<PAGE> 1
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): April 01, 1997
-------------
SVI Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
33-36125-D 84-1131608
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
7979 Ivanhoe Avenue, Suite 500, La Jolla, California 92037
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(619) 551-2365
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
9364 Cabot Drive, Suite B, San Diego, California 92126
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 28, 1997, SVI Holdings, Inc. (the "Company"), closed the
acquisition of the business of Chapman Computers (Pty) Ltd ("Chapman")
through it's wholly owned subsidiary, Divergent Technologies (Pty) Limited
("Divergent").
Pursuant to the agreement dated April 28, 1997, Divergent acquired the
assets, Principal Technology, and Computer Software Programs of Chapman from
Chapman Computers (Pty) Ltd, The Chapman Computers Unit Trust (the "Trust")
and Colin Bruce Chapman.
The purchase price of $1,534,000 was agreed upon by arms-length
negotiation between the parties. The Company paid $784,000 (Australian
Dollars 1,000,000) in cash with the balance of $750,000 settled by the
issuance of 300,000 shares of the common stock of the Company to the Chapman
Computers Unit Trust. The Shares issued for the acquisition are to be held in
escrow for a period of 3 years from the completion of sale of Chapman to
Divergent.
The cash portion of the purchase price was financed by the sale of a
portion of the Company's investment in Softline Limited.
Under the terms of the agreement, if the pre-tax profits of Chapman for
the year ended June 30, 1998 exceed 450,000 Australian Dollars, an additional
200,000 shares will be due to the Trust, with additional shares payable for
the excess of Chapman's profits over 450,000 Australian Dollars. The number
of additional shares will be determined by a formula agreed upon between the
parties.
Under the terms of the agreement of confidentiality and restraint of trade,
the services of Colin Chapman will be retained as a consultant to Divergent
and he has agreed not to disclose certain information to other parties, or to
enter into any business arrangement in competition with Divergent for a period
of three years from the termination of his consulting services.
Chapman is an Australian company which specializes in providing computer
systems for accounting and management to the retail industry in Australia, New
Zealand and the Pacific Rim.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED:
Please see financial statement pages indexed on page F-1
(b) PRO FORMA FINANCIAL INFORMATION:
Please see financial statement pages indexed on page F-1
(c) EXHIBITS:
See Exhibit Index attached hereto.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<PAGE> 3
Date: July 31, 1997 SVI HOLDINGS, INC.
(Registrant)
By: /s/ Russell Schechter
-----------------------------
Russell Schechter
Chief Financial Officer
<PAGE> 4
INDEX TO EXHIBITS
Exhibit
Number Description
- -------- -----------
2.1 Asset Purchase Agreement dated as of April 28, 1997, between the
Company, Divergent, Colin Bruce Chapman, Chapman Computers and
the Chapman Computers Unit Trust.
2.2 Escrow Agreement between Escrow Agent and Divergent, Colin Bruce
Chapman, Chapman Computers and the Chapman Computers Unit Trust.
2.3 Deed of Assignment of Copyright between Chapman Computers and
Chapman Computers Unit Trust and Divergent Technologies (Pty) Ltd.
2.4 Confidentiality agreement and restraint of trade between Chapman
Computers Pty Limited and Chapman Computers Pty Limited as Trustee for
the Chapman Computers Unit Trust and Divergent Technologies (Pty) Ltd.
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS
F-2 Audited financial statements of Chapman Computers (Pty) Ltd for the
year ended June 30, 1996.
F-13 Audited financial statements of Chapman Computers (Pty) Ltd for the
year ended June 30, 1996.
F-24 Pro-Forma consolidated statement of operations for the year ended
September 30, 1996.
F-26 Pro-Forma consolidated statement of operations for the six months
ended March 31, 1997.
F-27 Pro-Forma consolidated balance sheet as at March 31, 1997
F-1
<PAGE> 6
CHAPMAN COMPUTERS PTY. LTD.
FINANCIAL STATEMENTS - 30TH JUNE, 1996
CONVERTED TO U.S. DOLLARS
CONTENTS
Page No.
Directors' Report 1
Auditor's Report 2
Statement by Directors 3
Profit and Loss Account 4
Balance Sheet 5
Notes to the Accounts 6 and 7
Cash Flow Statement 8 and 9
F-2
<PAGE> 7
CHAPMAN COMPUTERS PTY. LTD.
DIRECTORS' REPORT - 30TH JUNE, 1996
CONVERTED TO U.S. DOLLARS
Your directors present their report on the accounts of the company for the year
ended 30th June, 1996.
The following persons hold office as directors at the date of this report:
Colin B. Chapman Bronte J. Chapman
Joan E. Chapman
Principal Activities
The company's principal continuing activity was sales and development of
computer systems.
Results
The net result from operations after applicable income tax expense was a profit
of US$46,436 (1995 - US$201,116).
Dividends
No dividends were paid in respect of the year ended 30th June, 1995. The
directors have made no declaration in respect to the year ended 30th June, 1996.
Directors' Benefits
Since 30th June, 1995, no director of the company has received or become
entitled to receive a benefit (other than a benefit included in Note 2 to the
accounts or a fixed salary as a full-time employee) by reason of a contract made
by the company or a related corporation with the director or with a firm of
which he is a member, or with a company in which he has a substantial financial
interest, other than transactions between other Chapman Group entities on
commercial terms.
Third Party Indemnities
The company has not, during or since the end of the financial year, in respect
of any person who is or has been an officer or auditor of the company or a
related body corporate:
- -indemnified or made any relevant agreement for indemnifying against a
liability, including costs and expenses in successfully defending legal
proceedings; or
- -paid or agreed to pay a premium in respect of a contract insuring against a
liability for the costs of expenses to defend legal proceedings.
Signed at Mount Barker this 20th day of March, 1997 in accordance with a
resolution of the directors.
Director /s/Colin Chapman Director /s/Bronte Chapman
F-3
<PAGE> 8
CHAPMAN COMPUTERS PTY. LTD.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
CONVERTED TO U.S. DOLLARS
Scope
We have audited the financial statements, set out on pages 3 to 7, of Chapman
Computers Pty. Ltd. for the year ended 30th June, 1996. The company's directors
are responsible for the financial statements. We have conducted an independent
audit of these financial statements in order to express an opinion on them to
the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards to
provide reasonable assurance as to whether the financial statements are free of
material misstatement. Our procedures included examination, on a test basis, of
evidence supporting the amounts and other disclosures in the financial
statements, and the evaluation of accounting policies and significant accounting
estimates. These procedures have been undertaken to form an opinion whether, in
all material respects, the financial statements are presented fairly in
accordance with Accounting Standards and other mandatory professional reporting
requirements (Urgent Issues Group Consensus Views) and statutory requirements so
as to present a view which is consistent with our understanding of the company's
financial position and the results of its operations.
The audit opinion expressed in this report has been formed on the above basis.
Opinion
In our opinion, the financial statements of Chapman Computers Pty. Ltd. are
properly drawn up:
(a) so as to give a true and fair view of:
(i) the state of affairs as at 30th June, 1996 and of the results for the
financial year ended on that date, of the company; and
(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the
Corporations Law to be dealt with in the financial statements;
(b) in accordance with the provisions of the Corporations Law; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
Signed at Mount Barker this 20th day of March, 1997.
MAJOR, MAY & ASSOCIATES
Chartered Accountants
/s/Tim Major
Tim Major
(Registered Company Auditor)
F-4
<PAGE> 9
CHAPMAN COMPUTERS PTY. LTD.
ACCOUNTS - 30TH JUNE, 1996
CONVERTED TO U.S. DOLLARS
STATEMENT BY DIRECTORS
In the opinion of the directors:-
(a)the Profit and Loss Account is drawn up so as to give a true and fair view of
the results of the company for the financial year ended 30th June, 1996; and
(b)the accompanying Balance Sheet is drawn up so as to give a true and fair view
of the state of affairs of the company as at the end of that financial year.
At the date of this statement, there are reasonable grounds to believe that the
company will be able to pay its debts as and when they fall due.
Signed at Mount Barker this 20th day of March, 1997 in accordance with a
resolution of the directors.
Director /s/Colin Chapman Director /s/Bronte Chapman
F-5
<PAGE> 10
CHAPMAN COMPUTERS PTY. LTD.
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30TH JUNE,1996
CONVERTED TO U.S. DOLLARS
Note 1996 1995
US$ US$
--------- ---------
Operating Profit/(Loss) 2 62,489 201,116
Less: Income Tax Attributable to
Operating Profit 1(b) 16,053 -
--------- ---------
Operating Profit/(Loss) after Income Tax 46,436 201,116
Retained Profits/(Accumulated Losses)
at the beginning of the financial year (15,661) (203,026)
--------- ---------
Total available for Appropriation 30,775 1,910
Appropriations - -
Adjustment to R&D Capital Reserve - (10,547)
Adjustment due to currency fluctuations 222 (3,204)
--------- ---------
Retained Profits/(Accumulated Losses)
at the end of the financial year 30,997 (15,661)
========= =========
The accompanying notes form part of these accounts.
F-6
<PAGE> 11
CHAPMAN COMPUTERS PTY. LTD.
BALANCE SHEET AS AT 30TH JUNE, 1996
CONVERTED TO U.S. DOLLARS
1996 1995
Note US$ US$
CURRENT ASSETS
Cash 16,525 69,122
Receivables 3 419,885 544,718
--------- ---------
TOTAL CURRENT ASSETS 436,410 613,840
--------- ---------
NON CURRENT ASSETS
Plant and Equipment 4 52,719 36,367
--------- ---------
TOTAL NON CURRENT ASSETS 52,719 36,367
--------- ---------
TOTAL ASSETS 489,129 650,207
--------- ---------
CURRENT LIABILITIES
Provisions 16,696 -
--------- ---------
TOTAL CURRENT LIABILITIES 16,696 -
--------- ---------
NON CURRENT LIABILITIES
Creditors and Borrowings 5 224,567 469,515
--------- ---------
TOTAL NON CURRENT LIABILITIES 224,567 469,515
--------- ---------
TOTAL LIABILITIES 241,263 469,515
--------- ---------
NET ASSETS 247,866 180,692
========= =========
SHAREHOLDERS' EQUITY
Issued Capital 2 2
Reserves 6 216,867 196,351
Retained Profits /(Losses) 30,997 (15,661)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 247,866 180,692
========= =========
Capital Expenditure Commitments 7
Contingent Liabilities 8
The accompanying notes form part of these accounts.
F-7
<PAGE> 12
CHAPMAN COMPUTERS PTY. LTD.
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30TH JUNE,1996
CONVERTED TO U.S. DOLLARS
1.STATEMENT OF ACCOUNTING POLICIES
The accounts have been prepared in accordance with all Applicable Accounting
Standards and with the disclosure requirements of Schedule 5 of the Corporations
Law. The accounts have been prepared in accordance with the historical cost
convention. The accounting policies adopted are consistent with those of the
previous year.
(a)Depreciation
Depreciation is calculated at rates prescribed by the Commissioner of Taxation,
so as to write off the assets over their estimated useful lives.
(b)Income Tax
Tax effect accounting procedures are followed whereby the income tax expense in
the profit and loss statement is matched with the accounting profit (after
allowing for permanent differences). Income tax on net cumulative timing
differences is set aside to the deferred income tax and future tax benefit
accounts at current rates. The future tax benefit relating to any tax losses is
not carried forward as an asset unless the benefit can be regarded as virtually
certain of realisation.
1996 1995
US$ US$
2.OPERATING PROFIT BEFORE INCOME TAX
has been determined after :
(a)Charging as Expenses:
Depreciation of fixed assets 19,671 14,124
Directors emoluments - -
Rental expense on operating leases 25,294 18,979
--------- ---------
(b)Crediting as Revenue:
Sales 902,249 806,456
Interest 12,674 1,488
--------- ---------
3.RECEIVABLES
Trade Debtors 403,658 283,968
Unbilled Work in Progress 15,750 241,351
Related Entity Loan Accounts 477 19,399
--------- ---------
419,885 544,718
========= =========
F-8
<PAGE> 13
CHAPMAN COMPUTERS PTY. LTD.
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30TH JUNE,1996
CONVERTED TO U.S. DOLLARS
4.PLANT & EQUIPMENT - AT COST
Office Furniture, Computers and Equipment 165,943 120,357
Less Accumulated Depreciation 113,224 83,990
--------- ---------
52,719 36,367
========= =========
5. PROVISIONS
Provision for Income Tax 16,696 -
--------- ---------
16,696 -
========= =========
6.CREDITORS & BORROWINGS
Related Entity Loan Accounts 224,567 469,515
--------- ---------
224,567 469,515
========= =========
7.RESERVES
Capital Reserve 60,797 55,046
R&D Capital Reserve 156,070 141,305
--------- ---------
216,867 196,351
========= =========
8.CAPITAL EXPENDITURE COMMITMENTS
No forward commitments to capital expenditure have been made.
9.CONTINGENT LIABILITIES
No contingent items existed at year end.
F-9
<PAGE> 14
Chapman Computers Pty Ltd
Statement of Cash Flows
Converted to U.S. Dollars
For the Year Ended 30th June, 1996
1996 1995
US$ US$
Cash Flows from Operarting Activities
Receipts from customers 1,008,160 658,618
Payments to suppliers (88,392) (71,993)
Wages & related costs (557,027) (348,868)
Interest received 12,674 1,488
Interest & other finance costs paid (8,374) (13,387)
Income Tax paid - -
Other expenses (178,970) (158,455)
---------- ----------
Net cash flows from Operating Activities 188,071 67,403
Cash Flows from Investing Activities
Acquisition of property plant & equip (45,586) (15,447)
---------- ----------
Net Cash Flows from Investing Activities (45,586) (15,447)
Cash Flows from financing Activities
Loans paid back by related entities 18,922 (2,439)
Loans paid back to related entities (244,948) (2,946)
---------- ----------
Net Cash Flows from Financing Activities (226,026) (5,385)
Net increase (decrease) in cash held (83,541) 46,571
Cash at beginning of year 69,122 31,912
Effect of exchange rates changes 30,944 (9,361)
---------- ----------
Cash at end of year 16,525 69,122
========== ==========
F-10
<PAGE> 15
Notes to the Statement of Cash Flows
- ------------------------------------
1. Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes cash on
hand and in banks and investments in money market instruments, net of
outstanding bank overdrafts. Cash at the end of the financial year as
shown in the statement of cash flows is reconciled to the related items
in the balance sheet as follows:
1996 1995
US$ US$
Cash 16,525 69,122
2. Reconciliation of Net Cash provided by Operating Activities to Operating
Profit after Income Tax.
1996 1995
US$ US$
Operating profit after income tax 46,436 201,116
Depreciation 19,671 14,124
Change in assets & liabilities:
Decrease in recivables 105,911 (147,837)
Increase in provision for income tax 16,053
----------- -----------
188,071 67,403
=========== ===========
F-11
<PAGE> 16
CHAPMAN COMPUTERS PTY. LTD.
DETAILED PROFIT AND LOSS STATEMENT
FOR THE YEAR ENDED 30TH JUNE,1996
CONVERTED TO U.S. DOLLARS
1996 1995
US$ US$
INCOME
Sales of Products and Services 902,249 806,456
Interest Received 12,674 1,488
--------- ---------
914,923 807,944
EXPENSES
Accounting Fees 984 2,594
Advertising 1,062 1,336
Bank Charges 1,769 1,128
Computer Equipment for Resale 85,947 66,435
Computer Software 2,445 5,558
Consultancy - 80
Cleaning 1,137 1,220
Depreciation 19,671 14,124
Electricity 2,096 2,634
Freight & Cartage 1,059 1,811
In-House Catering 573 -
Interest 6,605 12,259
Insurance 3,242 2,828
Leasing of Equipment 8,826 10,085
Licences and Subscriptions 1,078 6,832
Office Expenses and Petty Cash 2,633 1,097
Payroll Tax 3,427 -
Postage 872 405
Printing and Stationery 5,956 5,641
Rent 16,468 8,894
Repairs and Maintenance 10,477 12,059
Royalties 18,930 19,489
Secretarial - 222
Security 157 382
Seminar Costs 54 246
Sub Contractors 163,947 46,047
Superannuation Contributions 15,495 9,600
Telephone 21,308 17,353
Travelling Expenses 78,630 63,249
Wages and Salaries 377,585 293,221
--------- ---------
852,434 606,828
--------- ---------
Net Profit 62,489 201,116
========= =========
F-12
<PAGE> 17
CHAPMAN COMPUTERS PTY. LTD.
FINANCIAL STATEMENTS - 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
CONTENTS
Page No.
Directors' Report 1
Auditor's Report 2
Statement by Directors 3
Balance Sheet 5
Notes to the Accounts 6 and 7
Cash Flow Statement 8 and 9
F-13
<PAGE> 18
CHAPMAN COMPUTERS PTY. LTD.
DIRECTORS' REPORT - 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
Your directors present their report on the accounts of the company for the year
ended 30th June, 1995.
The following persons hold office as directors at the date of this report:
Colin B. Chapman Bronte J. Chapman
Joan E. Chapman
Principal Activities
The company's principal continuing activity was sales and development of
computer systems.
Results
The net result from operations after applicable income tax expense was a
profit of US$201,116 (1994 - US$126,734).
Dividends
No dividends were paid in respect of the year ended 30th June, 1994. The
directors have made no declaration in respect to the year ended 30th June,
1995.
Directors' Benefits
Since 30th June, 1994, no director of the company has received or become
entitled to receive a benefit (other than a benefit included in Note 2 to the
accounts or a fixed salary as a full-time employee) by reason of a contract
made by the company or a related corporation with the director or with a firm
of which he is a member, or with a company in which he has a substantial
financial interest, other than transactions between other Chapman Group
entities on commercial terms.
Third Party Indemnities
The company has not, during or since the end of the financial year, in respect
of any person who is or has been an officer or auditor of the company or a
related body corporate:
- - indemnified or made any relevant agreement for indemnifying against a
liability, including costs and expenses in successfully defending legal
proceedings; or
- - paid or agreed to pay a premium in respect of a contract insuring against
a liability for the costs of expenses to defend legal proceedings.
Signed at Mount Barker this 20th day of March, 1997 in accordance with a
resolution of the directors.
Director /s/Colin Chapman Director /s/Bronte Chapman\
F-14
<PAGE> 19
CHAPMAN COMPUTERS PTY. LTD.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
CONVERTED TO U.S. DOLLARS
Scope
We have audited the financial statements, set out on pages 3 to 7, of Chapman
Computers Pty. Ltd. for the year ended 30th June, 1995. The company's
directors are responsible for the financial statements. We have conducted an
independent audit of these financial statements in order to express an
opinion on them to the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards
to provide reasonable assurance as to whether the financial statements are
free of material misstatement. Our procedures included examination, on a
test basis, of evidence supporting the amounts and other disclosures in the
financial statements, and the evaluation of accounting policies and
significant accounting estimates. These procedures have been undertaken to
form an opinion whether, in all material respects, the financial statements
are presented fairly in accordance with Accounting Standards and other
mandatory professional reporting requirements (Urgent Issues Group Consensus
Views) and statutory requirements so as to present a view which is consistent
with our understanding of the company's financial position and the results of
its operations.
The audit opinion expressed in this report has been formed on the above basis.
Qualification
The financial statements of the company have not previously been audited.
For this reason we are unable to comment on the comparative figures used in the
financial statements, nor on any carried forward amounts that form part of
the current year's figures.
Opinion
Subject to the above qualification, in our opinion, the financial statements
of Chapman Computers Pty. Ltd. are properly drawn up:
(a) so as to give a true and fair view of:
(i) the state of affairs as at 30th June, 1995 and of the results for the
financial year ended on that date, of the company; and
(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the
Corporations Law to be dealt with in the financial statements;
(b) in accordance with the provisions of the Corporations Law; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
Signed at Mount Barker this 20th day of March, 1997.
MAJOR, MAY & ASSOCIATES
Chartered Accountants
/s/Tim Major
TIM MAJOR
(Registered Company Auditor)
F-15
<PAGE> 20
CHAPMAN COMPUTERS PTY. LTD.
ACCOUNTS - 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
STATEMENT BY DIRECTORS
In the opinion of the directors:-
(a) the Profit and Loss Account is drawn up so as to give a true and fair view
of the results of the company for the financial year ended 30th June, 1995;
and
(b) the accompanying Balance Sheet is drawn up so as to give a true and fair
view of the state of affairs of the company as at the end of that financial
year.
At the date of this statement, there are reasonable grounds to believe that the
company will be able to pay its debts as and when they fall due.
Signed at Mount Barker this 20th day of March, 1997 in accordance with a
resolution of the directors.
Director /s/Colin Chapman Director /s/Bronte Chapman
F-16
<PAGE> 21
CHAPMAN COMPUTERS PTY. LTD.
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
Note 1995 1994
US$ US$
Operating Profit/(Loss) 2 201,116 126,734
Less: Income Tax Attributable to
Operating Profit 1(b) - -
--------- ---------
Operating Profit/(Loss) after Income Tax 201,116 126,734
Retained Profits/(Accumulated Losses)
at the beginning of the financial year (203,026) (313,975)
--------- ---------
Total available for Appropriation (1,910) (187,241)
Appropriations - -
Adjustment to R&D Capital Reserve (10,547) -
Adjustment due to currency fluctuations (3,204) (15,785)
--------- ---------
Retained Profits/(Accumulated Losses)
at the end of the financial year (15,661) (203,026)
========= =========
The accompanying notes form part of these accounts.
F-17
<PAGE> 22
CHAPMAN COMPUTERS PTY. LTD.
BALANCE SHEET AS AT 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
Note 1995 1994
US$ US$
CURRENT ASSETS
Cash 69,122 31,912
Receivables 3 544,718 394,442
--------- ---------
TOTAL CURRENT ASSETS 613,840 426,354
--------- ---------
NON CURRENT ASSETS
Plant and Equipment 4 36,367 34,622
--------- ---------
TOTAL NON CURRENT ASSETS 36,367 34,622
--------- ---------
TOTAL ASSETS 650,207 460,976
--------- ---------
NON CURRENT LIABILITIES
Creditors and Borrowings 5 469,515 472,461
--------- ---------
TOTAL NON CURRENT LIABILITIES 469,515 472,461
--------- ---------
TOTAL LIABILITIES 469,515 472,461
--------- ---------
NET ASSETS 180,692 (11,485)
========= =========
SHAREHOLDERS' EQUITY
Issued Capital 2 2
Reserves 6 196,351 191,539
Retained Profits/(Losses) (15,661) (203,026)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 180,692 (11,485)
========= =========
Capital Expenditure Commitments 7
Contingent Liabilities 8
The accompanying notes form part of these
accounts.
F-18
<PAGE> 23
CHAPMAN COMPUTERS PTY. LTD.
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
1.STATEMENT OF ACCOUNTING POLICIES
The accounts have been prepared in accordance with all Applicable Accounting
Standards and with the disclosure requirements of Schedule 5 of the
Corporations Law. The accounts have been prepared in accordance with the
historical cost convention. The accounting policies adopted are consistent
with those of the previous year.
(a)Depreciation
Depreciation is calculated at rates prescribed by the Commissioner of
Taxation, so as to write off the assets over their estimated useful lives.
(b)Income Tax
Tax effect accounting procedures are followed whereby the income tax expense
in the profit and loss statement is matched with the accounting profit (after
allowing for permanent differences). Income tax on net cumulative timing
differences is set aside to the deferred income tax and future tax benefit
accounts at current rates. The future tax benefit relating to any tax losses
is not carried forward as an asset unless the benefit can be regarded as
virtually certain of realisation. No income tax is payable in respect of the
current year (1994 Nil) due to carried forward tax losses.
1995 1994
US$ US$
2. OPERATING PROFIT BEFORE INCOME TAX
has been determined after :
(a) Charging as Expenses:
Depreciation of fixed assets 14,124 15,571
Directors emoluments - -
Rental expense on operating leases 18,979 15,713
--------- ---------
(b) Crediting as Revenue:
Sales 806,456 630,263
Interest 1,488 529
--------- ---------
3. RECEIVABLES
Trade Debtors 283,968 173,890
Unbilled Work in Progress 241,351 203,591
Related Entity Loan Accounts 19,399 16,960
--------- ---------
544,718 394,441
========= =========
F-19
<PAGE> 24
CHAPMAN COMPUTERS PTY. LTD.
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
1995 1994
US$ US$
4. PLANT & EQUIPMENT - AT COST
Office Furniture, Computers and Equipment 120,357 104,910
Less Accumulated Depreciation 83,990 70,228
--------- ---------
36,367 34,622
========= =========
5. CREDITORS & BORROWINGS
Related Entity Loan Accounts 469,515 472,461
--------- ---------
469,515 472,461
========= =========
6. RESERVES
Capital Reserve 55,046 56,165
R&D Capital Reserve 141,305 135,374
--------- ---------
196,351 191,539
========= =========
7. CAPITAL EXPENDITURE COMMITMENTS
No forward commitments to capital expenditure have been made.
8. CONTINGENT LIABILITIES
No contingent items existed at year end.
F-20
<PAGE> 25
Chapman Computers Pty Ltd
Statement of Cash Flows
Converted to U.S. Dollars
For the Year Ended 30th June, 1996
1995
US$
Cash Flows from Operarting Activities
Receipts from customers 658,618
Payments to suppliers (71,993)
Wages & related costs (348,868)
Interest received 1,488
Interest & other finance costs paid (13,387)
Income Tax paid -
Other expenses (158,455)
----------
Net cash flows from Operating Activities 67,403
Cash Flows from Investing Activities
Acquisition of property plant & equip (15,447)
----------
Net Cash Flows from Investing Activities (15,447)
Cash Flows from financing Activities
Loans paid back by related entities (2,439)
Loans paid back to related entities (2,946)
----------
Net Cash Flows from Financing Activities (5,385)
Net increase (decrease) in cash held 46,571
Cash at beginning of year 31,912
Effect of exchange rates changes (9,361)
----------
Cash at end of year 69,122
==========
F-21
<PAGE> 26
Notes to the Statement of Cash Flows
- ------------------------------------
1. Reconciliation of Cash
For the purposes of the statement of cash flows, cash includes cash on
hand and in banks and investments in money market instruments, net of
outstanding bank overdrafts. Cash at the end of the financial year as
shown in the statement of cash flows is reconciled to the related items
in the balance sheet as follows:
1995
US$
Cash 69,122
2. Reconciliation of Net Cash provided by Operating Activities to Operating
Profit after Income Tax.
1995
US$
Operating profit after income tax 201,116
Depreciation 14,124
Change in assets & liabilities:
Decrease in receivables (147,837)
-----------
67,403
===========
F-22
<PAGE> 27
CHAPMAN COMPUTERS PTY. LTD.
DETAILED PROFIT AND LOSS STATEMENT
FOR THE YEAR ENDED 30TH JUNE, 1995
CONVERTED TO U.S. DOLLARS
1995 1994
US$ US$
INCOME
Sales of Products and Services 806,456 630,263
Interest Received 1,488 529
--------- ---------
807,944 630,792
--------- ---------
EXPENSES
Accounting Fees 2,594 -
Advertising 1,336 1,822
Bank Charges 1,128 880
Computer Equipment for Resale 66,435 45,170
Computer Software 5,558 49,218
Consultancy 80 -
Cleaning 1,220 1,050
Depreciation 14,124 15,572
Electricity 2,634 2,566
Freight & Cartage 1,811 2,333
Interest 12,259 14,604
Insurance 2,828 3,472
Leasing of Equipment 10,085 7,427
Licences and Subscriptions 6,832 964
Office Expenses and Petty Cash 1,097 1,073
Postage 405 417
Printing and Stationery 5,641 2,367
Rent 8,894 8,286
Repairs and Maintenance 12,059 8,230
Royalties 19,489 26,239
Secretarial 222 -
Security 382 -
Seminar Costs 246 -
Staff Training - 3,192
Sub Contractors 46,047 21,219
Superannuation Contributions 9,600 6,903
Telephone 17,353 15,890
Travelling Expenses 63,249 32,779
Wages and Salaries 293,221 232,385
--------- ---------
606,828 504,058
--------- ---------
Net Profit 201,116 126,734
========= =========
F-23
<PAGE> 28
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisition of Chapman Computers (Pty) Ltd. had occurred
on October 1, 1995. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the acquisition been made as of those dates or of the results which may
occur in the future.
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Year Ended September 30, 1996
SVI Pro-Forma
Historical Divergent Chapman Adjust. Pro-Forma
Net Sales 673,608 6,039,901 900,140 7,613,649
Cost Of Goods Sold 100,389 2,071,653 346,777 2,518,819
Gross Profit 573,219 3,968,248 553,363 5,094,830
Selling, general,
and administrative
expenses 1,089,309 3,786,146 575,590 A 308,183 5,759,229
----------- ----------- --------- -----------
Profit (loss)
from Operations (516,090) 182,101 (22,227) (664,399)
Other Income
/(expense)
Other Income 58,037 629,006 687,043
Interest (133,505) 6,014 (127,491)
Equity in
earnings of
Softline
Holdings Limited 379,429 3,067 382,496
Gain on foreign
currency
translation 343,000 343,000
----------- ----------- --------- -----------
Total other
income(expense) 646,961 629,006 6,014 1,285,048
----------- ----------- --------- -----------
Income from
continuing
operations
before Taxation 130,871 811,107 (16,213) 620,649
----------- ----------- --------- -----------
Taxation 226,442 - 226,442
----------- ----------- --------- -----------
Income (loss)
from continuing
operations 130,871 584,665 (16,213) 394,207
----------- ----------- --------- -----------
Income (loss)
from discontinued
operations
Loss from
operations of
Tango Products
USA, Inc. (67,319) (67,319)
F-24
<PAGE> 29
Gain on disposal
of Tango Products,
Inc. 83,911 83,911
----------- ----------- --------- -----------
Total income (loss)
from discontinued
operations 16,592 16,592
----------- ----------- --------- -----------
Net income (loss) 147,463 584,665 (16,213) 410,799
=========== =========== ========= ===========
Per share information
Income from
continuing operations 0.01 0.03
Income from
discontinued operations - -
----------- -----------
Net income per share 0.01 0.03
=========== ===========
Weighted average
common shares
outstanding 11,902,469 B 1,600,000 13,502,469
=========== ===========
Notes:
A Amotization of goodwill (128,043)
Amortization of Software License Rights (180,140)
---------
(308,183)
=========
B Shares issued for acquisition of Divergent 1,300,000
Shares issued for acquisition of Chapman 300,000
---------
1,600,000
=========
F-25
<PAGE> 30
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Six Months Ended March 31, 1997
(Unaudited)
SVI Holdings Chapman Pro Forma Pro Forma
Historical Computers Adjustments Consolidated
Net Sales 3,930,164 699,426 4,629,590
Cost Of Goods Sold 1,152,447 219,501 1,371,948
---------- ------- ---------
Gross Profit 2,777,717 479,925 3,257,642
Selling, General and
Administrative Expenses 2,379,044 296,903 A (29,276) 2,646,672
---------- ------- ----------
Profit from operations 398,673 183,022 610,971
Net interest Paid (46,072) (553) (46,625)
Other Income 20,149 32,891 53,040
Gain on disposal of
Softline Shares 152,253 152,253
Equity in earnings
of Softline Holdings 348,123 348,123
Foreign Exchange Loss (32,318) (32,318)
---------- ------- ----------
Income before income tax 840,808 215,361 1,085,444
Income Taxes 277,591 277,591
---------- ------- ----------
Net Income 563,217 215,361 807,853
========== ======= ==========
Net income per Share 0.04 0.06
========== ======= ==========
Weighted Average Number
of Common Shares Outstanding 13,248,340 B 300,000 13,548,340
========== ======= ==========
A Amortization of Goodwill on acquisition of Chapman 20,456
Amortization of Software license acquired from Chapman 8,820
------
29,276
======
B Shares issued for acquisition of Chapman 300,000
F-26
<PAGE> 31
SVI Holdings, Inc. and Subsidiaries
CONSOLIDATED PRO FORMA BALANCE SHEET
At March 31, 1997
SVI Historical Pro Forma Pro Forma
(Unaudited) Chapman Adjustments Consolidated
ASSETS
Current Assets
Pledged certificates of
deposit 700,000 700,000
Cash 216,453 109,352 325,805
Accounts receivable 1,039,709 434,275 1,473,984
Inventories 382,746 382,746
Prepaid expenses and
other current assets 323,640 323,640
----------- -------- ---------
Total current assets 2,662,548 543,627 3,206,175
Furniture and equipment,
net of accumulated
depreciation 2,556,277 2,556,277
Investment in Softline
Holdings, at equity 3,482,896 3,482,896
License rights, net of
accumulated amortization 3,168,750 A 352,800 3,521,550
Note receivable 153,225 153,225
Other Assets 1,027 1,027
Goodwill arising on
acquisition of subsidiary 1,552,378 B 818,220 2,370,598
---------- -------- -----------
13,577,101 543,627 15,291,748
=========== ======== ===========
LIABILITIES AND STOCKHOLDERS DEFICIT
Current liabilities
Lines of credit 699,399 699,399
Notes payable 320,051 320,051
Accounts payable and
accrued expenses 1,125,766 180,647 1,306,413
Loan from Sudash (Pty) Ltd 1,872,897 1,872,897
----------- -------- -----------
Total current liabilities 4,018,113 180,647 4,198,760
Due to stockholders 1,437,365 1,437,365
Note payable 3,268,242 C 784,000 4,052,242
Stockholders Equity
Preferred stock, $.0001 par
value, 5,000,000 shares
authorized, none issued
Common stock, $.0001 par
value, 50,000,000 shares
authorized, 13,875,284
issued and outstanding 1,387 2 D 28 1,417
Additional paid in capital 10,682,639 215,491 E 534,479 11,432,609
Accumulated deficit (5,804,165) 147,487 (147,487)(5,804,165)
Cumulative translation
adjustment (26,480) (26,480)
----------- ------- -----------
Total stockholders equity 4,853,381 362,980 5,603,381
----------- ------- -----------
13,577,101 543,627 15,291,748
=========== ======= ===========
F-27
<PAGE> 32
A Acquisition of Software Licence rights from Chapman 352,800
B Excess of purchase price over Net Assets Value of Chapman Computers
C Cash portion of purchase consideration paid to Chapman in April 1997
D Consolidation of equity of Chapman (2)
Issue of 300,000 shares as part of purchase consideration 30
----
28
====
E Consolidation of equity of Chapman (215,491)
Issue of 300,000 shares as part of purchase consideration 749,970
---------
534,479
=========
F-28
<PAGE> 1
EXHIBIT 2.1
THIS AGREEMENT is made on the 28th day of April 1997
BETWEEN
CHAPMAN COMPUTERS PTY LTD ACN 008 004 331 trading as Chapman Computers of 53
Gawler Street, Mount Barker in the State of South Australia of the one part
hereinafter called ("the Owner")
AND
CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 of 53 Gawler Street, Mount Barker
in the State of South Australia aforementioned in its capacity as trustee for
the Chapman Computers Unit Trust ("the Trust").
AND
COLIN BRUCE CHAPMAN of 10 Uplands Street, Mount Barker in the State of South
Australia of the second part hereinafter called ("Chapman")
AND
DIVERGENT TECHNOLOGIES PTY LIMITED ACN 003 908 325 of Level 1, 35 Spring Street,
Bondi Junction in the State New South Wales of the third part, hereinafter
called ("Purchaser")
AND
S.V.I. HOLDINGS INC. a Nevada Corporation situate in the United States of
America ("SVI")
RECITALS:
A. The Trust developed and owns the intellectual property in the Principal
Technology as well as the rights to market the Principal Technology.
B. The Owner is the proprietor of all other assets of Chapman Computers Pty
Limited ("the business").
C. The parties have agreed to enter into this Agreement whereby the Owner and
the Trust agrees to assign and sell to the Purchaser the assets of the
business as hereinafter defined as well as the Principal Technology and the
Computer Software Programs on terms and conditions hereinafter appearing.
D. SVI enters into this Agreement for the purposes of issuing shares to the
Purchaser as referred to in this Agreement.
<PAGE> 2
2
NOW THIS AGREEMENT WITNESSETH as follows:
1. Definitions and Interpretations
1.1 Definitions
"Accounts" means the profit & loss accounts of the Owner for the twelve (12)
months ending for the periods June 1994, June 1995 and June 1996 and from 1 July
1996 to 28 February 1997 which are annexed hereto and marked 'A', 'B', 'C' and
'D' respectively and summary of these four periods which is Annexure 'E';
"Associated Documentation" means operating manuals and other printed materials
as developed by the Trust including users' manuals, programming manuals,
modification manuals, flow charts, drawing and software listings which are
designed to assist or supplement the understanding or application of the
Computer Software Program;
"Completion Date" means the date being 28 March 1997;
"Payment Date" means on or before the date being 30 April 1997;
"delivery" shall mean the delivery of the Principal Technology on the Completion
Date;
"Principal Technology" means Computer Software Programs and all associated
products and know- how which together comprise a package called "CRMS" and
includes all Intellectual Property of every kind and to such programs, products
and know-how;
"Computer Software Programs" means the computer software programs (including
source-codes) and all associated products and know-how which together comprise
computer software package/s called "CRMS".
"Intellectual Property" includes:
(a) any patents, utility models, copyrights, registered or unregistered trade
marks trade names, brand names, registered designs and commercial names and
designations;
(b) any invention, discovery, trade secret, know-how, computer software and
confidential, scientific, technical and product information;
(c) any other rights resulting from intellectual activity arising out of
development of software products by the Trust.
relating to the computer software known as CRMS.
"Assets" means the assets set out in Annexure 'F' as well as the Principal
Technology, the Associated Documentation, Computer Software Programs and
Intellectual Property owned by the Owner and the Trust.
<PAGE> 3
3
"Customer List" means a statement of existing users and past users during the
period two (2) years from the date hereof of the Owner and the Trust which shall
be handed over on completion.
"Disclosed Information" means summary of the financial status of the Owner and
the Trust for the periods ending 30 June 1994, 30 June 1995 and 30 June 1996
which is annexed hereto and marked with the letter 'E', a summary of charges
pursuant to maintenance contracts the Owner and the Trust have with its
Customers which is annexed hereto and marked 'G', work-in-progress summary as at
17 January 1997 which is annexed hereto and marked 'H' and budgeted accounts and
projections of the financial affairs of the Owner and the Trust for the periods
1 March 1997 to 30 June 1997 and from 1 July 1997 to 30 June 1998 which is
annexed hereto and marked with the letter 'I' and Work in Progress Schedule as
at 27 March 1997 which is annexed hereto and marked with the letter 'L'.
"Warranties" means the warranties and representations referred to in this
Agreement;
"Regulations" means the requisite Stock Exchange regulations in the United
States of America relating to the Purchaser and/or S.V.I. Holdings Inc.
concerning this Agreement and the issue of shares hereinafter mentioned.
1.2 Interpretation
In this Agreement unless the context otherwise requires:
(a) words importing the singular include the plural and vice versa:
(b) words importing a gender include any gender;
(c) reference to a party includes that party's successors, legal personal
representatives and permitted assigns.
2. Scope of agreement
2.1 The Owner and the Trust agrees to assign and sell to the Purchaser the
Assets and the Owner agrees to procure that Chapman shall consult to the
Purchaser as hereinafter mentioned. The Purchaser is not purchasing the
shares of the Owner or the shares and units in the Trust nor shall the
Purchaser assume any of the liabilities of the Owner or the Trust other than
referred to in Clause 14.4 hereof.
2.2 This Agreement is conditional upon the Purchaser and SVI complying with the
Regulations.
2.3 The Purchaser and SVI shall use their best endeavours to comply with the
Regulations.
2.4 If the Purchaser shall not be able to comply with the Regulations to
complete the purchase within thirty (30) days from the Payment Date then
either party shall have the right to rescind this Agreement by giving
notice, in writing, to the other.
<PAGE> 4
4
2.5 If this Agreement is rescinded then neither party shall save for any
antecedent breach have any claim or claim for compensation against the other
arising out of such rescission.
3. Documentation
3.1 The Trust shall deliver to the Purchaser all the Associated Documentation
relating to the Principal Technology.
4. Purchase Price
4.1 The Purchase Price payable by the Purchaser to the Owner and the Trust for
the assets shall subject to the provisions of Clauses 17.2 and 18.1 be an
amount of One Million Dollars ($1,000,000.00) payable on the Payment Date
in the following manner:
(i) $100,000.00 to the Owner for all plant, fittings and fixtures;
(ii) $450,000.00 to the Owner for the debtors of the Owner;
(iii) $450,000.00 to the Trust for the Principal Technology, the Computer
Software Programs and Intellectual Property.
4.2 In addition to the amount referred to in Clause 4.1, SVI shall transfer or
issue to the Trust Three Hundred Thousand (300,000) shares in SVI which are
shares traded on the NASDAQ over the counter stock exchange in the United
States of America as additional consideration for the Principal Technology,
the Computer Software Programs and the Intellectual Property. These shares
shall be held in escrow in accordance with the provisions of Clause 4.6.
4.3 If the Purchaser establishes that for the period 1 July 1997 to June 1998,
the pre-tax profits derived by the Purchaser relating to the business in
respect of the assets is at least Four Hundred and Fifty Thousand
($450,000.00) is earned, then the Purchaser shall request that SVI shall
transfer or issue to the Trust Two Hundred Thousand (200,000) shares in SVI
whereupon SVI shall transfer to or issue to the Purchaser such shares. These
shares shall also be held in escrow in accordance with the provisions of
Clause 4.6
4.4 The Trust shall not be entitled to any additional shares as referred to in
Clause 4.3 if the pre-tax profits derived by the Purchaser in respect of
business generated in respect of the assets do not achieve $450,000.00 for
the period 1 July 1997 to 30 June 1998.
4.5 The Purchaser shall after 30 June 1998 if the Trust shall be entitled to
additional shares pursuant to this Clause request that SVI issue to the
Trust, in further consideration of the purchase of the Principal Technology,
the Computer Software Programs and the Intellectual Property and SVI shall
issue to the Vendor the additional number of such shares in SVI calculated
upon the following formula where:
<PAGE> 5
5
A97 = Actual before tax profit of the Purchaser with specific reference to its
business conducted in respect of the Assets ("the business") for year ending 30
June 1997.
A98 = Actual before tax profit of the business for the year ended 30 June 1998.
M98 = Before tax profits relating to the business for the year ended 30 June
1998 the minimum amount being $450,000.00.
B97 = Budget of $371,000 for year ending 30 June 1997.
S97 = Shortfall, if any, between $371,000 and A97.
Tax = Company tax at the rate applicable for the year ending 30 June 1998.
Exchange = Exchange rate between the Australian and US Dollars as at 30 June
1998.
S.V. = Market share value of S.V.I. Holdings Inc. as at 30 June 1998.
Number of Shares, if applicable, is the result of the following calculation:
A98 minus $450,000.00 minus S97 minus tax multiplied by Exchange divided by S.V.
multiplied by 3.
4.6 The shares referred to in Clauses 4.2, 4.3, 4.4 and 4.5 shall be held in
escrow by a Solicitor agreed to between the parties and failing agreement
appointed by the President for the time being of the Law Society of South
Australia for a period of three (3) years from the Completion Date during
which period the Trust shall not be entitled to deal in any manner with the
said shares. The Trust shall procure that said escrow agent shall enter
into an escrow agreement with the Purchaser and SVI in the form annexed
hereto and marked 'J'.
4.7 Notwithstanding the provisions of Clause 4.6 if the Trust requires for
special reasons because of financial hardship to sell any of the
aforementioned parcel of SVI shares prior to the period of three (3) years
from the Completion Date, then the Purchaser shall use its best endeavours
to procure the approval of the Board of Directors of SVI is not unreasonably
withheld for the Trust to sell any shares prior to the said three (3) year
period.
5. Delivery
5.1 The Owner and the Trust shall deliver the Assets owned by it to the
Purchaser at the Owner's premises at 53 Gawler Street, Mount Barker in the
State of South Australia on the Completion Date.
<PAGE> 6
6
6. Risk
6.1 Risk of loss of or damage to the Assets passes to the Purchaser on the
Completion Date.
7. Warranties
The following warranties apply:
7.1 The Owner and the Trust gives to the Purchaser the following Warranties:
(a) All the assets are:
(i) fully paid for;
(ii) in the possession of the Owner and the Trust;
(iii) the absolute property of the Owner and the Trust and free of all
encumbrances.
(b) The Accounts are accurate and represent a true reflection of the Owner's
financial affairs.
(c) Since 1 July 1993 the business of the Owner and the Trust have continued
in the ordinary course of business.
(d) The Disclosed Information is true and accurate.
(e) The Trust owns the Intellectual Property as well as the rights to market
for sale the Principal Technology and further warrants that except as
disclosed in this Agreement the Computer Software Programs do not
infringe the industrial or intellectual property rights of any person.
(f) The Owner and the Trust are not in litigation in relation to its
customers or anyone else.
(g) Without limiting the foregoing, the Owner and the Trust jointly and each
of them severally warrant that there are no existing restrictions or
constraints on its right and authority to transfer and assign the
Computer Software Programs, the Associated Documentation, Principal
Technology, Computer Software Programs and Intellectual Property or any
part thereof to the Purchaser.
(h) The Licence and Maintenance Agreements the Owner and the Trust have with
its Customers listed in Annexure 'K' are on foot and have been properly
executed and stamped.
(i) The Work-in-Progress Schedule current to 27 March 1997 annexed hereto
and marked 'L' is current true and accurate.
<PAGE> 7
7
(j) The Schedule of the debtors of the Owner and the Trust annexed as at
28 March 1997 hereto and marked 'M' is current and accurate and
collectable.
(k) The Owner, the Trust and Chapman will use their best endeavours to
ensure that current customers and prospective customers of the Owner and
the Trust will remain customers and prospective customers of the
Purchaser.
(l) The Owner and the Trust have disclosed all Contracts, arrangements or
commitments which contain any onerous or unusual provisions or any other
material provisions which should be disclosed to a prospective
Purchaser.
(m) The Owner and the Trust have made available all relevant and material
information to the Purchaser in order for the Purchaser to conduct a
full and proper due diligence investigation. The Owner and the Trust
undertake that all information disclosed is true, complete and accurate
in all material respects.
(n) The Owner and the Trust are not in litigation in relation to their
Customers or anyone else in relation to the Computer Software Programs
or the Principle Technology or in respect of any other asset the subject
of the sale, including but not limited to the Owner's and the Trust's
Maintenance or Support Agreements with its Customers.
(o) The Trust warrants that the Trust is the sole owner of the Computer
Software Programs and the Intellectual Property and has the right and
authority to sell to the Purchaser the Computer Software Programs..
Without limiting the foregoing, the Trust warrants that there are no
existing restrictions or constraints on its right and authority to
transfer and assign the Computer Software Programs and the Principle
Technology or any part thereof to the Purchaser.
(p) The Owner and the Trust further warrant that no third parties own or
have any right, title or interest in and to the Principal Technology.
(q) The Owner and the Trust warrant that it is duly and validly authorised
by all necessary corporate action to execute, deliver and perform this
Agreement and that such action shall not breach any other Agreement.
(r) The Owner and the Trust further warrants that the schedule of fees paid
in advance for customers and related services referred to in Clause 16.2
is true and accurate.
(s) The Owner and the Trust warrant that all of the contracts which the
Owner and/or the Trust have relating to the business of the Owner and
the Trust are listed in Schedule 'P' which is annexed hereto.
7.2 Each of the warranties is to be construed independently of the others and is
not limited by reference to any other warranties.
<PAGE> 8
8
7.3 The Parties have entered into this Agreement in reliance upon the
Warranties.
7.4 All warranties shall not merge with the completion of this Agreement and
shall survive such completion.
7.5 Where more than one party gives a warranty such party shall be jointly and
each of them severally liable to the Purchaser in the event of breach of any
such warranty hereby given.
8. Force majeure
8.1 Neither party shall be liable for any delay or failure to perform its
obligations pursuant to this agreement if such delay is due to force
majeure.
9. Waiver
9.1 No right under this agreement shall be deemed to be waived except by notice
in writing signed by each party.
10. Headings
10.1 Headings used in this agreement are for convenience and ease of reference
only, are not part of this agreement and shall not be relevant to or affect
the meaning or interpretation of this agreement.
11. Parties' rights
11.1 Any express statement of a right of the Parties under this agreement is
without prejudice to any other right of the Parties expressly stated in
this agreement or arising at law.
12. Engagement by the Purchaser of Chapman as a Employee
12.1 In consideration of the Purchaser entering into this Agreement, Chapman at
the request of the Owner and the Trust agrees to consult to the Purchaser
for a period of five (5) years from the Completion Date or a lesser period
if the Purchaser and Chapman agree ("the engagement") and the Purchaser
agrees with the Owner, to so employ Chapman.
12.2 The Purchaser shall pay to Chapman a gross salary of One Hundred Thousand
Dollars ($100,000.00) per annum for the services of Chapman by way of equal
monthly instalments in arrears.
12.3 "Gross salary" for the purposes of Clause 12.2 shall mean the aggregate of
all employment entitlements, benefits, insurances and taxes paid or payable
by the Purchaser in respect of Chapman's employment aforementioned.
<PAGE> 9
9
12.4 Chapman covenants with the Purchaser to:
(a) make himself available to the Purchaser to fulfil his obligations
under the engagement;
(b) carry out the engagement exercising the degree of care, diligence and
skill which is reasonable having regard to the expertise of Chapman.
(c) exercise and ensure the utmost good faith towards the Purchaser both
in carrying out his duties under this Agreement and in all of his
dealings with the Purchaser;
(d) not undertake any other activity or employment which is likely to
interfere with the proper carrying out of the employment by him.
12.5 The employment may be immediately terminated by the Purchaser without prior
notice to Chapman if any of the following events occur:
(a) Chapman commits a substantial breach of this Agreement and on being
given notice in writing of the breach by the Purchaser fails or
refuses to substantially and promptly remedy the breach.
(b) subject to paragraphs (a) and (c), Chapman fails to make available his
services to fulfil his obligations under the engagement;
(c) Chapman becomes incapacitated or prevented by illness or injury from
carrying out the engagement for a total continuous period exceeding
three (3) calendar months for a period in any twelve (12) consecutive
months;
(d) Chapman becomes of unsound mind, or under the control of a committee
or officer under any law relating to mental health;
(e) Chapman is convicted of any criminal offence other than an offence
which is not likely to affect the carrying out of the engagement by
him or the reputation of the Purchaser.
13. General
13.1 Subject to any provision to the contrary, this agreement, shall enure to
the benefit of and be binding upon the parties and their successors,
trustees, permitted assigns or receivers but shall not enure to the benefit
of any other persons.
13.2 The covenants, conditions and provisions of this agreement which are
capable of having effect after the expiration of the agreement shall remain
in full force and effect following the expiration of the agreement.
13.3 The Parties shall sign documents and do all things reasonably necessary to
give effect to this agreement.
<PAGE> 10
10
14 The Owner's and the Trust's Employees
14.1 The Owner and the Trust undertake to use their best endeavours to ensure
that employees listed in Annexure 'N' hereto which are employees of the
Owner and the Trust the Purchaser is prepared to engage shall upon receipt
of offers of employment from the Purchaser, upon terms substantially
similar to terms and conditions between the Owner and the Trust and the
said employees shall be accepted and that from the Completion Date such
employees shall commence working for the Purchaser.
14.2 The Owner and the Trust shall prior to the Completion Date use their best
endeavours to procure from the employees referred to in Annexure 'N'
letters addressed by the said employees to the Purchaser containing a
confidentiality agreement in the form already agreed upon between the Owner
and the Trust and them or if no such agreement exists in the form annexed
hereto and marked with the letter 'O'.
14.3 The Owner and the Trust as shown in Annexure 'R' shall not be required to
pay to the employees any accrued employee benefits up to and including the
Completion Date. For the purposes of this provision "accrued employee
benefits" shall mean accrued holiday pay, accrued long service leave and
sick leave and superannuation contributions to be paid on behalf of the
employees who shall be employed by the Purchaser only.
14.4 The Purchaser shall assume the Owner and the Trust's liability for accrued
employee benefits referred to in Clause 14.3 save that, if lawful, the
Purchaser shall have the right to require employees to take time off work
for the number of days equating the accrued holidays outstanding and to
which each employee is entitled to take.
15. Completion
15.1 The Owner and the Trust shall on the Completion Date deliver to the
Purchaser the following:
(a) A full list of the Owner and the Trust's customers valid as at the
Completion Date.
(b) The Assets as described in Annexure 'F' subject to the provisions of
this Agreement.
(c) Deed executed by Chapman and the Owner and the Trust concerning
restraint of Trade for a period of three (3) years following the date
Chapman ceases to consult to the Purchaser and a Confidentiality
Agreement concerning the business operations of the Purchaser.
(d) Schedule prepared by the Owner and the Trust showing fees paid in
advance by customers of the Owner and the Trust in respect of
maintenance and related services.
<PAGE> 11
11
(e) Deed executed by the Owner and the Trust assigning to the Purchaser
copyright in relation to the Computer Software Programs and the
Principle Technology.
(f) Audited accounts of the Owner and the Trust for the last two (2) years
so as to satisfy the United States Securities and Exchange Commission
Regulations.
16. Fees due to the Purchaser
16.1 Following the Completion Date, the Purchaser shall be entitled to receive
all moneys outstanding in respect of moneys payable by debtors of the Owner
and the Trust.
16.2 On and following the Completion Date, the Purchaser shall be entitled to
the unexpired portion of all fees for maintenance and related services paid
in advance by customers of the Owner and the Trust and on the Completion
Date the Owner and the Trust shall furnish the Purchaser with a Schedule
annexed hereto and marked with the letter 'S' showing all such fees paid in
advance. The total of such fees shall be deducted from the Purchase Price.
17. Debtors
17.1 If at the Completion Date the aggregate amount of moneys outstanding by
debtors of the Owner and the Trust to the Owner and the Trust ("the
debtor's amount") is less than $450,000.00 then the purchase price payable
by the Purchaser to the Owner and the Trust shall be reduced by the amount
being the difference between $450,000.00 and the debtors amount.
17.2 As at 31 March 1997 the Owner and the Trust shall prepare a complete and
accurate list of its Debtors and shall collect for and on behalf of the
Purchaser and pay upon receipt to the Purchaser any moneys received by the
Owner and the Trust in respect of such debtors which are received from the
Completion Date.
17.3 If outstanding amounts due by Debtors are not collected by the Purchaser
within six (6) months from the Completion Date then the Owner and the Trust
shall refund to the Purchaser the amounts not collected. The Owner and the
Trust shall use their best endeavours that such outstanding amounts be paid
to the Purchaser within three (3) months from the Completion Date.
17.4 The Purchaser shall use its best endeavours to collect the debts but shall
not be obliged to litigate for payment.
18. Premises, Telephones and Facsimiles
18.1 The Owner shall procure that the Purchaser shall have the right to occupy
the premises at 53 Gawler Street, Mount Barker in the State of South
Australia for an initial period of one (1) year at a fee or a rent of
Twenty Two Thousand Dollars ($22,000.00) per annum inclusive of all
outgoings payable in respect of the premises.
<PAGE> 12
12
18.2 Either party shall have the right after the first anniversary of the
Completion Date to give to the other three (3) months notice to terminate
the licence or tenancy referred to in Clause 18.1.
18.3 If notice referred to in Clause 18.2 is not issued, then the rent or fee as
aforementioned shall be increased on each anniversary of the commencement
of the lease or licence by an amount representing A in the formula where:
(i) A = B x C/D where
B = the rent payable as at the immediately preceding year of this
Lease.
C = the index number realised for the quarter ending or applicable as
at the date of the rent increase and
D = the index number realised for the quarter ending or applicable as
at the date of commencement of the immediately preceding particular
year of the lease.
(ii) In this Clause "Index Number" shall mean the Consumer Price Index
Number calculated for Adelaide (all groups) released from time to time
in the Commonwealth Statistician's Summary of Australian Statistics
together with any supplementary summary. In the event that there is
any suspension of discontinuance of the Consumer Price Index by the
Commonwealth Authorities then "Index Number" shall mean such Index
published at the relevant dates in the said Commonwealth Statistician's
Summary of Australian Statisticians which reflects fluctuations of the
cost of living in Adelaide and which the parties may mutually agree
upon and if they are unable to agree then such Index as may be
determined by the President (or other officer of similar status) at the
relevant times of the Commonwealth Institute of Valuers (South
Australian Division) or some person nominated by him whose decision
shall be conclusive and binding;
18.4 The Owner shall transfer to the Purchaser its telephone numbers and
facsimile numbers at the premises for use by the Purchaser.
19. Severability
19.1 If any provision of or the application of any provision of this Agreement
shall be declared to be void, voidable, or unenforceable in any
jurisdiction the validity, legality or enforceability of any other of the
remaining provisions of this Agreement shall not be affected.
20. Variation
20.1 Any variation of a term of this Agreement must be in writing and signed by
the parties.
<PAGE> 13
13
21. Effectiveness of Agreements
21.1 Each party must do all things necessary to give effect to this Agreement
and to the transactions contained in this Agreement.
22. Whole Agreement
22.1 This Agreement embodies the entire Agreement between the parties with
respect to the subject matter of this Agreement.
23. Insurance
23.1 As from the Completion Date the Purchaser shall nominate the Owner and the
Trust and Chapman as the insured in the Professional Indemnity Insurance
Policy of the Purchaser and shall maintain the insurance during the period
Chapman's services are provided to the Purchaser and for a period of six
(6) years thereafter.
24. Execution
24.1 This agreement may be executed in counterparts by the respective parties,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement, provided
that this agreement shall be of no force and effect until the counterparts
are exchanged.
IN WITNESS WHEREOF the parties have executed this Agreement the day of
1997
THE COMMON SEAL OF )
CHAPMAN COMPUTERS )
PTY LTD was hereunto affixed in )
accordance with its Articles of Association)
in the presence of: )
/s/Colin Chapman /s/Bronte John Chapman
Director Secretary
Colin Chapman Bronte John Chapman
Print Name Print Name
<PAGE> 14
14
THE COMMON SEAL OF )
CHAPMAN COMPUTERS )
PTY LTD as trustee for the Chapman )
Computers Unit Trust )
was hereunto affixed in )
accordance with its Articles of Association)
in the presence of: )
/s/Colin Chapman /s/Bronte John Chapman
Director Secretary
Colin Chapman Bronte John Chapman
Print Name Print Name
SIGNED SEALED AND DELIVERED )
by the said COLIN BRUCE CHAPMAN )
in the presence of: )
/s/Bronte John Chapman
Witness
Bronte John Chapman
Print Name
THE COMMON SEAL OF )
DIVERGENT TECHNOLOGIES )
PTY LTD was hereunto affixed in )
accordance with its Articles of Association )
in the presence of: )
/s/Ivan Hammerschlag /s/Shaun Rosen
Director Secretary
Ivan Hammerschlag Shaun Rosen
Print Name Print Name
THE COMMON SEAL OF)
S.V.I. HOLDINGS INC. was hereunto)
affixed in accordance with its Articles)
of Association in the presence of:)
/s/Barry Schechter
Director
Barry Schechter
Print Name
<PAGE> 1
EXHIBIT 2.2
DATED 1997
Between
ESCROW AGENT
And
DIVERGENT TECHNOLOGIES PTY LIMITED
And
CHAPMAN COMPUTERS PTY LIMITED
And
CHAPMAN COMPUTERS PTY LIMITED AS TRUSTEE FOR
THE CHAPMAN COMPUTERS UNIT TRUST
ESCROW AGREEMENT
DERRICK ZABOW & CO
Solicitors & Attorneys
Level 1, 38-44 York Street
SYDNEY NSW 2000
DX: 549 SYDNEY
Ref: DZ\D1149
<PAGE> 2
ESCROW AGREEMENT
AGREEMENT dated 1997
BETWEEN: of ("Escrow Agent");
AND: DIVERGENT TECHNOLOGIES PTY LIMITED (A.C.N. 003 908 325) of
Level 1, 35 Spring Street, Bondi Junction New South Wales 2022
("Divergent");
AND: CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 trading as
Chapman Computers of 53 Gawler Street, Mount Barker in the State of
South Australia ("Chapman Computers");
AND CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 of 53 Gawler
Street, Mount Barker in the State of South Australia aforementioned
in its capacity as trustee for the Chapman Computers Unit Trust
("the Trust").
WHEREAS:
A. Divergent and Chapman Computers and the Trust have entered into an
Agreement whereby Divergent has agreed to procure that S.V.I. Holdings Inc
incorporated in the State of Nevada in the United States of America ("SVI")
transfer or issue to the Trust 300,000 ordinary shares in SVI which are
tradeable on the NASDAQ over the counter stock exchange in the United
States of America ("the shares").
B. The Trust are not permitted unless otherwise agreed, in writing, by
Divergent to trade the shares for a period of three (3) years from 30 April
1997 and have agreed that subject to the aforementioned consent by
Divergent the Escrow Agent hold the shares in escrow for Chapman Computers
during the said period.
C. The Trust are not permitted unless otherwise agreed, in writing, by
Divergent to trade in any further shares issued under the Agreement dated
27 March 1997 for a period of three (3) years from 30 April 1997 and have
agreed that subject to the aforementioned consent by Divergent the Escrow
Agent hold the shares in escrow for Chapman Computers during the said
period.
THE PARTIES AGREE as follows:
1. DEFINITIONS
In this Agreement the following terms will have the meaning hereby assigned to
them:
"Chapman Computers" mean Chapman Computers Pty Ltd ACN 008 004 331 as trustee
for Chapman Computers Unit Trust.
"The Shares" means 300,000 ordinary shares in the share capital of SVI and any
further shares issued under the Agreement dated 27 March 1997.
<PAGE> 3
2
"Divergent" means Divergent Technologies Pty Limited A.C.N. 003 908 325 its
successors and assigns.
2. DEPOSIT
Upon the signing hereof and for a period of three (3) years from the date hereof
or such less period if agreed as aforementioned Divergent will deposit with the
Escrow Agent all of the script, share certificates and all other documentation
relating to the shares.
3. OBLIGATION OF ESCROW AGENT
(a) Escrow Agent agrees:
(i) to keep the shares in secure storage; and
(ii) not to divulge or disclose or otherwise make available to any person
whatsoever, or make any use whatsoever, of the shares without the
prior written consent of Divergent,except as provided in the Agreement
and as required by law.
(b) The Escrow Agent shall be under no obligation or responsibility:
(i) to determine the nature, or validity of the Shares;
(ii) for any transaction between Divergent and Chapman Computers other than
the performance of his obligations with respect to the shares.
4. INDEMNIFICATION
Chapman Computers hereby agrees to indemnify the Escrow Agent and hold the
Escrow Agent harmless against any and all loss, damages, costs and expenses that
may be incurred by the Escrow Agent by reason of the Escrow Agent's compliance
in good faith with the terms of this Agreement.
5. AMENDMENTS
This Agreement shall not be revoked, rescinded or modified as to any of its
terms and conditions except by written agreement between the parties hereto.
6. TERM
6.1 This Agreement shall continue for a period of three (3) years from the date
hereof or terminated earlier by the Escrow Agent or the parties hereto.
(a) by the Escrow Agent giving ninety (90) days written notice to Chapman
and Divergent; or
(b) by agreement of all the parties hereto.
<PAGE> 4
3
6.2 Upon termination of this Agreement under this Clause, the shares shall be
delivered to a substitute escrow agent, who shall agree to be bound to the
parties mutatis mutandis or to Chapman Computers upon the termination of
the aforementioned three (3) year period.
7. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the law in
force in the State of New South Wales.
8. FORCE MAJEURE
Failure or omission to carry out or observe any of the conditions of this
Agreement shall not give rise to any claim against a party hereto or result in
the breach of this Agreement if such failure or omission arises by reason of
delay or inability to perform, caused by war whether declared or not,
insurrections, strikes, inability to obtain materials, fire, storm, or other
severe action of the elements, accidents, government restrictions or for any
other causes whether like or unlike the foregoing which are unavoidable or
beyond the control of the relevant party.
9. AUSTRALIAN COMMERCIAL DISPUTES CENTRE ("ACDC")
(a) If a dispute arises out of or relates to this Agreement or the breach,
termination, validity or subject matter thereof, the parties agree to first
endeavour to settle the dispute by mediation administered by the ACDC.
(b) In the event that the dispute has not been settled within twenty eight (28)
days (or such period as agreed to in writing between the parties hereto)
after the appointment of the mediator, the dispute shall be submitted to
expert determination administered by the ACDC.
(c) The parties agree to accept the determination of the expert as final and
binding. The expert shall be a person agreed between the parties. The
ACDC will assist the parties by providing a list of suggested experts.
Failing agreement, the expert shall be a person appointed by the ACDC.
The mediator shall not be the same person as the expert.
IN WITNESS WHEREOF this Agreement has been duly executed on the day first
hereinbefore written.
<PAGE> 5
4
SIGNED by )
in the presence of: )
Witness
Print name
THE COMMON SEAL of DIVERGENT )
TECHNOLOGIES PTY LIMITED )
was affixed in accordance with its )
Articles of Association in the presence of:)
/s/Ivan Hammerschlag /s/Shaun Rosen
Director Director
Ivan Hammerschlag Shaun Rosen
Print name Print Name
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
was affixed in accordance with )
its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte Chapman
Print name Print Name
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
as trustee for the Chapman Computers )
Unit Trust was affixed in accordance )
with its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte Chapman
Print name Print Name
<PAGE> 1
EXHIBIT 2.3
DATED 1997
Between
CHAPMAN COMPUTERS PTY LIMITED
And
CHAPMAN COMPUTERS PTY LIMITED AS TRUSTEE FOR
THE CHAPMAN COMPUTERS UNIT TRUST
And
DIVERGENT TECHNOLOGIES PTY LIMITED
DEED OF ASSIGNMENT OF COPYRIGHT
DERRICK ZABOW & CO
Solicitors & Attorneys
Level 1, 38-44 York Street
SYDNEY NSW 2000
DX: 549 SYDNEY
Ref: DZ\D1149
<PAGE> 2
THIS DEED is made on the day of 1997
BETWEEN
CHAPMAN COMPUTERS PTY LTD ACN 008 004 331 of 53 Gawler Street, Mount Barker
in the State of South Australia in its capacity as trustee of the Chapman
Computer Unit Trust of the one part, hereinafter called ("the Owner")
AND
CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 of 53 Gawler Street, Mount
Barker in the State of South Australia aforementioned in its capacity as trustee
for the Chapman Computers Unit Trust ("the Trust").
AND
DIVERGENT TECHNOLOGIES PTY LIMITED ACN 003 908 325 of Level 1, 35 Spring
Street, Bondi Junction in the State of New South Wales of the other part,
hereinafter called ("the Purchaser")
WHEREAS:
A. By Agreement dated 27 March 1997 the Owner in its capacity as trustee of
the Chapman Computers Unit Trust agreed to assign to the Purchaser all its
right, title and interest in and to the Associated Documentation, the
Principal Technology and the Intellectual Property Rights.
B. The parties enter into this Deed on the terms and conditions hereinafter
contained.
NOW THIS DEED WITNESSETH AS FOLLOWS:
1. Definitions
"Associated Documentation" means operating and other printed manuals, relevant
to the Software as may be created from time to time including users' manuals,
programming manuals, modification manuals, flowcharts, drawing and software
listings which are designed to assist or supplement the development,
understanding or application of the Software ;
"Principal Technology" means computer Software programs and all associated
products and know- how which together comprise a package called "CRMS" and
includes all Intellectual
<PAGE> 3
2
Property Rights, but excluding any third party products to which the Owner has
no rights to transfer.
"Intellectual Property Rights" as owned by the Owner includes:
(a) any patents, utility models, copyrights, registered or unregistered trade
marks trade names, brand names, registered designs and commercial names and
designations relating to CRMS;
(b) any invention, discovery, trade secret, know-how, Software and
confidential, scientific, technical and product information, relating to
CRMS;
"Software" means the software including the source code thereto known as CRMS.
2. Assignment of copyright
2.1 The Owner hereby assigns to the Purchaser all copyright in and to the
Intellectual Property Rights, the Associated Documentation, Principal
Technology and Software including all technology used and developed by the
Owner in the ordinary course of business.
3. Confidentiality
3.1 The Owner acknowledges the confidential nature of the Software and
Associated Documentation as well as the Principal Technology. The Owner
hereby agrees to keep confidential such information that is confidential
and shall not disclose such confidential information to a third party
without the written permission of the Purchaser.
3.2 The Owner shall not develop on and for its own account a retail point of
sale system which performs functions similar in nature and scope to the
present functions performed by CRMS.
3.3 The restraint as contemplated in sub-clause 3.2 shall be for a period of
three (3) years from the Completion Date which period the parties consider
to be reasonable.
4. Survival of terms
This Deed shall enure to the benefit of and be binding upon the parties and
their successors in title and permitted assigns.
5. General
5.1 If any provision of or the application of any provision of this Deed shall
be declared to be void, voidable, or unenforceable in any jurisdiction the
validity, legality or enforceability of any other of the remaining
provisions of this Deed shall not be affected.
<PAGE> 4
3
5.2 Each party must do all things necessary to give effect to this Deed and to
the transactions contained in this Deed.
5.3 This Deed embodies the entire Deed between the parties with respect to the
subject matter of this Deed.
5.4 This Deed may be executed in counterparts by the respective parties, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Deed, provided that
this Deed shall be of no force and effect until the counterparts are
exchanged.
5.5 This Deed shall be governed and construed in accordance with the laws of
the State of New South Wales and the parties hereto shall submit to the
jurisdiction of the Courts of that State.
EXECUTED BY THE PARTIES AS A DEED
IN WITNESS whereof the parties have affixed their hands and seals on the day and
in the year first hereinbefore written.
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
was affixed in accordance with )
its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte Chapman
Print name Print Name
<PAGE> 5
4
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
as trustee for the Chapman Computers )
Unit Trust was affixed in accordance )
with its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte Chapman
Print name Print Name
THE COMMON SEAL of DIVERGENT )
TECHNOLOGIES PTY LIMITED )
was affixed in accordance with its )
Articles of Association in the presence of:)
/s/Ivan Hammerschlag /s/Shaun Rosen
Director Director
Ivan Hammerschlag Shaun Rosen
Print name Print Name
<PAGE> 1
EXHIBIT 2.4
DATED 1997
Between
CHAPMAN COMPUTERS PTY LIMITED
And
CHAPMAN COMPUTERS PTY LIMITED AS TRUSTEE FOR
THE CHAPMAN COMPUTERS UNIT TRUST
And
COLIN BRUCE CHAPMAN
And
DIVERGENT TECHNOLOGIES PTY LIMITED
CONFIDENTIALITY AGREEMENT AND RESTRAINT OF TRADE
DERRICK ZABOW & CO
Solicitors & Attorneys
Level 1, 38-44 York Street
SYDNEY NSW 2000
DX: 549 SYDNEY
Ref: DZ\D1149
<PAGE> 2
THIS AGREEMENT is made on the day of March 1997
BETWEEN
CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 of 53 Gawler Street in the
State of South Australia of the first part, hereinafter called ("the Owner")
AND
CHAPMAN COMPUTERS PTY LIMITED ACN 008 004 331 of 53 Gawler Street, Mount
Barker in the State of South Australia aforementioned in its capacity as trustee
for the Chapman Computers Unit Trust ("the Trust").
AND
COLIN BRUCE CHAPMAN of 10 Uplands Street, Mount Barker in the State of South
Australia of the second part, hereinafter called ("Chapman")
AND
DIVERGENT TECHNOLOGIES PTY LIMITED ACN 003 908 325 of Level 1, 35 Spring
Street, Bondi Junction in the State of New South Wales of the third part,
hereinafter called ("Divergent")
RECITALS
A. By Agreement dated 27 March 1997 Divergent is to engage Chapman as a
consultant in Divergent's business.
B. The Owner, the Trust and Chapman have agreed to enter into a
confidentiality agreement so as to protect Divergent's confidential
information including but not limited to all confidential information
relating to the computer software system known as CRMS as well as all
confidential information as hereinafter defined relating to the business of
the Owner hereby sold to the Purchaser ("the Owner and the Trust's
confidential information").
NOW THIS AGREEMENT witnesseth as follows:
1. Scope of the Agreement
1.1 The Owner, the Trust and Chapman agree to preserve and maintain in
confidence Divergent's confidential information which shall include the
Owner and the Trust's confidential information.
<PAGE> 3
2
2. Confidential information
2.1 Except to the extent such information is public knowledge or becomes public
knowledge other than by breach of this agreement, "confidential
information" shall mean for the purposes of this agreement:
2.1.1 information or material proprietary to Divergent and the Owner
and the Trust;
2.1.2 information reasonably designated as confidential by Divergent
and the Owner and the Trust;
2.1.3 information acquired by Chapman by virtue of provision of his
services;
2.1.4 trade secrets of Divergent and the Owner and the Trust;
2.1.5 customer list of Divergent and the Owner
2.1.6 information imparted in confidence to Chapman by Divergent; and
2.1.7 any other information classifiable in equity as confidential
information.
2.2 Without limiting the foregoing, "confidential information" shall include
but not be limited to source codes, object codes, user manuals, programming
manuals, modification manuals, flow charts, drawings, software listings,
models, drafts, diagrams and customer lists of Divergent.
2.3 The term "confidential information" extends to all forms of storage of
representation of the information referred to in sub-clauses 2.1 and 2.2
including, but not limited to, loose notes, diaries, memoranda, drawings,
photographs, electronic storage and computer printouts.
3. Intellectual property rights
3.1 All intellectual and industrial property rights derived from the
Confidential Information, whether arising prior to or in the course of or
subsequent to completion of the provision of services by Chapman shall
immediately be assigned to and vest in Divergent. To remove doubt, but
without limiting the generality of the preceding sentence, neither the
Owner, the Trust nor Chapman shall retain any copyright or other
intellectual property rights in the Confidential Information.
3.2 The Owner, the Trust and Chapman shall execute all documents and do all
acts and things reasonably required by Divergent for the purpose of giving
effect to clause 3.1.
4. Return of materials
4.1 Chapman shall return the materials referred to in clause 2.2 immediately
upon:
<PAGE> 4
3
4.1.1 termination of the agreement between Divergent and Chapman for
the provision of consultancy services;
4.1.2 completion by Chapman of the provision of the services;
4.1.3 demand by Divergent.
4.2 Without limiting the foregoing, Chapman undertakes that upon termination of
the consultancy services he shall immediately hand over to Divergent, and
shall not retain or remove from the premises where the services were
performed, any record, representation or reproduction (written, electronic,
photographic or otherwise) of the confidential information.
5. Survival of agreement
5.1 Chapman acknowledges and agrees that the undertakings given in relation to
the confidential information shall survive the termination of the
consultancy services and shall continue in force until such time as the
confidential information becomes public knowledge other than by breach of
this agreement.
5.2 Chapman acknowledges that information will not be deemed to be public
knowledge solely by virtue of the fact that it is embraced by more general
information which may have become public knowledge.
6. Covenant
6.1 Chapman acknowledges that the business of Divergent may be substantially
damaged in the event of a breach by Chapman of this agreement. In order to
prevent such damage arising, Chapman undertakes not to engage, for a period
of three (3) years from the termination of the consultancy services,
directly or through any other entity which competes with Divergent.
6.1.1 in any form of employment, consultancy, partnership or like
business arrangement with any competitor of Divergent operating
within the Commonwealth of Australia where Divergent trades;
6.1.2 in the supply of goods or services to any customer of Divergent
in Australia in circumstances where:
6.1.2.1 the identity of the customer or potential customer was
ascertained by Chapman in the course of the provision by Chapman
of the services to Divergent; and
6.1..2.2 the goods or services which Chapman's seeks to so supply
compete with goods or services which might otherwise be supplied
by Divergent.
<PAGE> 5
4
7. Successors and assigns
7.1 This agreement shall be binding upon the Owner, Trust and Chapman's
successors and assigns and legal personal representatives and shall enure
to the benefit of Divergent, its successors and assigns.
8. Headings
8.1 Headings used in this agreement are for convenience and ease of reference
only, are not part of this agreement and shall not be relevant to or affect
the meaning or interpretation of this agreement.
9. Severability
9.1 If any provision of this agreement is held invalid, unenforceable or
illegal for any reason, this agreement shall remain otherwise in full force
apart from such provision which shall be deemed deleted.
10. Governing law
10.1 This agreement shall be governed by and construed according to the laws of
the State of New South Wales.
11. Execution
11.1 This agreement may be executed in counterparts by the respective parties,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF the parties have executed this Agreement the day of
1997
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
was affixed in accordance with )
its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte John Chapman
Print name Print Name
<PAGE> 6
5
THE COMMON SEAL of )
CHAPMAN COMPUTERS PTY LTD )
as trustee for the Chapman Computers )
Unit Trust was affixed in accordance )
with its Articles of Association in the )
presence of: )
/s/Colin Chapman /s/Bronte Chapman
Director Secretary
Colin Chapman Bronte Chapman
Print name Print Name
SIGNED SEALED AND DELIVERED )
by the said COLIN BRUCE CHAPMAN )
in the presence of: ) /s/Colin Chapman
/s/Bronte Chapman
Witness
Bronte Chapman
Print Name
THE COMMON SEAL of DIVERGENT )
TECHNOLOGIES PTY LIMITED )
was affixed in accordance with its )
Articles of Association in the presence of:)
/s/Ivan Hammerschlag /s/Shaun Rosen
Director Director
Ivan Hammerschlag Shaun Rosen
Print name Print Name
