EXHIBIT 2.4
PRIVATE AND CONFIDENTIAL
Dated 9th August 1999
-------------------------
(1) THE PERSONS WHOSE NAMES AND
ADDRESSES ARE SHOWN IN
COLUMN 1 OF SCHEDULE 1
AND
(2) TELEMONDE, INC.
------------------------------
SHARE PURCHASE AGREEMENT
FOR THE SALE AND PURCHASE OF
ALL THE ISSUED SHARE CAPITAL OF
TGA (UK) LIMITED
------------------------------
Bird & Bird
00 Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
ref: JCS/DJC/Telmo.002
CONTENTS
Heading Page
1. DEFINITIONS AND INTERPRETATION.......................................... 2
2. SALE OF THE SHARES...................................................... 5
3. CONSIDERATION........................................................... 5
4. COMPLETION.............................................................. 6
5. REPRESENTATIONS AND WARRANTIES.......................................... 8
6. EMPLOYMENT OF SPECIFIED PARTIES......................................... 9
7. EXISTING AGREEMENTS..................................................... 9
8. PENDING AGREEMENTS......................................................10
9. PURCHASE FOR INVESTMENT PURPOSES........................................11
10. LACK OF DISCLOSURE STATEMENT............................................12
11. LEGEND ON CERTIFICATES..................................................12
12. TRANSFER AGENT..........................................................12
13. CONFIDENTIALITY.........................................................12
14. ANNOUNCEMENTS...........................................................13
15. NOTICES AND RECEIPTS....................................................13
16. RESOLUTIONS AND WAIVERS.................................................13
17. GENERAL.................................................................14
18. WHOLE AGREEMENT.........................................................14
19. RESPONSIBILITY FOR BROKER'S COMMISSION..................................15
20. GOVERNING LAW...........................................................15
SCHEDULE 1
The Sellers, their shareholdings and consideration...........................16
SCHEDULE 2
Part 1
Particulars of the Company..........................................17
SCHEDULE 3
The Warranties......................................................18
THIS AGREEMENT is made on the 9th day of August 1999
BETWEEN
(1) The persons whose names and addresses are shown in column 1 of Schedule 1
(each a "Seller" and together the "Sellers"); and
(2) TELEMONDE, INC. a company incorporated in the United States of America
under the laws of the State of Delaware whose principal place of business
is 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx, XXX (the
"Purchaser").
RECITALS
(A) TGA (UK) Limited (the "Company") (certain particulars of which are set out
in Part 1 of Schedule 2) is a private company limited by shares
incorporated in England and Wales on 7 October 1998 under the Companies
Xxx 0000 having an authorised capital of (pound)17,000 divided into 17,000
ordinary shares of (pound)1.00 each, of which 16,500 have been issued
fully paid or credited as fully paid (the "Shares").
(B) The Sellers are the registered holders and the beneficial owners of the
number of shares in the Company set opposite their respective names in
column 2 of Schedule 1 and such shares together comprise all the issued
and allotted shares in the capital of the Company.
(C) The Sellers wish to sell and, in reliance upon, inter alia, the
representations, warranties, undertakings set out in this Agreement, the
Purchaser is willing to purchase all the issued share capital of the
Company on the terms set out in this Agreement.
OPERATIVE PROVISIONS
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and the Schedules
"Accounts" means all or any one of the unaudited balance sheet of the
Company as at the Accounts Date and the unaudited profit and loss account
of the Company for the financial period ended on the Accounts Date;
"Accounts Date" means 23 June 1999;
"Agreed Form" means terms contained in a form which has been agreed and
initialed by or on behalf of the Sellers and the Purchaser for the purpose
of identification immediately prior to the signing of this Agreement;
"Completion" means completion of the sale and purchase of the Shares in
accordance with Clause 4;
1
"Completion Date" means the date of this Agreement;
"Consideration Shares" means the 200,000 shares of common stock, USD $0.001 par
value per share, of Telemonde, Inc. to be allotted to the Sellers upon
Completion (subject to the retention provisions contained in this Agreement);
"Cougar" means Cougar International Holdings, Inc. of X-0000, Xx. Xxxxxxx Xxxxx,
Xxxxxxxxx Street Steps, Nassau, Bahamas;
"Disclosure Letter" means the letter from the Sellers to the Purchaser of the
same date of this Agreement and which has been delivered to the Purchaser prior
to the signing of this Agreement in the Agreed Form;
"holding company" has the meaning given to it in Section 736 and 736A of the
Companies Xxx 0000;
"Insolvency Act" means the Insolvency Xxx 0000;
"Intellectual Property Rights" means all and any patents, trademarks, service
marks, trade names, registered designs, unregistered design rights, copyrights
and rights in confidential information, and all and any other intellectual
property rights, whether registered or unregistered, and including all
applications and rights to apply for any of the same;
"Intellectual Property Rights Agreement" means the agreement in the Agreed Form
between Cougar and the Purchaser in which Cougar assigns all its Intellectual
Property Rights to the Purchaser;
"Parties" means the parties to this Agreement;
"Purchaser's Solicitors" means Bird & Bird, 00 Xxxxxx Xxxx, Xxxxxx XX0X 0XX;
"Service Agreements" means service agreements in the Agreed Form between the
Company and each of Xxxx Xxxxxx and Xxxxxxxx Xxxxxx-Xxxx;
"subsidiary" is defined as in Section 736 and 736A of the Companies Xxx 0000;
"tax" means all taxes on gross or net income, profits or gains, distributions,
receipts, sales, use, occupation, franchise, value added, and personal property,
and all contributions, levies, imposts, duties, charges or withholdings of any
nature whatsoever chargeable by any tax authority, together with all fines,
penalties, charges, surcharges and interest relating to any of the foregoing or
to any late or incorrect return in respect of any of them;
"Taxes Act of 1988" means the Income and Corporation Taxes Xxx 0000;
"taxation warranties" means each and every warranty contained in Section D of
2
Schedule 3:
"Warranties" means all and any of the representations, warranties and
undertakings referred to in Clauses 5, 7 and 8 and Schedule 3.
"Year 2000 Compliant" means in respect of any computer software, product or
service (including any consultancy service) that neither the performance
nor the functionality of that computer software, product or service or
anything affected by or produced in accordance with that computer software,
product or service will be adversely affected by the advent of the year
2000 or any other year, or by the advent of 9 September 1999 or 29 February
2000. In particular and without limitation:
(i) no valid value for current date will cause any interruption of
any performance;
(ii) all manipulations of date related data will produce the correct
results for all valid date values;
(iii) if the valid date elements in any interfaces and data storage
permit specifying the century, they will specify the correct
century to eliminate date ambiguity; and
(iv) where any valid date element is represented without a century,
the correct century shall be unambiguous for all manipulations
involving that element.
1.2 References in this Agreement to any statutory provisions shall be construed
as references to those provisions as respectively amended, consolidated or
re-enacted (whether before or after the date of this Agreement) from time
to time and shall include any provisions of which they are consolidations
or re-enactments (whether with or without amendment).
1.3 Where any statement is qualified by the expression "so far as the Sellers
are aware" or "to the best of the Sellers' knowledge information and
belief" or any similar expression that statement shall be deemed to
include an additional statement that it has been made after due and careful
enquiry.
1.4 The Schedules form part of this Agreement and shall have the same force and
effect as if set out in the body of this Agreement and any reference to
this Agreement shall include the Schedules.
1.5 In this Agreement:-
(a) the masculine gender shall include the feminine and neuter and the
singular number shall include the plural and vice versa;
(b) references to persons shall include bodies corporate, unincorporated
associations and partnerships;
3
(c) any headings or side notes or, in the case of any legislation
specifically referred to, the inclusion in parentheses of the title to
the relevant Part, Section, Schedule or paragraph contained in such
legislation are for the sake of convenience only and shall not affect
the construction of this Agreement; and
(d) references to any party include a reference to the estate, personal
representative, successor, or permitted assigns of that party; and
(e) a person shall be deemed to be connected with another if that person
is connected with another within the meaning of section 839 of the
Taxes Xxx 0000.
1.6 Except where the contrary is stated, any reference in this Agreement to a
Clause or Schedule is to a Clause or Schedule of this Agreement, and any
reference within a Clause or Schedule to a sub-clause, paragraph or other
sub-division is a reference to such sub-clause, paragraph or other sub-
division so numbered or lettered in that Clause or Schedule.
2. SALE OF THE SHARES
2.1 Each of the Sellers shall sell with full title guarantee those of the
Shares set out opposite his name in Schedule 1 and the Purchaser relying on
the representations, warranties and undertakings of and indemnities by the
Sellers set out in this Agreement shall purchase the Shares on the terms of
this Agreement free from all claims, liens charges encumbrances and
equities and together with all rights attaching or accruing to them.
2.2 Each of the Sellers convenants with the Purchaser as follows:
(a) that he has the right to sell and transfer the full legal and
beneficial interest in the Shares set out opposite his name in
Schedule 1 to the Purchaser on the terms set out in this Agreement;
and
(b) that on, or after, Completion he will, at his own cost and expense,
execute and do (or procure to be executed and done by any necessary
party) all such deeds, documents, acts and things as the Purchaser may
from time to time require in order to vest any of the Shares set
opposite his name in Schedule 1 in the Purchaser, or its assignee, as
otherwise as may be necessary to give full effect to this Agreement.
2.3 Each of the Sellers hereby waives any rights of pre-emption conferred upon
him by the Articles of Association of the Company or in any other way in
respect of the Shares.
2.4 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all the Shares is completed simultaneously in
accordance with this Agreement.
3. CONSIDERATION
3.1 The consideration for the sale of the Shares shall be a) (pounds)1 payable
in cash upon
4
Completion and b) the allotment (procured by the Purchaser), by the
Purchaser to the Sellers of the Consideration Shares in accordance with the
provisions contained within this Agreement.
3.2 The Sellers shall be entitled to the Consideration Shares in the
proportions shown in column 3 of Schedule 1.
3.3 170,000 of the Consideration Shares shall be allotted (or transferred, as
the case may require) to the Sellers as soon as reasonably possible
following the Completion Date provided that an executed copy of this
Agreement is produced to the Purchaser's US lawyers. The balance of 30,000
Consideration Shares (the "Deferred Consideration") shall be allotted (or
transferred, as the case may require) to the Sellers on the date which is 8
weeks after Completion and shall be held until such time as they are
allotted (or transferred, as the case may require) to the Sellers, as
security for the Sellers' liabilities under the Warranties, indemnities and
other obligations of the Sellers contained in this Agreement.
3.4 In the event of a claim for breach of Warranty, indemnity or other
provision of this Agreement by the Purchaser, the Deferred Consideration
shall cease to become due to the Sellers until such time as the relevant
claim has been settled or finally determined. The Purchaser shall be
entitled to set-off all amounts due to the Purchaser for any breach (plus
its legal costs properly and reasonably incurred) against the Deferred
Consideration due to the Sellers following such settlement or final
determination. Such set-off shall be calculated on the basis of the open-
market value of the Deferred Shares at the relevant date of set-off.
3.5 The Sellers shall be entitled to the Deferred Consideration Shares, if any,
in the proportions shown in column 3 of Schedule 1.
3.6 In event the Purchaser shall (a) declare a dividend or other
distribution on its shares of common stock in shares of any class or series
of capital stock, (b) subdivide its outstanding shares of common stock, (c)
combine its outstanding shares of common stock into a smaller number of
shares of common stock or (d) issue any shares of its capital stock in a
reclassification of the shares of common stock, then the number of Deferred
Consideration Shares, as calculated immediately prior to the record date
for such dividend or distribution or the effective date of such
subdivision, combination or reclassification, shall be adjusted so that the
persons entitled to receive the Deferred Consideration Shares will be
entitled to receive the number of Deferred Consideration Shares that such
person would have owned or have been entitled to receive after the
happening of any of the events described above had the Deferred
Consideration Shares been issued immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made pursuant
to this Section 3.6 shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such event.
5
4. COMPLETION
4.1 Completion shall take place immediately after the signing and exchanging
of this Agreement, at the offices of the Purchaser's Solicitors when:
(a) the Sellers shall deliver or cause to be delivered to the Purchaser:
(i) transfers of the Shares duly completed in favour of the
Purchaser or as it may direct;
(ii) the share certificates representing the Shares (or an express
indemnity in a form satisfactory to the Purchaser in the case
of any found to be missing);
(iii) all the Statutory and Minute Books of the Company, Certificate
of Incorporation and the Certificate of Incorporation on
Change of Name;
(iv) a letter from the Bankers to the Company and dated with the
date of Completion, confirming that the existing fixed and
floating charges created by the Company in favour of such
Bankers have not crystallized and confirming that such Bankers
do not have any claim over any of the assets of the Company;
(v) a letter of instruction to the Bankers to the Company and
written confirmation from such Bankers that it will not allow
any further debits from the bank account of the Company until
the authorised signatories of that bank account have been
replaced pursuant to the instructions of the Purchaser;
(vi) the resignation of the auditors of the Company in accordance
with section 394 of the Companies Xxx 0000, confirming that
there are no circumstances connected with their resignation
which should be brought to the notice of the members or
creditors of the Company and that there are no fees due to
them;
(vii) a letter from Xxxxx Xxxxxx of Xxxx 0, 00 Xxxxxx Xxxxxx, Xxxxxx
W 1 P 5HP acknowledging that any Intellectual Property Rights
that he developed during his employment by Cougar are the
property of Cougar; and
(viii) the Intellectual Property Rights Agreement, duly executed by
Cougar.
(b) the Sellers shall procure that all indebtedness due from any of the
Sellers or any person connected with them to the Company shall be
satisfied in full;
(c) all indebtedness due from the Company to any of the Sellers (full
particulars of which are contained in the Disclosure Letter) shall be
satisfied in full without payment of interest;
6
(d) the Sellers shall cause a meeting of the Board of the Company to be
held at which the Board shall:
(i) appoint such persons as the Purchaser may nominate as
Directors and Secretary of the Company;
(ii) vote in favour of the registration of the Purchaser and/or its
nominees as members of the Company subject only to the
production of duly stamped and completed transfers in favour
of the Purchaser and/or its nominees in respect of the Shares;
(iii) appoint Xxxxx Xxxxxxxx, Xx. Xxxx'x Xxxxx, Xxxxxxx Xxxx,
Xxxxxx, XX0X 0XX as auditors; and
(iv) alter the accounting reference date of the Company to 1st
January;
(e) the parties shall join in procuring that all existing bank mandates in
force for the Company shall be altered (in such manner as the
Purchaser shall at Completion require) so as, inter alia, to reflect
the resignations and appointments referred to above; and
(f) the Purchaser shall not be obliged to complete this Agreement unless
the Sellers comply fully with the requirements of paragraphs (a), (b),
(d), and (e) of this Clause.
4.2 Upon completion of all the matters referred to in sub-clause 4.1 the
Purchaser shall procure the allotment (or transfer, as the case may be) of
the Consideration Shares (less the Deferred Consideration Shares) to the
Sellers.
4.3 If for any reason the provisions of Clause 4.1 are not fully complied with
the Purchaser may elect (in addition and without prejudice to all other
rights or remedies available to it) to rescind this Agreement or fix a new
date for Completion.
5. REPRESENTATIONS AND WARRANTIES
5.1 The Sellers hereby jointly and severally represent, warrant and undertake
to the Purchaser (contracting for itself and for any successor in title
either of the Purchaser or to the Shares or to a part or all of the
business of the Company) that:
(a) except as fully and fairly disclosed to the Purchaser in the
Disclosure Letter, each of the statements set out in Schedule 3 is
true and accurate;
(b) all information relating to the Company or their respective assets or
affairs which would be material to a purchaser for value of the
Shares, undertakings or assets of the Company is contained in this
Agreement and the Disclosure Letter; and
(c) all information contained or referred to in the Disclosure Letter is
true and
7
accurate and fairly presented and nothing has been omitted from the
Disclosure Letter which renders any of that information incomplete or
misleading.
5.2 Each of the Warranties set out in the several paragraphs of Schedule 3 is
separate and independent and except as expressly provided to the contrary
in this Agreement is not limited:
(a) by reference to any other paragraphs of Schedule 3; or
(b) by anything in this Agreement; or
(c) by anything in the Disclosure Letter which is not expressly referenced
to the Warranty concerned;
and none of the Warranties shall be treated as qualified by any actual or
constructive knowledge on the part of the Purchaser or any of its agents.
5.3 Each of the Sellers agrees with the Purchaser (as trustee for the Company
and its employees) to waive any rights or claims which it or he may have in
respect of any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by the Company or its employees in
connection with the giving of the Warranties and the preparation of the
Disclosure Letter.
5.4 Without prejudice to any other remedy available to the Purchaser or its
ability to claim damages on any basis which is available to it by reason of
any breach of the Warranties:
(a) the Sellers undertake with the Purchaser (for itself and as trustee
for the Company) that they will, at the direction of the Purchaser,
pay to the Purchaser or the Company or (in the case of liability to
another person which has not been discharged) the person to whom the
liability has been incurred, the aggregate of:
(i) the amount by which the value of any asset of any of the
Company (computed on the basis that full provision is made for
the facts and circumstances in relation to which such breach
arose) is less than the value of such assets (computed on the
assumption that the facts and circumstances were such as to
involve no such breach); and
(ii) the amount by which any liability of the Company (computed on
the basis that full provision is made for the facts and
circumstances in relation to which such breach arose), is
greater than such liability (computed on the assumption that
the facts and circumstances were such as to involve no such
breach);
(b) damages for breach of the Taxation Warranties and Warranties relating
to Intellectual Property Rights shall be calculated on a full
indemnity basis in respect of the loss to the Company, or to the
Purchaser, arising from such breach (determined at the option of the
Purchaser).
8
5.5 Any payment made by the Sellers for any breach of this Agreement shall be
deemed to be a reduction in the consideration of this Agreement.
6. EMPLOYMENT OF SPECIFIED PARTIES
The Seller shall indemnify and keep the Purchaser fully indemnified against
all liabilities, costs, expenses, losses and damages in respect of claims
brought against the Purchaser by previous or current employers of Xxxxxxxx
Xxxxxx-Xxxx, Xxxx Xxxxxx and Xxxxx Xxxxxx of Xxxx 0, 00 Xxxxxx Xxxxxx,
Xxxxxx X0X 0XX in relation to the employment of those parties by the
Purchaser.
7. EXISTING AGREEMENTS
The Sellers warrant and represent that the agreements listed below are the
only agreements to which the Company is a party:
(a) Licence and Service Agreement with Highpoint Telecom Europe Plc dated
15th March 1999;
(b) Wholesale and Master Services Agreement with Worldcom International
Limited dated 25th March 1999;
(c) Long Distances Services Interconnection Agreement with Serruijs
Communication Services B.V.;
(d) Letter of Understanding from the Company to Serruijs Communication
Services B.V.;
(e) Heads of terms for the acquisition of the Company by Telemonde
Switched Services Limited;
(f) Offer and Purchase with Excel Switching dated 25th March 1999 faxed to
the Company on 1st April 1999;
(g) Letter from the Company to Excel Switching Corporation entitled
Written Assurance for License Exception TSR;
(h) Offer and Purchase order with Excel Switching dated 25th March 1999
faxed to the Company 7th April 1999;
(i) Non-disclosure agreement with Nokia UK Limited dated 17th March 1999;
and
(j) Sale Agreement from Square One Technology Limited dated 18th April
1999.
8. PENDING AGREEMENTS
8.1 The Sellers shall procure that the Company (or such company as the
Purchaser may reasonably direct) will execute the agreements below each
containing the terms and
9
conditions acceptable to (and with the written approval of) the Purchaser
within three weeks of the Completion Date:
(a) Interconnection Agreement with Primus Telecommunications Limited;
(b) Interconnection Agreement with Teleglobe Communications Limited,
Teleglobe International (UK) Limited or Teleglobe UK Limited;
(c) Interconnection Agreement with IDT (UK) Limited;
(d) Interconnection Agreement with Telewest Communications Limited or
Telewest Networks Limited;
(e) Interconnection Agreement with I-Key Limited;
(f) Co-Location Agreement with I-Key Limited in respect of the racks and
rack space provided by the Company to I-Key Limited at Telehouse,
Xxxxxx X00;
(g) Co-Location Agreement with Worldcom International Limited which shall
include a right by the Company to offer the space provided under such
Agreement to other operators;
(h) Switch Partition Agreement with European Gateway Inc. Limited or
European (Wholesale) Limited; and
(i) Contract of Employment in respect of the employment of Xxxxx Xxxxxx of
Xxxx 0, 00 Xxxxxx Xxxxxx, Xxxxxx X0X 0XX.
8.2 The Sellers warrant that Xxxx Xxxxxx and Xxxxxxxx-Xxxxxx Xxxx shall execute
the Service Agreements within 7 days of the Completion Date.
9. PURCHASE FOR INVESTMENT PURPOSES
Sellers are acquiring the Consideration Shares for investment for their own
account, with the intent of holding the Consideration Shares for
investment, without the present intent of participating directly or
indirectly in a distribution of the Consideration Shares, and without the
participation of any other person in any part of the purchase. The Sellers
understand that the representations and warranties contained herein are to
be relied upon by the Purchaser as a basis for the exemption of the
issuance of the Consideration Shares from the registration requirements of
the United States Securities Act of 1933, as amended (the "Securities
Act"), and the exemptions from registration contained in applicable United
States' securities laws. Sellers acknowledge that the issuance of the
Consideration Shares will not be registered under the Securities Act or
under any United States' state securities laws, and that the Consideration
Shares must be held by the Sellers until (and that the Purchaser shall have
no obligation to recognize any sale, assignment or other transfer thereof
to any person unless) they are subsequently registered under the Securities
Act and under applicable United States' state securities laws, or unless
exemptions from the registration requirements of the Securities Act and
10
such laws are available and approved by counsel satisfactory to the
Purchaser. The Sellers understand that the Purchaser is not obligated to
register the Consideration Shares under the Securities Act or under any
United States' state securities laws. The Sellers further understand that
the Purchaser is not obligated to take any action, except as may be
required by law, necessary to make Rule 144 under the Securities Act or any
other method available for resales of the Consideration Shares by the
Sellers.
10. LACK OF DISCLOSURE STATEMENT
The Sellers acknowledge that the Purchaser has not prepared, and that it
has not been requested by the Sellers to prepare, a comprehensive written
prospectus or disclosure statement in connection with the issuance of the
Consideration Shares to the Sellers, covering the business, operations,
management, financial condition or prospects of the Purchaser of the nature
that otherwise might be required if the sale of the Consideration Shares to
the Sellers were required to be registered under the Securities Act. The
Sellers further acknowledge that the Purchaser, prior to the date hereof,
has furnished the Sellers the opportunity to ask questions of and receive
answers from the Purchaser concerning the financial and business affairs of
the Purchaser and has afforded the Sellers the opportunity to verify the
accuracy of all information provided or made available to the Sellers by
the Purchaser.
11. LEGEND ON CERTIFICATES
The Sellers hereby acknowledge that the following legend may be placed upon
the certificates issued to the Sellers to evidence the Consideration
Shares:
"The shares evidenced by this certificate have not been registered under
the Securities Act of 1933 or comparable state statues and may not be
transferred, not will any assignee or endorsee hereof be recognised as an
owner hereof by the issuer for any purpose, unless a registration statement
with respect to such shares shall then be in effect or unless the
availability of an exemption from registration with respect to any proposed
transfer or disposition of such shares shall be established to the
satisfaction of counsel for the issuer."
12. TRANSFER AGENT
The Sellers hereby acknowledge that the transfer agent for the Purchaser,
whether or not a corporate employee, shall be instructed not to transfer
the ownership of the certificate evidencing the Consideration Shares on the
stock transfer books of the Purchaser unless in the prior written opinion
of counsel, reasonably accepted to the Purchaser, such transfer is in
compliance with the above requirements and applicable provisions of law.
13. CONFIDENTIALITY
Each of the Sellers hereby jointly and severally undertakes to the
Purchaser, for itself and as trustee for the Company that he will:
13.1 not at any time after the date of this Agreement divulge or communicate to
any person
11
other than to officers or employees of the Company whose province it is to
know the same or on the instructions of the Board of Directors of the
Company any confidential information concerning the business, accounts,
finance or contractual arrangements or other dealings transactions or
affairs of the Company which may come to his knowledge; and
13.2 use his reasonable endeavours to prevent publication or disclosure of any
confidential information concerning such matters;
13.3 provided that such undertakings shall cease to have effect in relation to
any confidential information which comes into the public domain otherwise
than through the fault of any of the Sellers.
14. ANNOUNCEMENTS
None of the Sellers shall make or permit any person connected with any of
them to make any announcement concerning the sale and purchase of the
Shares or any ancillary matter after Completion except as required by law
or other applicable regulation or the London Stock Exchange or with the
written approval of the Purchaser, such approval not to be unreasonably
withheld or delayed.
15. NOTICES AND RECEIPTS
15.1 Any notice or other document to be served under this Agreement may be
delivered or sent by registered post or facsimile process to the party to
be served at his address appearing in this Agreement or at such other
address as he may have notified to the other parties in accordance with
this clause.
15.2 Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 am on the second business day after it was put
into the post; or
(c) if sent by facsimile process, at the expiration of 2 hours after the
time of despatch, if despatched before 3.00 pm on any business day,
and in any other case at 10.00 am on the business day following the
date of despatch.
15.3 In proving service of a notice or document it shall be sufficient to prove
that delivery was made or that the envelope containing the notice or
document was properly addressed and posted as a prepaid registered post
letter or that the facsimile message was properly addressed and despatched
as the case may be.
15.4 The receipt of the Sellers' Solicitors for any sum or document to be paid
or delivered to a Seller will discharge the Purchaser's obligation to pay
or deliver it to that Seller.
12
16. RESOLUTIONS AND WAIVERS
16.1 In relation to the Company, the Sellers shall procure the convening of all
meetings, the giving of all waivers and consents and the passing of all
resolutions as are necessary under the Companies Xxx 0000, its Articles
of Association or any agreement or obligations affecting it to give effect
to this Agreement.
16.2 For so long after Completion as it remains the registered holder of any of
the Shares, each of the Sellers will hold them and any distributions,
property and rights deriving from them in trust for the Purchaser and will
deal with the Shares and any distributions, property and rights deriving
from them as the Purchaser directs and will on request by the Purchaser
execute an instrument of proxy or other document which enables the
Purchaser or is representative to attend and vote at any meeting of the
Company.
17. GENERAL
17.1 Each of the obligations, warranties and undertakings set out in this
Agreement which is not fully performed at Completion will continue in force
after Completion.
17.2 If the Shares are sold or transferred after Completion, the benefit of each
of the obligations, warranties and undertakings undertaken or given by the
Sellers may be assigned to the purchaser or transferee of the Shares who
may enforce them as if he had been named in this Agreement as the
Purchaser.
17.3 Subject to sub-clause 17.2, none of the rights or obligations under this
Agreement may be assigned or transferred without the prior written consent
of all the parties.
17.4 Where any obligation, representation, warranty or undertaking in this
Agreement is expressed to be made, undertaken or given by the Sellers, they
shall be jointly and severally responsible in respect of it.
17.5 The Purchaser may release or compromise in whole or in part the liability
of any of the Sellers under this Agreement or grant any time or other
indulgence without affecting the liability of any other of the Sellers.
17.6 Time is of the essence in relation to this Agreement.
17.7 Each party shall pay the costs and expenses incurred by him or it in
connection with the entering into and completion of this Agreement.
17.8 This Agreement may be executed in any number of counterparts, all of which,
taken together shall constitute one and the same Agreement and any party
may enter into this Agreement by executing a counterpart.
18. WHOLE AGREEMENT
18.1 This Agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions contemplated by
this Agreement and supersede all
13
previous agreements, arrangements and understandings between the Parties
relating to these transactions.
18.2 Each of the Parties acknowledges that in agreeing to enter into this
Agreement he or it has not relied on any representation, warranty or other
assurance except those set out in this Agreement and waives all rights and
remedies, which, but for this Clause might be available to it in respect of
such representation, warranty or other assurance provided that nothing in
this Clause shall limit or exclude any liability for fraudulent
misrepresentation.
19. RESPONSIBILITY FOR BROKER'S COMMISSION
Each of the Parties represents to the others that all negotiations leading
to this Agreement have been carried on by it directly with the others
without the intervention of any other person and any claim for brokerage
commission or similar claim relating to this Agreement shall be the
responsibility of the Party incurring the same, provided that any such
claim incurred by the Company shall be the joint and several responsibility
of the Sellers.
20. GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with
English law. Each of the Sellers submits to the non-exclusive jurisdiction
of the English courts for all purposes relating to this Agreement.
IN WITNESS of which this Agreement has been executed by the Parties or their
duly authorised representatives on the date which appears first on page 1.
14
SCHEDULE 1
The Sellers, their shareholdings and consideration
--------------------------------------------------------------------------------
Seller Shareholding Share Consideration Deferred
Consideration
--------------------------------------------------------------------------------
Xxxxxxxx Xxxxxx-Xxxx 8,249 85,000 14,999
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxx
Xxxxxxxxx
XX00 0XX
--------------------------------------------------------------------------------
Xxxx Xxxxxx 8,250 85,000 15,000
00 Xxxxxx Xxx Xxxxx
Xxx Xxxxxx
Xxxxxxxxx
XX0 0XX
--------------------------------------------------------------------------------
Cougar International 1 0 1
Holdings Inc.,
St Xxxxxxx Court
Xxxxxxxxx Street Steps
P.O. Box 4805
Bahamas.
--------------------------------------------------------------------------------
15
SCHEDULE 2
Part 1
Particulars of the Company
(1) Company Number: 3646127
(2) Share Capital: (i) Authorised:-17,000
(ii) Issued:-16,500
(3) Registered Holders: Xxxxxxxx Xxxxxx-Xxxx - 8,249
Xxxx Xxxxxx - 8,250
Cougar International Holdings Inc. - 1
(4) Registered Office: 000-000 Xxxx Xxxx, Xxxxxx XX0 0XX
(5) Directors: Xxxxxxxx Xxxxxx-Xxxx
Xxxx Xxxxxx
(6) Secretary: Xxxxx Xxxxxxxxx of Winchester & Accounting
Services Limited, 0 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx,
Xxxxxxxxxx S021 1TH
(7) Auditors: None appointed
(8) Accounting reference date: 31/10/99
CHARGES OF THE COMPANY
A fixed and floating charge in the form of a debenture from Xxxxxxx'x Bank
Plc.
16
SCHEDULE 3
The Warranties
A. General
B. Accounts/Financial
C. Business
D. Tax
E. Intellectual Property etc
F. Directors/Employees etc
A. GENERAL
A.1 The Recitals and the Schedules
The information relating to the Sellers and the Company contained in the
Recitals and Schedules to this Agreement is true and accurate.
Sellers' authority and capacity
A.1.1 The Sellers each have the requisite power and authority to enter
into and perform this Agreement and such entry and performance will
not breach violate, infringe or otherwise affect the rights of any
other person.
A.1.2 This Agreement will, when executed, constitute binding obligations
on each Seller.
A.1.3 The execution and delivery of and the performance by each Seller of
its obligations under this Agreement will not:
(a) constitute a default under any instrument or arrangement
binding or otherwise to which any Seller is a party; or
(b) result in a breach of any order judgment or decree of any
court or governmental agency to which any Seller is a party or
by which any Seller is bound; or
(c) relieve any other party to a contract with the Company of its
obligations or enable that party to vary or terminate its
rights or obligations under that contract; or
(d) result in the creation or imposition of any lien, charge or
encumbrance of any nature on any of the property or assets of
the Company.
17
A.2 Memorandum and Articles of Association
The copies of the Memorandum and Articles of Association of the Company
delivered by the Sellers to the Purchaser is true complete and accurate in all
respects and has embodied in it or annexed to it true, accurate and complete
copies of all resolutions agreements and consents required by law to be so
embodied or annexed.
A.3 Compliance with Companies Acts
A.3.1 The Company and its officers (in their capacities as such) have
complied with the provisions of the Companies Xxx 0000 and in
particular (without prejudice to the generality of the foregoing)
all documents required to be filed with the Registrar of Companies
in respect of the Company have been duly filed.
A.3.2 The Statutory Books and Minute Books of the Company have been
properly written up and contain a true accurate and complete
record of the matters which should be dealt with in such books and
no notice or allegation that any of them is incorrect or should be
rectified has been received.
A.3.3 All returns and particulars, resolutions and other documents which
the Company is required by law to file with or deliver to the
Registrar of Companies have been correctly made up and duly filed
or delivered.
A.4 Sellers' interests
None of the Sellers nor any person connected with any of them has any
interest, directly or indirectly:
A.4.1 in any business which has a close trading relationship with is or
is likely to be competitive with the business of the Company; or
A.4.2 in any asset which within the two years preceding the date of this
Agreement has been acquired or disposed of by or leased to the
Company.
A.5 Ownership of the Shares
A.5.1 The Shares constitute the whole of the issued and allotted share
capital of the Company.
A.5.2 No person is entitled, or has claimed to be entitled, to require
the Company to issue any share or loan capital either now or at
any future date whether contingently or not.
A.5.3 There is no option, right of pre-emption, right to acquire,
mortgage, charge, pledge, lien or other form of security or
encumbrance on, over or affecting any of the Shares nor is there
any commitment to give or create any of the
18
foregoing and no person has claimed to be entitled to any of the
foregoing.
A.5.4 The Sellers are entitled to sell and procure the transfer of the
full legal and beneficial ownership in the Shares to the Purchaser
on the terms set out in this Agreement.
A.6 Subsidiaries, associations and branches
The Company:
A.6.1 does not hold or beneficially own nor has it agreed to acquire any
securities of any other corporation (whether incorporated in the
United Kingdom or elsewhere);
A.6.2 is not and has not agreed to become a member of any partnership or
other unincorporated association, joint venture or consortium (other
than recognised trade associations);
A.6.3 has not outside the United Kingdom any branch or any permanent
establishment.
A.7 Ownership of assets
A.7.1 The Company owns all the assets necessary to enable it to continue
to run its business in the manner and on the scale in which it has
been conducted in the year preceding the date of this Agreement.
A.7.2 Particulars of all fixed assets acquired or agreed to be acquired by
the Company since the date of incorporation are set out in the
Disclosure Letter.
A.7.3 Except for current assets offered for sale or sold in the ordinary
course of trading, the Company has not since the Accounts Date
disposed of any of the assets included in the Accounts or any assets
acquired or agreed to be acquired since the Accounts Date.
A.7.4 None of the property, assets, undertaking, goodwill or uncalled
capital of any of the Company is subject to any encumbrance
(including, without limitation, any debenture, mortgage, charge,
lien, deposit by way of security, xxxx of sale, lease, hire-
purchase, credit-sale or other agreement for payment on deferred
terms, option or right of pre-emption) or any agreement or
commitment to give or create any of the foregoing.
A.8 Vulnerable transactions
A.8.1 The Company has not been party to a transaction pursuant to or as a
result of which an asset owned, purportedly owned or otherwise held
by it is liable to be transferred or re-transferred to another
person or which gives or may give rise to a right of compensation or
other payment in favour of another person
19
in the event of the insolvency of any person.
A.8.2 No transaction at an undervalue (within the meaning of section 423
of the Insolvency Act 1986) (a) relating to any of the Shares or
(b) to which the Company has been a party, has been effected prior
to the date of this Agreement.
A.9 Compliance with statutes
The Company has not, nor has its officers, agents or employees (during the
course of their duties), done or omitted to do anything which is a
contravention of any statute, order, regulation or the like giving rise to
any fine, penalty or other liability on the part of the Company.
A.10 Licences and Consents
The Company has all licences (including statutory licences) and consents
necessary to own and operate its assets and to carry on its business as it
does at present and none of the Sellers is aware of anything that might
prejudice the continuation or renewal of any of those licences or consents.
A.11 Insider contracts
A.11.1 The Company is not a party to any contract or arrangement in which
any of the Sellers or any person connected with any of them is
interested, directly or indirectly, nor has there been any such
contract or arrangement at any time since incorporation.
A.11.2 The Company is not a party to, nor have its profits or financial
position been affected by, any contract or arrangement which is
not of an entirely arm's length nature.
A.11.3 None of the Sellers nor any person connected with any of them is a
party to any outstanding agreement or arrangement for the provison
of finance, goods, services or other facilities to or by the
Company or in any way relating to the Company or its affairs.
A.12 Litigation
A.12.1 The Company is not engaged in any litigation or arbitration
proceedings and there are no such proceedings pending or
threatened by the Company.
A.12.2 The Sellers do not know of anything which is likely to give rise
to any litigation or arbitration proceedings by or against the
Company.
A.12.3 The Company is not the subject of any investigation or inquiry by
any governmental, administrative or regulatory body.
20
A.13 Insolvency
A.13.1 No receiver or administrative receiver has been appointed in
respect of the Company or in respect of the whole or any part of
the assets or undertaking of the Company.
A.13.2 No administration order has been made and no petition has been
presented for such an order in respect of the Company.
A.13.3 No meeting has been convened at which a resolution will be
proposed nor has any resolution been passed nor has any petition
been presented or order made for the winding up of the Company.
A.13.4 The Company has not stopped or suspended payment of its debts,
become unable to pay its debts (within the meaning of Section 123
of the Insolvency Act) or otherwise become insolvent.
A.13.5 No unsatisfied judgment, order or award is outstanding against the
Company and no written demand under Section 123(1)(a) of the
Insolvency Act has been made against the Company and no distress
or execution has been levied on, or other process commenced
against, any asset of the Company.
A.13.6 No voluntary arrangement has been proposed under Section 1 of the
Insolvency Act in respect of the Company.
A.13.7 No circumstances have arisen which entitle any person to take any
action, appoint any person, commence proceedings or obtain any
order of the type mentioned above.
21
B. ACCOUNTS/FINANCIAL
B.1 Accounts
B.1.1 The Accounts:
(a) correctly state the assets of the Company and give a true and
fair view of the state of affairs of the Company as the
Accounts Date and of the profit or loss of the Company for the
period ended on the Accounts Date.
B.1.2 Without prejudice to the generality of the Warranty contained in
paragraph B.1.1, the Accounts:
(a) are complete and accurate in all respects;
(b) are not affected by and do not include any unusual or
non-recurring items;
(c) contain either adequate provision to cover, or full
particulars in notes of, all the liabilities and other
financial commitments (whether ascertained or contingent and
whether or not quantified or disputed) of the Company as at
the Accounts Date;
(d) make proper and adequate provision for:
(i) all bad and doubtful debts;
(ii) all amounts required to be deducted from any payments
made to any person whether under the Pay As You Earn
regulations legislation relating to National
Insurance Contributions relating to Statutory Sick
Pay or any other legislation whatsoever; and
(iii) all and any losses on contracts comprising
work-in-progress.
B.1.3 Any redundant or obsolete stock existing at the Accounts Date was
wholly written off and any slow-moving stock included in the
Accounts was properly written down in accordance with recognized
accounting principles and the value attributed to the remaining
stock did not exceed the lower of acquisition cost or net
realisable value at the Accounts Date.
B.1.4 No stock included in the Accounts was acquired otherwise than by
way of a transaction which was entirely at arm's length.
B.1.5 The debts included in the Accounts have realised or will realise,
in the ordinary course of collection, their nominal amounts plus
any accrued
22
interest less any provision for bad and doubtful debts included in
the Accounts.
B.1.6 No debt owing to the Company at the date of this Agreement (other
than debts included in the Accounts) will not in the ordinary
course of collection realise its nominal amount plus any accrued
interest.
B.1.7 There is no material difference between the accounting and
taxation treatment of any item in the Accounts and of any asset
acquired since incorporation.
B.1.8 The Company is the owner free from encumbrances or other third
party rights in the nature of security or title retention of all
its undertaking and assets which are included or which ought to
have been included in the Accounts and all such assets are in its
possession or under its control.
B.2 Accounting Records
All proper and necessary accounting and other books and records (including
all invoices and other records required for value added tax purposes) of
the Company relating to its financial and trading position have been fully
properly and accurately written up on a proper and consistent basis.
B.3 Position since the Accounts Date
Since the Accounts Date:
B.3.1 the Company's financial positions has not adversely altered to a
material extent;
B.3.2 the business of the Company has been carried on in the ordinary
and usual course and there has not been any material change in the
nature of the assets and liabilities shown in the Accounts;
B.3.3 there has not been any adverse change in the value of the net
assets;
B.3.4 there has been no deterioration in the turnover, financial or
trading position or prospects of the Company;
B.3.5 no directors fees have been paid and no resolution (whether by the
Board of Directors or by General Meeting) that such fees be paid
has been proposed or passed by the Company;
B.3.6 the Company has not disbursed any cash except in the ordinary
course of its business and all amounts received by the Company
have been deposited with that Company's bankers and appear in the
appropriate books of account;
B.3.7 no dividends or other distributions have been declared, paid or
made on or
23
by the Company;
B.3.8 the Company has not entered into any capital transaction as
vendor, purchaser, lessor or lessee or otherwise undertaken any
material commitment on its capital account.
B.4 Borrowings etc
B.4.1 The Company has not received notice (whether formal or informal)
from any person who is currently, or who has at any time been a
lender to it requiring repayment of any indebtedness or intimating
the enforcement by any such lender of any security which it may
hold over any assets of the Company and the Sellers are not aware
of any circumstances likely to give rise to any such notice being
given or which would enable any such notice to be given.
B.4.2 The total amount borrowed by the Company from its bankers does not
exceed its overdraft facilities as set out in the Disclosure
Letter.
B.4.3 The Company has not lent any money which has not been repaid to it
or acquired the benefit of any debt (present or future) save for
debts in respect of the sale of trading stock in the normal course
of trading.
B.4.4 The Company has not outstanding any loan capital or any money
borrowed (other than under the overdraft facilities disclosed
pursuant to the above), including money raised by factoring.
B.4.5 The Company has not outstanding any liability (whether present or
future) in respect of any guarantee or indemnity.
B.4.6 The Company has paid each of its creditors on or before the
relevant due date for payment and has not made any agreement to
postpone or delay any payment of its debts and "paid" in this
context means that either cash has been paid or a cheque has been
given or despatched to the relevant creditor and has not been
cancelled by the Company.
B.5 Plant and equipment
Of the plant, machinery, fixtures, fittings, equipment, vehicles,
furniture, materials and other assets (not being current assets) acquired
by the Company since incorporation and included in the Accounts:
B.5.1 none has been sold or disposed of at a figure lower than book
value or an open market arm's length value whichever is the
higher;
B.5.2 none has been or has been agreed to be let on hire or hire
purchase or sold on deferred terms; and
B.5.3 none was acquired at a price in excess of market value at the time
of
24
acquisition.
B.6 Government grants
The Company is not subject to any arrangement for receipt or repayment of
any grant, subsidy or financial assistance from any government department
or other body.
B.7 Loans
The Company has not lent any money which has not been repaid to it or owns
the benefit of any debt (whether present or future) other than debts
accrued to it in the ordinary course of its business.
B.8 Bank accounts
The statement of the Company's bank accounts and of the credit or debit
balances on them attached to the Disclosure Letter is correct and the
Company has not any other bank or deposit account (whether in credit or
overdrawn) not included in the statement and since the date of that
statement there has not been any payment out of any of the accounts except
for routine payments and the balance on the accounts is not substantially
different from the balances shown on the statement.
25
C. BUSINESS
C.1 Suppliers and customers
The Sellers have no reason to believe that any supplier customer or person
who has had dealings with the Company has ceased or will cease dealing with
the Company or may substantially reduce its dealings with the Company after
Completion or as a result of the acquisition by the Purchaser of the
Shares.
C.2 Trading contracts and outstanding offers
C.2.1 The Company has observed and performed all the terms and
conditions on its part to be observed and performed under its
trading contracts.
C.2.2 The Company will not be required after the date of this Agreement
to undertake any work or supply any goods or services except on
normal commercial terms under a contract entered into on or before
the date of this Agreement.
C.2.3 No offer, tender or the like which is capable of being converted
into an obligation of the Company by an acceptance or other act of
some other person is outstanding, except in the ordinary course of
its business.
C.3 Defective products and installation
C.3.1 The Company has not manufactured or sold products which are or
have or will become in any material respect dangerous, faulty or
defective or which do not comply in any material respect with any
warranty or representation expressly or impliedly made by it.
C.3.2 The Company has not accepted any obligation to service, repair or
maintain any system or product installed, serviced or repaired by
it or by any third party other than on arm's length terms and for
full consideration.
C.4 Material contracts
The Company is not a party to any contract, arrangement, or obligation
which, whether by reason of its nature, term, scope, price or otherwise, is
or is likely to be of material importance to its business, profits or
assets, or which:
C.4.1 is not in the ordinary course of its business; or
C.4.2 is incapable of performance in accordance with its terms within
six months of the date on which it was entered into or undertaken;
or
C.4.3 is expected to result in a loss to the Company on completion of
performance; or
26
C.4.4 is of an onerous nature or cannot be fulfilled or performed by the
Company on time and without undue or unusual expenditure of money
and effort.
C.4.5 requires an aggregate consideration payable by the Company in
excess of (pounds)50,000; or
C.4.6 involves payment by the Company by reference to fluctuations in
the Index of Retail Prices or any other index; or
C.4.7 requires payment of any sum by the Company in any currency other
than sterling; or
C.4.8 is for the provision of management or similar services to the
Company and which is not terminable by it on less than three
months' notice without compensation.
C.5 Agencies, etc.
The Company is not a party to:
C.5.1 any agency, distributorship, marketing, purchasing, manufacturing
or licensing agreement or arrangement; or
C.5.2 any agreement or arrangement which restricts its freedom to carry
on the whole or any part of its business in any part of the world
in such manner as it thinks fit.
C.6 Anti-competitive arrangements
C.6.1 The Company is not now, or has during the past six years been, a
party to any agreement, arrangement, concerted practice or course
of conduct which:
(a) is subject to registration under the Restrictive Trade
Practices Acts 1976 and 1977;
(b) contravenes the provisions of the Resale Prices Xxx 0000 or
any secondary legislation or adopted under the Fair Trading
Xxx 0000;
(c) infringes Article 81 or 82 of the Treaty establishing the
European Economic Community or any other anti-trust or similar
legislation in any jurisdiction in which that Company carries
on business or has assets or sales; or
(d) is void or unenforceable (whether in whole or in part) or may
render the Company liable to proceedings under any such
legislation as is referred to in paragraphs (a) to (c) above.
27
C.6.2 The Company has not given any undertaking and no order has been
made against or in relation to the Company pursuant to any anti-
trust or similar legislation in any jurisdiction in which the
Company carries on business or has assets or sales.
C.7 Plant in working order
All machinery and plant of the Company, including its fixed plant and
machinery, and all vehicles and office equipment owned or used by it:
C.7.1 is in satisfactory working order;
C.7.2 has been properly serviced and maintained;
C.7.3 complies with all relevant safety, pollution and health
legislation;
C.7.4 is not surplus to the Company's requirements; and
C.7.5 is in the possession of the Company.
C.8 Insurance
C.8.1 All the assets and undertaking of the Company of an insurable
nature and have at all material times been insured in amounts
representing their full replacement or reinstatement value against
fire and other risks normally insured against by persons carrying
on the same classes of business as those carried on by the Company
and the Company is now and has at all material times been
adequately covered against accident, damage, injury, third party
loss, loss of profits and other risks normally covered by
insurance.
C.8.2 The list of current policies of insurance of the Company attached
to the Disclosure Letter is true and complete and no premium due
to be paid and payable in respect of any policy is outstanding.
C.8.3 There are no circumstances which would or might entitle the
Company to make a claim under any policy of insurance or which
under the terms of any policy of insurance would or might be
required to be notified to the insurers and there are no claims
under any policy of insurance which have not been admitted by the
insurers.
C.8.4 No liability in respect of any claim made or pending against the
Company will exceed in amount the limit of insurance cover in
force for the benefit of the Company against such a claim and
there is no insurance policy under which the Company may be
required to bear any excess provision out of its own funds.
28
C.9 No powers of attorney
The Company has not granted any power of attorney or similar authority
which remains in force.
29
D. TAXATION
D.1 General/Compliance
D.1.1 The Company has not been involved in any transaction which has
given or may give rise to a liability to tax on the Company (or
would have given or might give rise to such a liability but for
the availability of any relief, allowance, deduction or credit)
other than tax in respect of normal trading income or receipts of
the Company arising from transactions entered into in the ordinary
course of business.
D.1.2 No payment has been made by the Company which will not be
deductible for the purposes of corporation tax (or any
corresponding tax on profits in any relevant foreign
jurisdiction), either in computing the profits of the Company or
in computing the corporation tax or corresponding tax chargeable
on the Company.
D.1.3 All sums payable under any obligation incurred by the Company
prior to Completion and which will continue to bind the Company
after Completion have been and will continue to be deductible for
the purposes of corporation tax (or any corresponding tax on
profits in any relevant foreign jurisdiction), either in computing
profits of the Company or in computing the corporation tax or
corresponding tax chargeable on the Company.
D.1.4 The Company has duly made all returns, given all notices and
supplied all other information required to be supplied to all
relevant tax authorities; all such information was supplied within
the time limits required by law and remains complete and accurate
in all material respects and all such returns and notices were and
remain complete and accurate in all material respects and were
made on the proper basis and do not, and, to the best of the
knowledge, information and belief of the Sellers, are not likely
to, reveal any transactions which may be the subject of any
dispute or investigation with any tax authority and is not and has
not in the last six years been the subject of any investigation by
any tax authority and there are no facts which are likely to cause
such an investigation to be instituted.
D.1.5 No transaction in respect of which any consent or clearance was
required or sought from any tax authority has been entered into or
carried out by the Company without such consent or clearance
having first been properly obtained and all information supplied
to any tax or other appropriate authority in connection with any
such consent or clearance fully and accurately disclosed all facts
and circumstances material to the giving of such consent or
clearance and any transaction for which such consent or clearance
was obtained has been carried out only in accordance with the
terms of such consent or clearance and the application on which
the consent or clearance was based and at a time when such consent
or clearance was valid and effective. No facts or circumstances
have arisen since any such consent or clearance was obtained which
would cause the consent or clearance to
30
become invalid or ineffective.
D.1.6 No tax authority has operated or agreed to operate any special
arrangement (being an arrangement which is not based on relevant
legislation or any published practice) in relation to the affairs
of the Company.
D.1.7 The Company has duly paid all amounts under deduction of tax where
required to do so by law.
D.1.8 All National Insurance contributions and sums payable to the
Inland Revenue under the P.A.Y.E system and any amounts of a
corresponding nature payable to any foreign tax authority due and
payable by the Company up to the date of this Agreement have been
paid and the Company has made all such deductions and retentions
as should have been made under sections 203 to 203L Taxes Xxx 0000
and all regulations made thereunder or under any comparable laws
or regulations of any relevant foreign jurisdiction.
D.1.9 The Company is not a party to any loan relationship (within the
meaning of section 81 Finance Act 1996) which has an unallowable
purpose (within the meaning of paragraph 13 of Schedule 9 to that
Act) and the Company applies an authorised accounting method
within section 85 of that Act in relation to its treatment in the
Accounts of all loan relationships to which the Company is a
party.
D.2 Employees
D.2.1 The Company has not adopted nor does it operate nor is it part of
any scheme approved, or for which approval has been or is to be
sought, under section 202 Taxes Act 1988 (Charities: Payroll
Deduction Scheme) or Chapter III Part V Taxes Act 1988 (Profit
Related Pay).
D.2.2 No officer or employee of the Company participates in any scheme
approved under Schedule 9 ICTA 1988 (approved share option and
profit sharing schemes) or is a beneficiary or potential
beneficiary of a qualifying employee share ownership trust as
defined in Schedule 5 Finance Xxx 0000 (employee share ownership
trusts).
D.2.3 The Company has not remunerated any director or employee other
than in cash paid to that director or employee and there are no
arrangements to pay any director or employee other than in cash
payable to that director or employee.
D.2.4 The Company has properly operated the P.A.Y.E system and has
deducted tax and national insurance contributions in accordance
with section 203A(1)(c) Taxes Xxx 0000 from all payments made or
treated as made to directors on all directors loan accounts and
accounted to the Inland Revenue for all tax and national insurance
contributions so deducted.
31
D.3 Capital gains
D.3.1 The Company is not a member of a group of companies as
defined in section 170 Taxation of Chargeable Gains Xxx 0000.
D.3.2 The Company has not since its incorporation disposed of any
asset otherwise than in the ordinary course of its trade.
D.3.3 If the Company disposed of each of its assets (except trading
stock and work-in-progress) for a consideration equal to the book
value of that asset as shown in or adopted for the purposes of the
Accounts to a person not connected with it and by way of bargain
at arm's length, no liability to tax would arise by reference to
any actual or deemed gain and the Company has not acquired any
such asset otherwise than by way of bargain at arm's length from
an unconnected person.
D.4 Capital expenditure
D.4.1
(a) All capital expenditure, other than expenditure on land and
buildings which is not capable of qualifying for industrial
building allowance, incurred by the Company or which may be
incurred by it under any continuing obligation has qualified
or will qualify for capital allowances.
(b) All such allowances made to the Company and set out in the
Disclosure Letter and any allowances which may be made on
expenditure to be incurred under a subsisting commitment have
been made or will be made in taxing its trade or business.
(c) The Company has not, since incorporation, done or omitted to
do, or agreed to do, or permitted to be done, any act as a
result of which there may be made a balancing charge or any
disposal value brought into account or any deemed trading
receipt under or by virtue of any provision of the Capital
Allowances Xxx 0000, or a withdrawal of first year allowances
or recovery of excess relief under any such provision.
D.4.2 The Company has not incurred any expenditure on the provision of
machinery or plant for leasing (the meaning of which is, for this
purpose, as extended by section 50 Capital Allowances Act 1990).
D.4.3 The Company is not in dispute with any person as to any
entitlement to capital allowances under section 51 Capital
Allowances Act 1990 and at the date of this Agreement as far as
the Warrantors are aware there are no circumstances which might
give rise to such a dispute.
32
D.4.4 The Company has not made any election under section 37 Capital
Allowances Act 1990 nor is taken to have made such an election
under sub-section (8)(c) thereof (election for assets to be
treated as short life assets).
D.4.5 None of the assets of the Company is or may be a long-life asset
within the meaning of Xxxxxxx 0X xx Xxxx XX Xxxxxxx Xxxxxxxxxx Xxx
0000.
D.5 Close companies
D.5.1 The Company is not, nor has it at any time been, a close company
for tax purposes as defined in section 414 Taxes Xxx 0000.
D.5.2 The Company is not, nor has it at any time been, a close
investment-holding company as defined in section 13A Taxes Xxx
0000.
D.5.3 The Company has not made any transfers of value within section 94
Inheritance Tax Xxx 0000.
D.5.4 The Company has not, since incorporation, done anything so as to
give rise to an assessment under section 419 (as extended by
section 422) Taxes Act 1988 (loan to participators and
associates).
D.5.5 Neither the shares of the Company, nor any property owned by the
Company are subject to an outstanding Inland Revenue charge (as
defined in section 237 Inheritance Tax Act 1984).
D.5.6 No circumstances exist such that a power of sale could be
exercised in relation to any shares, securities or other assets of
the Company pursuant to section 212 Inheritance Tax Act 2984
(contingent liability of transferee for unpaid capital transfer
tax or inheritance tax).
D.6 Distributions etc.
D.6.1 The Company has not since its incorporation:
(a) made any distribution or deemed distribution within the
meanings of sections 209, 210 or 418 Taxes Act 1988
(distributions and deemed distributions);
(b) repaid, redeemed or purchased or agreed to repay, redeem or
purchase any of its share capital, or capitalised or agreed to
capitalise in the form of redeemable shares or debentures, any
profits or reserves of any class or description.
D.6.2 The Company has not issued any share capital which is of a
relevant class as defined in section 249(2) Taxes Act 1988 nor
does the Company own any such share capital (shares carrying the
right to bonus share capital).
33
D.6.3 The Company has not issued any security (as defined in section
254(1) Taxes Act 1988) outstanding on Completion in circumstances
such that any interest or other payment payable in respect of it
may be treated as a distribution under section 209 Taxes Act 1988.
D.7 Transfer pricing
The Company is not liable to have its profits for tax purposes adjusted by
reason of any provision of tax law concerning the adjustment of profits of
associated enterprises including, without limitation, sections 770 and 770A
Taxes Act 1988 (sales etc. at an undervalue of overvalue) and it is not in
dispute with any tax authority in relation to the application of such provision.
D.8 Value added tax
D.8.1
(a) For the purposes of this paragraph D8 the expression "VAT
legislation" shall include the Value Added Tax Xxx 0000 and
any other applicable legislation in relation to value added
tax and all regulations, orders, notices, provisions and
conditions made or issued thereunder including the terms of
any agreement reached with the Commissioners of Customs and
Excise or any concession referred to in the Disclosure Letter.
(b) The Company:
(i) is registered for the purposes of value added tax and
has been so registered at all times that it has been
required to be registered by VAT legislation;
(ii) has complied fully with and observed in all material
respects the terms of VAT legislation; and
(iii) has maintained and obtained at all times complete,
correct and up-to-date records, invoices and other
documents (as the case may be) appropriate or
requisite for the purposes of VAT legislation and
has preserved such records, invoices and other
documents in such form and for such periods as are
required by VAT legislation;
(iv) and the Company is not nor has it ever been treated
as a member of a group for the purposes of VAT
legislation, nor has it applied for such treatment.
(c) The Company:
(i) is not in arrears with any payments or returns or
34
notifications under VAT legislation or liable to any
abnormal or non-routine payment or any forfeiture or
penalty or interest or surcharge or to the operation
of any penal, interest or surcharge provisions
contained therein;
(ii) has not been required by HM Commissioners of Customs
and Excise to give security under VAT legislation;
(iii) has not made exempt supplies such that it is not able
to obtain credit for all input tax paid or suffered
by it;
(iv) has not received a surcharge liability notice under
section 19 Finance Act 1985 (default surcharge) or a
penalty liability notice under section 14A Finance
Act 1985 (serious misdeclaration resulting in
understatements or overclaims).
(d) The Company does not hold any interest in any buildings or
land in respect of which it or any other person has made an
election to waive the exemption to value added tax in
accordance with the provisions of paragraph 2 Schedule 10
Value Added Tax 1994, nor is the Company contractually
committed (contingently or otherwise) to receive any supply in
respect of which such an election has been made.
D.8.2 None of the assets of the Company owned at the date hereof is a
capital item the input tax on which would be subject to adjustment
in accordance with the provisions of Part XV of the Value Added
Tax Regulations 1995.
D.9 Stamp duty
All documents in the possession or under the control of the Company or to the
production of which the Company is entitled which establish or are necessary to
establish the title of the Company to any asset have been duly stamped and any
applicable stamp duties or charges in respect of such documents have been duly
accounted for and paid, and no such documents which are outside the United
Kingdom would attract stamp duty if they were brought into the United Kingdom.
35
E. INTELLECTUAL PROPERTY ETC
E.1 Secret or confidential information or property
The Company has not at any time (save in the ordinary course of business or to
its professional advisers) disclosed to any person other than the Purchaser.
E.1.1 any of its secret or confidential information or property
(including, without limitation, financial and technical
information, designs, drawings, plans, statistics, documents,
files, records and papers); or
E.1.2 any other information relating to its business or affairs the
disclosure of which might or could cause loss or damage to or
adversely affect the Company; or
E.1.3 any secret or confidential information relating to its
manufacturers, suppliers, customers, clients and agents or to any
other person who has or has had any dealings with it.
E.2 Intellectual property rights
E.2.1 The Company does not:
(a) own, use, infringe or require to use any letters patent,
trade xxxx, service xxxx, registered design, registrable
business name, copyright or similar Intellectual Property
Right; or
(b) employ or require to employ in relation to goods or articles
manufactured or proposed to be manufactured by it any knowhow,
which either infringes or is likely to infringe any
Intellectual Property Right of a third party or which has
been disclosed to it by a third party under licence or
similar arrangements.
E.2.2 Full details of all registered Intellectual Property Rights
(including applications to register the same) and all commercially
significant unregistered Intellectual Property Rights owned or
used by the Company are set out in the Disclosure Letter.
E.2.3 The Company is the owner of and the sole legal and beneficial owner
of or applicant for such Intellectual Property Right and all the
Intellectual Property Rights referred to in paragraph E.2.2 above
are owned solely by the Company free of all encumbrances.
E.2.4 Full details are set out in the Disclosure Letter of all licence and
other agreements relating to Intellectual Property Rights to which
the Company is a party (whether as licensor or licensee) or which
relate to any Intellectual Property Right owned by the Company.
The Company is not in breach of any such agreement and, so far as
the Sellers and the Company is aware, no
36
third party is in breach of any such agreement.
E.2.5 All the Intellectual Property Rights described in paragraph E.2.3
above and all agreements disclosed in relation to paragraph E.2.4
above are valid and subsisting and nothing has been done or omitted
to be done by the Company, and the Sellers and the Company are
unaware of any act or omission of any third party, which would
jeopardise the validity or subsistence of any of such Intellectual
Property Rights or such agreements.
E.2.6 The Company owns or has licensed to it all Intellectual Property
Rights it requires to carry on its business as such business has
been carried on during the year prior to the date of this Agreement
and such rights and the Company's ability to use such rights will
not be affected by the acquisition of Company by the Purchaser.
E.2.7 Neither the Sellers nor the Company are aware of any unauthorised
use by any person of any Intellectual Property Rights or
confidential information of the Company.
E.3 Computer know-how and marketing information
E.3.1 For the purposes of paragraphs E.3.2, E.3.3 and E.3.4 below:
(a) "Computer Know-How" means all information (including that
comprised in or derived from data, discs, tapes, manuals,
source codes, flow-charts and specifications) relating to the
use or programming of any computer which is not intended by the
persons in possession of the information for use by
unauthorised persons and any computer software in whatever form
held; and
(b) "Marketing Information" means all information relating to the
marketing of any products or services (including customer names
and lists, sales targets, sales statistics, market share
statistics, marketing surveys and reports, marketing research
and any advertising or other promotional materials).
E.3.2 All Computer Know-How and Marketing Information used by the Company
is owned by or is the subject of a valid grant of rights to the
Company and is not subject to any restriction which materially and
adversely affects the Company's ability to use it for the purposes
of its business.
E.3.3 The Company has not disclosed nor is obliged to disclose any
Computer Know-How or Marketing Information of a confidential
nature to any person other than its employees.
E.3.4 The Company is not in breach of any agreement under which any
Computer Know-How or Marketing Information was or is to be made
available to it.
37
E.4 Data and records
E.4.1 All the records and systems (including but not limited to computer
systems), data and information of the Company are recorded, stored,
maintained or operated or otherwise held by the Company and are not
wholly or partly dependent on any facilities or means (including any
electronic, mechanical or photographic process, computerised or
otherwise) which are not under the exclusive ownership and control
of the Company.
E.4.2 The Company has not disclosed to any third party any such records,
control or other systems, data and information as is referred to
in subparagraph E.4.1 above.
E.4.3 The Company has complied with all relevant requirements of the Data
Protection Xxx 0000, including the following:
(a) the data protection principles established in that Act;
(b) requests from data subjects for access to data held by it; and
(c) the requirements relating to the registration of data users.
E.4.4 The Company has not received a notice or allegation from either the
data protection registrar or a data subject alleging non-compliance
with the data protection principles or prohibiting the transfer of
data to a place outside the United Kingdom.
E.4.5 No individual has claimed or will have the right to claim
compensation from the Company under that Act for loss or
unauthorised disclosure of data prior to Completion.
E.5 Business names
The Company does not carry on business under a name other than its own
corporate name.
E.6 Year 2000
E.6.1 All computers software, products and services supplied by the
Company are Year 2000 Compliant.
E.6.2 All computer software used by the Company is Year 2000 compliant.
38
F. EMPLOYEES
F.1 Particulars of employees
F.1.1 The persons whose names are set out in the Disclosure Letter are all
the employees of the Company and the particulars of their employment
set out in the Disclosure Letter are accurate and complete. No
person who was formerly employed by the Company has a right to
return to work.
F.1.2 The terms and conditions of employment of all employees of the
Company are in accordance with the standard terms and conditions
supplied to the Purchaser.
F.1.3 All subsisting contracts of employment to which the Company is a
party are terminable by it on three months' notice or less without
compensation (other than compensation in accordance with the
Employment Rights Act 1996).
F.1.4 No employee of the Company has been given notice of termination of
his employment (or had his employment terminated without notice)
since the Accounts Date and no employee of the Company has left its
employment of his own accord since that date or indicated his
intention of doing so.
F.1.5 Full particulars are contained in the Disclosure Letter of any
outstanding offer of employment made to any person by the Company
and there is no person who has accepted an offer of employment made
by the Company but whose employment has not yet started.
F.1.6 Full particulars are contained in the Disclosure Letter of any
agreement for the provision of consultancy services or the
services of personnel to the Company and of the terms applicable
to the secondment to the Company of any person.
F.2 Salary costs
F.2.1 Full particulars of the remuneration or the emoluments or pension
benefits of any employee of the Company is set out in the
Disclosure Letter.
F.3 Compensation and other sums due to employees
F.3.1 The Company does not have any liability to pay compensation for loss
of office or employment to any present or former officer or employee
or to make any payment under the provisions of the Employment Rights
Xxx 0000, the Sex Discrimination Acts 1975 and 1986, the Race
Relations Xxx 0000, the Disability Discrimination Xxx 0000, the
Equal Pay Xxx 0000 and/or Article 119 of the Treaty of Rome and no
such sums have been paid.
F.3.2 Except in respect of normal accruals of remuneration or emoluments
of
39
employment, no sum is payable to or for the benefit of any employee
or director of the Company.
F.3.3 The Company does not have an obligation to make any payment on
redundancy in excess of the statutory redundancy payment and the
Company has not operated any discretionary practice of making any
such excess payments.
F.4 No bonus schemes
There is no scheme or arrangement in operation by or in relation to the
Company under which any employee or other person is entitled to a
commission or remuneration of any other sort calculated by reference to the
whole or part of the turnover, profits or sales of the Company.
F.5 Labour relations
F.5.1 There is not and since incorporation there has not been any
industrial action affecting the Company and to the best of the
knowledge, information and belief of the Sellers there are no facts
or circumstances which might give rise to such industrial action.
F.5.2 The Company is not a party to any collective agreement or trade
dispute (within the meaning of the Trade Union and Labour Relations
(Consolidations) Act 1992) or any dismissal procedures agreement
(within the meaning of the Employment Rights Act 1996) or any
proceedings before any court or tribunal under or by virtue of the
provisions of the said Act of 1992 and to the best of the knowledge,
information and belief of the Sellers there are no facts or
circumstances which might give rise to the Company becoming a party
to any such agreement or becoming involved in any such dispute or
proceedings.
F.5.3 The Company has in all material respects complied with their
obligations to their employees and former employees and any
relevant trade union. No claim has been made or threatened against
the Company or against any person whom the Company or the Sellers is
or may be liable to compensate or indemnify and no inquiry or
investigation has been made or threatened by the Commission for
Racial Equality, the Equal Opportunities Commission or any health
and safety enforcement body, in respect of any act, event, omission
or other matter arising out of or in connection with:
(a) any application for employment by any person;
(b) the employment or termination of employment of any person;
(c) any retirement/death/disability benefit or any other benefit of
whatever type;
40
and, after making due and careful inquiries, the Seller is not
aware of any circumstance which may give rise to any such claim or
investigation.
F.6 Loans to employees
The Company has not made any loan or advance to any of its present
or future officers or employees which is outstanding.
F.7 No Pension Schemes
The Company has not paid, provided or contributed towards, and the Company
is not under any obligation or commitment (whether or not legally
enforceable) to pay, provide or contribute towards, any
retirement/death/disability benefit for or in respect of any present or
past employee (or any spouse, child or dependent of any of them) of the
Company.
41
SIGNED by XXXXXXXX XXXXXX-XXXX /s/ Xxxxxxxx Xxxxxx-Xxxx
in the presence of: ------------------------
/s/ Xxxx Xxxx Xxxxxx Xxxxxxxx
------------------------------
SIGNED by XXXX XXXXXX
in the presence of:
------------------------------
SIGNED by Xxxxxxxx Xxxxxx-Xxxx the duly /s/ Xxxxxxxx Xxxxxx-Xxxx
duly authorized representative of ------------------------
COUGAR INTERNATIONAL HOLDINGS
INC. in the presence of:
/s/ Xxxx Xxxx Xxxxxx Xxxxxxxx
-----------------------------
SIGNED by Xxxxx Xxxxxxx the duly /s/ Xxxxx Xxxxxxx
duly authorized representative of ------------------------
TELEMONDE INC.
in the presence of:
/s/
-----------------------------
42
