Exhibit 10.40
DATED 2002
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X X XXXX, XX XXXXXX AND X X XXXXXXXX (1)
and
DDI EUROPE (2)
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TAX DEED
Relating to the sale and purchase of the
whole of the issued share capital of Lunar
Solutions Limited and its subsidiaries
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CONTENTS
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CONTENTS
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1 Interpretation ....................................................... 1
2 Sellers' Covenant .................................................... 1
3 Restriction of Sellers' Liability .................................... 2
4 Credit for Tax Savings ............................................... 5
5 No Disclosures ....................................................... 6
6 No Withholdings or Deductions ........................................ 6
7 Tax on Payments ...................................................... 6
8 Date for Payment ..................................................... 6
9 Interest on Late Payments ............................................ 7
10 Price Reduction ...................................................... 7
11 Procedure for Tax Claims ............................................. 7
12 Overprovision ........................................................ 8
13 THIRD PARTY RECOVERY ................................................. 9
14 Purchaser's covenant ................................................. 10
15 Corporation Tax Returns .............................................. 10
16 Access to Books and Records .......................................... 11
17 Notices .............................................................. 11
18 Releases, Waivers etc by the Purchaser ............................... 12
19 Alterations .......................................................... 13
20 Counterparts ......................................................... 13
21 Successors and Assigns ............................................... 13
22 Applicable Law and Submission to Jurisdiction ........................ 13
23 Address for Service .................................................. 14
THIS DEED is made on 2002 BETWEEN:
(1) THE PERSONS whose respective names and addresses are set out in schedule 1
("the Sellers"); and
(2) DDi Europe Ltd (registered in England number 3731403) having its registered
office at Green Lane Business Park, Xxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxxxx, XX00 0XX ("the Purchaser").
WHEREAS this Deed is entered into pursuant to the Agreement as defined below
IT IS AGREED as follows:
1 Interpretation
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1.1 The provisions of Schedule 2 (Interpretation) of the Agreement shall apply
for the purposes interpretation and construction of this Deed and the
schedules (which form part of this Deed).
2 Sellers' Covenant
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2.1 Subject to the provisions of clause 3, the Sellers hereby jointly and
severally covenant with the Purchaser to pay to the Purchaser an amount
equal to:
(a) any Actual Tax Liability of any member of the Group:
(i) arising as a consequence of or by reference to one or more
Events which occurred on or before Completion; or
(ii) arising in respect of or by reference to any income profits or
gains which were earned accrued or received on or before
Completion or in respect of a period ended on or before
Completion; or
(iii) arising or assessed as a consequence of the failure of a
Relevant Person at any time to pay Tax;
(b) any Notional Tax Liability of any member of the Group;
(c) any liability of any member of the Group to pay or repay an amount in
respect of Tax:
(i) under any agreement or arrangements relating to the surrender of
group relief advance corporation tax or tax refund entered into
on or before Completion; or
(ii) under any indemnity or covenant entered into on or before
Completion;
(d) any Actual Tax Liability of any member of the Group or the Purchaser
in respect of inheritance tax which:
(i) is at Completion a charge on any of the shares or assets of any
member of the Group or gives rise to a power to sell mortgage or
charge any of
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the shares or assets of a Group member; or
(ii) after Completion becomes a charge on or gives rise to a power to
sell mortgage or charge any of the shares or assets of any
member of the Group being an Actual Tax Liability arising as a
result of the death of any person within seven years after a
transfer of value (or a deemed transfer of value) if a charge on
or power to sell mortgage or charge any such shares or assets
would, if the death had occurred immediately before Completion
and the inheritance tax payable as a result thereof had not been
paid, have existed at Completion; or
(iii) arises as a result of a transfer of value occurring or being
deemed to occur on or before Completion (whether or not in
conjunction with the death of any person whenever occurring)
which increased or decreased the value of the estate of any
member of the Group;
(e) any reasonable costs and expenses reasonably and properly incurred by
the Purchaser and/or any member of the Group in connection with:
(i) any liability or amount for which the Sellers are liable under
any of clauses 2.1(a) to 2.1(d) inclusive, including the costs
and expenses of investigating assessing or contesting any Tax
Claim in respect thereof; or
(ii) taking any action, including the defence of any Tax Claim, at
the request or direction of the Sellers; or
(iii) any successful claim by the Purchaser under this Deed.
3 Restriction of Sellers' Liability
---------------------------------
3.1 The provisions of paragraphs 2 (Time Limits) of schedule 5 (Limitations on
Liability) of the Agreement shall apply to this Deed as if the same were
set out herein in full and the liability of the Sellers under this Deed
shall be limited or excluded accordingly.
3.2 The covenant contained in clause 2 shall not extend to any Tax Liability to
the extent that:
(a) such Tax Liability was paid or discharged on or before Completion and
such payment or discharge was reflected in the Accounts; or
(b) provision reserve or specific allowance in respect of that Tax
Liability was made in the Accounts; or
(c) such Tax Liability arises or is increased as a result only of any
change in Tax Legislation or of any increase in rates of Tax or of any
change in the published practice or concession of any Tax Authority
(in each case) announced after Completion which has retrospective
effect; or
(d) such Tax Liability arises in consequence of an Event which has
occurred since the Accounts Date and before Completion in the ordinary
course of business of any member of the Group; or
2
(e) such Tax Liability arises or is increased or any provision or reserve
in respect of the Tax Liability in the Accounts is insufficient as a
result of any change after Completion in the bases, methods or
policies of accounting of any member of the Group; other than where
such change was made in order to comply with the law or generally
accepted accounting principles; or
(f) such Tax Liability arises as a result of any claim, election,
surrender or disclaimer made or notice or consent given, after
Completion (other than one, the making, giving or doing of which was
taken into account in computing any provision for Tax in the Last
Accounts) under, or in connection with the provisions of any enctment
or regulation relating to Tax by the Purchaser the Group or any member
of the group of companies to which the Purchaser belongs; or
(g) such Tax Liability arises as a result of the failure or omission by
the Purchaser the Group or any member of the group of companies to
which the Purchaser belongs to make any claim election, surrender or
disclaimer or give any notice or consent or do any other thing under
or in connection with the provision of any enactment or regulation
relating to Tax at Completion where the making, giving or doing of
which was taken into account in computing any provision in the
Accounts and the Purchasers are aware, or ought reasonably to have
been aware, that such claim, election, surrender or disclaimer or the
giving of such notice or consent was so taken into account; or
(h) such Tax Liability arises or is not reduced or eliminated (as it
otherwise would have been) as a result of any act, omission,
transaction or arrangement whatsoever carried out at the written
request or the written approval of the Purchaser or any member of the
group of companies to which the Purchaser belongs prior to Completion
or pursuant to the Agreement or any documents referred to in the
Agreement; or
(i) such Tax Liability arises or is increased or any provision or reserve
in respect thereof as is mentioned in clause 3.2(b) above is
insufficient as a consequence of any failure or delay by the Purchaser
or the Group in complying with their obligations under this Deed or
the Agreement; or
(j) the income, profits or gains in respect of which the Tax Liability
arises were actually earned, accrued or received by the Group prior to
the Last Accounts Date but were not reflected in the Last Accounts and
provided the income, profit or gain has not been distributed in any
way prior to Completion; or
(k) the Tax Liability would not have arisen but for a cessation or any
change on or after Completion in the nature or conduct of any trade
carried out by the Group at Completion; or
(l) such Tax Liability has been made good by insurers or otherwise
compensated for without cost to the Purchaser or the Group; or
(m) such Tax Liability arises or is increased by virtue of the Group's
average rate of corporation tax increasing as a result of becoming a
member of the Purchaser's group; or
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(n) any relief is available to the Group to set against or otherwise
mitigate the Tax Liability (other than any Accounts Relief or New
Relief); or
(o) such Tax Liability would not have arisen but for any voluntary act,
omission or transaction carried out after Completion by the Purchaser
or any member of the Group provided that this clause 3.2(e) shall not
apply to any act or transaction:
(i) required by law or carried out or effected by any member of the
Group pursuant to a legally binding commitment created or
entered into before Completion; or
(ii) which consists of communicating information to any Tax Authority
where the Purchaser is legally obliged to do so; or
(iii) carried out or effected any member of the Group in the ordinary
course of its business.
3.3 None of the following shall be regarded for the purposes of clause 3.2(d)
and 3.2(o) as an Event which has occurred in the ordinary course of
business of the Company:
(a) an Event giving rise to a liability under Part XVII ICTA 1988 (tax
avoidance);
(b) a distribution within the meaning given by Part VI ICTA 1988 (company
distributions, tax credits etc.) or within Section 418 ICTA 1988
(expenses treated as distributions);
(c) an acquisition or deemed acquisition by or supply or deemed supply to
any member of the Group of assets goods services or business
facilities of any kind (including a loan of money or a letting hiring
or licensing of any tangible or intangible property) for a
consideration which is treated for the purposes of Tax as less than
the actual consideration, to the extent of the shortfall;
(d) a disposal or supply or deemed disposal or supply by any member of the
Group of assets goods services or business facilities of any kind
(including a loan of money or letting hiring or licensing of any
tangible or intangible property) for a consideration which is treated
for the purposes of Tax as greater than the actual consideration, to
the extent of the excess;
(e) an Event which results in any member of the Group being liable for Tax
for which it is not primarily liable;
(f) an Event in respect of which an Actual Tax Liability arises as a
result of a failure by any member of the Group to deduct or account
for Tax;
(g) a disposal or deemed disposal of capital assets;
(h) any member of the Group ceasing or being deemed to cease to be a
member of any group or associated with any other company for the
purposes of Tax;
(i) any other Event which gives rise to a Tax Liability on deemed (as
opposed to actual) income profits or gains;
4
(j) an Event giving rise to a balancing charge.
4 Credit for Tax Savings
4.1 For the purposes of this clause 4:
(a) "Prior Liability" means a Tax Liability of any member of the Group in
respect of which the Sellers have made payment to the Purchaser under
this Deed;
(b) "Tax Saving" means the reduction or elimination on or before the
seventh anniversary of this Deed of any Tax Liability of any member of
the Group to the extent that such reduction or elimination would not
have occurred but for the payment or discharge by that Group member of
a Prior Liability; and
(c) any member of the Group shall be regarded as obtaining the benefit of
a Tax Saving on the last day on which (but for the Relief giving rise
to the Tax Saving) it would have been obliged to make an actual
payment of Tax in order to avoid incurring a liability to interest or
a charge fine or penalty in respect of that Tax.
4.2 The Purchaser shall use its reasonable endeavours to procure that the
benefit of any Tax Saving is obtained as early as possible provided that
nothing in this clause 4 shall require the Purchaser or any member of the
Group to manage their tax affairs in a way which, in the reasonable opinion
of the Purchaser, would prevent optimum use of any Reliefs available.
4.3 If the Purchaser becomes aware that a Tax Saving has arisen it will notify
the Sellers as soon as practicable. If (at the cost and expense of the
Sellers) the auditors for the time being of the relevant member of the
Group certify that such Group member has obtained the benefit of a Tax
Saving, then the Purchaser shall repay to the Sellers an amount equal to
the lesser of:
(a) the amount of such Tax Saving (as certified by the auditors); and
(b) (to the extent not already refunded) the amount(s) previously paid by
Sellers to the Purchaser under this Deed in respect of the Prior
Liability in question.
4.4 To the extent that there is an excess after payment under clause 4.3 above
has been made a refund shall be made to the Sellers of any previous payment
or payments by the Sellers under this Deed or the Agreement and not
previously refunded under clause 4.3 above up to the amount of such excess.
4.5 To the extent that the excess referred to in clause 4.4 is not exhausted
under that clause 4.4 the remainder of that excess shall be carried forward
and set off against any future payment or payments which become due from
the Sellers under this Deed or the Agreement.
4.6 The amount of any Tax Saving (or the Relief giving rise to such Tax Saving)
shall not be increased by:
(a) any Accounts Relief ; or
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(b) any surrender or claim to surrender any amount by way of group relief,
surplus advance corporation tax or tax refund; or
(c) any change in Tax Legislation or rates of Tax announced after
Completion.
5 No Disclosures
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5.1 Subject to the foregoing provisions of this Deed, the Purchaser shall be
entitled to make a claim under this Deed in respect of a Tax Liability
notwithstanding that:
(a) the Purchaser had knowledge (whether actual constructive or implied)
on or before Completion of that Tax Liability (or the matter giving
rise to the Tax Liability); or
(b) such Tax Liability has been paid or discharged by any member of the
Group whether before or after Completion but in any event after the
Accounts Date.
6 No Withholdings or Deductions
-----------------------------
6.1 Save only as may be required by law all sums payable by the Sellers to the
Purchaser under this Deed shall be paid free and clear of all deductions or
withholdings whatsoever.
6.2 If any deductions or withholdings are required by law to be made from any
payment under this Deed, the Sellers shall pay to the Purchaser such sum as
will, after the deduction or withholding has been made, leave the Purchaser
with the same amount as it would have been entitled to receive in the
absence of any such requirement to make a deduction or withholding.
7 Tax on Payments
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7.1 Subject to clause 21.4, if any sum payable by the Sellers to the Purchaser
under this Deed (including without limitation any sum payable under this
clause 7) is (or but for the availability of any Relief would be) subject
to an Actual Tax Liability in the hands of the Purchaser, the Sellers shall
pay to the Purchaser such sum as would have been required to be paid under
clause 6.2 had that Actual Tax Liability been a deduction or withholding
from the sum payable by the Sellers.
8 Date for Payment
----------------
8.1 Where the Sellers become liable to make a payment pursuant to the
provisions of this Deed, the due date for the making of that payment in
cleared funds shall be the date falling five business days after the date
on which the Purchaser or the relevant Group member has notified the
Sellers of the amount of the payment required to be made or, if later:
(a) in the case of an Actual Tax Liability, on or before the second
business day prior to the last date on which the payment of Tax in
question may be paid to the relevant Tax Authority in order to avoid
incurring a liability to interest or a charge fine or penalty in
respect of that Actual Tax Liability; or
6
(b) in the case of the loss or set off of a right to repayment of Tax
within paragraphs 1, 2 or 4 of schedule 3, the date on which the
repayment would have been received but for such loss or set off;
(c) in the case of the set off of a Relief (other than a right to
repayment of Tax) within paragraphs 2 to 5 inclusive of schedule 3,
the last date on which, but for the set off, the Actual Tax Liability
which would have been payable could have been paid to the relevant Tax
Authority in order to avoid incurring a liability to interest or a
charge fine or penalty in respect of that Actual Tax Liability;
(d) in the case of any liability within clause 2.1(c), the second business
day prior to the date on which the payment or repayment becomes due
and payable.
8.2 The Sellers may at their own expense require the amount of any payment
required to be made under this Deed to be certified by the auditors for the
time being of the relevant member of the Group (acting as experts and not
as arbitrators) and the amount so certified shall (save for manifest error)
be conclusive and binding on the parties.
9 Interest on Late Payments
-------------------------
9.1 If any payment required to be made by the Sellers under this Deed is not
made by the due date for payment thereof, then that payment shall carry
interest from that due date until the date when the payment is actually
made at the rate of two per cent. above the base rate from time to time of
Lloyds TSB Bank Plc compounded quarterly.
10 Price Reduction
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10.1 Any payment made by the Sellers under this Deed shall (so far as possible)
be treated as a reduction in the consideration paid for the Sale Shares
provided that nothing in this clause 10 shall limit or exclude the
liability of the Sellers under this Deed.
11 Procedure for Tax Claims
------------------------
11.1 If the Purchaser shall become aware of any Tax Claim which is likely to
give rise to a liability of the Sellers under this Deed the Purchaser shall
as soon as reasonably practicable and in any event, in the case where the
Tax Claim consists of an assessment or demand for which the period for
response or appeal is time limited within ten Business Days prior to the
expiry of such time limit give notice thereof to the Sellers but so that
such notice shall not be a condition precedent to the liability of the
Sellers hereunder.
11.2 If the Sellers shall indemnify the relevant Group member and the Purchaser
to the Purchaser's reasonable satisfaction against all losses costs damages
and expenses (including interest on overdue Tax) which may be incurred
thereby the Purchaser shall (and shall procure that the relevant Group
member shall) in accordance with any reasonable instructions of the Sellers
promptly given by notice to the Purchaser and that Group member (but
subject to clause 11.2(a) to 11.2(c) inclusive) seek to avoid dispute
resist appeal compromise or defend such Tax Claim provided always that:
(a) no Group member shall be obliged to appeal against any assessment for
Tax
7
raised on it if, having given the Sellers notice of the receipt of
that assessment, it has not within fifteen days thereafter received
instructions from the Sellers, in accordance with the preceding
provisions of this clause 11.2, to make that appeal;
(b) the Purchaser and that Group member shall not be obliged to comply
with any instruction of the Sellers which involves contesting any
assessment for Tax before any court or other appellate body (excluding
the Tax Authority in question) unless the Sellers furnish the
Purchaser with the written opinion of tax counsel of at least six
years' call to the effect that an appeal against the assessment for
Tax in question will, on the balance of probabilities, be won;
(c) the Purchaser and that Group member shall not in any event be obliged
to comply with any instruction of the Sellers to make a settlement or
compromise of the Tax Claim which is the subject of the dispute or
agree any matter in the conduct of such dispute which is likely
materially to increase the amount thereof or to increase the future
liability of any Group member or of the Purchaser in respect of Tax.
11.3 If any of the Sellers or, before Completion, a Group member shall have
committed acts or omissions which constitute fraud or negligent conduct
clause 11.2 shall not apply.
12 Overprovision
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12.1 If before the sixth anniversary of Completion the auditors for the time
being of the Group certify (at the request and expense of the Sellers)
that:
(a) any provision for Tax in the Accounts (excluding any provision for
deferred tax) has proved to be an overprovision; or
(b) the amount by which any right to repayment of Tax which has been
treated as an asset in the Accounts proves to have been understated;
then the amount of such overprovision or understatement ("Relevant Amount")
shall be dealt with in accordance with paragraph 12.2 below provided that
no account shall be taken of any overprovision or understatement to the
extent that it arises as a consequence of the utilisation of any Accounts
Relief or any action taken by the Group after Completion or any change in
law or practice after Completion.
12.2 Where it is certified under paragraph 12.1 of this Part that a Relevant
Amount has arisen such Relevant Amount is to be dealt with in accordance
with this paragraph 12.2:
(a) the Relevant Amount shall first be set off against any payment due
from the Sellers under this Deed or the Agreement;
(b) to the extent that there is an excess, a refund shall be made to the
Sellers of any previous payment or payments made by the Sellers under
this Deed or the Agreement and not previously refunded under this
clause up to the amount of
8
such excess; and
(c) to the extent that the excess referred to in paragraph 12.2(b) above
is not exhausted under that clause, the remainder of that excess shall
be carried forward and set off against any future payment or payments
which become due from the Sellers under this Deed or the Agreement.
12.3 Where any such certification as is mentioned in paragraph 12.1 above has
been made, the Sellers or the Purchaser or the Group may request that the
auditors for the time being of the Group review (at the expense of the
party so requesting) such certification in the light of all relevant
circumstances, including any facts which have become known only since such
certification, and to certify whether such certification remains correct or
whether in the light of those circumstances the amount which was the
subject of such certification should be amended.
12.4 If the auditors certify under paragraph 12.3 above that an amount
previously certified should be amended, that amended amount shall be
substituted for the purposes of paragraph 12.2 above as the Relevant Amount
in respect of the certification in question in place of the amount
originally certified, and such adjusting payment (if any) as may be
required by virtue of the above-mentioned substitution shall be made as
soon as practicable by the Sellers or (as the case may be) to the Sellers
13 THIRD PARTY RECOVERY
--------------------
13.1 This clause 13 applies where if, before the sixth anniversary of
Completion, any payment becomes due from the Sellers under this Deed or the
Agreement and the Group either is immediately or subsequently becomes
entitled to recover from any person (not being a member of the Group or an
employee of the Group but including any Tax Authority) any sum in respect
of the Tax Liability.
13.2 Where clause 13.1 applies, the Purchaser shall procure that the Group
promptly notifies the Sellers of its entitlement and, if so required by the
Sellers and subject to the Purchaser and the Group being indemnified by the
Sellers to their reasonable satisfaction against any liabilities, costs or
expenses (including additional Tax) which may thereby be incurred, takes
all steps to enforce that recovery (keeping the Sellers fully informed of
the progress of any action taken).
13.3 If the Sellers have made a payment under Deed or the Agreement in respect
of the Tax Liability in question, the Purchaser shall account to the
Sellers for whichever is the lesser of:
(a) any sum so recovered by the Group in respect of that Tax Liability
(including any interest or repayment supplement paid by the Tax
Authority or other person on or in respect thereof) less any Tax
chargeable on the Group in respect of that interest and all
liabilities and costs and expenses referred to in paragraph 13.2 above
incurred by the Group and/or the Purchaser in obtaining recovery of
such sum insofar as not previously made good to the Group or the
Purchaser (as appropriate) by the Sellers; and
(b) the amount paid by the Sellers under this Deed or the Agreement in
respect of
9
that Tax. Liability.
14 Purchaser's covenant
--------------------
14.1 The Purchaser hereby covenants with the Sellers to pay the Sellers an
amount equal to any Tax for which the Sellers are or may be liable as a
result of the application of section 767A or section 767AA Taxes Act
(change in company ownership: corporation tax) where the taxpayer company
or the transferred company (as defined in section 767A(1)(a) and section
767AA(1)(a) respectively) is the Group together with any reasonable costs
and expenses reasonably and properly incurred by the Sellers in connection
with taking any successful action under this clause but only in
circumstances where the Tax is directly or primarily chargeable against or
attributable to the Group and arises:
(a) in respect of income profits or gains earned, accrued or received in
respect of any period after Completion; or
(b) as a result of the failure of the Purchaser or the Group to apply an
amount provided for in the Accounts or an amount paid by the Sellers
to the Purchaser under this Deed to discharge a liability to which the
amount relates.
14.2 A payment to be made by the Purchaser under this Deed shall be made in
cleared funds seven days after written demand for such payment.
Where the Purchaser fails to make a payment in satisfaction of a liability
under this Deed by the due date for payment, the liability of the Purchaser
shall be increased to include interest on such sum from the date on which
the Purchaser becomes liable to make payment to the date of actual payment
at a rate per annum being two per cent above the base rate from time to
time of Lloyds TSB Bank Plc compounded quarterly
15 Corporation Tax Returns
-----------------------
15.1 In this clause 15:
(a) "the Agents" means PKF Birmingham or such other firm of chartered
accountants as may be agreed between the parties from time to time for
the purposes of this clause 15;
(b) "Relevant Returns" means the corporation tax returns and computations
of a Group member in respect of periods ended on or before the
Accounts Date to the extent these have not already been finalised or
submitted;
(c) "Relevant Correspondence" means all documents, correspondence and
communications relating to the Relevant Returns which shall be
received from or sent to the Inland Revenue; and
(d) "Sellers' Representative" means X X Xxxx.
15.2 The Purchaser shall procure that each Group member retains or appoints the
Agents to act on behalf of the Group in respect of the preparation,
submission and agreement of
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the Relevant Returns and to deal with all Relevant Correspondence.
15.3 The parties shall each use their reasonable endeavours to procure that the
Agents shall:
(a) prepare the Relevant Returns to the extent that the same shall not
have been prepared before the date hereof; and
(b) submit drafts of the same to the Sellers' Representative, the
Purchaser and the relevant Group member on or before 30 November 2002.
15.4 The Sellers' Representative may by notice in writing to the Purchaser on or
before 31 December 2002 comment on or suggest amendments to the Relevant
Returns. The Purchaser shall procure that the Agents shall incorporate in
the Relevant Returns those comments on and amendments to the Relevant
Returns suggested by the Sellers' Representative, as the Purchaser shall
consider reasonable and proper to make.
15.5 The parties shall each use their reasonable endeavours to procure that the
Agents shall:
(a) submit the Relevant Returns (as so amended) to the Inland Revenue and
provide copies to the Sellers' Representative, the relevant Group
member and Purchaser; and
(b) keep the Sellers' Representative, the relevant Group member and the
Purchaser fully informed of all material matters relating to the
submission, negotiation and agreement of the Relevant Returns
(including provision of copies of all Relevant Correspondence).
16 Access to Books and Records
---------------------------
16.1 The Purchaser shall (and shall procure that the relevant Group member and
its agents) provide to the Sellers and the Sellers shall (and shall procure
that their agents) provide to the Purchaser and the relevant Group member
such reasonable access to relevant books, accounts and records in their
respective possession or control as is necessary and reasonable:
(a) to investigate, assess, or, subject to clause 11.2, to contest any Tax
Claim; or
(b) to submit and agree Relevant Returns in accordance with clause 15.
17 Notices
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17.1 Except as otherwise provided in this Deed, every notice under this Deed
shall be in writing and shall be deemed to be duly given if it (or the
envelope containing it) identifies the party to whom it is intended to be
given as the addressee and:
(a) it is delivered by being handed personally to the addressee (or, where
the addressee is a corporation, any one of its Directors or its
Secretary); or
(b) it is delivered by being left in a letter box or other appropriate
place for the receipt of letters at the addressee's authorised
address; or
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(c) the envelope containing the notice is properly addressed to the
addressee at his authorised address and duly posted by first class
mail or recorded delivery service (or by airmail registered post if
overseas) or the notice is duly transmitted to that address by
facsimile transmission,
and, in proving the giving or service of such notice, it shall be sufficient to
prove that the notice was duly given within the meaning of this clause 17.1.
17.2 A notice sent by post (or the envelope containing it) shall not be deemed
to be duly posted for the purposes of clause 17.1(c) unless it is put into
the post properly stamped or with all postal or other charges in respect of
it otherwise prepaid.
17.3 For the purposes of this clause 17 the authorised address of each of the
Sellers shall be the address of the Sellers' Solicitors or (in the case of
notices transmitted by facsimile transmission) the facsimile number (if
any) of the Sellers' Solicitors and the authorised address of
(respectively) the Purchaser and each Group member shall be the address of
its registered office for the time being or (in the case of notices
transmitted by facsimile transmission) its facsimile number at that
address.
17.4 Any notice duly given within the meaning of clause 17.1 shall be deemed to
have been both given and received:
(a) if it is delivered in accordance with clause 17.1(a) or 17.1(b), on
such delivery;
(b) if it is duly posted or transmitted in accordance with clause 17.1(c)
by any of the methods there specified, on the second (or, when sent
airmail, fifth) business day after the day of posting or (in the case
of a notice transmitted by facsimile transmission) upon receipt by the
sender of the correct transmission report.
17.5 For the purposes of this clause 17 "notice" shall include any request,
demand, instructions or other document.
18 Releases, Waivers etc by the Purchaser
--------------------------------------
18.1 The Purchaser may, in its discretion, in whole or in part release, compound
or compromise, or waive its rights or grant time or indulgence in respect
of any liability to it under this Deed and may do so as regards any one or
more of the Sellers under that liability without in any way prejudicing or
affecting the liability of or its rights against any other of the Sellers
in respect of the same or a like liability, whether joint and several or
otherwise.
18.2 Neither the single or partial exercise or temporary or partial waiver by
the Purchaser of any right, nor the failure by the Purchaser to exercise in
whole or in part any right or to insist on the strict performance of any
provision of this Deed, nor the discontinuance, abandonment or adverse
determination of any proceedings taken by the Purchaser to enforce any
right or any such provision shall (except for the period or to the extent
covered by any such temporary or partial waiver) operate as a waiver of, or
preclude any exercise or enforcement or (as the case may be) further or
other exercise or enforcement by the Purchaser of, that or any other right
or provision.
18.3 All references in clause 18.2 to:
12
(a) any right shall include any power, right or remedy conferred by this
Deed on, or provided by law or otherwise available to, the Purchaser;
and
(b) any failure to do something shall include any delay in doing it.
18.4 The giving by the Purchaser of any consent to any act which by the terms of
this Deed requires such consent shall not prejudice the right of the
Purchaser to withhold or give consent to the doing of any similar act.
18.5 If any Seller shall for any reason not be liable hereunder or be released
by the Purchaser from any such liability, the other Sellers shall remain
liable in full in respect of such liability notwithstanding and without
prejudice to their right to a contribution.
18.6 The rights and remedies of the Purchaser provided in this Deed are
cumulative with and not exclusive of any rights and remedies provided by
law.
18.7 The provisions of Section 213 of the Inheritance Tax Act 1984 shall not
apply to any payments falling to be made under this Deed.
19 Alterations
-----------
19.1 No purported alteration of this Deed shall be effective unless it is in
writing, refers specifically to this Deed and is duly executed by each
party hereto.
20 Counterparts
------------
20.1 This Deed may be entered into in the form of two or more counterparts each
executed by one or more of the parties but, taken together, executed by all
and, provided that all the parties so enter into the Deed, each of the
executed counterparts, when duly exchanged or delivered, shall be deemed to
be an original, but, taken together, they shall constitute one instrument.
21 Successors and Assigns
----------------------
21.1 This Deed shall be binding on and shall ensure for the benefit of the
successors in title and personal representatives of each party.
21.2 None of the parties hereto shall be entitled to assign the benefit of any
rights under this Deed.
21.3 The benefit of this Deed shall be freely assignable by the Purchaser and,
in the event of any such assignment, all references in this Deed to the
Purchaser shall be deemed to include its assigns.
21.4 If an assignee makes a claim against the Sellers under any provision of
this Deed, then clauses 7 or 6.2 of this Deed shall not apply to such claim
or to any sums payable by the Sellers pursuant to such claim.
22 Applicable Law and Submission to Jurisdiction
---------------------------------------------
22.1 This Deed shall be governed by and construed in accordance with English
Law.
13
22.2 The parties hereby submit to the non-exclusive jurisdiction of the High
Court of Justice in England for the purpose of hearing and determining any
suit, action or proceedings which may arise out of or in connection with
this Deed.
23 Address for Service
-------------------
23.1 Each Seller ("the appointor") hereby irrevocably authorises and appoints
the Sellers' Solicitors (or such other person or persons, being a firm of
solicitors resident in England, as the appointor may hereafter as regards
himself by notice in writing to all the other parties hereto from time to
time substitute) to accept on his behalf service of all legal process
arising out of or connected with this Deed.
23.2 Service of such process on the person for the time being authorised under
clause 23.1 to accept it on behalf of the appointor shall be deemed to be
service of that process on the appointor.
IN WITNESS whereof this Deed has been duly executed the day and year first
before written
14
Schedule 1
----------
The Sellers
-----------
================================================================================
Name Address
--------------------------------------------------------------------------------
Xxxxxx Xxxxx Xxxx 8 St Michael's Close, Brinkworth, Marlbrough,
Wilts, SN15 5QG
--------------------------------------------------------------------------------
Xxxxxxxx Xxxxx Xxxxxx Paddock Gate, Tin Pitt, Marlbrough, Wilts, SN8
1BD
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxx Xxxxxxxx Xxx Xxxxxx Xxxxxxxxxx, 0 Xxxxxxxxx Xxxxxx,
Xxxx, XX0 0XX
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
15
Schedule 2
----------
The Group
---------
================================================================================
Name Registered Number Registered Office
--------------------------------------------------------------------------------
Lunar Solutions Ltd 3906322 Xxxxxxxxxxx Xxxxxx, Xxxxxx Xxxx,
Xxxxx, Xxxxxxxxx, XX00 0XX
--------------------------------------------------------------------------------
Kamtronics Ltd 1583316 Xxxxxxx Xxxxx, Xxxxxxxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxx, Xxxxxxxxx,
XX00 0XX
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
16
Schedule 3
----------
Notional Tax Liabilities
------------------------
================================================================================
(1) (2)
--------------------------------------------------------------------------------
1 The loss of any Accounts Relief. 1.1 If the Accounts Relief lost
was a right to repayment of
Tax, the amount of the repayment
which would have been obtained
but for the loss;
1.2 If the Accounts Relief lost was
a deduction from or set off
against Tax, the amount of the
Accounts Relief lost;
1.3 If the Accounts Relief lost was
a deduction from or set off
against income profits or gains,
the amount of Tax which would
(on the basis of rates of Tax
current at the date of the loss
and assuming income profits or
gains chargeable to Tax of an
amount equal to the Accounts
Relief) have been saved but for
the loss.
--------------------------------------------------------------------------------
2 The setting off of any Accounts 2.1 If the Accounts Relief was a
Relief against an Actual Tax right to repayment of Tax,
Liability of a Group member in the amount of the repayment
respect of which, but for such which would have been
setting off, the Purchaser would obtained but for the setting
have been able to make a claim off;
against the Sellers under this
Deed.
2.2 In any other case, the amount of
the Accounts Relief set off.
--------------------------------------------------------------------------------
3 The setting off of any Accounts 3 The amount of Tax which has been
Relief against income, profits saved in consequence of the
or gains in circumstances where, setting off of the Accounts
but for such setting off, a Relief.
Group member would have had a
Actual Tax Liability in respect
of which the Purchaser would
have been able to make a claim
against the Sellers under this
Deed.
================================================================================
17
================================================================================
4 The setting off of a New Relief 4.1 If the New Relief was a right
against an Actual Tax Liability to repayment of Tax, the amount
of a Group member in respect of of the repayment which would
which, but for such setting off, have been obtained but for the
the Purchaser would have been setting off;
able to make a claim against the
Sellers under this Deed. 4.2 In any other case, the amount
of the New Relief set off.
--------------------------------------------------------------------------------
5 The setting off of a New Relief 5 The amount of Tax which has been
against income, profits or gains saved in consequence of the
of a Group member in circumstances setting off of the New Relief.
where, but for such setting off, a
Group member would have had an
Actual Tax Liability in respect of
which the Purchaser would have been
able to make a claim against the
Sellers under this Deed.
================================================================================
18
Schedule 4
----------
Interpretation
--------------
1 In this Deed and in the schedules (which are part of this Deed) unless the
context otherwise requires:
(a) "Accounts" means the statutory accounts of each of the Company and the
Subsidary as at the Accounts Date for the financial period ended on
the Accounts Date;
(b) "Accounts Date" means 31 March 2002;
(c) "Accounts Relief" means any Relief where the availability of the
Relief has been:
(i) shown or treated as an asset in the Accounts; or
(ii) taken into account in computing (and so reducing) any provision
for deferred tax in the Accounts or has resulted in no provision
for deferred tax being made in the Accounts;
(d) "Actual Tax Liability" means a liability to make an actual payment of,
or of an amount in respect of, Tax whether or not such liability is
also or alternatively a liability of or chargeable against or
attributable to any other person [and whether or not a Group member
shall or may have a right of recovery or reimbursement against any
other person];
(e) "the Agreement" means the Agreement dated [ ] 2002 and made
between the Sellers (1) and the Purchaser (2);
(f) "Business Day" means a day (other than Saturday) when banks are open
for the transaction of normal banking business in London;
(g) "Event" means any event act transaction action or omission (whether or
not a Group member is a party thereto) and includes (without
limitation) the sale of the Sale Shares pursuant to the Agreement, any
change in the residence of any person for the purposes of Tax, the
death of any person, the receipt or accrual of any income profits or
gains, any distribution, any transfer payment loan or advance, and any
event which is deemed to have occurred or is treated or regarded as
having occurred for the purposes of Tax Legislation;
(h) "Group" means the companies whose names registered numbers and
registered offices are set out in schedule 2;
(i) "ICTA 1988" means the Income and Corporation Taxes Xxx 0000;
(j) "income profits or gains" means income profits or gains (including
capital gains) of any description or from any source and income
profits or gains which are deemed to be earned accrued or received for
the purposes of any Tax;
19
(k) "loss" means in relation to an Accounts Relief, the reduction
modification claw-back counter-action disallowance or cancellation of
or failure to obtain such Accounts Relief and "lost" shall be
construed accordingly;
and "lost" shall be construed accordingly;
(l) "New Relief" means any Relief which arises:
(i) as a result of any Event occurring after the Accounts Date; or
(ii) in respect of any period commencing on or after the Accounts
Date;
(m) "Next Accounts" means the audited statutory accounts of each member of
the Group in respect of the period beginning on 1 April 2002;
(n) "Notional Tax Liability" means, in relation to a Group member, an
amount calculated as provided in column (2) of schedule 3 in the
circumstances specified opposite in column (1) of schedule 3;
(o) "Relevant Person" means each of the Sellers and any person (except the
Purchaser or any member of the Group):
(i) who before Completion was a member of the same group of
companies as a Group member for any Tax purpose ("Group
Person"); or
(ii) with whom, before Completion, a Group member or, at any time,
any of the Sellers or a Group Person is connected (within the
meaning of section 839 ICTA 1988); or
(iii) any person who stands or has stood in a direct or indirect
relationship with a Group member at any time before Completion
such that failure by such person at any time to pay Tax could
result in an assessment on that Group member under section 767A
or section 767AA ICTA 1988;
(p) "Relief" means any loss, relief, allowance, exemption, set-off,
deduction, credit, right to repayment, or other relief available in
relation to Tax or to the computation of income profits or gains for
the purposes of Tax pursuant to Tax Legislation or otherwise;
(q) "schedule" means a schedule to this Deed;
(r) "set off" means, in relation to an Accounts Relief, the set off of the
Relief taken into account in the Next Accounts which is equivalent to
such Relief;
(s) "Tax" means:
(i) all forms of tax duties imposts and levies in the nature of tax
whenever created or imposed and whether of the United Kingdom or
elsewhere including (without limitation) corporation tax,
advance corporation tax, income tax, any tax or amount
equivalent to tax required to be deducted or withheld from or
accounted for in respect of any payment, capital gains tax, any
payment under section 601(2) ICTA 1988,
20
inheritance tax, value added tax, landfill tax, stamp duty, stamp
duty reserve tax, customs & excise duties, national insurance,
social security or similar contributions and any other taxes
levies duties charges or imposts similar to corresponding with or
replaced by any of the foregoing; and
(ii) all penalties fines charges surcharges and interest in relation
to any tax within paragraph (i) or to any return or information
required to be provided for the purposes of any such tax;
(t) "Tax Authority" means the Inland Revenue, HM Customs & Excise or other
governmental statutory state provincial or local government authority,
body or official (whether within or outside the United Kingdom)
involved in the assessment, collection or administration of Tax;
(u) "Tax Claim" means any notice demand assessment letter or other
document issued or action taken by or on behalf of any Tax Authority
(whether before, on or after the date of this Deed) from which it
appears that a Tax Liability is to be or may come to be imposed on any
Group member or that a Group member is liable or is sought to be made
liable to make any payment or increased or further payment to such Tax
Authority or is denied or is sought to be denied any Relief (in whole
or in part);
(v) "Tax Legislation" means any statute, enactment, law or regulation
providing for the imposition of Tax;
(w) "Tax Liability" means, in relation to any Group member, an Actual Tax
Liability or a Notional Tax Liability.
2 Reference to an Event occurring on or before Completion shall be deemed to
include:
(a) any combination of two or more Events all of which shall have occurred
on or before Completion; and
(b) any combination of two or more Events only the first or some of which
shall have occurred on or before Completion provided that, for the
purposes of this paragraph 2(b), there shall be disregarded any Event
which shall have occurred before Completion in the ordinary course of
business of a Group member; and
(c) any Event which is treated or deemed to occur on or before Completion
for the purposes of any Tax.
3 In determining for the purposes of this Deed whether a charge on or power
to sell mortgage or charge any of the shares or assets of any Group member
exists at any time the fact that any Tax is not yet payable or may be paid
by instalments shall be disregarded and such Tax shall be treated as
becoming due and the charge or power to sell mortgage or charge as arising
on the date of the transfer of value or other Event on or in respect of
which it becomes payable or arises.
4 For the purposes of this Deed, where a document (other than a document
which has ceased to have legal effect) to which a member of the Group is a
party and in the
21
enforcement of which the member of the Group is interested is not (or is
not properly) stamped, the stamp duty (together with any accrued interest
and/or penalties) required to be paid in order that such document be fully
and properly stamped shall, notwithstanding that a Group member may be
under no legal obligation to stamp that document, be treated as a liability
of that Group member arising on the date when the document was executed and
"Actual Tax Liability" shall be construed accordingly.
5 A reference to any enactment shall be constructed as including a reference
to:
(a) any enactment which that enactment has directly or indirectly replaced
(whether with or without modification); and
(b) that enactment as re-enacted, replaced or modified from time to time,
whether before, on or after the date hereof
and in this paragraph 5 "enactment" means any statute or statutory
provision (whether of the United Kingdom or elsewhere), subordinate
legislation, as defined by section 21(1) Interpretation Xxx 0000, and any
other subordinate legislation made under any such statute or statutory
provision.
6 References to the singular (including references to defined terms) shall
include references to the plural and vice versa, words denoting the
masculine gender shall include the feminine and neuter gender and vice
versa and references to persons shall include corporations and vice versa.
7 Words defined in or for the purposes of the Agreement shall bear the same
meanings in this Deed.
8 Words and expressions defined in or for the purposes of any Tax Legislation
shall bear the same meanings in this Deed.
9 Any English term for any action remedy method of judicial proceeding legal
document legal status court official or any legal concept or thing shall in
respect of any jurisdiction other than England be deemed to include what
most nearly approximates in that jurisdiction to the English legal term.
10 The expressions "the Sellers" and "the Purchaser" shall include the
respective personal representatives and successors in title and assigns
from time to time of those parties.
11 The headings (and summaries in parentheses of the scope of any statutory
provision) are inserted for convenience only and shall not affect the
construction of this Deed or the schedules.
22
SIGNED AS A DEED by
the said ) /s/ XXXXXXXX XXXXX XXXXXX (AS ATTORNEY)
XXXXXX XXXXX XXXX ) ------------------------------------------
in the presence of: ) /s/ XXXXX XXXXXXX EYRE
------------------------------------------
SIGNED AS A DEED by ) /s/ XXXXXXXX XXXXX XXXXXX
the said ) ------------------------------------------
XXXXXXXX XXXXX XXXXXX )
in the presence of: ) /s/ XXXXX XXXXXXX EYRE
------------------------------------------
SIGNED AS A DEED by
the said ) /s/ XXXXXXX XXXXXX XXXXXXXX
XXXXXXX XXXXXX XXXXXXXX ) ------------------------------------------
in the presence of: ) /S/ XXXXX XXXXXXX EYRE
------------------------------------------
EXECUTED AS A DEED by )
DDi EUROPE )
LIMITED acting by: )
)
Director ) /s/ XXXXX XXXXX
) ------------------------------------------
Secretary ) /s/ XXXX XXXXXX
------------------------------------------
23
