UNITED STATES
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): September
11, 2015
Lenco Mobile Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware |
000-53830 |
75-3111137 |
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
N/A[1] |
|
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s Telephone Number, Including
Area Code: N/A[2]
2025 First Avenue, Suite 320, Seattle, Washington
98121
(Former Name or Former Address, if Changed Since
Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
¨ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
_______________________
1
The Company no longer maintains a corporate office. For notice purposes, the Company’s bankruptcy counsel’s address
is: Lane Powell, P.C. 1420 Fifth Avenue, Suite 4200, Seattle, WA 98111, attn.: Bruce Leaverton.
2
The Company no longer has a registered telephone number. For notice purposes, the Company’s bankruptcy counsel’s
phone number is: (206) 223-7389, attn.: Bruce Leaverton.
Item 1.01 Entry into a Material
Definitive Agreement.
On August 21, 2015, Lenco Mobile, Inc. (the
“Company”) and Archer USA, Inc. (“Archer”), the wholly-owned subsidiary of the Company, filed a motion
(the “Sale Motion”) with the Bankruptcy Court (defined below) for authority to enter into and consummate the share
purchase agreement (the “SPA”) between the Company and IMImobile South Africa 1, Limited and IMImobile South Africa
2, Limited, companies registered in England with numbers 09634021 and 09633868 respectively (collectively, “IMI”).
At the time of filing of the Sale Motion, the SPA was not yet executed and the parties were in the process of negotiating the final
details of the transaction.
The Company was the sole owner of all issued
and outstanding shares of Lenco International Limited BVI (“Lenco International”) prior to the sale. Lenco International
owned, through its subsidiaries, all of the Company’s South African business, which is the subject of the sale described
herein. Pursuant to the terms of the SPA submitted to the Bankruptcy Court for approval, IMI agreed to acquire all issued and outstanding
shares of Lenco International for the total purchase price of $5,600,000 (the “Purchase Price”), comprise of (i) cash
at closing payment in the amount of $5.2 million, and (ii) deferred consideration of $400,000 to be paid within 90 days of the
closing date.
The SPA was subject to a number of closing
conditions, including: (i) the approval by the Bankruptcy Court (defined below) in the Bankruptcy Filing (defined below); (ii)
the execution of an agreement between Lenco International and Archer Africa Mauritius (Pty) Ltd (“Mauritius”) to purchase
all rights held by Mauritius with respect to the provisions of solutions to the government markets (the “AM Agreement”).
The parties subsequently waived the execution of the AM Agreement as a condition of closing. The Bankruptcy Court hearing for approval
of the subject sale took place on September 11, 2015 and the Bankruptcy Court entered an order approving the sale on the same date.
The Company and IMI executed the SPA on September 16, 2015, the sale closed and the net sale proceeds were wired into Lenco’s
debtor-in-possession account on the same day.
As previously disclosed, on September 6, 2014,
the Company and Archer each filed a voluntary petition for relief (the “Bankruptcy Filing”) under Chapter 11 of the
United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Western District
of Washington (the “Bankruptcy Court”). The cases are jointly administered and substantively consolidated under case
number 14-16659-KAO under the caption “In re: Archer USA, Inc.; Lenco Mobile, Inc.” All documents filed with the Bankruptcy
Court are available for inspection at the Office of the Clerk of the Bankruptcy Court or online at https://ecf.wawb.uscourts.gov/cgi-bin/login.pl.
The Company and Archer anticipate a prompt confirmation of a Chapter 11 Plan of Reorganization, which will control the distributions
to creditors of the bankruptcy estates.
The SPA has been included to provide shareholders
with information regarding its terms. It is not intended to provide any factual, business or operational information about the
Company, Archer USA or their respective subsidiaries. The SPA contains representations and warranties that the parties to the SPA
made solely for the benefit of each other. The assertions embodied in such representations and warranties are qualified by information
contained in schedules that Archer USA provided in connection with execution of the SPA. These disclosure schedules contain information
that modifies, qualifies and creates exceptions to the representations and warranties set forth in the SPA. Moreover, the representations
and warranties in the SPA (i) are subject to materiality standards which may differ from what may be viewed as material by investors
and shareholders, (ii) in certain cases, were used for the purpose of allocating risk among the parties rather than establishing
matters as facts, and (iii) were only made as of the date of the SPA and are modified in important part by the underlying disclosure
schedules. Accordingly, investors and shareholders should not rely on such representations and warranties as characterizations
of the actual state of facts or circumstances. Moreover, information concerning the subject matter of such representations and
warranties may change after the date of the SPA, which subsequent information may or may not be fully reflected in the Company’s
public disclosures.
The foregoing description of the SPA, is qualified
in its entirety by reference to the text of the SPA, a copy of which is attached to this Current Report on Form 8-K as Exhibit
2.1, and is incorporated herein by reference.
Risk Related the Company’s Equity Securities
The Company cannot predict what the ultimate value of its equity securities may be or whether the holders of its equity securities will receive any distribution in the bankruptcy proceedings; however, it is likely that the Company’s common stock and preferred stock will have very little or no value given the amount of the Company’s liabilities compared to its assets. The Company’s shareholders are cautioned that trading in shares of the Company’s equity securities during the pendency of the Bankruptcy Filings under Chapter 11 is highly speculative and poses substantial risks. Trading prices for the Company’s equity securities may bear little or no relationship to the actual recovery, if any, by holders in the Chapter 11 Case. Accordingly, the Company urges extreme caution with respect to existing and future investments in its equity securities.
Cautionary Note Regarding Forward-Looking
Statements
This Current Report on Form 8-K contains certain
forward-looking statements. Additional written and oral forward-looking statements may be made by the Company from time to time
in Securities and Exchange Commission (SEC) filings and otherwise. The Private Securities Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements. These forward-looking statements include statements that are predictive in nature
and depend upon or refer to future events or conditions. In this context, forward-looking statements may address our expected future
business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”,
“plans”, “goals”, “believes”, “will” and other words of similar meaning. Forward-looking
statements by their nature address matters that are, to different degrees, uncertain. In addition, any statements concerning future
financial performance, ongoing business strategies or prospects, and possible future actions, are also forward-looking statements.
The Company and Archer caution readers that results predicted by forward-looking statements, including, without limitation, those
relating to our future business prospects, revenues, working capital, liquidity, capital needs, interest costs and income are subject
to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking
statements.
For the Company and Archer, particular risks
and uncertainties that could cause actual future results to differ materially from those expressed in our forward-looking statements
include, but are not limited to, the impact of and risks related to the Company's and Archer's filing under Chapter 11 of the Bankruptcy
Code, including risks related to obtaining approval and confirmation of Company's and Archer's plan of reorganization, the impact
of any delay or inability in obtaining such confirmation, and the impact of our restructuring on the holders of our securities;
risks related to the ongoing transition of our business; the risk of management or key employees departing the company; the impact
of uncertainty regarding our ability to continue as a going concern on our liquidity and prospects; uncertainty concerning the
ultimate success of our efforts to secure working capital; the impact of our restructuring on our ability to execute potential
divestitures of certain assets and/or subsidiaries; and other risks and uncertainties discussed in our filings with the Securities
and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q. Forward-looking statements
speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations
of the SEC, we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information,
future events or otherwise.
Item 9.01. Financial Statements
and Exhibits.
|
Exhibit
Number |
Description |
|
2.1 |
Share Purchase Agreement between the Company and IMI dated September 16, 2015. |
The schedules referenced in the SPA have been
omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to
the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Lenco Mobile Inc. |
|
|
|
|
|
|
Dated: October 13, 2015. |
By: |
/s/ Matthew Harris |
|
|
Matthew Harris |
|
|
Chief Executive Officer |
EXHIBIT INDEX
|
Exhibit
Number |
Description |
|
|
|
|
2.1 |
Share Purchase Agreement between the Company and IMI, dated September 16, 2015. |
|
Exhibit 2.1
Dated as of September 16, 2015
SHARE PURCHASE AGREEMENT
between
LENCO MOBILE INC.
and
IMMOBILE SOUTH AFRICA 1 LIMITED
and
IMIMOBILE SOUTH AFRICA 2 LIMITED
TABLE OF CONTENTS
1. |
INTERPRETATION |
1 |
2. |
CONDITIONS |
7 |
3. |
SALE AND PURCHASE |
9 |
4. |
PURCHASE PRICE |
10 |
5. |
LIMITATION OF LIABILITY AND SET-OFF AGAINST DEFERRED CONSIDERATION |
11 |
6. |
CLOSING |
13 |
7. |
WARRANTIES |
14 |
8. |
LIMITATIONS ON CLAIMS |
16 |
9. |
CLOSING BALANCE SHEET; WORKING CAPITAL ADJUSTMENT |
17 |
10. |
INDEMNITIES |
18 |
11. |
RESTRICTIONS ON THE SELLER |
18 |
12. |
CONFIDENTIALITY AND ANNOUNCEMENTS |
20 |
13. |
FURTHER ASSURANCE |
22 |
14. |
ASSIGNMENT |
22 |
15. |
WHOLE AGREEMENT |
22 |
16. |
VARIATION AND WAIVER |
23 |
17. |
COSTS |
23 |
18. |
NOTICE |
23 |
19. |
INTEREST ON LATE PAYMENT |
24 |
20. |
SEVERANCE |
25 |
21. |
AGREEMENT SURVIVES CLOSING |
25 |
22. |
THIRD PARTY RIGHTS |
25 |
23. |
COUNTERPARTS |
26 |
24. |
LANGUAGE |
26 |
25. |
GOVERNING LAW AND JURISDICTION |
26 |
SCHEDULE 1 |
PARTICULARS OF THE COMPANY, SUBSIDIARIES AND DIRECTORS |
27 |
PART 1. |
THE COMPANY |
27 |
PART 2. |
THE SUBSIDIARIES |
28 |
SCHEDULE 2 |
CONDITIONS |
30 |
SCHEDULE 3 |
PURCHASE PRICE |
31 |
SCHEDULE 4 |
WARRANTIES |
32 |
PART 1. |
GENERAL WARRANTIES |
32 |
1. |
POWER TO SELL THE COMPANY |
32 |
2. |
SHARES IN THE COMPANY AND SUBSIDIARIES |
32 |
3. |
CONSTITUTIONAL AND CORPORATE DOCUMENTS |
33 |
4. |
INFORMATION |
34 |
5. |
COMPLIANCE WITH LAWS |
34 |
6. |
LICENCES AND CONSENTS |
34 |
7. |
INSURANCE |
34 |
8. |
POWER OF ATTORNEY |
35 |
9. |
DISPUTES AND INVESTIGATIONS |
35 |
10. |
DEFECTIVE PRODUCTS AND SERVICES |
36 |
11. |
ANTITRUST |
36 |
12. |
CONTRACTS |
37 |
13. |
TRANSACTIONS WITH THE SELLER |
38.. |
14. |
FINANCE AND GUARANTEES |
38 |
15. |
ASSETS |
40 |
16. |
CONDITION OF PLANT AND EQUIPMENT |
41 |
17. |
INTELLECTUAL PROPERTY |
42 |
18. |
INFORMATION TECHNOLOGY |
44 |
19. |
DATA PROTECTION |
46 |
20. |
EMPLOYMENT |
46 |
21. |
PROPERTY |
49 |
22. |
ACCOUNTS |
52 |
23. |
FINANCIAL AND OTHER RECORDS |
53 |
24. |
CHANGES SINCE ACCOUNTS DATE |
54 |
25. |
EFFECT OF SALE OF SHARES |
54 |
PART 2. |
TAX WARRANTIES |
62 |
SCHEDULE 5 |
INTELLECTUAL PROPERTY RIGHTS |
65 |
PART 1. |
REGISTERED INTELLECTUAL PROPERTY RIGHTS |
65 |
PART 2. |
MATERIAL UNREGISTERED INTELLECTUAL PROPERTY RIGHTS |
65 |
PART 3. |
INTELLECTUAL PROPERTY RIGHTS LICENSED FROM THIRD PARTIES |
65 |
PART 4. |
INTELLECTUAL PROPERTY RIGHTS LICENSED TO THIRD PARTIES |
65 |
SCHEDULE 6 |
INFORMATION TECHNOLOGY |
66 |
SCHEDULE 7 |
PARTICULARS OF PROPERTIES |
67 |
PART 5. |
FREEHOLD PROPERTIES |
67 |
PART 3. |
OTHER REAL PROPERTY |
67 |
SCHEDULE 8 |
DISCLOSURE SCHEDULE |
68 |
PART 1. |
DISCLOSURES REFERRED TO IN THE AGREEMENT |
68 |
THIS AGREEMENT is dated 16 September 2015.
PARTIES
(1) | | LENCO MOBILE INC. (in administration) incorporated and registered in Delaware,
United States of America, with file number 4647147 whose registered office is at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, USA (Seller). |
(2) | | IMIMOBILE SOUTH AFRICA 1 LIMITED (registered in England with number 09634021)
whose registered office is at c/o IMImobile PLC, Tempus Court, Bellfield Road, High Wycombe, Buckinghamshire, England HP13 5HA
(IMISA1) |
(3) | | IMIMOBILE SOUTH AFRICA 2 LIMITED (registered in England with number 09633868)
whose registered office is at c/o IMImobile PLC, Tempus Court, Bellfield Road, High Wycombe, Buckinghamshire, England HP13 5HA
(IMISA2) (IMISA1 and IMISA2 are each a Buyer and together they are the Buyers) |
BACKGROUND
(A) | | The Company (as defined below) is authorised to issue 50,000 no par value shares of
a single class, and has an issued share capital of ten (10) shares, which are owned by Seller. |
(B) | | Further particulars of the Company and its Subsidiaries at the date of this agreement
are set out in Schedule 1. |
(C) | | On September 6, 2014, Seller filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (as defined below) in the United States Bankruptcy Court for the Western District of Washington at Seattle
(Bankruptcy Court). |
(D) | | Seller is continuing to manage its affairs as a debtor and debtor in possession pursuant
to Sections 1107(a) and 1108 of the Bankruptcy Code. |
(E) | | The Seller has agreed to sell and the Buyers have agreed to buy the Sale Shares in
accordance with Section 363 and other applicable provisions of the Bankruptcy Code subject to the terms and conditions of this
agreement. |
(F) | | The Sale Shares will be sold pursuant to a Sale Order of the Bankruptcy Court approving
such sale under Section 363 of the Bankruptcy Code and shall be subject to all the terms and conditions of the Sale Order. |
AGREED TERMS
1. INTERPRETATION
1.1 The definitions and rules of interpretation in this
clause apply in this agreement.
Accounts: the audited financial
statements of Archer Mobile as at and to the Accounts Date, including the balance sheet, profit and loss account together with
the notes on them, the cash flow statement and the auditor's and Directors' reports (copies of which are attached to the Disclosure
Schedule).
Accounts Date: December 31, 2014.
Archer Digital: means Archer Digital
Proprietary Limited, a company incorporated and registered in South Africa with company number 2012/111827/07 whose registered
office is at 1st Floor Building 3, Clearwater Office Park, Cnr Millenium Boulevard & Christiaan de Wet Road, Strubens
Valley, South Africa.
Archer Mobile: means Archer Mobile
South Africa Proprietary Limited, a company incorporated and registered in South Africa with company number 2004/001519/07 whose
registered office is at 1st Floor Building 3, Clearwater Office Park, Cnr Millenium Boulevard & Christiaan
de Wet Road, Strubens Valley, South Africa.
Bankruptcy Case: means Chapter 11
Case No. 14-16659-TWD and Case No. 14-1666-TWD (collectively, the ("Bankruptcy Case") in the United States Bankruptcy
Court for the Western District of Washington at Seattle.
Bankruptcy Code: means 11 U.S.C.
Section 101, et. seq., and any amendments thereof operative at the time of the Bankruptcy Case.
Business: the business of the Company
and its Subsidiaries, namely the development, ownership, and operation of mobile phone and internet solutions for enterprises.
Business Day: a day (other than
a Saturday, Sunday or public holiday) when banks in London are open for business.
Buyers' Lawyers: Bracher Rawlins
LLP of 77 Kingsway, London, WC2B 6SR, United Kingdom.
Claim and Substantiated Claim: have
the meanings set out respectively in clause 8.
Closing: the closing of the sale
and purchase of the Sale Shares in accordance with this agreement.
Closing Agenda: a document in agreed
form identifying the documents to be delivered by the Buyers and Seller at Closing and the business to be conducted at a meeting
of the Company held at Closing.
Closing Date: means the date that
is 21 days following the date of the Sale Order or such earlier date as the Buyers shall agree if the Bankruptcy Court eliminates
the 14-day stay of the Sale Order pursuant to Bankruptcy Rule 6004(f).
Closing Payment: $5,200,000 (US)
which shall be paid by the Buyers in the Relevant Proportions subject to the terms of this agreement.
Company: Lenco International Limited
BVI, a company incorporated and registered in British Virgin Islands with company number 1472607 whose registered office is at
Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands, further details of which are set out in Part 1 of Schedule
Conditions: the conditions set out in Schedule 2.
Connected: in relation to a person
shall have the meaning given in section 1122 of the Corporation Tax Act 2010.
Control: in relation to a body corporate,
the power of a person to secure that the affairs of the body corporate are conducted in accordance with the wishes of that person:
(a) | | by means of the holding of shares, or the possession of voting power, in or in relation
to that or any other body corporate; or |
(b) | | by virtue of any powers conferred by the constitutional or corporate documents, or
any other document, regulating that or any other body corporate; |
and a Change of Control occurs if
a person who controls any body corporate ceases to do so or if another person acquires control of it.
Counsel: a barrister of not less
than 5 years standing having experience in claims similar to a relevant Outstanding Claim, as agreed by the Seller and the Buyers,
or failing such agreement, as appointed by the President for the time being of the Law Society in England and Wales on the application
of either party.
Deferred Consideration: the sum
of $400,000 (US) which shall be paid by the Buyers in the Relevant Proportions subject to the terms of this agreement.
Deferred Consideration Date: means
the date that falls 90 days immediately after the Closing Date.
Director: each person who is a director
of the Company or any of its Subsidiaries, the names of whom are set out in Schedule 1.
Disclosed: fairly, fully, clearly
and accurately disclosed (with sufficient details to identify the nature and scope of the matter disclosed) in or under the Disclosure
Schedule.
Disclosure Schedule: Schedule 8 to this agreement.
Due Amount: the amount (if any)
due for payment by the Seller to the Buyers in respect of a Resolved Claim which shall be paid to them in the Relevant Proportions.
Encumbrance: any interest of any
person (including any right to acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien, assignment, hypothecation,
security, interest, title, retention or any other security agreement or arrangement.
Estimated Liability: in relation
to an Outstanding Claim, a genuine and bona fide estimate of the amount of the Seller's liability to the Buyers if the Outstanding
Claim were to be resolved in the Buyers' favour, as agreed or determined in accordance with clause 6.2.
Final Order: means an order or judgment,
entered by a court of competent jurisdiction, that remains in full force and effect and has not been reversed, or amended or modified
in a manner that is materially inconsistent with the terms and conditions set forth in this Agreement, and as to which (i) no stay
is in effect, (ii) the time to seek rehearing, file a notice of appeal or seek other review has expired, and (iii) no appeal or
request for rehearing or other review is pending.
Group: in relation to a company,
that company, its Subsidiaries, any company of which it is a Subsidiary (its holding company) and any other Subsidiaries of any
such holding company; and each company in a Group is a member of the Group.
Unless the context otherwise requires,
the application of the definition of Group to any company at any time will apply to the company as it is at that time.
Intellectual Property Rights: has
the meaning given in paragraph 17 of Schedule 4.
Lenco Technology Group: means Lenco
Technology Group Limited, a company incorporated and registered in the British Virgin Islands with company number 1495111 whose
registered office is at Palm Grove House, Road Town, Tortola, British Virgin Islands.
Management Accounts: the unaudited
consolidated balance sheet and the unaudited consolidated profit and loss account of the Company and Lenco Technology Group for
the period of six months ended June 30, 2015 (a copy of which is attached to the Disclosure Schedule).
Material Contract: has the meaning given in paragraph
12,1 of Schedule 4.
Outstanding Claim: a Relevant Claim
that has been notified by either of the Buyers' to the Seller in accordance with this agreement, but which is not a Resolved Claim
as at the Deferred Payment Date.
Properties: has the meaning given in paragraph 21 of
Schedule 4.
Purchase Price: the aggregate purchase
price payable by the Buyers for the Sale Shares as set out in clause 4 which is payable by the Buyers in the Relevant Proportions
and in accordance with the terms of this agreement.
Relevant Proportions: in relation
to the Purchase Price, the Closing Payment or Deferred Payment, the amount payable by each Buyer and in relation to the Due Amount
the amount due to each Buyer which in each case shall be as follows:
Buyer |
Amount Payable (5) |
IMISA1 |
80 |
IMISA2 |
20 |
Relevant Claim: a claim for breach
of any Warranty or a claim under clause 11.
Reserved Sum: has the meaning given in clause 5.1(b)(i).
Resolved Claim: a Relevant Claim that has been:
(a) | | agreed in writing between the Buyers and the Seller as to both liability and quantum; |
(b) | | finally determined by a court of competent jurisdiction from which there is no right
of appeal, or from whose judgment the relevant party is debarred (by passage of time or otherwise) from making an appeal; or |
(c) | | unconditionally withdrawn by the Buyers in writing. |
Sale Motion: means the motion for
entry of a Sale Order seeking, inter alia, authority for the Seller to sell the Sale Shares to the Buyers.
Sale Order: means an order granting
the Sale Motion, which order shall authorize the Seller to sell and assign the Sale Shares to Buyers in accordance with the terms
and conditions of this Agreement.
Sale Shares: the ten (10) shares,
no par value, in the Company, each of which is fully paid.
Seller's Lawyers: Lane Powell PC,
1420 Fifth Avenue, Suite 4200, Seattle, WA 98111-9402, United States of America.
Subsidiary: in relation to a company
(the holding company), any company in which the holding company (or persons acting on its behalf) directly or indirectly holds
or controls either:
(a) | | a majority of the voting rights exercisable at shareholder meetings of that company;
or |
(b) | | the right to appoint or remove a majority of its board of directors, |
and any company which is a Subsidiary of
another company is also a Subsidiary of that company's holding company.
Unless the context otherwise requires,
the application of the definition of Subsidiary to any company at any time shall apply to the company as it is at that time and,
with respect to the Company, shall include Archer Digital and Lenco Technology Group.
Tax or Taxation: whether or not
directly or primarily chargeable against or attributable to the Company and regardless of whether the Company has, or may have,
any right of reimbursement against any other person:
(a) | | any form of tax, levy, impost, duty, contribution, customs and other import duties,
liability and charge in the nature of taxation and all related withholdings or deductions of any kind (including, for the avoidance
of doubt, any National Insurance and social security contribution liabilities and similar or corresponding obligations) wherever
and whenever payable and shall further include any amount payable as a consequence of any claim, direction order or determination
of any Taxation Authority; and |
(b) | | all fines, penalties, charges, costs and interest included in or relating to any of
the above or to any obligation in respect of any of the above. |
Tax Warranties: the warranties in Part 2 of Schedule
4.
Transaction: the transaction contemplated
by this agreement or any part of that transaction.
Transfer Agreements: (a) the sale
of shares agreement entered into on April 24, 2015 between the Company and Jonathan Mark Fox pursuant to which the Company purchased
from Mr. Fox all the outstanding shares of Archer Digital; (b) the sale of shares agreement entered into on April 24, 2015 between
the Company and Mr. Fox pursuant to which the Company sold all the outstanding stock of Archer Mobile to Mr. Fox; and (c) the Sale
of Business Agreement between Archer Mobile and Archer Digital entered into on April 28, 2015 pursuant to which all the assets
of Archer Mobile were transferred to Archer Digital.
Warranties: the representations and warranties in clause
7 and Schedule 4. ZAR: South African Rand.
1.2 | | Clause and schedule headings do not affect the interpretation of this agreement. |
1.3 | | A person includes a natural person, a corporate or unincorporated body (whether
or not having separate legal personality) and that person's personal representatives, successors or permitted assigns. |
1.4 | | Unless the context otherwise requires, words in the singular include the plural and
in the plural include the singular. |
1.5 | | A reference to one gender includes a reference to the other genders. |
1.6 | | Subject to clause 14, a reference to any party shall include that party's personal
representatives, successors and permitted assigns. |
1.7 | | A reference to a company shall include any company, corporation or other body
corporate, wherever and however incorporated or established. |
1.8 | | A reference to a particular statute, statutory provision or subordinate legislation
is a reference to it as it is in force from time to time, taking account of any amendment or re-enactment and includes any statute,
statutory provision or subordinate legislation which it amends or re-enacts and subordinate legislation for the time being in
force made under it. Provided that, as between the parties, no such amendment or re-enactment made after the date of this agreement
shall apply for the purposes of this agreement to the extent that it would impose any new or extended obligation, liability or
restriction on, or otherwise adversely affect the rights of, any party. |
1.9 | | Writing or written does not include e-mail (unless otherwise expressly provided
in this agreement). |
1.10 | | Documents in agreed form are documents in the form agreed by the parties
to this agreement and initialled by them for identification |
1.11 | | References to clauses and schedules are to clauses and schedules of this agreement;
references to paragraphs are to paragraphs of the relevant schedule. |
1.12 | | References to times of day are, unless the context otherwise requires, to London time
and references to a day are to a period of twenty four hours running from midnight on the previous day. |
1.13 | | Any reference to an English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction
other than England be deemed to include a reference to what nearly approximates to the English legal term in that jurisdiction. |
1.14 | | References to this agreement include this agreement as amended or varied in accordance
with its terms. |
2.1 | | Closing of this agreement is subject to: |
(a) | | entry of the Sale Order by no later than September 30, 2015 or such later time and
date as may be agreed in writing by the Seller and Buyers; |
(b) | | the Sale Order being in a form acceptable to each of the Buyers and the Seller in
form and substance; |
(c) | | the Conditions in paragraphs 1 to 3 of Schedule 2 being satisfied or waived by the
date and time provided in clause 2.4; |
(d) | | the Conditions in paragraph 3 of Schedule 2 being satisfied up to and including the
Closing Date or waived; and |
(e) | | the Company having executed an agreement with Archer Africa Mobile Limited (formerly
Archer Africa Mauritius (Pty) Ltd), and Archer Mobile South Africa (Pty) Ltd (AM Agreement) to purchase all rights held
by Archer Africa Mobile Limited with respect to the provision of the Company's solutions to the government markets in a form reasonably
satisfactory to the Buyers. The AM Agreement shall provide for: |
(i) | | a payment directly from Company to Archer Africa Mauritius (Pty) Ltd no later than
Closing of $850,850 (US) which shall be deducted from Closing Payment; |
(ii) | | a further payment by the Company equal to 17% of any Deferred Consideration payment
which would otherwise be payable to the Seller and which shall be deducted from such Deferred Consideration and shall be paid
concurrently with any such payment to the Seller; and |
(iii) | | a release of all rights to any incentive payments to the Company's management by the
Company or any of its Subsidiaries arising from any existing agreements to which the Company or any of its subsidiaries or any
of the Company's management are a party to whether written or otherwise. |
2.2 | | If any of the Conditions have not been satisfied or waived by the date and time provided
in clause 2.1 and clause 2.4, this agreement shall cease to have effect immediately after that time on that date except for: |
(a) | | the provisions mentioned in clause 2.3; and |
(b) | | any rights or liabilities that have accrued under this agreement. |
2.3 | | The following provisions shall continue to have effect, notwithstanding failure to
waive or satisfy the Conditions, Clauses 1, 2, 12,15, 16, 17 18, 24 and 25. |
2.4 | | The Seller and the Buyers shall use all reasonable endeavours (so far as lies within
their respective powers) to procure that the Conditions are satisfied by September 30, 2015, but in any event no later than: |
(a) | | 23:59 on October 31, 2015; or |
(b) | | such later time and date as may be agreed in writing by the Seller and Buyers. |
2.5 | | The Buyers and the Seller shall co-operate fully in all actions necessary to procure
the satisfaction of the Conditions, including, but not limited to, the provision by all parties of all information reasonably
necessary to make any application for consent, notification or filing that the Buyers deem to be necessary or as requested by
any relevant authority, keeping all parties informed of the progress of any notification or filing and providing such assistance
as may reasonably be required. |
2.6 | | With respect to the Sale Order, the Buyers and Seller shall neither take any action,
nor fail to take any action, which action or failure to act would reasonably be expected to result in: |
(a) | | the reversal, avoidance, revocation, vacating or modification of the Sale Order (in
any manner that would reasonably be expected to materially and adversely affect Buyers' or Seller's rights hereunder); or |
(b) | | the entry of a stay of the Sale Order pending appeal. |
2.7 | | If the Sale Order or any other order of the Bankruptcy Court relating to this Agreement
shall be appealed (or a petition for certiorari or motion for rehearing or reargument shall be filed with respect thereto) and,
as a result thereof, the Buyers elect not to proceed with a Closing and the Buyers provide written notice to the Seller within
two (2) business days following the filing of such appeal, petition for certiorari or motion for rehearing or reargument if (i)
the Buyers elect not to proceed with a Closing under the circumstances, and (ii) the Buyers desire for the Seller to contest any
such appeal, petition for certiorari or motion for rehearing or reargument, the Seller shall, contingent upon the cooperation
and financial support of the Buyers, take all steps as may be reasonable and appropriate to defend against such appeal, petition
or motion, and shall endeavour to obtain an expedited resolution thereof. |
3.1 | | On the terms of this agreement and subject to the Conditions, the Seller shall sell,
and the Buyers shall buy, with effect from Closing, the number of Sale Shares set out opposite their respective names in Schedule
3. Schedule 3. |
3.2 | | Subject to entry of the Sale Order, the Seller: |
(a) | | has the right to sell the Sale Shares on the terms set out in this agreement; |
(b) | | shall do all it can, at its own cost, to give the Buyers the full legal and beneficial
title to the Sale Shares; and |
(c) | | sells the Sale Shares free from all Encumbrances. |
3.3 | | The Seller confirms to the Buyers that there is no right to require the Company to
issue any share capital or create an Encumbrance affecting any unissued shares or debentures or other unissued securities of the
Company. |
3.4 | | The Seller confirms to the Buyers that no commitment has been given to create an Encumbrance
affecting the Sale Shares (or any unissued shares or debentures or other unissued securities of the Company), or for the Company
to issue any share capital and no person has claimed any rights in connection with any of those things. |
3.5 | | The Sale Shares are sold with all rights that attach, or may in the future attach,
to them (including, in particular, the right to receive all dividends and distributions declared, made or paid on or after the
date of this agreement). |
3.6 | | The Buyers are not obliged to complete the purchase of any of the Sale Shares unless
the purchase of all the Sale Shares is completed simultaneously. |
4.1 | | The Purchase Price is $5,600,000 (US) (Five Million Six Hundred Thousand Dollars)
and shall be satisfied by the Buyers (in the Relevant Proportions) as follows: |
(a) | | by payment of the Closing Payment (less the amount set out in clause 2.1(e)(i) which
shall be paid by Buyers to the Company or on behalf of the Company to enable it to satisfy its obligations under the AM Agreement)
to the Seller in cash at Closing in accordance with clause 4.3; and |
(b) | | subject to clause 5, by payment of the Deferred Consideration (the amount payable
pursuant to clause 2.1(e)(ii) which shall be paid by Buyers to the Company or on behalf of the Company to enable it to satisfy
its obligations under the AM Agreement) to the Seller on the Deferred Consideration Date. |
4.2 | | The Purchase Price shall be deemed to be reduced by the amount of any payment made
to the Buyers: |
(a) | | for a breach of any Warranty; or |
4.3 | | All payments to be made to the Seller under this agreement shall be in US dollars.
Such payments shall be made by electronic transfer of immediately available funds to the Seller's Lawyers (who are hereby irrevocably
authorised by the Seller to receive the same). Payment in accordance with this clause shall be a good and valid discharge of the
Buyers' obligations to pay the sum in question and the Buyers shall not be concerned to see the application of the monies so paid. |
5. | | LIMITATION OF LIABILITY AND SET-OFF AGAINST DEFERRED CONSIDERATION |
5.1 | | If on the Deferred Consideration Date: |
(a) | | a Due Amount (or any part of it) is outstanding, the Buyers shall be entitled (at
their sole discretion) to satisfy all (to the extent possible) or part of the Seller's liability to pay the Due Amount by way
of set-off against the Deferred Consideration (which shall be applied between them in the Relevant Proportions), and to treat
their obligation to pay the Deferred Consideration as being reduced pro tanto by the amount so set off; and/or |
(b) | | there is an Outstanding Claim, the Buyers shall be entitled (at their sole discretion)
to: |
(i) | | withhold from the Deferred Consideration (in the Relevant Proportions) an amount equal
to the Estimated Liability or, if lower, the full amount of the Deferred Consideration (Reserved Sum); and |
(ii) | | defer payment of the Reserved Sum until such time as the Outstanding Claim has become
a Resolved Claim. |
(c) | | save as specifically set out in this agreement, the set-off provisions of this clause
6.1 shall be the exclusive remedy under this agreement for any Due Amount, Outstanding Claim or Resolved Claim. |
5.2 | | Where the provisions of clause 5.1(b) apply, the Buyers and the Seller shall use all
reasonable endeavours to agree the Estimated Liability in respect of the Outstanding Claim as soon as possible and in any event
within the period of 10 Business Days following the Deferred Consideration Date. In the absence of such agreement, the following
procedure shall apply: |
(a) | | the determination of the Estimated Liability shall be referred to Counsel at the request
of either party; |
(b) | | Counsel shall be requested to provide his determination of the Estimated Liability
within 15 Business Days of accepting his appointment (or such other period as the Buyers and the Seller may otherwise agree with
Counsel); |
(c) | | Counsel shall act as an expert and not as arbitrator and his determination regarding
the amount of the Estimated Liability shall, in the absence of manifest error, be final and binding on all the parties; and |
(d) | | Counsel's fees in making his determination of the Estimated Liability shall be borne
by the Buyers (in one part in the Relevant Proportions) and the Seller (in the other part) equally or as Counsel may otherwise
direct having regard to the respective conduct of the parties. |
5.3 | | Where a Reserved Sum has been withheld by the Buyers pursuant to clause 5.1(b) in
respect of an Outstanding Claim, upon that claim becoming a Resolved Claim the Buyers shall: |
(a) | | be entitled (in their sole discretion) to satisfy all (to the extent possible) or
part of the Seller's liability (if any) to pay the Due Amount in respect of the relevant Resolved Claim by way of set-off against
the corresponding Reserved Sum, and to treat their obligation to pay the Reserved Sum as being reduced pro tanto by the amount
so set off; and |
(b) | | pay to the Seller the balance of the corresponding Reserved Sum (if any) after the
Buyers have exercised their rights (if any) pursuant to clause 5.3(a). Such payment shall be made by the Buyers within 5 Business
Days of the Outstanding Claim becoming a Resolved Claim. |
5.4 | | Nothing in this clause 5 shall prejudice, limit or otherwise affect: |
(a) | | any right or remedy the Buyers may have against the Seller from time to time, whether
arising under this agreement or any of the documents executed pursuant to this agreement; or |
(b) | | the Buyers' right to recover against the Seller, whether before or after the Deferred
Consideration is paid in accordance with this agreement. |
Notwithstanding the foregoing, unless specifically
set forth in clause 8.7 of this agreement, the Buyers' right to recover against the Seller shall in all cases be limited to the
amount of the Deferred Consideration and must be exercised by providing written notice to Seller prior to the Deferred Consideration
Date.
5.5 | | Subject to the limits imposed by clause 5.4, the amount of a Reserved Sum withheld
by the Buyers in accordance with this clause 5 shall not be regarded as imposing a limit on the amount of any claims under this
agreement. |
6.1 | | Closing shall take place on the Closing Date: |
(a) | | at the offices of the Buyers' Lawyers; or |
(b) | | at any other place or time as agreed in writing by the Seller and the Buyers. |
6.2 | | At Closing the Seller shall: |
(a) | | transfer the relevant number of Sale Shares to each Buyer in such form as is necessary
for the Buyers to establish legal ownership in accordance with British Virgin Islands law; |
(b) | | deliver a certified copy of the resolution adopted by the board of directors of the
Seller authorising the Transaction and the execution and delivery by the officers specified in the resolution of this agreement,
any documents necessary to transfer the Sale Shares in accordance with clause 6.2(a) and any other documents referred to in this
agreement; |
(c) | | deliver or cause to be delivered all other documents identified in the Closing Agenda
as documents to be delivered by the Seller at Closing; and |
(d) | | procure that a meeting of the Company and each of its Subsidiaries (if appropriate)
is held at which the business identified for that meeting in the Closing Agenda is conducted. |
6.3 | | At Closing the Buyers shall: |
(a) | | pay the Closing Payment (in the Relevant Proportions) in accordance with clause 4.3; |
(b) | | deliver a certified copy of the resolutions adopted by the board of directors of each
Buyer authorising the Transaction and the execution and delivery by the officers specified in the resolution of this agreement,
and any other documents referred to in this agreement as being required to be delivered by it; and |
(c) | | deliver all other documents identified in the Closing Agenda as documents to be delivered
by the Buyers at Closing. |
6.4 | | If the Seller does not comply with clause 6.2 in any material respect the Buyers may,
without prejudice to any other rights it has: |
(b) | | defer Closing to a date no later than 31 December 2015; or |
(b) | | rescind this agreement. |
6.5 | | The Buyers may defer Closing under clause 6.4 only once, but otherwise clause 6.4
applies to a Closing deferred under that clause as it applies to a Closing that has not been deferred. |
6.6 | | As soon as possible after Closing, the Seller shall send to IMISA1 (at IMISA1's registered
office for the time being) all records, correspondence, documents, files, memoranda and other papers relating to the Company and
its Subsidiaries, not otherwise required to be delivered at Closing under this agreement, which are not kept at any of the Properties. |
7.1 | | The Buyers enter into this agreement on the basis of, and in reliance on, the Warranties. |
7.2 | | The Seller warrants and represents to each Buyer that each Warranty is true and not
misleading on the date of this agreement except as Disclosed. |
7.3 | | The Warranties are deemed to be repeated on each day up to and including the Closing
Date and any reference made to the date of this agreement (whether express or implied) in relation to any Warranty shall be construed,
in relation to any such repetition, as a reference to each such day. |
7.4 | | The Seller shall ensure that the Seller, the Company and the Company's Subsidiaries,
do not do or omit to do anything which would, at any time before or at Closing, be inconsistent with any of the Warranties, breach
any Warranty or make any Warranty untrue or misleading. |
7.5 | | Without prejudice to the right of the Buyers to claim on any other basis or take advantage
of any other remedies available to it, if any Warranty is breached or proves to be untrue or misleading, the Seller undertakes
to pay to the Buyers on demand: |
(a) | | the amount necessary to put the Company and each of its Subsidiaries into the position
they would have been in if the Warranty had not been breached and had not been untrue or misleading; and |
(b) | | all costs and expenses (including, without limitation, damages, legal and other professional
fees and costs, penalties, expenses and consequential losses whether directly or indirectly arising) incurred by the Buyers or
the Company or any of its Subsidiaries as a result of the breach or of the Warranty not being true or being misleading (including
a reasonable amount in respect of management time). |
(c) | | notwithstanding the foregoing and save as specifically set out in clause 8.7 of this
agreement, the Buyers' right to recover against the Seller shall in all cases be limited in accordance with clause 5 and must
be exercised by providing notice to the Seller prior to the Deferred Consideration Date. |
A payment made in accordance with the provisions
of this clause 7.5 shall include any amount necessary to ensure that, after Taxation of the payment, the Buyers are left with the
same amount it would have had if the payment was not subject to Taxation.
7.6 | | The Buyers are not entitled to recover damages or otherwise obtain restitution more
than once in respect of the same loss. |
7.7 | | If at any time before or at Closing the Seller becomes aware that a Warranty has been
breached, is untrue or is misleading, or has a reasonable expectation that any of those things might occur, it must immediately: |
(a) | | notify the Buyers in sufficient detail to enable the Buyers to make an accurate assessment
of the situation; and |
(b) | | if requested by the Buyers, use its reasonable endeavours to prevent or remedy the
notified occurrence. |
7.8 If at any time before or at Closing
it becomes apparent that a Warranty has been breached, is untrue or misleading, or that the Seller has breached any other term
of this agreement that in either case is material to the sale of the Sale Shares, the Buyers may (without prejudice to any other
rights they may have in relation to the breach):
(a) | | rescind this agreement by notice to the Seller; or |
7.9 | | Warranties qualified by the expression so far as the Seller is aware (or any
similar expression) are deemed to be given to the best of the knowledge, information and belief of the Seller after it has made
all reasonable enquiries. |
7.10 | | Each of the Warranties is separate and, unless specifically provided, is not limited
by reference to any other Warranty or anything in this agreement. |
7.11 | | With the exception of matters Disclosed, no information of which the Buyers and/or
their agents and/or advisors has knowledge (actual, constructive or imputed) or which could reasonably have been discovered (whether
by investigation made by the Buyers or made on their behalf) shall prejudice or prevent any Claim or reduce any amount recoverable
thereunder. Notwithstanding the foregoing, the Buyers have conducted their own due diligence on the Company and its subsidiaries,
and are not aware of any breach of Warranty by Seller. |
7.12 | | The Seller agrees that any information supplied by the Company or any of its Subsidiaries
or by or on behalf of any of the employees, directors, agents or officers of the Company and any of its Subsidiaries (Officers)
to the Seller or its advisers in connection with the Warranties, the information Disclosed in the Disclosure Schedule or otherwise
shall not constitute a warranty, representation or guarantee as to the accuracy of such information in favour of the Seller, and
the Seller hereby undertakes to the Buyers and to the Company, the Subsidiaries and each Officer that it waives any and all claims
which it might otherwise have against any of them in respect of such claims |
8.1 | | The definitions
and rules of interpretation in this clause apply in this agreement.
Claim: a claim for breach of any of the Warranties.
Substantiated Claim: a Claim in respect of which liability is admitted by the
party against whom such Claim is brought, or which has been adjudicated on by a court
of competent jurisdiction and no right of appeal lies in respect of such adjudication,
or the parties are debarred by passage of time or otherwise from making an appeal.
A Claim
is connected with another Claim or Substantiated Claim if they all arise out of the occurrence
of the same event and relate to the same subject matter. |
8.2 | | This clause limits the liability of the Seller in relation to any Claim. |
8.3 | | The liability of the Seller for all Substantiated Claims when taken together shall
not exceed an amount equal to the Deferred Consideration. |
8.4 | | The Seller shall not be liable for a Claim unless the amount of a Substantiated Claim,
or of a series of connected Substantiated Claims of which that Substantiated Claim is one, exceeds $16,000 (US). |
8.5 | | The Seller is not liable for any Claim to the extent that the Claim: |
(a) | | relates to matters Disclosed; or |
(b) | | relates to any matter specifically and fully provided for in the Accounts. |
8.6 The Seller is not liable for a Claim
unless one of the Buyers has given the Seller notice in writing of the Claim, summarising the nature of the Claim as far as it
is known to the Buyers and the amount claimed, prior to the Deferred Consideration Date.
8.7 | | Nothing in this agreement shall operate to limit any claim that arises or is delayed
as a result of dishonesty, fraud, wilful misconduct or wilful concealment by the Seller, its agents or advisers in connection
with Seller's inducement of Buyers to enter into this Agreement, including but not limited to the warranties given by Seller in
clause 7 of this Agreement if fraudulently given by the Seller and relied on by the Buyers in entering into the transaction contemplated
by this Agreement. |
9. | | CLOSING BALANCE SHEET; WORKING CAPITAL ADJUSTMENT |
9 | | On or prior to the thirtieth (30th) day following the Closing, the Seller shall prepare
and deliver to the Buyers an unaudited consolidated schedule of all assets and liabilities of the Company and its Subsidiaries
as of the close of business on the Closing Date (the Closing Balance Sheet). |
9.2 | | Upon receipt of the Closing Balance Sheet, the Buyers shall be permitted during the
succeeding thirty (30) day period to examine the work papers used or generated in connection with the preparation of the Closing
Balance Sheet and such other documents as the Buyers may reasonably request in connection with its review. The Closing Balance
Sheet shall become final and binding upon the Seller and the Buyers unless, within thirty (30) days following its submittal to
the Buyers, the Buyers notify the Seller of their specific objection(s) (the Closing Balance Sheet Objection) thereto in
writing (the Objection Notice). If the Buyers so notify the Seller of their objection to the Closing Balance Sheet, the
Buyers and the Seller shall negotiate in good faith to resolve the Closing Balance Sheet Objection. If, within fifteen (15) days
following the receipt of the Objection Notice by the Seller any of such objection have not been resolved or waived, the Seller
and the Buyers shall submit the dispute to an independent third party auditor mutually agreed on by the Parties (the Auditor),
and the Auditor's opinion thereon and the resulting Closing Balance Sheet shall be final, binding and not subject to any appeal;
provided, however, that if after good faith efforts, the Seller and the Buyers cannot agree on the Auditor, then each party shall
designate an independent third party auditor and then cause the two auditors so designated to mutually designate an independent
third party auditor, which shall be the Auditor. The fees and expenses incurred in connection with any Balance Sheet Objection
shall be borne by the party incurring them, provided that the fees and expenses of the Auditor in connection with any such resolution
shall be paid one-half by the Seller and one-half by the Buyers. |
9.3 | | If the Net Working
Capital (as defined below) reflected on the Closing Balance Sheet is less than $80,000(US),
the Buyers shall be entitled to deduct the difference from the Deferred Consideration.
If the Net Working Capital reflected on the Closing Balance Sheet is more than $80,000
(US), the difference shall be added to the Purchase Price and shall be paid to the Seller
along with the Deferred Consideration. Net Working Capital means current assets
less current liabilities. |
10.1 | | The Seller undertakes to indemnify, and to keep indemnified, the Buyers, the Company
and the Company's Subsidiaries against all losses or liabilities (including, without limitation, any direct or indirect consequential
losses, loss of profit, loss of reputation, damages, claims, demands, proceedings, costs, expenses, penalties and legal and other
professional fees and costs) which may be suffered or incurred by any of them and which arise directly or indirectly in connection
with the following matters any breach of the Warranties set out in paragraphs 1, 2 and 15,6 to 15.9 of Schedule 4 |
10.2 | | Any payment made in respect of a claim under clause 10 shall include: |
(a) | | an amount in respect
of all costs and expenses incurred by the Buyers or the Company or any of their Subsidiaries
(as the case may be) in relation to the bringing of the claim (including a reasonable
amount in respect of management time); and |
(b) | | any amount
necessary to ensure that, after any Taxation of the payment, the Buyers, the Company
or any of their Subsidiaries (as the case may be) are left with the same amount
it would have had if the payment was not subject to Taxation. |
10.3 | | Notwithstanding the foregoing provisions of this clause 10, and save as specifically
set out in clause 8.7 of this agreement, the Buyers' right to recover against the Seller shall in all cases be limited in accordance
with clause 5. |
11. | | RESTRICTIONS ON THE SELLER |
11.1 | | The Seller shall not, and shall procure that each other member of the Seller's Group
shall not, at any time during the period of 3 years beginning with the Closing Date, in any geographic areas in which any business
of the Company or any of its Subsidiaries was carried on at the Closing Date (which the parties agree is the continent of Africa),
carry on or be employed, engaged or interested in any business which would be in competition with any part of the Business as
the Business was carried on at the Closing Date. |
11.2 | | The Seller shall not, and shall procure that each other member of the Seller's Group
shall not, at any time during the period of 3 years beginning with the Closing Date, deal with any person who is at the Closing
Date, or who has been at any time during the period of 12 months immediately preceding that date, a client or customer of the
Company or any of its Subsidiaries, |
11.3 | | The Seller shall not, and shall procure that each other member of the Seller's Group
shall not, at any time during the period of 3 years beginning with the Closing Date, canvass, solicit or otherwise seek the custom
of any person who is at the Closing Date, or who has been at any time during the period of 12 months immediately preceding that
date, a client or customer or the Company or any of its Subsidiaries. |
11.4 | | The Seller shall not, and shall procure that each other member of the Seller's Group
shall not, at any time during the period of 3 years beginning with the Closing Date: |
(a) | | offer employment to, enter into a contract for the services of, or attempt to entice
away from the Company or any of its Subsidiaries, any individual who is at the time of the offer or attempt, and was at the Closing
Date, employed or directly engaged in an executive or managerial position with the Company or any of its Subsidiaries; or |
(b) | | procure or facilitate the making of any such offer or attempt by any other person. |
11.5 | | Unless otherwise required by law, the Seller shall not, and shall procure that each
other member of the Seller's Group shall not, at any time after Closing, use in the course of any business within the continent
of Africa: |
(a) | | the words "Lenco Mobile"; |
(b) | | any trade or service mark, business or domain name, design or logo which, at Closing,
was or had been used by the Company or any of its Subsidiaries; or |
(c) | | anything which is, in the reasonable opinion of the Buyers, capable of confusion with
such words, mark, name, design or logo. |
11.6 | | The Seller shall not, and shall procure that each other member of the Seller's Group
shall not, at any time during a period of 3 years beginning with the Closing Date, solicit or entice away from the Company or
any of its Subsidiaries any supplier to the Company or any of its Subsidiaries who had supplied goods and/or services to the Company
or any of its Subsidiaries at any time during the 12 months immediately preceding the Closing Date, if that solicitation or enticement
causes or would cause such supplier to cease supplying or materially reduce its supply of, those goods and/or services to the
Company or any of its Subsidiaries. |
11.7 | | The covenants in this clause 11 are intended for the benefit of the Buyers and the
Company and the Company's Subsidiaries and apply to actions carried out by the Seller or any member of the Seller's Group in any
capacity and whether directly or indirectly, on the Seller's or any member of the Seller's Group behalf, on behalf of any other
person or jointly with any other person. |
11.8 | | Each of the covenants in this clause 11 is a separate undertaking and shall be enforceable
by each Buyer separately and independently of its right to enforce any one or more of the other covenants contained in this clause
11. Each of the covenants in this clause 11 is considered fair and reasonable by the parties but if any restriction is found to
be unenforceable, but would be valid if any part of it were deleted or the period or area of application reduced, the restriction
shall apply with such modifications as may be necessary to make it valid and enforceable. |
11.9 | | The price for the undertakings contained in this clause 11 is included in the Purchase
Price. |
11.10 | | Notwithstanding the undertakings contained in this clause 11, the Buyers acknowledge
that (a) none of the restrictions contained in this clause 11 shall apply to the Seller's individual directors or officers; and
(b) the Seller's intention is to distribute the proceeds it receives from the Transaction to its creditors and to be liquidated
under a plan of liquidation filed as part of the Bankruptcy Proceedings and confirmed by the Bankruptcy Court as soon as practicable
following Closing. |
12. | | CONFIDENTIALITY AND ANNOUNCEMENTS |
12.1 | | The Seller undertakes to the Buyers to keep confidential the terms of this agreement
and all information about the Company and its Subsidiaries and the Buyers' Group (as the Group is constituted immediately before
Closing) and about the Company and its Subsidiaries immediately before Closing, and use the information only for the purposes
contemplated by this agreement. |
12.2 | | The Buyers undertake to the Seller to keep confidential the terms of this agreement
and all information that it has acquired about the Seller or its Group (as such Group is constituted immediately after Closing)
and to use the information only for the purposes contemplated by this agreement. |
12.3 | | Neither party is required to keep confidential or to restrict its use of: |
(a) | | knowledge of the existence of this agreement after Closing; or |
(b) | | information that is or becomes public knowledge other than as a direct or indirect
result of the information being disclosed in breach of this agreement; or |
(c) | | information that the parties agree in writing is not confidential; or |
(d) | | information about the other party's Group, or the Company and the Company's Subsidiaries,
that it finds out from a source not connected with that Group, the Company or the Company's Subsidiaries, and that it has acquired
free from any obligation of confidence to any other person. |
12.4 | | The Buyers do not have to keep confidential or restrict their use of: |
(a) | | information about the Company and its Subsidiaries after Closing; or |
(b) | | information that is known to either Buyer before the date of this agreement and that
it has acquired free from any obligation of confidence to any other person. |
12.5 | | The Seller does not have to keep information about the Company and the Company's Subsidiaries
confidential or restrict its use of that information if the Conditions have not been satisfied or waived by the date and time
provided in clause 2. |
12.6 | | Either party may disclose any information that it is otherwise required to keep confidential
under this clause: |
(a) | | to such employees, professional advisers, consultants, or officers of its Group as
are reasonably necessary to advise on this agreement, or to facilitate the Transaction, if the disclosing party procures that
the people to whom the information is disclosed keep it confidential as if they were that party; or |
(b) | | with the other party's written consent; or |
(c) | | to confirm that the sale has taken place and the date of the sale (but without otherwise
revealing any other terms of sale or making any other announcement); or |
(d) | | to the extent that the disclosure is required: |
(i) | | by law, including but not limited to required disclosures required in the Bankruptcy
Case ; or |
(ii) | | by a regulatory body, tax authority or securities exchange; or |
(iii) | | to make any filing with, or obtain any authorisation from, a regulatory body, tax
authority or securities exchange; Or |
(iv) | | under any arrangements in place under which negotiations relating to terms and conditions
of employment are conducted; or |
(v) | | to protect the disclosing party's interest in any legal proceedings, |
but shall use reasonable endeavours
to consult the other party and to take into account any reasonable requests it may have in relation to the disclosure before making
it.
12.7 | | Each party shall supply the other with any information about itself, its Group or
this agreement as the other may reasonably require for the purposes of satisfying the requirements of a law, regulatory body or
securities exchange to which the requiring party is subject. |
12.8 | | This clause shall continue to have effect after the Closing Date |
13. | | FURTHER ASSURANCEThe Seller shall, at its expense, promptly execute and deliver
all documents, and do all things, that either Buyer may from time to time reasonably require for the purpose of giving full effect
to the provisions of this agreement. |
14.1 | | Except as provided otherwise, no person shall assign, or grant any Encumbrance or
security interest over, any of its rights under this agreement or any document referred to in it. |
14.2 | | Each person that has rights under this agreement is acting on its own behalf |
14.3 | | The Buyers may assign their rights but not their obligations under this agreement
(or any document referred to in the agreement) to a member of its Group or to any person to whom it transfers the Sale Shares. |
14.4 | | If there is an assignment: |
(a) | | the Seller shall discharge its obligations under this agreement to the assignor until
it receives notice of the assignment; |
(b) | | the assignee may enforce this agreement as if it were a party to it, but the Buyers
shall remain liable for any obligations under the agreement; and |
(c) | | the liability of the Seller to any assignee cannot be greater than its liability to
the Buyers. |
15.1 | | This agreement, and any documents referred to in it, constitute the whole agreement
between the parties and supersede any arrangements, understanding or previous agreement between them relating to the subject matter
they cover. |
15.2 | | Each party acknowledges that in entering into this agreement, and any documents referred
to in it, it does not rely on, and shall have no remedy in respect of, any statement, representation, assurance or warranty of
any person other than as expressly set out in this agreement or those documents. |
15.3 | | Nothing in this clause 15 operates to limit or exclude any liability for fraud |
16.1 | | Any variation of this agreement shall be in writing and signed by or on behalf of
all parties. |
16.2 | | Any waiver of any right under this agreement is only effective if it is in writing,
and it applies only to the party to whom the waiver is addressed and the circumstances for which it is given and shall not prevent
the party who has given the waiver from subsequently relying on the provision it has waived. |
16.3 | | No failure to exercise or delay in exercising any right or remedy provided under this
agreement or by law constitutes a waiver of such right or remedy or will prevent any future exercise in whole or in part thereof |
16.4 | | No single or partial exercise of any right or remedy under this agreement shall preclude
or restrict the further exercise of any such right or remedy. |
16.5 | | Unless specifically provided otherwise, rights arising under this agreement are cumulative
and do not exclude rights provided by law. |
17. | | COSTS
Unless otherwise provided, all costs in connection with the negotiation, preparation, execution and performance of this agreement, and any documents referred to in it, shall be borne by the party that incurred the costs. |
18.1 | | A notice given under this agreement: |
(a) | | shall be in writing in the English language; |
(b) | | shall be sent for the attention of the person, and to the address given in this clause
(or such other address or person as the party may notify to the others in accordance with the provisions of this clause); and |
(i) | | delivered personally; or |
(ii) | | sent by pre-paid first class post or recorded delivery; or |
(iii) | | (if the notice is to be served by post outside the country from which it is sent)
sent by airmail or international courier. |
18.2 | | The addresses for service of notice are: |
(i) | | c/o Lane Powell PC
1420 Fifth Avenue, Suite 4200
Seattle, WA 98111 |
(ii) | | for the attention of: Bruce Leaverton |
(i) | | address: IMImobile PLC, Tempus Court, Bellfield Road, High Wycombe, Buckinghamshire,
England HP13 5HA |
(ii) | | for the attention of: Mike Jefferies, |
18.3 | | A notice is deemed to have been received: |
(a) | | if delivered personally, at the time of delivery; or |
(b) | | in the case of pre-paid first class post or recorded delivery or international courier,
48 hours from the date of posting; or |
(c) | | in the case of airmail, 5 Business Days from the date of posting; and |
(d) | | if deemed receipt under the previous paragraphs of clause 18.3 is not within business
hours (meaning 9.00 am to 5.30 pm Monday to Friday on a day that is not a public holiday in the place of receipt), when business
next starts in the place of receipt. |
18.4 | | To prove service, it is sufficient to prove that the notice was , in the case of post,
that the envelope containing the notice was properly addressed and posted. |
19. | | INTEREST ON LATE PAYMENT |
19.1 | | Where a sum is required to be paid under this agreement but is not paid on the date
the parties agreed, the person due to pay the sum shall also pay an amount equal to interest on that sum for the period beginning
with that date and ending with the date the sum is paid (and the period shall continue after as well as before judgment). |
19.2 | | The rate of interest shall be 2% per annum above the base lending rate for the time
being of Barclays Bank Plc. Interest shall accrue on a daily basis and be compounded quarterly. |
19.3 | | This clause 19 is without prejudice to any claim for interest under the law. |
20.1 | | If any provision of this agreement (or part of a provision) is found by any court
or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions shall remain
in force. |
20.2 | | If any invalid, unenforceable or illegal provision would be valid, enforceable or
legal if some part of it were deleted, the provision shall apply with whatever modification is necessary to give effect to the
commercial intention of the parties. |
21. | | AGREEMENT SURVIVES CLOSING
This agreement (other than obligations that have already been fully performed) remains in full force after Closing. Notwithstanding the foregoing, the Buyers acknowledge that the Seller's intention is to distribute the proceeds from the Transaction to its creditors and to be liquidated under a plan of liquidation filed as part of the Bankruptcy Proceedings and confirmed by the Bankruptcy Court as soon as practicable following Closing. |
22.1 | | Subject to clause 22.2, this agreement and the documents referred to in it are made
for the benefit of the parties to them and their successors and permitted assigns, and are not intended to benefit, or be enforceable
by, anyone else. |
22.2 | | The following clauses are also intended to benefit future buyers of the Sale Shares
from the Buyers and, where they are identified in the relevant clauses, the Company and its Subsidiaries and shall be enforceable
by them to the fullest extent permitted by law: |
(a) | | Clause 7 (Warranties), subject to clause 8 (Limitations on claims); |
(b) | | Clause 10 (Indemnities); |
(c) | | Clause 11 (Restrictions on the Seller); |
(d) | | Clause 12.1 (Confidentiality and announcements); and |
(e) | | Clause 19 (Interest on late payments). |
22.3 | | Each party represents to the other that its respective rights to terminate, rescind,
or agree any amendment, variation, waiver or settlement under this agreement are not subject to the consent of any person that
is not a party to the agreement. |
23. | | COUNTERPARTS
This agreement may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each party had signed the same document. An electronic transmission or other facsimile of this Agreement or any related document shall be deemed an original and shall be admissible as evidence of the document and the signer's execution.
|
24. | | LANGUAGE
If this agreement is translated into any language other than English, the English language
text shall prevail. |
25. | | GOVERNING LAW AND JURISDICTION |
25.1 | | This agreement
and any disputes or claims arising out of or in connection with its subject matter
or formation (including non-contractual disputes or claims) are governed by and construed
in accordance with the law of State of Washington. |
25.2 | | The parties irrevocably agree that the United States Bankruptcy Court, Western District
of Washington at Seattle shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection
with this agreement or its formation (including non-contractual disputes or claims). |
This agreement has been entered into on the date stated at the beginning of it.
Schedule 1 Particulars of the company,
subsidiaries and directors
Part 1. The Company
Name: |
|
Lenco International Limited |
|
|
|
Registration number: |
|
1472607 |
|
|
|
Registered office: |
|
Palm Grove House Road Town, Totola, British Virgin Islands |
|
|
|
Issued Share Capital |
|
10 shares with no par value |
Amount: |
|
|
Divided into: |
|
|
|
|
|
Registered shareholders (and number of Sale Shares held): |
|
Lenco Mobile Inc. for all shares with no par value |
|
|
|
Beneficial owner of Sale Shares (if different) and number of Sale Shares held: |
|
|
Directors: |
|
BasCorp Services Limited (now First Names) |
|
|
|
Secretary: |
|
N/A |
Auditors: |
|
|
Part 2. The Subsidiaries
Name: |
Archer Digital Proprietary Limited |
Registration number: |
2012/111827/07 |
Registered office: |
North Wing — 63 Main Street, Bordeaux, Randburg, 2194 |
|
|
Issued share capital |
100 |
Amount: |
|
Divided into: |
|
Registered shareholders (and number of shares held): |
Lenco International Limited BVI for 100 shares |
|
|
Beneficial owner of shares (if different) and number of shares beneficially owned: |
|
Directors: |
Andrew Geach and Ross Venter |
Secretary: |
|
Auditors: |
Vincent Laubscher and Associates |
Name: |
Lenco Technology Group Limited |
Registration number: |
1495111 |
Registered office: |
Palm Grove House |
|
Road Town, Tortola, |
|
British Virgin Islands |
Issued share capital |
1 share with no par value |
Amount: |
|
Divided into: |
|
Registered shareholders (and number of shares held): |
Lenco International Limited BVI for all shares with no par value |
Beneficial owner of shares (if different) and number of shares beneficially owned: |
|
Directors: |
BasCorp Services Limited (now First Names) |
Secretary: |
N/A |
Auditors: |
|
Schedule 2 Conditions
The conditions to which the agreement is subject are as follows
| 1 | The following consents, authorisations or similar clearances have been granted in terms satisfactory to the Buyers: |
| (a) | a Final Order from the United States Bankruptcy Court, Western District of Washington at Seattle
which shall include a finding that the Buyers are entitled to the protections of section 363(m) of the Bankruptcy Code and the
sale of the Company be free and clear of all charges, mortgages, pledges, security interests, hypothecation, restrictions, claims,
secured debts, unsecured debts, liens, encumbrances, or other interests pursuant to section 363(f) of the Bankruptcy Code; and |
| (b) | all those that are required by any government, or regulatory body or authority, for Closing; or |
| (c) | all those that are, in the reasonable opinion of the Buyers, necessary or desirable for Closing. |
| 2. | Other than in relation to the Bankruptcy Proceedings, no
person: |
| (a) | having commenced, or threatened to commence, any proceedings or investigation for the purpose of
prohibiting or otherwise challenging or interfering with the Transaction; or |
| (b) | having taken or threatened to take any action as a result of or in anticipation of the Transaction
that would be materially inconsistent with any of the Warranties; or |
| (c) | having enacted or proposed any legislation (including any subordinate legislation) which would
prohibit, materially restrict or materially delay the implementation of the Transaction or the operations of the Company or any
of its Subsidiaries. |
| 3. | There not having occurred any material adverse change in
the business, operations, assets, position (financial, trading or otherwise), profits or prospects of the Company or any of its
Subsidiaries or any event or circumstance that may result in such material adverse change. |
Schedule 3 Purchase Price
Buyer |
Purchase price
(US Dollars) |
Number of Sale Shares |
IMISA1 |
$4,480,000 |
8 |
IMISA2 |
$1,120,000 |
2 |
Schedule 4 Warranties
Part 1. General warranties
| 1. | POWER TO SELL THE COMPANY |
| 1.1 | The Seller has taken all necessary action and, subject to the entry of the Sale Order, has all
requisite power and authority to enter into and perform this agreement in accordance with its terms and the other documents referred
to in it. |
| 1.2 | Subject to the entry of the Sale Order, this agreement and the other documents referred to in it
constitute (or shall constitute when executed) valid, legal and binding obligations on the Seller in the terms of the agreement
and such other documents. |
| 1.3 | Compliance with the terms of this agreement and the documents referred to in it shall not breach
or constitute a default under any of the following: |
| (a) | any provision of the constitutional documents of the
Seller; or |
| (b) | any material provision of any agreement or instrument to which the Seller is a party or by which it is bound; or |
| (c) | any order, judgment, decree or other restriction applicable to the Seller. |
| 2. | SHARES IN THE COMPANY AND SUBSIDIARIES |
| 2.1 | The Sale Shares constitute the whole of the issued share
capital of the Company and are fully paid. |
| 2.2 | The Seller is the sole legal and beneficial owner of the
Sale Shares. |
| 2.3 | Part 2 of Schedule 1 lists all the Subsidiaries of the
Company at the date of this agreement and sets out particulars of their issued share capital. |
| 2.4 | The Company is the sole legal and beneficial owner of the
whole issued share capital of each company listed in Part 2 of Schedule 1. |
| 2.5 | The issued shares of the Company's Subsidiaries are fully
paid. |
| 2.6 | The Sale Shares and the shares of the Company's Subsidiaries
are free from all Encumbrances. |
| 2.7 | No right has been granted to any person to require the
Company or of its Subsidiaries to issue any share capital and no Encumbrance has been created in favour of any person affecting
any unissued shares or debentures or other unissued securities of the Company or any of its Subsidiaries. |
| 2.8 | No commitment has been given to create an Encumbrance affecting
the Sale Shares or the issued shares of the Company's Subsidiaries (or any unissued shares or debentures or other unissued securities
of the Company or any of its Subsidiaries) or for any of them to issue any share capital and no person has claimed any rights
in connection with any of those things. |
| 2.9 | Neither the Company nor any of its Subsidiaries: |
| (a) | holds or beneficially owns, or has agreed to acquire, any securities of any corporation other than its own Subsidiaries; or |
| (b) | is or has agreed to become a
member of any partnership or other unincorporated association, joint venture or consortium
(other than recognised trade associations); or |
| (c) | has, outside its country of incorporation, any branch or permanent establishment. |
| (d) | has issued any securities that are convertible into shares. |
| 2.10 | Neither the Company nor any of its Subsidiaries has at
any time: |
| (a) | purchased, redeemed or repaid any of its own share capital; or |
| (b) | given any financial assistance in contravention of any applicable law or regulation. |
| 2.11 | All dividends or distributions declared, made or paid by
the Company or any of its Subsidiaries have declared, made or paid in accordance with that company's constitutional documents,
all applicable legislation and any agreements or arrangements made with any third party regulating the payment of dividends and
distributions. |
| 2.12 | Neither the Company nor Lenco Technology Group are trading
companies. |
| 3. | CONSTITUTIONAL AND CORPORATE DOCUMENTS |
| 3.1 | The copies of the constitutional and corporate documents
of the Company and its Subsidiaries Disclosed to the Buyers or their advisers are true, accurate and complete in all respects
and copies of all the resolutions and agreements required to be annexed to or incorporated in those documents by the applicable
law are annexed or incorporated. |
| 3.2 | All statutory books and registers of the Company and its
Subsidiaries have been properly kept and no notice or allegation that any of them is incorrect or should be rectified has been
received. |
| 3.3 | All returns, particulars, resolutions and other documents
which the Company or any of its Subsidiaries is required by law to file with or deliver to any authority in any jurisdiction (including,
in particular, one responsible for maintaining a register of companies) have been correctly made up and filed or, as the case
may be, delivered. |
| 4.1 | All information contained in the Disclosure Schedule is
complete and accurate in all material respects and is not misleading in any material respect. |
| 4.2 | The particulars relating to the Company and its Subsidiaries
set out in Schedule 2 of this agreement are accurate and not misleading. |
| 4.3 | There is no information that has not been Disclosed which,
if Disclosed, would reasonably affect the willingness of the Buyers to buy the Sale Shares on the terms of this agreement. |
So far as the Seller is aware,
the Company and each of its Subsidiaries has at all times conducted its business in accordance with all applicable laws and regulations.
| 6.1 | The Company and each of its Subsidiaries has all necessary
licences, consents, permits and authorities necessary to carry on its business in the places and in the manner in which its business
is now carried on, all of which are valid and subsisting, except where the failure to have such licenses, consents, permits and
authorities do not have a material adverse effect on the business of the Company and its Subsidiaries, taken as a whole. |
| 6.2 | So far as the Seller is aware, there is no reason why any
of the licences, consents, permits and authorities referred to in paragraph 6.1 should be suspended, cancelled, revoked or not
renewed on substantially the same terms. |
| 7.1 | The insurance policies maintained by or on behalf of the
Company and its Subsidiaries cover all risks that are normally insured against by a person carrying on the same type of business
as the Company and its Subsidiaries. |
| 7.2 | The particulars of the insurance policies set out in the
Disclosure Schedule are accurate and not misleading. |
| 7.3 | There are no material outstanding claims under, or in respect
of the validity of, any of those policies and so far as the Seller is aware, there are no circumstances likely to give rise to
any claim under those policies. |
| 7.4 | All the insurance policies are in full force and effect,
are not void or voidable, nothing has been done or not done which could make any of them void or voidable, so far as the Seller
is aware, and Closing will not terminate, or entitle any insurer to terminate, any such policy. |
| 8.1 | There are no powers of attorney in force given by the Company
or any of its Subsidiaries. |
| 8.2 | No person, as agent or otherwise, is entitled or authorised
to bind or commit the Company or any of its Subsidiaries to any obligation not in the ordinary course of the Company's or, in
the case of a Subsidiary, the Subsidiary's, business. |
| 8.3 | The Disclosure Schedule sets out the names of all persons
who have authority to bind the Company and its Subsidiaries in the ordinary course of business. |
| 9. | DISPUTES AND INVESTIGATIONS |
| 9.1 | Save for the Bankruptcy Proceedings, neither the Company
nor any of its Subsidiaries nor any person for whom the Company or any of its Subsidiaries is vicariously liable: |
| (a) | is engaged in any litigation, administrative, mediation or arbitration proceedings or other proceedings
or hearings before any statutory or government body, department, board or agency (except for debt collection in the normal course
of business); or |
| (b) | so far as the Seller is aware, is the subject of any investigation, inquiry or enforcement proceedings
by any government, administrative or regulatory body. |
| 9.2 | No director of the Company or any of its Subsidiaries is,
to the extent that it relates to the business of the Company or its Subsidiaries, engaged in or subject to any of the matters
mentioned in paragraph 9.1 of this Schedule. |
| 9.3 | No proceedings, investigation or inquiry as are mentioned
in paragraph 9.1 or paragraph 9.2 of this Schedule 4 are pending or, so far as the Seller is aware, threatened, and, so far as
the Seller is aware, there are no circumstances likely to give rise to any such proceedings. |
| 9.4 | Save for in respect of the Bankruptcy Proceedings, the
Company and its Subsidiaries are not affected by any existing or pending judgments or rulings and have not given any undertakings
arising from legal proceedings to a court, governmental agency, regulator or third party. |
| 10. | DEFECTIVE PRODUCTS AND SERVICES |
No proceedings have been started
and there are no outstanding liabilities or claims pending or, so far as the Seller is aware, threatened against the Company or
any of its Subsidiaries in respect of any services supplied by the Company or any of its Subsidiaries for which the Company or
any of its Subsidiaries is or is likely to become liable and, So far as the Seller is aware, no dispute exists between the Company
and any of its Subsidiaries and any of their respective customers or clients.
| 11.1 | The definition in this paragraph applies in this agreement: |
Antitrust Law: the national
and directly effective legislation of any jurisdiction which governs the conduct of companies or individuals in relation to restrictive
or other anti-competitive agreements or practices (including, but not limited to, cartels, pricing, resale pricing, market sharing,
bid rigging, terms of trading, purchase or supply and joint ventures), dominant or monopoly market positions (whether held individually
or collectively) and the control of acquisitions or mergers.
| 11.2 | Neither the Company nor any of its Subsidiaries is engaged
in any agreement, arrangement, practice or conduct which amounts to an infringement of the Antitrust Law of any jurisdiction in
which the Company or any of its Subsidiaries conduct business and no Director is engaged in any activity which would be an offence
or infringement under any such Antitrust Law. |
| 11.3 | Neither the Company nor any of its Subsidiaries is the
subject of any investigation, inquiry or proceedings by any relevant government body, agency or authority in connection with any
actual or alleged infringement of the Antitrust Law of any jurisdiction in which the Company or any of its Subsidiaries conducts
business. |
| 11.4 | No such investigation, inquiry or proceedings as mentioned
in paragraph 12.3 of this Schedule 4 are pending or, so far as the Seller is aware, threatened, and, so far as the Seller is aware,
there are no circumstances likely to give rise to any such investigation, inquiry or proceedings. |
| 11.5 | Neither the Company nor any of its Subsidiaries is affected
by any existing or pending decisions, judgments, orders or rulings of any relevant government body, agency or authority responsible
for enforcing the Antitrust Law of any jurisdiction and neither the Company nor any of its Subsidiaries have given any undertakings
or commitments to such bodies which affect the conduct of the Business. |
| 12.1 | The definition in this paragraph applies in this agreement. |
Material Contract:
an agreement or arrangement to which the Company or one of its Subsidiaries is a party and which is of material importance
to the business, profits or assets of the Company or any of its Subsidiaries.
| 12.2 | Except for the agreements and arrangements Disclosed and,
with respect to clauses (b) through (m) below, except as do not have a material adverse effect on the business of the Company
or its Subsidiaries, taken a whole, neither the Company nor any of its Subsidiaries is a party to or subject to any agreement
or arrangement which: |
| (a) | is a Material Contract; or |
| (b) | is of an unusual or exceptional nature; or |
| (c) | is not in the ordinary and usual course of business of the Company or its
Subsidiaries; or |
| | |
| (d) | may be terminated as a result of any Change of Control of the Company or
any of its Subsidiaries; or |
| (e) | restricts the freedom of the Company or any of its Subsidiaries to carry
on the whole or any part of its business in any part of the world in such manner as it thinks fit; or |
| (f) | involves agency or distributorship; or |
| (g) | involves partnership, joint venture, consortium, joint development, shareholders
or similar arrangements; or |
| (h) | is incapable of complete performance in accordance with its terms within
six months after the date on which it was entered into; or |
| (i) | cannot be readily fulfilled or performed by the Company or the relevant
Subsidiary on time without undue or unusual expenditure of money and effort; or |
| | |
| (j) | involves or is likely to involve an aggregate consideration payable by or
to the Company or any of its Subsidiaries in excess of £10,000; or |
| | |
| (k) | requires
the Company or any of its Subsidiaries to pay any commission, finders' fee, royalty or the like. |
| | |
| (l) | s not on arm's length terms; or |
| (m) | is for the supply of goods and/or services by or to the
Company or any of its Subsidiaries on terms under which retrospective or future material discounts, or price reductions are given; |
| 12.3 | Each Material Contract is in full force and effect and binding on the parties to it. Neither the
Company nor any of its Subsidiaries have defaulted under or breached a Material Contract and so far as the Seller is aware: |
| (a) | no other party to a Material Contract has defaulted under or breached such a contract; and |
| (b) | no such default or breach by the Company, any of its Subsidiaries or any other party is likely or has been threatened. |
| 12.4 | No notice of termination of a Material Contract has been
received or served by the Company or any of its Subsidiaries and, so far as the Seller is aware, there are no grounds for determination,
rescission, avoidance, repudiation or a material change in the terms of any such contract. |
| 13. | TRANSACTIONS WITH THE SELLER |
| 13.1 | There is no outstanding indebtedness or other liability (actual or contingent) and no outstanding
contract, commitment or arrangement between the Company and any of the following, or between any of the Company's Subsidiaries
and any of the following: |
| (a) | the Seller or any member of the Seller's Group (other than the Company or any of its Subsidiaries)
or any person Connected with the Seller or such a member; or |
| (b) | any director of the Seller or a member of the Seller's Group or any person connected with such
a director. |
| 13.2 | Neither the Seller nor any person Connected with the Seller
is entitled to a claim of any nature against the Company or any of its Subsidiaries, or has assigned to any person the benefit
of a claim against the Company or any of those Subsidiaries to which the Seller or a person Connected with the Seller would otherwise
be entitled. |
| 14. | FINANCE AND GUARANTEES |
| 14.1 | Full particulars of all money borrowed by the Company and
each of its Subsidiaries (including full particulars of the terms on which such money has been borrowed) have been Disclosed. |
| 14.2 | No guarantee, mortgage, charge, pledge, lien assignment
or other security agreement or arrangement has been given by or entered into by the Company or any of its Subsidiaries or any
third party in respect of borrowings or other obligations of the Company or its Subsidiaries. |
| 14.3 | The total amount borrowed by the Company or any of its
Subsidiaries does not exceed any limitations on the borrowing powers contained: |
| (a) | in the constitutional documents of the Company or (in the case of a Subsidiary) the Subsidiary; or |
| (b) | in any debenture or other deed or document binding on the Company or Subsidiary. |
| 14.4 | Neither the Company nor any of its Subsidiaries has any
outstanding loan capital or has lent any money that has not been repaid and there are no debts owing to the Company or its Subsidiaries
other than debts that have arisen in the normal course of business. |
| 14.5 | Neither the Company nor any of its Subsidiaries: |
| (a) | factored any of its debts or discounted any of its debts or engaged in financing of a type which
would not need to be shown or reflected in the Accounts; or |
| (b) | waived any right of set-off it may have against any third party. |
| 14.6 | All debts (less any provision for bad and doubtful debts)
owing to the Company or any of its Subsidiaries reflected in the Accounts and all debts subsequently recorded in the books of
the Company and its Subsidiaries have either prior to the date of this agreement been realised or will, within three months after
the date of this agreement, realise in cash their full amount as included in those Accounts or books and none of those debts nor
any part of them has been outstanding for more than two months from its due date for payment. |
| 14.7 | Except for trade accounts payable in the ordinary course
of business or as reflected in the Accounts, no indebtedness of the Company or any of its Subsidiaries is due and payable and
no security over any of the assets of the Company or any of its Subsidiaries is now enforceable, whether by virtue of the stated
maturity date of the indebtedness having been reached or otherwise. Neither the Company nor any of its Subsidiaries has received
any notice the terms of which have not been fully complied with and/or carried out from any creditor requiring any payment to
be made and/or intimating the enforcement of any security which it may hold over the assets of the Company of its Subsidiaries. |
| 14.8 | Lenco Technology Group and/or the Company and/or any of
its Subsidiaries are not indebted to Jonathan Fox and no amount is owing to him or will become payable to him by said companies. |
| 14.9 | Neither the Company nor any of its Subsidiaries has given
or entered into any guarantee, mortgage, charge, pledge, lien, assignment or other security agreement or arrangement or is responsible
for the indebtedness, or for the default in the performance of any obligation, of any other person (other than among the Seller's
Group as reflected in the Accounts). |
| 14.10 | Neither the Company nor any of its Subsidiaries is subject
to any arrangement for receipt or repayment of any grant, subsidy or financial assistance from any government department or other
body, |
| 14.11 | Particulars of the balances on all the bank accounts of
the Company and its Subsidiaries showing the position as at the day immediately preceding the date of this agreement have been
Disclosed and the Company and its Subsidiaries have no other bank accounts. Since those particulars were given there have been
no payments out of those accounts other than routine payments in the ordinary course of business. |
| 14.12 | Having regard to the existing banking and other facilities
available to it, the Company and each of its Subsidiaries has sufficient working capital for the purposes of: |
| (a) | continuing to carry on its business in its present form and at its present level of turnover for
the next twelve months; and |
| (b) | executing, carrying out and fulfilling in accordance with their respective terms all orders, projects
and contractual obligations which have been placed with or undertaken by the Company and each of its Subsidiaries. |
| 14.13 | A Change of Control of the Company will not result in: |
| (a) | the termination of or material affect on any financial agreement or arrangement to which the Company,
or any of its Subsidiaries, is a party or subject; or |
| (b) | any indebtedness of the Company or of any of its Subsidiaries becoming due, or capable of being
declared due and payable, prior to its stated maturity. |
| 15.1 | The Company or one of its Subsidiaries is the full legal
and beneficial owner of and has good marketable title to all the assets included in the Accounts, and any assets acquired since
the Accounts Date, and all other assets used by the Company or its Subsidiaries except for those disposed of since the Accounts
Date in the normal course of business. |
| 15.2 | Except as Disclosed, none of the assets shown in the Accounts
or acquired by the Company or its Subsidiaries since the Accounts Date or used by the Company or any of its Subsidiaries is the
subject of any lease, lease hire agreement, hire purchase agreement or agreement for payment on deferred terms or is the subject
of any licence or factoring arrangement, |
| 15.3 | The Company or one of its Subsidiaries is in possession
and control of all the assets included in the Accounts, and those acquired since the Accounts Date, except for those Disclosed
as being in the possession of a third party in the normal course of business. |
| 15.4 | None of the assets, undertaking or goodwill of the Company
or its Subsidiaries is subject to an Encumbrance, or to any agreement or commitment to create an Encumbrance, and no person has
claimed to be entitled to create such an Encumbrance. |
| 15.5 | The assets of the Company and of each of its Subsidiaries
comprise all the assets necessary for the continuation of the relevant company's business in the manner in which such business
is carried on at the Accounts Date and Closing. |
| 15.6 | The assets transferred to Archer Digital under the Transfer
Agreement comprise all the assets necessary or desirable for the continuation of the business carried on by Archer Mobile immediately
prior to completion of the Transfer Agreement and no assets were retained by Archer Mobile which, add value to or can be utilised
in such business. |
| 15.7 | All of the assets of Archer Mobile were validly and properly
transferred to Archer Digital pursuant to the Transfer Agreement and Archer Digital has acquired good and marketable title to
all such assets free from any Encumbrance. |
| 15.8 | The Transfer Agreement is valid, legal and binding as between
Archer Digital and Archer Mobile and, so far as the Seller is aware, there are no grounds for rescission, avoidance, repudiation
or termination of the Transfer Agreement. |
| 15.9 | The Buyers will be immediately following Completion be
in materially the same position as they would have been in had they acquired Archer Mobile and the Transfer Agreement had not
been entered into. |
| 16. | CONDITION OF PLANT AND EQUIPMENT |
The machinery and equipment used in connection with
the Business:
| (a) | are in good working order and have been regularly and properly maintained; |
| (b) | are capable and will continue to be capable of doing the work for which they were designed; and |
| (c) | are not surplus to the current or proposed requirements of the Company and its Subsidiaries. |
| 17.1 | The definition in this paragraph applies in this agreement. |
Intellectual Property Rights:
patents, utility models, rights to inventions, copyright and neighbouring and related rights, moral rights, trade marks and
service marks, business names and domain names, rights in get-up and trade dress, goodwill and the right to sue for passing off
or unfair competition, rights in designs, rights in computer software, database rights, rights to use, and protect the confidentiality
of, confidential information (including know-how and trade secrets), and all other intellectual property rights, in each case whether
registered or unregistered and including all applications and rights to apply for and be granted, renewals or extensions of, and
rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist
now or in the future in any part of the world.
| 17.2 | Complete and accurate particulars are set out in Part 1
and Part 2 of Schedule 5 respectively of all registered Intellectual Property Rights (including applications for such rights)
and material unregistered Intellectual Property Rights owned, used or held for use by the Company or any of its Subsidiaries. |
| 17.3 | Complete and accurate particulars are set out in Part 3
and Part 4 of Schedule 5 respectively of all licences, agreements, authorisations and permissions (in whatever form and whether
express or implied) under which: |
| (a) | the Company or any of its Subsidiaries uses or exploits Intellectual Property Rights owned by any third party; or |
| (b) | the Company or any of its Subsidiaries has licensed or agreed to license Intellectual Property
Rights to, or otherwise permitted the use of any Intellectual Property Rights by, any third party. |
| 17.4 | Except as set out in Part 3 and Part 4 of Schedule 5, the
Company or the relevant specified Subsidiary is the sole legal and beneficial owner of (or applicant for) the Intellectual Property
Rights set out in Part 1 and Part 2 of Schedule 5, free from all Encumbrances. |
| 17.5 | The Company and its Subsidiaries do not require any Intellectual
Property Rights other than those set out in Part 1 and Part 2 of Schedule 5 in order to carry on their respective activities as
currently conducted. |
| 17.6 | The Intellectual Property Rights set out in Part 1 and
Part 2 of Schedule 5 are valid, subsisting and enforceable and, so far as the Seller is aware, nothing has been done or not been
done as a result of which any of them has ceased or might cease to be valid, subsisting or enforceable. In particular: |
| (a) | all application and renewal fees and other steps required for the maintenance or protection of
such rights have been paid on time or taken; |
| (b) | all confidential information (including know-how and trade secrets) owned or used by the Company
or its Subsidiaries has been kept confidential and has not been disclosed to third parties (other than parties who have signed
written confidentiality undertakings in respect of such information, details of which are set out in the Disclosure Schedule); |
| (c) | so far as the Seller is aware, no mark, trade name or domain name identical or similar to any such
rights has been registered or is being used by any person in the same or a similar business to that of the Company or any of its
Subsidiaries, in any country in which the Company or any Subsidiary has registered or is using that mark, trade name or domain
name; and |
| (d) | there are and have been no claims, challenges, disputes or proceedings, pending or, so far as the
Seller is aware, threatened, in relation to the ownership, validity or use of such rights. |
| 17.7 | Nothing is due to be done within 30 days of Closing the
omission of which would jeopardise the maintenance or prosecution of any of the Intellectual Property Rights owned or used by
the Company or any of its Subsidiaries which are registered or the subject of an application for registration. |
| 17.8 | So far as the Seller is aware, there has been no infringement
by any third party of any Intellectual Property Rights set out in Part 1 or Part 2 of Schedule 5, nor any third party breach of
confidence or actionable act of unfair competition in relation to the business or assets of the Company or any of its Subsidiaries,
and no such infringement, breach of confidence or actionable act of unfair competition is current or anticipated. |
| 17.9 | The agreements and licences set out in Part 3 and Part
4 of Schedule 5: |
| (a) | are valid and binding; |
| (b) | have not been the subject of any breach or default by any party or of any event which, with the
giving of notice or lapse of time, would constitute a default; |
| (c) | are not the subject of any claim, dispute or proceeding, pending or, so far as the Seller is aware,
threatened; and |
| (d) | have, where required, been duly recorded or registered. |
| 17.10 | A Change of Control of the Company or any of its Subsidiaries
will not result in the termination of or materially effect any Intellectual Property Rights set out in Schedule 5. |
| 17.11 | The activities of the Company and each of its Subsidiaries
and, so far as the Seller is aware, of any licensee of Intellectual Property Rights granted by the Company or any of its Subsidiaries: |
| (a) | have not infringed, do not infringe and are not likely to infringe the Intellectual Property Rights of any third party; |
| (b) | have not constituted, do not constitute and are not likely to constitute any breach of confidence,
passing off or actionable act of unfair competition; and |
| (c) | have not given and do not give rise to any obligation to pay any royalty, fee, compensation or
any other sum whatsoever. |
| 18. | INFORMATION TECHNOLOGY |
| 18.1 | The definitions in this paragraph apply in this agreement. |
IT System: all computer
hardware (including network and telecommunications equipment) and software (including associated preparatory materials, user manuals
and other related documentation) owned, used, leased or licensed by or to the Company or any of its Subsidiaries.
IT Contracts: all arrangements
and agreements under which any third party (including without limitation any member of the Seller's Group (other than the Company
and its Subsidiaries) and any source code deposit agents) provides any element of, or services relating to, the IT System, including
leasing, hire purchase, licensing, maintenance and services agreements.
| 18.2 | Complete and accurate particulars of the IT System and
all IT Contracts are set out in Exhibit 1 to this Schedule 4. |
| 18.3 | Save to the extent provided in the IT Contracts, the Company
and its Subsidiaries are the owners of the IT System free from Encumbrances. The Company and its Subsidiaries have obtained all
necessary rights from third parties to enable them to make exclusive and unrestricted use of the IT System. |
| 18.4 | The IT Contracts are valid and binding and, so far as the
Seller is aware, no act or omission has occurred which would, if necessary with the giving of notice or lapse of time, constitute
a breach of any such contract. |
| 18.5 | There are and have been no claims, disputes or proceedings
arising or, so far as the Seller is aware, threatened under any IT Contracts. |
| 18.6 | None of the IT Contracts are liable to be terminated or
otherwise materially affected by a Change of Control of the Company and/or its Subsidiaries, and the Seller has no reason to believe
that any IT Contracts will not be renewed on the same or substantially the same terms when they expire. |
| 18.7 | The Company and its Subsidiaries have possession or control
of the source code of all software in the IT System, or have the right to gain access to such code under the terms of source code
deposit agreements with the owners of the rights in the relevant software and reputable deposit agents, in either case to the
extent necessary for the IT System to function in accordance with its use in the ordinary course of business (particulars of which
are set out in Exhibit 1 to this Schedule 4). |
| 18.8 | So far as the Seller is aware, the elements of the IT System: |
| (a) | are functioning properly and in accordance with all applicable
specifications; |
| (b) | are not defective in any respect and have not been materially
defective or materially failed to function during the last 3 years; |
| (c) | do not contain any software virus and have not within the
last 12 months been infected by any software virus or accessed by any unauthorised person; |
| (d) | have sufficient capacity and performance to meet the current
and foreseeable business requirements of the Company and its Subsidiaries; |
| (e) | include sufficient user information to enable reasonably
skilled personnel in the field to use and operate the IT System without the need for further assistance; and |
| (f) | have been satisfactorily and regularly maintained and the
IT System has the benefit of appropriate maintenance and support agreements, complete and accurate particulars of which are set
out in Exhibit 1 to this Schedule 4, |
| 18.9 | The Company and its Subsidiaries have implemented appropriate
procedures (including in relation to off-site working where applicable) for ensuring the security of the IT System and the confidentiality
and integrity of all data stored in it. |
| 18.10 | The Company and its Subsidiaries have in place a disaster
recovery plan which is fully documented and would enable the business of the Company and its Subsidiaries to continue if there
were significant damage to or destruction of some or all of the IT System. A copy of the plan is attached to the Disclosure Schedule. |
| 18.11 | The performance and functionality of the IT System (and
any other equipment and systems owned or used by the Company or its Subsidiaries which depend on date-programmed control devices)
has not been affected and will be unaffected by any changes in dates (past, present or future). In particular: |
| (a) | no value for a current date has caused or will cause any
interruption in operation; |
| (b) | date-based functionality has behaved and will behave consistently for all dates; |
| (c) | in all interfaces and data storage, the century in any date is and will be specified either explicitly
or by unambiguous algorithms or inferencing rules; and |
| (d) | all leap years (that is, a year occurring once in four, with 366 days) will be recognised as such. |
| 18.12 | The IT System is capable of: |
| (a) | performing its functions in multiple currencies; |
| (b) | displaying and printing the generally accepted symbols for any currency; and |
| (c) | processing the generally accepted codes for any currency. |
So far as the Seller is aware,
the Company and its Subsidiaries have complied in all material respects with the requirements of all applicable legislation concerning
rights in respect of privacy and personal data.
| 20.1 | The name of each person who is a Director is set out in
Schedule 1. |
| 20.2 | The Disclosure Schedule includes details of all individuals
employed by the Company or any of its Subsidiaries and the principal terms of their contract including: |
| (a) | the individual's name; |
| (b) | the company which employs them; |
| (c) | the individual's date of birth; |
| (d) | the country in which the individual is employed and/or is paid; |
| (e) | the law governing the contract of employment; |
| (f) | the remuneration of each individual (including any benefits and privileges provided, or which the
Company or its Subsidiary is bound to provide to them or their dependants whether now or in the future); |
| (g) | the commencement date of each contract, and the length of service of the employee; |
| (h) | the length of notice necessary to terminate the contract of employment or, if a fixed term, the
expiry date of the fixed term and details of any previous renewals; and |
| (i) | the type of contract (whether full- or part-time or other). |
| 20.3 | The Disclosure Schedule includes details of all individuals
who are providing services to the Company or any of its Subsidiaries under an agreement which is not a contract of employment
with the Company or other relevant Subsidiary (including, in particular, where the individual acts as a consultant or is on secondment
from an employer which is not a member of the Seller's Group) and the particulars of the terms on which the individual provides
services, including: |
| (a) | the individual's name; |
| (b) | the company which engages them; |
| | |
| (c) | any country in which the individual provides services; |
| (d) | the law governing the agreement; |
| (e) | the remuneration of the individual (including any benefits and privileges provided, or which the
Company or any of its Subsidiaries is bound to provide to them or their dependants, whether now or in the future); |
| (f) | the length of notice necessary to terminate the agreement or, if a fixed term, the expiry date
of the fixed term and the details of any previous renewals. |
| 20.4 | The Disclosure Schedule includes particulars of all the
employees of the Company and its Subsidiaries who are on secondment, maternity leave or other statutory leave or absent due to
ill-health or for any other reason. |
| 20.5 | No notice to terminate the contract of employment of any
employee of the Company or any of its Subsidiaries (whether given by the relevant employer or by the employee) is pending, outstanding
or, so far as the Seller is aware, threatened and no dispute is otherwise outstanding between: |
| (a) | the Company and any of its current or former employees relating to their employment, its termination
or any reference given by the Company regarding them; or |
| (b) | any of the Company's Subsidiaries and any of their current or former employees relating to their
employment, its termination or any reference given by any of the Company's Subsidiaries regarding them. |
| 20.6 | No offer of employment has been made by the Company or
by any of its Subsidiaries to any individual which has not yet been accepted or which has been accepted but where the individual's
employment has not yet started. |
| 20.7 | The acquisition of the Sale Shares by the Buyers or compliance
with the terms of this agreement will not entitle any Directors, officers or senior employees of the Company or any of its Subsidiaries
to terminate their employment or receive any payment or other benefit (other than as set forth in this agreement or otherwise
Disclosed). |
| 20.8 | All contracts of employment between the Company and its
employees and between each of its Subsidiaries and that Subsidiary's employees are terminable on not more than 3 months' notice
without compensation (except compensation payable under the applicable law). |
| 20.9 | Neither the Company nor any of its Subsidiaries is a party
to, bound by or proposing to introduce in respect of its Directors and employees any redundancy payment scheme in addition to
statutory redundancy pay, nor is there any agreed procedure for redundancy selection. |
| 20.10 | Except as Disclosed, neither the Company nor any of its
Subsidiaries is a party to, bound by or proposing to introduce in respect of any of its Directors or employees any incentive scheme
(including, without limitation, any share option arrangement, profit sharing, commission or bonus scheme). |
| 20.11 | Except as Disclosed, there are no incentive schemes or
other incentive arrangements (including, without limitation, any share option arrangement, commission, profit sharing or bonus
scheme) established by any member of the Seller's Group in which the Company or any of its Subsidiaries or any of their respective
Directors or employees participates. |
| 20.12 | Neither the Company nor any of its Subsidiaries has incurred
any actual or contingent liability in connection with any termination of employment of its employees (including redundancy payments),
or for failure to comply with any order for the reinstatement or re-engagement of any employee. |
| 20.13 | Neither the Company nor any of its Subsidiaries has incurred
any liability for failure to provide information or to consult with employees under any applicable employment legislation. |
| 20.14 | Neither the Company nor any of its Subsidiaries has made
or agreed to make a payment, or provided or agreed to provide a benefit to a present or former Director, officer or employee,
or to their dependants in connection with the actual or proposed termination or suspension or variation of an employment contract. |
| 20.15 | Neither the Company nor any of its Subsidiaries has in
the last 12 months materially altered and they shall not materially alter (whether to take effect prior to, on or after the Closing
Date) any of the terms of employment or engagement of any of the employees (without the prior written consent of the Buyers). |
| 20.16 | Neither the Company nor any of its Subsidiaries has or
will transfer or agree to transfer any employee from working for the Company or any of its Subsidiaries or induce any employee
to resign their employment with the Company or any of its Subsidiaries without the prior written consent of the Buyers. |
| 20.17 | Except as Disclosed, there are no sums owing to or from
any employee other than reimbursement of expenses, wages for the current salary period and holiday pay for the current holiday
year. |
| 20.18 | Neither the Company nor any of its Subsidiaries has offered,
promised or agreed to any future variation in the contract of any employee. |
| 20.19 | The Disclosure Schedule includes true, complete and accurate: |
| (a) | copies of all contracts, handbooks, policies and other documents which apply to the employees. |
| (b) | copies of all agreements or arrangements with any trade union, employee representative body or
body of employees and their representatives (whether binding or not) and details of any unwritten agreements or arrangements which
may affect any employee. |
| 20.20 | In respect of each employee, the Company and its Subsidiaries
have: |
| (a) | performed all obligations and duties they are required to perform (and settled all outstanding
claims), whether or not legally binding and whether arising under contract, applicable legislation or otherwise; |
| (b) | complied with the terms of any relevant agreement or arrangement with any trade union, employee
representative or body of employees or their representatives (whether binding or not); and |
| | |
| (c) | maintained adequate, suitable and up to date records. 20.21
No employee is subject to a current disciplinary warning or procedure. |
| 20.22 | Neither the Company nor any of its Subsidiaries is involved
in any material industrial or trade dispute or negotiation regarding a claim with any trade union or other group or organisation
representing employees and there is nothing likely to give rise to such a dispute or claim, |
| 21.1 | The definitions in this paragraph apply in this agreement. |
Current Use: the
use for each Property as set out in Schedule 7.
Investment Lease: a lease, underlease or occupational licence identified
in Schedule 7 as being one to which a Property is subject, and all documents which are supplemental or collateral to such lease,
underlease or occupational licence.
Investment Property:
a Property identified in Schedule 7 as being subject to an Investment Lease.
Previously-owned Land
and Buildings: land and buildings that have, at any time before the date of this agreement, been owned and/or occupied and/or
used by the Company or any of its Subsidiaries, but which are either no longer owned, occupied or used by the Company or any of
its Subsidiaries, or are owned, occupied or used by one of them but pursuant to a different lease, licence, transfer or conveyance.
Properties: all
those properties identified in Schedule 7 and Property means any one of them or any part or parts of them.
Tenant: a tenant in whom an Investment
Lease is currently vested.
| 21.2 | The particulars of the Properties set out in Schedule 7
are true, complete and accurate. |
| 21.3 | The Properties are the only real properties owned, used
or occupied by the Company and its Subsidiaries. |
| 21.4 | Neither the Company nor any of its Subsidiaries has any
right of ownership, right of use, option, right of first refusal or contractual obligation to purchase, or any other legal or
equitable right affecting any land or buildings other than the Properties. |
| 21.5 | Neither the Company, nor any company that is or has at
any time been a Subsidiary of the Company, has any actual or contingent liability in respect of Previously-owned Land and Buildings. |
| 21.6 | Neither the Company nor any company that is or has at any
time been a Subsidiary of the Company has given any guarantee or indemnity for any liability relating to any of the Properties,
any of the Investment Leases, and Previously-owned Land and Buildings or any other land or buildings. |
| 21.7 | All the Properties are actively used by the Company or
its Subsidiaries in connection with the business of the Company or its Subsidiaries other than the Investment Properties. The
Investment Properties are held by the Company or its Subsidiaries as investments. |
| 21.8 | The information contained in Schedule 7 is complete and
accurate and includes all the information needed to identify: |
(a) the Properties;
(b) all Investment Leases;
(c) all Tenants; and
(d) the Current Use of the Properties.
| 21.9 | The Company, or the Subsidiary identified as the owner
of each Property in Schedule 7, is solely legally and beneficially entitled and has a good and marketable title, to it. |
| 21.10 | The Properties are each exclusively occupied either by
the Company or by the Subsidiary identified as the occupier in Schedule 7 or, in the case of any Investment Property, by the Tenant
identified as the occupier in Schedule 7. |
| 21.11 | Except for the Investment Leases, the Properties are free
from claims, liabilities, third party rights, private rights to restrict the use of any Property (other than any right to restrict
use in accordance with the terms of any lease under which a Property is held), rights of occupation, options, rights to acquire,
rights of first refusal, financial obligations (including public financial obligations), security interests, public rights and
public restrictions. |
| 21.12 | There are appurtenant to each Property, all rights necessary
for their Current Use and enjoyment (without restriction as to time or otherwise). Access to each Property is over public roads
maintained at public expense and such roads immediately abut each Property at each point where access is gained. |
| 21.13 | Each of the Investment Leases has been validly granted,
is subsisting and is not subject to any agreement or right in favour of the Tenant to terminate or renew. |
| 21.14 | The contractual date for termination of each Investment
Lease and each lease under which any Property is held is accurately stated in Schedule 7. |
| 21.15 | The terms of the Investment Leases and of any lease under
which any Property is held are not unusual or onerous. There is no outstanding breach of any obligation under any such lease.
There is no outstanding application for any consent under any such lease. There is no pending rent review under any such lease. |
| 21.16 | Neither the Company nor any of its Subsidiaries have received
or are aware of any notice, order or proposal, which would adversely affect the value or use or enjoyment of any of the Properties,
or access to or from any of them. |
| 21.17 | None of the Properties is held on terms that would allow
any landlord or other third party to change those terms, or terminate the right of the Company or any of its Subsidiaries to hold
the Property, by reason of a Change of Control of the Company. |
| 21.18 | There are no disputes relating to or affecting any of the
Properties |
| 21.19 | The Current Use of each of the Properties is set out in
Schedule 7 and is authorised under the applicable law and regulations and any permissions authorising that use are unconditional,
permanent and not personal. Where applicable, the present use is in accordance with the provisions of the relevant Investment
Lease or any lease under which the Property is held. |
| 21.20 | There has been no material breach of any applicable law
or regulation in respect of any of the Properties. |
| 21.21 | Each of the Properties is in a good state of repair and
condition and is fit for the Current Use. |
| 21.22 | There are no development works, redevelopment works or
fitting-out works outstanding in respect of any of the Properties. |
| 21.23 | None of the Properties has suffered from any of the following: |
| (g) | defects in the drains and services from time to time serving the Properties; or |
| (h) | dry rot, wet rot, rising damp and any infestation. |
| 21.24 | Neither the Company, nor any of its Subsidiaries, have
received any adverse report from any engineer, surveyor or other professional relating to any of the Properties and the Seller
is not aware of any predecessor in title having done so. |
| 21.25 | All replies given in writing by or on behalf of the Seller
or the Company, or any Subsidiary of the Seller or Company, in response to any enquiries raised in writing by or on behalf of
the Buyers in relation to the Properties were complete and accurate in all material respects at the date they were given and would
still be complete and accurate in all material respects if the replies were instead being given on the Closing Date, In this paragraph
24.25, the expression in writing shall include e-mail. |
| 22.1 | The Accounts have been prepared in accordance with the
accounting standards, policies, principles and practices generally accepted in Archer Mobile's country of incorporation and in
accordance with the law of that jurisdiction. |
| 22.2 | Where applicable, the Accounts have been audited by an
auditor of good repute qualified in its country of incorporation and the auditor has given an auditor's certificate without qualification. |
| (a) | make proper and adequate provision or reserve for all bad and doubtful debts,
obsolete or slow-moving stock and for depreciation on non current assets; |
| (b) | do not overstate the value of current or non current assets; and |
| (c) | do not understate any liabilities (whether actual or contingent). |
| 22.4 | The Accounts give a true and fair view of the state of
affairs of Archer Mobile as at the Accounts Date and of the profit and loss of Archer Mobile for the financial year ended on that
date. |
| 22.5 | The Accounts contain either provision adequate to cover,
or full particulars in notes of, all Taxation (including deferred taxation) and other liabilities (whether quantified, contingent,
disputed or otherwise) of Archer Mobile as at the Accounts Date. |
| 22.6 | The Accounts are not affected by any unusual or non-recurring
items or any other factor that would make the financial position and results shown by the Accounts unusual or misleading in any
material respect. |
| 22.7 | Where applicable, the Accounts have been filed in accordance
with the requirements of the law of Archer Mobile's country of incorporation. |
| 22.8 | The Accounts have been prepared on a basis consistent with
the accounts of Archer Mobile for the two prior accounting periods without any change in accounting policies used. |
| 22.9 | The Management Accounts have been prepared on a basis consistent
with that employed in preparing the Accounts and fairly represent the assets and liabilities and the profit and losses of the
Company and its Subsidiaries as at and to the date for which they have been prepared. |
| 23. | FINANCIAL AND OTHER RECORDS |
| 23.1 | All financial and other records of the Company and of each
of its Subsidiaries: |
| (a) | have been properly prepared and maintained;
|
| (b) | constitute an accurate record of all matters that ought to appear in them; |
| (c) | do not contain any material inaccuracies or discrepancies; and |
(d)
are in the possession of the Company or the Subsidiary to which they relate.
| 23.2 | No notice has been received or, so far as the Seller is
aware, allegation made that any of those records are incorrect or should be rectified. |
| 23.3 | All statutory records, including the accounting records,
required to be kept or filed by the Company or any of its Subsidiaries have been properly kept or filed and comply with all requirements
of any applicable legislation. |
| 23.4 | All deeds and documents belonging to the Company are in
the possession of the Company and those belonging to its Subsidiaries are in the possession of the Subsidiary to which they belong. |
| 24. | CHANGES SINCE ACCOUNTS DATE |
Since the Accounts Date:
| (a) | the Company and each of its Subsidiaries has conducted its business in the
normal course and as a going concern; |
| (b) | there has been no material adverse change in the turnover, financial position
or prospects of the Company or any of its Subsidiaries; |
| (c) | neither the Company nor any of its Subsidiaries have issued or agreed to
issue any share or loan capital; |
| (d) | no dividend or other distribution of profits or assets has been, or agreed
to be, declared, made or paid by the Company or any of its Subsidiaries; and |
| (e) | neither the Company nor any of its Subsidiaries has borrowed or raised any
money or taken any form of financial security, and no capital expenditure has been incurred on any individual item by the Company
or any of its Subsidiaries in excess of E*10,000 and neither the Company nor any of its Subsidiaries has acquired, invested or
disposed of (or agreed to acquire, invest or dispose of) any individual item by the Company or any of its Subsidiaries in excess
of £10,000; |
| 25. | EFFECT OF SALE OF SHARES |
So far as the Seller is
aware, neither the acquisition of the Sale Shares by the Buyers nor compliance with the terms of this agreement will:
| (a) | cause the Company or any one of its Subsidiaries to lose the benefit of any right or privilege it presently enjoys; or
|
| (b) | relieve any person of any obligation to the Company or any of its Subsidiaries
(whether contractual or otherwise), or enable any person to determine any such obligation or any right or benefit enjoyed by the
Company or any of its Subsidiaries, or to exercise any right in respect of, the Company or any of its Subsidiaries; or |
| (c) | give rise to or cause to become exercisable any right of pre-emption over the Sale Shares; or |
| (d) | except as Disclosed, entitle any person to receive from the Company or any of its Subsidiaries
any finder's fee, brokerage or other commission in connection with the purchase of the Sale Shares by the Buyers; or |
| (e) | entitle any person to acquire, or affect the entitlement of any person to acquire, any shares in
the Company; or |
| (f) | result in any customer or supplier being entitled to cease dealing with the Company or any of its
Subsidiaries or to reduce substantially its existing level of business or to change the terms on which it deals with the Company
or any of its Subsidiaries; or |
| (g) | so far as the Seller is aware, result in any officer or senior employee leaving the Company or
any of its Subsidiaries; or |
| (h) | result in a breach of contract, law, regulation, order, judgment, injunction, undertaking, decree
or other like imposition; or |
| (i) | result in the loss or impairment of or any default under any licence, authorisation or consent
required by the Company or any of its Subsidiaries for the purposes of its business; or |
| (j) | result in the creation, imposition, crystallisation or enforcement of any Encumbrance on any of
the assets of the Company or its Subsidiaries; or |
| (k) | result in any present or future indebtedness of the Company becoming due and payable, or capable
of being declared due and payable, prior to its stated maturity date or in any financial facility of the Company or any of its
Subsidiaries being withdrawn. |
Exhibit 1 to Schedule 4
Disclosures Against Part 1 Warranties
Section |
Disclosures |
1.1 |
None |
1.2 |
None |
1.3 |
None |
2.1 |
None |
2.2 |
None
— - — |
2.3 |
None |
2.4 |
None |
2.5 |
None |
2.6 |
None |
2.7 |
None |
2.8 |
None |
2.9 |
None |
2,10 |
None |
2.11 |
None |
2.12 |
None |
3.1 |
None |
3.2 |
The
Company and LTG are non-trading entities and thus have not maintained separate audited financial
statements. |
3.3 |
The
Company and LTG have not filed tax returns in the British Virgin Islands. |
4.1 |
None |
4.2 |
None |
4.3 |
None |
5.0 |
None |
6.1 |
Archer Digital has undertaken a process to obtain consents to assignment with customers and suppliers as appropriate. The process is not yet complete. |
6.2 |
None |
7.1
7.2 |
None |
None |
7.3 |
There
are no pending claims under the policies.
Management has not undertaken any analysis
of the issue, but conceivably the litigation matters disclosed could give rise to claims against the policies. |
7.4 |
None |
8.1 |
None |
8.2 |
None |
8.3 |
Andrew Geach and Ross Venter have the ordinary and customary authority with respect to Archer Digital as officers and directors. |
9.1 |
Neither the Company nor any of its subsidiaries
are a party to litigation. There are two pending matters, however, in which Archer Mobile South Africa is a party:
1. Skynet
Telecommunications Ltd. and Living the Brand Ltd, Claimants, and Archer Mobile South Africa (Pty) Ltd. and Lenco Mobile Inc.,
Defendants, LD/117/2012. The action is pending in the High Court of Lagos State, Nigeria. The total claim exceeds $100m.
Archer Mobile South Africa has retained counsel in South Africa (Eversheds) and in Nigeria (Aelex). Counsel believes the
claims are wholly without merit.
2. Archer
Mobile South Africa instituted a patent infringement action in South Africa against Ntsumi, a
small competitor in the market. |
9.2 |
None, other than as non-party participants in the matters described in Section 9.1. |
9.3 |
None |
9.4 |
None |
10.0 |
None |
11.1 |
None |
11.2 |
None |
11.3 |
None |
11.4 |
None |
11.5 |
None |
11.6 |
None |
12.1 |
No disclosures applicable (definitional subsection) |
12.2 |
12.2(d) The four primary carriers in South
Africa provide Archer Digital with messaging services. Archer Digital has
contracts with Vodacom and Telkom for these services. Archer Digital is negotiating agreements with MTN and
CelIC for these services. Until such agreements
are in place, Archer Digital is operating under the terms of the
existing contracts
with AMSA. Archer Digital has executed agreements with a key supplier, Khumbula, and with its governmental services partner, Buzz
Mobile.
12.2(k) Archer Digital has an agreement with LTG which requires it to pay royalties for the use of certain technologies
owned by LTG. |
12.3 |
None, other than as set forth in Section 12.2. |
12.4 |
None, other than as set forth in Section 12.2. |
13.1 |
None |
13.2 |
None |
14.1 |
For the sake of clarity, the loans include a loan from Lenco International to Archer Digital, the purpose of which was to facilitate the purchase of assets from AMSA. |
14.2 |
Archer Digital
maintains a separate bank account in which funds are deposited and secured on behalf of Khumbula Procurement and Services
(Pty) LTD as part of a BBBEE Interest Free Loan. Details are set forth in Annexure D of the Sub-Lease Agreement
between Archer Digital and Khumbula. The guaranteed amount is ZAR200,000 plus interest. |
14.3 |
None |
14.4 |
Buzz Mobile has an
interest free loan account of ZAR50,000 that will be repaid during the course of the current financial year. |
14.5 |
None |
14.6 |
None |
14.7 |
None |
14.8 |
None |
14.9 |
None, other than as section forth in Section 14.2. |
14.10 |
None |
14.11 |
None |
14.12 |
This warranty is superseded by the contractual commitment regarding working capital and cash balance as of the date of closing. |
14.13 |
None |
15.1 |
None |
15.2 |
None |
15.3 |
None |
15.4 |
None |
15.5 |
None |
15.6 |
None |
15.7 |
None |
15.8 |
None |
15.9 |
None |
16.0 |
Management have undertaken a program to upgrade
certain IT equipment. The anticipated cost of the program is approximately ZAR3,5m, which will be financed under a
standard financing facility. |
17.1 |
No disclosures applicable (definitional subsection) |
17.2 |
Schedule
5 includes a list of patents. It does not include the actual patents, which are readily available, nor
does it include the patent applications which are also available for inspection. |
17.3 |
Schedule
5 identifies the license agreement between LTG and Archer Digital. It does not include the agreement, but
the agreement is readily available. |
17.4 |
None |
17.5 |
None |
17.6 |
Archer Digital / LTG patents fully disclose the inventions included therein. |
17.7 |
None |
17.8 |
See Section 9.1 regarding an action initiated by AMSA alleging infringement by a third party. |
17.9 |
None, other than certain tax withholding issues with respect to prior royalty payments made by AMSA. |
17.10 |
None |
17.11 |
None |
18.1 |
No disclosures applicable (definitional subsection) |
18.2 |
Schedule 6 includes an overview of the IT systems and identifies certain third-party software included in the systems.
It is not a detailed description of the IT systems. It also identifies material supplier contracts, but does not provide
details of the contracts. The contracts are readily available for inspection. |
18.3 |
None |
18.4 |
None |
18.5 |
None |
18.6 |
None |
18.7 |
The Company and / or its subsidiaries have source code developed internally for the test and production systems run by
the company, but does not have access to source code for any third-party software in its systems and for IT systems generally. |
18.8 |
See Section 16.0 regarding hardware upgrade program. Management believes the program is necessary to support ongoing
growth in the business. Archer Digital employs a third party service provider to store backup tapes offsite. There is no
permanent off-site working alternative such as a replicated IT environment. |
18.9 |
None |
18.10 |
Continuation of the business operations are supported by an interruption of some duration would be likely. See attached plan. |
19.0 |
None |
20.1 |
None |
20.2 |
The Disclosure Schedule includes the information as set forth in the Schedule. It does not include every item identified
in this Section. |
20.3 |
Irene Kufakwedeke, Tamirira Mabuwane are contractors to the organization and not included in the Disclosure Schedule. The
employees of Khumbula are not included in the Disclosure Schedule. |
20.4 |
None |
20.5 |
None |
20,6 |
None |
20.7 |
None,
other than payments as set forth in the Agreement,
included the condition to closing payments to Archer Mauritius. |
20.8 |
None |
20.9 |
None |
20.10 |
The employee incentive plan, which provides for monthly incentive payments, has been previously disclosed and is readily available for inspection. |
20.11 |
The employee incentive plan, which provides for monthly incentive payments, has been previously disclosed and is readily available for inspection. |
20.12 |
None |
20.13 |
None |
20.14 |
None |
20.15 |
None |
20.16 |
None |
20.17 |
None |
20.18 |
None |
20.19 |
None |
20.20 |
None |
20.21 |
None |
20,22 |
None |
21.1 |
No
disclosures applicable (definitional subsection) |
21.2 |
None |
21.3 |
None |
21.4 |
None |
21.5 |
None |
21.6 |
See Section 14.2. The amount is in effect a deposit against future lease payments. |
21.7 |
None |
21.8 |
None |
21.9 |
None |
21.10 |
Khumbula and Buzz Mobile each operate out of the
same office space as Archer Digital |
21.11 |
None |
21.12 |
None |
21.13 |
None |
21.14 |
None |
21.15 |
None |
21.16 |
None |
21.17 |
None |
21.18 |
None |
21.19 |
None |
21.20 |
None |
21.21 |
None |
21.22 |
None |
21.23 |
None |
21.24 |
None |
21.25 |
None |
22.1 |
None |
22.2 |
None |
22.3 |
There
have been instances in which certain messaging suppliers may have under-billed from time to time for messaging services provided to AMSA and Archer Digital. |
22.4 |
None,
subject to Section 22.3. |
22.5 |
None,
subject to Section 22.3. |
22.6 |
None.
subject to Section 22.3. |
22.7 |
None |
22.8 |
Note
that Archer Digital has been trading since 1 May 2015. |
22.9 |
None |
23.1 |
Historical
royalty payments were wired directly from AMSA to Seller. The payments should have been accounted for as having been made to LTG
net of withholding taxes. In addition, as requested by Buyer, Archer Digital now accounts for messaging revenue and messaging costs in accordance with and based on the month in which each message was sent. |
23.2 |
None |
23.3 |
None |
23.4 |
None |
24.0 |
A
dividend was paid by AMSA to Lenco International in 2015. For capital expenditures, see the disclosure in Section 16 regarding IT equipment plan. |
25.0 |
None |
Part 2. Tax warranties
| 1.1. | For purposes of the warranties and representations set out below Taxation or Tax means
all forms of taxation, whether direct or indirect by reference to income, profits, gains, net wealth, asset values, turnover, added
value, dividends or other reference, and any statutory, governmental, state, provincial, local governmental or municipal impositions,
duties, contributions, rates and levies (including, but not limited to, normal tax, Secondary Tax on Companies (STC), Dividends
Tax, Regional Service Council levies, VAT, capital gains tax, donations tax, stamp duties, securities transfer tax, transfer duties,
employees' tax and employment related levies, Unemployment Insurance Fund contributions) whenever and wherever imposed (whether
imposed by way of a withholding or deduction for or on account of tax or otherwise) in respect of any person and all penalties,
charges, costs and interest relating thereto. |
| 1.2. | All registrations, returns, computations, notices and information which are or have been required
to be made or given by the Company for any Tax purpose have been made or given within the requisite periods and on a proper basis
and are up-to-date and correct and all provisional and other Taxation shall have been paid as at the due date thereof in compliance
with the provisions of the relevant legislation. |
| 1.3. | The Company has settled (or, have made sufficient provision in the Accounts or the Management
Accounts for) for, all amounts due to the South African Revenue Service (SARS) in respect of any period prior to and including
the date of this agreement, including for the Company and the employees of the Company. |
| 1.4. | The Company is not liable to SARS for any further Tax (other than that which is provided for) in
respect of any period prior to and including the date of this agreement and the Company has not received any request or notification
from any Tax Authority to the contrary. |
| | |
| 1.5 | The Company is not in breach of any material
law relating to Tax. |
| 1.6. | The Company was and is not obliged to report any tax benefit realised under any arrangement in
accordance with the Reportable Arrangement provisions contained in sections 34 to 39 of the Tax Administration Act, No 28 of 2011
(the TAA) or as previously set out in sections 80M to 80T of the Income Tax Act. |
| 1.7. | The Company has not been a party to any transaction falling within the ambit of sections 42 to
47 of the Income Tax Act in the 6 (six) years prior to the date of this agreement. |
| 1.8. | The Company is not a party to any agreement with SARS bearing
upon or relating to the manner or circumstances in which Tax will or might be levied on it in particular, the Company has not
obtained any Advance Tax Ruling as contemplated in Chapter 7 (sections 75 to 90) of the TAA or previously under Part 1A (sections
76B to 76S) of the Income Tax Act. |
| 1.9. | No material expenditure or losses incurred by he Company
nor any allowances claimed as a deduction in the determination of theC ompany's taxable income will be disallowed for such purposes. |
| 1.10. | The Company has included in its taxable income all income
received by or accrued to it, all actual and deemed capital gains and all other amounts including amounts that must be included
in its taxable income. |
| 1.11. | The Company does not have any exposure or will not have
any exposure to any Taxes as a result of transfer pricing or anti-avoidance legislation being invoked by SARS. |
| 1.12. | The Company is not and was not a party to, or engaged in,
any transaction, operation, scheme, agreement or arrangement of the nature referred to in section 103(1) or sections 80A to 80L
of the Income Tax Act or section 73 of the VAT Act. |
| 1.13. | The Company has properly determined the VAT payable for
each tax period in accordance with section 16 of the VAT Act and has paid any such tax due to SARS by no later than the date prescribed
by section 28 of the VAT Act. |
| 1.14. | No notice has been served on the Company in terms of which
it has been appointed as a representative taxpayer. |
| 1.15. | The entering into or implementation of this Agreement will
not result in any profit or gain accruing or being deemed to accrue to the Company for Tax purposes. |
| 1.16. | The Company is applying the correct tariff classifications
for customs duty purposes in respect of imported goods. |
| 1.17. | The Company only claims rebates of customs duties for imported
goods re-exported where the necessary documentation is obtained and retained. |
| 1.18. | All amounts owing by the Company in respect of income tax
for periods ended prior to or on the date of this agreement and all amounts of Tax for which the Company is or will become liable
in respect of its income up to that date will have been paid or will be fully provided for in the Company's Accounts. |
| 1.19. | The Company has been registered with SARS as a vendor in
terms of the VAT Act and has duly complied with the provisions of the VAT Act. |
| 1.20. | The Company will be in a position to, and will, settle
all creditors' claims in respect of which the Company has made a deduction for input tax in terms of section 16(3) of the Vat
Act on or before the date of this agreement within 12 months after the tax period within which such input tax deduction was made. |
Schedule 5 Intellectual property rights
Part 1. Registered intellectual property
rights
· Patent
Certificate 2010/06747
· Patent
Complete Specifications 2010/06747
· Patent
Certificate 2009/01923
·
Patent Complete Specifications 2009/01923
Part. 2. Material unregistered
intellectual property rights
None
Part 3. Intellectual property rights
licensed from third parties
Certain messaging and related technology
under the terms of an agreement with Lenco Technology Group.
Part 4. Intellectual property rights
licensed to third parties
None
Schedule 6 Information technology
See Exhibit 1 to Schedule 4
Schedule 7 Particulars of properties
Part
5. Freehold properties
None
Part
2. Leasehold properties
Description of the Property |
Clearwater Office Park, Building 3, First Floor |
Owner |
Khumbula Procurement and Services (Pty) Ltd is the Lessor to Archer Digital and the Lessee of Leaf Properties |
Registered/unregistered (and title number) |
2006/002535/07 |
Contractual date of termination of lease |
30/09/2017 |
Occupier |
Archer Digital (Pty) Ltd |
Use |
Rent |
Is there an Investment Lease? |
No |
Part 3. Other
real property
None
Schedule 8 Disclosure schedule
Part 1. Disclosures referred to in the
agreement
The contents of the documents referred
to in this paragraph are deemed to be Disclosed and copies of all these documents are annexed to this Schedule and have been initialled
by the parties for the purpose of identification:
| (a) | The following constitutional and corporate documents of
the Company and its Subsidiaries: |
(i) See Annex 1 for the Company
(ii) See Annex 2 for Archer Digital
(iii) See Annex 3 for Lenco Technology Group
| (b) | The document containing particulars of the insurance policies
maintained by or on behalf of the Company and its Subsidiaries See Annex 4 |
| (c) | The following agreements and arrangements to which the
Company or one of its Subsidiaries is a party or to which it is subject: |
(i) See Annex 5
| (d) | The document containing particulars of all money borrowed
by the Company or any of its Subsidiaries —Annex 6 |
| (e) | The document containing particulars of the balance on the
bank accounts of the Company and its Subsidiaries on the day immediately preceding the date of this agreement — See Annex
7 |
| (f) | The list of all the employees of the Company and its Subsidiaries
and the particulars of their employment — See Annex 8 |
| (g) | The list of all individuals providing services to the Company
or its Subsidiaries under an agreement which is not a contract of employment with the Company or any of its Subsidiaries and the
particulars of the terms on which they provide services — None |
| (h) | The list of all employees on secondment, maternity leave
or who are absent due to ill-health or for any other reason — None; and |
| (i) | The document containing the particulars of all agreements
or arrangements with any trade union, group or organisation representing employees that relate to any employees of the Company
or its Subsidiaries — None. |
| (j) | Details of confidentiality undertakings — None, other
than those contained in each employee's contract of employment. Copy of standard contracts attached as Annex 9, Parts 1 and 2. |
| (k) | Copy of disaster recovery plan — See Annex 10. |
ANNEX 1 — Lenco International Corporate
Documents
ANNEX 2 — Archer Digital Corporate
Documents
ANNEX 3 — Lenco Technology Group
Corporate Documents
ANNEX 4 — Insurance Policies
ANNEX 5 — UNKNOWN
ANNEX 6 — Archer Digital Loan Agreement
ANNEX 7 — Bank Account Balances
ANNEX 8 — Employee Information
ANNEX 9 — Confidentiality Agreements
ANNEX 10 — Disaster Recovery Plan
Signed by a director on behalf of Lenco Mobile Inc. |
|
/s/ Matthew Harris |
|
|
Director |
|
|
|
Print name: |
|
Matthew Harris |
|
|
|
Signed by a director on behalf of IMImobile South Africa 1 Limited |
|
/s/ Mike Jefferies |
|
|
Director |
|
|
|
Print name: |
|
Mike Jefferies |
|
|
|
Signed by a director on behalf of IMImobile South Africa 2 Limited |
|
/s/ Mike Jefferies |
|
|
Director |
|
|
|
Print name: |
|
Mike Jefferies |
|
|
|