<PAGE>
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): May 1, 1999
------------
SVI Holdings, Inc.
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada
- ------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-23049 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)
- ------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 1999, SVI Holdings, Inc. ("SVI") completed the sale of all of its
capital stock in IBIS Systems Pty. Ltd. ("IBIS"), previously a wholly-owned
subsidiary of SVI. IBIS supplied and provided customer service for accounting
and business software applications primarily to United Kingdom customers in the
construction and plant hire industries. SVI acquired IBIS effective October 1,
1997 from Softline Limited, in a multi-component transaction which resulted in
Softline Limited becoming the majority shareholder of SVI. The sale of IBIS has
an effective date of January 1, 1999.
The purchaser of IBIS was Kielduff Investments Limited, an Ireland corporation
("Kielduff") which is owned and controlled by Peter Nagle and other former
management of SVI's IBIS subsidiary. The purchase price for all of the stock of
IBIS was as follows:
- - $2,250,000 cash.
- - 141,000 shares of SVI common stock.
- - The surrender by Mr. Nagle of an option to purchase 50,000 shares of
SVI common stock at an exercise price of $3.00 per share.
- - A promissory note (the "Note") in the amount of $18,108,000, payable in
full on October 1, 1999, bearing interest from May 1, 1999 at 2% over
the base prime rate for U.S. dollar deposits quoted by HSBC Plc. The
Note is secured by a pledge in favor of SVI of all of the common stock
of IBIS.
As part of the transaction, SVI agreed to pay to Systems for Business
Incorporated, a British Virgin Islands corporation, the sum of $4.5 million
which is last payable under the Note, in settlement of certain claims including
obligations assumed by SVI from Softline Limited in connection with its
acquisition of IBIS. Mr. Nagle is an affiliate of Systems for Business
Incorporated.
SVI also agreed with Kielduff that for a period of two years following the sale,
SVI will not (a) solicit the customers of IBIS or (b) compete with the existing
business of IBIS in the United Kingdom.
The consideration for the sale was negotiated at arms' length. Although SVI has
deemed Mr. Nagle to be an executive officer of SVI as a result of his previous
position at IBIS, Mr. Nagle was not a director and he did not participate in the
Board's decision to sell IBIS. SVI decided to sell IBIS because SVI has focused
its strategic emphasis to enterprise software solutions for the retail industry.
IBIS' software applications are primarily non-retail and utilized for the
building, leasing and general financial industries. The Board of Directors
determined that the consideration to be received from the sale of IBIS should be
directed to further acquisitions within the retail enterprise marketplace. In
determining the financial terms for the sale, SVI considered, among other
factors: (a) the earnings of IBIS during the period of SVI's ownership; (b) the
assets and liabilities of IBIS; (c)the technology of IBIS; (d) growth potential
in IBIS's core business; (e) IBIS's client base; and (f) the terms of the
settlement with Systems for Business Incorporated.
The transaction is further described in the press release attached an Exhibit to
this filing.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information
F-1 Introductory Notes
F-2 Pro Forma Consolidated Balance Sheet as of December
31, 1998
F-4 Pro Forma Consolidated Statement of Operations for
the nine months ended December 31, 1998
F-6 Pro Forma Consolidated Statement of Operations for
the fiscal year (six months) ended March 31, 1998
(c) Exhibits
10.1 Press release dated May 14, 1999
10.2 Share Sale Agreement
10.3 Promissory Note
10.4 Pledge Agreement
10.5 Settlement and Release Agreement
<PAGE>
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 hereto duly authorized.
Date: May 14, 1999
SVI Holdings, Inc.
(Registrant)
By: /s/ David L. Reese
------------------
David L. Reese
Chief Financial Officer
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
SVI Holdings, Inc. and Subsidiaries
Introductory Notes
The accompanying unaudited pro forma consolidated balance sheet
includes the balance sheet of SVI Holdings, Inc. and its subsidiaries
(collectively, the "Company") as of December 31, 1998, reflecting the
disposition of IBIS Systems Pty. Ltd. ("IBIS"), which was consummated as of
January 1, 1999, as if such disposition had occurred on December 31, 1998.
The accompanying unaudited pro forma consolidated statement of
operations for the nine months ended December 31, 1998 shows the consolidated
operations of the Company (i) combined with the operations of Applied Retail
Solutions ("ARS"), which was acquired by the Company as of July 1, 1998, and
(ii) deleting the operations of IBIS, as if the respective transactions were
each completed as of the beginning of the nine month period presented, using the
purchase method of accounting and based upon the assumptions indicated in the
notes to the statement.
The accompanying unaudited pro forma consolidated statement of
operations for the six months ended March 31, 1998 shows the consolidated
operations of the Company (i) combined with the operations represented by
certain assets of Multisoft Financial Systems Limited acquired by IBIS on March
9, 1998, (ii) combined with the operations of ARS, and (iii) deleting the
operations of IBIS, as if the respective transactions were each completed as of
the beginning of the six month period presented, using the purchase method of
accounting and based upon the assumptions indicated in the notes to the
statement.
These statements are not necessarily indicative of future operations or
the actual results which would have occurred had the various acquisitions been
consummated at the beginning of the periods indicated.
The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements of the Company and
the notes to such statements included in the Company's Form 10-KSB for the
transitional fiscal year ended March 31, 1998 and Form 10-QSB for the nine
months ended December 31, 1998, as well as the historical financial statements
of ARS included in the Form 8-K/A filed on October 15, 1998.
F-1
<PAGE>
<TABLE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet
As of December 31, 1998
(Unaudited)
<CAPTION>
SVI Holdings IBIS Pro forma Pro forma
and Subsidiaries Disposition Adjustments Consolidated
--------------------------------------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 5,155,735 $ (32,400) $ 2,250,000 (A) $ 7,373,335
Accounts receivable, net 7,689,634 (4,538,289) 3,151,345
Inventories 210,630 (88,463) 122,167
Prepaid expenses and other current assets 907,668 (729,412) 178,256
--------------------------------------------- --------------
Total current assets 13,963,667 (5,388,564) 10,825,103
Furniture and equipment, net 1,440,900 (747,686) 693,214
Capitalized software, net 14,097,044 (972,344) (2,044,844) (B) 11,079,856
Goodwill on acquisition of subsidiaries, net 14,863,835 (6,906,157) (4,832,082) (C) 3,125,596
Not-to-compete agreements, net 1,765,471 - 1,765,471
Note receivable from affiliate 5,301,201 15,750,000 (A) 21,051,201
Deferred tax asset 451,930 451,930
--------------------------------------------- --------------
Total assets $ 51,884,048 $ (14,014,751) $ 11,123,074 $ 48,992,371
============================================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 1,551,562 (799,692) 751,870
Accrued expenses 3,108,846 (1,731,328) 402,188 (D) 1,779,706
Intercompany loans (5,528,633) 5,528,633 (E) -
Income taxes payable 2,957,120 (1,301,471) 1,736,526 (F) 3,392,175
--------------------------------------------- --------------
Total current liabilities 7,617,528 (9,361,124) 7,667,347 5,923,751
Deferred Tax Liability 503,357 503,357
--------------------------------------------- --------------
Total liabilities 8,120,885 (9,361,124) 7,667,347 6,427,108
--------------------------------------------- --------------
Stockholders' equity
Preferred stock -
Common stock 2,879 (3) - 2,876
Additional paid in capital 35,044,001 - 35,044,001
Treasury Stock (666,904) (666,904)
Retained earnings 10,026,323 (4,500,668) 3,455,727 8,981,382
Cumulative translation adjustment (643,136) (152,956) - (796,092)
--------------------------------------------- --------------
43,763,163 (4,653,627) 3,455,727 42,565,263
--------------------------------------------- --------------
Total liabilities and stockholders' equity $ 51,884,048 $ (14,014,751) $ 11,123,074 $ 48,992,371
============================================= ==============
</TABLE>
F-2
<PAGE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Balance Sheet
As of December 31, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS:
(A) Sale of IBIS:
Cash received 2,250,000
Note receivable 15,750,000
----------------
Total sale price 18,000,000
================
(B) Unamortized IBIS software on Sabica books
as of 12/31/98 2,044,844
================
(C) Unamortized IBIS goodwill on Sabica books
as of 12/31/98 4,832,082
================
(D) Accrued expenses:
Purchase consideration for Todd's 402,188
-
----------------
402,188
================
(E) Write off intercompany receivable from
IBIS on Sabica's books 5,528,633
================
(F) Income tax provision on proforma
adjustments 1,736,526
================
F-3
<PAGE>
<TABLE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended December 31, 1998
(Unaudited)
<CAPTION>
SVI Holdings IBIS Pro Forma Pro Forma
and Subsidiaries Disposition Adjustments Consolidated
--------------------------------------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 25,489,585 $ (12,402,521) $ 13,087,064
Cost of goods sold 5,444,798 (2,884,204) 2,560,594
--------------------------------------------- --------------
Gross profit 20,044,787 (9,518,317) - 10,526,470
Selling, general and admin. expenses 13,222,033 (5,513,250) 300,203 (B) 8,008,986
--------------------------------------------- --------------
Profit / (loss) from operations 6,822,754 (4,005,067) (300,203) 2,517,484
Interest income 496,418 (13,482) 482,936
Interest expense (66,556) (66,556)
Other income 719,856 (166,380) 553,476
Loss on disposal of IBIS Systems - (1,305,580) 5,646,894 (A) 4,341,314
Foreign exchange gain (loss) (62,547) 152,959 (154,438) (64,026)
--------------------------------------------- --------------
Income before income tax 7,909,925 (5,337,550) 5,192,253 7,764,628
Income taxes 2,183,596 (836,882) 1,736,526 (C) 3,083,240
--------------------------------------------- --------------
Net income $ 5,726,329 $ (4,500,668) $ 3,455,727 $ 4,681,388
============================================= ==============
Earnings per share:
Basic $ 0.20 $ 0.16
================ ==============
Diluted $ 0.18 $ 0.15
================ ==============
Shares outstanding:
Basic 28,387,094 28,387,094
Diluted 32,284,928 32,284,928
</TABLE>
F-4
<PAGE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended December 31, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS
(A) Record Gain / (Loss) on sale of IBIS effective 4/1/98:
Cash Consideration 18,000,000
---------------
Inter-Co Loan to IBIS from Sabica 4,699,196
Overhead Recovery due Sabica -
Goodwill - Sabica 5,031,605
Software - Sabica 2,220,117
Consideration - Todd's of Lincoln 402,188
---------------
Basis of IBIS on Sabica's books 12,353,106
---------------
Gain on Sale of IBIS Systems on
Sabica's books 5,646,894
---------------
Net book value of IBIS 4,653,627
Less: Net earnings for 9 months ended 12/31/98 (3,348,047)
---------------
Writeoff net book value of IBIS as of
4/1/98 1,305,580
---------------
Net gain on sale of IBIS 4,341,314
===============
(B) Reverse transactions related to IBIS on the books of Sabica Ventures
(Parent):
Overhead recoveries from IBIS 669,000
Amortization of IBIS software (175,273)
Amortization of goodwill - IBIS (193,524)
---------------
300,203
===============
(C) Accrue income tax liability on gain on sale of IBIS
Gain on sale of IBIS 4,341,314
Estimated tax rate 40%
---------------
Tax liability 1,736,526
===============
F-5
<PAGE>
<TABLE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Six Months Ended March 31, 1998
(Unaudited)
<CAPTION>
SVI Holdings Multisoft IBIS Pro Forma Pro Forma
and Subsidiaries Assets ARS Disposition Adjustments Consolidated
----------------------------------------------------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 16,354,383 $ 1,697,640 $ 986,410 $ (5,156,368) (A) $ (1,697,640) $ 12,184,425
Cost of goods sold 6,489,081 333,935 38,031 (2,620,398) (A) (333,935) 3,906,714
----------------------------------------------------------- -------------- --------------
Gross profit 9,865,302 1,363,705 948,379 (2,535,970) (1,363,705) 8,277,711
Selling, general and admin. expenses 6,500,041 458,955 1,221,267 (949,735) (B) (544,319) 6,686,209
----------------------------------------------------------- -------------- --------------
Profit / (loss) from operations 3,365,261 904,750 (272,888) (1,586,235) (819,386) 1,591,502
Interest income 351,309 2,569 353,878
Interest expense (16,635) (2,110) 2,769 (15,976)
Other income 56,427 289 (21,646) 35,070
Gain on disposal of IBIS Systems (131,775) (D) 5,803,218 5,671,443
Gain on disposal of Softline shares 4,388,389 - 4,388,389
Foreign exchange gain (loss) (14,041) (14,041)
----------------------------------------------------------- -------------- --------------
Income before income tax 8,130,710 904,750 (272,140) (1,736,887) 4,983,832 12,010,265
Income taxes 2,311,743 299,390 (104,200) (463,160) (D) 1,969,187 4,012,960
----------------------------------------------------------- -------------- --------------
Net income $ 5,818,967 $ 605,360 $ (167,940) $ (1,273,727) $ 3,014,645 $ 7,997,305
=========================================================== ============== ==============
Earnings per share:
Basic $ 0.21 $ 0.29
=============== ==============
Diluted $ 0.19 $ 0.26
=============== ==============
Shares outstanding:
Basic 27,768,239 (C) 250,000 28,018,239
Diluted 31,045,886 (C) 250,000 31,295,886
</TABLE>
F-6
<PAGE>
SVI Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the Six Months Ended March 31, 1998
(Unaudited)
PRO FORMA ADJUSTMENTS:
(A) IBIS Systems acquired the assets of Multisoft on March 9, 1998. This
proforma presents the period ended as if IBIS were not present. This
requires that the differential period presented for the asset of Multisoft
be eliminated.
(B) Amortization of Agreement not-to-compete - ARS 160,500
Eliminate Multisoft Assets S G&A (458,955)
Reverse amortization of IBIS goodwill on Sabica (129,016)
Reverse amortization of IBIS software on Sabica (116,848)
---------------
(544,319)
===============
(C) Shares issued for acquisition of ARS 250,000
---------------
250,000
===============
Excludes 750,000 shares held in escrow pending determination of whether
earn-out provisions of the ARS acquisition agreement will be achieved.
(D) Record Gain / (Loss) on sale of IBIS
Cash Consideration 18,000,000
---------------
Inter-Co Loan to IBIS from Sabica 4,699,196
Goodwill - Sabica as of 4/1/98 5,160,621
Software - Sabica as of 4/1/98 2,336,965
---------------
Basis of IBIS on Sabica's books 12,196,782
---------------
Gain on Sale of IBIS on Sabica's books 5,803,218
---------------
Net Assets - IBIS as of 4/1/98 1,273,727
IBIS's net income for 6 months ended 3/31/98 (1,141,952)
---------------
Writeoff book value of IBIS as of 10/1/97 131,775
---------------
Net gain on sale of IBIS 5,671,443
Assumed effective tax rate 40%
---------------
Tax provision on gain on sale of IBIS 2,268,577
Less: Income tax provision for
Multisoft Assets (299,390)
---------------
1,969,187
===============
No assumptions are made herein regarding debt reduction or interest income /
expense related to any pro forma increase / decrease in cash.
F-7
<PAGE>
Contact: Barry Schechter
Chief Executive Officer
David Reese
Chief Financial Officer
619.551.2365
E-mail: [email protected]
--------------------
Roger Pondel/Michael Pollock/E.E. Wang
Pondel Parsons & Wilkinson
310.207.9300
E-mail: [email protected]
FOR IMMEDIATE RELEASE
SVI HOLDINGS ANNOUNCES SALE OF
IBIS SUBSIDIARY IN UNITED KINGDOM
La Jolla, California- May 14, 1999 - SVI Holdings, Inc. (AMEX: SVI)
today announced it has sold IBIS Systems Ltd., a United Kingdom-based
subsidiary, to a group of IBIS' executives for $18 Million. The effective date
of the transaction is January 1, 1999.
Barry Schechter, president and chief executive officer of SVI, said,
"Since early last year our objective has been to rapidly position SVI as a
leading global provider of retail software solutions. The sale of IBIS enables
SVI to concentrate on this objective and provides us with added resources to
aggressively pursue near-term acquisition opportunities that compliment and
expand our core business".
SVI Holdings is focused on becoming a leading global provider of
enterprise software solutions for the retail industry. These solutions include
point of sale, retail marketing and merchandising, training, and retail
financial systems. SVI maintains offices and subsidiaries in the United States,
United Kingdom, Australia and South Africa. The company has a worldwide base of
more than 80,000 terminals among such major clients as OfficeMax, Crate &
Barrel, the U.S. Postal Service, Musicland, Charming Stores and others.
CERTAIN STATEMENTS CONTAINED IN THIS NEWS RELEASE REGARDING MATTERS
THAT ARE NOT HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. BECAUSE SUCH
FORWARD-LOOKING STATEMENTS INCLUDE RISKS AND UNCERTAINTIES, ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE EXPRESSED IN OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
INCLUDE, BUT ARE NOT LIMITED TO, COMPETITION, THE COMPANY'S ABILITY TO
CONSUMMATE ACQUISITIONS AND DEVELOP ADVANCED TECHNOLOGIES, FLUCTUATIONS IN
CURRENCY EXCHANGE RATES, THE DEMAND FOR THE COMPANY'S PRODUCTS AND SERVICES
INTERNATIONALLY, ESPECIALLY IN THE UNITED KINGDOM, AUSTRALIA AND SOUTH AFRICA,
AND OTHER RISK FACTORS IDENTIFIED FROM TIME TO TIME IN THE COMPANY'S FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION. OTHER RISK FACTORS ARE LISTED IN
THE COMPANY'S TRANSITION REPORT ON FORM 10-KSB FOR THE SIX MONTHS ENDED MARCH
31, 1998. SVI UNDERTAKES NO OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO THE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF
THIS NEWS RELEASE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
# # #
<PAGE>
DATED 1999
-------------------------------------------------------
SVI HOLDINGS INC
- AND -
KIELDUFF INVESTMENTS LIMITED
-----------------------------------------------------
SHARE SALE AGREEMENT
RE: IBIS SYSTEMS LIMITED
-----------------------------------------------------
BEALE AND COMPANY
GARRICK HOUSE
27-32 KING STREET
COVENT GARDEN
LONDON
WC2E 8JD
TEL: 0171 240 3474
FAX: 0171 240 9111
DX: 51632 COVENT GARDEN
E-MAIL [email protected]
REF: MJA/VHT/B00434.1
1
<PAGE>
SHARE SALE AGREEMENT
--------------------
DATE:
PARTIES:
1. "The Vendor" : SVI Holdings Inc a Nevada corporation whose registered
office is at 7979 Ivanhoe Avenue, Suite 500, La Jolla, California,
82037 USA
2. "The Purchaser" : Kielduff Investments Limited (registered no. 296820)
whose registered office is at Block A, Unit 3 Broomfield Business Park,
Mallahide, County Dublin, Ireland.
OPERATIVE PROVISIONS:
1. INTERPRETATION
--------------
1.1 In this agreement, including the Schedules other than Schedule [4];
1.1.1 the following words and expressions have the following
meanings, unless they are inconsistent with the context:
"Agreed Form" the form agreed between the parties on or
prior to the date of this agreement and
initialled for the purpose of identification by
their respective solicitors
"CA" Companies Act 1985
2
<PAGE>
"CAA" Capital Allowances Act 1990
"Companies Acts" CA, the former Companies Acts (within the
meaning of CA's 735(1)) and the Companies Act
1989
"Company" Ibis Systems Limited a company registered in
England with registered number 3410598 and
whose registered office is at 2 Twyford Place,
Lincolns Inn,
Cressex, High Wycombe, Bucks HP12 3RE
"Company's Auditors" Grant Thornton
"Completion" completion of the purchase of the Shares in
accordance with this Agreement
"Deed of Indemnity" a deed in the form set out in Schedule [4]
"Disclosure Letter" the disclosure letter of the same date as this
agreement from the Vendor to the Purchaser
"FA" Finance Act
"FRS" a financial reporting standard issued by The
Accounting Standard Board Limited or an SSAP
"ICTA" Income and Corporation Taxes Act 1988
"Intellectual Property patents, patent applications, know-how, trade
Rights" marks, trade mark applications, trade names,
registered designs, copyright or other similar
intellectual or commercial right
3
<PAGE>
"ITA" Inheritance Tax Act 1984
"Last Accounts Date" 31st March 1998 (being the date to which the
Principal Accounts have been prepared)
"Loan Note" the promissory note, in Agreed Form, to be
delivered by the Vendor to the Purchaser
pursuant to Clause 3.1.3
"Planning Acts" as defined in the Town and Country Planning Act
1990, s336
"Pledge Agreement" the pledge agreement, in Agreed Form, under the
terms of which the Shares are pledged to secure
the Loan Note
"Principal Accounts" the audited balance sheet as at the Last
Accounts Date and audited profit and loss
account for the year ended on the Last Accounts
Date of the Company and the directors' report
and notes thereto
"Properties" the leasehold properties of the Company shortly
described in Schedule [5]
"Purchaser's Solicitors" Beale and Company, Garrick House, 27-32 King
Street, Covent Garden, London WC2E 8JD
ref: MJA
"Shares" the Two ordinary shares of (pound)1 each in the
capital of the Company comprising the whole of
its issued and allotted share capital
"Subsidiary" a subsidiary as defined in CA, s 736
"SVI Loan" The net inter-company balance owed by the
Company to the Vendor as at 31st December 1998
4
<PAGE>
"Taxation" the same meaning as in the Deed of Indemnity
"TCGA" Taxation of Chargeable Gains Act 1992
"TMA" Taxes Management Act 1970
"VATA" Value Added Tax Act 1994
"Vendor's Solicitors" Solomon Ward Seidenwurm & Smith, LLP of 401B
Street, Suite 1200, San Diego, California 92101
"Warranties" the warranties and undertakings of the Vendors
contained in clause [5] and Schedule [3]
"Warranty Claim" any claim made by the Purchaser for breach of
any of the Warranties or any claim made by any
Group Company under the Deed of Indemnity;
1.1.2 all references to a statutory provision shall be construed as
including references to:
(a) any statutory modification, consolidation or re-enactment
(whether before or after the date of this agreement) for the
time being in force;
(b) all statutory instruments or orders made pursuant to a
statutory provision;
(c) any statutory provisions of which a statutory provision is a
modification, consolidation or re-enactment;
1.1.3 a reference to an SSAP is a reference to a statement of
standard accounting practice adopted by The Accounting
Standards Board Limited;
5
<PAGE>
1.1.4 except where the context otherwise requires words denoting the
singular include the plural and vice versa; words denoting any
one gender include all genders; words denoting persons include
firms and corporations and vice versa;
1.1.5 unless otherwise stated, a reference to a clause or sub-clause
or a Schedule is a reference to a clause or a sub-clause of or
a Schedule to this agreement.
1.2 Clause headings in this agreement and in the Schedules are for ease of
reference only and do not affect the construction of any provision.
2. AGREEMENT
---------
2.1 Subject to the terms and conditions of this agreement, the Vendor shall
sell (a) the Shares with full title guarantee and (b) the SVI Loan, and
the Purchaser shall purchase the Shares with all rights attaching to
them and the SVI Loan with effect from 31st December 1998.
3. PURCHASE CONSIDERATION
----------------------
3.1 The purchase consideration for the Shares shall be the sum of
22,500,000 U.S. Dollars payable as follows:
3.1.1 The sum of 2,250,000 U.S. Dollars which the Vendor
acknowledges having received:
3.1.2 The sum of 2,142,000 U.S. Dollars by Purchaser's delivery to
Vendor on Completion of the following:
(a) 52,000 shares in the Vendor having an agreed value of
U.S. Dollars 624,000:
(b) 89,000 shares in the Vendor having an agreed value of
U.S. Dollars 1,068,000; and
(c) 50,000 share options exercisable at 3 U.S. Dollars
each having an agreed value of U.S. Dollars 450,000.
6
<PAGE>
3.1.3 issue and delivery by the Purchaser of a secured Loan Note in
Agreed Form in favour of the Vendor or the Vendor's designee
or assignee under the terms of which the Purchaser agrees to
pay the sum of 18,108,000 U.S. Dollars on or before the
expiration of six (6) months from Completion with interest on
such sum at the rate of 2% above the base rate for the time
being for U.S. Dollar deposits of HSBC Plc payable from 1st
May 1999. The sum of 4,500,000 U.S. Dollars last payable under
Loan Note shall be payable by the Vendor to a third party
under the terms of that certain Settlement and Release
Agreement entered into concurrently with this agreement.
4. COMPLETION
----------
4.1 Completion shall take place at the offices of the Purchaser's
Solicitors immediately after the signing of this Agreement.
4.2 The Vendor shall deliver to the Purchaser:
4.2.1 duly completed and signed transfers in favour of the Purchaser
or as it may direct in respect of the Shares together with the
relative share certificates;
4.2.2 the Deed of Indemnity duly executed by the Vendor and the
Company;
4.2.3 the resignations of Mr B Schechter and Mr I Epstein as
directors of the Company with a written acknowledgement from
each of them executed as a deed in such form as the Purchaser
requires that he has no claim against the Company in respect
of breach of contract, compensation for loss of office,
redundancy or unfair dismissal or on any other grounds
whatsoever;
4.2.4 the resignation of the existing auditors of the Company
confirming that they have no outstanding claims of any kind
and containing a statement under CA s 394(1) that there are no
such circumstances as are mentioned in that section;
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4.2.5 the statutory books of the Company complete and up-to-date and
its certificates of incorporation and common seal;
4.2.6 the leases relating to each of the Properties;
4.2.7 the appropriate forms to amend the mandates given by the
Company to its bankers;
4.2.8 written confirmation from the Vendor that there are no
subsisting guarantees given by the Company in its favour and
that the Vendor will not be indebted to the Company nor vice
versa.
4.3 A Board meeting of the Company shall be held at which:
4.3.1 such persons as the Purchaser may nominate shall be appointed
additional directors;
4.3.2 the transfers referred to in clause 4.2.1 shall be approved
(subject to stamping); and
4.3.3 the resignations referred to in clause 4.2.3 shall be
submitted and accepted.
4.4 Upon completion of the matters referred to in clause 4.2 - 4.3:
4.4.1 the Purchaser shall deliver to the Vendor's Solicitors (a) the
duly executed Loan Note, (b) the duly executed Pledge
Agreement together with the Shares, (c) the shares and options
referred to in Clauses 3.1.2 representing 2,142,000 U.S.
Dollars of the purchase consideration referred to in clause
3.1.2 and (d) a Settlement and Release Agreement among Vendor,
Purchaser, Systems for Business Incorporated, and Ibis Systems
Limited.
4.5 The Purchaser and Vendor may in their absolute discretion waive any
requirement contained in clauses 4.2 to 4.3, and shall not be obliged
to complete, respectively, the purchase or sale of any of the Shares
unless the purchase of or sale of all the Shares is completed in
accordance with this agreement, but may instead rescind this agreement
without prejudice to any other remedy it may have.
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<PAGE>
5. WARRANTIES
----------
5.1 The Vendor warrants to the Purchaser that:
5.1.1 the Vendor has and will have full power and authority to enter
into and perform this agreement and the Deed of Indemnity
which constitute or when executed will constitute binding
obligations in accordance with their respective terms;
5.1.2 the Shares constitute the whole of the issued and allotted
share capital of the Company;
5.1.3 except as provided by this Agreement and the Pledge Agreement,
there is and at Completion will be no pledge, lien or other
encumbrance on, over or affecting the Shares and there is and
at Completion will be no agreement or arrangement to give or
create any such encumbrance and no claim has been or will be
made by any person to be entitled to any of the foregoing;
5.1.4 the Vendor will be entitled to transfer the full legal and
beneficial ownership of the Shares to the Purchaser on the
terms of this agreement without the consent of any third
party;
5.1.5 the information in Schedule [2] relating to the Company is
true and accurate in all respects;
5.1.6 save as set out in the Disclosure Letter, the Warranties in
Schedule [3] are true and accurate in all respects; and,
except in respect of anything to which the Purchaser gives its
consent under clause [5.6], will continue to be so up to and
including Completion;
5.1.7 the contents of the Disclosure Letter and of all accompanying
documents are true and accurate in all respects and fully,
clearly and accurately disclose every matter to which they
relate.
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5.2 Each of the Warranties is without prejudice to any other Warranty and,
except where expressly stated otherwise, no clause of this agreement
shall govern or limit the extent or application of any other clause.
5.3 The Vendor shall promptly disclose in writing to the Purchaser any
event or circumstance which arises or becomes known to it prior to
Completion and is materially inconsistent with any of the Warranties or
the contents of the Disclosure Letter or might be material to be known
by a purchaser for value of the Shares.
5.4 Except for the Warranties set forth in Sections 5.1.1 through 5.1.5,
all Warranties and the information contained in the Disclosure Letter
is provided solely in reliance upon the information provided to Vendor
by the Company's managing director (the "Managing Director") and/or its
officers, agents, representatives or advisers (collectively "Agents").
The parties to this agreement acknowledge that: (a) Vendor did not own
or control the business of the Company prior to August 13, 1997, (b)
the Managing Director has exercised and maintained day-to-day
management and control over the Company's business, assets and
operations since its inception, and (c) the Managing Director has
comprehensive and extensive knowledge and familiarity with all aspects
of the Company including, without limitation, its business, assets and
operations. All Warranties and Indemnities (including without
limitation as set forth in the Deed of Indemnity) provided by Vendor
under this agreement are accordingly qualified as follows: (i) all such
Warranties and Indemnities exclude events, occurrences, acts, omissions
and conditions which occurred or existed prior to August 13, 1997 or
after December 31, 1998 or any Warranty Claim arising from the
foregoing, and (ii) all such Warranties and Indemnities exclude events,
occurrences, acts, omissions and conditions which the Purchaser or the
Managing Director had actual knowledge of prior to Completion or which
occurred or arose as a result of the conduct of the Managing Director
or any Agent acting under the direction of the Managing Director or any
Warranty Claims arising from the foregoing.
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<PAGE>
5.5 The Vendor shall not make any claim against the Company or the Managing
Director, or the Agents in connection with the information supplied by
the Agents in connection with the Warranties and the Disclosure Letter
unless such Agent knew that the information delivered to Vendor
contains or will contain any untrue statement of a material fact or
deliberately omits or will omit any material fact necessary in order to
make the statements made in the Warranties, in the light of the
circumstances under which they are or were made, not misleading.
5.6 The Vendor shall procure that in so far as it is able and except so far
as may be necessary to give effect to this agreement, the Company shall
not before Completion without the prior written consent of the
Purchaser:
5.6.1 do, procure or allow anything which may cause, constitute or
result in a breach of the Warranties; or
5.6.2 in any way depart from the usual course of its business.
5.7 The Vendor shall procure that until Completion the Purchaser, its
agents, representatives and professional advisers are given promptly on
request whatever facilities and information regarding the business,
assets, liabilities, contracts and affairs of the Company, and of the
documents of title and other evidence of ownership of its assets, that
the Purchaser may require.
5.8 The Purchaser acknowledges that it has not been induced to enter into
this agreement by any representation or warranty other than the
Warranties.
6. LIMITATION OF LIABILITY CLAUSES
-------------------------------
6.1 The provisions of Schedule [6] shall apply.
7. VENDOR'S COVENANTS
------------------
11
<PAGE>
7.1 For the purpose of assuring to the Purchaser the full benefit of the
businesses and goodwill of the Company the Vendor undertakes by way of
further consideration for the obligations of the Purchaser under this
agreement as separate and independent agreements that it will not:
7.1.1 at any time after Completion disclose to any person, or itself
use for any purpose, and shall use his best endeavours to
prevent the publication or disclosure of, any information
concerning the business, accounts or finances of the Company
or any of its clients' or customers' transactions or affairs
of which it has knowledge except to the extent required by
applicable laws including the securities laws of the United
States of America;
7.1.2 for [2] years after Completion either on its own account or
for any other person directly or indirectly solicit, interfere
with or endeavour to entice away from the Company any person
who to its knowledge is, or has during the past [2] years
been, a client, customer or employee of, or in the habit of
dealing with the Company;
7.1.3 for [2] years after Completion, either alone or jointly with
or as manager, agent for or employee of any person, directly
or indirectly carry on or be engaged concerned or interested
in any business in the UK that is competitive with the main
business of the Company save as the result of making an
acquisition of a business in, or a company which has or whose
subsidiary has a business in, the United Kingdom a
non-material part of which is competitive with the business of
the Company. For the purpose of this sub-clause the expression
"main business of the Company" shall mean the supply,
installation, MAINTENANCE, and support of accounting and
business software to customers in the construction and plant
hire industry and its allied trades.
8. GENERAL
8.1 No announcement shall be made in respect of the subject matter of this
agreement unless specifically agreed between the parties or it is an
announcement required by law including the securities laws of the
United States of America.
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<PAGE>
8.2 This agreement shall be binding upon each party's successors and
assigns and personal representatives (as the case may be).
8.3 All expenses incurred by or on behalf of the parties, including all
fees of agents, representatives, solicitors, accountants and actuaries
employed by any of them in connection with the negotiation, preparation
or execution of this agreement, shall be borne solely by the party who
incurred the liability and the Company shall have any liability in
respect of them.
8.4 Time shall be of the essence of this agreement, both as regards the
dates and periods specifically mentioned and as to any dates and
periods which may be substituted by agreement in writing between or on
behalf of the Vendor and the Purchaser.
8.5 Any notice required to be given by any of the parties under this
agreement may be sent by post to the address of the addressee as set
out in this agreement or to such other address as the addressee may
have notified for the purpose of this clause. Communications sent by
post shall be deemed to have been received forty-eight hours after
posting. In proving service by post it shall be necessary to prove only
that the communication was contained in an envelope which was duly
addressed and posted in accordance with this clause.
8.6 The Agreement shall be governed by English law.
8.7 In case of any controversy, claim or dispute arising out of or relating
to this agreement or the breach thereof:
8.7.1 both parties shall meet and exert their best efforts to find
an amicable settlement;
8.7.2 failing agreement within a period of thirty days (30) from the
date on which either party with reference to the present
Article requests an amicable settlement, the matter shall be
referred to arbitration adjudicated under English Law
conducted in English and held in New York, New York, USA in
accordance with Rules of Conciliation and Arbitration of the
International Chamber of Commerce;
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<PAGE>
8.7.3 the Arbitration Board shall consist of three members. Each of
the parties shall appoint one arbitrator and the two so
nominated shall in turn choose a third. If the chosen
arbitrators cannot agree on the choice of the third
arbitrator, such arbitrator shall be appointed by the Court of
Arbitration of the International Chamber of Commerce;
8.7.4 the arbitration shall be conducted in accordance with the
Rules of the International Chamber of Commerce and it is
agreed that the decision shall be final and binding and there
shall be no appeal to the Courts from the decision of the
arbitrators;
8.7.5 either party shall be entitled to have any arbitration award
made an order of Court for the purposes of enforcement;
8.7.6 the obligation herein to arbitrate shall not be binding upon
either party with respect to requests for temporary
restraining orders, preliminary injunctions or other
procedures (or their functional equivalent) in a court of
competent jurisdiction to obtain interim relief when deemed
necessary by such court to (a) preserve the status quo or
prevent irreparable injury pending resolution by arbitration
of the actual dispute between the parties or (b) to order
specific performance.
8.8 This agreement shall be engrossed in two counterparts each showing the
signature of one party. Each party agrees to accept the signature of an
authorised representative of the other on a facsimile copy of the
counterpart as being valid and effective for the purposes of completing
this Agreement.
9. MISCELLANEOUS
-------------
9.1 The Vendor agrees to the following additional terms with effect from
Completion:
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<PAGE>
9.1.1 To comply with any existing obligation incurred by the Company
on behalf of the Vendor to issue to Todds of Lincoln Limited
55,000 Restricted Shares in the common stock of the Vendor and
to deliver a certificate for such shares to the Solicitors of
Todds of Lincoln Limited to be received by them on or before
31st May 1999; and
9.1.2 to waive the conditions precedent on the share options held by
Simon Carter to enable him to exercise his options at 5 U.S.
Dollars per share in accordance with the option agreement and
the Vendor agrees to give its approval to the transfer of the
options to Simon Carter's relatives trusts or retirement plans
as envisaged by clause 3 of the Option Agreement.
IN WITNESS WHEREOF THE PARTIES HAVE BY THEIR AUTHORISED REPRESENTATIVES DULY
SIGNED THIS AGREEMENT THE DAY AND YEAR FIRST BEFORE WRITTEN
SIGNED BY ) /s/ Barry M. Schechter
FOR AND ON BEHALF OF )
SVI HOLDINGS LIMITED
)
)
IN THE PRESENCE OF: ) /s/ Norman L. Smith
SIGNED BY )
FOR AND ON BEHALF OF ) /s/ Mary Nagle, Director
KIELDUFF INVESTMENTS ) /s/ David B. Kennelly, Director
LIMITED )
IN THE PRESENCE OF: ) /s/ R.L. Burnham
/s/ Duncan Burnham
<PAGE>
PROMISSORY NOTE
$18,108,000 SAN DIEGO, CALIFORNIA December 31, 1998
KIELDUFF INVESTMENTS LIMITED having an address for notices at Block A,
Unit 3 Broomfield Business Park, Mallahide, County Dublin, Ireland ("Maker"),
promises to pay to SVI HOLDINGS, INC., having an address for notices at 7979
Ivanhoe Avenue, Suite 500, La Jolla, California 92037 (the "Holder"), the
principal sum of Eighteen Million One Hundred and Eight Thousand US Dollars
($18,108,000) together with interest thereon computed from May 1, 1999 at a rate
of 2% above the base rate for the time being for dollar deposits of HSBC Plc.
All amounts due under this Promissory Note shall be payable as more fully set
forth below:
1. PAYMENTS. All amounts of principal and interest due under this Note
shall be paid to the Holder on or before October 1, 1999.
2. MANNER OF PAYMENTS. All payments by Maker under this Note shall be
(a) made in lawful money of the United States of America, and (b) deemed paid by
Maker upon their actual receipt by the Holder.
3. SECURED BY PLEDGE AGREEMENT. This Note is secured by a Pledge
Agreement dated the same date as this Note between Maker and the Holder (the
"Pledge Agreement").
4. ACCELERATION. All unpaid principal and late charges under this Note
shall, at the Holder's election, be immediately due and payable upon the
occurrence of any of the following events:
4.1. If any amount due under this Note is not received by the
Holder within fourteen (14) days
after its due date.
4.2. Any default occurs under the Pledge Agreement.
4.3. The making by Maker of any general arrangement or assignment
for the benefit of creditors; Maker's becoming bankrupt, insolvent or a "debtor"
as defined in 11 U.S.C. Section 101, or any successor statute (unless, in the
case of a petition filed against Maker, such petition is dismissed within thirty
(30) days after its original filing); the appointing of a trustee or receiver to
take possession of substantially all of Maker's assets (unless possession is
restored to Maker within thirty (30) days after such taking); or the attachment,
execution or judicial seizure of substantially all of Maker's assets (unless
such attachment, execution or judicial seizure is discharged within thirty (30)
days after such attachment, execution or judicial seizure).
5. NOTE WAIVERS. Maker waives presentment, demand, protest, notice of
demand and dishonor.
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6. COMMERCIAL PURPOSES. Maker acknowledges that the loan evidenced by
this Note is being obtained for business or commercial purposes, the proceeds of
which will not be used primarily for personal, family, household or agricultural
purposes.
7. GOVERNING LAW. This Note is governed by and construed in accordance
with the laws of the State of California, irrespective of California's
choice-of-law principles.
8. VENUE AND JURISDICTION. All actions and proceedings arising in
connection with this Note must be tried and litigated exclusively in the State
and Federal courts located in the County of San Diego, State of California,
which courts have personal jurisdiction and venue over each of the parties to
this Note for the purpose of adjudicating all matters arising out of or related
to this Note. Each party authorizes and accepts service of process sufficient
for personal jurisdiction in any action against it as contemplated by this
paragraph by registered or certified mail, return receipt requested, postage
prepaid, to its address for the giving of notices set forth in this Note.
9. PARTIAL INVALIDITY. Each provision of this Note is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Note (or the application of such provision to any person or circumstance) is or
becomes invalid or unenforceable, the remainder of this Note, and the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, are not affected by such invalidity
or unenforceability.
10. FURTHER ASSURANCES. Each party to this Note shall execute and
deliver all instruments and documents and take all actions as may be reasonably
required or appropriate to carry out the purposes of this Note.
11. TIME OF ESSENCE. Time and strict and punctual performance are of
the essence with respect to each provision of this Note.
12. ATTORNEY'S FEES. The prevailing party in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Note may
recover from the unsuccessful party all costs, expenses, and actual attorney's
fees (including expert witness and other consultants' fees and costs) relating
to or arising out of (a) the Proceeding (whether or not the Proceeding proceeds
to judgment), and (b) any post-judgment or post-award proceeding including,
without limitation, one to enforce or collect any judgment or award resulting
from the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and actual attorney's fees.
13. MODIFICATION. This Note may be modified only by a contract in
writing executed by the party to this Note against whom enforcement of the
modification is sought.
///
///
///
///
///
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<PAGE>
14. WAIVER. Any waiver of a default or provision under this Note must
be in writing. No such waiver constitutes a waiver of any other default or
provision concerning the same or any other provision of this Note. No delay or
omission by a party in the exercise of any of its rights or remedies constitutes
a waiver of (or otherwise impairs) such right or remedy. A consent to or
approval of an act does not waive or render unnecessary the consent to or
approval of any other or subsequent act.
/s/ Mary Nagle, Director
---------------------------------
KIELDUFF INVESTMENTS LIMITED
Witnessed by:
/s/ David Kennelly
--------------------------
--------------------------
3
<PAGE>
PLEDGE AGREEMENT
This Agreement is executed effective December 31, 1998 between SVI HOLDINGS,
INC., a Nevada corporation, having an address for notices at 7979 Ivanhoe
Avenue, Suite 500, La Jolla, CA 92037 ("Pledgee") and KIELDUFF INVESTMENTS
LIMITED having an address for notices at Block A, Unit 3 Broomfield Business
Park, Mallahide, County Dublin, Ireland ("Pledgor"), who agree as follows:
1. RECITAL. This Agreement is made with reference to the following
recital of essential facts:
1.1. Pledgee and Pledgor entered into a Share Sale Agreement re Ibis
Systems Limited effective December 31, 1998 (the "Share Sale Agreement").
1.2. Pursuant to the Share Sale Agreement Pledgor has executed a
Promissory Note dated December 31, 1998 in the amount of $18,108,000 (the
"Note") in favor of Pledgee.
1.3. In order to secure Pledgor's payment obligations under the
Note, Pledgor has agreed to pledge to Pledgee all of the issued and outstanding
shares in the capital stock of Ibis Systems Limited, a company incorporated
under the laws of England (the "Company") represented by two (2) Shares (the
"Shares").
1.4. This Agreement is executed and delivered to Pledgee in
accordance with the provisions of the Share Sale Agreement in order to secure
the full and timely performance of all of the Pledgor's obligations under the
Note.
2. GRANT OF SECURITY INTEREST. To secure Pledgor's obligations to
Pledgee under the Note (and all renewals, extensions, amendments, and changes
of, or substitutions or replacements to, any of the obligations under the Note),
and the faithful performance by Pledgor of all of its obligations under the
Share Sale Agreement (all of the foregoing collectively referred to as the
"Obligations"), Pledgor hereby assigns and grants to Pledgee a security interest
in the following (collectively, the "Collateral"):
2.1. the Shares;
2.2. all stock, membership interests, dividends, distributions,
substitutions, shares (or membership interests) issued pursuant to any merger or
reorganization of the Company or any other proceeds of the Shares as the term
proceeds is defined in Section 9306 of the California Uniform Commercial Code
belonging to the Pledgor or to which the Pledgor is entitled;
2.3. all income, revenue, distributions, and proceeds of any kind
whatsoever payable to the Pledgor in respect of its interest in the Company, or
any proceeds resulting from any voluntary or involuntary conversion or transfer
(including without limitation, a sale, exchange, gift, lease, refinancing,
condemnation, or foreclosure) of the Shares or any portion of the Shares.
1
<PAGE>
3. DELIVERY OF SHARES. Upon Pledgor's execution of this Pledge
Agreement, Pledgor shall (a) concurrently and validly endorse the share
certificate(s) evidencing the Shares in blank and deliver such certificate(s) to
Norman L. Smith, Esq., of Solomon Ward Seidenwurm & Smith (the
"Pledgeholder"),and (b) deliver to Pledgeholder a duly executed Assignment
Separate from Certificate with respect to each certificate representing the
Shares (the "Assignment").
4. TERMS OF PLEDGE.
4.1. The Shares and Assignments will be held by the Pledgeholder and
are being pledged by Pledgor subject to the terms and conditions of this
Agreement. As long as no Default (as defined in paragraph 8 below) exists under
this Agreement, Pledgor will have the right at all times to exercise the voting
rights in connection with the Shares and otherwise exercise the rights of
ownership relative to the Shares, subject to the covenants contained in
Paragraph 6, below. Pledgor shall indemnify, defend, and hold Pledgeholder
harmless from and against any and all actions, causes of action, claims,
demands, expenses, and liabilities that Pledgeholder may suffer or incur by
virtue of its role as Pledgeholder under this Agreement; provided, however, the
foregoing indemnification will not relate to any such matter arising out of the
gross negligence or intentional misconduct of Pledgeholder. Pledgeholder will
not be liable to Pledgor or Pledgee for any action taken or omitted to be taken
by Pledgeholder except for Pledgeholder's own gross negligence or intentional
misconduct.
4.2. Pledgor and Pledgee acknowledge and agree that Pledgeholder's
sole duties and responsibilities under this Agreement shall be to: (a) hold the
share certificates representing the Shares and the Assignments during the term
of the pledge provided for in this Agreement; (b) following the occurrence of a
Default to deliver the share certificates representing the Shares and the
Assignments in accordance with the Agreement; (c) return the share certificates
representing the Shares and the Assignments to Pledgor upon Pledgeholder's
receipt of written notice from Pledgee that the Note has been paid in full; and
(d) upon receipt of a written directive from Pledgor or Pledgee, deliver a copy
of such directive to the party from whom such directive was not received. Upon
receipt of conflicting directives from Pledgor and Pledgee, Pledgeholder shall
have the right to either (i) cease taking any action hereunder until he receives
either (a) joint instructions from both Pledgor and Pledgee, or (b) a court
order from a court of competent jurisdiction instructing Pledgeholder how to
proceed, or (ii) file an action in interpleader to resolve such dispute and
Pledgeholder shall have no responsibility to take any action following the
filing of any such interpleader action until so instructed by all of the parties
to this Agreement or in accordance with an order from a court of competent
jurisdiction. Additionally, in the event of any action, claim, demand, or
liability suffered by Pledgeholder by virtue of any act or failure to act by any
of the Pledgor or Pledgee, then Pledgor and Pledgee shall jointly and severally
indemnify, defend, and hold Pledgeholder harmless against such action, claim,
demand, or liability, and the party responsible for such action, claim, demand,
or liability shall promptly reimburse the non-responsible party(ies) for any
costs or expenses, including attorney's fees and collection costs, incurred by
such non-responsible party in indemnifying Pledgeholder.
5. PLEDGOR'S REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that the following are true and accurate:
2
<PAGE>
5.1. LEGAL POWER, RIGHT AND AUTHORITY. As of the date of this
Agreement, Pledgor has the legal power, right and authority to enter into this
Agreement.
5.2. ACTION. As of the date of this Agreement, all requisite
corporate actions have been taken by Pledgor in connection with entering into
this Agreement and the consummation of the transactions contemplated by this
Agreement.
5.3. INDIVIDUAL EXECUTING. The individual executing this Agreement
on behalf of Pledgor has the legal power, right, and actual authority to bind
Pledgor to the terms and conditions of this Agreement.
5.4. GOVERNMENTAL APPROVAL. Pledgor has obtained all permits,
approvals, licenses and other governmental consent necessary or desirable in
connection with the loan evidenced by the Note and the repayment of all
indebtedness evidenced by the Note.
5.5. NO CONFLICT. The loan evidenced by the Note does not violate or
breach any agreement, license, permit, judgment, decree, order, statute,
ordinance, rule or regulation to which Pledgor, or any of its assets are subject
or bound. Pledgor is not subject to any agreement, license, permit, judgment,
decree, order, statute, ordinance, rule or regulation that would impair the
power of Pledgor to enter into and carry out the undertakings required under the
Note. The Note does not violate, conflict with, result in the breach of, or
constitute a default under any Applicable Laws. The term "Applicable Laws" means
all applicable constitutional, legislative, judicial and administrative
provisions, statutes, regulations, decisions, rulings, orders, ordinances and
other laws of the State of California, the United States of America and the
United Kingdom.
6. COVENANTS OF PLEDGOR. Pledgor covenants that until all of the
Obligations have been fully and finally satisfied, Pledgor will fully and
completely comply (and cause compliance by the Company) with the following
affirmative and negative covenants:
6.1. Pledgor shall promptly inform Pledgee in writing as soon as
Pledgor becomes aware of: (a) any material adverse changes in the Company's
financial condition, and (b) all existing and all threatened litigation, claims,
investigations, administrative proceedings or similar actions effecting the
Company which could materially effect the financial condition of the Company.
6.2. Pledgor shall cause the Company to maintain its books and
records in accordance with its current custom and practice and permit Pledgee to
examine and audit the Company's books and records at all reasonable times.
Pledgor shall cause the Company to maintain fire and other risk insurance,
public liability insurance, and such other insurance as Pledgee may reasonably
require with respect to the Company's properties and operations, in form,
amounts, coverages and with insurance companies consistent with the Company's
current custom and practice.
6.3. Pledgor shall cause the Company to maintain executive and
management personnel with substantially the same qualifications and experiences
as the present executive and management personnel.
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<PAGE>
6.4. Pledgor shall defend any proceeding which seeks to, or
threatens to, affect, challenge, or impair Pledgee's security interest in the
Collateral and shall indemnify and hold Pledgee harmless from and against any
and all costs and expenses incurred in connection with any such action or
proceeding, including attorneys' fees and costs, other than any such action or
claim of a creditor or creditors of the Pledgee.
6.5. Pledgor shall, promptly upon request by Pledgee, execute and
deliver any documents or instruments, provide any notices, execute and file any
financing statements or other documents, and take any other actions which are,
in the reasonable judgment of Pledgee, necessary or desirable to perfect or
continue the perfection and first lien priority of Pledgee's security interest
in the Collateral, and to protect the Collateral against any adverse claims (in
violation of the representations and warranties in Paragraph 5, above), and pay
all reasonable costs incurred by Pledgee in connection therewith.
6.6. Pledgor shall cause all taxes, assessments, and other
obligations affecting the assets of the Company to be paid when due, subject to
the right of the Company to dispute, in good faith, any such obligations in a
timely manner.
6.7. Pledgor shall deliver to Pledgee on behalf of the Company,
within 10 days after the end of month, income and operating statements and other
financial reports in the same form as have previously been delivered to Pledgee
and which shall be certified as true and correct by a duly authorized officer of
the Company.
6.8. Pledgor shall accord Pledgee and Pledgee's representatives with
access from time to time as Pledgee and such representatives may require to all
properties owned by or over which the Company has control. Pledgee and the
Pledgee's representatives shall have the right, and Pledgor will permit the
Pledgee and such representatives from time to time as the Pledgee and such
representatives may request, to examine, inspect, copy, and make extracts from
any and all of the Company's books, records, electronically stored data, papers,
and files. Pledgor shall make all of the Company's copying facilities available
to Pledgee.
6.9. Pledgor shall pay when due all taxes, assessments, and liens,
if any, upon the Collateral. Pledgor may withhold any such payment or may elect
to contest any lien if Pledgor is in good faith conducting appropriate
proceedings to contest the obligation to pay, so long as Pledgee's interest in
the Collateral is not jeopardized. In any such contest, Pledgor shall represent
itself and Pledgee and shall satisfy any final adverse judgment before
enforcement against the Collateral. Pledgor shall name Pledgee as an additional
obligee under any surety bond furnished in the contest proceedings.
6.10. Pledgor and the Company shall not without the prior written
consent of the Pledgee:
6.10.1. permit any change in the name or structure of the
Company or alter the corporate, capital or legal structure of the Company,
including the creation or acquisition of any subsidiaries, or enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
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(or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease,
encumber, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or a
substantial portion of the business, property or assets of, or stock or other
evidence of beneficial ownership of, any person or any division or line of
business of any person;
6.10.2. create or suffer to exist any further security
interest in the Collateral;
6.10.3. sell or otherwise dispose of the Collateral or any
interest in the Collateral;
6.10.4. permit payments or distributions from the Company
other than in the ordinary course of business;
6.10.5. divert any corporate opportunity from the Company;
6.10.6. permit the Company to sell, transfer, encumber or
otherwise dispose of all or any of its assets including intangible and
intellectual property, except in the ordinary course of business in a
commercially reasonable transaction involving only unrelated and unaffiliated
parties;
6.10.7. incur any additional indebtedness other than in the
ordinary course of business in a commercially reasonable transaction involving
only unrelated and unaffiliated parties;
6.10.8. permit the Company to create, incur, assume or permit
to exist any lien on or with respect to any property or asset of any kind;
6.10.9. permit the Company to enter into, amend, restate,
modify or terminate any contracts except in the ordinary course of business in a
commercially reasonable transaction involving unrelated and unaffiliated
parties;
6.10.10. permit the Company to increase the compensation
payable to any officer or employee other than in the ordinary course of business
consistent with prior practices;
6.10.11. permit the Company to make any single item of capital
expenditure in excess of $50,000;
6.10.12. permit the Company to enter into or permit to exist
any transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any affiliate of
Pledgor, on terms that are less favorable to such person than those that might
be obtained at the time from persons who are not such an affiliate;
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6.10.13. permit the Company to pay any dividends or make any
other distribution of assets to shareholders;
6.10.14. permit the Company to issue shares of capital stock
or other securities or options or warrants to purchase such securities;
6.10.15. permit the Company to engage in any business
activities substantially different than those in which the Company is presently
engaged;
6.10.16. permit the Company to cease operations, liquidate,
merge, transfer, acquire or consolidate with any other entity, or change the
Company's name; or
6.10.17. permit the Company to make any loans or advances or
to acquire any indebtedness.
7. EVENTS OF DEFAULT. Pledgor shall be in default under this Agreement
upon the occurrence of any of the following events:
7.1. Pledgor's breach of this Agreement, which breach is not cured
within fourteen (14) days of written notice to Pledgor of such breach.
7.2. Any amount due under the Note is not received by Pledgee on its
due date.
7.3. Any actual or attempted disposition of the Collateral in
violation of this Agreement.
7.4. The making by Pledgor of any general arrangement or assignment
for the benefit of creditors; Pledgor becoming bankrupt, insolvent or a "debtor"
as defined in 11 U.S.C. Section 101, or any successor statute or similar statute
or law in Ireland (unless, in the case of a petition filed against Pledgor, such
petition is dismissed within 30 days after its original filing); the appointing
of a trustee or receiver to take possession of substantially all of Pledgor's
assets (unless possession is restored to Pledgor within 30 days after such
taking); or the attachment, execution or judicial seizure of substantially all
of Pledgor's assets (unless such attachment, execution or judicial seizure is
discharged within 30 days after such attachment, execution or judicial seizure).
8. RIGHTS OF PLEDGEE UPON DEFAULT. Should a default occur under
Paragraph 7 above (a "Default"), Pledgee shall give Pledgeholder and Pledgor
written notice and full details of such Default. Immediately following the
receipt of such written notice of Default, Pledgeholder may exercise any of the
following remedies with regard to the Collateral on behalf of Pledgee:
8.1. Vote, grant proxies, attend shareholder meetings, nominate and
elect directors, receive dividends and other distributions to shareholders, and
otherwise exercise any rights attributable to the Shares provided that such
Default may be exercised for a maximum period of thirty (30) days from receipt
of the written notice by the Pledgeholder before the Pledgor shall exercise its
rights under and in accordance with paragraph 8.2 below.
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8.2. Cause the Shares to be transferred to Pledgee on the books of
the Company, in accordance with the Assignments or other forms executed by
Pledgor in connection with the delivery of the Shares. Provided that if Pledgor
has not committed a Default (other than under paragraph 7.2 above) under this
Agreement as a result of which Pledgee asserts that it is entitled to recover
from Pledgor an amount necessary to compensate, reimburse and/or indemnify
Pledgee for its losses, liabilities, detriment, or damages, arising from such
Default, Pledgee shall return to Pledgor the consideration received for the
Shares (as set forth in paragraph 3 of the Purchase Agreement), in the form
received by Pledgee (the "Return Consideration"), and the parties will consider
the transactions contemplated by the Purchase Agreement to be rescinded, with
effect from the date the Shares are transferred to Pledgee in accordance with
this paragraph 8.2.
If Pledgee asserts that it is entitled to recover from Pledgor the
amount necessary to compensate, reimburse and/or indemnify Pledgee for losses,
liabilities, detriment or damages arising as a result of Pledgor's Default
(other than under paragraph 7.2 above), then Pledgee may deduct from the Return
Consideration such amounts as the Pledgee determines in good faith will be
reasonable to deduct in respect of such entitlement and shall remit the balance
of the Return Consideration to Pledgor within fourteen (14) days of transfer of
the Shares to Pledgee. Payment of the Return Consideration shall be without
prejudice to:
(a) Pledgor's right to institute proceedings for the recovery of the
Return Consideration or balance of the Return Consideration not remitted to the
Pledgor and for the determination of the issue as to its liability to Pledgee
under this Agreement, and
(b) Pledgee's right to recover an amount necessary to compensate,
reimburse and/or indemnify Pledgee for any losses, liabilities, detriment or
damages arising as a result of Pledgor's Default (other than under paragraph 7.2
above).
9. RETURN OF SHARES/NOTE. Upon Pledgor's performance of all of its
obligations under this Agreement and the Note, Pledgeholder shall return the
Collateral to Pledgor and the Note marked "PAID."
10. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor represents and
warrants to Pledgee that except for the security interest created by this
Agreement, no person or entity has any right, title, interest, or claim in or to
the Collateral or any part of the Shares.
11. GOVERNING LAW. This Agreement is governed by and construed in
accordance with the laws of the State of California, irrespective of
California's choice-of-law principles.
12. FURTHER ASSURANCES. Each party to this Agreement shall execute and
deliver all instruments and documents and take all actions as may be reasonably
required or appropriate to carry out the purposes of this Agreement including,
without limitation, as follows:
12.1. Pledgor agrees that at any time, and from time to time, at
its own expense, Pledgor will promptly execute, deliver and file or record all
financing statements, instruments and documents, and will take all further
actions including, without limitation, causing the Company to so execute,
deliver, file or take other actions, in any jurisdiction that may be necessary
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or desirable, or that Pledgee reasonably may request, in order to perfect and
protect any pledge or security interest granted hereby or to enable Pledgee to
exercise and enforce its rights and remedies hereunder with respect to the
Collateral and to preserve, protect and maintain the Collateral and the value
thereof including, without limitation, payment of all taxes, assessments and
other charges imposed on or relating to the Shares. Pledgor hereby consents and
agrees that the issuers of, or obligors on, the Collateral, or any registrar or
transfer agent or trustee for any of the Shares, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of Pledgee to
effect any transfer or exercise any right hereunder, notwithstanding any other
notice or direction to the contrary heretofore or hereafter given by Pledgor or
any other person to such issuers or such obligors or to any such registrar or
transfer agent or trustee.
12.2. Pledgor hereby irrevocably appoints Pledgee as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor, and in
the name of Pledgor, or otherwise, from time to time, in Pledgee's sole and
absolute discretion to do an of the following acts or things: (a) to do all acts
and things and to execute all documents necessary or advisable to perfect and
continue perfected the security interests created by this Agreement and to
preserve, maintain and protect the Collateral; (b) to do any and every act which
Pledgor is obligated to do under this Agreement; (c) to prepare, sign, file and
record, in Pledgor's name, any financing statement covering the Collateral; and
(d) to endorse and transfer the Shares upon foreclosure by Pledgee; PROVIDED,
HOWEVER, that Pledgee shall be under no obligation whatsoever to take any of the
foregoing actions, and Pledgee shall have no liability or responsibility for any
act (other than its own gross negligence or willful misconduct) or omission
taken with respect thereto.
13. VENUE AND JURISDICTION. All actions and proceedings arising in
connection with this Agreement must be tried and litigated exclusively in the
State and Federal courts located in the County of San Diego, State of
California, which courts have personal jurisdiction and venue over each of the
parties to this Agreement for the purpose of adjudicating all matters arising
out of or related to this Agreement. Each party authorizes and accepts service
of process sufficient for personal jurisdiction in any action against it as
contemplated by this paragraph by registered or certified mail, return receipt
requested, postage prepaid, to its address for the giving of notices set forth
in this Agreement. Notwithstanding the foregoing, (a) Pledgeholder and/or
Pledgee may institute proceedings in any court of competent jurisdiction to
obtain interim relief when deemed necessary to (i) preserve the status quo, (ii)
to prevent irreparable injury pending resolution of the actual dispute between
the parties, or (iii) to order specific performance or other injunctive relief,
and (b) if the issues in dispute between Pledgee and Pledgor arising from this
Agreement are those referred to in paragraphs 8.2(a) and (b), the parties agree
that such dispute shall be resolved or adjudicated in accordance with paragraph
8.7 of the Share Sale Agreement.
14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which is deemed an original and all of which together constitute one
document.
15. TIME OF ESSENCE. Time and strict and punctual performance are of
the essence with respect to each provision of this Agreement.
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<PAGE>
16. ATTORNEY'S FEES. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies) all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, and actual attorney's fees.
17. MODIFICATION. This Agreement may be modified only by a contract in
writing executed by the party to this Agreement against whom enforcement of the
modification is sought.
18. HEADINGS. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the interpretation
of this Agreement.
19. PRIOR UNDERSTANDINGS. This Agreement and all documents specifically
referred to and executed in connection with this Agreement: (a) contain the
entire and final agreement of the parties to this Agreement with respect to the
subject matter of this Agreement, and (b) supersede all negotiations,
stipulations, understandings, agreements, representations and warranties, if
any, with respect to such subject matter, which precede or accompany the
execution of this Agreement.
20. INTERPRETATION. Whenever the context so requires in this Agreement,
all words used in the singular may include the plural (and vice versa) and the
word "person" includes a natural person, a corporation, a firm, a partnership, a
joint venture, a trust, an estate or any other entity. The terms "includes" and
"including" do not imply any limitation. For purposes of this Agreement, the
term "day" means any calendar day and the term "business day" means any calendar
day other than a Saturday, Sunday or any other day designated as a holiday under
California Government Code Sections 6700-6701. Any act permitted or required to
be performed under this Agreement upon a particular day which is not a business
day may be performed on the next business day with the same effect as if it had
been performed upon the day appointed. No remedy or election under this
Agreement is exclusive, but rather, to the extent permitted by applicable law,
each such remedy and election is cumulative with all other remedies at law or in
equity.
21. PARTIAL INVALIDITY. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, are not affected by such invalidity
or unenforceability unless such provision or the application of such provision
is essential to this Agreement.
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22. SUCCESSORS-IN-INTEREST AND ASSIGNS. Pledgor may not voluntarily or
by operation of law assign, hypothecate, delegate or otherwise transfer or
encumber all or any part of its rights, duties or other interests in this
Agreement without the prior written consent of Pledgee, which consent may be
withheld in Pledgee's sole and absolute discretion. Any such transfer in
violation of this paragraph is void. Subject to the foregoing and any other
restrictions on transferability contained in this Agreement, this Agreement is
binding upon and inures to the benefit of the successors-in-interest and assigns
of each party to this Agreement.
23. NOTICES. All notices or other communications required or permitted
to be given to a party to this Agreement shall be in writing and shall be
personally delivered, sent by certified mail, postage prepaid, return receipt
requested, or sent by an overnight express courier service that provides written
confirmation of delivery, to such party at its address as set forth above in the
introductory Paragraph of this Agreement. Each such notice or other
communication shall be deemed given, delivered and received upon its actual
receipt, except that if it is sent by mail in accordance with this Paragraph,
then it shall be deemed given, delivered and received three days after the date
such notice or other communication is deposited with the United States Postal
Service in accordance with this Paragraph. Any party to this Agreement may give
a notice of a change of its address to the other party(ies) to this Agreement.
Notice to Pledgeholder shall be to Norman L. Smith, Esq., Solomon Ward
Seidenwurm & Smith, 401 B Street, Suite 1200, San Diego, CA 92101.
24. WAIVER. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default or
provision concerning the same or any other provision of this Agreement. No delay
or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A consent
to or approval of an act does not waive or render unnecessary the consent to or
approval of any other or subsequent act.
25. DRAFTING AMBIGUITIES. Each party to this Agreement and its legal
counsel have reviewed and revised this Agreement. The rule of construction that
ambiguities are to be resolved against the drafting party or in favor of the
party receiving a particular benefit under an agreement may not be employed in
the interpretation of this Agreement or any amendment to this Agreement.
///
///
///
///
///
///
///
///
///
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26. SURVIVAL. The covenants, conditions, representations and warranties
of this Agreement shall survive the execution of this Agreement.
SVI HOLDINGS, INC., a Nevada corporation
By: /s/ Barry M. Schechter
------------------------------------
Barry M. Schechter, President
------------------------------------
KIELDUFF INVESTMENTS LIMITED, an Ireland company
By: /s/ Mary Nagle
------------------------------------
Mary Nagle, Director
------------------------------------
I ACCEPT THE OBLIGATIONS IMPOSED UPON ME UNDER THIS PLEDGE
AGREEMENT:
/s/ Norman L. Smith
----------------------------------------
Norman L. Smith, Esq., Pledgeholder
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SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the "Agreement") is entered into
effective December 31, 1998 by and among SVI Holdings, Inc., a Nevada
corporation, ("SVI"), Softline Limited, a South African company ("Softline"),
Systems for Business Incorporated, a British Virgin Islands corporation,
("Systems"), Kielduff Investments Limited, an Ireland company ("Kielduff") and
Ibis Systems Limited, a company incorporated under the laws of England ("Ibis"),
who agree as follows:
1. RECITALS.
1.1. On or about August 1997, Systems and Softline entered
into an Acquisition Agreement in Respect of Trade Marks, an Acquisition of
Business Agreement and certain related agreements (collectively, the "Prior
Purchase Agreements").
1.2. SVI has assumed certain obligations of Softline under the
terms of the Prior Purchase Agreements.
1.3. SVI and Kielduff have entered into a Share Sale Agreement
evenly dated herewith (the "Ibis Purchase Agreement") under which SVI shall sell
to Kielduff all of the issued and outstanding shares of Ibis. Kielduff has
agreed to deliver to SVI a Loan Note (as defined in the Ibis Purchase Agreement)
as part of the requirements of the Ibis Purchase Agreement. The Ibis Purchase
Agreement has been facilitated by Systems.
1.4. In the event of consumation and performance of the Ibis
Purchase Agreement Systems shall have certain claims against Softline and SVI
arising out of the Prior Purchase Agreements and the Ibis Purchase Agreement.
1.5. The parties intend to effect a settlement and release of
the certain matters among them as more fully set forth below.
2. SETTLEMENT. Providing Kielduff shall have repaid $13,608,000 under
the Loan Note together with all interest and collection costs thereon
unconditionally and without any right of recovery: (a) SVI shall pay to Systems
all further sums it receives from Kielduff under the Loan Note, and (b) on
System's request SVI will assign the benefits of the Loan Note to Systems
together with the benefits of any security held in relation thereto. If SVI does
not receive the sum of $13,608,000 together with all interest and collection
costs thereon in accordance with the Loan Note, SVI shall have no obligation to
pay Systems any amount whatsoever.
3. RELEASE BY SVI AND SOFTLINE. Upon performance in full of paragraph 2
above, SVI and Softline on their own behalf and on behalf of their respective
subsidiaries, officers, directors, shareholders, employees, agents, attorneys,
representatives, consultants, predecessors, successors and affiliates fully and
forever releases, discharges, and dismisses all claims, demands, actions, causes
of action and rights, in law or in equity, in the nature of an administrative
proceeding or otherwise (known, unknown, contingent, accrued, inchoate or
otherwise) which SVI and Softline have or may have against Systems and its
respective subsidiaries, officers, affiliates, shareholders, its subsidiaries,
officers, directors, shareholders, employees, agents, attorneys,
representatives, consultants, predecessors, successors, and affiliates arising
out of the Prior Purchase Agreements. For the purposes of this paragraph 3,
"affiliate" shall mean any person or entity controlled by, controlling, or under
common control with, directly or indirectly, the referenced person or entity.
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4. RELEASE BY SYSTEMS. Upon performance in full of paragraph 2 above,
Systems on its own behalf and on behalf of its respective subsidiaries,
officers, directors, shareholders, employees, agents, attorneys,
representatives, consultants, predecessors, successors and affiliates fully and
forever releases, discharges, and dismisses all claims, demands, actions, causes
of action and rights, in law or in equity, in the nature of an administrative
proceeding or otherwise (known, unknown, contingent, accrued, inchoate or
otherwise) which Systems has or may have against SVI and Softline and their
respective subsidiaries, officers, affiliates, shareholders, its subsidiaries,
officers, directors, shareholders, employees, agents, attorneys,
representatives, consultants, predecessors, successors, and affiliates arising
out of the Prior Purchase Agreements. For the purposes of this paragraph 4,
"affiliate" shall mean any person or entity controlled by, controlling, or under
common control with, directly or indirectly, the referenced person or entity.
5. WARRANTY, REPRESENTATION AND COVENANT. The parties to this Agreement
warrant, represent and covenant that they have not previously assigned or
transferred in any manner, or purported to have assigned or transferred in any
manner, any of the claims described or set forth in the paragraphs 3 and 4
above.
6. NO ADMISSION OF LIABILITY. Nothing contained in this Agreement shall
be construed as an admission by any party to this Agreement of any liability of
any kind to any party to this Agreement or any other person.
7. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
8. FURTHER ASSURANCES. Each party to this Agreement shall execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement.
9. VENUE AND JURISDICTION. For purposes of venue and jurisdiction, this
Agreement shall be deemed made and to be performed in the City of San Diego,
California.
10. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one document.
11. ATTORNEY'S FEES. In the event any litigation, arbitration,
mediation, or other proceeding ("Proceeding") is initiated by any party against
any other party to enforce, interpret or otherwise obtain judicial or
quasi-judicial relief in connection with this Agreement, the prevailing party in
such Proceeding shall be entitled to recover from the unsuccessful party all
costs, expenses, actual attorney's and expert witness fees, relating to or
arising out of (1) such Proceeding (whether or not such Proceeding proceeds to
judgment), and (2) any post-judgment or post-award proceeding including without
limitation one to enforce any judgment or award resulting from any such
Proceeding. Any such judgment or award shall contain a specific provision for
the recovery of all such subsequently incurred costs, expenses, actual
attorney's and expert witness fees.
12. MODIFICATION. This Agreement may be modified only by a contract in
writing executed by the party to this Agreement against whom enforcement of such
modification is sought.
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13. HEADINGS. The headings of the paragraphs of this Agreement have
been included only for convenience, and shall not be deemed in any manner to
modify or limit any of the provisions of this Agreement, or be used in any
manner in the interpretation of this Agreement.
14. INTERPRETATION. Whenever the context so requires in this Agreement,
all words used in the singular shall be construed to have been used in the
plural (and vice versa), each gender shall be construed to include any other
genders, and the word "person" shall be construed to include a natural person, a
corporation, a firm, a partnership, a joint venture, a trust, an estate or any
other entity.
15. PARTIAL INVALIDITY. Each provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. If any provision of this
Agreement or the application of such provision to any person or circumstance
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability, unless such provision or such
application of such provision is essential to this Agreement.
16. WAIVER. Any waiver of a default under this Agreement must be in
writing and shall not be a waiver of any other default concerning the same or
any other provision of this Agreement. No delay or omission in the exercise of
any right or remedy shall impair such right or remedy or be construed as a
waiver. A consent to or approval of any act shall not be deemed to waive or
render unnecessary consent to or approval of any other or subsequent act.
17. DRAFTING AMBIGUITIES. Each party to this Agreement and its legal
counsel have reviewed or have had an opportunity to review this Agreement. The
rule of construction that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
of any amendments or exhibits to this Agreement.
18. EFFECTIVENESS. This Agreement shall become effective when it has
been executed by all of the parties to this Agreement.
SVI HOLDINGS, INC., SYSTEMS FOR BUSINESS INC.,
a Nevada corporation a British Virgin Islands corporation
By: /s/ Barry M. Schechter By: /s/ Simon Hancock
------------------------ ---------------------------
Its: President Its: Director
----------------------- --------------------------
IBIS SYSTEMS LIMITED,
SOFTLINE LIMITED an England company
a South African company
By: /s/ Barry M. Schechter By: /s/ Peter Nagle
------------------------- ----------------------------
Its: Director Its:
------------------------ ---------------------------
KIELDUFF INVESTMENTS LIMITED,
an Ireland company
By: /s/ Mary Nagle
-------------------------
Its: Director
- ----------------------------
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