Print Name Print Name
____________________ _________________________
Office Held Office Held
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN 050-053-355, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
____________________ _________________________
Signature of Director Signature of Director/Secretary
____________________ _________________________
Print Name Print Name
____________________ _________________________
Office Held Office Held<PAGE>
"KILAT":
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN 003-982-616, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
____________________ _________________________
Signature of Director Signature of Director/Secretary
____________________ _________________________
Print Name Print Name
____________________ _________________________
Office Held Office Held
"SHAREHOLDERS":
______________________________________________________
Eng Lee, individually
______________________________________________________
Mary Lee, individually
<PAGE>
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
ASSETS
TANGIBLE ASSETS
[To be completed- Non-intellectual property, tangible assets only]
INTANGIBLE ASSETS
[To be completed- Non-intellectual property, intangible assets only]
<PAGE>
EXHIBIT B
TO
ASSET PURCHASE AGREEMENT
CONTRACTS
[To be completed]
<PAGE>
EXHIBIT C
TO
ASSET PURCHASE AGREEMENT
ALLOCATION SCHEDULE
Tangible Assets: $100,000
Intangible Assets, including Good Will: $650,000
Purchase Price: $750,000
<PAGE>
EXHIBIT D
TO
ASSET PURCHASE AGREEMENT
FORM OF NOTE
[ATTACHED]
<PAGE>
EXECUTION COPY
PROMISSORY NOTE
$350,000.00 July 9, 1997
Salt Lake City, Utah
FOR VALUE RECEIVED, Sento Technical Innovations Corporation, a Utah
corporation (the "BORROWER"), promises and agrees to pay to the order of
Australian Software Innovations (Services) Pty. Ltd ACN 050-053-355, a limited
company organized under the laws of Australia, or order (the "LENDER"), at 51
Rawson Street, Suite 301, Epping NSW, Australia, or at such other place as the
holder hereof may designate in writing, in lawful money of the United States of
America, the principal sum of Three Hundred Fifty Thousand and no/100 United
States Dollars, according to the terms and conditions set forth in this Note.
1. Borrower shall make payments on the outstanding principal balance of
this Note in the monthly amounts of $50,000 each, commencing on August 8, 1997,
and continuing until February 8, 1998 (the "Maturity Date"). All indebtness
evidenced by this Note which remains outstanding on the Maturity Date shall be
due and payable in full thereon.
2. Borrower may prepay the principal amount of this Note, in whole or in
part, at any time without penalty or premium for any such early payment.
3. If any payment required by this Note is not made when due, or if any
other event occurs or circumstance exists which under any instrument evidencing
or securing the obligations evidenced by this Note entitles the holder hereof to
accelerate the maturity of such obligations, the entire unpaid principal balance
and accrued but unpaid interest hereunder shall, at the option of the holder
hereof, at once become due and payable without notice (time being the essence
hereof). Failure to exercise such option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent default, event or
circumstance giving rise to such right of acceleration.
4. Prior to the Maturity Date (or accelerated Maturity Date pursuant to
Section 3 above), no interest shall be due or payable by Borrower on amounts
outstanding hereunder. All past due principal (whether by acceleration or in
due course) and, if permitted by applicable law, past due interest, shall, both
before and after judgment, bear interest at the rate of twenty percent (20%) per
annum.
5. Borrower agrees to pay the holder hereof a "late charge" equal to five
percent (5%) of any payment due pursuant to this Note which is more than fifteen
(15) days in arrears.
6. In the event that any payment under this Note is not made at the time
and in the manner required (whether before or after maturity), Borrower agrees
to pay, in addition to any late charge required by Section 5 above, any and all
costs and expenses (regardless of the particular nature thereof and whether
incurred before or after the initiation of suit or before or after judgment)
which may be incurred by the holder hereof in connection with the enforcement of
any of its rights under this Note, including, but not limited to, attorneys'
fees and all costs and expenses of collection.
7. Borrower and all sureties, guarantors and endorsers hereof waive
presentment for payment, demand and notice of dishonor and nonpayment of this
Note, and consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the holder hereof with respect to the
payment or other provisions of this Note, and to the release of any security, or
any part thereof, with or without substitution.
8. Notwithstanding any other provision contained in this Note or in any
instrument given to evidence or secure the obligations evidenced hereby: (i)
the rates of interest and charges provided for herein and therein shall in no
event exceed the rates and charges which result in interest being charged at a
rate equalling the maximum allowed by law; and (ii) if, for any reason
whatsoever, the holder hereof ever receives as interest in connection with the
transaction of which this Note is a part an amount which would result in
interest being charged at a rate exceeding the maximum allowed by law, such
amount or portion thereof as would otherwise be excessive interest shall
automatically be applied toward reduction of the unpaid principal balance then
outstanding hereunder and not toward payment of interest.
9. This Note is delivered in the State of Utah and shall be governed by
and construed in accordance with the laws of said State, without giving effect
to any conflict of laws provisions. Each of Borrower and the Lender expressly
submits itself to the exclusive, personal jurisdiction of the federal and state
courts situated in Salt Lake City, Utah. This Note shall bind the successors
and assigns of Borrower and shall inure to the successors and assigns of the
Lender.
IN WITNESS WHEREOF, Borrower has executed this Note as of the day and
year first above written.
"Borrower":
Sento Technical Innovations Corporation, a
Utah corporation
By:
__________________________________________
Name:
________________________________________
Title:
_______________________________________
<PAGE>
EXECUTION COPY
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of July 9, 1997, by
and among Sento Technical Innovations Corporation, a Utah corporation ("BUYER")
and Australian Software Innovations (Services) Pty. Ltd ACN 050-053-355, a
limited company organized under the laws of Australia (the "SELLER").
RECITALS
Pursuant to that certain Asset Purchase Agreement dated as of July 9, 1997
(the "Asset Purchase Agreement"), among Buyer, Centerpost Innovations Pty. Ltd.
ACN 074-678-774, Seller, Kilat Holdings Pty. Limited ACN 003-982-616, and Eng
Lee and Mary Lee, Buyer has agreed to acquire from Seller, and Seller has agreed
to sell to Buyer, among other things, the rights and interests of Seller in and
to certain agreements of Seller, and Buyer has agreed to assume the obligations
of Seller thereunder in accordance with the terms of the Asset Purchase
Agreement.
NOW, THEREFORE, in consideration of the covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Buyer and Seller agree as follows:
10. Seller hereby assigns to Buyer, and Buyer hereby accepts from Seller,
all of Seller's rights, title and interest in, to and under each and every
Contract, as such term is defined in the Asset Purchase Agreement, free and
clear of all Encumbrances except as expressly assumed by Buyer pursuant to the
Asset Purchase Agreement. Buyer hereby assumes and hereafter shall pay,
discharge and perform when due, all obligations of Seller arising under each
Contract which arise on or after the date hereof as provided in the Asset
Purchase Agreement.
11. This Agreement is made pursuant to the terms of the Asset Purchase
Agreement and does not alter or amend any of the obligations, covenants,
representations or warranties contained in the Asset Purchase Agreement. In the
event of any inconsistency between this Agreement and the Asset Purchase
Agreement, the Asset Purchase Agreement shall control.
12. This Agreement may be signed in one of more counterparts, and all
counterparts so executed shall constitute one instrument, binding on the parties
hereto, notwithstanding that the parties are not signatory to the same
counterpart. Executed counterparts of this Agreement transmitted by telecopier
shall be valid and binding.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, each of Buyer and Seller have duly executed and
delivered this Assignment Agreement as of the date first written above.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By:
_____________________________________________
Name:
Title:
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES)
PTY. LTD. ACN 050-053-355, a limited company organized under the
laws of Australia was hereunto affixed in accordance with its
articles of association in the presence of:
_________________________ _________________________
Signature of Director Signature of
Director/Secretary
_________________________ _________________________
Print Name Print Name
_________________________ _________________________
Office Held Office Held
EXECUTION COPY
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
BY AND AMONG
SENTO TECHNICAL INNOVATIONS CORPORATION,
KILAT HOLDINGS PTY. LIMITED,
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES) PTY LTD,
AND
ENG LEE AND MARY LEE, INDIVIDUALLY
DATED AS OF JULY 9, 1997
<PAGE>
EXECUTION COPY
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
THIS INTELLECTUAL PROPERTY PURCHASE AGREEMENT (this "AGREEMENT") is entered
into in Orem, Utah effective as of the 9th day of July, 1997, by and among Sento
Technical Innovations Corporation, a Utah corporation (the "BUYER"), Australian
Software Innovations (Services) Pty. Ltd ACN 050-053-355, a limited company
organized under the laws of Australia (the "SELLER"), Kilat Holdings Pty.
Limited ACN 003-982-616, a limited company organized under the laws of Australia
("KILAT"), and Eng Lee and Mary Lee (collectively, the "SHAREHOLDERS"),
individually.
RECITALS
A. Pursuant to an Option Agreement (the "OPTION AGREEMENT") dated as of
the 10th day of September, 1996 between Buyer, Seller, Kilat and the
Shareholders, Seller granted to Buyer and its nominee, Centerpost, an option
(the "OPTION") to purchase the Assets and the Intellectual Property Assets,
Kilat and the Shareholders agreed to facilitate Buyer's purchase of the Assets
and the Intellectual Property Assets and Seller, Kilat and the Shareholders
agreed to execute the Deed of Restraint of Trade.
B. Eng Lee is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital stock
of Kilat.
C. Buyer has elected pursuant to Section 1.6 of the Option Agreement to
exercise the Option with respect to the Assets and the Intellectual Property
Assets.
D. Buyer desires to purchase the Assets and the Intellectual Property
Assets from Seller, and Seller is obligated pursuant to the Option Agreement to
sell the Assets and the Intellectual Property Assets to Buyer, in accordance
with the terms and conditions of the Option Agreement. All capitalized terms
used herein without definition shall have the meanings set forth in ARTICLE 9.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and for other good and valuable
consideration, the receipt, adequacy and legal sufficiency of which are hereby
acknowledged, Buyer, Seller, Kilat and the Shareholders hereby agree as follows:
ARTICLE 1
SALE OF INTELLECTUAL PROPERTY ASSETS;
ADDITIONAL AGREEMENTS; CLOSING
1.1 ACQUISITION. Subject to the terms and conditions of this Agreement,
at the Closing, Seller shall sell, transfer and deliver to Buyer, and Buyer
shall purchase, all of Seller's right, title and interest in and to the
Intellectual Property Assets (the "ACQUISITION").
1.2 ADDITIONAL UNDERSTANDINGS. In connection with the Acquisition, the
parties hereto agree as follows:
(a) Buyer will not, pursuant to this Agreement, acquire any property
of Seller other than the Intellectual Property Assets to be acquired by Buyer
from Seller pursuant to the terms of this Agreement; nor will Buyer assume or be
bound by any contract or agreement other than the Contracts and the Deed of
Restraint of Trade (PROVIDED, HOWEVER, that Buyer shall not assume any
obligation of Seller thereunder); nor will Buyer assume any other debt, claim,
Liability, Tax, judgment or obligation whatsoever of Seller except for those
obligations under the Contracts to be performed after the Closing Date.
(b) In connection with the Acquisition, Seller, Kilat and each of the
Shareholders shall, from the date of this Agreement until the Closing Date,
afford Buyer's employees, auditors, legal counsel and other authorized
representatives reasonable access to the properties, records and personnel of
Seller in order to inspect, investigate and audit the Intellectual Property
Assets and the operations and business of Seller. Buyer agrees to conduct any
such inspection, investigation or audit in a reasonable manner, during regular
business hours, so as not to disrupt the normal functioning of Seller's
business. Seller, Kilat and the Shareholders agree to cooperate fully with
Buyer and to make the Seller's books and records, the Assets, the Intellectual
Property Assets and the employees of Seller available to Buyer as reasonably
required by Buyer in order for Buyer to complete its due diligence in a timely
fashion.
(c) Seller, Kilat and the Shareholders covenant and agree that upon
Buyer's request they will do all acts and execute or cause Seller to execute all
such documents as are necessary to cause the name of Seller to be changed as of
the Closing Date to a name that does not include the words "Australian Software
Innovations" or the acronym "ASI" or any similar name and will on or before the
Closing Date deliver to Buyer appropriate signed notices to the Australian
Securities Commission having such effect and all other materials reasonably
requested by Buyer in connection therewith, together with all filing fees
payable in respect of lodging such notices. Seller, Kilat and the Shareholders
consent to Buyer causing a company controlled by Buyer or its Affiliates to
change its name to Australian Software Innovations Pty Limited on or after the
Closing Date.
1.3 PURCHASE PRICE. The price to be paid by Buyer for the purchase of the
Intellectual Property Assets (the "PURCHASE PRICE") shall be Four Hundred Fifty
Five Thousand Dollars ($455,000).
1.4 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer shall pay to Seller
Five Hundred Fifty Five Thousand Dollars ($555,000), representing the full
amount of the Purchase Price, in the form of cash, certified funds or wire
transferred funds, with the transfer of such funds to be initiated by Buyer
within twenty-four hours of the Closing.
1.5 CLOSING. Upon satisfaction or waiver of the conditions to Closing
contained in ARTICLE 4 and ARTICLE 5 hereof, the parties hereto agree to close
the Acquisition contemporaneously with the consummation of the transactions
described in the Asset Purchase Agreement and the Deed of Restraint of Trade
(the "CLOSING"). The Closing shall take place at the principal offices of
Buyer, or such other place as may be agreed to by the parties, on the date
agreed to by the parties, but in all events on or before thirty (30) days from
the date hereof. It is the intent of the parties to consummate the Closing as
soon as possible after the execution of this Agreement. The parties agree to
use their good faith and reasonable efforts to close the Acquisition as soon as
possible and to cooperate fully with each other to complete the Closing.
1.6 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver to Buyer:
(i) An Assignment Agreement assigning to Buyer the Contracts,
free and clear of all Encumbrances except as expressly assumed by Buyer and
described on EXHIBIT B;
(ii) Complete and accurate Disclosure Schedules;
(iii) Such other documents, including certificates of
independent legal advice and appropriate statutory declarations, as may be
required by this Agreement or the Asset Purchase Agreement, or reasonably
requested by Buyer to carry out the transactions contemplated hereby or thereby;
and
(iv) Possession of the Intellectual Property Assets.
(b) At the Closing, Buyer shall deliver to Seller:
(i) The amount of Four Hundred Fifty Five Thousand Dollars
($455,000) in the form of cash, certified funds or wire transferred funds, with
the transfer of such funds to be initiated by Buyer within twenty-four hours of
the Closing;
(ii) An Assignment Agreement accepting assignment to Buyer of all
Seller's rights under the Contracts and assuming the obligations arising under
the Contracts to be performed after the Closing Date; and
(iii) Such other documents, including officers' certificates,
as may be required by this Agreement or the Asset Purchase Agreement, or as
reasonably requested by Seller to carry out the transactions contemplated hereby
or thereby.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER,
KILAT AND THE SHAREHOLDERS
Except as otherwise indicated, Seller, Kilat and each of the Shareholders
jointly and severally represent and warrant to Buyer that the following
representations and warranties are true, correct and complete as of the date of
this Agreement and will be true, correct and complete as of the Closing Date:
2.1 AUTHORITY. Seller, Kilat and each of the Shareholders have the
absolute and unrestricted right, power, authority and capacity to execute and
deliver the Transaction Agreements, as applicable, to perform his, her or its
obligations thereunder and to consummate the transactions contemplated thereby.
This Agreement has been, and each of the Transaction Agreements will be when
executed, duly and validly executed and delivered by Seller, Kilat and each of
the Shareholders, and each of the Transaction Agreements, as applicable,
constitutes, or will when executed constitute, the legal, valid and binding
agreement of Seller, Kilat and each of the Shareholders, enforceable against
Seller, Kilat and each of the Shareholders in accordance with its terms except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
creditors' rights generally.
2.2 ORGANIZATION, EXISTENCE AND GOOD STANDING OF SELLER AND KILAT. Seller
is a limited company duly organized, validly existing and in good standing under
the laws of Australia and has full power and authority to carry on its business
as now being conducted, to own and operate its properties and assets, and to
perform all its obligations under the Transaction Agreements and the Contracts.
Kilat is a limited company duly organized, validly existing and in good standing
under the laws of Australia and has full power and authority to carry on its
business as now being conducted, to own and operate its properties and assets,
and to perform all its obligations under the Transaction Agreements.
2.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Disclosure Schedules, neither the execution and delivery of the Transaction
Agreements, the consummation of the transactions contemplated thereby, nor the
compliance by Seller and Kilat with any of the provisions thereof will, as of
the Closing Date, (i) conflict with or violate any provision of the Memorandum
and Articles of Association or other charter or governing documents of Seller or
Kilat, respectively, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, contract, agreement, commitment, bond,
mortgage, indenture, license, lease, pledge agreement or other instrument or
obligation to which Seller or Kilat is a party or by which Seller or Kilat or
any of their respective properties or assets may be bound, including, without
limitation, any other agreement with respect to the sale by Seller of any of its
properties or assets, (iii) to the best knowledge of Seller, Kilat and the
Shareholders, violate or conflict with any provision of any Legal Requirement
binding upon Seller or Kilat, or (iv) to the best knowledge of Seller, Kilat and
the Shareholders, result in, or require, the creation or imposition of, any
Encumbrance upon or with respect to any properties of Seller or Kilat,
including, without limitation, the Assets or the Intellectual Property Assets,
or impair the ability of Seller, Kilat or the Shareholders to carry out their
respective obligations under or the Transaction Agreements.
2.4 BOOKS AND RECORDS. The books of account and other business records of
Seller regarding the Intellectual Property Assets and the business and
operations of Seller have all been made available to Buyer and such books and
records are complete and correct with regard to the matters which are the
subject of the Transaction Agreements.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent fully
disclosed in writing to Buyer in the Disclosure Schedules, as of the Closing
Date, Seller will have no Liabilities, including, without limitation, any
Liabilities resulting from failure to comply with any Legal Requirement
applicable to Seller, its business or operations, the Intellectual Property
Assets due or to become due and whether incurred in respect of or measured by
the income or sales of Seller for any period or arising out of any transactions
entered into, or any state of facts existing, on or before the Closing Date
which could, as of or after the Closing Date, materially adversely affect
Seller's business or operations or the Intellectual Property Assets, give rise
to an Encumbrance against the Intellectual Property Assets or materially
adversely affect Seller's ability to carry out the transactions contemplated by
the Transaction Agreements.
2.6 ABSENCE OF CHANGES. Between the date of this Agreement and the
Closing Date, there will not have been (i) any material adverse change, or any
event, condition or contingency that is likely to result in a material adverse
change in the condition of Seller's business or operations or the Intellectual
Property Assets; (ii) any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting Seller's business or
operations, the Assets or the Intellectual Property Assets; (iii) any
termination or receipt of notice of termination of one or more of the Contracts;
(iv) any dispute or any other occurrence, event or condition of any character,
which reasonably could be anticipated to give rise to a legal or administrative
action or to a material adverse change affecting the Assets or the Intellectual
Property Assets or Seller's ability to carry out its obligations hereunder; or
(v) any agreement to do any of the foregoing.
2.7 CONTRACTS. Except as set forth on the Disclosure Schedules or as
otherwise described in this Agreement:
(a) Complete and accurate copies, including all amendments, of the
Contracts have been delivered to Buyer.
(b) All of the Contracts are in full force and effect and are valid
and enforceable in accordance with their terms, there are no material defaults
thereunder or breaches thereof, and no condition exists or event has occurred
which, with notice or lapse of time or both, would constitute a default
thereunder.
(c) Seller has the right to assign its rights and obligations under
the Contracts to Buyer, and such assignment will not result in a default, breach
or right of termination thereunder.
(d) Set forth in the Disclosure Schedules is a complete and accurate
description of all obligations or commitments of Seller with respect to any
asset of any nature whatsoever that is used in whole or in part for the personal
use or benefit of any shareholder, officer, director or employee of Seller or
any Affiliate thereof.
2.8 PERSONAL PROPERTY.
(a) Except as set forth in the Disclosure Schedules, there is no
asset, property, right or interest of any nature whatsoever necessary to or
currently utilized in the operation of Seller's business which is not included
in the Assets or the Intellectual Property Assets and Buyer has been given,
pursuant to the Option, an opportunity to acquire all of such assets,
properties, rights and interests.
(b) Seller has made available to the Buyer true, correct and complete
copies of all material contracts, agreements, mortgages, leases and commitments
relating to or affecting any interest in the Intellectual Property Assets.
(c) Other than the Contracts, there are no agreements, whether verbal
or written, affecting any of the Intellectual Property Assets which have not
been disclosed in writing to Buyer. Other than the Contracts or as authorized
by Buyer in writing prior to the Closing, all such agreements affecting the
Intellectual Property Assets will be terminated prior to or at the Closing.
2.9 TITLE TO ASSETS AND RELATED MATTERS. Seller owns all of the
Intellectual Property Assets free and clear of all Encumbrances and the claims
or rights of any other party. Seller has the power, authority and right to sell
the Intellectual Property Assets to Buyer free and clear of any Encumbrances.
2.10 INTELLECTUAL PROPERTY. Except as set forth in the Disclosure
Schedules:
(a) The Intellectual Property Assets constitute all of the
Intellectual Property necessary to or currently utilized in Seller's business
and all such Intellectual Property is owned by Seller free and clear of all
Encumbrances, and is not subject to any license, royalty or other agreement, and
Seller has not granted any license or agreed to pay any royalty in respect of
any Intellectual Property necessary to or currently utilized in Seller's
business, except for that license granted pursuant to an Exclusive License and
Technical Assistance Agreement between Seller and Spire Technologies, Inc. dated
as of July 1, 1996;
(b) None of the Intellectual Property necessary to or currently
utilized in Seller's business has been or is the subject of any pending or
threatened Proceeding or claim of infringement;
(c) No license or royalty agreement to which Seller is a party or by
which any of the Intellectual Property necessary to or currently utilized in
Seller's business is or could be materially affected is in breach or default by
any party thereto or the subject of any notice of termination given or
threatened;
(d) To the best knowledge of Seller and each of the Shareholders, the
products manufactured or sold by Seller and any process, method, part, design,
material or other Intellectual Property they employ, and the marketing and use
by Seller of any such product, service or other Intellectual Property, do not
infringe any Intellectual Property or confidential or proprietary rights of
another, and Seller has not received any notice contesting its right to use any
Intellectual Property; and
(e) Seller owns or possesses adequate rights in perpetuity in and to
all Intellectual Property necessary to conduct its business as presently
conducted.
2.11 COMPLIANCE WITH LAWS. Seller is in compliance with all Legal
Requirements applicable to the ownership of the Assets and the Intellectual
Property Assets and the operation of its business where the failure so to comply
would have a material adverse effect on Seller's ability to carry out its
obligations under the Transaction Agreements, or the ability of Buyer to carry
on the business operations related to the Intellectual Property Assets after the
Closing, and Seller does not have any basis to expect, nor has it received, any
Order, notice, or other communication from any Governmental Authority of any
alleged, actual, or potential violation and/or failure to comply with any such
Legal Requirement, except as disclosed on the Disclosure Schedules.
2.12 LITIGATION. Except as set forth in the Disclosure Schedules, (i)
neither Seller, Kilat nor either of the Shareholders is subject to any Order in
which relief is sought involving, affecting, or relating to the ownership,
operation, or use of the Intellectual Property Assets, the operation of Seller's
business or the matters covered by the Transaction Agreements which would
prevent, delay, or make illegal the transactions contemplated by the Transaction
Agreements, (ii) there are no Proceedings pending or threatened against,
involving, affecting, or relating to Seller, Kilat or either of the
Shareholders, the operation of Seller's business or to Seller's ownership,
operation or use of the Intellectual Property Assets before any arbitrator or
Governmental Authority, and (iii) to the best knowledge of Seller, Kilat and
each of the Shareholders, there exist no facts to serve as a basis for the
institution of any Proceeding against Seller, Kilat, either of the Shareholders
or any of the Intellectual Property Assets which would prohibit or adversely
affect the Assets or the Intellectual Property ability of Seller, Kilat or the
Shareholders to carry out their respective obligations under the Transaction
Agreements.
2.13 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or
similar Person has acted directly or indirectly on behalf of Seller in
connection with the Transaction Agreements or the transactions contemplated
thereby, and no Person, including Seller, Kilat or either of the Shareholders,
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee or expense, directly or indirectly, in connection with the
Transaction Agreements or the transactions contemplated thereby.
2.14 BANKRUPTCY. Seller has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator or
trustee of it or any of its property or assets, or commenced any proceeding
under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statute or any jurisdiction; and no such
action or proceeding has been commenced or threatened against Seller by any
creditor, claimant, Governmental Authority or any other person.
2.15 LABOR MATTERS. Except as set forth in the Disclosure Schedules,
(a) Seller has made all payments to its employees required by any
Legal Requirement or any Employee Benefit Plans;
(b) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or
threatened, any Proceeding against Seller under any Legal Requirement governing
the conditions of Seller's employment of its employees, or any basis or ground
for any such claim;
(c) Seller has not been a party to any collective bargaining
agreement or other labor contract affecting the employees of Seller;
(d) To the best knowledge of Seller, Kilat and each of the
Shareholders, there has not been, and there is not presently pending or existing
or threatened, any strike, slowdown, picketing, work stoppage, labor arbitration
or proceeding in respect of the grievance of any employee, an application or
complaint filed by an employee or union with any Governmental Authority, or
organizational activity or labor dispute against or affecting the business of
Seller; and
(e) Seller has complied with all its obligations under all relevant
superannuation legislation and has made all contributions required to be made in
respect of its employees for their period of employment up to and including the
Closing Date. Seller has established reserves and accruals (each of which is
accurately set forth in the Disclosure Schedules) in amounts sufficient to
satisfy all superannuation obligations in respect of its employees for their
period of employment up to and including the Closing Date.
2.16 DISCLOSURE. No representation or warranty of Seller, Kilat or the
Shareholders contained in this Agreement, the Exhibits hereto, or any other
Transaction Agreement contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to Seller, Kilat or either of the
Shareholders which has specific application to Seller (other than general
economic or industry conditions) and which materially and adversely affects or,
so far as Seller, Kilat or either of the Shareholders can reasonably foresee,
materially threatens, the Intellectual Property Assets or the ability of Seller,
Kilat or the Shareholders to carry out their respective obligations under the
Transaction Agreements, which has not been set forth in this Agreement or in the
Disclosure Schedules.
2.17 TAX MATTERS. With respect to Taxes, including, without limitation,
Taxes imposed by the Income Tax Assessment Act of 1936 of the Commonwealth of
Australia (the "TAX ACT") and any other Australian national, state or
territorial law or regulation:
(a) Seller has lodged, or will lodge, at or before the correct time all
Tax Returns required by law to be lodged on or before the Closing Date and all
such Tax Returns have been, or will be, as the case may be, fully and accurately
completed;
(b) Seller has made, to the Commissioner of Taxation or the appropriate
Governmental Authority a full and true disclosure of all material facts
necessary for the proper assessment of Seller and each deduction, rebate or
credit claimed in those Tax Returns has been properly claimed and is duly
allowable;
(c) All other necessary information, documents and notices in respect of
Tax have been properly and duly submitted by Seller to all relevant Governmental
Authorities in respect of Tax for all periods up to the Closing Date and will
continue to be properly and duly submitted up to the Closing Date and there is
no unresolved dispute with any of those authorities nor is any such dispute
foreshadowed or contemplated;
(d) All Taxes which have been assessed or imposed or are lawfully
assessable upon or are payable by Seller and which are due and payable or which
may become due and payable subsequent to but are referable to the period ending
on the Closing Date have been paid by Seller or adequate provisions has been
made for them in Seller's accounts and such provisions have been fully disclosed
to Buyer; and
(e) All obligations imposed on Seller under all laws relating to Tax have
been complied with and, without limiting the generality of the foregoing, all
amounts of income tax and medicare levy required by law to be deducted by Seller
from salary or wages of Seller's employees (including, without limitation,
Seller's directors and officers) and from prescribed payments and all amounts of
withholding tax have been duly deducted and where payable to the relevant taxing
authority have been duly paid.
2.18 INSURANCE. Seller is adequately insured against public liability in
such amounts as accord with sound business principles and such policies will not
expire prior to the Closing Date. Seller is adequately insured against workers'
compensation liability and has complied with all respects with the legislation
relating to workers' compensation in all jurisdictions where relevant. All
premiums in respect of the insurance coverage referred to in this Agreement will
have been paid prior to the Closing Date, Seller has complied with all the
conditions of the associated policies and has not made any false or misleading
statement or done or omitted to do anything which would entitle the insurers to
avoid the policies or refuse to meet any claim thereunder in full other than as
disclosed by Seller to Buyer in writing prior to the Closing Date. There is no
fact or matter of which Seller, Kilat or the Shareholders is aware which could
lead to Seller's insurance policies being vitiated or repudiated and neither
Seller, Kilat nor the Shareholders will permit any such policies to lapse prior
to the Closing Date, nor will Seller, Kilat or the Shareholders do or fail to do
anything which will render any of Seller's insurance policies void or voidable
prior to the Closing Date.
2.19 TRADE PRACTICES. There is no agreement, arrangement or activity
whether by commission or omission in which Seller has been or will be concerned
which infringes or which has been or which is required to be authorized under
the Trade Practices Act of 1974 of the Commonwealth of Australia or any other
anti-trust legislation in relation to the Intellectual Property Assets,
including, without limitation, any Australian national, state or territorial law
or regulation.
2.20 ENVIRONMENTAL LIABILITIES. There are no Environmental Liabilities (as
defined below) affecting any of Seller's business premises. There are no
factors affecting any of Seller's business premises which are likely within the
next twelve months to give rise to any Environmental Liability. For the
purposes of this clause, the term "ENVIRONMENTAL LAW" means any planning,
environmental, health, toxic, hazardous substances, dangerous goods,
waste/disposal or pollution laws, regulations, orders, notices, ordinances or
requirements, and the term "ENVIRONMENTAL LIABILITY" means any obligation,
expense, penalty or fine under an Environmental Law which could be imposed on
any occupier in possession of Seller's business premises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller, Kilat and the Shareholders as
follows:
3.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Utah and has full power and authority to purchase the Assets and the
Intellectual Property Assets and to carry on its intended business therewith.
3.2 AUTHORITY. Buyer has full power and authority to execute and deliver
the Transaction Agreements, to perform its obligations thereunder, and to
consummate the transactions contemplated thereby. This Agreement has been, and
each of the Transaction Agreements will be, when executed, duly and validly
executed and delivered by Buyer and each of the Transaction Agreements, as
applicable, constitutes, or will, when executed, constitute, the legal, valid,
and binding agreement of Buyer, enforceable against Buyer in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws
affecting creditor's rights generally.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration with,
no notice to and no Governmental Authorization, consent or approval of any
Governmental Authority, creditor or other person in a contractual relationship
with Buyer is necessary in connection with Buyer's execution and delivery of the
Transaction Agreements, the performance of its obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby. Neither the execution and delivery of the Transaction Agreements, the
consummation of the transactions contemplated thereby, nor the compliance by
Buyer with any of the provisions thereof will, as of the Closing Date, (i)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of the Buyer's Articles of Incorporation or Bylaws, or of any note, contract,
agreement, commitment, bond, mortgage, indenture, license, lease, pledge
agreement or other instrument or obligation to which Buyer is a party or by
which Buyer or any of its properties or assets may be bound, or (ii) violate or
conflict with any provision of any Legal Requirement binding upon Buyer.
3.4 BANKRUPTCY. Buyer has not made any assignment for the benefit of
creditors, filed any petition in bankruptcy, been adjudicated insolvent or
bankrupt, petitioned or applied to any tribunal for any receiver, conservator or
trustee of it or any of its property or assets, or commenced any proceeding
under any reorganization arrangement, readjustment of debt, conservation,
dissolution or liquidation law or statute or any jurisdiction; and no such
action or proceeding has been commenced or threatened against Buyer by any
creditor, claimant, governmental authority or any other person.
3.5 NO BROKER'S OR FINDER'S FEES. No agent, broker, investment banker or
similar Person has acted directly or indirectly on behalf of Buyer in connection
with the Transaction Agreements or the transactions contemplated hereby, and no
Person, including Buyer, is or will be entitled to any broker's or finder's fee
or any other commission or similar fee or expense, directly or indirectly, in
connection with the Transaction Agreements or the transactions contemplated
thereby.
ARTICLE 4
CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by the
Transaction Agreements at the Closing are subject to fulfillment of the
following conditions, any one or more of which may be waived in whole or in part
by Buyer in the manner provided for herein.
4.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Seller, Kilat and the Shareholders contained in the
Transaction Agreements, including the Exhibits thereto, are true, correct and
complete in all material respects as of the Closing Date.
4.2 PERFORMANCE; COMPLIANCE WITH AGREEMENT. Seller, Kilat and each of the
Shareholders shall have performed and complied with all obligations, agreements,
covenants and conditions required by the Transaction Agreements to be performed
or complied with by them on or before the Closing Date, including without
limitation making all the deliveries required by SECTION 1.6.
4.3 AUTHORIZATION; THIRD-PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary in
connection with the execution and delivery of the Transaction Agreements by
Seller, Kilat and the Shareholders, the performance of their respective
obligations hereunder and thereunder, or the consummation of the transactions
contemplated hereby and thereby shall have been made or obtained. All corporate
actions necessary to authorize the execution, delivery and performance of the
Transaction Agreements by Seller and Kilat, and the consummation by Seller and
Kilat of the transactions contemplated by the Transaction Agreements shall have
been duly and validly taken, and Seller and Kilat shall have full right and
power to sell the Intellectual Property Assets and to perform their respective
obligations upon the terms provided in the Transaction Agreements. On or prior
to the Closing Date, Seller, Kilat and the Shareholders shall have furnished to
the Buyer evidence of the foregoing filings, notices, consents, stipulations and
assignments.
4.4 NO MATERIAL ADVERSE CHANGE. During the period from the date of this
Agreement through the Closing Date, there shall not have been any material
adverse change in the Intellectual Property Assets, and none of the events
described in SECTION 2.6 shall have occurred.
4.5 COMPLETION OF BUYER'S INVESTIGATION. Buyer shall have completed, to
its sole satisfaction and at its expense, an investigation into the condition of
the Intellectual Property Assets and the business and operations of Seller. If
Buyer is not satisfied with any matter revealed during its investigation, or
with any matter set forth on the Disclosure Schedules, Buyer shall have the
right to terminate this Agreement if notice of termination is given to the
Seller, Kilat and the Shareholders prior to the Closing.
4.6 GOOD TITLE TO BUYER. Seller shall have conveyed the Intellectual
Property Assets to Buyer, free and clear of all Encumbrances.
4.7 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the transactions
contemplated by the Transaction Agreements shall have been satisfactory in all
reasonable respects to Buyer and its counsel.
ARTICLE 5
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLER, KILAT AND THE SHAREHOLDERS
The obligations of Seller, Kilat and the Shareholders to consummate the
transactions contemplated by the Transaction Agreements at the Closing are
subject to the fulfillment of the following conditions, any one or more of which
may be waived in whole or in part by Seller, Kilat or the Shareholders in the
manner provided for herein.
5.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The representations
and warranties of Buyer contained in the Transaction Agreements shall be true,
correct and complete in all material respects as of the Closing Date.
5.2 BUYER'S PERFORMANCE; COMPLIANCE WITH AGREEMENT. Buyer shall have
performed and complied with all obligations, agreements, covenants and
conditions required by the Transaction Agreements to be performed or complied
with by Buyer on or before the Closing Date, including without limitation making
all the deliveries required by SECTION 1.6.
5.3 AUTHORIZATION; THIRD PARTY CONSENTS. All filings and registrations
with and notices to, and each Governmental Authorization, consent or approval
of, any Governmental Authority, creditor or other Person which is necessary in
connection with Buyer's execution and delivery of the Transaction Agreements,
the performance of its obligations thereunder, or the consummation of the
transactions contemplated thereby shall have been made or obtained. All
corporate action necessary to authorize the execution, delivery and performance
of the Transaction Agreements by Buyer and the consummation by Buyer of the
transactions contemplated by the Transaction Agreements shall have been duly and
validly taken, and Buyer shall have full right and power to purchase the
Intellectual Property Assets and to perform its obligations upon the terms
provided in the Transaction Agreements. Buyer shall have furnished to Seller,
Kilat and the Shareholders evidence of the foregoing consents and actions, if
requested.
5.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing Date, there will not have been any material adverse change, or any
event, condition or contingency that results in a material adverse change
affecting the ability of Buyer to carry out its obligations under the
Transaction Agreements.
5.5 ACTIONS SATISFACTORY. The form and substance of all actions,
proceedings, instruments and documents required to consummate the transactions
contemplated by the Transaction Agreements shall have been satisfactory in all
reasonable respects to Seller, Kilat and the Shareholders and their counsel.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 EXPENSES. Except as otherwise expressly provided herein, each party
to this Agreement shall bear its respective expenses incurred in connection with
the preparation, execution and performance of the Transaction Agreements and the
transactions contemplated hereby, including without limitation all fees and
expenses of agents, business brokers, legal counsel, accountants, tax and
financial advisors and other facilitators and advisors.
6.2 CONFIDENTIALITY.
(a) NON-DISCLOSURE AND USE. Each of Buyer, Seller, Kilat and the
Shareholders acknowledges that, in connection with the transactions contemplated
by the Option Agreement and the Transaction Agreements, each has become or may
become privy to the technical, marketing and other proprietary information of
another party, including, without limitation, information, material, documents
and data related to such other party, to the business activities of such other
party and/or to its customers, trade secrets and other proprietary information
(collectively, the "PROPRIETARY INFORMATION"). Each agrees (i) to take at all
times all reasonably necessary steps to safeguard the confidentiality of any
Proprietary Information; (ii) not to disclose, reveal, make accessible or make
available to any third Person any Proprietary Information; and (iii) not to use
any Proprietary Information for such party's own benefit or for any other
Person's benefit; PROVIDED, HOWEVER, that Buyer, Seller, Kilat or the
Shareholders may disclose (A) Proprietary Information which at the time of the
disclosure is part of the public knowledge and readily accessible to such third
party, (B) Proprietary Information which is required by law to be disclosed, and
(C) Proprietary Information required to be disclosed to BMC by the terms of the
BMC Agreement.
(b) RETURN. Buyer, Seller, Kilat and the Shareholders agree that if
the Acquisition is not consummated, each of them will return to the other
parties hereto any and all material containing or reflecting Proprietary
Information.
(c) REMEDIES. Each of Buyer, Seller, Kilat and the Shareholders
acknowledges and agrees that any breach of the terms of this SECTION 6.2 would
result in irreparable injury and damage to the injured party for which such
party would have no adequate remedy at law; each of Buyer, Seller, Kilat and the
Shareholders therefore also acknowledges and agrees that in the event of such
breach or any threat of breach, the injured or threatened party shall be
entitled, in addition to any other remedies to which such party may be entitled
at law or in equity, to an immediate injunction and restraining order to prevent
such breach and/or threatened breach by the breaching or threatening party
and/or any and all persons and/or entities acting for and/or with such breaching
or threatening party, without having to provide a bond or other security or to
prove actual damages.
6.3 OPERATION OF BUSINESS. Except pursuant to or in connection with the
BMC Agreement, neither Seller, Kilat nor either of the Shareholders will engage
in any practice, take any action or enter into any transaction outside the
Ordinary Course of Business with respect to the Intellectual Property Assets or
the operation of Seller's business from the date of this Agreement until the
Closing Date without the prior written consent of Buyer. Without in any manner
limiting the foregoing, Seller, Kilat and the Shareholders covenant and agree
that during such period,
(i) The aggregate monthly remuneration (including, without
limitation, all salary, distributions, dividends, bonuses, deferred
compensation, automobile lease expense, superannuation payments and other
payments) paid to or for the benefit of Kilat and the Shareholders and all
Affiliates of Kilat and the Shareholders shall not exceed Sixteen Thousand
Six Hundred Sixty Seven Australian Dollars (AUS$16,667), and
(ii) Except as set forth in the Disclosure Schedules, Seller will
not, and Kilat and the Shareholders will not permit Seller to, make any
payment or incur any obligation with respect to any asset of any nature
whatsoever that is used in whole or in part for the personal use or benefit
of any shareholder, officer, director or employee of Seller or any
Affiliate thereof.
Seller, Kilat and the Shareholders will use their best commercially reasonable
efforts to preserve the Intellectual Property Assets and the goodwill and value
of Seller's business, to comply with all laws applicable to the Intellectual
Property Assets and Seller's business and to maintain good working relationships
with lessors, licensors, suppliers, customers and employees. In addition,
Seller will not sell or contract to sell any interest in Seller or lease,
license, transfer, pledge, mortgage, hypothecate or otherwise dispose of any of
the Intellectual Property Assets and Kilat and the Shareholders will not permit
Seller to take any such action, except as expressly required by the BMC
Agreement. Seller will not, and Kilat and the Shareholders will not permit
Seller to, do any act or thing or suffer or permit any omission which would make
any policy of insurance of Seller written with respect to the Intellectual
Property Assets void or voidable or do anything that would mean that any
existing insurance policy of Seller is not materially in full force and effect
at all times prior to the Closing Date.
6.4 PUBLICITY. The parties hereto agree, subject to the provisions of
SECTION 6.2, to advise and confer with each other, to the maximum extent
possible, regarding and prior to the issuance of any reports, statements,
releases, public announcements or similar publicity with respect to this
Agreement or the transactions contemplated hereby; PROVIDED, HOWEVER, that any
of the parties may make such announcements, give such notices and provide such
information to Governmental Authorities, employees, creditors, affiliates and
the public as its counsel may advise is legally required.
6.5 EXCLUSIVITY. From and after the date of this Agreement until the
Closing:
(a) Except for dealings with BMC pursuant to the express terms of the
BMC Agreement, neither Seller nor any of its officers, directors, stockholders
or agents (including, without limitation, Kilat and the Shareholders) shall
directly or indirectly:
(i) Enter into any transaction with any party other than Buyer
relative to any disposition of the Intellectual Property Assets or Seller's
business or operations or any part thereof; or
(ii) Solicit or encourage submission of inquiries, proposals or
offers from any other party relative to potential disposition of the
Intellectual Property Assets or Seller's business or operations or any part
thereof; or
(iii) Provide further information to any party other than
Buyer relating to any possible disposition of the Intellectual Property Assets
or Seller's business or operations or any part thereof.
(b) Seller, Kilat and the Shareholders agree that if Seller, Kilat or
either of the Shareholders receives an offer or proposal (other than the BMC
Agreement) relating to the possible disposition of the Intellectual Property
Assets or Seller's business or operations or any part thereof, Seller, Kilat and
the Shareholders will immediately notify Buyer of such offer or proposal, the
identity of the party making the offer or proposal and the specific terms of the
offer or proposal.
6.6 COOPERATION. Kilat and each of the Shareholders agrees to cause
Seller to take, or to refrain from taking, all actions necessary to fulfill
Seller's covenants and obligations under the Transaction Agreements.
ARTICLE 7
INDEMNIFICATION AND LIMITATION
7.1 INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS. Subject to the
limitations set forth in SECTION 7.4, Seller, Kilat and each of the
Shareholders, jointly and severally, unconditionally, absolutely and irrevocably
agree to and shall defend, indemnify and hold harmless Buyer, and each of
Buyer's officers, directors, employees, counsel, successors, assigns, and legal
representatives (Buyer and such persons are collectively referred to as the
"BUYER'S INDEMNIFIED PERSONS") from and against, and shall reimburse Buyer's
Indemnified Persons for, each and every Loss paid, imposed on or incurred by
Buyer's Indemnified Persons, directly or indirectly, relating to, resulting from
or arising out of any inaccuracy in any representation or warranty of Seller,
Kilat or the Shareholders under the Option Agreement, the Transaction Agreements
or the Exhibits thereto or any agreement, certificate or document delivered by
Seller, Kilat or the Shareholders pursuant hereto in any respect, or any breach
or nonfulfillment of any covenant, agreement or other obligation of Seller,
Kilat or the Shareholders under the Option Agreement, the Transaction Agreements
or the Exhibits thereto or any agreement, certificate or document to be
delivered by Seller, Kilat or the Shareholders pursuant hereto. With respect to
matters not involving Proceedings brought or asserted by third parties against
Buyer's Indemnified Persons, within thirty (30) days after notification from
Buyer's Indemnified Persons supported by reasonable documentation setting forth
the nature of the circumstances entitling Buyer's Indemnified Persons to
indemnity hereunder, Seller, Kilat and the Shareholders shall, at no cost or
expense to Buyer's Indemnified Persons, diligently commence resolution of such
matters in a manner reasonably acceptable to Buyer's Indemnified Persons and
shall diligently and timely prosecute such resolution to completion; PROVIDED,
HOWEVER, with respect to those valid claims that may be satisfied by payment of
a liquidated sum of money and which are not disputed reasonably and in good
faith by Seller, Kilat and the Shareholders, Seller, Kilat and the Shareholders
shall promptly pay the amount so claimed. If litigation or any other Proceeding
is commenced or threatened, the provisions of SECTION 7.3 shall control over the
immediately preceding sentence. Buyer shall be entitled to offset against any
amounts owed by Buyer to Seller, Kilat or the Shareholders under any Transaction
Agreement any amounts owed by Seller, Kilat or the Shareholders, respectively,
to Buyer hereunder.
7.2 INDEMNIFICATION BY BUYER. Buyer unconditionally, absolutely and
irrevocably agrees to and shall defend, indemnify and hold harmless Seller,
Kilat, the Shareholders and the successors, assigns, heirs and legal and
personal representatives of Seller, Kilat and the Shareholders (Seller, Kilat,
the Shareholders and such persons are collectively referred to as the "SELLER'S
INDEMNIFIED PERSONS") from and against, and shall reimburse Seller's Indemnified
Persons for, each and every Loss paid, imposed on or incurred by Seller's
Indemnified Persons, directly or indirectly, relating to, resulting from or
arising out of any inaccuracy in any representation or warranty of Buyer under
the Option Agreement, the Transaction Agreements or the Exhibits thereto or any
agreement, certificate or other document delivered or to be delivered by Buyer
pursuant hereto in any respect, or any breach or nonfulfillment of any covenant,
agreement or other obligation of Buyer under the Option Agreement, the
Transaction Agreements, the Exhibits thereto or any agreement, certificate or
document to be delivered by Buyer pursuant hereto. With respect to matters not
involving Proceedings brought or asserted by third parties against Seller's
Indemnified Persons, within thirty (30) days after notification from Seller's
Indemnified Persons supported by reasonable documentation setting forth the
nature of the circumstances entitling Seller's Indemnified Persons to indemnity
hereunder, the Buyer, at no cost or expense to Seller's Indemnified Persons,
shall diligently commence resolution of such matters in a manner reasonably
acceptable to Seller's Indemnified Persons and shall diligently and timely
prosecute such resolution to completion; PROVIDED, HOWEVER, with respect to
those valid claims that may be satisfied by payment of a liquidated sum of money
and which are not disputed reasonably and in good faith by Buyer, Buyer shall
promptly pay the amount so claimed. If litigation or any other Proceeding is
commenced or threatened, the provisions of SECTION 7.3 shall control over the
immediately preceding sentence.
7.3 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. If any Proceeding shall be
brought or asserted against a party entitled to indemnification pursuant to
SECTIONS 7.1 or 7.2, or any successor thereto (the "INDEMNIFIED PERSON") in
respect of which indemnity may be sought under this Article from an indemnifying
person or any successor thereto (the "INDEMNIFYING PERSON"), the Indemnified
Person shall give prompt written notice of such Proceeding to the Indemnifying
Person who shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Person and the payment of all
expenses; provided, that any delay or failure to so notify the Indemnifying
Person shall relieve the Indemnifying Person of its obligations hereunder only
to the extent, if at all, that it is prejudiced by reason of such delay or
failure. In no event shall any Indemnified Person be required to make any
expenditure or bring any cause of action to enforce the Indemnifying Person's
obligations and liability under and pursuant to the indemnification obligations
set forth in this Article. In addition, actual or threatened action by a
Governmental Authority or other Person is not a condition or prerequisite to the
Indemnifying Person's obligations under this Article. The Indemnified Person
shall have the right to employ separate counsel in any of the foregoing
Proceedings and to participate in the defense thereof, but the reasonable fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless the Indemnified Person shall in good faith determine that there exist
actual or potential conflicts of interest which make representation by the same
counsel inappropriate. The Indemnified Person's right to participate in the
defense or response to any Proceeding should not be deemed to limit or otherwise
modify its rights and obligations under this Article. In the event that the
Indemnifying Person, within fifteen (15) days after notice of any such
Proceeding, fails to assume the defense thereof, the Indemnified Person shall
have the right to undertake the defense, compromise or settlement of such
Proceeding for the account of the Indemnifying Person, subject to the right of
the Indemnifying Person to assume the defense of such Proceeding with counsel
reasonably satisfactory to the Indemnified Person at any time prior to the
settlement, compromise or final determination thereof. If the Indemnifying
Person assumes the defense of any Proceeding, the Indemnified Person shall,
reasonably and in good faith, assist and cooperate in the defense thereof.
Anything in this Article to the contrary notwithstanding, the Indemnifying
Person shall not, without the Indemnified Person's prior written consent, settle
or compromise any Proceeding or consent to the entry of any judgment with
respect to any Proceeding for anything other than money damages paid by the
Indemnifying Person. The Indemnifying Person may, without the Indemnified
Person's prior written consent, settle or compromise any such Proceeding or
consent to entry of any judgment with respect to any such Proceeding that
requires solely the payment of money damages by the Indemnifying Person and that
includes as an unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Person from all liability in respect of such
Proceeding.
7.4 LIMITATION OF LIABILITY. Notwithstanding the foregoing provisions of
this ARTICLE 7, Buyer agrees that the maximum monetary amount for which the
Shareholders shall be liable to Buyer's Indemnified Persons in connection with
the provisions of the Transaction Agreements shall be limited to the aggregate
amount of One Million Eight Hundred Thousand Dollars ($1,800,000); PROVIDED,
HOWEVER, that the foregoing limitation on the liability of the Shareholders
shall not apply to, and each of the Shareholders shall be jointly and severally
liable to Buyer's Indemnified Persons, and any of them, for the aggregate amount
of actual damages resulting from:
(a) any representation made by Seller, Kilat or either of the
Shareholders which any of Seller, Kilat or either of the Shareholders knows or
has reason to know is false or misleading at the Closing Date, or
(b) any fraudulent conduct of Seller, Kilat or either of the
Shareholders.
Furthermore, each of Seller, Kilat and the Shareholders acknowledges and agrees
that the foregoing limitation of liability shall not in any manner limit the
liability of Seller and Kilat for any reason whatsoever.
7.5 GUARANTEE.
(a) Kilat and each of the Shareholders gives the indemnity set forth
in SECTION 7.1 and the guarantee set forth in this SECTION 7.5 in consideration
of Buyer's agreement to enter into the Transaction Agreements. Kilat and each
of the Shareholders acknowledges the receipt of valuable consideration from
Buyer for the agreement of Kilat and the Shareholders to incur obligations and
give rights under such indemnity and guarantee.
(b) Kilat and each of the Shareholders unconditionally and
irrevocably guarantees to Buyer the due and punctual performance and observance
by Seller of its obligations under the Transaction Agreements including, without
limitation, any obligation to pay money.
(c) Kilat and each of the Shareholders waive any right it, he or she
have of first requiring Buyer to commence proceedings or enforce any other right
against Seller or any other person before claiming under such indemnity and
guarantee.
(d) This guarantee and the foregoing indemnity are continuing
security obligations and are not discharged by any one payment. Such guarantee
and indemnity do not merge on completion.
(e) The liabilities of Kilat and each of the Shareholders under such
guarantee and indemnity are as a guarantor, indemnifier and principal debtor and
the rights of Buyer under such guarantee and indemnity are not affect by
anything which might otherwise affect them at law or in equity including, but
not limited, one or more of the following:
(i) Buyer granting time or other indulgence to, compounding or
compromising with or releasing Seller, or any other guarantor;
(ii) acquiescence, delay, acts, omissions or mistakes on the part
of Buyer;
(iii) any novation of a right of Buyer;
(iv) any variation of the Transaction Agreements, or any
agreement entered into in performance of thereof; or
(v) the invalidity or unenforceability of an obligation or
liability of a person other than the relevant guarantor (being Kilat or one
of the Shareholders).
(f) Kilat and each of the Shareholders may not, without the consent
of Buyer:
(i) raise a set-off or counterclaim available to it or Seller
against Buyer in reduction of it's liability under such guarantee and
indemnity;
(ii) claim to be entitled by way of contribution, indemnity,
subrogation, marshaling or otherwise to the benefit of any security or
guarantee held by Buyer in connection with the Transaction Agreements; or
(iii) prove in competition with Buyer, if a liquidator,
provisional liquidator, receiver, official manager or trustee in bankruptcy
is appointed in respect of Seller or Seller is otherwise unable to pay its
debts when they fall due,
until all money payable to Buyer in connection with the Transaction
Agreements is paid.
(g) If a claim that a payment or transfer to Buyer in connection with
the Transaction Agreements is void or voidable (including, but not limited to, a
claim under laws relating to liquidation, insolvency or protection of creditors)
is upheld, conceded or compromised, then Buyer is entitled immediately as
against Kilat and each Shareholder to the rights to which it would have been
entitled under such guarantee and indemnity if the payment or transfer had not
occurred.
(h) Kilat and each of the Shareholders agree to pay or reimburse
Buyer on demand for its costs, charges and expenses in making, enforcing and
doing anything in connection with such guarantee and indemnity including,
without limitation, legal costs and expenses on a full indemnity basis. Any
amounts paid to Buyer by Kilat or one of the Shareholders must be applied first
against payment of costs, charges and expenses under this SECTION 7.5(H), then
against other obligations under such guarantee and indemnity.
(i) Kilat and each of the Shareholders acknowledges having been given
a copy of this Agreement and having had full opportunity to consider its
provisions before entering into such guarantee and indemnity.
ARTICLE 8
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any investigation made at any time by or on behalf of the
parties hereto, all of the representations and warranties of the parties shall
survive the Closing of the transactions contemplated by the Transaction
Agreements (even if the other party knew or had reason to know of any
misrepresentation or breach of any warranty at the time of the Closing) and all
of the covenants of the parties shall survive the Closing, including but not
limited to the obligations of the parties set forth in SECTION 6.2 and the
indemnification obligations of the parties hereto. In addition, the covenants
and obligations set forth in SECTION 6.2 shall survive the termination of this
Agreement.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified,
terminated, rescinded or supplemented only by written agreement of the parties
hereto.
8.3 WAIVER; CONSENTS. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
each party affected thereby only by a written instrument signed by the party
granting such waiver. No waiver, or failure to insist upon strict compliance,
by any party of any condition or any breach of any obligation, term, covenant,
representation, warranty or agreement contained in this Agreement, in any one or
more instances, shall be construed to be a waiver of, or estoppel with respect
to, any other condition or any other breach of the same or any other obligation,
term, covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
8.4 FURTHER ASSURANCES; COOPERATION. The parties hereto agree (i) to
furnish upon request to each other such further information, (ii) to execute and
deliver to each other such other documents, and (iii) to do such other acts and
things, all as another party hereto may at any time reasonably request,
including before, at and after the Closing, for the purpose of carrying out the
intent of the Transaction Agreements, the Transaction Agreements and the
documents referred to therein.
8.5 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when (i) delivered
personally, (ii) sent by telecopier (with receipt confirmed), or (iii) received
by the addressee, if sent by Express Mail, Federal Express or other express
delivery service (receipt requested) or (iv) three business days after being
sent by registered or certified mail, return receipt requested, in each case to
the other party at the following addresses and telecopier numbers (or to such
other address or telecopier number for a party as shall be specified by like
notice; provided that notices of a change of address or telecopier number shall
be effective only upon receipt thereof):
if to Seller, to:
Australian Software Innovations (Services) Pty Ltd
51 Rawson Street, Suite 301
Epping NSW 2121
Attn: Eng Lee, Managing Director
Telecopier: 61-2-869-0280
if to Kilat or the Shareholders, to:
Eng Lee
51 Rawson Street, Suite 301
Epping NSW 2121
Telecopier: 61-2-869-0280
if to Buyer, to:
Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
with copies to:
Brian G. Lloyd
Kimball, Parr, Waddoups, Brown & Gee
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Telecopier: (801) 532-7750
8.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns. Buyer may,
in its discretion, assign its rights, interests and obligations hereunder to any
Person without the prior consent of any other party hereto. Neither Seller,
Kilat nor either of the Shareholders may assign any of their respective rights,
interests or obligations hereunder without the prior written consent of Buyer.
This Agreement is not intended to and shall not confer upon any person other
than the parties any rights or remedies hereunder or with respect hereto.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of New South Wales, Australia applicable to contracts
made and to be performed wholly therein.
8.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
8.9 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. Unless otherwise provided, all references in this Agreement to
articles and sections refer to the corresponding articles and sections of this
Agreement. All words used herein shall be construed to be of such gender or
number as the circumstances require. Unless otherwise specifically noted, the
words "herein," "hereof," "hereby," "hereinabove," "hereinbelow," "hereunder,"
and words of similar import, refer to this Agreement as a whole and not to any
particular article, section, clause or other subdivision hereof. Whenever the
term "including" or a similar term is used in this Agreement, it shall be read
as if it were written "including by way of example only and without in any way
limiting the generality of the clause or concept to which reference is made."
This Agreement shall be construed as though all parties had drafted it.
8.10 ENTIRE AGREEMENT. This Agreement and the Transaction Agreements,
including the Exhibits and the documents, instruments and schedules referred to
herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants, or undertakings
other than those expressly set forth or referred to herein and in the
Transaction Agreements. The Transaction Agreements supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
8.11 ATTORNEYS' FEES. In the event a Proceeding is brought by any party
under this Agreement to enforce or construe any of its terms, the party that
prevails by enforcing this Agreement shall be entitled to recover, in addition
to all other amounts and relief, its reasonable costs and attorneys' fees
incurred in connection with such Proceeding.
8.12 SEVERABILITY. If any part of this Agreement is or becomes legally
ineffective, invalid or unenforceable in any jurisdiction, the effectiveness,
validity or enforceability of this Agreement in any other jurisdiction, or the
remainder of it in that jurisdiction, will not be affected.
8.13 JOINT AND SEVERAL. In this Agreement:
(a) any agreement, covenant, obligation, representation or warranty on
the part of two or more persons binds them jointly and severally; and
(b) any agreement, covenant, obligation, representation or warranty
in favor of two or more persons is for the benefit of them jointly and
severally.
ARTICLE 9
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings specified or referred to below when used in this Agreement. Any
reference or citation to a law, statute or regulation shall be deemed to include
any amendments to that law, statute or regulation and judicial and
administrative interpretations of it.
9.1 "ACQUISITION" shall have the meaning set forth in SECTION 1.1.
9.2 "AFFILIATE" means, with respect to any specified Person, each other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such specified Person (whether a general or limited
partner), each officer, director or general partner of such specified Person,
and each other Person who is the beneficial owner of five percent (5%) or more
of any class of the voting securities of such specified Person or five percent
(5%) or more in market value of the outstanding securities of such Person. For
purposes of this definition, "control" means the possession of the power to
direct or cause the direction of all or any part of the management and policies
of a specified Person, whether through the ownership of voting securities, by
contract or otherwise.
9.3 "AGREEMENT" means this Asset Purchase Agreement, including the
Exhibits hereto, which are hereby incorporated herein.
9.4 "ASSETS" means the assets of Seller identified more particularly on
EXHIBIT A.
9.5 "ASSET PURCHASE AGREEMENT" means that certain Asset Purchase Agreement
to be executed by and among Buyer, Seller, Kilat and the Shareholders
contemporaneously with the execution of this Agreement, acceptable to Buyer in
its discretion.
9.6 "BMC" means, collectively, BMC Software, Inc., a Delaware corporation,
BMC Software (Cayman) LDC, a Cayman unlimited liability company or any assignee
thereof under the BMC Agreement.
9.7 "BMC AGREEMENT" means that Asset Purchase and Services Agreement dated
as of June 30, 1997, among BMC Software, Inc., a Delaware corporation, BMC
Software (Cayman) LDC, a Cayman unlimited liability company or its assignee,
Buyer, certain shareholders of Buyer, ASI and Eng H. Lee.
9.8 "BUYER" means Sento Technical Innovations Corporation, a Utah
corporation, or any successor, transferee or assignee thereof.
9.9 "BUYER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.1.
9.10 "CENTERPOST" means Centerpost Innovations Pty. Ltd. ACN 074-678-774, a
limited company organized under the laws of New South Wales, Australia.
9.11 "CLOSING" shall have the meaning set forth in SECTION 1.5(A).
9.12 "CLOSING DATE" means the date and time as of which the Closing
actually takes place.
9.13 "CONTRACTS" means those contracts and agreements identified more
particularly on EXHIBIT B, the rights of which Buyer has elected to acquire from
Seller hereunder.
9.14 "DEED OF RESTRAINT OF TRADE" shall mean that certain Deed of Restraint
of Trade to be executed by and among Buyer and the Shareholders
contemporaneously with the execution of this Agreement, acceptable to Buyer in
its discretion.
9.15 "DISCLOSURE SCHEDULES" means the disclosure schedules prepared and
delivered by Seller, Kilat and the Shareholders to Buyer prior to the Closing.
The Disclosure Schedules shall contain all information necessary to make the
representations and warranties set forth in ARTICLE 2 true and correct.
9.16 "DOLLARS" or "$" means United States dollars.
9.17 "EMPLOYEE BENEFIT PLAN" means any stock option, stock right, profit
sharing, thrift-savings, simplified employee pension plan, deferred compensation
plan, severance pay, golden parachute, cafeteria plan, flexible compensation
plan, life insurance, medical, dental, disability, welfare, superannuation or
vacation plans or any other similar plan or arrangement of any kind or
character.
9.18 "ENCUMBRANCE" means any lien, pledge, hypothecation, charge, mortgage,
deed of trust, security interest, encumbrance, equity, trust, equitable
interest, claim, easement, right-of-way, servitude, right of possession, lease
tenancy, license, encroachment, burden, intrusion, covenant, infringement,
interference, proxy, option, right of first refusal, community property
interest; or legend, defect, impediment, exception, condition, restriction,
reservation, limitation, impairment, imperfection of title; or restriction on or
condition to the voting of any security, restriction on the transfer of any
security or other asset, restriction on the receipt of any income derived from
any security or other asset, and restriction on the possession, use, exercise or
transfer of any other attribute of ownership, whether based on or arising from
common law, constitutional provision, statute or contract.
9.19 "ENTITY" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability company, joint
venture, joint stock association, estate, trust, cooperative, foundation, union,
syndicate, league, consortium, coalition, committee, society, firm, company or
other enterprise, association, organization or entity of any nature, other than
a Governmental Authority.
9.20 "GOVERNMENTAL AUTHORITY" means any Australian national, state or
territorial or local governmental authority or semi-governmental authority, and
foreign governmental authority, the United States of America, any State of the
United States, any local authority and any political subdivision of any of the
foregoing, any multi-national organization or body, any agency, department,
commission, board, bureau, court or other authority thereof, or any
quasi-governmental or private body exercising, or purporting to exercise, any
executive, legislative, judicial, administrative, police, regulatory or taxing
authority or power of any nature.
9.21 "GOVERNMENTAL AUTHORIZATION" means any permit (including without
limitation any Environmental Permit), license, franchise, approval, certificate,
consent, ratification, permission, confirmation, endorsement, waiver,
certification, registration, transfer, qualification or other authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any Legal Requirement.
9.22 "INTELLECTUAL PROPERTY" means any and all trademarks, tradenames,
service marks, patents, copyrights (including any registrations, applications,
licenses or rights relating to any of the foregoing), technology, trade secrets,
inventions, know-how, names, logos, artwork, designs, discoveries, computer
programs, software products and related source code and documentation,
processes, and all other intangible assets, properties and rights.
9.23 "INTELLECTUAL PROPERTY ASSETS" means all Intellectual Property of
Seller, including, without limitation, all Intellectual Property necessary to or
currently utilized in Seller s business and all of the intangible assets of
Seller identified more particularly on EXHIBIT C.
9.24 "KILAT" means Kilat Holding Pty. Limited ACN 003-982-616, a limited
company organized under the laws of Australia.
9.25 "KNOWLEDGE" or "KNOWN" - An individual shall be deemed to have
"knowledge" of or to have "known" a particular fact or other matter if such
individual is actually aware of such fact or other matter. An Entity shall be
deemed to have "knowledge" of or to have "known" a particular fact or other
matter if any individual who is serving or who has at any time served as an
officer, director, member, manager, trustee, or shareholder of such Entity (or
in any similar capacity) has, or at any time had, knowledge of such fact or
other matter.
9.26 "LEGAL REQUIREMENT" means any law (including without limitation any
Environmental Laws), statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
9.27 "LIABILITY" means any debt, obligation, duty or liability of any
nature (including any unknown, undisclosed, unfixed, unliquidated, unsecured,
unmatured, unaccrued, unasserted, contingent, conditional, inchoate, implied,
vicarious, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles.
9.28 "LOSS" means any loss, damage, injury, harm, detriment, decline in
value, lost opportunity, Liability, exposure, claim, demand, cost of any
Proceeding, settlement, judgment, award, punitive damage award, fine, penalty,
Tax, fee, charge, cost or expense (including, without limitation, costs of
attempting to avoid or in opposing the imposition thereof, interest, penalties,
costs of preparation and investigation, and the fees, disbursements and expenses
of attorneys, accountants and other professional advisors).
9.29 "OPTION" shall have the meaning set forth in RECITAL A.
9.30 "OPTION AGREEMENT" shall have the meaning set forth in RECITAL A.
9.31 "ORDER" means any order, judgment, injunction, edict, decree, ruling,
pronouncement, determination, decision, opinion, sentence, subpoena, consent
decree, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
9.32 "ORDINARY COURSE OF BUSINESS" means an action taken by a Person if:
(i) such action is recurring in nature, is consistent with the past
practices of such Person and is taken in the ordinary course of the normal day-
to-day operations of such Person;
(ii) the aggregate monetary amount associated with such action (or any
series of related actions) is less than Twenty-Five Thousand Dollars ($25,000),
unless prior to taking such action, the Person obtains from Buyer written
consent to the taking of such action; and
(iii) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other persons that are in
the same line of business as such Person.
9.33 "PERSON" means any individual, Entity or Governmental Authority.
9.34 "PROCEEDING" means any action, suit, litigation, arbitration, lawsuit,
claim, proceeding (including any civil, criminal, administrative, investigative
or appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination, investigation, challenge,
controversy or dispute commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Authority or any arbitrator.
9.35 "PROPRIETARY INFORMATION" shall have the meaning set forth in SECTION
6.2.
9.36 "PURCHASE PRICE" shall have the meaning set forth in SECTION 1.3.
9.37 "SELLER" means Australian Software Innovations (Services) Pty Ltd ACN
050-053-355, a limited company organized under the laws of Australia.
9.38 "SELLER'S INDEMNIFIED PERSONS" shall have the meaning set forth in
SECTION 7.2.
9.39 "SHAREHOLDERS" refers collectively to Eng Lee and Mary Lee, in their
individual capacities.
9.40 "TAX" means any federal, national, state, territorial, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, environmental, customs duties, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value 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 a Governmental Authority
(including any interest, penalties and additions thereto that may arise in
connection therewith), whether disputed or not.
9.41 "TAX RETURNS" means any return (including any information return),
report, statement, declaration, schedule, notice, notification, form,
certificate or other document or information filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
9.42 "TRANSACTION AGREEMENTS" means this Agreement and such other documents
as are entered into in connection with this Agreement in order to complete the
transactions contemplated hereby, including, without limitation, the Option
Agreement, the Asset Purchase Agreement and the Deed of Restraint of Trade.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By:
__________________________________________________
Its:
__________________________________________________
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN 050-053-355, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
____________________ _________________________
Signature of Director Signature of
Director/Secretary
____________________ _________________________
Print Name Print Name
____________________ _________________________
Office Held Office Held
<PAGE>
"KILAT":
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN 003-982-616, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
____________________ _________________________
Signature of Director Signature of
Director/Secretary
____________________ _________________________
Print Name Print Name
____________________ _________________________
Office Held Office Held
"SHAREHOLDERS":
______________________________________________________
Eng Lee, individually
______________________________________________________
Mary Lee, individually
<PAGE>
EXHIBIT A
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
ASSETS
[To be completed - Non-intellectual property assets only]
<PAGE>
EXHIBIT B
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
CONTRACTS
[To be completed]
<PAGE>
EXHIBIT C
TO
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
INTELLECTUAL PROPERTY ASSETS
[ATTACHED]
<PAGE>
EXECUTION COPY
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of July ___, 1997,
by and among Sento Technical Innovations Corporation, a Utah corporation
("BUYER") and Australian Software Innovations (Services) Pty. Ltd ACN 050-053-
355, a limited company organized under the laws of Australia (the "SELLER").
RECITALS
Pursuant to that certain Intellectual Property Purchase Agreement dated as
of July ___, 1997 (the "IP Purchase Agreement"), among Buyer, Seller, Kilat
Holdings Pty. Limited ACN 003-982-616, and Eng Lee and Mary Lee, Buyer has
agreed to acquire from Seller, and Seller has agreed to sell to Buyer, among
other things, the rights and interests of Seller in and to certain agreements of
Seller, and Buyer has agreed to assume the obligations of Seller thereunder in
accordance with the terms of the IP Purchase Agreement.
NOW, THEREFORE, in consideration of the covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Buyer and Seller agree as follows:
(a) Seller hereby assigns to Buyer, and Buyer hereby accepts from Seller,
all of Seller's rights, title and interest in, to and under each and every
Contract, as such term is defined in the IP Purchase Agreement, free and clear
of all Encumbrances except as expressly assumed by Buyer pursuant to the IP
Purchase Agreement. Buyer hereby assumes and hereafter shall pay, discharge and
perform when due, all obligations of Seller arising under each Contract which
arise on or after the date hereof as provided in the IP Purchase Agreement.
(b) This Agreement is made pursuant to the terms of the IP Purchase
Agreement and does not alter or amend any of the obligations, covenants,
representations or warranties contained in the IP Purchase Agreement. In the
event of any inconsistency between this Agreement and the IP Purchase Agreement,
the IP Purchase Agreement shall control.
(c) This Agreement may be signed in one of more counterparts, and all
counterparts so executed shall constitute one instrument, binding on the parties
hereto, notwithstanding that the parties are not signatory to the same
counterpart. Executed counterparts of this Agreement transmitted by telecopier
shall be valid and binding.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, each of Buyer and Seller have duly executed and
delivered this Assignment Agreement as of the date first written above.
"BUYER":
SENTO TECHNICAL INNOVATIONS CORPORATION, a Utah corporation
By:
_____________________________________________
Name:
Title:
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES)
PTY. LTD. ACN 050-053-355, a limited company organized under the
laws of Australia was hereunto affixed in accordance with its
articles of association in the presence of:
_________________________ _________________________
Signature of Director Signature of
Director/Secretary
_________________________ _________________________
Print Name Print Name
_________________________ _________________________
Office Held Office Held
DEED OF RESTRAINT OF TRADE
THIS DEED OF RESTRAINT OF TRADE (the "DEED") is entered into in Orem, Utah,
effective as of the ____ day of July, 1997, by Australian Software Innovations
(Services) Pty. Ltd. ACN 050-053-355, a limited company organized under the laws
of Australia (the "SELLER"), Kilat Holdings Pty. Limited ACN 003-982-616, a
limited company organized under the laws of Australia ("KILAT"), and Eng Lee and
Mary Lee (collectively, the "SHAREHOLDERS"), individually, in favor of, and for
the benefit of, Sento Technical Innovations Corporation, Utah corporation (the
"BUYER").
RECITALS
A. Pursuant to an Option Agreement (the "OPTION AGREEMENT") dated as of
the 10th day of September, 1996 between Buyer, Seller, Kilat and the
Shareholders, Seller granted to Buyer and its nominee Centerpost Innovations
Pty. Ltd. ACN 074-678-774 ("CENTERPOST") an option (the "OPTION") to purchase
substantially all of the assets of Seller (the "ASSETS"), and Kilat and the
Shareholders agreed to facilitate Buyer s purchase of the Assets.
B. Eng Lee is the Managing Director of Seller, Kilat owns all of the
issued and outstanding shares of the capital stock of Seller and the
Shareholders own all of the issued and outstanding shares of the capital stock
of Kilat.
C. Buyer and Centerpost have elected to exercise the Option with respect
to the Assets.
D. Pursuant to the terms of the Option Agreement, Buyer and Centerpost
have entered into an Asset Purchase Agreement (the "ASSET PURCHASE AGREEMENT")
and Buyer has entered into an Intellectual Property Purchase Agreement (the
"INTELLECTUAL PROPERTY PURCHASE AGREEMENT"), both dated as of the date hereof,
with Seller, Kilat and the Shareholders.
E. Pursuant to the terms of the Option Agreement, Seller, Kilat and the
Shareholders have agreed to enter into, and undertake the covenants and
obligations set forth in, this Deed.
WITNESSETH
NOW THIS DEED WITNESSES, in consideration of the respective
representations, warranties and covenants contained herein and for other good
and valuable consideration, the receipt, adequacy and legal sufficiency of which
are hereby acknowledged, Buyer, Seller, Kilat and the Shareholders agree as
follows:
1. PAYMENT. In consideration of the payment of the aggregate amount of
Seventy Eight Thousand United States Dollars ($78,000), receipt of which is
hereby acknowledged by each of Seller, Kilat and the Shareholders, Seller, Kilat
and the Shareholders hereby agree to undertake and be bound by each of the
covenants and obligations set forth in this Deed.
2. COVENANTS. Each of Seller, Kilat and the Shareholders acknowledges
the receipt of valuable consideration from Buyer in the form of the payment
described in SECTION 1 above, as well as the covenants and obligations of Buyer
set forth in the Asset Purchase Agreement and the Intellectual Property Purchase
Agreement, as well as all other documents and agreements contemplated thereby
(collectively, the "ACQUISITION DOCUMENTS"). In consideration of that valuable
consideration and to protect the goodwill associated with the Assets, each of
Seller, Kilat and the Shareholders covenants and agrees, for themselves and
their respective Affiliates (as defined below), to be bound by the following
restrictions:
(a) Commencing on the date of this Deed and continuing:
(i) for a period of twelve (12) months; and
(ii) for a period of twelve (12) months from the first
anniversary of the date of this Deed; and
(iii) for a period of twelve (12) months from the second
anniversary of the date of this Deed:
none of them will be engaged or involved in any capacity in any business or
activity in the Commonwealth of Australia or elsewhere which is the same as
or similar to the business of Buyer, as successor to Seller in relation to
the Assets; PROVIDED, HOWEVER, that the foregoing covenant shall not limit
the ability of Seller or Eng Lee ("LEE"), one of the Shareholders, to
provide the services expressly required under the terms of an Asset
Purchase and Services Agreement dated June 30, 1997 among BMC Software,
Inc., BMC Software (Cayman) LDC, Buyer, ASI and Lee.
(b) If any of the prohibitions or restrictions contained in this Deed
is judged by any court to go beyond what is reasonable in the
circumstances, but would be reasonable and necessary if any activity were
deleted or a period or area were reduced, then the prohibitions or
restrictions will apply with that activity deleted or period or area
reduced by the minimum amount determined necessary by the relevant court.
(c) Each of the prohibitions and restrictions in this Deed has effect
as a separate and several prohibition or restriction and is to be enforced
accordingly.
(d) Notwithstanding any of the other provisions of this Deed, Seller,
Kilat, the Shareholders and their respective Affiliates may hold in the
aggregate up to, but not more than, ten percent (10%) of the capital stock
of a public company, the shares of which are quoted on the Australian Stock
Exchange Limited, even though that company carried on any of the activities
referred to in this clause.
(e) Seller, Kilat and the Shareholders each acknowledge that all the
prohibitions and restrictions contained in this Deed are reasonable in
these circumstances and warrant that:
(i) they have received independent legal advice with respect to
this Deed;
(ii) they consider such prohibitions and restrictions to go no
further than reasonably necessary to protect the goodwill associated
with the Assets; and
(iii) damages would not be an adequate remedy to protect the
goodwill associated with the Assets.
(f) For purposes of this Deed, the term Affiliate shall mean, with
respect to any specified person or entity, each other person or entity
which, directly or indirectly, controls, is controlled by or is under
common control with such specified person or entity (whether a general or
limited partner), each officer, director or general partner of such
specified entity, and each other person or entity who is the beneficial
owner of five percent (5%) or more of any class of the voting securities of
such specified entity or five percent (5%) or more in market value of the
outstanding securities of such entity. For purposes of this definition,
"control" means the possession of the power to direct or cause the
direction of all or any part of the management and policies of a specified
person or entity, whether through the ownership of voting securities, by
contract or otherwise.
(g) For purposes of this Deed, the term "engaged or involved in"
includes direct or indirect involvement as a principal, agent, partner,
employee, shareholder, member, unitholder, director, trustee, beneficiary,
manager, consultant, adviser or financier.
3. EXECUTION. This Deed is executed contemporaneously with the
Acquisition Documents, dated as of the date hereof, by and among Buyer,
Centerpost, Seller, Kilat and the Shareholders and is subject to the terms and
conditions set forth therein. In the event the Asset Purchase Agreement and the
Intellectual Property Purchase Agreement are not executed by each of Buyer,
Centerpost (with respect to the Asset Purchase Agreement only), Seller, Kilat
and the Shareholders, this Deed shall be of no force or effect.
[REMAINDER OF PAGE INTENTIONALLY BLANK -- SIGNATURE PAGE FOLLOWS]
<PAGE>
EXECUTED AS A DEED, as of the date first above written.
"SELLER":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN 050-053-355, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
_________________________ _________________________
Signature of Director Signature of Director/Secretary
_________________________ _________________________
Print Name Print Name
_________________________ _________________________
Office Held Office Held
"KILAT":
THE COMMON SEAL of KILAT HOLDINGS PTY.
LIMITED ACN 003-982-616, a limited
company organized under the laws of Australia
was hereunto affixed in accordance with
its articles of association in the presence of:
_________________________ ______________________________
Signature of Director Signature of Director/Secretary
_________________________ ______________________________
Print Name Print Name
_________________________ ______________________________
Office Held Office Held
"SHAREHOLDERS":
_________________________ ______________________________
Eng Lee, individually Mary Lee, individually
SIGNED, SEALED AND DELIVERED BY THE SAID ENG LEE AND MARY LEE IN THE PRESENCE
OF:
EXECUTION COPY
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is entered into as of July ___,
1997, by and between Centerpost Innovations Pty. Ltd. ACN 074-678-774, a limited
company organized under the laws of New South Wales, Australia ("Centerpost"),
and Australian Software Innovations (Services) Pty. Ltd. ACN 050-053-355, a
corporation organized under the laws of New South Wales, Australia ("ASI").
In consideration of the promises and covenants set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Centerpost and ASI agree as follows:
1. SERVICES. ASI hereby agrees that, during the Term (as defined below),
it shall make available to Centerpost the services of Eng H. Lee ("Lee"), the
current managing director of ASI. Centerpost hereby engages ASI for the Term to
make such services available and engages Lee for the Term, as an independent
contractor to Centerpost, to perform the duties pertaining to the office of
managing director of Centerpost.
2. TERM. The term of this Agreement (the "Term") shall commence on the
date of this Agreement and continue through and expire on the first anniversary
thereof, unless earlier terminated as permitted herein. The Term shall be
automatically renewed for successive additional periods of one year, unless the
Term is terminated pursuant to Section 4 below or unless either Centerpost or
ASI provides written notice to the other party hereto of its desire not to renew
at least ninety days in advance of the end of the then-current Term.
3. CONSIDERATION. As consideration for the services to be provided by
ASI and Lee, Centerpost shall pay to ASI the annual sum of Two Hundred Thousand
Australian Dollars per year, payable in monthly installments. ASI and Lee shall
be responsible for the payment of any taxes or other assessments on such
consideration.
4. TERMINATION. Either party may terminate this Agreement for cause
provided that the complaining party shall provide at least fifteen (15) days'
written notice to the breaching party specifying the nature and, so far as then
known, the extent of the breach and the action required to correct the breach.
The breaching party shall be afforded fifteen (15) days (or such additional time
as the complaining party may determine, as confirmed in writing, to be
reasonable) to cure the breach or, as determined by the complaining party, to
achieve substantial cure if a complete cure cannot be reasonably effectuated
within the designated period. If the breach remains uncured at the expiration
of the designated period, this Agreement may be terminated by written notice
given by the complaining party at any time while the breach remains uncured
thereafter, and such termination shall be effective as of the date of such
notice or such later date as may be provided therein.
5. NOTICES. Except when actual receipt is expressly required by the
terms hereof, all notices and demands required or permitted under this Agreement
shall be in writing and shall be deemed to have been given or delivered:
(i) when delivered in person to the intended recipient, (ii) upon receipt of a
confirmation of a facsimile transmission to the intended recipient, or
(iii) after deposit in the United States or Australian mail in a sealed envelope
or container, either registered or certified mail, return receipt requested,
postage prepaid, addressed by name and address to the intended recipient as
follows:
To Centerpost: Centerpost Innovations Pty. Ltd.
c/o Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
To ASI: Australian Software Innovations (Services) Pty Ltd
51 Rawson Street, Suite 301
Epping NSW 2121
Attn: Eng Lee, Managing Director
Telecopier: 61-2-869-0280
6. MISCELLANEOUS.
(a) CONSTRUCTION PRINCIPLES. The headings and underlined Section
titles set forth in the text of this Agreement are for guidance only and shall
have no significance in the interpretation of this Agreement. When this
Agreement refers to a Section by number or letter without further
identification, the reference shall be construed as pertaining to the
corresponding Section of this Agreement unless the context clearly requires
reference to another instrument, agreement or document.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the specific subject matter
hereof, and this Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter. Notwithstanding the
above, the parties acknowledge the existence as separate agreements and
obligations of the Consulting Agreement and the Consulting Agreement (II), both
dated as of the date hereof between Sento Technical Innovations Corporation and
Lee.
(c) WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the terms of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the parties.
(d) WAIVER OF BREACH. The waiver by Centerpost of any breach of any
provision of this Agreement by ASI shall not operate or be construed as a waiver
of any subsequent breach by ASI.
(e) SEVERABILITY. In the event that any condition, covenant or other
provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the remainder of
this Agreement and shall in no way affect any other covenant or condition herein
contained. If such condition, covenant or other provision shall be deemed
invalid due to its scope or breadth, such provision shall be deemed valid to the
extent of the scope or breadth permitted by law.
(f) NON-EXCLUSIVITY OF REMEDIES. Except as specifically provided
herein, the rights and remedies of the parties hereto shall not be mutually
exclusive, and the exercise of one or more of the provisions of this Agreement
shall not preclude the exercise of any other rights or remedies provided for by
this Agreement or by law, equity, statute or otherwise. Each of the parties
confirms that damages at law may be an inadequate remedy for a breach or
threatened breach of any of the provisions hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of New South Wales, Australia, without reference to its choice of
law provisions.
[REMAINDER OF PAGE INTENTIONALLY BLANK -- SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, Centerpost and ASI have duly executed and delivered
this Agreement as of the date first written above.
"CENTERPOST":
THE COMMON SEAL of CENTERPOST INNOVATIONS PTY. LTD.
ACN 074-678-774, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
_________________________ ______________________________
Signature of Director Signature of Director/Secretary
_________________________ ______________________________
Print Name Print Name
_________________________ ______________________________
Office Held Office Held
"ASI":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN 050-053-355, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
_________________________ ______________________________
Signature of Director Signature of Director/Secretary
_________________________ ______________________________
Print Name Print Name
_________________________ ______________________________
Office Held Office Held
EXECUTION COPY
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is entered into as of July ___,
1997, by and between Sento Technical Innovations Corporation, a Utah corporation
("Sento"), and Eng H. Lee, an individual ("Lee").
RECITALS
WHEREAS, pursuant to that certain Intellectual Property Purchase Agreement
dated as of July ___, 1997, among Sento, Australian Software Innovations
(Services) Pty. Ltd. ("ASI"), Kilat Holdings Pty. Limited ("Kilat"), Lee and
Mary Lee (together with Lee, the "Shareholders") and that certain Asset Purchase
Agreement dated as of July ___, 1997, among Sento, Centerpost Innovations Pty.
Ltd. ("Centerpost"), ASI, Kilat and the Shareholders, Sento will acquire certain
assets of ASI (the "ASI Assets"); and
WHEREAS, Lee is the managing director of ASI and the Shareholders are the
beneficial owners of 100% of the issued and outstanding capital stock of ASI;
and
WHEREAS, pursuant to that certain Asset Purchase and Services Agreement
dated as of June 30, 1997, among Sento, BMC Software, Inc. and BMC Software
(Cayman) LDC or its assignee (collectively, "BMC"), certain shareholders of
Sento, ASI and Lee, Sento will sell the ASI Assets to BMC; and
WHEREAS, in order to facilitate the transition of the ASI Assets from Sento
to BMC, Sento desires to engage Lee on a consulting basis on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sento and Lee hereby agree as
follows:
1. SERVICES. Sento hereby engages Lee to provide consulting services to
Sento during the Term (as defined below), as an independent contractor, in order
to facilitate the transfer of the ASI Assets from Sento to BMC, and Lee hereby
agrees to provide such services to Sento.
2. TERM. The term of this Agreement (the "Term") shall commence on the
date hereof (the "Commencement Date") and continue through and expire on the
five-month anniversary thereof, unless earlier terminated as permitted herein.
3. CONSIDERATION.
(a) On the Commencement Date, Sento will advance to Lee the sum of
Five Hundred Thousand U.S. Dollars (the "Consulting Advance"). Lee shall issue
to Sento on the Commencement Date a promissory note (the "Note") for repayment
of the Consulting Advance in the form of Exhibit A attached hereto and
incorporated herein by this reference.
(b) Commencing with the first monthly anniversary of the date of this
Agreement and continuing for each of the next four monthly anniversaries
thereafter during the Term, Sento shall make payments to Lee as consulting fees
for services hereunder in the amount of One Hundred Thousand U.S. Dollars
($100,000) each.
4. TERMINATION. Either party may terminate this Agreement for cause
provided that the complaining party shall provide at least fifteen (15) days'
written notice to the breaching party specifying the nature and, so far as then
known, the extent of the breach and the action required to correct the breach.
The breaching party shall be afforded fifteen (15) days (or such additional time
as the complaining party may determine, as confirmed in writing, to be
reasonable) to cure the breach or, as determined by the complaining party, to
achieve substantial cure if a complete cure cannot be reasonably effectuated
within the designated period. If the breach remains uncured at the expiration
of the designated period, this Agreement may be terminated by written notice
given by the complaining party at any time while the breach remains uncured
thereafter, and such termination shall be effective as of the date of such
notice or such later date as may be provided therein. If Sento terminates this
Agreement pursuant to this Section 4, then all sums due under the Note at the
time of such termination shall then be due and payable to Sento.
5. NOTICES. Except when actual receipt is expressly required by the
terms hereof, all notices and demands required or permitted under this Agreement
shall be in writing and shall be deemed to have been given or delivered:
(i) when delivered in person to the intended recipient, (ii) upon receipt of a
confirmation of a facsimile transmission to the intended recipient, or
(iii) after deposit in the United States or Australian mail in a sealed envelope
or container, either registered or certified mail, return receipt requested,
postage prepaid, addressed by name and address to the intended recipient as
follows:
To Sento: Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
To Lee: Eng Lee
51 Rawson Street, Suite 301
Epping NSW 2121
Telecopier: 61-2-869-0280
6. MISCELLANEOUS.
(a) CONSTRUCTION PRINCIPLES. The headings and underlined Section
titles set forth in the text of this Agreement are for guidance only and shall
have no significance in the interpretation of this Agreement. When this
Agreement refers to a Section by number or letter without further
identification, the reference shall be construed as pertaining to the
corresponding Section of this Agreement unless the context clearly requires
reference to another instrument, agreement or document.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the specific subject matter hereof
and this Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter. Notwithstanding the above, the
parties acknowledge the existence as separate agreements and obligations of the
Consulting Agreement (II) dated as of the date hereof between Sento and Lee and
the Services Agreement dated as of the date hereof between Centerpost and ASI.
(c) WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the terms of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the parties.
(d) WAIVER OF BREACH. The waiver by Sento of any breach of any
provision of this Agreement by Lee shall not operate or be construed as a waiver
of any subsequent breach by Lee.
(e) NON-EXCLUSIVITY OF REMEDIES. Except as specifically provided
herein, the rights and remedies of the parties hereto shall not be mutually
exclusive, and the exercise of one or more of the provisions of this Agreement
shall not preclude the exercise of any other rights or remedies provided for by
this Agreement or by law, equity, statute or otherwise. Each of the parties
confirms that damages at law may be an inadequate remedy for a breach or
threatened breach of any of the provisions hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Utah, without reference to its choice of law
provisions.
[REMAINDER OF PAGE INTENTIONALLY BLANK -- SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, Sento and Lee have duly executed and delivered this
Agreement as of the date first written above.
"SENTO":
Sento Technical Innovations Corporation
By: ________________________________________________
Its: ________________________________________________
"LEE": _______________________________________________
Eng H. Lee, individually
<PAGE>
Exhibit A
to
Consulting Agreement
FORM OF NOTE
[Attached]
<PAGE>
EXECUTION COPY
PROMISSORY NOTE
$500,000.00 July ___, 1997
Salt Lake City, Utah
FOR VALUE RECEIVED, Eng H. Lee, an individual (the "BORROWER"), promises
and agrees to pay to the order of Sento Technical Innovations Corporation, a
Utah corporation, or order (the "LENDER"), at 311 North State Street, Orem, Utah
84057, or at such other place as the holder hereof may designate in writing, in
lawful money of the United States of America, the principal sum of Five Hundred
Thousand and no/100 Unites States Dollars, according to the terms and conditions
set forth in this Note.
1. Borrower shall make payments on the outstanding principal balance of
this Note in the monthly amounts of $100,000 each, commencing on August ___,
1997, and continuing until December ___, 1997 (the "Maturity Date").
Notwithstanding the foregoing, Lender agrees that during the term of a
Consulting Agreement entered into by and between Lender and Borrower as of July
___, 1997 (the "CONSULTING AGREEMENT"), the obligation of Borrower to make
payments required under this Note shall be offset against the obligation of
Lender to pay to Borrower the monthly consulting payments required pursuant to
the terms of the Consulting Agreement. All indebtness evidenced by this Note
which remains outstanding on the Maturity Date shall be due and payable in full
thereon.
2. Borrower may prepay the principal amount of this Note, in whole or in
part, at any time without penalty or premium for any such early payment.
3. If any payment required by this Note is not made when due, or if any
other event occurs or circumstance exists which under any instrument evidencing
or securing the obligations evidenced by this Note entitles the holder hereof to
accelerate the maturity of such obligations, the entire unpaid principal balance
and accrued but unpaid interest hereunder shall, at the option of the holder
hereof, at once become due and payable without notice (time being the essence
hereof). Failure to exercise such option shall not constitute a waiver of the
right to exercise the same in the event of any subsequent default, event or
circumstance giving rise to such right of acceleration.
4. Prior to the Maturity Date, no interest shall be due or payable by
Borrower on amounts outstanding hereunder. All past due principal (whether by
acceleration or in due course) and, if permitted by applicable law, past due
interest, shall, both before and after judgment, bear interest at the rate of
twenty percent (20%) per annum.
5. Borrower agrees to pay the holder hereof a "late charge" equal to five
percent (5%) of any payment due pursuant to this Note which is more than fifteen
(15) days in arrears.
6. In the event that any payment under this Note is not made at the time
and in the manner required (whether before or after maturity), Borrower agrees
to pay, in addition to any late charge required by Section 5 above, any and all
costs and expenses (regardless of the particular nature thereof and whether
incurred before or after the initiation of suit or before or after judgment)
which may be incurred by the holder hereof in connection with the enforcement of
any of its rights under this Note, including, but not limited to, attorneys'
fees and all costs and expenses of collection.
7. Borrower and all sureties, guarantors and endorsers hereof waive
presentment for payment, demand and notice of dishonor and nonpayment of this
Note, and consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the holder hereof with respect to the
payment or other provisions of this Note, and to the release of any security, or
any part thereof, with or without substitution.
8. Notwithstanding any other provision contained in this Note or in any
instrument given to evidence or secure the obligations evidenced hereby: (i)
the rates of interest and charges provided for herein and therein shall in no
event exceed the rates and charges which result in interest being charged at a
rate equalling the maximum allowed by law; and (ii) if, for any reason
whatsoever, the holder hereof ever receives as interest in connection with the
transaction of which this Note is a part an amount which would result in
interest being charged at a rate exceeding the maximum allowed by law, such
amount or portion thereof as would otherwise be excessive interest shall
automatically be applied toward reduction of the unpaid principal balance then
outstanding hereunder and not toward payment of interest.
9. This Note is delivered in the State of Utah and shall be governed by
and construed in accordance with the laws of said State, without giving effect
to any conflict of laws provisions. Each of Borrower and the Lender expressly
submits itself to the exclusive, personal jurisdiction of the federal and state
courts situated in Salt Lake City, Utah. This Note shall bind the successors
and assigns of Borrower and shall inure to the successors and assigns of the
Lender.
IN WITNESS WHEREOF, Borrower has executed this Note as of the day and
year first above written.
"Borrower":
__________________________________________________
Eng H. Lee, individually
EXECUTION COPY
CONSULTING AGREEMENT (II)
THIS CONSULTING AGREEMENT (II) (the "Agreement") is entered into as of July
___, 1997, by and between Sento Technical Innovations Corporation, a Utah
corporation ("Sento"), and Australian Software Innovations (Services) Pty. Ltd.
ACN 050-053-355, a limited company organized under the laws of Australia
("ASI").
RECITALS
WHEREAS, pursuant to that certain Intellectual Property Purchase Agreement
dated as of July ___, 1997 (the "IP Purchase Agreement"), among Sento, ASI,
Kilat Holdings Pty. Limited ("Kilat"), Eng Lee and Mary Lee (the "Shareholders")
and that certain Asset Purchase Agreement dated as of July ___, 1997 (the "Asset
Purchase Agreement"), among Sento, Centerpost Innovations Pty. Ltd.
("Centerpost"), ASI, Kilat and the Shareholders, Sento will acquire certain
assets of ASI (the "ASI Assets"); and
WHEREAS, pursuant to that certain Asset Purchase and Services Agreement
dated as of June 30, 1997 (the "BMC Agreement"), among Sento, BMC Software, Inc.
and BMC Software (Cayman) LDC or its assignee (collectively, "BMC"), certain
shareholders of Sento, ASI and Eng Lee ("Lee"), Sento will sell the ASI Assets
to BMC; and
WHEREAS, in connection with the transactions contemplated by the IP
Purchase Agreement, the Asset Purchase Agreement and the BMC Agreement, Sento
desires to engage ASI on a consulting basis on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the promises and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sento and ASI hereby agree as
follows:
1. SERVICES. Sento hereby engages ASI as an independent contractor for
the Term (as defined below) to provide certain consulting services to be
determined from time to time in the discretion of the Board of Directors of
Sento, including without limitation facilitation of the transfer of the ASI
Assets from ASI to Sento and from Sento to BMC pursuant to the IP Purchase
Agreement, the Asset Purchase Agreement and the BMC Agreement. ASI hereby
agrees to provide such services to Sento.
2. TERM. The term of this Agreement (the "Term") shall commence on the
date hereof (the "Commencement Date") and continue through and expire on the
third anniversary of the Commencement Date, unless earlier terminated as
permitted herein.
3. CONSIDERATION. Subject to the termination of this Agreement as
permitted herein, commencing on the ___ day of October, 1997 and continuing on
the ____ day of each January, April, July and October thereafter through and
including the ____ day of April, 2000, Sento shall make payments to ASI as
consulting fees for services hereunder in the amount of Twelve Thousand Five
Hundred U.S. Dollars ($12,500) each.
4. TERMINATION.
(a) Sento may terminate this Agreement immediately upon notice to ASI
in its discretion if at any time during the Term ASI shall cease to be formally
engaged by Sento or one of its subsidiaries as an officer, director, employee or
independent contractor.
(b) Either party may terminate this Agreement for cause provided that
the complaining party shall provide at least fifteen (15) days' written notice
to the breaching party specifying the nature and, so far as then known, the
extent of the breach and the action required to correct the breach. The
breaching party shall be afforded fifteen (15) days (or such additional time as
the complaining party may determine, as confirmed in writing, to be reasonable)
to cure the breach or, as determined by the complaining party, to achieve
substantial cure if a complete cure cannot be reasonably effectuated within the
designated period. If the breach remains uncured at the expiration of the
designated period, this Agreement may be terminated by written notice given by
the complaining party at any time while the breach remains uncured thereafter,
and such termination shall be effective as of the date of such notice or such
later date as may be provided therein.
5. NOTICES. Except when actual receipt is expressly required by the
terms hereof, all notices and demands required or permitted under this Agreement
shall be in writing and shall be deemed to have been given or delivered:
(i) when delivered in person to the intended recipient, (ii) upon receipt of a
confirmation of a facsimile transmission to the intended recipient, or
(iii) after deposit in the United States or Australian mail in a sealed envelope
or container, either registered or certified mail, return receipt requested,
postage prepaid, addressed by name and address to the intended recipient as
follows:
To Sento: Sento Technical Innovations Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
Telecopier: (801) 224-2426
To ASI: Australian Software Innovations
(Services) Pty. Ltd.
51 Rawson Street, Suite 301
Epping NSW 2121
Telecopier: 61-2-869-0280
6. MISCELLANEOUS.
(a) CONSTRUCTION PRINCIPLES. The headings and underlined Section
titles set forth in the text of this Agreement are for guidance only and shall
have no significance in the interpretation of this Agreement. When this
Agreement refers to a Section by number or letter without further
identification, the reference shall be construed as pertaining to the
corresponding Section of this Agreement unless the context clearly requires
reference to another instrument, agreement or document.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the specific subject matter
hereof, and this Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter. Notwithstanding the
above, the parties acknowledge the existence as separate agreements and
obligations of the Consulting Agreement dated as of the date hereof between
Sento and Lee and the Services Agreement dated as of the date hereof between
Centerpost and ASI.
(c) WAIVER, MODIFICATION OR CANCELLATION. Any waiver, alteration or
modification of any of the terms of this Agreement or cancellation or
replacement of this Agreement shall not be valid unless in writing and signed by
the parties.
(d) WAIVER OF BREACH. The waiver by Sento of any breach of any
provision of this Agreement by ASI shall not operate or be construed as a waiver
of any subsequent breach by ASI.
(e) NON-EXCLUSIVITY OF REMEDIES. Except as specifically provided
herein, the rights and remedies of the parties hereto shall not be mutually
exclusive, and the exercise of one or more of the provisions of this Agreement
shall not preclude the exercise of any other rights or remedies provided for by
this Agreement or by law, equity, statute or otherwise. Each of the parties
confirms that damages at law may be an inadequate remedy for a breach or
threatened breach of any of the provisions hereof.
(f) GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Utah, without reference to its choice of law
provisions.
[REMAINDER OF PAGE INTENTIONALLY BLANK -- SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, Sento and ASI have duly executed and delivered this
Agreement as of the date first written above.
"SENTO":
Sento Technical Innovations Corporation
By: ______________________________________________________
Its: ______________________________________________________
"ASI":
THE COMMON SEAL of AUSTRALIAN SOFTWARE
INNOVATIONS (SERVICES) PTY. LTD
ACN 050-053-355, a limited company organized
under the laws of Australia was hereunto
affixed in accordance with its articles of
association in the presence of:
_________________________ ______________________________
Signature of Director Signature of
Director/Secretary
_________________________ ______________________________
Print Name Print Name
_________________________ ______________________________
Office Held Office Held
ASSET PURCHASE AND SERVICES AGREEMENT
ASSET PURCHASE AND SERVICES AGREEMENT ( Agreement ), dated June 30, 1997, among
BMC Software, Inc., a Delaware corporation ( BMC ), BMC Software (Cayman) LDC, a
Cayman unlimited liability company ( BMC Cayman ) or its assignee (collectively,
the Buyers ), Sento Technical Innovations, Corporation, a Utah corporation (the
Seller ), the principal stockholders of Seller as set forth on the signature
page hereto (the Seller Stockholders ), Australian Software Innovations
(Services) Pty. Ltd. ACN 050-053-355, a limited company organized under the laws
of Australia (the Optionee ) and Eng Lee ( Lee ).
WHEREAS, Buyers have agreed to purchase, and Seller has agreed to sell to
Buyers, the Products (as such term is defined below) and related Assets (as such
term is defined below) and Seller and Buyers desire to enter into this Agreement
to set forth the terms and conditions upon which Buyers agree to purchase from
Seller, and Seller agrees to sell to Buyers, such Products and related Assets.
WHEREAS, Seller has an option (the Option ) to purchase the Products and
certain of the Assets pursuant to the terms of an Option Agreement by and among
Seller and Optionee (the Option Agreement ) and will exercise such option prior
to the Closing Date (as such term is defined below).
In consideration of the mutual agreements contained herein, the parties
agree as follows:
ARTICLE I. DEFINITIONS.
The following terms, when set forth with their initial letter capitalized,
shall have the corresponding meanings set forth below:
Affiliate shall have the meaning set forth in Section 6.03.
Assets shall mean the Assignable Distribution Agreements, the Assignable
Licenses, the Products and all books and records, contracts, customer lists and
trial backlogs relating thereto.
Assignable Distribution Agreements shall mean those distribution
agreements that may be assigned to Buyers without third party consent, or for
which such consent has been obtained, and that are not terminated prior to
Closing (as hereinafter defined) pursuant to Section 6.04 hereof.
Assignment shall mean an assignment in the form of Exhibit A.
Assignable Licenses shall mean those Licenses that may be assigned to
Buyers without the licensee s consent or for which such consent has been
obtained.
Assumed Obligations shall have the meaning set forth in Section 2.01(c).
Assumption shall mean an assumption agreement in the form of Exhibit B.
Bill of Sale shall mean a bill of sale in the form of Exhibit C covering
those Assets not described in the Assignment.
Buyers Accounts Receivable shall mean the accounts receivable of Buyers
for the following third-party fees:
a. except as provided in Section 8.04, license fees for Licenses invoiced
after the Closing Date; and
b. maintenance, enhancement or support fees collected on or after the
Closing Date under the Licenses relating to the Products.
Closing and Closing Date shall have the corresponding definitions set
forth in Section 2.03.
Closing Payment shall have the meaning set forth in Section 2.02.
Confidential Information shall mean any data or information that is
competitively sensitive and not generally known by the public.
Copy or Copies shall include, without limitation, any copy,
translation, prior draft, revision, or other tangible embodiment from which the
work in question or any work derived therefrom, or any portion of any of them,
may be perceived, reproduced, or otherwise communicated, either directly or with
the aid of a machine or device, or any portion thereof in possession of Seller.
Distribution Agreements shall have the meaning set forth in Section
6.04(c).
Damages shall have the meaning set forth in Section 12.02.
Default shall mean, as to any party to this Agreement, a default by such
party in the performance of any of its material obligations hereunder and the
continuation of such default for a period of 15 days after notice if Seller (in
the case of a default by Buyers) or Buyers (in the case of a default by Seller,
Optionee, Lee or the Seller Stockholders) shall thereafter notify such
defaulting party in writing that a Default has occurred.
Documentation shall have the general meaning customary in the software
industry. It specifically includes, without limitation, all information and
materials relating to the Products. The term particularly includes, by way of
example and not of limitation:
(a) any and all existing listings of the Source Code and/or Object
Code of any program, routine, and subroutine comprising any portion of the
Products, together with all Copies of any of them;
(b) any and all existing descriptions of the designs, formulae,
methods, and algorithms embodied in any portion of the Products, together
with all Copies of any of them; and
(c) all other existing design notes, flow charts, logic diagrams,
coding charts, manuals, specifications, instructions, annotations,
technical and engineering data, laboratory studies, and benchmark test
results used or produced in the development of the Products, together with
all Copies of any of them.
Escrow Account shall mean a joint signature bank account, at Texas
Commerce Bank, National Association, which shall be covered by the terms and
conditions of this Agreement.
Escrow Amount shall mean the $1,400,000 to be paid into the Escrow
Account at Closing, as provided in Section 2.02.
Excluded Obligations shall have the meaning set forth in Section 2.01(c).
Intellectual Property Rights means those intangible legal rights or
interests representing or embodied in (a) any idea, design, concept, technique,
invention, discovery, or improvement, and proprietary information, regardless of
patentability, including but not limited to patent applications, trade secrets,
and know-how; (b) any work of authorship, regardless of copyrightability, but
including copyrights, mask works and any moral rights recognized by law; and (c)
any other similar rights, in each case on a worldwide basis.
Licenses shall mean all licenses of the Products between Seller and
third-party end-user customers.
Object Code shall have the general meaning customary in the software
industry. By way of illustration of this general meaning, the object code of a
computer program comprises a machine-readable sequence of instructions stored in
electronic form, e.g., on a floppy disk or magnetic tape, as a sequence of ones
and zeros.
Pending Transactions shall have the meaning set forth in Section 8.04.
Products shall mean the computer software products owned by Seller or to
be acquired by Seller from Optionee which are known as the SYSMON/Open
Aviator, LOGMON/Control Tower and FLIGHTLOG/ASI-Accounting products and
further described in Schedule 6.01(a) hereto, including, without limitation:
(a) any and all related patents and patent applications, patent rights,
inventions, discoveries and improvements, patent licenses, processes and
formulae, trade secrets, proprietary technical information, trademarks, trade
names, labels and other trade rights, copyrights, design documents and
conceptions, and any and all rights to any of the foregoing, (b) all original
works of authorship comprising the Source Code and Object Code of the Products,
(c) all original works of authorship comprising Documentation concerning the
installation, customization, modification, use and maintenance of such Products
and (d) all Copies in the possession of Seller or Optionee of the works of
authorship and other materials described in (a) through (c) above.
Purchase Price shall mean the aggregate purchase consideration specified
in Section 2.02.
Retained Distribution Agreements shall mean those Distribution Agreements
that are not assigned by Seller to Buyers at the Closing and which Buyers do not
assume pursuant to this Agreement until such Distribution Agreements are
assigned to Buyers or terminated.
Retained Licenses shall mean all Licenses that are not assigned by Seller
to Buyers at the Closing and which Buyers do not assume pursuant to this
Agreement until such Licenses are assigned to Buyers or terminated.
Source Code shall have the general meaning customary in the software
industry. By way of illustration of this general meaning, the source code of a
computer program comprises a series of statements in an English-like
high-level computer language or in a relatively low-level language such as
the assembly language for a particular computer language in question.
Sub-Licenses shall mean all sub-licenses of the Products heretofore
entered between distributors of Seller and third-party end-user customers
described on Schedule 6.04(a).
Tax or Taxes means any income, gross income, gross receipts, profits,
capital stock, franchise, business, withholding, payroll, social security,
workers compensation, unemployment, disability, property, ad valorem, stamp,
excise, occupation, service, sales, use, license, lease, transfer, import,
export, value added, goods and services, alternative minimum, estimated or other
similar tax (including any fee, assessment, or other charge in the nature of or
in lieu of any tax) imposed by any domestic or foreign governmental entity or
political subdivision thereof, and any interest, penalties, additions to tax, or
additional amounts in respect of the foregoing.
Tax Return or Tax Returns shall mean all tax returns, declarations of
estimated tax and tax reports relating to any Tax, including, without
limitation, income, franchise, sales and use, unemployment compensation, excise,
severance, property, gross receipts, profits, payroll and withholding tax
returns and information returns.
Trade Secret shall mean the whole or any part of any scientific or
technical information, design process, procedure, formulae, data processing
technique, computer program or improvement that is valuable and secret (in the
sense that it is not generally known to competitors of Seller). To the extent
consistent with the foregoing, Trade Secrets include, without limitation, the
specialized information and technology embodied in computer program material,
including Source Code, Object Code, Documentation and other program and system
designs, that provide Seller with an advantage over its competitors with respect
to the Products.
ARTICLE II. TRANSFER OF ASSETS.
2.01. ASSETS TO BE SOLD AND LIABILITIES TO BE ASSUMED.
(a) Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell, convey, assign, transfer and deliver the
following: (i) all right, title and interest in and to the Products, the
Assignable Distribution Agreements, the Assignable Licenses, the Buyers
Accounts Receivable and all other Assets, subject to the exceptions listed
in sub-paragraph (b) of this Section 2.01, to BMC Cayman, and (ii) all
right, title and interest in and to the distribution rights to the Products
in the United States to BMC.
(b) Such sale, conveyance, assignment, transfer and delivery will be
effected, at the Closing by delivery by Seller to Buyers of the duly
executed Assignment, Bill of Sale and such other good and sufficient
instruments of conveyance and transfer as shall be reasonably necessary to
vest in Buyers good, valid and marketable title to the Assets, free and
clear of all claims, liens and encumbrances (whether absolute, accrued,
contingent or otherwise) except for: (i) all rights under the Distribution
Agreements; (ii) all rights under the Licenses; (iii) all rights under the
Sub-Licenses and (iv) the exceptions set forth on Schedule 2.01(b).
(c) At the Closing, Buyers shall assume the liabilities and
obligations arising from the acts and omissions of Buyers under the
Assignable Distribution Agreements and Assignable Licenses after the
Closing (the Assumed Obligations ), by delivery to Seller of the duly
executed Assumption. The Assumed Obligations are the only liabilities and
obligations being assumed by Buyers at the Closing, provided; however,
that: in the event any Retained Distribution Agreements or Retained
Licenses are assigned to Buyers subsequent to the Closing, all obligations
of the Seller under any such Retained Distribution Agreements or Retained
Licenses shall thereafter be considered Assumed Obligations for purposes
of this Section 2.01. Except as specifically set forth in the preceding
sentences, Buyers shall neither assume nor agree to pay, perform or
discharge, and Seller shall solely retain and be responsible for paying and
discharging, all liabilities and obligations occurring or arising under
Licenses and Distribution Agreements prior to the Closing and all other
liabilities and obligations of Seller, whether disclosed, undisclosed,
direct, indirect, absolute, contingent, secured, unsecured, accrued or
otherwise. Except as specifically set forth in this paragraph, Seller
shall solely retain and be responsible for paying, discharging and
performing all liabilities or obligations of any nature of Seller
(absolute, accrued, contingent or otherwise) that arose, existed or accrued
on or prior to the Closing or that arise out of, or result from, any act or
omission or alleged act or omission of Seller or its employees or agents or
subcontractors, on or prior to the Closing. The liabilities and
obligations not being assumed by Buyers are hereinafter collectively called
the Excluded Obligations. Seller shall utilize all reasonable efforts
that may be necessary to prevent any person, firm or governmental authority
from having recourse against any of the Assets or against Buyers as
transferee thereof, with respect to the Excluded Obligations at the
Closing. For the avoidance of doubt, any sales or other transfer tax
arising out of the sale of the Assets to Buyers shall be the sole
responsibility of Seller, and Seller shall indemnify and hold Buyers
harmless from and against any liability arising from or relating to any
claim of non-payment or underpayment of the same.
2.02. CONSIDERATION. Subject to the terms and conditions of this
Agreement, in reliance on Seller s, Seller Stockholders , Optionee s and Lee s
representations, warranties and agreements contained herein, and in
consideration of the aforesaid sale, conveyance, assignment, transfer and
delivery of the Assets, Buyers will deliver or cause to be delivered to Seller
at the Closing, as payment for the aforesaid sale, conveyance, assignment,
transfer and delivery of the Assets, the following consideration:
payment, by federal funds bank wire transfers or bank checks as
determined by Seller, in its sole discretion, of an amount equal to
$2,450,000 to be paid by BMC for distribution rights to the Products in the
United States and of an amount equal to $4,550,000 to be paid by BMC Cayman
for all remaining Assets (together, the Purchase Price ), which shall be
payable as follows: $5,600,000 (the Closing Payment ) to Seller or as
directed by Seller and $1,400,000 to the Escrow Account.
2.03. CLOSING. The closing of the transactions contemplated by this
Agreement will take place at 10:00 a.m. local time at BMC, 2101 CityWest
Boulevard, Houston, Texas, on the 10th day of July, 1997 or such other time as
may be agreed to by Buyers and Seller. The location of the Closing may be
changed to such other place as Buyers and Seller may mutually agree upon in
writing. The date on which the closing actually occurs is hereinafter referred
to as the Closing Date. The closing shall be effective as of the close of
business on the Closing Date (the closing, when so effective, the Closing ).
2.04. DELIVERY BY SELLER. At or prior to the Closing, Seller will
deliver to Buyers the following, in form and substance reasonably satisfactory
to Buyers:
(a) the duly executed Assignment;
(b) the duly executed Bill of Sale if any Assets are not covered by
the Assignment;
(c) a true and complete copy of all promotional and sales materials
used in marketing the Products;
(d) physical delivery of the Products, including without limitation,
(a) all Copies of Source Code, including any enhanced or modified versions,
(b) all Documentation, including flow charts, program procedures and
descriptions, procedures for maintenance and modification and testing data
in Seller s possession and (c) all physical Copies of the Products in
Seller s, Optionee s or Lee s possession; PROVIDED, HOWEVER, that Seller
and Optionee shall retain subsequent to the Closing sufficient copies of
the Source Code, the Object Code and such Documentation as reasonably
necessary to permit Seller and Optionee to perform the obligations under
this Agreement to be performed subsequent to the Closing under Sections
9.05 and 9.06. Seller and Optionee shall immediately return all Source
Code, Object Code and Documentation to Buyers upon satisfaction of the
obligations under Sections 9.05 and 9.06.
(e) lists of all customer prospects and current customers for the
Products, including output of Seller s sales database;
(f) the certified resolutions referred to in Section 4.02 hereof;
(g) the opinion of counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit D hereto;
(h) an amended and updated Schedule 6.04(a);
(i) an accounting showing all of Buyers Accounts Receivable as of the
Closing Date;
(j) a true and complete executed copy of all documentation relating
to the Option Agreement; and
(k) all other documents, instruments and writings reasonably required
to be delivered by Seller at or prior to the Closing pursuant to this
Agreement.
2.05 DELIVERY BY BUYERS. At or prior to the Closing, Buyers will deliver
to Seller or the Escrow Account, the following, in form and substance reasonably
satisfactory to Seller:
(a) the Closing Payment referred to in Section 2.02 hereof;
(b) the Escrow Amount referred to in Section 2.02 hereof;
(c) the duly executed Assumption;
(d) all other documents, instruments and writings reasonably required
to be delivered by Buyers at or prior to the Closing pursuant to this
Agreement.
ARTICLE III. RELATED MATTERS.
3.01. INFORMATION.
(a) ACCESS PENDING THE CLOSING. Prior to the Closing, Seller will
provide Buyers and their counsel, accountants and other representatives
reasonable access during normal business hours with copies of Seller s
contracts, commitments and records and other business and financial
information that relate to the Products.
(b) ACCESS AFTER THE CLOSING. Subsequent to the Closing, Seller will
permit Buyers and their representatives to have reasonable access to, and
to examine and make copies of, all invoices, records, Licenses, contracts,
commitments, records and other business and financial information that
relate to the Assets.
(c) RECORD RETENTION. For a period of three (3) years after the
Closing, Buyers, Seller and Optionee each agree that prior to the
destruction or disposition of any Licenses, contracts and commitments that
relate directly to the Assets, each party shall provide not less than 30
nor more than 60 days prior written notice to the others of any such
proposed destruction or disposal. If a recipient of such notice desires to
obtain any of such documents, it may do so by notifying the other party in
writing at any time prior to the scheduled date for such destruction or
disposal. Such notice must specify the documents which the requesting
party wishes to obtain. The parties shall then promptly arrange for the
delivery of such documents. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by the requesting party.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER STOCKHOLDERS.
Seller and Seller Stockholders (solely with respect to Sections 4.02 and
4.03) hereby, jointly and severally, represent, warrant and covenant to Buyers
that:
4.01. ORGANIZATION, ETC. Seller is a corporation duly organized,
validly existing and in good standing under the laws of Utah. Seller has the
full corporate power and authority to conduct its business as currently
conducted and to own, operate or lease the property and assets it purports to
own, operate and hold. Seller has the requisite power and authority to enter
into, execute and deliver this Agreement and related instruments or agreements
to which it is a party and to carry out the transactions contemplated hereby on
its part.
4.02. AUTHORITY. The execution and delivery of this Agreement, the
Assignment, the Bill of Sale, and any other conveyances or agreements
contemplated hereby and the effectuation of the transactions contemplated hereby
and by the Option Agreement have been duly authorized by all necessary corporate
action of Seller. Seller will deliver to Buyers at the Closing complete and
correct copies, certified by its secretary, of the resolutions duly and validly
adopted by its Board of Directors, evidencing such authorization (which
resolutions will not have been modified, revoked or rescinded in any respect
prior to, and will be in full force and effect at, the Closing). No other
corporate act or proceeding on the part of Seller or Seller Stockholders is
necessary for the due and valid authorization of this Agreement or the
transactions contemplated hereby and by the Option Agreement. When executed by
Seller and Seller Stockholders, this Agreement will constitute and the Option
Agreement currently constitutes the valid and binding obligation of Seller and
Seller Stockholders enforceable against each in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization and other laws affecting creditors rights and
equitable remedies generally.
4.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the effectuation by Seller of the transactions contemplated hereby
or by the Option Agreement (a) will violate any statute or law, or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, or (b) will violate or conflict with or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the Assets, under any term or provision of (i) the
incorporation and organizational documents of Seller, or (ii) any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Seller is a party or by which Seller or any of its assets or
properties, may be bound or affected, which violation, conflict or default would
cause a material adverse effect on the business, prospects or condition
(financial or otherwise) of Seller. Except for filings, consents, approvals or
authorizations which will have been made or obtained or actions which will have
been taken at or prior to the Closing, no filing with, or consent, approval,
authorization or action by, any governmental authority is required in connection
with the execution and delivery by Seller of this Agreement or the effectuation
by it of the transactions contemplated herein or in the Option Agreement.
4.04. LITIGATION. There are no actions, suits or proceedings by or
against Seller at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, agency, instrumentality or
authority and, to the best of the knowledge of Seller, no judgment, order or
decree of any such court or other governmental agency has been entered against
or served on Seller which would have a material adverse effect on the business
prospects or condition (financial or otherwise) of Seller.
4.05. SUFFICIENCY OF CAPITAL. Seller now has capital sufficient to
carry on its business and transactions and all businesses and transactions in
which it is about to engage, is now, and after giving effect to the transactions
contemplated by this Agreement will be, solvent and able to pay its debts as
they mature, now owns property whose fair saleable value is greater than the
amount required to pay its debts and will not be rendered insolvent by the
transactions contemplated by this Agreement or the Option Agreement.
4.06. COMPLIANCE WITH LAW. Seller has conducted its business in
accordance with all material applicable laws, regulations and other requirements
of all national governmental authorities, and of all states, municipalities and
other political subdivisions and agencies thereof, having jurisdiction over
Seller and which could have a material adverse effect on Buyers s interest in
the Assets. Seller has received no notification of any asserted present or past
failure by Seller to comply with such laws, rules or regulations in connection
with its business and operations or in connection with the Assets.
4.07. TAXES. Seller has filed all Tax Returns for periods ending on or
before Closing and paid all Taxes now due for periods covered by such returns
and in respect of all periods through the date hereof. No material deficiencies
have been proposed or assessed against Seller by federal, state or local tax
authorities that remain unpaid.
4.08. FINANCIAL STATEMENTS. Seller has delivered to Buyers its audited
consolidated financial statements as of and for the period ended March 31, 1997
as set forth in its most recent annual report on Form 10-KSB (the Financial
Statements ). Except as set forth in the Financial Statements, Seller has no
outstanding claims, liabilities or indebtedness, contingent or otherwise, which
in the aggregate are material to the condition (financial or otherwise) of
Seller.
4.09. DISTRIBUTION AGREEMENTS. Except as set forth on Schedule
6.04(c), all Assignable Distribution Agreements may be terminated at will by
Buyers without any payment to the respective distributor.
4.10. STATE SALES TAX. No Tax will be imposed on Buyers by the State
of Utah as a result of the transfer of tangible personal property to Buyers.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF OPTIONEE AND LEE.
Optionee and Lee, jointly and severally, hereby represent, warrant and
covenant to Buyers that:
5.01 ORGANIZATION, ETC. Optionee is a limited company duly organized,
validly existing and in good standing under the laws of Australia. Optionee has
the full corporate power and authority to conduct its business as currently
conducted and to own, operate or lease the property and assets it purports to
own, operate and hold. Optionee has the requisite power and authority to enter
into, execute and deliver this Agreement and related instruments or agreements
to which it is a party and to carry out the transactions contemplated hereby on
its part.
5.02. AUTHORITY. The execution and delivery of this Agreement and the
effectuation of the transactions contemplated hereby and by the Option Agreement
have been duly authorized by all necessary corporate action of Optionee.
Optionee will deliver to Buyers at the Closing complete and correct copies,
certified by its secretary, of the resolutions duly and validly adopted by its
Board of Directors and stockholders, evidencing such authorization (which
resolutions will not have been modified, revoked or rescinded in any respect
prior to, and will be in full force and effect at, the Closing). No other
corporate act or proceeding on the part of Optionee is necessary for the due and
valid authorization of this Agreement or the transactions contemplated hereby
and by the Option Agreement. Each of this Agreement and the Option Agreement
constitute the valid and binding obligation of Optionee and Lee enforceable
against each in accordance with their terms except as may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization and other laws
affecting creditors rights and equitable remedies generally.
5.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the effectuation by Optionee and Lee of the transactions contem-
plated hereby or by the Option Agreement (a) will violate any statute or law, or
any rule, regulation, order, writ, injunction or decree of any court or
governmental authority, or (b) will violate or conflict with or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Assets, under any term or
provision of (i) the incorporation and organizational documents of Optionee, or
(ii) any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Optionee is a party or by which
Optionee or any of its assets or properties, may be bound or affected, which
violation, conflict or default would cause a material adverse effect on the
business, prospects or condition (financial or otherwise) of the Optionee.
Except for filings, consents, approvals or authorizations which will have been
made or obtained or actions which will have been taken at or prior to the
Closing, no filing with, or consent, approval, authorization or action by, any
governmental authority is required in connection with the execution and delivery
by Optionee of this Agreement or the effectuation by it of the transactions
contemplated herein or in the Option Agreement.
5.04 TITLE. As of the date hereof, Optionee has good, valid and
marketable title to all of the Assets and all interests therein, and none of the
Assets nor any interest therein is, except as set forth in Schedule 6.01(b), or
at the Closing will be, subject to any mortgage, pledge, lien, security
interest, sale agreement, encumbrance, claim or charge, license (other than the
exceptions described in Section 2.01 (b) hereof), lease or other obligation of
any kind, whether accrued, absolute, contingent or otherwise.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER, SELLER STOCKHOLDERS,
OPTIONEE AND LEE.
Seller, Seller Stockholders, Optionee and Lee hereby, jointly and
severally, represent, warrant and covenant to Buyers that:~
_
6.01. ASSETS; SOFTWARE PRODUCTS.
(a) Schedule 6.01(a) describes in full all software and software
products, both generally available and under development (in all stages of
development), that are included in Seller s or Optionee s software business
relating to any of the Products.
(b) At the Closing, Seller will have, good, valid and marketable
title to all of the Assets and all interests therein, and none of the
Assets nor any interest therein is, except as set forth in Schedule
6.01(b), or at the Closing will be, subject to any mortgage, pledge, lien,
security interest, sale agreement, encumbrance, claim or charge, license
(other than the exceptions described in Section 2.01 (b) hereof), lease or
other obligation of any kind, whether accrued, absolute, contingent or
otherwise. At the Closing, Seller will have, complete and unrestricted
power and the unqualified right to sell to Buyers and to assign, transfer
and deliver to Buyers, and upon consummation of the transactions
contemplated by this Agreement, Buyers will acquire, good, valid and
marketable title to the Assets, free and clear of all mortgages, pledges,
liens, security interests, conditional sales agreements, encumbrances or
charges of any kind (other than the exceptions described in Section 2.01(b)
hereof).
(c) Schedule 6.01(c) sets forth the form and placement of the
proprietary legends and copyright notices displayed in or on the Products.
In no instance has the eligibility of the Products for protection under
applicable copyright laws been forfeited to the public domain by omission
of any required notice or any other action.
(d) The Source Code for the Products has at all times been maintained
in strict confidence and the only individuals or entities who have access
to such Source Code are set forth on Schedule 6.01(d) or Schedule 6.01(e).
Except as set forth on Schedule 6.01(d) or Schedule 6.01(e), all of such
individuals or entities are parties to written nondisclosure agreements.
(e) Schedule 6.01(e) sets forth all individuals and entities,
including employees, agents, consultants and contractors who have
contributed to or participated in the conception and development of the
Products. Except as set forth on Schedule 6.01(e), all of such individuals
are parties to written nondisclosure agreements reasonably protecting the
Confidential Information and Trade Secrets included in the Products.
Except as set forth on Schedule 6.01(e), all of Seller s and Optionee s
employees listed on Schedule 6.01(e) have executed instruments of
assignment in favor of Seller or Optionee as assignee of all tangible and
intangible property thereby arising.
(f) Except as set forth on Schedules 6.01(d) and (e), Seller has not
provided any Copies of the Products or of Documentation to any third
parties other than pursuant to the Distribution Agreements or Licenses and
other than evaluation Copies provided to potential customers, and, except
as set forth on Schedule 6.01(d), all such evaluation Copies have been
provided in Object Code only.
(g) Neither Seller nor Optionee has taken any action to cause any of
the Products or Trade Secrets related to the Products to enter the public
domain and Optionee has not failed to take any actions, the failure of
which would have caused, or has directly caused, the Products or any Trade
Secrets to enter the public domain. Seller has not entered into or
executed any previous agreement of sale, license, lease or similar
transactions, other than the Distribution Agreements or Licenses, pursuant
to which a party other than Seller has acquired or may acquire rights to
the Products that conflict with the provisions of this Agreement.
(h) Schedule 6.01(h) contains a complete list of software libraries,
compilers and other third-party software used in the development of the
Products and all license agreements for the use of such software by Seller
and, if such software is not licensed, the basis of the use of such
software by Seller. All use of each such software program by Seller has
been in full compliance with the respective license agreement or right of
use listed on Schedule 6.01(h).
6.02. DOCUMENTATION OF SOURCE CODE. All of the Source Code includes
all commentary or explanation that may be reasonably necessary to render such
materials understandable and usable by a trained computer programmer skilled in
client/server Unix operating systems monitoring. The Documentation also includes
any programs (including compilers), workbenches, tools and higher level (or
proprietary ) language used for the development, maintenance, and the
implementation of the software programs.
6.03. PATENTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 6.03 delivered
in connection herewith contains an accurate and complete description of all
patents, trademarks, trade names, assumed names, copyrights, technology, and
processes, and all applications therefore, currently owned or held by Seller,
Optionee or their Affiliates that relate to the Products. For the purposes of
this Agreement, the term Affiliate shall mean any individual or entity
controlling, controlled by or under common control with the subject referenced.
The Products, the use thereof by Seller and the use, license, sale or lease of
the Products, or of any part thereof, or of any Copy, or of any part thereof, do
not and will not infringe on, or contribute to the infringement of, any
copyright, trade secret, patent right or trademark of any third party in either
the United States or any foreign country. No person or entity has asserted a
claim that the use, license, sale or lease of the Products, or any part thereof,
infringes or contributes to the infringement of any patent claim, copyright or
trade secret right of any third party in either the United States or any foreign
country, and Seller is not aware of any basis for any such claim. The
Assignment will assign all such patents, trademarks, trade names, assumed names,
copyrights, Trade Secrets and similar rights, and all applications with respect
to any thereof, will be duly executed and, if required to be filed, will be in
form suitable for filing.
6.04. LICENSES, TRIALS, CONTRACTS AND COMMITMENTS.
(a) Schedule 6.04(a) sets forth a complete and accurate list of each
License of the Products entered into by Seller or Optionee and their
respective Distributors as of the date hereof. Schedule 6.04(a) details
which License is not an Assignable License and which licenses are license
agreements between Seller and the licensee and which are sub-licenses
between a Distributor and an end-user licensee. Except as set forth on
Schedule 6.04(a), Seller has provided accurate and complete copies of such
Licenses to Buyers.
(b) Seller and Optionee are currently conducting Trials with respect
to the Pending Transactions (as hereinafter defined) with respect to the
Products, all of which are being conducted or have been delivered in
connection with Seller s or Optionee s standard published pricing and their
discount structure, as applicable.
(c) Schedule 6.04(c) sets forth all agency, marketing or distribution
agreements that obligate Seller or Optionee to provide or support the
Products or that grant any right to sell, relicense, market or distribute
the Products (the Distribution Agreements ).
(d) Seller is not in material default, nor is there any basis for any
valid claim of material default, under any License and, in particular,
Seller has not taken any action that would cause, or failed to take any
action, the failure of which would cause, the Source Code of the Products
to be released from escrow. Schedule 6.04(d) summarizes material pending
customer complaints known to Seller relating to the Products as of the
Closing Date.
6.05. NO MISLEADING STATEMENTS. This Agreement and the information and
schedules referred to herein, when taken together, do not include any untrue
statement of material fact and do not omit to state any material fact necessary
to make the statements contained herein and therein not misleading.
6.06. NO BROKERAGE FEES. None of Seller, Seller Stockholders, Optionee
or Lee or any of their respective Affiliates has retained any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYERS.
Buyers hereby jointly and severally, represent, warrant and covenant to
Seller, the Seller Stockholders, Optionee and Lee that:
7.01. ORGANIZATION. BMC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. BMC
Cayman is a Cayman unlimited liability company duly organized, validly existing
and in good standing under the laws of the Cayman Islands. Each of the Buyers
has the requisite corporate power and authority to carry on its business as
presently conducted and the requisite power and authority, to enter into,
execute and deliver this Agreement, the Assumption and related instruments or
agreements to which it is a party and to carry out the transactions contemplated
hereby and thereby.
7.02. AUTHORITY. The execution and delivery of this Agreement, the
Assumption and any agreements contemplated hereby and the effectuation by Buyers
of the transactions contemplated hereby and thereby have been duly authorized by
the respective Boards of Directors of the Buyers. No other corporate act or
proceeding on the part of Buyers or their stockholders is necessary to authorize
this Agreement, or the transactions contemplated hereby. When executed by the
Buyers, this Agreement will constitute the valid and binding obligation of each
of the Buyers, enforceable against each in accordance with its terms except as
may be limited by applicable bankruptcy, insolvency, moratorium, reorganization
and other laws affecting creditors rights and equitable remedies generally.
7.03. NO VIOLATION. Neither the execution and delivery of this
Agreement nor the Assumption nor the effectuation by Buyers of the transactions
contemplated hereby (a) will violate any statute or law, or any rule,
regulation, order, writ, injunction or decree of any court or governmental
authority, or (b) will violate or conflict with or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, any term or provision of (i) the incorporation and organizational
documents of BMC or BMC Cayman or (ii) any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which either
of the Buyers is a party or by which either of the Buyers or any of their assets
or properties may be bound or affected. Except for filings, consents, approvals
or authorizations which will have been made or obtained or actions which will
have been taken at or prior to the Closing, no filing with, or consent,
approval, authorization or action by, any governmental authority is required in
connection with the execution and delivery by Buyers of this Agreement or the
effectuation by them of the transactions contemplated herein.
ARTICLE VIII. OTHER OBLIGATIONS OF THE PARTIES.
8.01. CONDUCT OF BUSINESS OF SELLER AND OPTIONEE PENDING THE CLOSING.
Seller and Optionee agree that from the date hereof until the earlier of the
Closing or termination of this Agreement as herein provided, except as otherwise
specifically permitted by this Agreement or unless otherwise consented to by
Buyers in writing, which consent Buyers will not withhold unreasonably:
(a) Seller and Optionee shall not enter into any licenses or other
contracts respecting the Products except in the ordinary course of business
in accordance with their respective standard published pricing and discount
structure.
(b) Seller and Optionee shall not take any action that would, or fail
to take any action the failure of which would, cause directly or indirectly
any of the Products or Trade Secrets to enter the public domain or that
could otherwise adversely affect the Products or Trade Secrets.
(c) Seller and Optionee shall not in any way dispose of or encumber
the Assets or any right relating thereto.
(d) Except as contemplated by this Agreement, neither Seller nor
Optionee will, directly or indirectly (through a representative or
otherwise), solicit, or furnish information to, any prospective buyers,
commence negotiations with any other party or enter into any agreement with
any other party concerning the sale of the Assets or of Seller or Optionee
or of any part of Seller or Optionee (other than assets not included in the
Assets).
(e) Seller and Optionee will use their best efforts to preserve their
exclusive rights to use their trademarks, trade names, service marks and
similar rights and to preserve as secret all of their Trade Secrets
respecting the Products.
8.02. CONSENTS. Seller and Optionee will use their reasonable efforts
to obtain, prior to the Closing, the consent of each licensee under each License
(other than Assignable Licenses) to the assignment of such Licenses to Buyers at
the Closing. All such consents will be in writing and executed counterparts
thereof will be delivered to Buyers at the Closing.
8.03 CONDUCT OF DUE DILIGENCE BY BUYERS. Buyers shall use all diligent
efforts to conduct and conclude a due diligence investigation of the Assets by
no later than ten (10) business days after the date of this Agreement. Seller
and Optionee will cooperate with such review and will provide Buyers and their
agents reasonable access to the Products immediately following the date of this
Agreement.
8.04 SALES DURING TRANSITION PERIOD. Buyers and Seller agree that Seller
may close the sales of the Products during the first 90 days after the Closing
Date to the sales prospects listed on Schedule 8.04 at the prices and in the
quantities consistent with those indicated on Schedule 8.04 (the Pending
Transactions ) using Seller s standard form of license and terms, including
discount premiums. Buyers and Seller agree that during the 90 day period
following the Closing Date, Seller will receive a commission on sales of the
Products to those sales prospects listed on Schedule 8.04 based on the following
payment scale: (i) for sales made during the first 30 days after the Closing
Date, Seller shall receive a 90% commission; (ii) for sales made during the
second 30 days after the Closing Date, Seller shall receive a 80% commission;
and (iii) for sales made during the third 30 days after the Closing Date, Seller
shall receive a 70% commission. In addition, Buyers and Seller agree that
during the 90 day period beginning 90 days after the Closing Date, Seller shall
receive a 60% commission on revenues received by Buyers from sales of Products
utilized in conjunction with the DEC PolyCenter Capacity Planning Product.
ARTICLE IX. COVENANTS OF SELLER, OPTIONEE AND LEE.
9.01. NONCOMPETITION. Each of Seller, Optionee and Lee and their
respective Affiliates covenant and agree that, for a period of three years from
and after the Closing Date, it shall not (i) compete with Buyers, directly or
indirectly, whether individually or as owner, stockholder, member, director,
agent, consultant, employee, independent contractor or otherwise, of any
corporation, partnership, proprietorship or other business organization or
association, in the development or marketing of any computer software program
that performs or is intended to perform functions substantially similar to any
of those performed by the Products at Closing or (ii) offer employment to, or
induce or attempt to induce any director, officer, employee, agent, or customer,
supplier or lessor of BMC or its subsidiaries to terminate such position or
relationship with BMC or its subsidiaries. Notwithstanding anything to the
contrary contained herein, Seller and Lee and their respective Affiliates shall
not be prohibited from (x) making minority, passive investments in companies
whose securities are publicly traded and that compete with Buyers or any of
their assigns or (y) marketing computer software programs that perform or are
intended to perform functions substantially similar to existing Enlighten and
COS/MANAGER software products currently distributed by Seller. Seller and Lee
acknowledge that this covenant not to compete is ancillary to the sale of
certain assets of Seller s and Lee s businesses from which Seller and Lee will
receive good and valuable financial consideration, is reasonably necessary to
protect the Assets being acquired by Buyers and does not impose an undue or
unreasonable hardship upon Seller, Optionee or Lee. If, however, any portion of
this covenant is found by a court of competent jurisdiction to be unreasonable,
Seller, Optionee and Lee agree that the covenant shall be reformed by the court
whereby it is reasonable and, as reformed, shall be enforced by the court
prospectively.
Notwithstanding the foregoing, it is hereby agreed that any performance by
Seller, Optionee or Lee of their obligations required under this Agreement,
including without limitation, all obligations under the Retained Distribution
Agreements or Retained Licenses or under Section 9.05 hereof shall not be
considered a default of this Section 9.01. The parties agree that $750,000 of
the consideration payable to BMC is allocable to this noncompetition covenant.
9.02. CONFIDENTIALITY. Subsequent to the Closing, Seller, Optionee and
Lee agree to keep secret and not, without the prior written consent of Buyers,
use or disclose to any third party any Confidential Information or Trade Secrets
relating to the Products.
9.03. ADDITIONAL DOCUMENTS RELATING TO PROPRIETARY RIGHTS AND TITLE.
Seller, Optionee and Lee shall execute, without additional consideration from
Buyers, any and all additional and proper copyright, patent and trade secret
documents reasonably requested by Buyers, including, without limitation,
copyright registration applications, patent applications, recordation documents
and/or conveyance documents reasonably necessary for the purposes of protecting
Buyers s rights in and to the Products or perfecting Buyers s right, title and
interest to the Assets.
9.04 RETAINED DISTRIBUTION AGREEMENTS AND RETAINED LICENSES. Seller shall
observe all provisions of, and perform all of its obligations under, the
Retained Distribution Agreements and Retained Licenses, including, but not
limited to, the performance of its product maintenance obligations, in a manner
reasonably satisfactory to the respective distributor and licensee. Seller
shall request the consent of the distributor and/or licensee under any Retained
Distribution Agreement or Retained License to the transfer or assignment thereof
to Buyers. If such consent is not obtained or if an attempted assignment
thereof would be ineffective or would affect the rights of Seller thereunder
such that Buyers would not in fact receive all such rights, Seller and Buyers
shall enter into any arrangements reasonably necessary to provide (a) for
Buyers, the benefits thereunder, including, but not limited to, the economic
benefits accruing post-Closing to the licensor under the Retained Distribution
Agreements or Retained Licenses and the enforcement of the benefit of Buyers or
any and all rights of the licensor against the distributor/licensee thereto
arising out of breach or cancellation by such other party or otherwise, and (b)
for Seller, the performance of all of the obligations of the licensor
thereunder.
9.05 POST-CLOSING MAINTENANCE. Seller, Optionee and Lee shall provide
maintenance and support services for the Products in accordance with the
maintenance and support services plan set forth in Schedule 9.05 for a period of
six months following the Closing Date; provided, however, that Buyers may, upon
giving written notice to Seller, reduce such six-month period to any shorter
period selected by Buyers . Buyers shall make appropriate arrangements to
provide timely access to the Source Code of the Products as necessary to
performance by Seller, Optionee and Lee of their obligations under this
Agreement. Seller, Optionee and Lee covenant that the services they will
provide pursuant to this Section 9.05 will conform in all material respects to
the descriptions and specifications therefor set forth in Schedule 9.05.
Seller, Optionee and Lee covenant that they will perform the services required
under this Section 9.05 in a professional manner with due diligence and good
faith. Buyers will pay to Seller, in consideration of Seller, Optionee and Lee s
performance of these services, 100% of any maintenance fees received by Buyers
during the period in which Seller, Optionee and Lee are providing these
services. Buyers will invoice, bill and collect fees in connection with all
maintenance services after the Closing Date.
9.06 INTEGRATION OF PRODUCTS. Seller or Optionee shall provide three of
the leading developers of the Products, the names of whom are set forth on
Schedule 9.06, to Buyers in Houston for a period of six months following the
Closing Date to work full-time on the integration of the Products with BMC s
PATROL systems management software product as set forth on Schedule 9.06.
Buyers shall have the option of extending such services for an additional six
months at the cost of $50,000 per month with the understanding that if Buyers
elect to extend such services for the additional six months, Buyers shall pay a
completion bonus of $15,000 per individual to each of the three developers
listed on Schedule 9.06. Seller and Optionee covenant that the services they
will provide pursuant to this Section 9.06 will conform in all respects to the
descriptions and specifications therefor set forth in Schedule 9.06. Seller and
Optionee covenant that they will perform the services required under this
Section 9.06 in a professional manner with due diligence and good faith. In the
event any of the persons listed on Schedule 9.06 becomes an employee of BMC
within the period ending six months after the completion of the integration
services, BMC shall pay Seller $25,000 per individual so employed.
9.07 BUYERS ACCOUNTS RECEIVABLE. On and after the Closing Date, Seller
shall remit to Buyers, every three months following the Closing Date, all
payments of Buyers Accounts Receivable received by Seller. Buyers shall notify
all of its customers (other than those under the Retained Distribution
Agreements and Retained Licenses) immediately after the Closing all payments of
maintenance and other amounts shall thereafter be made to Buyers rather than
Seller.
9.08 EXERCISE OF OPTION. Seller shall exercise the Option pursuant to the
Option Agreement and complete the purchase of the Assets prior to July 9, 1997.
9.09 U.K. DISTRIBUTION AGREEMENT. Seller and Optionee shall enter into an
arrangement with Software Innovations Ltd. providing for the termination of the
exclusive distribution or licensing rights of Software Innovations Ltd. with
respect to the Products, including any and all rights under the Marketing Rights
Agreement between Optionee and Software Innovations Ltd. dated December 7, 1989
and the renewal thereof dated September 9, 1994.
ARTICLE X. CONDITIONS TO BUYERS OBLIGATIONS.
Except as may be waived by Buyers, the obligations of Buyers are subject to
the fulfillment, prior to or at the Closing, of each of the following
conditions:
10.01. DUE DILIGENCE. Buyers shall have completed the due diligence
investigation contemplated by Section 8.03 to their reasonable satisfaction.
10.02. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Seller, Seller Stockholders, Optionee and Lee in this
Agreement, and the statements contained in the Exhibits and Schedules annexed
hereto or in any instrument, list, certificate or writing delivered by Seller,
Optionee and Lee pursuant to this Agreement, shall have been true in all
material respects when made and at and as of the Closing Date as though such
representations and warranties were made at and as of such date, except for any
changes permitted by the terms of this Agreement or consented to by Buyers in
writing.
10.03 NO MATERIAL ADVERSE CHANGE. Since the date of this Agreement
there shall not have occurred any material adverse change in the condition
(financial or otherwise), business, properties, or assets of Seller, or in the
Assets.
10.04. PERFORMANCE. Each of Seller, Optionee and Lee shall have
performed and complied with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by them, prior to or at
the Closing.
10.05. CONSENTS; LEGALITY. All approvals of applications to public
authorities (federal, state or local, domestic or foreign), other than consents
to assignment of any License under which a governmental agency is licensee, and
all necessary corporate and shareholder action of Seller, if any, the granting
or performing of which are necessary, in the reasonable opinion of Buyers, for
the consummation of the transactions contemplated hereby shall have been
obtained and no such approval or action shall contain any condition which
materially adversely affects or will materially adversely affect the Assets or
the operations, business or prospects related to the Assets.
10.06. LITIGATION
(a) There shall be no order, decree or injunction of a court of
competent jurisdiction, including without limitation the entry of a
preliminary or permanent injunction, that (i) prevents or delays the
performance by Buyers, Seller, Optionee or Lee of their respective
obligations hereunder or (ii) would impose any material limitation on the
ability of Buyers effectively to exercise full rights of ownership of the
Assets and the goodwill associated therewith.
(b) No action, suit or proceeding before any court or any
governmental or regulatory authority shall be pending against Buyers,
Seller or Lee challenging the validity or legality of the transactions
contemplated by this Agreement or the Option Agreement.
10.07. OPTION CLOSING. Seller shall have exercised the option to
purchase from Optionee the Assets and the purchase and sale of the Assets by
Seller shall have been completed.
ARTICLE XI. CONDITIONS TO SELLER S, SELLER STOCKHOLDER S, OPTIONEE S AND
LEE S OBLIGATIONS.
Except as may be waived by Seller, the obligations of Seller, Seller
Stockholders, Optionee and Lee under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
11.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyers in this Agreement shall be true in all material
respects when made and at and as of the Closing Date as though such represen-
tations and warranties were made at and as of such date, except for any changes
permitted by the terms of this Agreement or consented to by Seller in writing.
11.02. PERFORMANCE. Buyers shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to so be
performed or complied with by them prior to or at the Closing.
11.03. LITIGATION.
(a) There shall be no order, decree or injunction of a court of
competent jurisdiction, including without limitation the entry of a
preliminary or permanent injunction, which prevents or delays the
performance by Buyers, Seller Stockholders, Seller, Optionee or Lee of
their respective obligations hereunder.
(b) No action, suit or proceeding before any court or any
governmental or regulatory authority shall be pending against Buyers,
Seller Stockholders, Seller, Optionee or Lee challenging the validity or
legality of the transactions contemplated by this Agreement or the Option
Agreement.
ARTICLE XII. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS.
12.01. SURVIVAL OF REPRESENTATIONS.
(a) The representations, warranties, covenants and agreements of the
parties contained in Articles IV, V, VI and IX and in this Article XII of
this Agreement or in any writing delivered pursuant to such sections shall
not terminate at, but rather shall survive, the Closing and shall terminate
on the third anniversary of the Closing Date.
(b) All such representations, warranties, covenants and agreements
shall survive as to any claim or demand made prior to their termination
date until such claim or demand is fully paid or otherwise resolved by the
parties hereto in writing or by a court of competent jurisdiction.
(c) The representations, warranties, covenants and agreements of the
parties contained in Article VII of this Agreement shall terminate at and
shall not survive the Closing Date.
12.02. INDEMNIFICATION. Subject to Section 12.04, each of Seller, the
Seller Stockholders, Optionee and Lee (each, an Indemnifying Party ) shall,
severally and jointly (except with respect to the representations, warranties
and covenants contained in Articles IV and V hereof, severally and NOT jointly),
indemnify and hold harmless Buyers and their directors and officers, and each
other person, if any, who controls Buyers within the meaning of the Securities
Act ( Controlling Persons ) in respect of any and all claims, losses, damages,
liabilities, demands, assessments, judgments, costs and expenses (including,
without limitation, settlement costs and any legal or other expenses for
investigating, bringing or defending any actions or threatened actions)
(collectively, Damages ) reasonably incurred by Buyers, any of their directors,
officers or Controlling Persons in connection with each and all of the
following:
(i) any misrepresentation or breach of any warranty made by the
Indemnifying Parties in this Agreement or in any schedule, exhibit,
certificate or other instrument contemplated by this Agreement; and
(ii) the breach of any covenant, agreement or obligation of the
Indemnifying Parties contained in this Agreement or any other instrument
contemplated in this Agreement.
In addition, each of Seller and Optionee, severally and not jointly, shall
indemnify, defend and hold harmless Buyers from and against all Damages
resulting from the following:
(i) its liabilities or obligations (whether absolute, accrued,
contingent or otherwise) that are not Assumed Obligations as defined in
Section 2.01(c);
(ii) any taxes relating to its operations prior to the Closing Date;
and
(iii) the noncompliance by it with the provisions of any
applicable bulk sales, fraudulent conveyance or other similar law for the
protection of its creditors.
12.03 CLAIMS FOR INDEMNIFICATION.
(a) Whenever any claim shall arise for indemnification under this
Article XII, the party asserting the claim for indemnification (the
Indemnified Party ) shall promptly describe such claim in a written notice
( Notice of Claim ) to the party from which indemnification is sought (the
Indemnifying Party ) and, when known, specify the facts constituting the
basis for such claim and the amount or an estimate of the amount of such
claim. Each Notice of Claim shall (A) be signed by a proper representative
of the Indemnified Party, (B) contain a description of the claim,
(C) specify the amount of such claim, and (D) state that, in the opinion of
the signer thereof, such Notice of Claim is valid under the terms of this
Article XII and is being given by the Indemnified Party in good faith.
(i) Without limiting the foregoing, the Indemnified Party shall
give the Indemnifying Party prompt notice of any claim for
indemnification hereunder resulting from, or in connection with, any
claim or legal proceeding by a person who is not a party to this
Agreement ( Third Party Claim ) and, with respect to any Third Party
Claim, the Indemnifying Party shall at its election, undertake and
control the defense thereof by representatives reasonably satisfactory
to the Indemnified Party and the Indemnifying Party. However, the
Indemnified Party shall have the right to participate in any such
defense of a Third Party Claim with advisory counsel of its own
choosing at its own expense. In the event the Indemnifying Party,
within a reasonable time after notice of any Third Party Claim, fails
to defend, the Indemnified Party shall have the right diligently to
undertake the defense, compromise or settlement of such Third Party
Claim on behalf of, and for the account of, the Indemnifying Party, at
the expense and risk of the Indemnifying Party to the extent of its
liability set forth in Article XII. The Indemnified Party, without
the Indemnifying Party s written consent, shall not settle or
compromise any such Third Party Claim or consent to entry of any
judgment; the Indemnifying Party s consent shall be conditioned, among
other matters, on the giving by the claimant or the plaintiff to the
Indemnified Party, an unconditional release from all liability in
respect of such Third Party Claim. Notwithstanding any provision
herein to the contrary, failure of the Indemnified Party to give any
notice of any Third Party Claim required by this Article XII shall not
constitute a waiver of the Indemnified Party s right to
indemnification or a defense to any claim by the Indemnified Party
hereunder unless the Indemnifying Party is materially adversely
affected by such failure.
(ii) the Indemnifying Party, without the Indemnified Party s
written consent, shall not settle or compromise any Third Party Claim
against the Indemnifying Party or consent to the entry of any judgment
that does not include as an unconditional term thereof, the giving by
the claimant or the plaintiff to the Indemnifying Party an
unconditional release from all liability with respect to such Third
Party Claim.
12.04 EXTENT AND MANNER OF INDEMNIFICATION. Seller shall have no
indemnification obligation under this Agreement with respect to any Damages that
exceed in the aggregate the total consideration received by Seller pursuant to
this Agreement. Seller Stockholders, Optionee and Lee, collectively, shall have
no indemnification obligation under this Agreement with respect to any Damages
that exceed in the aggregate $3.5 million, such obligation to be allocated among
the Seller Stockholders, Optionee and Lee as set forth on SCHEDULE 12.04. All
indemnification hereunder shall be effected first by the release of funds from
Escrow Account and, for claims in excess of the Escrow Amount, by payment of
cash or delivery of a certified cashier s check in the amount of the
indemnification liability. Buyers agree to use commercially reasonable efforts
to pursue each of Seller, Optionee and Lee for satisfaction of any
indemnification claims hereunder before approaching the Seller Stockholders.
12.05 EXCLUSIVE REMEDY. Subsequent to Closing, the provisions of this
Article XII shall provide the exclusive monetary, but not injunctive, remedy of
Buyers for any breach of this Agreement.
12.06 ESCROW.
(a) Buyers and Seller agree that the Escrow Amount shall be placed in
escrow with Buyers at Texas Commerce Bank, National Association, for a
period beginning on the Closing and ending on the 24-month anniversary of
the Closing, to be disbursed solely upon the joint signatures of the Buyers
and Seller, all as set forth below, provided that one-half of the Escrow
Amount shall be disbursed to Seller automatically on the 12-month
anniversary of the Closing. Disbursements from the Escrow Amount shall be
made for the payment of amounts, if any, needed to satisfy the
indemnification rights of the Buyers pursuant to Article XII hereof.
(b) The Escrow Amount or the appropriate portion thereof shall be
disbursed to Buyers during the period ending on the 24-month anniversary of
the Closing at any time or from time to time, upon the Buyers, giving
Seller a Notice of Claim unless Seller delivers a Notice of Objection (as
hereafter defined) in accordance with the procedures described in this
Section 12.06. Such Notice of Claim must be for a specified amount.
(i) Seller may give the Buyers written notice ( Notice of Objection )
(A) attaching a copy of such Notice of Claim, (B) stating that, in the good
faith opinion of the Seller, the claim described in such Notice of Claim is
invalid (either in whole or in specified part) under the terms of Article
XII hereof, (C) giving the reasons for the alleged invalidity, and (D)
stating that, based on such alleged invalidity, the Seller objects to the
payment of any portion of the Escrow Amount to the requesting party on
account thereof. In the event that a Notice of Objection alleges that a
Notice of Claim is only partially invalid, the Seller, within 30 days of
the receipt of such Notice of Claim, may agree to pay over to the Buyers
that portion of the amounts specified in such Notice of Claim as to which
no objection is made. The Seller is not required to agree to make any
payments to Buyers in respect of a Notice of Claim that has been objected
to in a Notice of Objection given to Buyers as aforesaid except (X) as
provided in the immediately preceding sentence, or (Y) in accordance with
an order of any arbitration panel initiated by any of the parties hereto
pursuant to paragraph ii below.
(ii) Buyers and Seller agree to submit to final and binding
arbitration any and all disputes Seller has specified in a Notice of
Objection or Buyers have specified in a Notice of Claim to which the Seller
has not responded within 30 days of receipt of such Notice of Claim. Any
such dispute subject to arbitration in accordance with the American
Arbitration Association rules.
(c) The Escrow Account shall be terminated on the 24-month
anniversary of the Closing Date; PROVIDED, HOWEVER, that the Escrow Account
may continue beyond such 24-month anniversary, if Buyers have asserted
indemnification claims, and any such claims remain unsatisfied (but only to
the extent necessary to satisfy such unsatisfied claims). Upon termination
of the Escrow Account, all remaining amounts therein that constitute the
Escrow Amount and that have not been paid or are not properly payable to
third parties, or to Buyers pursuant hereto, shall be disbursed to Seller
along with all interest that has accrued on the Escrow Amount during the
period ending 24 months after the Closing.
<PAGE>
ARTICLE XIII. TERMINATION OF AGREEMENT.
13.01. TERMINATION. This Agreement may be terminated prior to the
Closing, or, if an earlier date is expressly provided below, on or prior to such
earlier date:
(a) by the mutual written consent of the Buyers and Seller; or
(b) by the Seller or Buyers, upon written notice from the terminating
party to the other party, if the terminating party s conditions to Closing
shall not have occurred on or before the 10th day of July, 1997;
13.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Buyers or Seller as provided in Section 13.01 hereof,
this Agreement shall forthwith become void and there shall not be any liability
or obligation with respect to the terminated provisions of this Agreement on the
part of the Buyers or Seller, except and to the extent such termination results
from the willful breach by a party of any of its representations, warranties or
agreements hereunder.
ARTICLE XIV. MISCELLANEOUS.
14.01. NOTICES. All notices, claims, certificates, requests, demands
and other communications hereunder will be in writing or sent by facsimile
transmission and will be deemed to have been duly given upon receipt, addressed
as follows:
If to Buyers, to: BMC Software, Inc.
2101 CityWest Boulevard
Houston, Texas 77042
Attn: M. Brinkley Morse, Vice President
If to Seller, to: Sento Technical Innovations, Corporation
311 North State Street
Orem, Utah 84057
Attn: Robert K. Bench, President
If to Optionee Eng Lee
or Lee to: Managing Director
Australian Software Innovations (Services) Pty. Ltd.
Level 3, 51 Rawson Street
Epping NSW 2121
Australia
14.02. GOVERNING LAW. This Agreement is entered into under, and shall
be governed for all purposes by, the internal laws of the State of Texas as if
made and entered into between two residents of that state. The sole
jurisdiction and venue for actions related to the subject matter hereof shall be
the state and U.S. federal courts located in the State or county in which the
defendant has its principal place of business or, if an individual, his or her
residence.
14.03. COUNTERPARTS. This Agreement may be executed simultaneously in
several counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
14.04. ENTIRE AGREEMENT. This Agreement and the documents referred to
herein contain the entire agreement between the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
14.05. FURTHER ACTION. Each of the parties hereto shall use such
party s best efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate the
transactions contemplated by this Agreement.
14.06. EXPENSES. Each of the parties hereto shall bear such party s own
expenses in connection with this Agreement and the transactions contemplated
hereby.
14.07. CAPTIONS. The captions appearing herein are for the convenience
of the parties only and shall not be construed to affect the meaning of the
provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of Seller and Buyers as of the date first above
written.
BMC SOFTWARE, INC. SENTO TECHNICAL INNOVATIONS, CORPORATION
By: ___________________________ By: ______________________________
Name: M. Brinkley Morse Name:Robert K. Bench
Title: Vice President, General Counsel Title:President
BMC SOFTWARE (CAYMAN) LDC SELLER STOCKHOLDERS
By:____________________________ ____________________________________
Name: Gary B. Godfrey
Title:
_____________________________________
Douglas D. Yates
_____________________________________
Jeffrey L. Webster
______________________________________
Brian W. Braithwaite
_____________________________________
Robert K. Bench
AUSTRALIAN SOFTWARE INNOVATIONS (SERVICES)
PTY. LTD. ACN 050-053-355
By:__________________________________
Name: Eng Lee
Title: Managing Director
ENG LEE
_________________________________
Eng Lee
<PAGE>
ASSIGNMENT
KNOW ALL MEN BY THESE PRESENTS that Sento Technical Innovations,
Corporation, a Utah corporation (the Seller ), for good and valuable
consideration to Seller in hand paid (receipt of which is hereby acknowledged),
pursuant to an Asset Purchase and Services Agreement, dated as of June 30,
1997, (the Agreement ), among BMC Software, Inc., a Delaware corporation, BMC
Software (Cayman) LDC, a Cayman unlimited liability company (collectively, the
Buyers ), the Seller, the Seller Stockholders (as defined therein), Australian
Software Innovations (Services) Pty. Ltd. ACN 050-053-355, a limited company
organized under the laws of Australia, and Eng Lee does hereby by these
presents, sell, convey, assign, transfer and deliver unto Buyers, their
successors and assigns, the following:
The entire right, title, and interest, including without limitation the
right to sue and recover damages for past infringements of copyrights and the
like, for the United States and all foreign countries, in and to those certain
Products (as defined in the Agreement) except as described in this Assignment
and Section 2.01(b) of the Agreement.
The entire right, title, and interest, in and to those certain Assignable
Licenses (as defined in the Agreement) and Assignable Distribution Agreements
(as defined in the Agreement).
Seller warrants and covenants that no assignment, grant, mortgage, license,
or other agreement currently affecting the rights and property herein conveyed,
other than the exceptions described in Section 2.01(b) of the Agreement has been
(except as set forth in Schedule 4.03 annexed to the Agreement) made to others
by the Seller nor will Seller do so after the date hereof, and that the full
right to convey the same as herein expressed is possessed thereby.
Seller covenants that it will from time to time at its expense make,
assign, execute and deliver, or cause to be made, executed and delivered, such
instruments, acts, consents and assurances as Buyers may reasonably request to
more effectively assign, transfer to and vest in Buyers all of Seller s right,
title and interest to the aforesaid property or assets being assigned,
transferred and delivered hereunder and to put Buyers in possession of any such
property or assets being assigned, transferred and delivered hereunder.
To be binding on the successors and assigns of the Seller and to extend to
the successors, assigns, and nominees of the Buyers.
Sento Technical Innovations Corp.
PRESS RELEASE
FOR IMMEDIATE RELEASE
SENTO TECHNICAL INNOVATIONS CORPORATION ANNOUNCES ACQUISITION OF AUSTRALIAN
SOFTWARE INNOVATIONS
OREM, Utah, July 14, 1997 Sento Technical Innovations Corporation (NASDAQ
Symbol: SNTO) announced today that it has exercised its option to acquire
substantially all of the assets of Australian Software Innovations (Services)
Pty. Ltd. ( ASI ), a software developer and integrator located in Sydney,
Australia.
This transaction is valued at $2,483,000, which includes last year s payment of
$550,000 for the exclusive North American distribution rights for ASI s
OpenAviator system monitoring and performance management software. In
connection with the acquisition, Eng H. Lee, the founder and principal of ASI,
will provide consulting and transition services to Sento and Centerpost
Innovations Pty. Ltd., Sento s Australian subsidiary. In addition, Mr. Lee will
continue to serve as Vice President, Chief Technical Officer, and a director of
Sento.
Commenting on this key acquisition, Robert K. Bench, President of Sento, stated,
This acquisition is an important link in establishing a global presence for
Sento. ASI has a strong reputation in Southeast Asia for innovative product
development, leading information technology solutions, and expert training,
consulting, and support services. In addition to over 800 customer sites,
including key installations in financial, government, and private institutions
throughout Australia and Europe, ASI also successfully trains and supports an
effective server-based technology distribution network in Southeast Asia. We
are very excited to build on ASI s success as we expand into the growing Asian
technology market.
Eng Lee, President of ASI, said, Sento and ASI have worked in tandem since 1994
supplying organizations throughout Southeast Asia with leading software
solutions and superior technical support. During that time, Sento brought our
systems monitoring and management software product, OpenAviator, to the US
market as a distribution partner and product development center. This
transaction formalizes our long and mutually beneficial relationship, allowing
us to more effectively leverage our combined technical and financial resources.
PRESS RELEASE
For Immediate Release
BMC Software Strengthens PATROL Operating System Management Through Acquisition
of Performance Optimization Products From Sento Technical Innovations
BMC SOFTWARE CURRENTLY INTEGRATING OPENAVIATOR INTO PATROL MANAGEMENT SUITE
HOUSTON July 17, 1997 BMC Software Inc. (NASDAQ: BMCS) and Sento Technical
Innovations Corporation (NASDAQ:SNTO) today announced BMC Software's acquisition
of Sento's OpenAviator product suite, effective June 30, 1997. The $7 million
acquisition included rights under existing license and distribution agreements
related to the OpenAviator (also known as SYSMON) suite, as well as the
acquisition of two other software products - Control Tower and FlightLog. With
the acquisition of OpenAviator, BMC Software's PATROL Management Suite of
products now will monitor and interpret operating system performance data
extracted directly from the system's kernel - the part of the operating system
that performs the system's most basic functions. BMC Software also will acquire
an installed base of several hundred OpenAviator customers concentrated in the
Asia Pacific and European regions.
"When we evaluated the OpenAviator product suite, we saw a unique
opportunity to enhance our PATROL Knowledge Modules (KMs) for Unix and Windows
NT," said Wayne Morris, director of corporate strategy for BMC Software. "With
the integration of OpenAviator, PATROL will enable users to conduct online
monitoring, long-term data trending, automated event detection and action
execution - while minimizing the use of valuable CPU capacity. In addition,
this acquisition will strengthen our presence and market share in the rapidly
growing Asia Pacific region."
BMC Software and Sento are currently integrating the OpenAviator product
suite into BMC Software's PATROL Unix and NT KMs. The integration of
OpenAviator will improve the performance and functional depth of BMC Software's
core operating system products. Product support and maintenance for the current
OpenAviator customer base will be transitioned to BMC Software during the next
six months.
"Recognizing the unique capabilities and value of this product, we set out
to find the best company to appropriately integrate and market it worldwide. In
the end, we felt that the perfect match for OpenAviator was BMC, and we are
pleased to participate in a concerted effort to integrate the product into
PATROL," said Gary Godfrey, Sento chairman and CEO. "Additionally, the sale of
the OpenAviator product suite allows us to pursue other activities to facilitate
our corporate goals, including product development, acquisitions and the
expansion of our services resources."
OpenAviator Provides Vital Data On Operating Systems
OpenAviator is a system availability and analysis utility which provides
system administrators with the ability to immediately access and analyze the
events that affect the availability of computing resources. The product
centrally monitors Unix and Windows NT operating systems, enabling on-line
resource monitoring, background trend analysis, capacity planning, alarm
management, SNMP trap capabilities and user-defined data collection. <PAGE>
By integrating the kernel reader capabilities of OpenAviator into PATROL,
BMC Software's operating system KMs can collect parameter information from the
operating system in a more efficient manner. The enhanced operating system KMs
will enable users to view a "snapshot" of their entire system and view graphical
displays of data from multiple systems on one screen. Users can quickly
identify which applications and processes are consuming the majority of the
system resources.
Availability and Pricing
The PATROL Management Suite, including the PATROL Operating Systems KMs, is
currently available from BMC Software and its agents and distributors worldwide.
PATROL product pricing begins at $6,000 (U.S.), depending on the number of
consoles and managed objects. Pricing for individual PATROL Knowledge Modules
begins at $750 (U.S.), depending on the quantity and server size.
<PAGE>
About BMC Software
BMC Software Inc. is a worldwide developer and vendor of more than 150
software solutions that address the management of applications, data and
performance optimization across host-based and open systems environments. The
company's PATROL management suite automates and centralizes the control of all
the critical elements in distributed application management - data, databases,
servers, middleware, applications, networks and server hardware. BMC Software
is the world's 12th largest independent software vendor and a Forbes 500
company, with annual revenues exceeding $560 million in fiscal 1997. For more
information on BMC Software, access the World Wide Web at http://www.bmc.com or
call 800/841-2031 or 713/918-8800.
About Sento Technical Innovations Corporation
Sento Technical Innovations Corp. provides a full range of information
technology hardware, software, consultation and support services to the
worldwide server-based computing market. Products include integrated software
solutions, Internet and intranetworking, security systems, data storage and
recovery, systems configuration, installation and outsourcing. Sento
specializes in the Windows NT, UNIX and OpenVMS computing environments. For
more information, visit Sento's home page at http://www.sento.com.
BMC Software, the BMC Software logo and all other product or service names are
registered trademarks or trademarks of BMC Software, Inc. in the USA and other
select countries. The (R) and (TM) symbols indicate USA registration or USA
trademarks. Other logos and products/trade names are registered trademarks or
trademarks of their respective companies. BMC Software is an Equal Opportunity
Employer.
####
PRESS CONTACTS:
Sento Technical Innovations Corporation BMC Software, Inc
311 North State Street 2101 CityWest Boulevard
Orem, UT 84057-1970 Houston, TX 77042-2827
(801) 226-6222 (713) 918-2036
[email protected] [email protected]
Kathy Allred Angela Goodwin
Investor Relations Coordinator
