DATED 2000
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XXXXXX XXXXXX, XXXXX XXXXXXXXX XXXXXX,
XXXXXXX XXXXXX XXXXXXX and XXXXX XXXXXX
- and -
G S TELECOM LIMITED
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SHARE PURCHASE AGREEMENT
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Xethos Group Inc. May 2000 Snowstorm
CONTENTS
Clause Subject matter Page
1. INTERPRETATION..........................................................1
2. PURCHASE AND SALE OF SHARES AND SHAREHOLDER LOAN........................5
3. OPERATIVE WARRANTY PROVISIONS...........................................6
4. WARRANTIES OF THE VENDOR................................................7
5. PURCHASER'S REPRESENTATIONS AND WARRANTIES.............................16
6. CLOSING MATTERS........................................................17
7. TRANSACTION EXPENSES...................................................18
8. VENDORS RIGHT TO UNWIND THIS AGREEMENT.................................18
9. FURTHER PROVISIONS.....................................................18
10. NOTICES................................................................18
11. GENERAL................................................................18
Xethos Group Inc. May 2000 Snowstorm
THIS AGREEMENT is dated the day of 2000
BETWEEN:
(1) Xxxxxx Xxxxxx of 00 Xxxxxxx Xxxx, Xxxxxxx, Xxxx XX00 0XX, Xxxxx Xxxxxxxxx
Xxxxxx of 00 Xxxxxxxxxxx, Xxxxxxxxx, Xxxxxxxx XX00 0XX, Xxxxxxx Xxxxxx
Xxxxxxx of 5 South View, Ditchlings, Hassocks, Sussex BN6 8TQ and Xxxxx
Xxxxxx of Castle Farm, Lavendon, Olney, Bucks MK46 4JG ("Vendors");
(2) G.S. TELECOM,LIMITED, a company incorporated pursuant to the laws of the
State of Colorado whose principal place of business is at 00000 xxxx 00xx
Xxx, Xxxxx Xxxxx, Xxxxxxxx 0000, XXX ("Purchaser").
WHEREAS:
(A) The Vendors are the registered and beneficial owners of 100% of the
issued share capital of the Company represented by 100 ordinary shares of
(pound)1 each; and
(B) The Vendors have agreed to sell and the Purchaser has agreed to Purchase
100% of the issued share capital of the Company, subject to the following
terms and conditions.
1. INTERPRETATION
Where used in this Agreement, each of the following words will have the
following meanings:
"Accounts Receivable"
means all of the trade accounts, notes and other debts
arising out of the operation of the Business owing to the
Company as at the Closing Date, whether due or to become
due as at or after the Closing Date, and which are
described in Schedule E together with those accounts
receivable arising in the normal and ordinary course of the
business between the date specified in Schedule E and the
Closing Date;
"Act"
means the United States Securities and Exchange Act of 1933
and the Rules thereunder, both as amended from time to
time;
"Assets"
means all of personal property, choses in action,
intangible or intellectual property, including patents,
copyrights, trade-marks, trade names or licenses, and all
other assets of whatsoever nature owned by the Company,
listed in Schedule B;
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"Business"
means the business carried on by the Company
"Business Plan"
means the business plan of the Company to be agreed by both
parties within one month of closing. The agreed key
objective of this business plan being cash flow being
positive in Month six and in any case no later than month
nine.
"Closing Date"
means the date of closing of the transactions in paragraph
6.1 of this Agreement;
"Company"
means Snowstorm Developments Ltd;
"Common Stock"
means shares of common stock, no par value;
"Consideration Securities"
means 3 million restricted shares of Common Stock;
"Contracts"
means all of the material commitments, agreements,
contracts, arrangements, instruments, leases and other
documents entered into by the Company, by which the Company
is bound or to which the Company or the Assets are subject;
"Disclosure Statement"
means a statement of disclosures made by the Vendor for the
purpose of qualifying the representations and warranties
contained in this Agreement;
"Exchange"
means the NASD Bulletin Board;
"Financial Statements"
means those included in Schedule A;
"Indebtedness"
means any and all trade accounts, debts, duties,
endorsements, guarantees, liabilities, obligations,
responsibilities and undertakings of the Company assumed,
created, incurred or made, whether voluntary or
involuntary, however incurred or made or arising, whether
due or not due (except accrued employees' salaries which
are not yet due), absolute, inchoate or contingent,
liquidated or unliquidated, determined or undetermined,
direct or indirect, express or implied, and for which the
Company may be liable individually or jointly with others,
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which are described in Schedule C, as at the date specified
in Schedule C;
"Lien"
means any mortgage, debenture, charge, hypothecation,
pledge, interest or encumbrance of whatever kind or nature,
regardless of form and whether consensual or arising by
laws, statutory or otherwise, that secures the payment of
any Indebtedness or the performance of any obligation or
creates in favour of or grants to any Person any
proprietary right;
"Person"
means an individual, corporation, body corporate,
partnership, joint venture, society, association, trust or
unincorporated organisation or any trustee, executor,
administrator, or other legal representative;
"Purchaser'
means G.S.Telecom, Limited;
"Shares"
means the 100 ordinary shares of (pound)1 each in the
capital of the Company of which the Vendors are the
registered and beneficial owners, representing 100% of the
issued shares in the capital of the Company;
"Stock Options"
means the stock options to be issued by the Purchaser to
the Vendors and such other persons as the Vendors should
elect, on the terms set out in the Schedule;
"TCGA 1992"
means Taxation of Chargeable Gains Act 1992;
"Tax or Taxation"
means liability arising under any of the Taxation Statutes;
"Taxation Statutes"
means statutes and all statutory provisions made pursuant
to it whether before or after the date of this agreement
for the time being in force providing for or imposing or
relating to all forms of tax, duties, levies and rates of
any kind including without limitation:
(i) any charge, tax, duty or levy upon income, profits,
chargeable gains or any other property or instruments
in writing or supplies or other transactions;
(ii) income tax, corporation tax, advance corporation tax,
withholding tax, capital gains tax, inheritance tax,
capital transfer tax, value added tax, stamp duty,
stamp duty reserve tax, capital duty, customs and
other import duties, national insurance
contributions, general rates, water rates or other
local rates;
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(iii) any liability for sums equivalent to any such charge,
tax, duty, levy or rates and/or for any penalty, fine
or interest payable in connection with them; or
(iv) any law, regulation or statutory provision of any
kind providing for or imposing or otherwise relating
to any charge, tax, levy or rates, of a similar
nature, chargeable outside the United Kingdom and/or
for any penalty, fine or interest payable in
connection with them.
"VAT"
means value added tax.
"Warranties"
means the statements set out in clause 3.1;
"Heads of Agreement"
the heads of agreement set out in the schedule dated 22
March 2000 between the Purchaser and the Company.
1.2 In this Agreement, except as otherwise expressly provided:
(a) "Agreement" means this agreement, as it may from time to
time be supplemented or amended in effect;
(b) all references in this Agreement to a designated "para-
graph" or other subdivision or to a Schedule to the
designated paragraph or other subdivision of or
Schedule, to this Agreement;
(c) the words "herein", "hereof' and "hereunder" and other
words of similar import refer to this Agreement as a whole
and not to any particular paragraph or other subdivision or
Schedule;
(d) the headings are for convenience only and do not form a
part of this Agreement and are not intended to interpret,
define, or limit the scope, extent or intent of this
Agreement or any provision hereof;
(e) the singular of any term includes the plural, and vice
versa, the use of any term is equally applicable to any
gender and, where applicable, and the word "including" is
not limited (whether or not non-limited language, such as
"without limitation" or "but not limited" to words of
similar import, is used with reference thereto;
(f) any accounting term not otherwise defined has the
meanings assigned to it in accordance with generally
accepted accounting principles applicable in the United
Kingdom;
(g) any reference to a statute includes and is a reference to
that statute and to the regulations made pursuant thereto,
with all amendments made thereto and in force from time to
time, and to any statute or regulations that may be passed
which has the effect of supplementing or superseding that
statute or regulations;
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(h) except as otherwise provided, any dollar amount referred to
in this Agreement is in U.S. funds; and
(i) any other term defined within the text of this Agreement
has the meaning so ascribed.
1.3 The following are the Schedules to this Agreement:
Schedule Description
A Financial Statements of the Company
B List of Assets
C List of Contracts
D Service Contracts
E Disclosure Statement
F Heads of Agreement.
2. PURCHASE AND SALE OF SHARES AND SHAREHOLDER LOAN
2.1 Subject to the conditions and upon the terms hereinafter set forth,
the Purchaser agrees to purchase and the Vendors agree to sell and
assign to the Purchaser all of their rights, title and interests in
and to the Shares.
2.2 The purchase price for the Shares shall be as follows:
(a) the allotment and issue credited as fully paid to the Vendors
of the Consideration Securities such allotment and issue to
be effective as from 22.03.00;
(b) the granting of the Stock Options of 640,000.00 shares at the
higher of $1:50 or the market price for that class of share on
the date of grant;
(c) a further payment of one million shares of common stock in the
capital of the Purchaser forthwith on the Company achieving a
net profit of $125,000 or more for two successive quarters (as
evidenced by the management accounts of the Company) or on
achieving a registered user base of one million and;
(d) a further one million shares of common stock in the capital of
the Company will be allocated to the Vendors forthwith on the
Company achieving a net profit of $250,000 or more for two
successive quarters (as evidenced by the management accounts of
the Company) or on achieving a registered user base of five
million;
With the consideration securities and the further shares of common
stock to be issued pursuant to paragraphs 2.2 (c) and (d) above be
issued to the Vendor in the proportions by which they own the Shares
immediately prior to Completion of this Agreement.
2.3 On the Date of signing the Purchaser shall make available to the
Company a facility which may be drawn down by the Company monthly in
advance in accordance with the cashflow projections agreed as
follows; $45,000 for June, July and August 2000 then $190,000 for
September 2000 onwards until the cash flow is positive or nine months
whichever is earlier. . The facility drawn down shall be interest
free and repayable only in the event of the unwinding of this
Agreement in accordance with this Agreement, at which point it shall
become repayable within 18 months of the date of such unwinding.
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3. Operative warranty provisions
3.1 The Vendors warrant to the Buyer that in their opinion:
3.1.1 except only as fairly disclosed in the Disclosure Statement, the
Warranties are on the Closing Date true and not misleading or
inaccurate.
3.1.2 the Purchaser will obtain absolute title to the entire legal and
beneficial interest in all the Shares free from any Security
Interest.
3.2 The rights and remedies of the Purchaser for any breach of the Warran-
ties will not be affected by:
3.2.1 The execution and Closing of this Agreement;
3.2.2 any investigation made by or on behalf of the Purchaser into the
Company;
3.2.3 any information of which it may have actual, implied or construc-
tive notice prior to the Closing Date, other than that contained
in the Disclosure Statement;
3.2.4 the Purchaser rescinding or failing to rescind this agreement or
failing to exercise or delaying the exercise of any right or
remedy; or
3.2.5 any other event or matter whatsoever, except a specific and duly
authorised written waiver or release.
3.3 The Vendors acknowledge that the Purchaser is entering into this
agreement in reliance upon the Warranties.
3.4 Each of the Warranties will be construed as a separate and
independent warranty and, except where expressly provided to the
contrary, will not be governed, limited or restricted by reference to
or inference from any other terms of this agreement or any other
Warranty.
3.5 Where any Warranty refers to the awareness or the knowledge,
information or belief of the Vendors, the Vendors undertake that they
have made reasonable enquiry into the subject matter of that
Warranty.
3.6 The Vendors undertake with the Purchaser that they will not make any
claim for an indemnity or a contribution or otherwise against the
Company or any director or employee of the Company , or the estate of
any such director or employee, in connection with any liability which
the Vendors have or may have in respect of the Warranties or any
other term of this agreement.
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4. WARRANTIES OF THE VENDOR
4.1 The Vendors represent and warrant to the Purchaser (subject to the
provisions of paragraph 4.2) as follows:
(a) The Vendors are the registered holder and beneficial owner
of the entire issued share capital of the Company, and the
Vendors have no other interest, legal or beneficial, direct
or indirect, in any other securities in the capital of the
Company or in the Assets or Business of the Company;
(b) the Shares are free and clear of all liens, mortgages,
encumbrances, security instruments, equities or claims of
any nature or kind whatsoever, and to the best of the
knowledge of the Vendors, the Shares are validly issued as
fully paid;
(c) no Person has any agreement or option or a right capable of
becoming an agreement for the purchase of the Shares;
(d) the execution and delivery of this Agreement and the
completion of the transaction contemplated hereby has been
duly and validly authorised by all necessary corporate
action on the part of the Vendors;
(e) the Vendors have the power and capacity and good and
sufficient right and authority to enter into this Agreement
on the terms and conditions herein set forth and to
transfer the legal and beneficial title and ownership of
the Shares to the Purchaser;
(f) this Agreement constitutes a legal, valid and binding
obligation of the Vendors enforceable against the Vendors
in accordance with its terms except as may be limited by
laws of general application affecting the rights of
creditors;
(g) the performance of this Agreement will not be in violation
of any agreement or other instrument to which the Vendors
are a party;
(h) the Company is duly incorporated and validly existing under
the laws of England and Wales, and has filed all necessary
returns and audited accounts and has the right to enter
into this Agreement;
(i) the authorised capital of the Company is (pound)100
comprised of 100 ordinary shares of(pound)1 each and there
are currently an aggregate of 100 ordinary shares of
(pound)1 each issued and held as follows:
Name of Shareholders Number of Shares
Xxxxxx Xxxxxx 75
Xxxxx Xxxxxxxxx Xxxxxx 12
Xxx Xxxxxxx 3
Xxxxx Xxxxxx 10
(j) no other person or party has any agreement or option or a
right or is capable of becoming a party to this Agreement
nor has any person or party the right to require the
Company to issue any further or other securities in its
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capital or to convert or exchange any securities into or
for shares in the capital of the Company or any rights for
the purchase, subscription, allotment or issuance of any of
the unissued shares in the capital of the Company nor any
right to require the Company to purchase, redeem or
otherwise acquire any of the issued and outstanding shares
in the capital of the Company;
(k) the unaudited financial statements of the Company for the
period ended 21.3.2000, which are attached hereto as
Schedule A, present fairly the financial position of the
Company and the results of its operations for the periods
then ended, in accordance with generally accepted
accounting principles;
(l) since 21.3.2000,
(i) there have been no material adverse changes in the
corporate or financial affairs or operations of the
Company apart from losses substantially similar to
previous losses;
(ii) the Company has not discharged or satisfied or paid
any Liens or Indebtedness other than current Indebted
-ness in the ordinary course of business;
(iii) no single capital expenditure has been authorised or
made by the Company which exceeds (pound)5,000;
(iv) the Company has neither waived nor surrendered any
right of material value;
(m) there is no Indebtedness of the Company which is not dis-
closed or reflected in Schedules A and C, except that in-
curred in the ordinary course of business since 21.3.2000,
and the Company has not guaranteed, or agreed to guarantee,
any debt, liability or other obligation of any Person;
(n) on the Closing Date the Indebtedness of the Company will
not exceed(pound)25,000, save as disclosed;
(o) Save as disclosed in the Disclosure Statement the Company
is not indebted nor under obligation to the Vendors or any
of the directors, officers, employees or affiliates of the
Company, and specifically the Company is not liable to pay
any outstanding salaries or wages, except in the ordinary
course of business;
(p) neither the Vendors nor any officer, director or employee
of the Company are indebted or under obligation to the
Company on any account whatsoever;
(q) no dividends or other distribution on any shares in the
capital of the Company have been made, declared or
authorised;
(r) the Company has the corporate power to own the Assets owned
by it as shown in Schedule B, and to carry on the Business
and is duly registered and qualified to carry on business
in the United Kingdom and all other jurisdictions in which
it does so;
(s) the Company has good title or rights to and possession of
all the Assets free and clear of all Liens, and neither the
Vendors nor any of their family or affiliates own any
Assets used by the Company;
(t) since 21.3.2000 the Company has conducted the Business in
the ordinary course and has maintained the Assets in good
condition, repair and working order and suitable in all
respects for the use to which they are intended;
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(u) the Accounts Receivable of the Company are bona fide and
collectible in the ordinary course and are not subject to
any known defences, counterclaims or set-off;
(v) the memorandum and articles of the Company have not been
altered since the incorporation of the Company;
(w) there is not believed to be any basis for and there are no
actions, suits, judgements, investigations or proceedings
outstanding or pending or to the knowledge of the Vendors
threatened against or affecting the Company at law or in
equity or before or by any court or governmental authority,
department, commission, board, bureau or agency;
(x) to the best knowledge of the Vendors, the Company is not in
breach or violation of any laws, ordinances, statutes,
regulations, by-laws, judgements, orders or decrees to
which it is subject or which apply to it or of any patents,
copyrights, trade-marks or licenses held by any other
Person;
(y) so far as the Vendors are aware the Company has obtained
all permits, certificates, approvals, registrations and
licenses which are required for the operation of the
Business as it is presently being conducted, and no
violations thereof have been experienced, noted, or
recorded, and so far as the Vendors are aware, no
proceeding is pending or threatened to revoke or limit any
of them;
(z) the Company has not experienced nor are the Vendors aware
of any occurrence or event which has had, or might
reasonably be expected to have, a materially adverse effect
on the Business or the results of its operations;
(aa) all material transactions of the Company have been promptly
and properly recorded or filed in or with its respective
books and records, and the minute books of the Company
contain all records of the meetings and proceedings of
shareholders and directors thereof,
(bb) the performance of this Agreement and the completion of the
transactions contemplated hereby will not conflict with or
be in violation of the articles of incorporation and
by-laws of the Company or of any agreement or other
instrument to which the Vendors or the Company are a party
and will not give any Person any right to terminate or
cancel any agreement or any right, license, permit or other
benefit enjoyed by the Company and will not result in the
creation or imposition of any lien, encumbrance or
restriction of any nature whatsoever in favour of a third
party upon or against the assets of the Company;
(cc) the Company does not own, directly or indirectly, any
shares or interest in any other Person;
(dd) the only directors and officers of the Company are as
follows:
Name Positions:
Xxxxxx Xxxxxx President and Chief Executive
Xxxxx Xxxxxx Non-Executive Chairman
Xxxx Xxxxxx Executive Sales and Marketing Director
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(ee) set out in Schedule "F" is a true and correct listing of
the only valid and outstanding Contracts of the Company;
(ff) all of the Contracts set out in Schedule "F" have been
approved by the board of directors of the Company and the
Company is not in material breach of any of the terms,
conditions, covenants or provisions of, is in default
under, or has done or omitted to do anything which, with
the giving of notice or lapse of time or both, would
constitute a material breach of or default under any
Contract;
(gg) as at 21/3/00 the only full-time employees of the Company
were the Executive Directors as above and Xxxxx Xxxxxxxxxx;
(hh) the Company does not have any Contracts, pension plans,
profit sharing plans, bonus plans, undertakings, or
arrangements whether oral, written or implied with lessees,
licensees, managers, accountants, suppliers, agents,
distributors, officers, directors, lawyers, or others which
cannot be terminated on not more than one month's notice;
(ii) there are no pension, profit sharing, incentive, bonus or
similar plans or other compensation plans affecting the
Company and the Company has no unfunded or unpaid liability
in respect of any such plans;
(jj) Taxation
Liability to Taxation
In the opinion of the Directors the Company has no
liability for taxation in respect of the period ended on
the 21.3.2000. Returns, clearances and investigations All
information, notices, returns, computations and payments
which should be or should have been submitted or made by
the Company for any purpose relating to Taxation have been
and will until the Closing Date continue to be made within
the requisite periods and are up-to-date, correct and on a
proper basis and none of them is the subject or likely to
be the subject of any dispute with the Inland Revenue,
Customs and Excise or other Taxation authorities.
All particulars furnished to the Inland Revenue, Customs
and Excise or other Taxation authorities in connection with
the application for any consent or clearance on behalf of
the Company or affecting the Company fully and accurately
disclosed all facts and circumstances material for the
decision of the relevant authority and any such consent or
clearance is valid and effective and any transaction for
which such consent or clearance has previously been
obtained has been carried into effect in accordance with
the terms of the relative application, consent or
clearance.
The Company has not been the subject of a back duty or
other investigation by the Inland Revenue, Customs and
Excise or other Taxation authority and there are no facts
which are likely to cause any such investigation to be
instituted.
Penalties and interest
The Company has not paid or become liable to pay any
penalty or interest charged by virtue of the provisions of
the Taxes Management Act 1970 or any other Taxation
Statute.
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Taxation claims, liabilities and reliefs.
The Company is not nor will become liable to pay or make
reimbursement or indemnity in respect of any Taxation or
amounts corresponding to it in consequence of the failure
by any other person to discharge that Taxation within any
specified period or otherwise where such Taxation relates
to a profit, income or gain, transaction, event, omission
or circumstance arising or deemed to arise, whether wholly
or partly, prior to the Closing Date.
No relief, whether by way of deduction, reduction, set-off,
exemption, repayment or allowance or otherwise, from,
against or in respect of any Taxation has been claimed
and/or given to the Company which could or might be
withdrawn, postponed, restricted or otherwise lost as a
result of any act or omission, event or circumstance
arising or occurring at any time after the Closing Date.
The execution of this agreement or Closing Date will not
result in any profit or gain being deemed to accrue to the
Company for any purpose in relation to Taxation.
Distributions and deductibility of payments
The Company has not made any distribution within the mean-
ing of any of sections 209, 210 and 211 ICTA 1988 in the
last six years other than those provided for in the Xxxxx-
cial Statements.
The Company has not since 21.3.2000 incurred material
expenditure which will not be wholly deductible in
computing profits as a trading expense or expense of
management or as a charge on income or in computing income
for the purposes of schedule D ICTA 1988 except for
expenditure on the acquisition of an asset to be held
otherwise than as stock-in-trade, details of which are set
out in the Disclosure Statement.
Utilisation of losses and advance corporation tax
Nothing has been done and no event or series of events has
occurred in respect of the Company which might cause the
disallowance of the carry forward losses, excess charges,
excess expenses of management or advance corporation tax
under sections 245, 393, 768 or 768A ICTA 1988.
Transactions not at arm's-length
The Company has not carried out or been engaged in any
transaction or arrangement to which the provisions of
section 770 ICTA 1988 have been or may be applied. The
Company is not party to any transaction or arrangement
under which it may be required to pay for assets, services
or facilities, an amount which is in excess of the market
value of the relevant assets, services or facilities or
will receive any payment for any assets, services or
facilities that it has supplied or provided or is liable to
supply or provide which is less than the market value of
the relevant assets, services or facilities.
The Company has not disposed of or acquired any asset in
such circumstances that the provisions of section 17 TCGA
1992 could apply to them.
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Base values and acquisition costs
The Company has not in the six years ending on the Closing
Date carried out or been engaged in any transaction or
arrangement in respect of which there may be substituted
for the actual consideration given or received by it a
different consideration for any purposes relating to
Taxation.
Capital losses and limited partnerships
The Company has not incurred a capital loss to which the
provisions of section 18(3) TCGA 1992 are applicable.
PAYE, NIC and deductions from payments made
The Company has properly fulfilled its obligations under
the PAYE system and/or any other Taxation Statute by de-
ducting income tax as required by law from all payments
made or treated as made to its employees or former employ-
ees and accounting to the Inland Revenue for all tax so de-
ducted or which ought to have been deducted and for all tax
chargeable on benefits provided for or to its employees or
former employees.
Tax avoidance
The Company has not engaged in or been a party to a scheme
or arrangement of which the main purpose or one of the main
purposes was the avoidance of, or a reduction in liability
to Taxation.
Chargeable gains
The Company is not owed a debt, not being a debt on a
security, upon the disposal or satisfaction of which a
liability to corporation tax on chargeable gains will arise
by reason of the provisions of section 251 TCGA 1992.
Stamp duty and stamp duty reserve tax
The Company has not made a claim for relief under section
42 Finance Act 1930 in circumstances where such relief may
be forfeited by the sale of the Shares to the Purchaser or
the existence of any other term of this agreement. The
Company has complied in all respects with the provisions of
part IV Finance Act 1986 and with any regulations made
under it, and the Company is not party to an agreement
which falls within the terms of section 87 (1) of that Act
and in relation to which the conditions referred to in
section 87 (2) of that Act have not been fulfilled.
4.2 Limitations
4.2.1 The provisions of this paragraph 4.2.1 shall operate to limit or
qualify the liabilities of the Vendors under or in connection with
the Warranties and other terms contained in this Agreement and
references to "such liabilities" shall be construed accordingly.
The warranties will survive the execution and closing of this
agreement
4.2.2 No claim shall be brought against the Vendors in respect of such
liabilities unless notice in writing of any such claim
(specifying in reasonable detail the nature of the breach and so
far as is practicable the amount claimed in respect thereof) has
been given to the Vendors by the person intending to bring such
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claim by not later than one year from the Closing Date and any
such claim which may have been made shall (if it has not been
previously satisfied settled or withdrawn) be deemed to have been
withdrawn on the expiration of 6 months from the date of the said
notice unless proceedings in respect thereof shall have been both
issued and served on the Vendors before such expiration.
4.2.3 Notwithstanding the other provisions of paragraph 4.2:
(i) no claim shall be brought in respect of such
liabilities unless the amount of loss sustained in
respect of which a claim may properly be brought
shall exceed the sum of (pound)5,000 (such a claim
which exceeds that sum being herein referred to as a
"Qualifying Claim");
(ii) no claim may be brought in respect of a Qualifying
Claim unless the loss thereby sustained (when
aggregated with any other Qualifying Claims) exceeds
(pound)25,000 whereupon all Qualifying Claims and not
merely the excess over (pound)25,000 may be brought;
and
(iii) the total liability of the Vendors in respect of all
claims under or in respect of any of the terms of
this Agreement shall not exceed (pound)50,000.
4.2.4 The Vendors shall have no liability in respect of such liabilities
and accordingly no claim may be brought in respect thereof if and
to the extent that any one or more of the following provisions may
apply:
(i) such liabilities are wholly or partly attributable
to any voluntary act omission transaction or arrange-
ment of the Purchaser at any time or of the Company
after the date hereof;
(ii) either the Company or the Purchaser is entitled to
claim indemnity against any loss or damage suffered
by any of them under the terms of any insurance
policy for the time being in force, save that any
excess payable under any such insurance policy will
be payable by the Vendors;
(iii) such liabilities arise in connection with any fact,
matter or circumstance disclosed in the Disclosure
Statement or in any of the schedules to this
Agreement;
(iv) such liabilities arise in connection with any matter
provided for under the terms of this Agreement or
arising from the implementation of the same;
(v) such liabilities arise in connection with any matter
or thing done or omitted prior to Completion by the
Vendors or the Company at the written request of or
with the written approval of the Purchaser, its
representatives or professional advisers;
(vi) the loss or liability suffered or incurred by the
Purchaser or the Company (as the case may be) to
which such liabilities relate is contingent, future
or unascertainable and no claim may be brought in
respect of such liabilities until such time as the
Company or the Purchaser shall have actually suffered
the loss or incurred the liability in question;
(vii) such liabilities arise wholly or partly out of as a
result of or in connection with:
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Xethos Group Inc. May 2000 Snowstorm
(a) any change in the nature of the business of
the Company (or in the manner of conducting
the same) after the date hereof; or
(b) any asset acquired or disposed of by the
Company after the date hereof; or
(c) any statutory provision not in force at the
date hereof or any change in any statutory
provision hereafter or any decision of the
Courts altering the accepted interpretation
of any statutory provision or the withdrawal
of any extra statutory concession previously
made by or any change in practice of the In-
land Revenue or other taxation authority or
any increase in the rates of Taxation in
force at the date hereof; or
(d) the passing of a resolution for the winding
up of the Company after the date hereof; or
(e) any change in the format, matter, bases,
priorities and principles used in the
preparation of the accounts of the Company
after the Closing Date from those used and
adopted in the accounts of the Company,
prior to the Closing Date;
(viii)the loss or liability resulting from such liabilities
has been or is made good or otherwise compensated for
at no expense to the Purchaser and/or the Company;
(ix) the loss or liability resulting from such liabilities
is less than the aggregate of any over-provision made
in the accounts in respect of any liability and any
undervalue of any asset recorded in the accounts.
(x) such liabilities arise in relation to any fact,
matter or circumstance which would be revealed by:
(a) a physical inspection of the state and condi-
tions of the Assets;
(b) the statutory books and registers (including
minute books) of the Company;
(xi) such liabilities arise in relation to any fact,
matter or circumstance which appear as a matter of
public record, including but not limited to matters
appearing on the file at Companies House in respect
of the Company.
4.2.5 The Purchaser shall reimburse to the Vendors amount equal to any
sum paid by the Vendors in respect of any claim for such
liabilities which is subsequently recovered by or paid to the
Purchaser or the Company by any other person (less any reasonable
costs and expenses incurred by the Company in making such
recovery) within ten days of such payment.
4.2.6 Any sum recovered by the Purchaser or the Company in the
circumstances described in paragraph 4.2.5 above shall be taken
into account, with retrospective effect, when ascertaining whether
the threshold in paragraph 4.2.3 is exceeded. Any sums paid by the
Vendors which would not have been payable but for the said
threshold being exceeded by the inclusion of the reimbursed claim
shall be repaid forthwith.
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4.2.7 Where having discharged any claim for breach of the
representations or warranties herein the Vendors request the
assignment to them of any right of the Purchaser or of the Company
to make recovery in whole or in part from any third party, the
Purchaser will assign or procure the assignment to the Vendors of
such right and, if the same is not legally capable of effective
assignment, will, subject to being indemnified to the reasonable
satisfaction of the Purchaser, pursue such claim on behalf of such
Vendors and pay over to the Vendors all amounts recovered.
4.2.8 Any such liabilities shall not extend to any part of the loss or
damage suffered by the Purchaser or the Company to the extent that
such part shall be used or shall be capable of being used by the
Purchaser or the Company or any present or future subsidiaries of
either of them to offset in whole or in part any past present or
future liability to Taxation.
4.2.9 Where the Company or the Purchaser may be entitled (whether by
reason of insurance or payment, discount or otherwise) to recover
from some other person any sum in respect of taxation or any other
damage or liability the subject of a claim against the Vendors
under this Agreement or for which a claim could be made hereunder
(and whether before or after the Vendors have made payment here-
under) the Purchaser shall if so required by the Vendors and at
its own cost and expense take or (as the case may require) procure
that the Company takes all steps (whether by way of a claim
against its insurers or otherwise) as the Vendors may reasonably
require to enforce such recovery and shall keep the Vendors inform
-ed to his reasonable satisfaction of the progress of any action
taken. Thereafter any claim against the Vendors shall be limited
(in addition to the limitations on the liability of the Vendor
referred to in this paragraph 4.2) to the amount by which the loss
or damage suffered by the Purchaser as a result of such breach
shall exceed the amount (if any) so recovered. The Purchaser shall
not be entitled to make any claim in respect of such liabilities
if it or the Company fails to act in accordance with the reason-
able instructions of the Vendors in conducting a claim against a
third party.
4.2.10 The Vendors shall be entitled to require the Purchaser or the
Company to take all such reasonable steps or proceedings as the
Vendors may consider appropriate in order to mitigate any claim in
respect of such liabilities or in respect of the undertakings in
this Agreement and the Purchaser shall procure that the Company
shall act in accordance with any such requirements subject to the
Purchaser and/or the Company being indemnified by the Vendors
against all reasonable costs and expenses incurred in connection
therewith. For the purpose of enabling the Vendors to remedy a
breach or to mitigate or otherwise determine the amount of any
claim or to decide what steps or proceedings should be taken in
order to mitigate any claim the Purchaser shall:
(i) give notice to the Vendors within 30 days of any
breach or circumstance giving or likely to give rise
to a breach coming to its notice or to the notice of
the Company;
(ii) make or procure to be made available to the Vendors
or their duly authorised representatives all relevant
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Xethos Group Inc. May 2000 Snowstorm
personnel, books of accounts, records and
correspondence of the Company for the purpose of
enabling the Vendor to ascertain or extract any
relevant information; and
(iii) make no admission of the fact or amount of any
liability on the part of the Company or the Purchaser
without the prior written consent of the Vendors such
consent not to be unreasonably withheld or delayed.
The Purchaser shall not be entitled to make any claim in
respect of a breach of any warranty if it or the Company
fails to give the said notice or act in accordance with the
reasonable instructions of the Vendors in conducting any
dispute or negotiation in relation to the claim in
accordance with this paragraph 4.2.10.
4.2.11 Any breach of any of the warranties or any other provision of this
Agreement by the Vendors shall give rise only to an action by the
Purchaser for damages and shall not entitle the Purchaser to
rescind this Agreement.
4.2.12 Nothing in this Agreement shall be deemed to relieve the Purchaser
from its common law duty to the Vendors to mitigate its loss and
without prejudice to the generality of the foregoing the Purchaser
shall take and shall procure that the Company shall take all
practicable and reasonable steps to avoid or mitigate any loss or
liability which may give rise to a claim under this Agreement.
Nothing in this paragraph 4.2.12 shall exclude or limit the
Vendor's liability arising out of the Vendor's fraud.
5. PURCHASER'S REPRESENTATIONS AND WARRANTIES
5.1 In order to induce the Vendors to enter into and consummate this
Agreement, the Purchaser represents and warrants to the Vendors as
follows:
5.1.1 the Purchaser is a corporation duly incorporated and validly
existing under the laws of Colorado, and is in good standing with
respect to the filing of annual reports with the State of
Colorado.
5.1.2 the execution and delivery of this Agreement and the completion of
the transactions contemplated hereby have been duly and validly
authorised by all necessary corporate action on the part of the
Purchaser.
5.1.3 the Purchaser is a "reporting issuer within the meaning of the
U.S Securities Laws.
5.1.4 the Purchaser is a resident of the United States for tax purposes.
5.1.5 the current form 15c211 is true and correct and complies with the
requirements of the Act.
5.1.6 the execution, delivery and performance of this Agreement and each
of the other agreements contemplated or referred to herein to the
Purchaser, and the completion of the transactions contemplated
hereby, will not constitute or result in a violation or breach or
default under:
(i) any term or provision of any of the memorandum, art-
icles, or other constitutional documents of the
Purchaser; or
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Xethos Group Inc. May 2000 Snowstorm
(ii) any term or provision of any licenses, registrations
or qualification of the Purchaser or any court,
governmental authority or regulatory body or any
applicable law or regulation of any jurisdiction.
5.1.7 the Consideration Securities are registered under the Act and
therefore none of such securities can be sold, transferred,
assigned or disposed of except in accordance with the Act and the
Rules and Regulations of the Securities and Exchange Commission
promulgated thereunder.
5.1.8 the Consideration Securities shall rank pari passu in all respects
with the Common Stock in issue at the date hereof and will
continue to do so after the Closing Date.
6. CLOSING MATTERS
6.1 The obligations of the parties to complete the transactions
contemplated by this Agreement may be subject to the acceptance for
filing by the Exchange of this Agreement. The parties agree to
co-operate fully in the obtaining of such approval if necessary and
agree to provide such further and other documents and assurances to
obtain such approval, provided that no such documents and assurances
change the substance of this Agreement.
6.2 On the Closing Date, the Vendors will deliver or cause to be
delivered to the Purchaser at the registered office of the Company
the following:
(a) all corporate records, books of account, Contracts,
registers and documents of the Company, including the
minute book and corporate seal of the Company;
(b) minutes of a meeting of the board of directors of the
Company approving this Agreement and the Service Agreement
(Contract of employment), providing the necessary
authorisation for the company to enter into the Agreement
and the Service Agreement;
(c) duly executed resolutions of the Company amending the
authorised signatories of all corporate bank accounts as
the Purchaser directs;
6.3 Within one month of the Closing Date, the Purchaser shall deliver to
the Vendors' Solicitors:
(a) non-renounceable Certificates in the agreed form in respect
of the Consideration Securities to be allotted and issued
pursuant to Clause 2.2;
(b) the Stock Options duly executed by the Purchaser;
(c) a certified copy of the resolutions of the Board of the
Purchaser approving the execution by the Purchaser of this
Agreement and all transactions and documents to be entered
into or made pursuant to it; and
(d) any other documents required.
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Xethos Group Inc. May 2000 Snowstorm
7. TRANSACTION EXPENSES
Each party to this Agreement will bear all costs and expenses incurred by
it in negotiating this Agreement Without limiting the generality of the
foregoing, the Purchaser will bear all costs and expenses related to
obtaining any approvals which may be required by paragraph 6.2, or in
order to obtain permission for the Consideration Securities to be traded
on the Exchange except to the extent that any documentation or
information is required to be provided by the Vendors to complete the
same, in which event the cost of providing that documentation or
information will be to the account of the Vendors.
8. VENDORS RIGHT TO UNWIND THIS AGREEMENT
If at any time the funds agreed to be paid by the Purchaser to the
Company as set out in the Heads of Agreement or further agreed between
the parties or set out in this Agreement are not made available to the
Company within fourteen days following the due date of payment then the
Vendors shall have the right to unwind this Agreement and retain the
consideration as security free of restriction. For the avoidance of doubt
it is hereby agreed that in the event of such unwinding all intellectual
property belonging to the Company will revert to Xxxxxx Xxxxxx and no
further right to exploit that intellectual property will remain with the
Company or Xethos Group Inc.
9. FURTHER PROVISIONS
9.1 The Company will appoint the Purchaser's nominated representative to its
Board forthwith upon receipt of the documents set out in clause 6.3 above .
9.2 The Purchaser agrees to deposit with the Company the funds required for
each month under clause 2.3 above and subsequently under the agreed
Business Plan of the Company on the first day of that month.
9.3 The Purchaser will appoint Xxxxxx Xxxxxx as a Director of the board of the
Purchaser should he so request within two years of the date hereof.
10. NOTICES
All notices, requests, demands and other communications hereunder must be
in writing and will be deemed to have been duly given if delivered by
courier or sent by prepaid registered mail addressed to the addressee at
the address appearing on the first page hereof or to such other address
as may be given in writing by the parties hereto, and will be deemed to
have been received, if delivered, on the date of delivery and if mailed
as aforesaid, then on the sixth business day following the posting
thereof
11. GENERAL
11.1 This Agreement will endure to the benefit of and will be binding upon the
parties and their heirs, executors, administrators, successors and
assigns
11.2 Time will be of the essence of this Agreement.
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11.3 The terms and provisions herein contained constitute the entire
agreement between the parties and will supersede all previous oral or
written communications regarding the purchase and sale of the Shares.
11.4 If any part of this Agreement is held invalid or unenforceable by a
Court of law, then this Agreement will be read as if such invalid or
unenforceable provision were removed.
11.5 This Agreement may be executed in several parts in the same form and
such parts and the heads of agreement as so executed will together form
one original agreement, and such parts will be read together and
construed as if all signing parties hereto had executed one copy of this
Agreement.
11.6 This Agreement will be governed by and construed in accordance with the
laws of England and Wales and the parties submit to the non-exclusive
jurisdiction of the English Courts.
11.7 The provisions of the Heads of Agreement shall remain in full force and
effect notwithstanding Closing in so far as the provisions thereof have
not been completed or superseded by this Agreement.
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Xethos Group Inc. May 2000 Snowstorm
IN WITNESS WHEREOF the parties have duly executed this Agreement as a Deed on
the day and year first above written.
Executed and delivered as a deed )
at the date of this agreement by )
Xxxxxx Xxxxxx in the presence of: )
Witness:
Address:
Occupation:
Executed and delivered as a deed )
at the date of this agreement by )
Xxxxx Xxxxxxxxx Xxxxxx in the presence of: )
Witness:
Address:
Occupation
Executed and delivered as a deed )
at the date of this agreement by )
Xxxxx Xxxxxx in the presence of: )
Witness:
Address:
Occupation:
Executed and delivered as a deed )
at the date of this agreement by )
Xxxxxxx Xxxxxx Xxxxxxx in the presence of: )
Witness:
Address:
Occupation:
Executed and delivered as a deed )
at the date of this agreement by )
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Xethos Group Inc. May 2000 Snowstorm
G.S.TELECOM, LIMITED acting by )
Secretary/Director
President/CEO
Copyright Xethos Page 21
