DATED November 27, 1999
XXXX XXXXXXXX AND OTHERS
(THE "VENDORS")
XXXXXXXX-XXXX INC.
(THE "PURCHASER")
MERGER AGREEMENT
XXXXXXXXX, WILL & XXXXX
0 XXXXXXXXXXX
XXXXXX
XX0X 0XX
TEL: 0000 000 0000
FAX: 0000 000 0000
TABLE OF CONTENTS
Page
1. Interpretation . . . . . . . . . . . . . . . . . . . . . .2
2. Sale of shares . . . . . . . . . . . . . . . . . . . . . .6
3. Consideration. . . . . . . . . . . . . . . . . . . . . . .6
4. Completion . . . . . . . . . . . . . . . . . . . . . . . .7
5. Warranties . . . . . . . . . . . . . . . . . . . . . . . .8
6. Confidentiality Undertaking. . . . . . . . . . . . . . . 11
7. Announcements. . . . . . . . . . . . . . . . . . . . . . 12
8. Registration of Consideration Shares . . . . . . . . . . 13
9. Shareholders Agreement . . . . . . . . . . . . . . . . . 13
10. Provisions relating to this Agreement. . . . . . . . . . 15
11. Law and Jurisdiction . . . . . . . . . . . . . . . . . . 18
SCHEDULE 1 : THE VENDORS . . . . . . . . . . . . . . . . . . . 20
SCHEDULE 2 : PART I - THE COMPANY. . . . . . . . . . . . . . . 29
SCHEDULE 2 : PART II - THE SUBSIDIARIES. . . . . . . . . . . . 30
SCHEDULE 3 : WARRANTIES. . . . . . . . . . . . . . . . . . . . 32
SCHEDULE 4 : TAX . . . . . . . . . . . . . . . . . . . . . . . 55
SCHEDULE 5 : PARTICULARS OF PREMISES . . . . . . . . . . . . . 69
SCHEDULE 6 : EARN OUT PAYMENTS . . . . . . . . . . . . . . . . 72
SCHEDULE 7 : WARRANTORS' AND PURCHASER'S PROTECTION. . . . . . 77
THIS AGREEMENT is dated November 27, 1999 and made
BETWEEN:
(1) THE PERSONS whose names and addresses are as set out in the first column of
Schedule 1 (the "VENDORS"); and
(2) XXXXXXXX-XXXX INC. (the "PURCHASER"), a company organised under the laws of
Delaware having its principal place of business at 000 Xxxxx Xxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxx.
BACKGROUND:
(A) The Vendors wish to merge the operations of Fulcrum Solutions Limited and
its subsidiaries with the UK operations of the Purchaser.
(B) The Vendors and the Purchaser wish the merger to be accomplished by the
acquisition of the entire issued A shares, B shares, D Shares and E Shares
in the share capital of Fulcrum Solutions Limited in return for common
stock in the Purchaser and cash and subject to the terms of this Agreement.
(C) The Purchaser will also acquire all the common stock in Fulcrum Solutions
Inc. not owned by the Company under a separate share sale agreement to be
entered into on the date hereof.
(D) A further US$497,589 will be applied to purchase 29,653 options in
Xxxxxxxx-Xxxx, Inc. at US$16.78 per option for the benefit of the existing
optionholders of the Company.
THE PARTIES AGREE THAT:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement where the context admits:
"AFFILIATE" means, in relation to a body corporate, any subsidiary or
holding company of such body corporate, and any subsidiary of any such
holding company for the time being.
"AGREED FORM" means, in relation to any document, a document in the terms
signed or initialled by or on behalf of the Purchaser and the
Representatives for identification.
"AUDITED ACCOUNTS" means the audited consolidated balance sheet of the
Company and the Subsidiaries made up as at the Balance Sheet Date and the
audited consolidated profit and loss account of the Company and the
Subsidiaries in respect of
2
the financial year ended on the Balance Sheet Date including, in each case,
the notes thereto and the directors' report and auditors' report.
"BALANCE SHEET DATE" means 30 September 1999.
"BASE CONSIDERATION" shall have the meaning given in clause 3:
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks
are open for ordinary banking business in London.
"COMPANY" means Fulcrum Solutions Limited a company registered in England
and Wales under number 03331163 and incorporated on 11 March 1997 as a
private company limited by shares under the Companies Acts.
"COMPANIES ACTS" means statutes from time to time in force concerning
companies including (without limitation) the Companies Xxx 0000, the
Companies Xxx 0000, Part V of the Criminal Justice Xxx 0000 and the
Companies Consolidation (Consequential Provisions) Xxx 0000.
"COMPLETION" means completion of the sale and purchase of the Sale Shares
in accordance with clause 5.
"COMPLETION DATE" means 27th November 1999.
"CONSIDERATION" means the consideration to be paid for the Sale Shares in
accordance with clause 3.1.
"CONSIDERATION SHARES" means the unregistered common stock in the Purchaser
to be issued to the Vendors in accordance with clause 4 and/or schedule 6;
"DIRECTORS" means in relation to the Company or any of the Subsidiaries,
its directors or officers, as the case may be named in schedule 2 and
"CONTINUING DIRECTORS" or "CONTINUING OFFICERS" means the persons named in
part I of schedule 2 as continuing directors or officers of the Company
respectively following Completion.
"DISCLOSURE LETTER" means the letter dated the date hereof written and
delivered by or on behalf of the Warrantors to the Purchaser in Agreed
Form.
"EARN-OUT PAYMENTS" means the amounts calculated and paid to the Vendors in
accordance with the provisions of schedule 6.
"ENCUMBRANCE" includes any interest or equity of any person (including any
right to acquire, option or right of pre-emption) any mortgage, charge,
pledge, lien, assignment, hypothecation, security interest (including any
created by law), title retention or other security agreement or arrangement
and any rental, hire purchase, credit sale, or other agreement for payment
on deferred terms.
3
"FSI" means Fulcrum Solutions Inc. a company organised under the laws of
Delaware having its principal place of business at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
"PREMISES" means the land and premises particulars of which are set out in
schedule 5.
"PURCHASER'S DISCLOSURE LETTER" means the letter dated the date hereof
written and delivered by or on behalf of the Purchaser to the Vendors in
Agreed Form.
"PURCHASER'S GROUP" means the Purchaser and each of its Affiliates
including, after Completion, the Company and each of the Subsidiaries.
"PURCHASERS' SOLICITORS" means XxXxxxxxx, Will & Xxxxx of 0 Xxxxxxxxxxx,
Xxxxxx, XX0X 0XX.
"RETENTION" shall have the meaning given in clause 5.5.
"RELEVANT CLAIM" shall have the meaning given in Schedule 7.
"REPRESENTATIVES" shall mean the persons referred to in clause 10.9.2 or
such other persons notified to the Purchaser in accordance with clause
10.9.3.
"SALE SHARES" means the shares to be bought and sold pursuant to clause 2.1
being all the issued shares in the capital of the Company.
"STOCK VALUE EQUIVALENT" means, as regards the Base Consideration 337,262
Consideration Shares, as regards the Retention 16,340 Consideration Shares
and as regards the Earn Out Payments such number of Consideration Shares
which when multiplied by the average of the closing price for common stock
in the Purchaser for fifteen (15) Business Days up to and including the
fifth Business Day prior to the relevant date as at which the amount is
determined that equals the amount due to be paid and satisfied by the issue
of Consideration Shares under this Agreement.
"SUBSIDIARIES" means the companies details of which are set out in part II
of schedule 2.
"TAX DEED" means the deed in Agreed Form relating to taxation, to be
executed and delivered on the date of this Agreement.
"VENDOR DIRECTORS" means those persons nominated by the Vendors as
directors pursuant to paragraph 8 of schedule 6.
"VENDORS' SOLICITORS" means Wilde Sapte of 0 Xxxxx Xxxxx, Xxxxxx XX0X 0XX.
"WARRANTIES" means the warranties by the Vendors implied by the words "with
full title guarantee" in clause 2.1 and the Warranties set out in schedules
3 and 4, and all other warranties, covenants and indemnities contained in
this Agreement or implied by law, but shall not include any of the
warranties contained in the Tax Deed.
4
"WARRANTORS" means Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxxx and
Xxxxxx Xxxxxxx.
1.2 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement, where the context admits:
1.2.1 words and phrases the definitions of which are contained or
referred to in Part XXVI Companies Act 1985 shall be construed as
having the meanings thereby attributed to them;
1.2.2 references to, or to any provision of, any treaty, statute,
directive, regulation, decision, order, instrument, by-law, or
any other law of, or having effect in, any jurisdiction ("LAWS")
shall be construed also as references to all other Laws made
under the Law referred to, and to all such Laws as amended,
re-enacted, consolidated or replaced or as their application is
modified by other Laws as at the date of this Agreement;
1.2.3 where any statement is to the effect that the Warrantors or the
Purchaser are not aware of any matter or circumstance, or is a
statement qualified by the expression "SO FAR AS THE WARRANTORS
ARE AWARE", "TO THE BEST OF THE WARRANTORS' KNOWLEDGE AND BELIEF"
or "SO FAR AS THE PURCHASER IS AWARE" any similar expression,
that statement shall be deemed to include an additional statement
that it has been made after due and careful enquiry;
1.2.4 references to clauses and schedules are references to clauses of
and schedules to this Agreement, references to paragraphs are,
unless otherwise stated, references to paragraphs of the schedule
in which the reference appears, and references to this Agreement
include the schedules;
1.2.5 references to the singular shall include the plural and vice
versa and references to the masculine, the feminine and the
neuter shall include all such genders;
1.2.6 "PERSON" includes any individual, partnership, body corporate,
corporation sole or aggregate, state or agency of a state, and
any unincorporated association or organisation, in each case
whether or not having separate legal personality; and
1.2.7 "COMPANY" includes any body corporate.
1.2.8 references to the Vendors or Warrantors include a reference to
each of them.
1.3 JOINT AND SEVERAL LIABILITIES
All warranties, representations, indemnities, covenants, agreements and
obligations given or entered into by more than one person in this Agreement
are unless otherwise expressed given or entered into jointly and severally.
5
1.4 HEADINGS
The headings and sub-headings are inserted for convenience only and shall
not affect the construction of this Agreement.
1.5 SCHEDULES
Each of the schedules shall have effect as if set out herein.
2. SALE OF SHARES
2.1 SALE AND PURCHASE
Subject to the terms of this Agreement, each of the Vendors shall sell with
full title guarantee, free from all Encumbrances and together with all
rights now or hereafter attaching thereto, the number of Sale Shares set
opposite his name in the second column of schedule 1, and the Purchaser
shall purchase all such Sale Shares, consisting of 1,742,997 A Shares of 1p
each, 58,911 B shares of 10p each, 333,480 D Shares of 1p each and
23,343,600 E Shares of 0.01p each.
2.2 NO SALE OF PART ONLY
Neither the Vendors nor the Purchaser shall be obliged to complete the sale
and purchase of any of the Sale Shares unless the sale and purchase of all
the Sale Shares is completed simultaneously.
2.3 WAIVER OF PRE-EMPTION RIGHTS
Each of the Vendors hereby waives any pre-emption rights he may have
relating to the Sale Shares whether conferred by the Company's Memorandum
and Articles of Association or otherwise.
3. Consideration
3.1 AMOUNT
The total consideration for the Sale Shares shall be the sum of:
3.1.1 US$1,935,385 in cash and 337,262 Consideration Shares to be
issued under Clause 4.4 ("Base Consideration");
3.1.2 the 16,340 Consideration Shares to be issued, in accordance with
clause 5.5 ("Retention"); and
3.1.3 the Earn-Out Payments
6
Such consideration shall be apportioned among the Vendors, unless otherwise
specified, in accordance with the appropriate percentage as set out in
schedule 1.
4. COMPLETION
4.1 DATE AND PLACE OF COMPLETION
Completion shall take place at the offices of the Vendors' Solicitors on
the Completion Date.
4.2 VENDORS' OBLIGATIONS
On Completion the Vendors shall subject to the due performance by the
Purchaser of its obligations under clause 4.3:
4.2.1 deliver to the Purchaser:
(a) transfers of the Sale Shares duly executed by the registered
holders thereof in favour of the Purchaser or its nominees
together with the relative share certificates or an indemnity in
respect of any missing certificates;
(b) such waivers or consents as the Purchaser may require to enable
the Purchaser or its nominees to be registered as holders of the
Sale Shares; and
(c) certified copy powers of attorney in the Agreed Form;
4.2.2 procure that the Directors (other than the Continuing Directors)
and the secretary or secretaries of the Company and the
Subsidiaries retire from all their offices with the Company and
the Subsidiaries, each delivering to the Purchaser a deed (in the
Agreed Form) made out in favour of the Company and/or the
Subsidiaries acknowledging that he has no claim outstanding for
compensation or otherwise;
4.2.3 deliver to the Purchaser as agent for the Company and the
Subsidiaries other than FSI all the statutory and other books of
the Company and each of the Subsidiaries (other than FSI) and
its/their certificate(s) of incorporation, any certificates of
incorporation on change of name and common seal(s), certificates
or indemnities in respect of all issued shares in the capital of
each of the Subsidiaries; and
4.2.4 deliver the Tax Deed duly executed by each of the Vendors;
4.2.5 procure board meetings of the Company and of each of the
Subsidiaries other than FSI to be held at which there shall be:
7
(a) passed a resolution to approve, in the case of the Company, the
transfers of the Sale Shares and (subject only to due stamping)
to register, in the register of members, the Purchaser as the
holder of the Sale Shares;
(b) appointed as directors and/or secretary such persons as the
Purchaser may nominate, such appointments to take effect
immediately; and
(c) tendered and accepted the resignations and acknowledgements of
the directors and secretaries referred to in clause 4.2.2 each
such acceptance to take effect at the close of the meeting.
4.3 PURCHASER'S OBLIGATIONS
On Completion the Purchaser shall:
4.3.1 pay such part of the Base Consideration to be satisfied in cash
to the Vendors as set out in schedule 1 for the Sale Shares as
provided by clause 3, by way of telegraphic transfer of funds for
the same day value to the client account of the Vendors'
Solicitors (Bank: National Westminster plc, Account Number:
01759108 and Sort Code: 50-00-00); and
4.3.2 deliver the Tax Deed duly executed by the Purchaser.
4.4 CONSIDERATION SHARES
The Purchaser shall as soon as practicable, in any event no later than ten
(10) Business Days after the Completion Date procure the issue of the
Consideration Shares in respect of the Base Consideration to each of the
Vendors, in accordance with the amounts set out in schedule 1.
4.5 VENDOR DIRECTORS
The Purchaser shall as soon as practicable after completion procure that
the Vendor Directors are appointed to the board of Xxxxxxxx-Xxxx Limited.
5. WARRANTIES
5.1 GENERAL
5.1.1 The Vendors hereby severally warrant and represent to and for the
benefit of the Purchaser the Warranties as set out in paragraphs
3.1 and 3.2 of Schedule 3.
5.1.2 The Warrantors hereby jointly and severally warrant to the
Purchaser in the terms of the Warranties subject to the
provisions of this Agreement and in particular the exclusions and
limitations in schedule 7.
8
5.1.3 Any sum payable by the Warrantors or the Vendors in respect of
any breach of the Warranties shall be treated as a reduction in
the Consideration.
5.2 DISCLOSURE
The Warranties are given subject to facts and matters fairly disclosed in
or by this Agreement or in the Disclosure Letter with sufficient details to
identify the nature and scope of the matter disclosed and the Purchaser
shall accordingly have no claim in respect of any of the Warranties in
relation to any fact or matter so disclosed.
5.3 WARRANTIES TO BE INDEPENDENT
Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other Warranty
or anything in this Agreement.
5.4 PURCHASER'S REMEDIES
5.4.1 The parties acknowledge that they have not been induced to enter
into this Agreement by, and that they do not in connection with
this Agreement or its subject matter rely on, any representation,
warranty, promise or assurance by the each other or any other
person save for those contained in this Agreement and the Tax
Deed.
5.4.2 Nothing in this clause 5.4 shall exclude or affect any right or
remedy available to either party in respect of fraud.
5.5 RETENTION
5.5.1 The amount of the Retention shall:
(a) be released to the Warrantors by issue of the Stock Value
Equivalent of US$690,283 being 16,340 Consideration Shares on 31
March 2001 provided that no Relevant Claim is notified to the
Warrantors in accordance with the provisions of schedule 7; or
(b) be reduced by the amount of any Relevant Claim notified in
accordance with the provisions of schedule 7 to the Warrantors
and released to the Warrantors on 31 March 2001; or
(c) be extinguished but without prejudice to the rights of the
Purchaser in respect of its rights and remedies under this
Agreement if during the period prior to 31 March 2001 a Relevant
Claim in excess of the Retention is notified to the Warrantors in
accordance with the provisions of schedule 7.
5.5.2 If the liability of the Warrantors (as the same is defined in
paragraph 2.3 of schedule 7) in respect of a Relevant Claim for
which the whole or part of the Retention is reduced or
extinguished in accordance with Clause 5.5.1, is:
9
(a) less than the amount by which the Retention is reduced, the
Purchaser shall release to the Warrantors the difference between
the Retention received and the liability of the Warrantors; or
(b) greater than the amount by which the Retention is reduced, the
Warrantors shall pay the Purchaser the difference between the
Retention received and the liability of the Warrantors.
5.6 INDEMNITY
5.6.1 Clause 5.2 shall not apply to this clause 5.6.
5.6.2 In the event that a Relevant Claim arises or the Company, its
Subsidiaries or the Purchaser suffers any loss as a result of:
(a) a breach or breaches of the Warranty referred to in paragraphs 4,
8.1 and 8.5 of schedule 3;
(b) any dividend or other distribution having been declared or paid
other wise than in accordance with the memorandum or articles of
association of the Company or any of its subsidiaries and/or in
accordance with the Companies Acts;
(c) the litigation or dispute with or claims made by Goldstar
Publications Limited and Euphony, insofar as any amounts finally
settled or in respect of which judgment or order is given, exceed
any professional indemnity insurance
the Warrantors shall jointly and severally indemnify and hold harmless
the Purchaser from and against any and all loss, damage, levy, fine,
penalty, costs, expenses liability (including legal costs) caused by
or arising from or incurred as a result of such breach, acts or
omissions by the Company or any of its Subsidiaries.
5.6.3 Notwithstanding the provisions of schedule 7, the Warrantors
shall jointly and severally indemnify and hold harmless the
Purchaser against 50 per cent. of any and all loss, damage, levy,
fine, penalty, costs (including legal costs), expenses or
liability caused by or arising from or incurred as a result of
any breach, act or omission or failure in respect of the law
applicable to and terms of including maintenance of insurance in
respect thereof all "welfare benefit plans" (as defined in
section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), "employee pension benefit plans" (as
defined in section 3(2) of ERISA) bonus, profit sharing, deferred
compensation incentive or other compensation plans or agreements,
and other employee fringe benefit plans whether funded or
unfunded, qualified or unqualified maintained or contributed to
for the benefit of any of the employees of FSI including, for the
avoidance of doubt, the 401(k) plan.
10
5.6.4 The indemnities set out in this clause 5.6 shall be satisfied in
the first place by reducing or extinguishing the Retention.
5.7 WARRANTIES BY PURCHASER
5.7.1 The Purchaser warrants to each of the Vendors as follows:
(a) the Purchaser has the requisite power and authority to enter into
and perform this Agreement;
(b) this Agreement will, when executed, constitute binding
obligations of the Purchaser in accordance with their respective
terms; and
(c) subject to the provisions of schedule 7, so far as the Purchaser
is aware there is nothing material in the context of this
transaction affecting the business of Xxxxxxxx-Xxxx Limited that
would cause a reasonable vendor not to have entered into this
Agreement on the terms of the Earn Out provisions set out in
schedule 6.
5.7.2 PURCHASER'S DISCLOSURE
The Purchasers' warranty referred to in clause 5.7.1(c) is given
subject to facts and matters fairly disclosed in or by this
Agreement or in the Purchaser's Disclosure Letter with sufficient
details to identify the nature and scope of the matter disclosed
and the Vendors shall accordingly have no claim in respect of
such warranty in relation to any fact or matters so disclosed.
6. Confidentiality Undertaking
6.1 CONFIDENTIALITY
Subject to clause 6.2 and to clause 7, each party:-
6.1.1 shall treat as strictly confidential information obtained or
received by it as a result of negotiating, entering into or
performing its obligations under this Agreement which relates to
the negotiation of, or the provisions or subject matter of, this
Agreement or to any other party ("CONFIDENTIAL INFORMATION"); and
6.1.2 shall not, except with the prior written consent of each other
party (which shall not be unreasonably withheld or delayed),
publish or otherwise disclose to any person any Confidential
Information.
6.2 PERMITTED DISCLOSURES
Clause 6.1 shall not apply if and to the extent that the party disclosing
Confidential Information can demonstrate that:
11
6.2.1 such disclosure is required by law or by any securities exchange
or regulatory or governmental body having jurisdiction over it (
including but not limited to the Securities and Exchange
Commission, the Panel on Take-overs and Mergers and the Serious
Fraud Office) and whether or not the requirement has the force of
law; or
6.2.2 the Confidential Information concerned was lawfully in its
possession (as evidenced by written records) prior to its being
obtained or received as described in clause 6.1.1; or
6.2.3 the Confidential Information concerned has come into the public
domain other than through its fault or the fault of any person to
whom such Confidential Information has been disclosed in
accordance with clause 6.1.2.
6.3 CONTINUANCE OF RESTRICTIONS
The restrictions contained in this clause 6 shall survive Completion and
shall continue without limit of time.
7. ANNOUNCEMENTS
7.1 RESTRICTIONS
Subject to clauses 7.2 and 7.4, and whether or not any restriction
contained in clause 6 applies, no party to this Agreement shall make any
announcement, (including, without limitation any communication to the
public, to any customers or suppliers of the Company, or to all or any of
the employees of the Company) concerning the provisions or subject matter
of this Agreement or containing any information about any other party
without the prior written approval of the others (which shall not be
unreasonably withheld or delayed).
7.2 PERMITTED ANNOUNCEMENTS
Clause 7.1 shall not apply if and to the extent that such announcement is
required by law or by any securities exchange or regulatory or governmental
body having jurisdiction over it (including but not limited to the
Securities and Exchange Commission, the Panel on Takeovers and Mergers and
the Serious Fraud Office) and whether or not the requirement has the force
of law and provided that any such announcement shall be made only after
consultation with the other parties.
7.3 CONTINUANCE OF RESTRICTIONS
The restrictions contained in this clause 7 shall survive Completion and
shall continue without limit of time.
7.4 ANNOUNCEMENTS TO CUSTOMERS AND SUPPLIERS
12
The Vendors and the Purchaser shall as soon as practicable after Completion
procure that a joint announcement in the Agreed Form of the sale and
purchase of the Sale Shares is made to the customers and suppliers of the
Company and each Subsidiary.
13
8. REGISTRATION OF CONSIDERATION SHARES
8.1 Consideration Each issue of the Consideration Shares whether in
satisfaction of the Base, Retention or each Earn Out Payment shall not be
registered (and shall be exempt from registration) under the United States
Securities Act of 1933, as amended (the "Securities Act").
8.2 Each Vendor acknowledges that the Consideration Shares have not been
registered under the Securities Act and are being acquired for investment
purposes and without a view to distribution thereof (as the terms
"investment" and "distribution" are recognised under the Securities Act).
8.3 Each Vendor who is a United States resident or citizen covenants with the
Purchaser that he will not attempt to sell or otherwise dispose of any of
the Consideration Shares issued unless the sale or disposal is registered
under the Securities Act or is exempt from registration thereunder. Each
Vendor who is neither a United States resident nor United States citizen
recognises that the Consideration Shares are being issued to him in
reliance on the exemption afforded by Regulation S of the Rules and
Regulations under the Securities Act and that such shares may not be
offered or sold in the United States or to US persons (as defined in
Regulations) for a period of 12 months from the date of issue or until
prior registration of the Consideration Shares is effected under the
Securities Act or an exemption from such registration is available.
8.4 The Purchaser shall at its expense use its reasonable endeavours to cause
the registration of the Consideration Shares under Form S-3 under the
Securities Act as soon as practicable after the issue of the Consideration
Shares to the Vendors and maintain such registration for a period of one
year from their issue provided that the Purchaser shall be entitled to
delay any such filing and the use by the Purchaser of the prospectus or
Registration Statement (as defined in the Securities Act) if it is
reasonably determined that such filing or use would impede, delay or
interfere with any significant financing, acquisition, or other transaction
involving the Purchaser or require disclosure of material information which
the Purchaser has a bona fide business purpose for preserving
confidentiality.
8.5 Subject to clause 8.4, in the event that a Vendor wishes to sell or
otherwise dispose of any Consideration Shares, he shall only do so through
a broker nominated by the Purchaser from time to time.
8.6 The certificates representing the Consideration Shares shall bear a legend
reflecting the limitations and restrictions set out in this clause 8 and
the Purchaser may in accordance with the Securities Act, prevent or halt
any transfer by placing stop orders with its transfer agents with respect
to such certificates.
9. SHAREHOLDERS AGREEMENT
Xxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx hereby
agree that the Shareholders Agreement made among themselves relating to the
business of the Company is hereby terminated and any antecedent or future
claims that any of
14
them may have as shareholders of the Company or otherwise under the
agreement against each other or the Company is hereby waived.
15
10. PROVISIONS RELATING TO THIS AGREEMENT
10.1 SUCCESSORS AND ASSIGNS
10.2 This Agreement shall be binding upon and enure for the benefit of the
successors of the parties but shall not be assignable save that the
Purchaser may assign this Agreement to any member within the Purchaser's
Group.
10.3 WHOLE AGREEMENT AND VARIATIONS
10.3.1 This Agreement, together with any documents referred to in it,
constitutes the whole agreement between the parties relating to
its subject matter and supersedes and extinguishes any prior
drafts, agreements, and undertakings, whether in writing or oral,
relating to such subject matter.
10.3.2 No variation of this Agreement shall be effective unless made in
writing and signed by each of the parties.
10.4 AGREEMENT SURVIVES COMPLETION
The Warranties and all other provisions of this Agreement, in so far as the
same shall not have been performed at Completion, shall remain in full
force and effect notwithstanding Completion.
10.5 RIGHTS ETC CUMULATIVE AND OTHER MATTERS
10.5.1 The rights, powers, privileges and remedies provided in this
Agreement are cumulative and are not exclusive of any rights,
powers, privileges or remedies provided by law or otherwise.
10.5.2 No failure to exercise nor any delay in exercising any right,
power, privilege or remedy under this Agreement shall in any way
impair or affect the exercise thereof or operate as a waiver
thereof in whole or in part.
10.5.3 No single or partial exercise of any right, power, privilege or
remedy under this Agreement shall prevent any further or other
exercise thereof or the exercise of any other right, power,
privilege or remedy.
10.6 INVALIDITY
If any provision of this Agreement shall be held to be illegal, void,
invalid or unenforceable under the laws of any jurisdiction, the legality,
validity and enforceability of the remainder of this Agreement in that
jurisdiction shall not be affected, and the legality, validity and
enforceability of the whole of this Agreement in any other jurisdiction
shall not be affected.
16
10.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, which shall
together constitute one agreement. Any party may enter into this Agreement
by signing any such counterpart.
10.8 COSTS
Save as otherwise expressly provided herein, each party shall bear its own
costs arising out of or in connection with the preparation, negotiation and
completion of the sale and purchase as set out in this Agreement.
10.9 NOTICES
10.9.1 Any notice or other communication required to be given under this
Agreement or in connection with the matters contemplated by it
shall, except where otherwise specifically provided, be in
writing in the English language and shall be addressed as
provided in clause 10.9.2 and may be:
(a) personally delivered, in which case it shall be deemed to have
been given upon delivery at the relevant address; or
(b) if within the United Kingdom, sent by first class pre-paid post,
in which case it shall be deemed to have been given two (2)
Business Days after the date of posting; or
(c) if from or to any place outside the United Kingdom, sent by
pre-paid priority airmail, in which case it shall be deemed to
have been given seven (7) Business Days after the date of
posting; or
(d) sent by fax, in which case it shall be deemed to have been given
when despatched, subject to confirmation of uninterrupted
transmission by a transmission report provided that any notice
despatched by fax after 17.00 hours (at the place where such fax
is to be received) on any day shall be deemed to have been
received at 09.00 on the next Business Day.
10.9.2 The addresses and other details of the parties referred to in
clause 10.9.1 are, subject to clause 10.9.3:
FOR THE VENDORS:
To the Representatives:
Name: Xxxxxx Xxxxxxxx
Address: 00 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx
00
XX0 0XX
Name: Xxxxx Xxxxxxxxxx
Address: 00 Xxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxx
X00 0XX
Name: Xxxxxx Xxxxxxx
Address: 0X Xxxxxx Xxxx, Xxxxxx XX00 0XX
Name: Xxxx Xxxxxxxx
Address: 000 Xxxx Xxx, Xxxxxxxx, Xxxxxx XX0 0XX
FOR THE PURCHASER:
Name: Xxxxxxxx-Xxxx Inc.
For the attention of: Xxxxx Xxxxxx
Address: 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000-0000
Fax number: (x0) 000 000 0000
With copies to:
Name: Xxxxxxxx-Xxxx Limited
For the attention of: Xxx Xxxxxxxx
Address 0 Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxx X0 0XX
Fax Number: 0000 000 0000
10.9.3 Any party to this Agreement may notify the other parties of any
change to its address or other details specified in clause 10.9.2
provided that such notification shall only be effective on the
date specified in such notice or five (5) Business Days after the
notice is given, whichever is later.
10.9.4 For the avoidance of doubt, any communication required to be
given to any or all of the Vendors shall be deemed to be validly
given if given to the Representatives in accordance with clause
10.9.1 and each Vendor to which any communications relates shall
be deemed to have received such communications on the 5th
Business Day after the communication is received by the
Representatives.
18
10.9.5 Without prejudice to clause 10.9.4, upon receipt of any notice or
other communication hereunder, the Representatives who have
received the same shall confer with and appoint one of their
number to pass the said notice or communication to each of the
other Vendors on the day of receipt of the same by the
Representatives or as soon as practicable thereafter.
10.9.6 Without prejudice to clause 10.9.4, if any Vendor shall have
occasion to address any notice or other communication to the
Purchaser, he or she shall discuss the same with the
Representatives who shall nominate one of their number to give
such notice or communication to the Purchaser.
10.10 FURTHER ASSURANCE
At any time after completion, each Vendor shall, at the request of the
Purchaser, execute or procure the execution of such documents and do or
procure the doing of such acts and things as the Purchaser may lawfully and
reasonably require for the purpose of vesting the Sale Shares in the
Purchaser or its nominees and giving to the Purchaser the full benefit of
all the provisions of this Agreement.
11. LAW AND JURISDICTION
11.1 ENGLISH LAW
This Agreement shall be governed by, and construed in accordance with,
English law.
11.2 JURISDICTION
In relation to any legal action or proceedings to enforce this Agreement or
arising out of or in connection with this Agreement ("PROCEEDINGS") each of
the parties irrevocably submits to the jurisdiction of the English courts
and waives any objection to Proceedings in such courts on the grounds of
venue or on the grounds that the Proceedings have been brought in an
inconvenient forum.
11.3 PROCESS AGENT
The Purchaser appoints Xxxxxxxx-Xxxx Limited of 0 Xxxxxxxxx, Xxxxxx Xxxx,
Xxxxxx X0 0XX as its process agent to receive on its behalf service of
process in any proceedings in England. Service upon the process agent shall
be good service upon the Purchaser whether or not it is forwarded to and
received by the Purchaser. If for any reason the process agent ceases to
be able to act as process agent, or no longer has an address in England,
the Purchaser irrevocably agrees to appoint a substitute process agent with
an address in England acceptable to the Representatives and to deliver to
the Representatives a copy of the substitute process agent's acceptance of
that appointment within twenty (20) Business Days. In the event that the
Purchaser fails to appoint a substitute process agent, it shall be
effective service for the Vendors to serve the process upon the last known
address in England of the last known process
19
agent for the Purchaser notified to the Representatives, notwithstanding
that such process agent is no longer found at such address or has ceased
to act.
AS WITNESS the hands of the duly authorised representatives of the parties on
the date first before written.
20
SCHEDULE 1 : THE VENDORS
Names and Addresses of No. of Sale Shares Appropriate Base Consideration Retention
Vendors held Percentage (%) Amount
Gross Cash Gross Consideration (no. of
Shares Consideration
Shares)
(US$)
Xxxx Xxxxxxxx 416,630 A shares 19.806106 396,122 72,372 4,085
000 Xxxx Xxx 83,370 D shares
Banstead 5,835,900 E shares
Surrey SM7 1HN
Xxxxxx Xxxxxxxx 416,630 A shares 19.806106 396,122 72,372 4,085
00 Xxxxxx Xxxxxx 83,370 D shares
Stanmore 5,835,900 E shares
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxxxxxxx 416,630 A shares 19.806106 396,122 72,372 4,085
41 Colet Gardens 83,370 D shares
Hammersmith 5,835,900 E shares
Xxxxxx X00 0XX
Xxxxxx Xxxxxxx 416,630 A shares 19.806106 396,122 72,372 4,085
0X Xxxxxx Xxxx 83,370 D shares
Xxxxxx XX00 0XX 5,835,900 E shares
21
Xxxx J Batting 1,000 B shares 0.246395 4,928 900
0 Xxxxxxxxx
Xxxxxx xx Xxxxxx
XX00 0XX
Zag Asghar 1,000 B shares 0.246395 4,928 000
Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx Road
Kenilworth
Warwickshire CV8 1FE
Xxxxxx Brine 5,000 B shares 1.231976 24,640 4,502
Xxxxx Xxxxx, 0 Xxxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxxxxxxx XX0 0XX
Xxxxxxx Xxxxxxx 1,500 B shares 0.369593 7,392 1,351
0 Xxxx Xxxx
Xxxxxxxxx
Xxxxx XX00 0XX
Fiona Cannons 1,500 B shares 0.369593 7,392 1,351
0 Xxxxxxxxx
Xxxxxx xx Xxxxxx
Xxxxxx XX00 0XX
22
Xxxxxxxx Xxxxxxx 5,000 B shares 1.231976 24,640 4,502
Xxxxx Xxxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx
Xxxxxx XX0 0XX
Xxxx Xxxxx 5,000 B shares 1.231976 24,640 4,502
00 Xxxxxx Xxxx
Xxxx Xxxxxxxx
Xxxxxx X0 0XX
Xerxes Hodivala 5,257 B shares 1.295299 25,906 4,734
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxx 2,000 B shares 0.492790 9,856 1,801
0 Xxxxxxxxxx Xxx
Xxxxxx
Xxxxxxxxx
Xxxxxx XX0 0XX
23
Xxxxxx Xxxxx 3,000 B shares 0.739185 14,784 2,701
00 Xxxx Xxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx XX0 0XX
Xxxx Xxxxx 1,500 B shares 0.369593 7,392 1,351
Xxxx 0, 0 Xxxxxx Xxxx
Xxxxxxxx
Xxxxxx XX0 0XX
Xxx Xxxxxxxxx 3,000 B shares 0.739185 14,784 2,701
Dutch Barge "Anny"
00 Xxxxx Xxxxx Xxxx
Xxxxxx X0 0XX
Xxxx Xxxxx 1,500 B shares 0.369593 7,392 1,351
00 Xxxxxxxx Xxx Xxxx
Xxxxxxx
Xxxxxxxxx XX00 0XX
Xxxxx Xxxxx 5,444 B shares 1.341375 26,828 4,900
0 Xxxxxxx Xxxx
Xxxxxx
Xxxxxx XX00 0XX
24
Xxxxx Xxxxx 5,000 B shares 1.231976 24,640 4,502
00 Xxxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxxxxxxxxxxx XX0 0XX
Xxxxx Xxxxxx 3,000 B shares 0.739185 14,784 2,701
00 Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxx
Xxxxxxxxx XX00 0XX
Xxxx X Xxxx 3,000 B shares 0.739185 14,784 2,701
January Cottage
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxxxxxxxx 2,000 B shares 0.492790 9,856 1,801
00 Xxxxxxx Xxxx
Xxxx Xxxxxx
Xxxxxx XX0 0XX
Xxxxxxx Xxxxx 2,000 B shares 0.492790 9,856 1,801
00x Xx Xxxxx
Xxxxxx XX0 0XX
25
Xxxxxxx Xxxxxx 2,929 A shares 0.136721 2,734 000
00 Xxxxxxx Xxxx 84 B shares
Balerno
Xxxxxxxxx XX00 0XX
Xxxxx Xxxx 5,859 A shares 0.273729 5,474 1000
22 Hillview 169 B shares
Blackhall
Xxxxxxxxx XX0 2AF
Xxxxxxx Xxxxxxx 4,394 A shares 0.205348 4,106 751
00 Xxxxxxxx Xxxx 127 B shares
Xxxxxxxxxx
Xxxxxxxxx XX0 0XX
Xxxx Xxxxxxxx 1282 A shares 0.059900 1,198 219
00 Xxx Xxxx Xxxx 00 X shares
Xxxxxxx
Xxxxxxxxxxx
Xxxxxx XX0 0XX
26
Xxxxxxx X Xxxxxxx 916 A shares 0.042691 854 156
00 Xxxxxxxxx Xxxx 26 B shares
Xxxxxxxx
Xxxx
Xxxxxxxxxx XX0 0XX
Xxxxx Xxxxxxxxx 45,801 A shares 2.141492 42,830 7,825
The Barn 1,328 B shares
Xxxxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxxxx
Xxxxxxxx
Xxxx Xxxxxxx 2,748 A shares 0.128319 2,566 468
00 Xxxxxxx Xxxx 79 B shares
Xxxxxx
Xxxxxxxxxx XX00 0XX
Xxxxx X Xxxxxxx 916 A shares 0.042691 854 156
6 Green Villa Park 26 B shares
Xxxxxxxx
Xxxxxxxx XX0 0XX
27
Xxxx Xxxx 1,832 A shares 0.085629 1,712 314
31 Regency House 53 B shares
Xxxxxxxxx Xxxxxx
Xxxxxxxxxx X0 0XX
Xxx Xxxxxx 5,496 A shares 0.256886 5,137 939
The Lodge 159 B shares
Altrincham Grammar
School for Girls
Xxxxxxxxx Xxxx
Xxxxxx
Xxxxxxxxxx XX00 0XX
Xxxx Xxxxxxx 2,748 A shares 0.128319 2,566 469
Apartment 27 79 B shares
The Xxx Xxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxxxxxx X0 0XX
Xxxxxx Xxxxxx 366 A shares 0.016962 339 62
22 Wellburn Close 10 B shares
Xxxxxx XX0 0XX
28
Xxxxx Xxxx 916 A shares 0.042691 854 156
2 Giantswood Lane 26 B shares
Xxxxxxxxx
Xxxxxxxx XX00 0XX
Xxxxxx X Xxxxxxxx 274 A shares 0.012579 251 46
14 Kent Close 7 B shares
Xxxxxx
Xxxx Xxxxxxxxx XX00 0XX
Discretionary earn out
element -- 3.230769 -- --
-------- ---------- -------
100.00 1,935,385 353,602
-------- ---------- -------
29
SCHEDULE 2 : PART I - THE COMPANY
Name: Fulcrum Solutions Limited
Number: 03331163
Registered Office: Xxxxx Xxxx
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Authorised Capital: L40,000
Issued Capital: L33,990.51 divided into
1,742,997 A Shares of 1p each
58,911 B Shares of 10p each
500,004 C Shares of 1p
333,480 D Shares of 1p
23,343,600 E Shares of 0.01p
Directors: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxxx
Secretary: Xxxxxx Xxxxxxxx
Accounting Reference Date: 30 September
Auditors: KPMG of 0 Xxxxxx Xxxx
Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Continuing Directors: Xxxx Xxxxxxxx
Xxxxx Xxxxxxxxxx
30
SCHEDULE 2 : PART II - THE SUBSIDIARIES
Name: Fulcrum Solutions (North) Limited
Number: 03503022
Registered Office: Xxxxx Xxxx
00 Xxxxx Xxxxxxxx Xxxx
Xxxxxx XX0X 0XX
Authorised Capital: L15,000
Issued Capital: L11,674.67 comprising 1,167,467 ordinary shares of 1p
each
Registered Shareholders: Fulcrum Solutions Limited
Beneficial owner of
issued capital: Fulcrum Solutions Limited
Directors: Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
Secretary: Xxxxxx Xxxxxxxx
Accounting Reference Date: 30 September
Auditors: KPMG
0 Xxxxxx Xxxx
Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Name: Fulcrum Solutions (Scotland) Limited
Number: 03356700
Registered Office: 00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Authorised Capital: L15,000
Issued Capital: L9,125 comprising 912,500 ordinary shares of 1p each
Registered Shareholders: Fulcrum Solutions (North) Limited
Beneficial owner of
issued capital: Fulcrum Solutions (North) Limited
31
Directors: Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxxx
Secretary: Xxxxxx Xxxxxxxx
Accounting Reference Date: 30 September
Auditors: KPMG
0 Xxxxxx Xxxx
Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Name: Fulcrum Solutions Inc.
Principal place of
Business: 0000 Xxxxxx Xxxxxx
Xxxxxxxxxx
Xxxxxxxx
Authorised Capital: $1,000 divided into 75,000 Class A Voting common
stock of $0.01 each and 25,000 Class B Non-Voting
common stock at $0.01 each
Issued Capital: US$925 divided into 75,000 Class A Voting common
stock and 22,500 Class B Non-Voting stock
Registered Shareholders: Fulcrum Solutions Limited
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
Xxx Xxxxxx
Xxxx Xxxx
Xxxx Xxxx
Xxx Xxxxxxxx
Xxxxx Xxxx
President: Xxxxxx Xxxxxxx
Chief Operating Officer: Xxxxx Xxxxxxxxxx
Secretary: Xxxxxx Xxxxxxxx
32
SCHEDULE 3 : WARRANTIES
1. INTERPRETATION
1.1 Definitions
In this schedule, where the context admits:
"COMPUTER SYSTEMS" means the Hardware, Software and Data.
"DATA" means any data or information used by or for the benefit of the
Company at any time and stored electronically at any time.
"HARDWARE" means any computer equipment used by or for the benefit of the
Company at any time including, without limitation, parts of computer
equipment such as firmware, screens, terminals, keyboards, disks and
including without limitation, cabling and other peripheral and associated
electronic equipment but excluding all Software.
"INTELLECTUAL PROPERTY" means patents, trade marks, service marks, rights
(registered or unregistered) in any designs; applications for any of the
foregoing; trade or business names; copyright (including rights in computer
software) and topography rights; know-how; secret formulae and processes;
lists of suppliers and customers and other confidential and proprietary
knowledge and information; rights protecting goodwill and reputation;
database rights and all rights and forms of protection of a similar nature
to any of the foregoing or having equivalent effect anywhere in the world
and all rights under licences and consents in respect of any of the rights
and forms of protection mentioned in this definition.
"SOFTWARE" means any set of instructions for execution by a computer
processor used by or for the benefit of the Company at any time
irrespective of application, language or medium.
"SOFTWARE PRODUCTS" means any software and associated documentation and
materials, which is now or has at any previous time been supplied by the
Company.
1.2 CONSTRUCTION
Construction
In this schedule where the context admits:-
1.2.1 any question whether a person is connected with another shall be
determined in accordance with Section 839 Income and Corporation
Taxes Xxx 0000, (subject to the deletion of the words from
"Except" to "arrangements" in sub-section (4)
33
thereof) which shall apply in relation to this schedule as it
applies in relation to that Act;
1.2.2 references to the "COMPANY" shall include each of the
Subsidiaries except for FSI;
1.2.3 reference to any Act, statutory instrument, regulation, bye-law
or other requirement of English law and to any English legal term
for any action, remedy, method of judicial proceeding, legal
document, legal status, court, official or any legal concept or
thing shall in respect of any jurisdiction other than England be
deemed to include that which most nearly approximates in that
jurisdiction to the English legal term; and
1.2.4 where, in this schedule 3, a term is defined in and for the
purposes of a particular paragraph, the relevant definition shall
apply, where the context admits, for all other purposes of this
schedule.
2. WARRANTIES AND REPRESENTATIONS
2.1 The Vendors hereby severally warrant and represent to and for the benefit
of the Purchaser Warranties as set out in paragraphs 3.1 and 3.2 of this
schedule.
2.2 The Warrantors hereby jointly and severally warrant and represent to and
for the benefit of the Purchaser as set out in the following paragraphs
(other than paragraphs 3.1 and 3.2) of this Schedule.
3. THE COMPANY AND THE VENDORS
3.1 CAPACITY
Each of the Vendors has full power and authority to enter into and perform
this Agreement, and may execute and deliver this Agreement and perform his
obligations under this Agreement without requiring or obtaining the consent
of its shareholders or of any other person, authority or body and this
Agreement constitutes valid and binding obligations of the Vendors in
accordance with its terms.
3.2 OWNERSHIP OF SALE SHARES
Each of the Vendors is the registered and sole beneficial owner of the
number of Sale Shares set out against his name in schedule 1 free from any
Encumbrances.
3.3 LIABILITIES OWING TO OR BY VENDORS
There is not outstanding any indebtedness or other liability (actual or
contingent) owing by the Company to any Warrantor or to any Director or any
person connected with any of them, nor is there any indebtedness owing to
the Company by any such person.
34
3.4 COMPETING INTERESTS
None of the Warrantors nor any person connected with any of them has any
interest, direct or indirect, in any business other than that now carried
on by the Company which is or is likely to be or become competitive with
the business or any proposed business of the Company save as the registered
holder or beneficial owner of not more than 5 per cent. of any class of
securities of any company which is listed in the Official List of the
London Stock Exchange Limited or listed or quoted on any other recognised
stock exchange.
4. THE COMPANY'S CONSTITUTION
4.1 SHARE CAPITAL
The Sale Shares comprise the whole of the issued and allotted A Shares, B
Shares, D Shares and E Shares in the share capital of the Company and
schedule 2 contains true particulars of the authorised and issued share
capital of the Subsidiaries and all the shares there shown as issued are in
issue fully paid and are beneficially owned and registered as set out
therein free from any Encumbrances.
4.2 OPTIONS ETC.
No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, issue, sale, transfer
or conversion of any share or loan capital of the Company under any option
or other agreement (including conversion rights and rights of pre-emption).
4.3 MEMORANDUM AND ARTICLES
The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied
therein or annexed thereto a copy of every resolution or agreement as is
required by law to be embodied in or annexed to it, and sets out completely
the rights and restrictions attaching to each class of authorised share
capital of the Company.
4.4 COMPANY RESOLUTIONS
Neither the Company nor any class of its members has passed any resolution
(other than resolutions relating to business at annual general meetings)
which was not special business.
5. THE COMPANY AND ITS INVESTMENTS
5.1 PARTICULARS OF THE COMPANY AND SUBSIDIARIES
The particulars of the Company and the Subsidiaries set out in schedule 2
are true and complete and the Company has no other subsidiaries.
35
5.2 INVESTMENTS, ASSOCIATIONS AND BRANCHES
The Company:-
5.2.1 is not the holder or beneficial owner of, and has not agreed to
acquire, any share or other capital of any other company or
corporation (whether incorporated in the United Kingdom or
elsewhere) other than of the Subsidiaries;
5.2.2 is not, and has not agreed to become, a member of any
partnership, joint venture, consortium or other unincorporated
association, body or undertaking in which it is to participate
with any other in any business or investment; and
5.2.3 has no branch, agency or place of business outside England and no
permanent establishment (as that expression is defined in the
relevant double taxation relief orders current at the date of
this Agreement) outside the United Kingdom.
6. THE COMPANY AND THE LAW
6.1 COMPLIANCE WITH LAWS
The Company has conducted its business in all material respects in
accordance with all applicable laws and regulations of the United Kingdom,
and any relevant foreign country or authority.
6.2 LICENCES ETC
6.2.1 The Company has obtained all licences, consents, permits,
approvals and authorisations required to be granted by third
parties in order for the Company to carry on effectively any
aspect of its business in the places and in the manner in which
such business is now carried on by the Company and all such
licences, consents, permits approvals and authorisations are in
full force and effect and are not limited in duration or subject
to onerous conditions.
6.2.2 So far as the Warrantors are aware all reports, returns and
information required by law or as a condition of any licence,
consent, permit, approval or other authorisation to be made or
given to any person or authority in connection with the Company's
business have been made or given to the appropriate person or
authority.
6.3 BREACH OF STATUTORY PROVISIONS
The Company has not committed, or omitted to do, any act or thing the
commission or omission of which is, or could be, in contravention of any
Act, Order, Regulation, or the like in the United Kingdom or elsewhere
which is punishable by fine or other penalty and no notice or communication
has been received with respect to any alleged, actual or potential
violation of or failure to comply with, any of the same.
36
6.4 LITIGATION
6.4.1 Neither the Company nor any of its officers or agents nor any of
its employees is engaged in or the subject of any litigation or
arbitration administrative or criminal proceedings whether as
plaintiff, defendant or otherwise, which adversely affects or is
likely to have an adverse effect on the Company's business and/or
the ability of the Company or any purchaser to carry on the
Company's business in the same manner and to the same extent as
previously carried on.
6.4.2 No litigation or arbitration or administrative or criminal
proceedings are pending or threatened or expected by or against
the Company or any of its officers, agents or employees; and so
far as the Warrantors are aware there are no facts or
circumstances likely to give rise to any such litigation or
arbitration or administrative or criminal proceedings.
6.4.3 Neither the Company nor any of its officers or employees has been
a party to any undertaking or assurance given to any court or
governmental agency or the subject of any injunction which is
still in force.
6.5 FAIR TRADING
6.5.1 So far as the Warrantors are aware no agreement, practice or
arrangement carried on by the Company or to which the Company is
or since incorporation has been a party:
(a) is or ought to be or ought to have been registered in accordance
with the provisions of the Restrictive Trade Practices Acts 1976
and 1977 or contravenes the provisions of the Resale Prices Xxx
0000 or is or has been the subject of any enquiry, complaint,
investigation or proceeding under any of those Acts; or
(b) is or has been the subject of an enquiry, complaint,
investigation, reference or report under the Fair Trading Act
1973 (or any previous legislation relating to monopolies or
mergers) or the Competition Xxx 0000 or constitutes an
anti-competitive practice within the meaning of the 1980 Act; or
(c) infringes Article 81 of the Treaty of Rome establishing the
European Economic Community or constitutes an abuse of dominant
position contrary to Article 82 of the said Treaty or infringes
any regulation or other enactment made under Article 83 and/or
Article 235 of the said Treaty or is or has been the subject of
any enquiry, complaint, investigation or proceeding in respect
thereof; or
37
(d) has been notified to the Directorate General of Competition of
the Commission of the European Communities and/or to the EFTA
Surveillance Authority; or
(e) is by virtue of its terms or by virtue of any practice for the
time being carried on in connection therewith a "Consumer Trade
Practice" within the meaning of section 13 Fair Trading Act 1973
and susceptible to or under reference to the Consumer Protection
Advisory Committee or the subject matter of a report to the
Secretary of State or the subject matter of an Order by the
Secretary of State under the provisions of Part II of that Act;
or
(f) infringes any other competition, restrictive trade practice,
anti-trust, fair trading or consumer protection law or
legislation applicable in any jurisdiction in which the Company
has assets or carries on business.
6.5.2 The Company has not given and so far as the Warrantors are aware,
there has been no default or contravention of any assurance or
undertaking (written or oral) to the Restrictive Practices Court
or the Director General of Fair Trading, the Secretary of State
for Trade and Industry, the European Commission, the EFTA
Surveillance Authority or the Court of Justice of the European
Communities, or to any other court, person or body and is not
subject to or in default or contravention of any Article, Act,
decision, regulation, order or other instrument or undertaking
relating to any matter referred to in this paragraph 6.5.
6.6 PRODUCT LIABILITY
6.6.1 The Company has not, sold or supplied any product or service
which:-
(a) does not comply in any material respect with any warranty or
representation, express or implied, made by or on behalf of the
Company in respect of it or with all laws, regulations, standards
and requirements applicable to it; or
(b) was sold or supplied on terms that the Company accepts an
obligation to service or repair or replace such products after
delivery.
6.7 INDUCEMENTS
So far as the Warrantors are aware no officer, agent or employee of the
Company has paid any bribe (monetary or otherwise) or used any of the
Company's assets unlawfully to obtain an advantage for any person.
7. THE COMPANY'S AND WARRANTORS' SOLVENCY
7.1 WINDING-UP
38
No order has been made, petition presented or resolution passed for the
winding up of the Company and no meeting has been convened for the purpose
of winding up the Company. None of the Warrantors is bankrupt, or the
subject of any bankruptcy proceedings. The Company has not been a party to
any transaction which could be avoided in a winding up.
7.2 ADMINISTRATION AND RECEIVERSHIP
No steps have been taken for the appointment of an administrator or
receiver (including an administrative receiver) of all or any part of the
Company's or any of the Warrantors' assets.
7.3 COMPOSITIONS
Neither the Company nor any of the Warrantors has made or proposed any
arrangement or composition with its or his creditors or any class of its or
his creditors.
7.4 INSOLVENCY
Neither the Company nor any of the Warrantors is insolvent, or unable to
pay its or his debts within the meaning of the insolvency legislation
applicable to the Company and the Warrantors respectively and neither the
Company nor any of the Warrantors has stopped paying its or his debts as
they fall due.
7.5 UNSATISFIED JUDGMENTS
No distress, execution or other process has been levied against the Company
or action taken to repossess goods in the Company's possession which has
not been satisfied in full. No unsatisfied judgment is outstanding against
the Company.
7.6 FLOATING CHARGES
No floating charge created by the Company has crystallised and, so far as
the Warrantors are aware, there are no circumstances likely to cause such a
floating charge to crystallise.
7.7 ANALOGOUS EVENTS
No event analogous to any of the foregoing has occurred in any foreign
jurisdiction in which the Company carries on business.
8. THE COMPANY'S ACCOUNTS AND RECORDS
8.1 Books and records
All accounts, books, ledgers, financial and other records of whatsoever
kind ("RECORDS") of the Company:
39
8.1.1 have been fully, properly and accurately maintained on a
consistent basis are up to date and in the possession and control
of the Company and contain true, complete and accurate records of
all matters required by law to be entered therein;
8.1.2 do not contain or reflect any material inaccuracies or
discrepancies; and
8.1.3 give and reflect a materially complete and accurate view of the
financial, contractual and trading position of the Company and of
its fixed and current assets and liabilities (actual and
contingent) debtors and creditors (as appropriate) and all other
matters which ought or would normally be expected to appear
therein
and no notice or allegation that any of the records is incorrect or should
be rectified has been received.
8.2 ACCOUNTS
The Audited Accounts
8.2.1 were prepared in accordance with the requirements of all relevant
statutes and accounting practices generally accepted in the
United Kingdom or the United States, as the case may be at the
time they were audited and commonly adopted by companies carrying
on businesses similar to the Company's (including all applicable
Statements of Standard Accounting Practice and Financial
Reporting Standards);
8.2.2 show a true and fair view of the assets and liabilities of the
Company as at, and the profits of the Company for the accounting
reference period ended on, the Balance Sheet Date;
8.2.3 are not affected by any unusual or non-recurring items;
8.2.4 in the case of consolidated financial statements, show a true and
fair view of the state of affairs of the Company and the
Subsidiaries as a whole; and
8.2.5 apply bases and policies of accounting which have been
consistently applied in the audited financial statements of the
Company and, in the case of the Company and the Subsidiaries, in
the audited consolidated financial statements for the previous
accounting reference periods ending on the Balance Sheet Date.
8.3 PROFITS
The profits of the Company for the financial years prior to the Balance
Sheet Date as shown by the Audited Accounts and the audited accounts for
such previous years and the trend of profits thereby shown have not (save
as fairly disclosed in such accounts) been affected by the inclusion of
non-recurring items of income or expenditure, by
40
transactions of an abnormal or unusual nature or entered into otherwise
than on normal commercial terms or by any other factors rendering such
profits for all or any of those periods exceptionally high or low.
8.4 PROVISION FOR LIABILITIES
Full provision has been made in the Audited Accounts for all material
liabilities of the Company outstanding at the Balance Sheet Date and
adequate provision (or note) in accordance with generally accepted
accounting principles in the United Kingdom and the United States, as the
case may be at the time they were audited, has been made therein for all
other liabilities of the Company then outstanding whether contingent,
quantified, disputed or not including (without limitation) the cost of any
work or material for which payment has been received or credit taken, any
future loss which may arise in connection with uncompleted contracts and
any claims against the Company in respect of completed contracts.
8.5 RETURNS
The Company has complied with the provisions of the Companies Acts and all
returns, particulars, resolutions and other documents required under any
legislation to be delivered on behalf of the Company to the Registrar of
Companies or to any other authority whatsoever have been properly made and
delivered. All such documents delivered to the Registrar of Companies or
to any other authority whatsoever, whether or not required by law, were
true and accurate when so delivered and the Company has not received
notification of the levy of any fine or penalty for non-compliance by the
Company or any director of the Company.
9. THE COMPANY'S BUSINESS AND THE EFFECT OF THE SALE
9.1 BUSINESS SINCE THE BALANCE SHEET DATE
Since the Balance Sheet Date:
9.1.1 the Company has carried on its business in the ordinary and usual
course so as to maintain it as a going concern;
9.1.2 there has been no material deterioration in the financial
position or turnover of the Company;
9.1.3 there has been no significant event or occurrence (including, but
not limited to the loss of any significant customer or supplier)
which has had a material adverse affect on the Company's business
or its value or profitability;
9.1.4 the Company has not borrowed or raised any money or taken any
form of financial facility (whether pursuant to a factoring
arrangement or otherwise);
41
9.1.5 the Company has paid its creditors in accordance with their
respective credit terms or (if not) within the time periods
usually applicable to such creditors and save as disclosed there
are no debts outstanding by the Company which have been due for
more than four weeks;
9.1.6 there has been no unusual change in the Company's work in
progress;
9.1.7 the Company has not entered into, or agreed to enter into, any
commitment to acquire or dispose of on capital account any asset
of a value in excess of L10,000 or equivalent;
9.1.8 no share or loan capital has been issued or agreed to be issued
by the Company;
9.1.9 no distribution of capital or income has been declared, made or
paid in respect of any share capital of the Company and
(excluding fluctuations in overdrawn current accounts with
bankers) no loan or share capital of the Company has been repaid
in whole or part or has become liable to be repaid in whole or
part; and
9.1.10 no substantial customer or supplier of the Company has in the
period of 6 months preceding the date of this Agreement ceased
or reduced the level of its trade with or supplies to the Company
or indicated an intention to do any of the foregoing.
9.2 WORKING CAPITAL
Having regard to existing bank and other facilities, the Company has
sufficient working capital for the purposes of continuing to carry on its
business in its present form and at its present level of turnover for the
foreseeable future and for the purposes of performing in accordance with
their respective terms all orders, projects and contractual obligations
which have been placed with, or undertaken by, the Company.
9.3 COMMISSION
No one is entitled to receive from the Company any finder's fee, brokerage,
or other commission in connection with this Agreement or the sale and
purchase of shares in the Company.
9.4 CONSEQUENCE OF SHARE ACQUISITION BY THE PURCHASER
The acquisition of the Sale Shares by the Purchaser and compliance with the
terms of this Agreement will not:
9.4.1 So far as the Warrantors are aware, cause the Company to lose the
benefit of any licence, consent, permit, approval or
authorisation (public or private) or any right or privilege it
presently enjoys or relieve any person of any obligation to the
Company (whether contractual or otherwise) or enable any
42
person to determine any such obligation or any contractual right
or benefit now enjoyed by the Company or to exercise any right
whether under an agreement with the Company or otherwise;
9.4.2 result in any present indebtedness of the Company becoming due or
capable of being declared due and payable prior to its stated
maturity;
9.4.3 so far as the Warrantors are aware result in a breach of, or
constitute a default under any order, judgement or decree of any
court or government agency by which the Company is bound or
subject; and
9.4.4 so far as the Warrantors are aware result in a breach of, or
constitute a default under the terms, conditions or provisions of
any agreement, understanding, arrangement or instrument
(including, but not limited to, any of the Company's contracts)
and, to the best of the knowledge and belief of the Warrantors, the
Company's relationships with clients, customers, suppliers and employees
will not be adversely affected thereby and the Warrantors are not aware of
any circumstances (whether or not connected with the Purchaser or the sale
of the Sale Shares hereunder) indicating that, nor has it been informed or
is otherwise aware that any person who now has business dealings with the
Company would or might cease to do so from and after Completion.
9.5 GRANTS
The Company has not applied for or received any grant or other financial
assistance from any supranational, national or local authority or
government agency.
9.6 INSURANCES
9.6.1 Full particulars of all the insurance policies (including,
without limitation, the limit and basis of cover under each
policy and the amount of the applicable excess) in which the
Company has an interest (the "COMPANY'S INSURANCES") are given in
the Disclosure Letter.
9.6.2 All the Company's Insurances are in full force and effect and
will be maintained in full force without alteration pending
Completion and all premiums have been paid on time. So far as the
Warrantors are aware there are no circumstances which might lead
to any liability under any of the Company's Insurances being
avoided by the insurers or the premiums being increased. The
Company's Insurances contain no special or unusual terms,
restrictions or rates of premium. There is no claim outstanding
under any of the Company's Insurances nor are the Warrantors
aware of any circumstances likely to give rise to a claim or of
any circumstances which might cause any of the insurers to refuse
to renew them.
9.7 TRADING NAME
43
The Company does not trade under any name other than its corporate name.
10. THE COMPANY'S ASSETS
10.1 NET TANGIBLE ASSET VALUE
The value of the net tangible assets of the Company at the date of this
Agreement and Completion determined in accordance with the same accounting
policies as those applied in the Audited Accounts (and on the basis that
each fixed asset is valued at a figure no greater than the value attributed
to it in the Audited Accounts or, in the case of any fixed asset acquired
by the Company after the Balance Sheet Date, at a figure no greater than
cost) is not/will not be less than the value of the net tangible assets of
the Company at the Balance Sheet Date as shown in the Audited Accounts.
10.2 ASSETS AND CHARGES
10.2.1 Except for current assets disposed of by the Company in the
ordinary course of its business, the Company is the owner legally
and beneficially of and has good title to all assets included in
the Audited Accounts and all assets which have been acquired by
the Company since the Balance Sheet Date and no Encumbrance is
outstanding nor is there any agreement or commitment to give or
create any Encumbrance over or in respect of the whole or any
part of the Company's assets, undertaking, goodwill or uncalled
capital and no claim has been made by any person that he is
entitled to any such Encumbrance.
10.2.2 Since the Balance Sheet Date, save for disposals in the ordinary
course of its business, the assets of the Company have been in
the possession of, or under the control of, the Company.
10.3 DEBTS
Save to the extent of the provision or reserve therefor contained or
reflected in the Audited Accounts, any debts owed to the Company as
recorded in the Company's books and records are good and collectable in the
ordinary course of business and will realise their full face value within
three months after Completion. The rights of the Company in respect of
such debts are valid and enforceable and are not subject to any defence,
right of set-off or counter-claim, withholding or other deduction and no
act has been done or omission permitted whereby any of them has ceased or
might cease to be valid and enforceable in whole or in part. No amount
included in the Audited Accounts as owing to the Company at the Balance
Sheet Date has been realised for an amount less than the value at which it
was included in the Audited Accounts or is now regarded by the Warrantors
as irrecoverable in whole or in part. The Company has not factored or
discounted any of its debts or other receivables or agreed to do so.
10.4 FIXED ASSETS
44
All fixed assets of the Company including, without limitation, all fixed
and movable plant and machinery, vehicles, Computer Systems and other
equipment used in, or in connection with, the business of the Company:
10.4.1 are in good repair and condition (taking into account their age
and level of use), are in satisfactory working order and have
been regularly and properly serviced and maintained and none is
dangerous, inefficient, obsolete or in need of renewal or
replacement;
10.4.2 are not unsafe, dangerous or in such a physical condition as to
contravene the Health & Safety at Work etc Xxx 0000; and
10.4.3 are not surplus to the Company's current or proposed
requirements.
10.5 INTELLECTUAL PROPERTY RIGHTS
10.5.1 The Company is the sole legal and beneficial owner free from
Encumbrances of the Intellectual Property referred to in the
Disclosure Letter and owns no other Intellectual Property.
10.5.2 All the Intellectual Property rights owned or used by the Company
are valid and enforceable and so far as the Warrantors are aware
nothing has been done, omitted or permitted whereby any of them
has ceased or might cease to be valid and enforceable.
10.5.3 So far as the Warrantors are aware none of the processes or
products of the Company infringes any Intellectual Property or
any right of any other person relating to Intellectual Property
or involves the unlicensed use of confidential information
disclosed to the Company by any person in circumstances which
might entitle that person to make a claim against the Company.
10.5.4 There are no outstanding claims against the Company for
infringement of any Intellectual Property or of any rights
relating to it used (or which has been used) by the Company and
during the last three years no such claims have been settled by
the giving of any undertakings which remain in force.
10.5.5 Confidential information and know-how used by the Company is kept
strictly confidential and the Company operates and fully complies
with procedures which maintain such confidentiality. The
Warrantors are not aware of any such confidentiality having been
breached. The Company has not disclosed (except in the ordinary
course of its business) any of its know-how, trade secrets or
list of customers to any other person.
10.5.6 All application and renewal fees, costs, charges, taxes and other
steps required for the maintenance or protection of the
Intellectual Property have been duly paid on time or taken and
none of such rights are subject to any existing challenge or
attack by a third party or competent authority and there
45
are no outstanding patent office or trade marks registry
deadlines which expire within three months of Completion.
10.5.7 The Company, if required to do so, was registered under the Data
Protection Xxx 0000 and is registered under the Data Protection
Xxx 0000 and has complied with the data protection principles set
out in such Acts.
10.6 COMPUTER SYSTEMS
10.6.1 The Hardware has been satisfactorily maintained and supported and
has the benefit of an appropriate maintenance and support
agreement terminable by the contractor by not less than 24 months
notice.
10.6.2 Disaster recovery plans are in effect and are adequate to ensure
that the Hardware, Software and Data can be replaced or
substituted without material disruption to the business of the
Company.
10.6.3 So far as the Warrantors are aware in the event that any person
providing maintenance or support services for the Hardware,
Software and Data ceases or is unable to do so, the Company has
all necessary rights and information to procure the carrying out
of such services by employees or by a third party without undue
expense or delay.
10.6.4 The Company has sufficient technically competent and trained
employees to ensure proper handling, operation, monitoring and
use of its computer systems.
10.6.5 The Company has adequate procedures to ensure internal and
external security of the Hardware, Software and Data, including
(without limitation) procedures for preventing unauthorised
access, preventing the introduction of a virus, taking and
storing on-site and off-site back-up copies of Software and Data.
10.6.6 Where any of the records of the Company are stored
electronically, the Company is the owner of all hardware and
software licences necessary to enable it to keep, copy, maintain
and use such records in the course of its business and does not
share any hardware or software relating to the records with any
person.
10.6.7 So far as the Warrantors are aware the Company owns, and is in
possession and control of, original copies of all the manuals,
guides, instruction books and technical documents (including any
corrections and updates) required to operate effectively the
Hardware and the Software.
10.6.8 The Hardware and Software have never unduly interrupted or
hindered the running or operation of the Company's business, and
have no defects in operation which so affect the Company's
business.
46
10.6.9 The Hardware is the absolute property of the Company free from
encumbrances.
11. PREMISES
11.1 TITLE TO PREMISES
11.1.1 The particulars of the Premises shown in schedule 5 are true and
correct. Except as shown the Company has no other interest in
land and does not occupy any other land or premises and has not
entered into any agreement to acquire or dispose of any land or
premises or any interest therein which has not been completed.
11.1.2 So far as the Warrantors are aware the owner of each of the
Premises shown in schedule 5 is solely legally and beneficially
entitled to and has good and marketable title to and exclusive
occupation of such Premises.
11.1.3 So far as the Warrantors are aware each of the Premises is held
free from any mortgage or charge (whether legal or equitable,
fixed or floating), encumbrance, lease, sub-lease, tenancy,
licence or right of occupation, rent charge, exception,
reservation, easement, quasi-easement or privilege (or agreement
for any of the same) in favour of a third party.
11.1.4 The leases, sub-leases, tenancies, licences, or agreements for
any of the same under which the Premises are held are valid and
subsisting against all persons, including any person in whom any
superior estate or interest is vested.
11.1.5 So far as the Warrantors are aware there are appurtenant to each
of the Premises all rights and easements necessary for its
current use and enjoyment (without restriction as to time or
otherwise) and the access for each of the Premises is over roads
which the Warrantors believe have been adopted by the local
authority and maintained at public expense.
11.1.6 So far as the Warrantors are aware the Company has not entered
into positive covenants or personal obligations (whether in a
conveyance, transfer or assignment to it or otherwise).
11.2 MATTERS AFFECTING PREMISES
11.2.1 So far as the Warrantors are aware none of the Premises or any
part thereof is affected by any of the following matters or is to
the knowledge of the Warrantors likely to become so affected:
(a) any outstanding dispute, notice or complaint or any exception,
reservation, right, covenant, restriction or condition which is
of an unusual nature or which affects or might in the future
affect the use of any of the Premises for the purpose for which
it is now used (the
47
"CURRENT USE") or which affects or might in the future affect the
value of the Premises;
(b) any notice, order, demand, requirement or proposal of which the
owner has notice or of which the Warrantors are aware made or
issued by or on behalf of any government or statutory authority,
department or body for acquisition, clearance, demolition or
closing, the carrying out of any work upon any building, the
modification of any planning permission, the discontinuance of
any use or the imposition of any building or improvement line,
the alteration of any road or footpath or which otherwise affects
any of the Premises or their current use or value;
(c) any commutation or agreement for the commutation of rent or
payment of rent in advance of the due dates of payment thereof;
(d) any outstanding claim or liability (contingent or otherwise)
whether under the Planning Acts (as that expression is defined in
the Town and Country Planning Act 1990) or otherwise.
11.2.2 So far as the Warrantors are aware each of the Premises is in a
good state of repair and condition and fit for the current use.
11.2.3 So far as the Warrantors are aware all restrictions, conditions
and covenants (including any imposed by or pursuant to any lease,
sub-lease, tenancy or agreement for any of the same and whether
the Company is the landlord or tenant thereunder and any arising
in relation to any superior title) affecting any of the Premises
have been observed and performed and so far as the Warrantors are
aware no notice of any breach of any of the same has been
received or is to the Warrantors' knowledge likely to be
received.
11.2.4 So far as the Warrantors are aware the current use of the
Premises and all machinery and equipment therein and the conduct
of any business therein complies in all material respects with
all relevant statutes and regulations and all necessary licences
and consents required thereunder have been obtained.
11.2.5 Any necessary action to protect the interests of the Company has
been taken under the Landlord and Xxxxxx Xxx 0000 and in relation
to rent review provisions in relation to each lease, sub-lease,
tenancy or agreement for any of the same in respect of which the
Company is the landlord or the tenant thereunder and all
appropriate time limits have been complied with and no rent
reviews are outstanding at the date hereof or exercisable prior
to Completion.
11.3 OUTSTANDING PREMISES LIABILITIES
So far as the Warrantors are aware except in relation to the Premises, the
Company has no liabilities (actual or contingent) arising out of the
conveyance, transfer, lease,
48
tenancy, licence, agreement or other document relating to land or premises
or an interest in land or premises, including, without limitation,
leasehold premises assigned or otherwise disposed of.
12. THE COMPANY'S CONTRACTS
12.1 NO OTHER CONTRACTS
There are not in force in relation to the Company's business, assets or
undertaking any agreements, undertakings, understandings, arrangements or
other engagements, whether written or oral, to which any of the Warrantors
or any person connected with any of them is a party or of which it has the
benefit or to which it is otherwise subject, the benefit of which would be
required to be assigned to or otherwise vested in the Company to enable the
Company to carry on its business and/or to enjoy all the rights and
privileges attaching thereto and/or to any of its assets and undertaking in
the same manner and scope and to the same extent and on the same basis as
the Company has carried on business or enjoyed such rights prior to the
date hereof.
12.2 THE COMPANY'S CONTRACTS
Each of the Company's contracts annexed to and/or listed in the Disclosure
Letter is valid and binding and no notice of termination of any such
contract has been received or served by the Company.
12.3 CONTRACTUAL ARRANGEMENTS
The Company is not a party to or subject to any agreement, transaction,
obligation, commitment, understanding, arrangement or liability which:
12.3.1 so far as the Warrantors are aware cannot readily be fulfilled or
performed by the Company on time and without undue or unusual
expenditure of money or effort; or
12.3.2 involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or exceptional
nature; or
12.3.3 is in the nature of an agency, distribution, franchise or
management agreement; or
12.3.4 requires the Company to pay any commission, finder's fee, royalty
or the like; or
12.3.5 involves liabilities which may fluctuate in accordance with an
index or rate of currency exchange or interest or movements in
the price of any securities or commodities; or
12.3.6 is a contract for the supply of assets to the Company on hire,
lease, hire purchase, credit or deferred payment terms; or
49
12.3.7 is dependent on the guarantee or covenant of or security provided
by any other person; or
12.3.8 is a contract for the sale of shares or assets comprising a
business undertaking which contains warranties or indemnities
under which the Company still has a remaining liability or
obligation; or
12.3.9 can be terminated as a result of any change in the underlying
ownership or control of the Company, or would be materially
affected by such change; or
12.3.10 is in any way otherwise than in the ordinary course of the
Company's business.
12.4 SUBSTANTIAL OR SIGNIFICANT CONTRACTS
No contract, agreement, transaction, obligation, commitment, understanding,
arrangement or liability entered into by the Company and now outstanding or
unperformed involves any of the following:
12.4.1 obligations on the part of the Company which will cause or are
likely to cause the Company to incur expenditure or an obligation
to pay money in excess of L10,000; or
12.4.2 the supply by the Company of services to any one customer such
that the value of such supplies exceeds or is likely to exceed 5
per cent. of the total turnover of the Company in the financial
year ending 30 September 1999.
12.5 DEFAULTS
12.5.1 The Company is not in default under any agreement to which it is
a party, and the Company is not aware of any invalidity or
grounds for termination, avoidance, rescission or repudiation of
any agreement to which the Company is a party which, in any such
case, would be material in the context of the financial or
trading position of the Company nor (so far as the Warrantors are
aware) are there any circumstances likely to give rise to any
such event.
12.5.2 Full details of any customers (or any persons to whom the Company
in the course of business has supplied goods and services in the
12 months ending on the date hereof) who have defaulted in the
payment when due of any monies to the Company are specified in
the Disclosure Letter.
12.6 SURETIES
No Vendor nor any third party has given any guarantee of or security for,
any overdraft loan, loan facility or off-balance sheet financing granted to
the Company nor has the Company given any guarantee of or security for any
overdraft loan, loan
50
facility or off-balance sheet financing granted to any of the Warrantors or
any person connected with any of them and there is not now outstanding in
respect of the Company any guarantee or warranty or agreement for indemnity
or for suretyship given by or for the accommodation of the Company or in
respect of the Company's business.
12.7 POWERS OF ATTORNEY
No power of attorney given by the Company (other than to the holder of an
encumbrance solely to facilitate its enforcement) which would enable any
person other than persons employed by the Company to enter into contracts
or commitments in the course of their duties to enter into contracts or
commitments on behalf of the Company, is now in force.
12.8 INSIDER CONTRACTS
12.8.1 There is not outstanding any agreement or arrangement to which
the Company is a party and in which
(a) any of the Warrantors,
(b) any person beneficially interested in the Company's share
capital,
(c) any Director or officer, or
(d) any person connected with any of them,
is or has been interested, whether directly or indirectly.
12.8.2 The Company is not a party to, nor have its profits or financial
position during such period been affected by, any agreement or
arrangement which is not entirely of an arm's length nature.
12.8.3 All costs incurred by the Company have been charged to the
Company and not borne by any of the Warrantors or any person
connected with any of them or any other person.
12.9 DEBTS
There are no debts owing by or to the Company other than debts which have
arisen in the ordinary course of business, nor has the Company lent any
money which has not been repaid.
12.10 OPTIONS AND GUARANTEES
The Company is not a party to any option or pre-emption right, and it has
not given any guarantee, suretyship, comfort letter or any other obligation
(whatever called) to pay, provide funds or take action in the event of
default in the payment of any
51
indebtedness of any other person or in the performance of any obligation of
any other person.
12.11 TENDERS, ETC.
No offer, tender, or the like is outstanding which is capable of being
converted into an obligation of the Company by an acceptance or other act
of some other person and the Company is not in negotiations with, nor has
it put proposals forward or entered into discussions with any customer or
supplier for the renewal of any existing business or acquisition of any new
business.
13. THE COMPANY AND ITS BANKERS
13.1 BORROWINGS
The total amount borrowed by the Company from its bankers does not exceed
its facilities and the total amount borrowed by the Company from whatsoever
source does not exceed any limitation on its borrowing contained in its
articles of association or bye-laws as the case may be, or in any debenture
or loan stock deed or other instrument.
13.2 CONTINUANCE OF FACILITIES
Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are given in the
Disclosure Letter and true and correct copies of all documents relating
thereto are annexed to the Disclosure Letter and neither the Warrantors nor
the Company has done anything whereby the continuance of any such
facilities in full force and effect might be affected or prejudiced.
13.3 OFF-BALANCE SHEET FINANCING
The Company has not engaged in any borrowing or financing not required to
be reflected in the Audited Accounts.
13.4 BANK ACCOUNTS
Full and accurate particulars of all the bank and deposit accounts of the
Company and of the credit or debit balances on such accounts as at a date
(the "STATEMENT DATE") not more than seven days before the date of this
Agreement are given in the Disclosure Letter. Since the Statement Date
there have been no payments out of any such accounts except for routine
payments in the ordinary course of the Company's business and the balances
on such accounts are not now substantially different from the balances
shown as at the Statement Date.
14. DIRECTORS AND EMPLOYEES
52
14.1 DIRECTORS
Schedule 2 show the full names of and offices held by each person who is a
director of the Company and no other person is a director or shadow
director of the Company.
14.2 EMPLOYEES
14.2.1 The individuals, details of whom are given in or annexed to the
Disclosure Letter (the "EMPLOYEES") are all employed by the
Company at the date of this Agreement. There are no other
individuals employed by the Company at the date of this
Agreement.
14.2.2 All contracts of service of any of the Employees (including for
these purposes the directors referred to in paragraph 14.1) are
terminable on not more than three months notice without
compensation (other than compensation, payable in accordance with
the Employment Rights Act 1996).
14.2.3 The particulars shown in the Disclosure Letter show true and
complete details of the names, ages and lengths of continuous
service of all of the Employees and by reference to each of the
Employees remuneration payable and other benefits provided by the
Company or which the Company is bound to provide (whether now or
in the future) to each category of the Employees at Completion or
any person connected with any such person and (without limiting
the generality of the foregoing) include particulars of all
profit sharing, incentive, bonus, commission arrangements and any
other benefit to which any such category of the Employees is
entitled or which is regularly provided or made available to them
(including details of their notice period and their entitlement
to holiday) in any case whether legally binding on the Company or
not.
14.2.4 There are no subsisting contracts for the provision by any person
of any consultancy services to the Company.
14.2.5 None of the Employees has given notice terminating his contract
of employment.
14.2.6 None of the Employees is under notice of dismissal.
14.2.7 None of the Employees has any outstanding dispute with the
Company in connection with or arising from his employment nor is
there any liability outstanding to such persons except for
remuneration or other benefits accruing due and no such
remuneration or other benefit which has fallen due for payment
has not been paid.
14.2.8 During the period of six months ending with the execution of this
Agreement the Company has not directly or indirectly terminated
the employment of any person employed in or by the Company.
53
14.2.9 None of the Employees belongs or has belonged at any material
time to an independent trade union recognised by the Company.
14.2.10 There are no employee representatives representing all or any of
the Employees.
14.2.11 The Company has complied with all of its statutory obligations to
inform and consult appropriate representatives as required by
law.
14.2.12 There is no plan, scheme, commitment, policy, custom or practice
(whether legally binding or not) relating to redundancy affecting
any of the Employees more generous than the statutory redundancy
requirements.
14.2.13 All plans for the provision of benefits to the Employees comply
in all respects with all relevant statutes, regulations and other
laws and all necessary consents in relation to such plans have
been obtained and all governmental filings in relation to such
plans have been made.
14.2.14 There are no loans owed by any of the Employees to the Company.
14.2.15 Since the Balance Sheet Date no change has been made in (i) the
rate of remuneration, or the emoluments or pension benefits or
other contractual benefits, of any officer of the Company or any
of the Employees or (ii) the terms of engagement of any such
officer or any of the Employees.
14.2.16 There are no training schemes, arrangements or proposals whether
past or present in respect of which a levy may become payable by
the Company under the Industrial Training Act 1982 (as amended by
the Employment Act 1989) and pending Completion no such schemes,
arrangements or proposals will be established or undertaken.
14.2.17 There is no outstanding undischarged liability to pay to any
governmental or regulatory authority in any jurisdiction any
contribution, taxation or other duty arising in connection with
the employment or engagement of any of the Employees.
14.2.18 None of the Employees will become entitled by virtue of their
contract of service to any payment or enhancement in or
improvement to their remuneration, benefits or terms and
conditions of service only by reason of the execution of this
Agreement or of completion of the sale and purchase under or
pursuant to this Agreement.
14.2.19 The Company has not in the last 12 months, entered into any
informal or formal agreement to amend or change the terms or
conditions of employment of any of the officers of the Company or
any of the Employees (whether such amendment or change is to take
the effect prior to or after Completion).
14.3 SERVICE CONTRACTS
54
There is not outstanding any contract of service between the Company and
any of its directors, officers or employees which is not terminable by the
Company without compensation (other than any compensation payable by
statute) on not more than three months notice given at any time.
14.4 DISPUTES WITH EMPLOYEES
There is no:
14.4.1 outstanding or threatened claim by any person who is now or has
been an employee of the Company or any dispute outstanding with
any of the said persons or with any unions or any other body
representing all or any of them in relation to their employment
by the Company or of any circumstances likely to give rise to any
such dispute;
14.4.2 industrial action involving any employee, whether official or
unofficial, currently occurring or threatened; or
14.4.3 industrial relations matter which has been referred to ACAS or
any similar governmental agency in the applicable jursidiction
for advice, conciliation or arbitration.
1. PENSIONS AND OTHER BENEFITS
There is not in operation as at date of this Agreement, and there has not
been in operation at any time prior to the date of this Agreement, any
agreement, arrangement, custom or practice for the payment of, or payment
of a contribution towards, a pension, allowance, lump sum or other similar
benefit on retirement, death, termination of employment (whether voluntary
or not) or during periods of sickness or disablement (whether during
service or after retirement), for the benefit of an employee or director or
their respective dependents.
2. FULCRUM SOLUTIONS INC.
So far as the Warrantors are aware, there is nothing material in the
context of this transaction affecting the business of Fulcrum Solutions
Inc. that would cause a reasonable purchaser not to have entered into this
Agreement and the agreement to sell and purchase the common stock in FSI
referred to in recital (C), on their respective terms.
3. MISCELLANEOUS
All information contained or referred to in the Disclosure Letter or in any
annexure thereto or which has otherwise been disclosed by or on behalf of
the Warrantors to the Purchaser on or prior to the date hereof is true and
accurate in all material respects and the Warrantors are not aware of any
other fact or matter which renders any such information misleading because
of any omission, ambiguity or for any other reason.
55
SCHEDULE 4 : TAX
1. INTERPRETATION
In this schedule, where the context admits:
"TAX" includes (without limitation) corporation tax, advance corporation
tax, the charge under Xxxxxxx 000 Xxxxx Xxx 0000, income tax, capital gains
tax, the charge under Section 601(2) Taxes Xxx 0000, value added tax,
excise duties, the charge to tax under Schedule 9A Value Added Tax Xxx
0000, customs and other import duties, inheritance tax, stamp duty, stamp
duty reserve tax, capital duties, national insurance contributions, local
authority council taxes, petroleum revenue tax, foreign taxation and
duties, amounts payable in consideration for the surrender of group relief
or advance corporation tax or refunds pursuant to Section 102 Finance Act
1989 and any payment whatsoever which the Company may be or become bound to
make to any person as a result of the operation of any enactment relating
to any such taxes or duties and all penalties, charges and interest
relating to any of the foregoing or resulting from a failure to comply with
the provisions of any enactment relating to taxation;
"TAXES ACT 1988" means Income and Corporation Taxes Xxx 0000;
"TCGA 1992" means the Taxation of Chargeable Gains Xxx 0000;
"VALUE ADDED TAX" and "VAT" mean value added tax as provided for in the
Value Added Tax Xxx 0000 and legislation supplemental thereto or replacing,
modifying or consolidating it;
references to income or profits or gains earned, accrued or received shall
include income or profits or gains treated as earned, accrued or received
for the purposes of any legislation; and
references to the "COMPANY" include each of the Subsidiaries.
2. TAXATION WARRANTIES AND REPRESENTATIONS
The Warrantors hereby jointly and severally warrant and represent to and
for the benefit of the Purchaser in the terms set out in the following
paragraphs of this schedule 4.
3. GENERAL TAXATION MATTERS
3.1 RESIDENCE
The Company is and always has been resident for Tax purposes only in the
jurisdiction in which it is incorporated.
56
3.2 TAX PROVISIONS
Full provision or reserve has been made in the Audited Accounts for all Tax
liable to be assessed on the Company or for which it is accountable in
respect of income, profits or gains earned, accrued or received on or
before the Balance Sheet Date and any event on or before the Balance Sheet
Date including distributions made down to such date or provided for in the
Audited Accounts and full provision has been made in the Audited Accounts
for deferred Tax calculated in accordance with generally accepted
accounting principles.
3.3 RETURNS
The Company has properly and punctually made all returns and provided all
information required for Tax purposes and none of such returns is disputed
by the Inland Revenue or the Internal Revenue Services, as the case may be,
or any other authority concerned (in the United Kingdom or elsewhere) and
the Vendors are not aware that any dispute is likely, or that any event has
occurred which would or might give rise to a payment under the Tax Deed.
3.4 PAYMENT OF TAX
3.4.1 The Company has duly and punctually paid all Tax which it has
become liable to pay and is under no liability to pay any penalty
or interest in connection with any claim for Tax and has not paid
any Tax which it was and is not properly due to pay.
3.4.2 The Company is not and never has been liable to pay corporation
tax in accordance with the Corporate Tax (Instalment Payments)
Regulations 1990.
3.5 AUDITS
The Company has not in the last six years received any visit or inspection
from any Tax authority.
3.6 SPECIAL ARRANGEMENTS AND CONCESSIONS
3.6.1 Full details of any special arrangements and concessions
(including, without limitation, any arrangements and concessions
relating to the taxation of foreign exchange gains and losses
and/or financial instruments and/or loan relationships) which
relate to or affect the Company and which have been made with any
Tax authority or relied upon by the Company, in either case
within the last seven years, are set out in the Disclosure
Letter.
3.6.2 The Company has not taken any action which has had, or might
have, the result of prejudicing or disturbing any such special
arrangement or concession.
57
4. DISTRIBUTIONS AND PAYMENTS
4.1 DISTRIBUTIONS
4.1.1 No distribution within the meaning of Sections 209, 210 and 212
Taxes Act 1988 has been made by the Company except dividends
shown in its audited accounts nor is the Company bound to make
any such distribution.
4.1.2 No securities (within the meaning of Section 254(1) Taxes Act
1988) issued by the Company and remaining in issue at the date
hereof were issued in such circumstances that the interest
payable thereon falls to be treated as a distribution under
Section 209(2)(e)(iii) Taxes Xxx 0000.
4.1.3 The Company has not made or received any distribution which is an
exempt distribution within Xxxxxxx 000 Xxxxx Xxx 0000.
4.1.4 The Company has not received any capital distribution to which
the provisions of Section 189 TCGA 1992 could apply.
4.1.5 The Company has not used any credit, relief or set off that may
be disallowed pursuant to Xxxxxxx 000 Xxxxx Xxx 0000.
4.1.6 The Company has not issued any share capital, nor granted options
or rights to any person which entitles that person to require the
issue of any share capital to which the provision of Xxxxxxx 000
Xxxxx Xxx 0000 could apply.
4.1.7 The Company has not since incorporation:-
(a) treated as franked investment income any qualifying distribution
received which would fall to be treated as if it were a foreign
income dividend pursuant to the provisions of schedule 7 of the
Finance Xxx 0000; or
(b) made any qualifying distribution which would fall to be treated
as a foreign income dividend pursuant to the provisions of
schedule 7 of the Finance Xxx 0000.
4.2 GROUP INCOME
The Disclosure Letter contains particulars of all elections made by the
Company under Section 247 Taxes Act 1988 and the Company has not paid any
dividend without paying advance corporation tax or made any payment without
deduction of income tax in the circumstances specified in sub-section (6)
of that section. In respect of each such election the conditions of
Xxxxxxx 000 Xxxxx Xxx 0000 have at all times and continue to be satisfied.
58
4.3 SURRENDER OF ADVANCE CORPORATION TAX
The Disclosure Letter contains particulars of all arrangements and
agreements to which the Company is or has been a party relating to
surrenders of advance corporation tax made or received by the Company under
Xxxxxxx 000 Xxxxx Xxx 0000 and:
4.3.1 the Company has not paid nor is liable to pay any amount in
excess of the advance corporation tax surrendered to it nor for
the benefit of any advance corporation tax which is or may become
incapable of set off against the Company's liability to
corporation tax;
4.3.2 the Company has received all payments due to it under any such
arrangement or agreement for all surrenders of advance
corporation tax made by it; and
4.3.3 save in respect of this Agreement, there have not been in
existence in relation to the Company any such arrangements as are
referred to in Section 240(11) Taxes Xxx 0000.
4.4 ACT CARRY FORWARD
There has been no major change in the business of the Company within the
meaning of Xxxxxxx 000 Xxxxx Xxx 0000.
4.5 SURPLUS ACT
The Company does not have and has not had at any time since immediately
before 6 April 1999 any unrelieved surplus advance corporation tax within
the meaning give to that term by Section 32 Finance Xxx 0000.
4.6 PAYMENTS UNDER DEDUCTION
All payments by the Company to any person which ought to have been made
under deduction of Tax have been so made and the Company has (if required
by law to do so) provided certificates of deduction to such person and
accounted to the Inland Revenue for the Tax so deducted.
4.7 PAYMENTS AND DISALLOWANCES
No rents, interest, annual payments or other sums of an income nature paid
or payable by the Company or which the Company is under an obligation to
pay in the future are wholly or partially disallowable as deductions or
charges in computing profits for the purposes of corporation tax by reason
of the provisions of Sections 74, 125, 338, 577, 577A, 779 to 000, xxx 000
Xxxxx Xxx 0000 or otherwise.
59
5. LOSSES
5.1 GROUP RELIEF
5.1.1 The Disclosure Letter contains particulars of all arrangements
and agreements relating to group relief to which the Company is
or has been a party and:
(a) all claims by the Company for group relief were when made and are
now valid and have been or will be allowed by way of relief from
corporation tax;
(b) the Company has not made nor is liable to make any payment under
any such arrangement or agreement save in consideration for the
surrender of group relief allowable to the Company by way of
relief from corporation tax and equivalent to the Tax for which
the Company would have been liable had it not been for the
surrender;
(c) the Company has received all payments due to it under any such
arrangement or agreement for surrender of group relief made by it
and no such payment is liable to be repaid;
(d) the Company is not a dual resident investing company within the
meaning of Xxxxxxx 000 Xxxxx Xxx 0000; and
(e) save in respect of this Agreement, there have not been in
existence in relation to the Company any such arrangements as are
referred to in Xxxxxxx 000 Xxxxx Xxx 0000.
5.2 TAX LOSSES
There has not within the three years preceding the date hereof been a major
change in the business of the Company within the meaning of Xxxxxxx 000
Xxxxx Xxx 0000.
6. CLOSE COMPANIES
6.1 CLOSE COMPANY
6.1.1 The Company is not and has never been a close company.
6.1.2 No distribution within Section 418 Taxes Act 1988 has been made
by the Company.
6.1.3 The Company has not made (and will not be deemed to have made)
any loan or advance to a participator or an associate of a
participator so as to become liable to make any payment under
Xxxxxxx 000 Xxxxx Xxx 0000.
6.1.4 The Company is not, and has not since 31 March 1989 been, a close
investment holding company within the meaning of Xxxxxxx 00X
Xxxxx Xxx 0000.
60
6.1.5 The Company has not expended or applied any sum liable to be
regarded as income available for distribution pursuant to
paragraph 8 schedule 19 Taxes Act 1988 (first business loans) and
is not bound (contingently or otherwise) to expend or apply any
such sum.
7. ANTI-AVOIDANCE
7.1 SECTION 765 TAXES ACT 1988
The Company has not without the prior consent of the Treasury been a party
to any transaction for which consent under Section 765 Taxes Act 1988 was
required. Where such consent would have been required but for the
provisions of Section 765A(1) Taxes Xxx 0000, the Company has complied in
full with the requirements of The Movements of Capital (Required
Information) Regulations 1990 and a copy of the notification required
pursuant thereto is annexed to the Disclosure Letter.
7.2 CONTROLLED FOREIGN COMPANIES
7.2.1 The Company has no interest in the share capital of any company
not resident in the United Kingdom for taxation purposes (or
which is treated for the purposes of any double taxation
convention as not being so resident) which is controlled by
persons resident in the United Kingdom for taxation purposes and
in which the Company has 10 per cent or more of the voting rights
(a "CONTROLLED FOREIGN COMPANY").
7.2.2 No enquiries have been made or intimated by the Inland Revenue in
respect of any Controlled Foreign Company.
7.2.3 No direction has been made by the Board of Inland Revenue under
Section 747 Taxes Act 1988 in respect of any Controlled Foreign
Company.
7.2.4 Section 748(1) Taxes Act 1988 applies to each Controlled Foreign
Company.
7.3 ANTI-AVOIDANCE
7.3.1 The Company has not at any time entered into or been a party to a
transaction or series of transactions either:
(a) containing steps inserted without any commercial or business
purpose; or
(b) being transactions to which any of the following provisions could
apply:
Sections 703, 729, 730, 737, 739, 770 to 774, 776, 779, 780, 781
or 786 Taxes Xxx 0000 or schedule 28AA Taxes Xxx 0000 or
schedule 9 paragraph 13 Finance Xxx 0000 without in the
appropriate cases, having received clearance in respect thereof
from the Inland Revenue.
61
7.3.2 The Company has never been requested to furnish information
pursuant to notices served under Sections 745 or 778 Taxes Xxx
0000.
8. CAPITAL ASSETS
8.1 BASE VALUES
8.1.1 The Disclosure Letter contains full and accurate particulars of:
(a) the extent to which the book value of an asset or a particular
class of assets as shown in the Audited Accounts is in excess of
either:-
(1) the amount falling to be deducted under Section 38 TCGA
1992 from the consideration receivable on a disposal of
that asset, or
(2) the balance of the qualifying expenditure attributable to
that asset or pool of assets, as the case may be, brought
forward into the accounting period in which Completion will
occur and save to the extent disclosed, no such excess
exists; and
(b) the extent to which provision for Tax in respect of such excess
has been made in the Audited Accounts.
8.1.2 No election under Section 35 TCGA 1992 is in effect in relation
to the Company and full particulars are given in the Disclosure
Letter of the first relevant disposal for the purposes of the
said Section 35.
8.1.3 The Disclosure Letter contains full and accurate particulars of
all assets held by the Company on or after 6 April 1988 in
respect of which relief is or would be available under schedule 4
TCGA 1992 upon disposal.
8.2 ROLL-OVER RELIEF
The Disclosure Letter contains full and accurate particulars of all claims
made by the Company under Sections 152 to 156, s.158, ss.242 to 245, s.247
or Section 248 TCGA 1992 and no such claim or other claim has been made by
any other person (in particular pursuant to Section 165 or Section 175 TCGA
1992) which affects or could affect the amount or value of the
consideration for the acquisition of any asset by the Company taken into
account in calculating liability to corporation tax on chargeable gains on
a subsequent disposal.
8.3 PRE-ENTRY LOSSES
The Disclosure Letter contains details of all pre-entry losses falling
within paragraph 1(2)(a) schedule 7A TCGA 1992 which have, or will have,
accrued to the Company prior to Completion and details of all assets which,
if disposed of on Completion, would give rise to an allowable loss.
62
8.4 DEPRECIATORY TRANSACTIONS
No loss which might accrue on the disposal by the Company of any share in
or security of any company is liable to be reduced by virtue of any
depreciatory transaction within the meaning of Section 176 and Section 177
TCGA 1992 nor is any expenditure on any share or security liable to be
reduced under Section 125 TCGA 1992.
8.5 VALUE SHIFTING
The Company does not hold, and has not held, any shares upon the disposal
of which Section 31 or 32 TCGA 1992 could apply.
8.6 CONNECTED PARTY AND INTRA-GROUP TRANSACTIONS
8.6.1 The Company has not disposed of or acquired any asset to or from
any person connected with it within Section 839 Taxes Act 1988 or
in circumstances such that the provision of s.17 TCGA 1992 could
apply to such disposal or acquisition.
8.6.2 The Company has not acquired any asset (past or present) from any
other company then belonging to the same group of companies as
the Company within the meaning of Section 170(2) to (14) TCGA
1992.
8.6.3 The Company has not made, and is not entitled to make, a claim
pursuant to Section 172 TCGA 1992.
8.7 GROUP RECONSTRUCTIONS
The Company has not been party to any scheme of reconstruction or
reorganisation to which the provisions of Section 139 TCGA 1992, Xxxxxxx
000 Xxxxx Xxx 0000 or to which Xxxxxxx 000 Xxxxx Xxx 0000 could apply.
8.8 CHARGEABLE POLICIES
The Company has not acquired benefits under any policy of assurance
otherwise than as original beneficial owner.
8.9 GAINS ACCRUING TO NON-RESIDENT COMPANIES OR TRUSTS
There has not accrued any gain in respect of which the Company may be
liable to corporation tax on chargeable gains by virtue of the provisions
of Section 13 or Section 87 TCGA 1992.
8.10 COMPANY MIGRATION
8.10.1 The Company is not a dual resident company for the purposes of
Section 139(3) or Section 160 or Section 188 TCGA 1992.
63
8.10.2 There are no circumstances pursuant to which the Company may
become liable to tax pursuant to Section 185 (Deemed disposal of
assets on company ceasing to be resident in U.K.), Section 186
(Deemed disposal of assets on company ceasing to be liable to
U.K. tax), Section 187 (Postponement of charge on deemed
disposal) TCGA 1992 or Section 132 (Liability of other persons
for unpaid tax) Finance Xxx 0000 or Section 191 TCGA 1992
(Non-payment of tax by non-resident companies).
9. CLAIMS, ELECTIONS AND CLEARANCES
9.1 CLAIMS BY THE COMPANY
The Company has made no claim under any of the following:
9.1.1 Section 279 TCGA 1992 (assets situated outside the United
Kingdom);
9.1.2 Section 24(2) TCGA 1992 (assets of negligible value);
9.1.3 Section 280 TCGA 1992 (tax on chargeable gains payable by
installments);
9.1.4 Sections 242 and 243 Taxes Act 1988 (surplus franked investment
income); or
9.1.5 Xxxxxxx 000 Xxxxx Xxx 0000 (unremittable income arising outside
the United Kingdom).
9.2 ELECTIONS
The Disclosure Letter contains full particulars of all elections made by
the Company under the following provisions:
9.2.1 Xxxxxxx 000, 000 xxx 000 Xxxxx Xxx 0000 (lump sum receipts for
patents and copyright);
9.2.2 Section 37 Capital Allowances Act 1990 (short life assets); and
9.2.3 Section 00 Xxxxxxx Xxxxxxxxxx Xxx 0000 (leasehold interests).
9.3 CLEARANCES
There are annexed to the Disclosure Letter copies of all correspondence
relating to applications for clearance under any enactment relating to Tax.
All facts and circumstances material to such applications for clearance
were disclosed in such applications.
10. MISCELLANEOUS
10.1 ASSESSMENT OF TAX ON LESSEES
No notice pursuant to Section 23 Taxes Act 1988 has been served on the
Company.
64
10.2 LEASEHOLDS
The Company is not liable to Tax under the provisions of Sections 34, 35
and 36 Taxes Act 1988 nor does it own any leasehold interest to which the
said Section 35 may apply.
10.3 FOREIGN EXCHANGE GAINS AND LOSSES
10.3.1 No exchange gain or loss of the Company has been calculated in
accordance with schedule 15 Finance Xxx 0000 and regulations made
thereunder.
10.3.2 The Disclosure Letter contains full details of all claims to
defer unrealised exchange gains made by the Company pursuant to
Section 139 Finance Xxx 0000.
10.3.3 The Disclosure Letter contains details of all debts to which the
provisions of Chapter II of Part II Finance Xxx 0000 do not apply
by virtue of Regulation 3 of the Exchange Gains and Losses
(Transitional Provisions) Regulations 1994.
10.3.4 The Company has not received any direction as referred to in
Section 136(1)(d) or Section 136A(7)(b) Finance Xxx 0000.
10.4 FINANCIAL INSTRUMENTS
10.4.1 The Company has not entered into any transaction for which the
provisions of Section 165, Section 166 and Section 167 Finance
Act 1994 could apply.
10.4.2 The Disclosure Letter contains full details of all qualifying
contracts with non resident persons for the purposes of
Section 168 Finance Xxx 0000.
10.5 FINANCE LEASES
The Company is not a party to any finance lease to which Schedule 12
Finance Xxx 0000 would apply.
10.6 LOAN RELATIONSHIPS
10.6.1 The Company applies an authorised accruals method of accounting
(as that term is defined in Section 85 Finance Act 1996) in
respect of all loan relationships (as that term is defined in
Section 81 Finance Act 1996) to which it is a party.
10.6.2 The Disclosure Letter contains full and accurate particulars of
any loan relationship to which the Company is a party, whether as
debtor or creditor, where any other party to that loan
relationship is connected with the Company for the purposes of
Chapter II of Part IV Finance Xxx 0000.
65
10.6.3 The Disclosure Letter contains full and accurate particulars of
any loan relationship to which the Company is a party and to
which Section 92 or Section 93 Finance Xxx 0000 applies.
10.6.4 The Disclosure Letter contains full and accurate particulars of
any debtor relationship (as that term is defined in Section 103
Finance Act 1996) of the Company which relates to a relevant
discounted security (as that term is defined in paragraph 3 of
schedule 13 Finance Act 1996) to which paragraph 17 or paragraph
18 of schedule 9 Finance Xxx 0000 applies.
10.6.5 The Company has not entered into any transaction to which
paragraph 11(1) of schedule 9 Finance Xxx 0000 applies.
10.6.6 The Company has not been, and is not entitled to be, released
from any liability which arises under a debtor relationship of
that Company.
10.6.7 The Disclosure Letter contains full and accurate particulars of
(I) any loan relationship to which the Company is a party,
whether as debtor or creditor, to which paragraph 8 of schedule
15 Finance Xxx 0000 has applied or will apply on the occurrence
of a relevant event (as defined in paragraph 8(2)) in respect
thereof; (ii) in each case, the amount of any deemed chargeable
gain or deemed allowable loss which has arisen or will arise in
consequence of that relevant event; and (iii) any election made
pursuant to paragraph 9 of schedule 15 Finance Xxx 0000.
11. TAXATION OF EMPLOYEES AND AGENTS
11.1 P.A.Y.E.
The Company has properly operated the Pay As You Earn system, deducting tax
as required by law from all payments to or treated as made to employees and
ex-employees of the Company and punctually accounted to the Inland Revenue
for all tax so deducted and all returns required pursuant to Xxxxxxx 000
Xxxxx Xxx 0000 and regulations made thereunder have been punctually made
and are accurate and complete in all respects.
11.2 DISPENSATIONS AND P.A.Y.E AUDITS
The Disclosure Letter contains full details of all dispensations obtained
by the Company and all details of any visit from the Audit Office of the
Inland Revenue within the last six years including full details of any
settlement made pursuant thereto.
11.3 BENEFITS FOR EMPLOYEES
11.3.1 The Company has not made any payment to or provided any benefit
for any officer or employee or ex-officer or ex-employee of the
Company which is not allowable as a deduction in calculating the
profits of the Company for taxation purposes.
66
11.3.2 The Company has not issued any shares in the circumstances
described in Section 138(1) Taxes Act 1988 and has complied
with Section 139(5) Xxxxx Xxx 0000.
11.3.3 The Company has not issued any shares in the circumstances
described in Section 77(1) and has complied with Section 85
Finance Xxx 0000.
11.3.4 The Company has not made any payment to which Xxxxxxx 000 Xxxxx
Xxx 0000 applies.
11.4 SLAVE COMPANIES
Any payment made to or for the direct or indirect benefit of any person
who is or might be regarded by any taxation authority as an employee of
the Company is made to such person direct and is not made to any company
or other entity associated with that person.
11.5 SUB-CONTRACTORS
11.6 The Company is not and never has been either a contractor or a
sub-contractor for the purposes of Xxxxxxx XX Xxxx XXXX Xxxxx Xxx 0000.
11.7 NATIONAL INSURANCE
The Company has paid all national insurance contributions for which it
is liable and has kept proper books and records relating to the same and
has not been a party to any scheme or arrangement to avoid any liability
to account for primary or secondary national insurance contributions.
12. STAMP DUTIES
12.1 STAMP DUTY
The Company has duly paid or has procured to be paid all stamp duty on
documents to which it is a party or in which it is interested and which
are liable to stamp duty.
12.2 STAMP DUTY RESERVE TAX
The Company has made all returns and paid all stamp duty reserve tax in
respect of any transaction in securities to which it has been a party or
in respect of which it is liable to account for stamp duty reserve tax.
13. VALUE ADDED TAX
13.1 COMPLIANCE
67
The Company has complied with all statutory provisions and regulations
relating to value added tax and has duly paid or provided for all
amounts of value added tax for which the Company is liable.
13.2 TAXABLE SUPPLIES
All supplies made by the Company are taxable supplies and the Company is
not and will not be denied credit for any input tax by reason of the
operation of Section 26 Value Added Tax Xxx 0000 and regulations made
thereunder.
13.3 INPUT TAX
All input tax for which the Company has claimed credit has been paid by
the Company in respect of supplies made to it relating to goods or
services used or to be used for the purpose of the Company's business.
13.4 VAT GROUPS
The Company is not and has not been, for value added tax purposes a
member of any group of companies (other than that comprising the Company
and the Subsidiaries alone) and no act or transaction has been effected
in consequence whereof the Company is or may be held liable for any
value added tax chargeable against some other company except where that
other company is a Subsidiary.
13.5 SECTION 8 SUPPLIES
No supplies have been made to the Company to which the provisions of
Section 8 Value Added Tax Xxx 0000 might apply;
13.6 OFFENCES
The Company has not committed any offence contrary to Section 60 or
Section 72 Value Added Tax Xxx 0000, nor has it received any penalty
liability notice pursuant to Section 64(3), surcharge liability notice
pursuant to Section 59, or written warning issued pursuant to Section
76(2) of that Act.
13.7 LIABILITY TO REGISTER
The Company has not been and is not liable to be registered for value
added tax otherwise than pursuant to the provisions of paragraph 1
schedule 1 Value Added Tax Xxx 0000.
13.8 SECURITY
The Company has not been required to give security under paragraph 4
schedule 11 Value Added Tax Xxx 0000.
13.9 ELECTIONS
68
The Disclosure Letter contains details and copies of all elections,
together with the relevant notification, made by the Company pursuant to
paragraph 2 schedule 10 Value Added Tax Xxx 0000.
13.10 DEVELOPERS
The Company is not and has not since 1 August 1989 been in relation to
any land, building or civil engineering work a developer within the
meaning of paragraph 5(5) schedule 10 Value Added Tax Xxx 0000.
13.11 INTEREST
The Company has not paid and is not liable to pay any interest pursuant
to Section 74 Value Added Tax Xxx 0000.
13.12 CAPITAL GOODS SCHEME
The Disclosure Letter contains full details of any assets of the Company
to which the provisions of Part XV Value Added Tax Regulations 1995 (the
Capital Goods Scheme) apply and in particular:
13.12.1 the identity (including in the case of leasehold property, the
term of years), date of acquisition and cost of the asset; and
13.12.2 the proportion of input tax for which credit has been claimed
(either provisionally or finally in a tax year and stating
which).
14. INHERITANCE TAX AND GIFTS
14.1 POWERS OF SALE FOR INHERITANCE TAX PURPOSES
There are not in existence any circumstances whereby any such power as
is mentioned in Section 212 Inheritance Tax Act 1984 could be exercised
in relation to any shares in, securities of, or assets of, the Company.
14.2 GIFTS
14.2.1 The Company is not liable to be assessed to corporation tax on
chargeable gains or to inheritance tax as donor or donee of any
gift or transferor or transferee of value.
14.2.2 The Company has not been a party to associated operations in
relation to a transfer of value within the meaning of
Section 268 Inheritance Tax Xxx 0000.
14.2.3 No Inland Revenue charge (as defined in Section 237 Inheritance
Tax Act 1984) is outstanding over any asset of the Company or in
relation to any shares in the capital of the Company.
69
14.2.4 The Company has not received any asset as mentioned in Section
282 TCGA 1992.
70
SCHEDULE 5 : PARTICULARS OF PREMISES
FREEHOLD PREMISES WITH REGISTERED TITLES
There are no Freehold Properties
71
LEASEHOLD PREMISES WITH REGISTERED TITLES
--------------------------------------------------------------------------------
THERE ARE NO LEASEHOLD PREMISES WITH REGISTERED TITLES
LEASHOLD PREMISES WITH UNREGISTERED TITLES
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
Demised Premises Present Tenant Date of and parties to Term Current principal yearly Current use
lease rent
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
Suite 9, Fulcrum Solutions 24.11.98 12 months L10,500 Offices
Grosvenor House, Limited (1) Xxxxxx Xxxx
45 The Downs Xxxxxxx
Altrincham (2) Fulcrum
Solutions Limited
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
Suite 10, Fulcrum Solutions 24.11.98 12 months L10,500 Offices
Grosvenor House, Limited (1) Xxxxxx Xxxx
45 The Downs Xxxxxxx
Altrincham (2) Fulcrum
Solutions Limited
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
72
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
Demised Premises Present Tenant Date of and parties to Term Current principal yearly Current use
lease rent
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
2nd Floor Fulcrum Solutions 24.06.97 xx 00.00.00 -- Offices
Ebury Gate Limited (1) Premier Oil Plc
Lower Belgrave (2) Fulcrum Solutions
Street Limited
London
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
Ground Floor Fulcrum Solutions 02.08.99 5 years from L51,000 Offices
00/00 Xxxxx Xxxxxx (Scotland) Limited (1) Barra (UK) Limited 02.08.99
Edinburgh (2) Fulcrum Solutions
(Scotland) Limited
-------------------- ---------------------- -------------------------- -------------- ---------------------------- ----------------
73
SCHEDULE 6 : EARN OUT PAYMENTS
1. The Earn Out Payments shall be calculated in accordance with the
provisions of this schedule 6 and paid to each of the Vendors,
pro-rata to their holding of Sale Shares as set out in the second
column of schedule 1 ("Appropriate Percentage").
2. In this schedule, where the context admits:
"EARN OUT PERIOD" means each and any of the periods from the
Completion Date to 31 December 2000 and the accounting periods
ending 31 December 2001 and 2002;
"EARN OUT LEVEL" means the amount set out opposite the relevant
Operating Income Target in paragraph 3;
"EXCHANGE RATE" means the US$1.62 to L1;
"UNADJUSTED OPERATING INCOME" means (subject to paragraph 5 below) for
each Earn Out Period the profits before interest and tax arising from
Ordinary Activities as stated in the Relevant Accounts;
"OPERATING INCOME ADJUSTMENTS" shall mean the following:
there shall be excluded in the Operating Income:
(i) all payments, charges or expenses for allocation of management,
office overheads, executive, general and administrative expenses
or other charges or expenses of the Purchaser, if any unless
normally and historically incurred on behalf of the Company, its
Subsidiaries and Xxxxxxxx-Xxxx Limited;
(ii) any National Insurance Contribution paid by the Company upon the
exercise of any options by employees of the Company pursuant to
an unapproved scheme relating to shares in the Purchaser; and
(iii) any capitalised leasehold improvements and all other
capitalised facility costs which are not recoverable in the
course of Ordinary Activities; but
there shall be included in the Operating Income:
(iv) any such payments, charges or expenses directly relating or
capable of being allocated to the conduct of Ordinary Activities
or the operation, administration and management of the Ordinary
Activities;
(v) all gross profits derived from contracts won or business
conducted by an employee of Fulcrum Solutions Inc., but for the
benefit and on behalf of the Purchaser's Group; and
74
(vi) the amount of any payment made to the Purchaser under Clauses
5.6.2 or 5.6.3.
"OPERATING INCOME TARGET" means the targets as to the Operating Income
for each Earn Out Period set out in paragraph 3;
"OPERATING INCOME" shall be ascertained as follows:-;
(a) For each month during an Earn Out Period, two directors of the
Company of whom one is and one is not a Vendor Director shall
agree the Operating Income Adjustments for that month in respect
of each of the Company, its Subsidiaries and Xxxxxxxx-Xxxx
Limited within 15 Business Days of the end of the month.
(b) As soon as practicable, in any event no later than 90 days after
the end of an Earn Out Period, the Purchaser shall procure that
the Relevant Accounts are prepared and approved.
(c) The Unadjusted Operating Income shall be adjusted by the
application of the aggregate monthly Operating Income
Adjustments agreed pursuant to paragraph (a) and such adjusted
figure shall be the "Operating Income" for that Earn Out Period.
(d) In the event that the two directors referred to in paragraph (a)
are unable to agree the monthly Operating Income Adjustments
within 15 Business Days of the end of a month, the matter shall
be referred to all directors of the Company who shall use their
best endeavours in good faith to agree the monthly Operating
Income Adjustments within 10 Business Days of the matter being
referred to them.
(e) In the event that the directors referred to in paragraph (d) are
unable to agree the monthly Operating Income Adjustments within
the 10 Business Day period, the dispute shall be referred to the
executive committee of the Purchaser for determination within 10
Business Days of the matter being referred to it.
(f) In the event that the monthly Operating Income Adjustments are
not determined within the 10 Business Day period pursuant to
paragraph (e), either the Purchaser or the Vendor Directors may
by notice to the other, refer the dispute to the auditors for
the time being of the Company who shall act as an Expert and
whose decision shall be final and binding on the parties. All
costs relating to such determination shall be borne equally
between the Purchaser and the Vendors in the absence of any
direction by the Expert.
"ORDINARY ACTIVITIES" means the business of the Company and its
Subsidiaries as at the Completion Date and the business of
Xxxxxxxx-Xxxx Limited both prior to and after its transfer to the
Company after Completion;
75
"RELEVANT ACCOUNTS" means the audited financial statements of the
Company and the Subsidiaries and Xxxxxxxx-Xxxx Limited made up to the
end of each Earn Out Period prepared in accordance accounting
practices generally accepted in the United Kingdom or the United
States, as the case may be, applying bases and policies which have
been consistently applied in audited financial statements previously
applied by the Company, its Subsidiaries and Xxxxxxxx-Xxxx Limited;
3. The Operating Income Levels and Earn Out Levels for each Earn Out
Period are as follows:
EARN OUT PERIOD ENDING 31 DECEMBER 2000:
Operating Income Target Earn Out Levels
(US$million) (US$million)
8.10 16.0
7.49 14.0
6.75 10.0
6.00 5.0
4.51 0
EARN OUT PERIOD ENDING 31 DECEMBER 2001:
Operating Income Targets Earn Out Levels
(US$million) (US$million)
14.70 21.0
13.46 16.0
11.67 8.0
9.86 4.0
8.97 0
EARN OUT PERIOD ENDING 31 DECEMBER 2002:
Operating Income Target Earn Out Levels
(US$million) (US$million)
21.50 15.0
76
20.10 10.0
19.23 7.0
17.49 3.0
15.72 0
4. For each Earn Out Period, the Earn Out Payment shall be:
4.1 in the case of the Operating Income (rounded up or down to the nearest
ten thousand pounds sterling), expressed in US Dollars in accordance
with the Exchange Rate, for the relevant Earn Out Period equalling an
Earn Out Target, the Earn Out Level; or
4.2 in the case of the Operating Income (rounded up or down to the nearest
ten thousand pounds sterling), expressed in US Dollars in accordance
with the Exchange Rate, for the relevant Earn Out Period when
expressed as a percentage of the Operating Income Target, falling
between two Operating Income Levels, the prorated amount of the
relevant band of the Earn Out Level; or
4.3 in the case of the Operating Income (rounded up or down to the nearest
ten thousand pounds sterling), expressed in US Dollars in accordance
with the Exchange Rate, for the relevant Earn Out Period being above
the highest Operating Income Target, the sum of the highest Earn Out
Level plus 50% of the amount by which the Operating Income for that
Earn Out Period ("Earn Out Bonus") exceeds the highest Operating
Income Target for that Earn Out Period.
5. In any Earn Out Period the Operating Income for that period will be
used to calculate performance against the Earn Out Target. If the
Operating Income exceeds the highest Operating Income Target for that
period then the surplus will first be carried back to any previous
period where the highest Operating Income Target was missed and used
to re-calculate the Earn Out Level for that period. Following such
carry back, the Operating Income surplus in that current period will
be re-calculated as stated in paragraph (c) of the definition of
Operating Income. If the Operating Income is below the highest
Operating Income Target for the period then any excess from previous
periods will be carried forward and used in the Earn Out calculation
for that current year, subject to the prior application of any
previous carry back. Any Earn Out Bonus previously paid on carried
forward Operating Income will be subtracted from the revised Earn Out
Payment.
6. The Purchaser shall satisfy the Earn Out Payment due to the Vendors by
issuing the Stock Value Equivalent as at the end of the relevant Earn
Out Period of the amount of the Earn Out Payment.
7. The following provisions are to apply throughout the Earn Out Periods:
77
7.1 The Vendors may by notice in writing addressed to the Company appoint,
remove and replace two directors of the board of the Company and
Xxxxxxxx Xxxx Limited ("Vendor Directors") such directors to be
appointed after prior consultation with and with the approval of the
Purchaser, such approval not be to unreasonably withheld.
7.2 The Purchaser will not without the written consent of the Vendors
initiate or implement any action with the intention of materially
prejudicing or frustrating the achievement of the Operating Income
Targets provided that nothing in this paragraph 7.2 shall prevent the
Purchaser from taking any action through acquisitions or otherwise for
the long term benefit of the Company, its Subsidiaries and/or
Xxxxxxxx-Xxxx Limited.
7.3 Separate accounts covering the combined operations of the Company, its
Subsidiaries and Xxxxxxxx-Xxxx Limited shall until otherwise agreed by
the parties be maintained at all times notwithstanding the acquisition
of any further companies or businesses and their merger with any such
entities.
7.4 The Purchaser shall use its reasonable endeavours to ensure that all
non-UK personnel of Xxxxxxxx-Xxxx Limited have, at all relevant times,
valid visas and work permits provided that the Purchaser shall not be
liable under this paragraph 7.4 if any such visa or work permit is
revoked or otherwise not renewed for reasons beyond its reasonable
control, including for the avoidance of doubt, any changes to the
relevant law or regulation or application of any governmental
discretion or any action or omission by the relevant personnel giving
rise to such revocation or non-renewal.
7.5 Subject to any third party consent or any terms of any bank facilities
or other funding arrangements, the Purchaser will provide that such
working capital and other financial resources set out in a budget in
respect of Ordinary Activities for each Earn Out Period to be adopted
by the directors of the Company and approved by the Purchaser, are
made available in timely fashion to the Company, its Subsidiaries and
Xxxxxxxx-Xxxx Limited.
8.1 The Purchaser may at any time during any Earn Out Period in its
absolute discretion notify the Vendors that the Earn Out Targets shall
no longer apply and the Vendors shall be entitled to all subsequent
Earn Out Payments calculated on the basis that the maximum Earn Out
Target is deemed to have been achieved in each Earn Out Period and
paid in accordance with paragraph 6.
8.2 Immediately upon the service of the notice referred to in paragraph
8.1, the covenants set out in paragraph 7 shall no longer apply.
78
SCHEDULE 7 : WARRANTORS' AND PURCHASER'S PROTECTION
1. INTERPRETATION
In this schedule where the context admits "RELEVANT CLAIM" means any
claim in connection with any of the Warranties, the Indemnities or the
Tax Deed and any claim in connection with the Warranty set out in
paragraph 16 of schedule 3 shall mean a "US RELEVANT CLAIM".
2. FINANCIAL LIMITS
2.1 AGGREGATE LIMIT
The aggregate liability of the Warrantors in respect of this Agreement
and the Tax Deed and all claims relating thereto shall be limited to
the Consideration as finally determined and received by the
Warrantors.
2.2 THRESHOLDS
2.2.1 The Warrantors shall not be liable in respect of a Relevant
Claim other than a US Relevant Claim unless:-
(a) the liability of the Warrantors in respect of that Relevant
Claim (ignoring any liability for costs, expenses and
interest) exceeds US$15,000; and
(b) the aggregate liability (not counting for any purpose any
liability below US$15,000) of the Warrantors in respect of all
Relevant Claims exceeds US$200,000 in which case the
Warrantors shall be liable for the whole and not just the
amount by which the aggregate liability exceeds such amount.
2.2.2 The Warrantors shall not be liable in respect of US Relevant
Claims unless the liability in respect of such US Relevant
Claims exceed US$100,000.
2.2.3 The Purchaser shall not be liable in respect of claims in
connection with clause 5.7.1(c) unless such claims exceed
US$400,000.
2.3 LIABILITY
For the purpose of paragraph 2.2 the liability of the Warrantors in
respect of a Relevant Claim or a US Relevant Claim or the Purchaser in
respect of a claim under clause 5.7.1(c), as the case may be, shall
mean the amount in respect of such claim for which the Warrantors or
Purchaser, as the case may be, admit liability in writing or are found
to be liable by a court of competent jurisdiction.
3. TIME LIMITS
3.1 NOTICE TO WARRANTORS OR PURCHASER
79
3.1.1 The Warrantors shall have no liability in respect of any
Relevant Claim (other than a US Relevant Claim) unless the
Purchaser shall have given notice in writing to the Warrantors
of such claim specifying (in reasonable detail) the matter
which gives rise to the claim, the nature of the claim and the
amount claimed in respect thereof (detailing the Purchaser's
calculation of the loss thereby alleged to have been suffered
by it), such notice to be given as soon as reasonably
practicable and in any event not later than 31 March 2002 in
the case of the Warranties set out in Schedule 3 other than in
respect of a US Relevant Claim, 7 years after the date of
Completion in respect of a relevant claim under Schedule 4
or the Tax Deed.
3.1.2 The Warrantors shall have no liability in respect of a US
Relevant Claim unless the Purchaser shall have given notice in
writing to the Warrantors of such claim specifying (in
reasonable detail) the matter which gives rise to the claim,
the nature of the claim and the amount in respect thereof
(detailing the Purchaser's calculation of the loss thereby
alleged to have suffered by it) such notice to be given as
soon as reasonably practicable and in any event no later than
the date referred to in paragraph 3.1.3.
3.1.3 The Purchaser shall have no liability in respect of a claim in
connection with clause 5.7.1(c) unless the Vendors shall have
given notice in writing to the Purchaser of such claim
specifying (in reasonable detail) the matter which gives rise
to the claim, the nature of the claim and the amount in
respect thereof (detailing the Vendors' calculation of the
loss thereby alleged to have suffered by them) such notice to
be given as soon as reasonably practicable and in any event no
later than 3 months after the approval of the audited
accounts for Xxxxxxxx-Xxxx Limited by its board of directors
for the year ending 31 December 1999.
3.2 COMMENCEMENT OF PROCEEDINGS
All and any liability of the Warrantors in respect of any Relevant
Claim notified to the Representatives in accordance with paragraph
3.1 shall (if such claim has not previously been satisfied, settled
or withdrawn) be extinguished on the expiry of nine months from the
date of such notification in the case of the Warranties set out in
schedule 3 and six months after the seventh anniversary of the
date of Completion Date in the case of the Warranties set out in
Schedule 4 or the Tax Deed unless the Purchaser shall within such
period have issued and validly served on the Warrantors proceedings
in respect of such claim.
3.3 EXCESS PROVISIONS, OVERVALUES, UNDERVALUES AND WRITTEN-OFF AMOUNTS
3.4 If and to the extent that:
3.4.1 the amount of any allowance, provision or reserve (other than
any provision or reserve for Tax) made in the Audited Accounts
or otherwise taken into
80
account or reflected therein is found to be in excess of the
matter for which such allowance, provision or reserve was
made; or
3.4.2 any asset is found to have been included at an undervalue in
the Audited Accounts or any liability (other than any
liability for Tax) is found to have been included at an
overvalue in the Audited Accounts; or
3.4.3 any sum is received by the Company or any Subsidiary which has
previously been written off as irrecoverable in its accounts,
then the amount of any such excess, undervalue, overvalue or receipt
as the case may be (the "EXCESS AMOUNT") shall be credited against and
applied in relieving the Warrantors from any liability they would
otherwise incur in respect of any claims under the Warranties, or at
the option of the Warrantors shall be credited against and applied in
or towards satisfaction of any claims which the Purchaser may have
against the Warrantors under the Tax Deed.
4. ACCOUNTING BASES ETC.
The Warrantors shall not be liable in respect of any claim under the
Warranties or to the extent that it arises or is increased as a result
of any change after Completion in the accounting bases, policies,
practices or methods applied in preparing any accounts or valuing any
assets or liabilities of the Company from those used in preparing the
Audited Accounts save to the extent necessary to bring such policies
etc into line with generally accepted accounting practice.
5. ACTS OF PURCHASER OR VENDORS ETC.
Neither the Warrantors nor the Purchaser, as the case may be, shall be
liable in respect of a claim under the Warranties or clause 5.7.1(c),
as the case may be, to the extent that the claim is attributable (in
whole or in part) to any voluntary act, omission or transaction
carried out by or at the request of or with the consent of the
Purchaser or any of its Affiliates or the Vendors, as the case may be,
or any of their respective successors in title or assigns on or after
Completion other than any such act, omission or transaction carried
out in the ordinary and proper course of business.
6. RECOVERY FROM THIRD PARTIES
6.1 COVERED LOSSES
Neither the Warrantors nor the Purchaser, as the case may be, shall be
liable in respect of any claim under the Warranties or clause 5.7.1(c)
as the case may be, to the extent that the claim relates to a Covered
Loss. A Covered Loss means:
6.1.1 any loss which is covered by and recovered under any insurance
in force at the relevant time for the benefit of the Company
any of its Subsidiaries or Xxxxxxxx-Xxxx Limited, as the case
may be;
81
6.1.2 any loss in respect of which the Company or any of the
Subsidiaries or Xxxxxxxx-Xxxx Limited has any other right of
recovery against, or indemnity from, any person other than the
Warrantors or the Purchaser, (whether under any provision of
law, contract or otherwise howsoever) provided that in respect
of a claim made by the Purchaser, the Purchaser need not take
any action which the Purchaser or the Company reasonably
considers to be materially prejudicial to its commercial
interests.
6.2 ACCOUNTING TO WARRANTORS
6.2.1 If the Warrantors pay to or for the benefit of the Purchaser,
the Company or any Subsidiary an amount in respect of any
claim under the Warranties and the Company or any Subsidiary
or any member of the Purchaser's Group subsequently receives
from any other person any payment or benefit in respect of the
matter giving rise to such claim, the Purchaser shall
thereupon pay to the Warrantors an amount equal to the payment
or benefit received (except to any extent that the liability
of the Warrantors in respect of the Relevant Claim was reduced
to take account of such payment or benefit).
6.2.2 If the Purchaser pays to or for the benefit of any Vendor an
amount in respect of any claim under clause 5.7.1(c) and the
Vendors subsequently receive from any other person any payment
or benefit in respect of the matter giving rise to such claim,
the Vendors shall thereupon pay to the Purchaser an amount
equal to the payment or benefit received (except to any
extent that liability of the Purchaser in respect of such
claim was reduced to take account of such benefit or payment).
7. RELATED BENEFITS
In assessing any damages or other amounts payable in respect of a
claim under the Warranties or clause 5.7.1(c) there shall be taken
into account any related savings or other net benefits which become
available to the Purchaser or the Vendors.
8. NO DUPLICATION OF RECOVERY
8.1 LOSS OTHERWISE COMPENSATED
Neither the Warrantors nor the Purchaser shall be liable in respect of
any claim under the Warranties or clause 5.7.1(c) to the extent that
the subject of the claim has been or is made good or is otherwise
compensated for without cost to the Purchaser or the Vendors as the
case may be.
8.2 NO DOUBLE RECOVERY
Neither the Purchaser nor the Vendors shall be entitled to recover
damages or otherwise obtain reimbursement or restitution more than
once in respect of the same loss.
82
9. CONDUCT OF CLAIMS
9.1 If either the Purchaser or the Vendors, as the case may be, become
aware of a claim made against it or them that may constitute a
Relevant Claim or a US Relevant Claim for which the Warrantors may
be liable, or a claim in respect of clause 5.7.1(c), as the case may
be, for which the Purchaser may be liable, the Vendors or the
Purchaser, as the case may be, shall:
(a) notify the Warrantors or the Purchaser, as the case may be, as
soon as practicable of the matter and consult with the
Warrantors or the Purchaser, as the case may be, in good faith
with respect to the matter; and
(b) if the matter becomes or has become the subject of proceedings
then the Purchaser shall consult with the Warrantors in good
faith or vice versa to achieve the best possible resolution of
such proceedings.
9.2 In respect of claims referred to in paragraph 9.1 the Warrantors or
the Purchaser, as the case may be, shall provide any assistance
(including the provision of information) as reasonably may be
requested and required by the Purchaser or the Warrantors, as the
case may be, in dealing with such claim and the conduct of it.
83
Signed by ) /s/ Xxxx Xxxxxxxx
XXXX XXXXXXXX ) ...........................................
Signed by ) /s/ Xxxxxx Xxxxxxxx
XXXXXX XXXXXXXX ) ...........................................
Signed by ) /s/ Xxxxx Xxxxxxxxxx
XXXXX XXXXXXXXXX ) ...........................................
Signed by ) /s/ Xxxxxx Xxxxxxx
XXXXXX XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for XXXX J BATTING ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for ZAG ASGHAR ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for XXXXXX BRINE ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for XXXXXXX XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for FIONA CANNONS ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXXXX XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XERXES HODIVALA ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXX XXXXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXXX XXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXX X XXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxxx
attorney for XXXXX XXXXXXXXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXXX XXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXXX XXXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXX XXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXXX XXXXXXX ) ...........................................
Signed as a Deed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXX XXXXXXXX ) ...........................................
Signed by as ) /s/ Xxxx Xxxxxxxx
attorney for XXXXXXX X. XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXXX XXXXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXX XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXXX X. XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXX XXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXX XXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXX XXXXXXX ) ...........................................
Signed by as ) /s/ Xxxxxx Xxxxxxx
attorney for XXXXXX XXXXXX ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for XXXXX XXXX ) ...........................................
Signed by as ) /s/ Xxxxx Xxxxxxxxxx
attorney for XXXXXX X. XXXXXXXX ) ...........................................
Signed by )
For and on )
behalf of ) /s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
XXXXXXXX-XXXX INC. )......................................
Duly authorised representative
