EXHIBIT 2.01
DATED 30 AUGUST 2004
THE PERSONS WHOSE NAMES AND ADDRESSES
ARE SET OUT IN PART A OF SCHEDULE 7
and
NIGEL XXXXXXX XXXX
and
XXXXXXX XXXXX XXXXXX
and
XXXX XXXXXXXXX
and
VERITAS SOFTWARE CORPORATION
and
KVAULT SOFTWARE LIMITED
----------------------------------
FORM OF
SHARE PURCHASE AGREEMENT
----------------------------------
Xxxxxxxxx and May
Xxx Xxxxxxx Xxx,
Xxxxxx, XX0X 0XX
JCXT/SEZD
CD042310123
THIS AGREEMENT is made 30 August 2004
BETWEEN:
1. The persons whose names and addresses are set out in Part A of Schedule 7
(Ownership of the Securities) (collectively the "PRINCIPAL SELLERS" and
individually a "PRINCIPAL SELLER")
2. NIGEL XXXXXXX XXXX, Wokingham, Berkshire ("XXXXX XXXX");
3. XXXXXXX XXXXX HEDGER, Newbury, Berkshire ("XXXXXXX XXXXXX");
4. XXXX XXXXXXXXX, Wilmcote, Stratford upon Avon ("XXXX XXXXXXXXX");
5. VERITAS SOFTWARE CORPORATION, a company incorporated in Delaware whose
principal place of business is at 000 Xxxxx Xxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx 00000, Delaware (the "PURCHASER"); and
6. KVAULT SOFTWARE LIMITED, a company incorporated in England and Wales
(registered number 03876482) whose principal place of business is at 000
Xxxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxxxxxx XX00 0XX (the
"COMPANY").
WHEREAS:
(A) The Principal Sellers are persons holding Shares and/or Vested Options
and/or Unvested Options in the Company. Their respective interests in the
Company are detailed in Part A of Schedule 7 (Ownership of the
Securities). Xxxxx Xxxx holds Shares, Vested Options and Unvested Options
in the Company. Xxxxxxx Xxxxxx holds Unvested Options and Vested Options
in the Company and Xxxx Xxxxxxxxx holds Vested Options in the Company.
(B) The Purchaser has agreed to make an offer to purchase all of the
Securities of the Sellers. The offer is made on the terms of and subject
to the conditions of this agreement.
(C) The Sellers have each agreed to accept the Purchaser's Offer in respect of
their Securities in the manner and for the consideration, and in each case
upon the terms and subject to the conditions set out, in this agreement
(the "TRANSACTION").
(D) As part of the Transaction, the Company, Xxxxx Xxxx, Xxxx Xxxxxxxxx and
Xxxxxxx Xxxxxx will endeavour to procure that the Minor Sellers will
transfer their Shares and/or exercise their Vested Options and/or
Accelerated Options in accordance with the Exercise Proposal and transfer
any shares arising therefrom and/or roll-over their Unvested Options in
accordance with the Unvested Options Proposal. The identity of the Minor
Sellers and the Vested Options, Accelerated Options, Unvested Options
and/or Shares they currently hold are set out in Part B of Schedule 7
(Ownership of the Securities).
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(E) The Purchaser's Offer is such that the Sellers, upon acceptance of the
Purchaser's Offer, shall be entitled to require the Minor Sellers to sell
their Securities to the Purchaser in accordance with the Articles of
Association.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this agreement and the Schedules to it:
"2005/2006 MANAGEMENT means those Unvested Options set out in section
PERFORMANCE OPTIONS" (v) of Part B of Schedule 7 (Ownership of the
Securities);
"ACCELERATED OPTION" means an option to buy shares in the Company
which has been granted pursuant to one of the
Option Schemes to an Accelerated Optionholder
and which has not vested in accordance with its
terms on or prior to the date of this agreement
but will vest as a result of Completion (and
which does not form part of the Unvested
Options Proposal);
"ACCELERATED means the persons set out in section (iv) of
OPTIONHOLDERS" Part B of Schedule 7 (Ownership of the
Securities);
"ACCOUNTS" means the audited financial statements of the
Company and of each Subsidiary, and the audited
consolidated financial statements of the
Company, prepared in accordance with applicable
legal requirements, for the accounting
reference period ended on the Accounts Date
each of which financial statements comprises a
balance sheet, profit and loss account, notes
to the financial statements, auditors' and
directors' reports and (in the case of the
financial statements of the Company and of the
consolidated financial statements of the
Company) a cash flow statement, a copy of which
has for the purpose of identification only been
signed by the Sellers' Solicitors and delivered
to the Purchaser or the Purchaser's Solicitors;
"ACCOUNTS DATE" means 31 December 2003;
"APPLICABLE RATE" means the rate for conversion of Sterling to US
Dollar of 1.796;
"ARTICLES OF ASSOCIATION" means the articles of association of the
Company in the form attached to the Disclosure
Letter;
"ASSUMED OPTION VALUE" means the product of the number of Outstanding
Options multiplied by the Price per Ordinary
Share;
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"BOOKS AND RECORDS" includes, without limitation, all notices,
correspondence, orders, inquiries, drawings,
plans, books of account and other documents and
all computer disks or tapes or other machine
legible programs or other records;
"BUSINESS DAY" means a day (other than a Saturday or a Sunday)
on which banks are open for business (other
than solely for trading and settlement in euro)
in London and San Francisco;
"BUSINESS INFORMATION" means all information, know-how and records
(whether or not confidential and in whatever
form held) including (without limitation) all
formulas, designs, specifications, drawings,
data, manuals and instructions, computer source
codes and preparatory design materials,
application program interfaces, configuration
data and all customer lists, sales information,
business plans and forecasts, and all technical
or other expertise and all accounting and tax
records, correspondence, orders and inquiries;
"CLAIM" means a claim for breach of a Relevant
Warranty;
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMPANIES ACTS" means the Companies Xxx 0000, the Companies
Consolidation (Consequential Provisions) Xxx
0000, the Companies Xxx 0000 and Part V of the
Criminal Justice Xxx 0000;
"COMPANY TRANSACTION means the aggregate amount of all liabilities
LIABILITIES" or obligations of the Company or any member of
the Group that will become payable upon or are
paid or payable by reference to completion of
the sale and purchase of the Sale Shares
(including, without limitation, bonuses payable
to any director or employee of any member of
the Group) but does not include any amounts
deducted or withheld in accordance with clause
2.16;
"COMPLETION" means completion of the sale and purchase of
the Sale Shares under this agreement;
"COMPLETION DATE" means the date 10 Business Days after the date
of issue of the Drag-Along Notice, provided
that if the conditions set out in Schedule 1
(Conditions to Completion) shall not have been
satisfied, waived or deferred on or before the
second Business Day prior to such date,
"COMPLETION DATE" shall mean 2 Business Days
after the day on which such conditions shall
have been satisfied, waived or deferred or such
other date as the parties may agree but, in any
event, no later than
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30 days after the date of issue of the
Drag-Along Notice;
"CONFIDENTIAL BUSINESS means Business Information which is
INFORMATION" confidential;
"DANGEROUS SUBSTANCE" has the meaning given in paragraph 25 of
Schedule 3 (Warranties);
"DEBT CERTIFICATE" means the certificate in the form set out in
Schedule 12 (Debt Certificate) signed by the
Management Warrantors on behalf of the Sellers
on the day prior to the Completion Date
confirming the Debt Repayment Amount;
"DEBT REPAYMENT AMOUNT" means the sum of all amounts payable in full
satisfaction of all Indebtedness of the Company
as at the Completion Date;
"DISCLOSURE LETTER" means the letter dated of even date with this
agreement written by the Management Warrantors
to the Purchaser for the purposes of sub-clause
7.2 (Warranties and covenants) and delivered to
the Purchaser before the execution of this
agreement;
"DOMAIN NAME" means the domain name xxxxxxxxxxxxxxx.xxx;
"DOMAIN NAME TRANSFER" means any documentation required to be
submitted to effect the transfer or surrender
of the Domain Name to the Company, in the form
prescribed by the relevant domain name
registry;
"DRAG-ALONG NOTICE" means the drag-along notice in the form set out
in Schedule 11 (Form of Drag-Along Notice) to
be issued by the Sellers to the holders of the
Drag-Along Shares in accordance with the
Articles of Association;
"DRAG-ALONG SHARES" means the shares referred to in Section (i) of
Part B of Schedule 7 (Ownership of the
Securities) that are owned by the Minor
Sellers;
"EMI SCHEME" means the kVault Software Limited Enterprise
Management Incentive Scheme in the form
attached to the Disclosure Letter;
"ENTERPRISE VAULT" has the meaning given in Part 1 of Schedule 22;
"ENVIRONMENTAL LAWS" has the meaning given in paragraph 25 of
Schedule 3 (Warranties);
"ENVIRONMENTAL MATTERS" has the meaning given in paragraph 25 of
Schedule 3
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(Warranties);
"ENVIRONMENTAL PERMITS" has the meaning given in paragraph 25 of
Schedule 3 (Warranties);
"ERISA" means the Employee Retirement Income Security
Act of 1974.
"ERISA AFFILIATE" of any entity means any other entity that,
together with such entity, would be treated as
a single employer under Section 414 of the
Code.
"ESCROW AGENT" means the escrow agent appointed by the parties
in accordance with clause 5.1;
"ESCROW AGREEMENT" means the escrow agreement to be entered into
between the parties referred to in clause
5.1(A) (Escrow) in the form set out in Schedule
13 (Form of Escrow Agreement);
"ESCROW AMOUNT" means an amount equal to 15 per cent, of the
number of Sale Shares, Drag-Along Shares and
Option Shares (to the extent such Options
Shares are to be issued to the Sellers), in
each case multiplied by the applicable Price
per Share;
"ESCROW ACCOUNT" means the deposit account specified in the
Escrow Agreement;
"EXCLUSIVITY LETTER" means the letter dated 16 July 2004 from the
Purchaser to the Company relating to the
exclusivity of dealings between the Purchaser
and the Company;
"EXERCISE PROPOSAL" means the Purchaser's offer to the Vested
Optionholders in respect of the exercise of the
Vested Options and the Accelerated
Optionholders in respect of the exercise of the
Accelerated Options as more particularly
described in the Options Proposals Letter;
"EXERCISE VALUE" means an amount equivalent to the aggregate of
each exercise price of Vested Options
multiplied by the number of Vested Options
granted at that exercise price plus each
exercise price of the Unvested Options
multiplied by the number of Unvested Options
granted at that exercise price plus each
exercise price of the Accelerated Options
multiplied by the number of Accelerated Options
granted at that exercise price provided that no
account shall be taken of the 2005/2006
Management Performance Options;
"GROUP" means the Company and all the Subsidiaries;
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"ICTA 1988" means the Income and Corporation Taxes Xxx
0000;
"INDEBTEDNESS" means the deferred consideration payments under
the Sale of Business Agreement between Compaq
Computer Corporation and the Company dated 3
December 1999 payable by the Company as at the
Completion Date;
"INFORMATION TECHNOLOGY" means computer hardware, software, networks,
databases and/or other information technology;
"INTELLECTUAL PROPERTY means all rights in patents, trade marks and
RIGHTS" service marks (including associated goodwill),
designs, trade or business names, trade dress,
copyrights, topography rights and databases
(whether or not any of these is registered and
including applications for registration of any
such thing) and all rights or forms of
protection of a similar nature or having
equivalent or similar effect to any of these
which may subsist anywhere in the world;
"IPR CLAIM" means any allegation, claim, assertion, action
or suit by any person (other than the Purchaser
or any member of its group) that any
Proprietary Software (but excluding any
modifications made after the Completion Date)
or the manufacture, use or any other
exploitation of any Proprietary Software or any
other Intellectual Property Rights owned by the
Company and/or any Group member as at or prior
to the Completion Date infringe any such
person's Intellectual Property Rights, or any
matter which may give rise to any such
allegation, claim, assertion, action or suit;
"IPR CLAIM LIABILITY" means any losses, liabilities, damages, claims,
demands, settlements, third party costs and
expenses of any kind whatsoever (including
reasonable legal expenses) incurred by the
Purchaser and/or any Group member arising from
any IPR Claim which IPR Claim, to the extent
that it arises after Completion, is notified by
the Purchaser in writing to the Sellers'
Representative (provided that one has been
appointed and has not resigned or been removed
and a replacement has not been appointed) on or
prior to the first anniversary of the
Completion Date;
"LEASE" has the meaning given in paragraph 24.9 of
Schedule 3 (Warranties);
"MANAGEMENT ACCOUNTS" means the management accounts of the Group for
each complete month since the Accounts Date
until 31 July 2004, a copy of which has for the
purposes of identification only been signed by
the Seller's Solicitors and delivered to the
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Purchaser or the Purchaser's Solicitors;
"MANAGEMENT WARRANTORS" means Xxxxx Xxxx, Xxxxxxx Xxxxxx and Xxxx
Xxxxxxxxx;
"MATERIAL ADVERSE EFFECT" means any change, event, violation, inaccuracy,
circumstance or effect (including if arising
from a breach or breaches of Warranty but, for
the avoidance of doubt, a breach of Warranty
shall not of itself constitute a Material
Adverse Effect) which occurs after the date of
this agreement that is, or would reasonably be
likely to be, materially adverse to the
business, assets (including intangible assets),
financial condition or result of operations or
have a material and lasting effect on the
prospects of the Group provided that such event
is not caused by:
(a) changes in interest rates, exchange rates
or securities or commodity prices or in
economic, financial, market or political
conditions generally;
(b) changes in conditions generally affecting
the industry in which the Company
operates;
(c) changes in laws, regulations or
accounting practices;
(d) any prospective or actual change in
control arising from this agreement;
(e) the Purchaser unreasonably withholding or
delaying its consent to any member of the
Group doing any act, omission or
transaction set out in Schedule 6
(Conduct of business before Completion)
in circumstances where one or more of the
Management Warrantors have given written
notice to the Purchaser of the
anticipated material adverse consequences
of withholding such consent;
(f) any loss, disruption or diminution of
existing or future customer, distributor
or supplier relationships arising from
the entering into of this agreement
becoming known to any third party; or
(g) any matter disclosed in the Disclosure
Letter.
"MINOR SELLERS" means the holders of the Shares and/or Vested
Options and/or Accelerated Options and/or
Unvested Options, other than the Sellers,
identified in Part (B) of Schedule 7 (Ownership
of the Securities);
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"NET WORKING CAPITAL" means the aggregate of all cash (other than
cash provided as collateral for obligations),
cash equivalents, debtors outstanding (for less
than 90 days) and prepayments (made 10 months
or less in advance) less the aggregate of all
trade and other creditors, borrowings and
indebtedness in the nature of borrowings
(including, without limitation, under any
finance leases, hire purchase or conditional
sale agreements but excluding the Indebtedness)
calculated on a consolidated basis for the
Group at the Completion Date provided that all
accrued income and deferred revenue shall be
excluded for the purpose of this definition;
"NEW OPTIONS" means any options to buy shares in the Company
granted at the Purchaser's request pursuant to
the Option Schemes after the date of this
agreement but on or prior to the Completion
Date, the terms of such options to take effect
at Completion;
"OPTIONS PROPOSALS LETTER" means the letter to holders of Vested Options,
Accelerated Options and Unvested Options
setting out details of the Exercise Proposal
and Unvested Options Proposals in the form set
out in Schedule 17 (Options Proposals Letter);
"OPTION PROPOSAL" means the Exercise Proposal and the Unvested
Options Proposal, as the context requires;
"OPTION SCHEMES" means (a) the kVault Unapproved Establishment
and Re-Pricing Share Option Scheme, (b) the
kVault Software plc Discretionary Option Scheme
2001, (c) the EMI Scheme and/or (d) the kVault
Software Limited US Unapproved Share Option
Scheme;
"OPTION SHARES" means any Ordinary Shares issued after the date
of this agreement following exercise of a
Vested Option or an Accelerated Option pursuant
to the Exercise Proposal;
"ORDINARY SHARES" means the ordinary shares of 2.5p each in the
capital of the Company;
"OUTSTANDING OPTIONS" means Vested Options and Accelerated Options in
relation to which the holder has not accepted
an Option Proposal on or before the date for
acceptance specified in the relevant Option
Proposal and Unvested Options (excluding for
these purposes any New Options and the
2005/2006 Management Performance Options);
"PENSION SCHEMES" means any one or more of;
(i) the group personal pension arrangements
with
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Scottish Widows and NPI;
(ii) the Kilo Software Directors Pension
Scheme, governed by a trust deed dated 6
February 2002 (as amended);
(iii) the Kilo Software plc Death in Service
Scheme established by a declaration of
trust dated 25 January 2000; and
(iv) the Group Income Protection Plan with
Friends Provident (Policy No. G16718);.
"PREFERENCE SHARES" means the issued A and B preference shares of
2.5p each in the capital of the Company and
Preference Shareholders shall be construed
accordingly;
"PRICE PER A PREFERENCE means the amount of the Purchase Price
SHARE" attributable to each A Preference Share as
calculated in accordance with Schedule 8
(Calculation of Purchase Price per Share) or
the equivalent amount in Sterling calculated at
the Applicable Rate;
"PRICE PER B PREFERENCE means the amount of the Purchase Price
SHARE" attributable to each B Preference Share as
calculated in accordance with Schedule 8
(Calculation of Purchase Price per Share) or
the equivalent amount in Sterling calculated at
the Applicable Rate;
"PRICE PER ORDINARY means the amount of the Purchase Price
SHARE" attributable to each Ordinary Share as
calculated in accordance with Schedule 8
(Calculation of Purchase Price per Share) or
the equivalent amount in Sterling calculated at
the Applicable Rate;
"PRICE PER SHARE" means the Price per Ordinary Share, the Price
per A Preference Share or the Price per B
Preference Share, as the context requires;
"PROCEEDINGS" means any proceeding, suit or action arising
out of or in connection with this agreement;
"PROPERTY" OR means freehold, leasehold or other immovable
"PROPERTIES" property in any part of the world;
"PROPERTY OWNER" means, in relation to any Relevant Property,
the person referred to as owner in Schedule 10
(Property);
"PROPRIETARY SOFTWARE" means any computer software in which any member
of the Group owns any Intellectual Property
Rights as set out in
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Schedule 17 (Proprietary Software);
"PURCHASE PRICE" means the purchase price for the Sale Shares,
the Drag-Along Shares and the Option Shares as
set out in Clause 4 (Consideration);
"PURCHASER'S GROUP" means the Purchaser, its subsidiaries and
subsidiary undertakings, any holding company of
the Purchaser and all other subsidiaries of any
such holding company from time to time and
which term shall include, after Completion, the
Company and the Subsidiaries;
"PURCHASER'S OFFER" means the offer by the Purchaser to purchase
Securities as referred to in Recital (B) to
this agreement;
"PURCHASER'S SOLICITORS" means Xxxxxxxxx and May;
"RELEVANT PROPERTY" means the Property or Properties referred to in
Schedule 10 (Property);
"RELEVANT WARRANTIES" means all of the Warranties except for the
Title and Capacity Warranties and the
Warranties set out in paragraph 5 and
sub-paragraph 24.10 of Schedule 3 (Warranties);
"SALE SHARES" means the shares referred to in Section (i) of
Part A of Schedule 7 (Ownership of the
Securities) that are to be transferred by the
Sellers to the Purchaser pursuant to this
agreement;
"SECURITIES" has the meaning given in the Articles of
Association;
"SELLERS" means the Principal Sellers, Xxxxx Xxxx,
Xxxxxxx Xxxxxx and Xxxx Xxxxxxxxx;
"SELLERS' AGENT" means Deutsche Bank AG or such other person as
appointed pursuant to this agreement from time
to time;
"SELLERS' REPRESENTATIVE" means Xxxx XxXxxxxxx or such other person as
appointed pursuant to this agreement from time
to time;
"SELLERS' SOLICITORS" means Weil, Gotshal & Xxxxxx;
"SERVICE DOCUMENT" has the meaning given in sub-clause 30.5
(Agent for service);
"SETTLED CLAIM" has the meaning set out in clause 8
(Purchaser's remedies and Warrantors'
limitations on liability);
"SHARES" means the Sale Shares, the Drag-Along Shares
and, if the
10
context requires, the Option Shares;
"SHARE PURCHASE has the meaning given in sub-clause 21.1
DOCUMENTS" (Entire agreement);
"SUBSIDIARY" means at any relevant time any then subsidiary
or subsidiary undertaking of the Company, basic
information concerning each current subsidiary
and subsidiary undertaking of the Company being
set out in Schedule 15 (Basic information about
the Subsidiaries);
"TAX" OR "TAX" OR includes all forms of taxation and statutory,
"TAXATION" governmental, supra-governmental, state,
principal, local governmental or municipal
impositions, duties, contributions and levies,
in each case whether of the United Kingdom or
elsewhere and whenever imposed, and all
penalties, charges, costs and interest relating
thereto and without limitation all employment
taxes and any deductions or withholdings of any
sort;
"TAX COVENANT" means the tax covenant referred to in Schedule
5 (Tax Covenant);
"TAX WARRANTIES" means the Warranties set out in paragraphs 27
to 40 of Schedule 3 (Warranties);
"TCGA 1992" means the Taxation of Chargeable Gains Xxx
0000;
"TITLE AND CAPACITY means the Warranties set out in paragraphs 1
WARRANTY" and 2 of Schedule 3 (Warranties);
"TRANSACTION EXPENSES" means US$1,680,000 (one million six hundred and
eighty thousand), which represents an estimate
to be adjusted and confirmed by reference to
invoices at Completion;
"UNVESTED OPTION" means an option to buy shares in the Company
which has been granted pursuant to one of the
Option Schemes and which has not vested in
accordance with its terms on or prior to the
date of the Agreement which will include the
New Options (but which does not include the
Accelerated Options);
"UNVESTED OPTIONS means the proposal to holders of Unvested
PROPOSAL" Options set out in the Options Proposals
Letter;
"US EMPLOYEE PLAN" means any "employee benefit plan", as defined
in Section 3(3) of ERISA and each other plan,
contract, commitment or arrangement (written or
oral) providing for bonuses, profit-sharing,
stock option or other stock related rights or
other forms of incentive or deferred
compensation, vacation benefits, insurance
(including any self-insured
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arrangements), health or medical benefits,
employee assistance, disability or sick leave
benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and
post-employment or retirement benefits
(including compensation, pension health,
medical or life insurance benefits) which is
maintained, administered or contributed to by
the Company or its Subsidiaries and covers any
employee or former employee of the Company or
its Subsidiaries in the United States, or with
respect to which the Company or its
Subsidiaries could reasonably be expected to
have any material liability with respect to
employees in the United States.
"VAT" means the value added tax charged by the
provisions of VATA 1994 and all legislation
(whether primary or secondary) which is
supplemental to it and any tax similar to that
tax imposed in addition or substitution to it;
"VATA 1994" means the Value Added Tax Xxx 0000;
"VAT GROUP" has the meaning given in paragraph 31 of
Schedule 3 (Warranties);
"VESTED OPTION" means an option to buy shares in the Company
which has been granted pursuant to any of the
Option Schemes and has vested in accordance
with its terms on or prior to the date of the
agreement;
"VESTED OPTIONHOLDER" means any person holding one or more Vested
Options as detailed in Section (ii) of Part A
and Section (ii) of Part B of Schedule 7
(Ownership of the Securities);
"WARRANTIES" means the warranties set out in Schedule 3
(Warranties) given by the Sellers and the
Warrantors, as applicable, and "WARRANTY" shall
be construed accordingly;
"WARRANTORS" means the Sellers or the Management Warrantors,
whichever the context requires; and
"WORKING HOURS" means 9.30 a.m. to 5.30 p.m. on a Business Day.
1.2 In this agreement, unless otherwise specified:
(A) references to clauses, sub-clauses, paragraphs, sub-paragraphs and
Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs
of, and Schedules to, this agreement;
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(B) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted;
(C) references to a "COMPANY" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(D) references to a "PERSON" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
(E) references to "INDEMNIFY" and "INDEMNIFYING" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that
person and all loss or damage and all payments, costs or expenses
made or incurred by that person as a consequence of or which would
not have arisen but for that circumstance;
(F) the expressions "ACCOUNTING REFERENCE DATE", "ACCOUNTING REFERENCE
PERIOD", "ALLOTMENT", "BODY CORPORATE", "CURRENT ASSETS",
"DEBENTURES", "HOLDING COMPANY", "PAID UP", "PROFIT AND LOSS
ACCOUNT", "SUBSIDIARY", "SUBSIDIARY UNDERTAKING" and "WHOLLY-OWNED
SUBSIDIARY" shall have the meaning given in the Companies Acts;
(G) a person shall be deemed to be connected with another if that person
is connected with that other within the meaning of section 839
ICTA 1988;
(H) references to writing shall include any modes of reproducing words
in a legible and non-transitory form;
(I) references to times of the day are to London time;
(J) headings to clauses and Schedules are for convenience only and do
not affect the interpretation of this agreement;
(K) the Schedules and any attachments (but not the Tax Covenant) form
part of this agreement and shall have the same force and effect as
if expressly set out in the body of this agreement, and any
reference to this agreement shall include Schedules;
(L) "so far as each of the Management Warrantors is aware" shall mean
the awareness and knowledge of Xxxxx Xxxx, Xxxxxxx Xxxxxx and Xxxx
Xxxxxxxxx (or any of them) and any awareness or knowledge that such
persons would have had if they had made reasonable enquiry as to the
awareness and knowledge of Xxxx XxXxxxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxx
Xxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxx Xxxxx, Xx
Xxxxxxx and Xxxxxx Xxxxxxx;
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(M) references 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 most nearly
approximates in that jurisdiction to the English legal term;
(N) (i) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of
acts, matters or things; and
(ii) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general words.
2. THE PURCHASER'S OFFER AND DRAG-ALONG
2.1 To the extent that it applies to them, each of the Sellers accepts the
Purchaser's Offer and, at Completion, each of the Sellers who holds Sale
Shares shall sell and the Purchaser shall purchase those Sale Shares set
opposite its name in Part A; section (i) of Schedule 7 (Ownership of the
Securities) with all rights attached or accruing to them at the date of
this agreement.
2.2 Each of the Sellers represents to the Purchaser that he has the right to
transfer legal and beneficial title to the Sale Shares to be sold by him.
2.3 Each Seller represents to the Purchaser that the Sale Shares to be sold by
him pursuant to the Purchaser's Offer shall be free from all charges and
encumbrances and from all other rights exercisable by or claims by third
parties.
2.4 Each of the Sellers who holds Sale Shares waives all rights of pre-emption
over or co-sale in respect of any of the Sale Shares and any other right
arising as a result of the proposed transfer of any of the Sale Shares
conferred upon him by the Articles of Association or in any other way and
undertakes to take all steps necessary to ensure that any rights of
pre-emption over or co-sale in respect of any of the Sale Shares and any
other such rights are waived.
2.5 For the avoidance of doubt, Part 1 Law of Property (Miscellaneous
Provisions) Xxx 0000 shall not apply to the transfer of the Sale Shares
for the purposes of this clause.
2.6 Immediately following the date of this agreement the Purchaser agrees to
make and undertake all acts necessary to comply with the Exercise Proposal
and the Unvested Options Proposal.
2.7 The Sellers who are Vested Optionholders agree to accept the Exercise
Proposal and shall promptly take all necessary actions to satisfy the
requirements of the Exercise Proposal in respect of their Vested Options
and Option Shares (including the execution of powers of attorney).
14
2.8 The Sellers who hold Unvested Options agree to accept the Unvested Options
Proposal and shall promptly take all necessary actions to satisfy the
requirements of the Unvested Options Proposal in respect of their Unvested
Options (including the execution of powers of attorney referred to in the
Options Proposals Letter).
2.9 Following signature of this agreement by the parties the Sellers and, in
relation to sub-clauses (A)(i) to (A)(iii) below, the Company will:
(A) to the extent that the Minor Sellers hold Drag-Along Shares:
(i) on the date of announcement of the Transaction by the
Purchaser, issue the Drag-Along Notice to the Minor Sellers
which shall notify them of the Purchaser's Offer and the
Sellers acceptance of it and require the Minor Sellers to sell
their Drag-Along Shares;
(ii) use their reasonable endeavours to procure properly executed
powers of attorney from each of the Minor Sellers in the form
set out in the Drag-Along Notice;
(iii) if, following expiry of 5 Business Days after the date of
issue of the Drag-Along Notice, a Minor Seller has failed to
provide a properly executed power of attorney as specified in
clause 2.9(A)(ii) procure that any two of the directors of the
Company are authorised to execute such a power of attorney on
behalf of such Minor Seller in respect of his Drag-Along
Shares and that two directors execute such a power of
attorney; and
(iv) instruct the Sellers' Agent to act as escrow agent for the
purposes of article 14.6.4(c) of the Articles of Association
and the Sellers' Solicitors to act as escrow agent for the
purposes of article 14.3 of the Articles of Association;
(v) instruct and procure compliance by the Sellers' Agent in
respect of those matters specified in the Drag-Along Notice to
be carried out by such agent;
(B) to the extent that the Minor Sellers are Vested Optionholders or
Accelerated Optionholders:
(i) notify them of the Exercise Proposal; and
(ii) use their reasonable endeavours to procure that they accept
the Exercise Proposal and properly execute and return a form
of election in the form set out in the Exercise Proposal;
(C) to the extent that the Minor Sellers hold Unvested Options:
(i) notify them of the Unvested Options Proposal; and
15
(ii) use their reasonable endeavours to procure that they accept
the Unvested Options Proposal and properly execute and return
a form of election in the form set out in the Unvested Options
Proposal.
2.10 The Sellers will procure the grant by the Company to employees of the
Group of such number of New Options and in such amounts as the Purchaser
may require in writing to the Sellers' Representative within 5 Business
Days of the date of this agreement, such New Options to be subject to the
Unvested Options Proposal and in respect of a maximum of 10,000,000
Ordinary Shares.
2.11 The Purchaser hereby offers to purchase, on the terms of and subject to
the conditions of this agreement, at Completion, the Drag-Along Shares
and, subject to issue after Completion, the Option Shares.
2.12 In accordance with the Articles of Association, the Preference
Shareholders hereby consent to the Company taking any action, or
permitting any action to be taken, to affect the transfer of the Shares
pursuant to this agreement.
2.13 The Sellers shall procure that the Company shall not allot or issue any
Ordinary Shares upon the exercise of Vested Options or Accelerated Options
in the period from the date of signature of this agreement to the date of
issue of the Drag-Along Notice.
2.14 The Company shall not allot or issue any Ordinary Shares upon the exercise
of Vested Options or Accelerated Options in the period of 30 days from the
date of issue of the Drag-Along Notice or until the day following the
Completion Date, if earlier, and shall notify the Purchaser of the number
of, and holders of, any Ordinary Shares that fall to be issued as a result
of acceptance of the Exercise Proposal promptly following the closing date
for acceptance of the Exercise Proposal and in any case not less than one
Business Day prior to the anticipated date of Completion.
2.15 To the extent relevant, the Preference Shareholders waive the requirement
of article 14.1.3 of the Articles of Association that the consideration
per Ordinary Share (on an as-converted basis) offered pursuant to the
Offer be equal to or greater than the B Preference Share Conversion Price
(as defined in the Articles of Association) multiplied by two.
2.16 The Purchaser shall be entitled to deduct and withhold from the
consideration otherwise payable to any person (pursuant to this agreement,
the Drag-Along Notice, the Exercise Proposal or otherwise) an amount equal
to such amounts as it or the Company may be required to pay to any tax
authority with respect to the making of such payment under any provision
of Tax law. If the Purchaser so withholds amounts and duly accounts, or
procures that the Company duly accounts, for such amounts to the
appropriate Tax authority, such amounts shall be treated for all purposes
as having been paid to the person in respect of which the Purchaser made
such deduction and withholding.
3. CONDITIONS
3.1 The obligations of the Purchaser are in all respects conditional upon
those matters listed in Schedule 1 (Conditions to Completion).
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3.2 The Sellers will each use all reasonable endeavours to fulfil or procure
the fulfilment of the conditions listed at paragraphs 1 - 9 and 11 -14 of
Schedule 1 (Conditions to Completion) and will notify the Purchaser
immediately upon the satisfaction of such conditions.
3.3 The Purchaser will use all reasonable endeavours to fulfil or procure the
fulfilment of the conditions listed at paragraphs 11 and 12 of Schedule 1
(Conditions to Completion) and will notify the Sellers immediately upon
satisfaction of such conditions.
3.4 The Purchaser may waive in whole or in part all or any of the conditions
or extend the period in which the conditions are to be satisfied.
3.5 Each of the Sellers and the Purchaser undertake to disclose in writing to
the other anything which will or is reasonably likely to prevent the
conditions from being satisfied on the date initially set for Completion
immediately it comes to the notice of any of them.
3.6 If:
(A) any fact which would prevent the conditions (other than the
conditions at paragraph 10 or, as a result of the Purchaser's breach
of clause 3.3, paragraphs 11 or 12 of Schedule 1 (Conditions to
Completion)) from being satisfied on the date initially set for
Completion (whether it does so because of any disclosure made under
sub-clause 3.5 or not) comes to the knowledge of the Purchaser; or
(B) the conditions (other than the conditions at paragraph 10 or, as a
result of the Purchaser's breach of clause 3.3, paragraphs 11 or 12
of Schedule 1 (Conditions) are not fulfilled (notwithstanding the
required reasonable endeavours in sub-clauses 3.2 and 3.3) or waived
by the Purchaser on or before the date which is 30 days after the
date of signature of this agreement.
the Purchaser may terminate this agreement by notice in writing to the
Sellers' Representative.
3.7 If the agreement is terminated in accordance with sub-clause 3.6, all
obligations of the parties under this agreement shall end except for those
expressly stated to continue without limit in time but (for the avoidance
of doubt) all rights and liabilities of the parties which have accrued
before termination shall continue to exist.
3.8 The Sellers and the Company agree to comply with the terms set out in the
Exclusivity Letter during the period from the date of signing this
agreement to the earlier of the Completion Date or the date of termination
of this agreement pursuant to 3.6, as if the exclusive period defined in
the Exclusivity Letter commenced on the date of signing this agreement and
ended on the Completion Date or such earlier date of termination.
3.9 The Company agrees, and the Sellers agree to procure the Company, to
co-operate and use reasonable endeavours to assign to the Purchaser the
service agreement between TriNet Group, Inc and the Company dated on or
about 1 October 2000 (as amended) and related agreements.
17
3.10 The Purchaser shall provide a notification to the German Federal Cartel
Office immediately following signature of this agreement and shall use its
best endeavours to procure the notification from the German Federal Cartel
Office referred to in paragraph 10 of Schedule 1 (Conditions to
Completion) on or before the date 30 days after the date of issue of the
Drag-Along Notice and shall update the Sellers' Representative as to the
progress of such notification on a regular basis.
4. CONSIDERATION
4.1 The Purchase Price for the Sale Shares, the Drag-Along Shares and the
Option Shares (whether payable pursuant to this agreement, the Drag-Along
Notice, the Exercise Proposal or otherwise) shall be an amount in US
Dollars equal to:
(A) US$225,000,000; less
(B) the Assumed Option Value as at the Completion Date; less
(C) the Transaction Expenses; less
(D) the amount of US$605,515 in respect of the Company Transaction
Liabilities; less
(E) the Debt Repayment Amount set out in the Debt Certificate; plus
(F) the Exercise Value as at the Completion Date.
For the purposes of this clause, any amounts expressed in Sterling shall
be converted to US Dollars at the Applicable Rate.
4.2 The consideration for each Sale Share, Drag-Along Share and Option Share
is the relevant Price per Share and shall be paid to each Seller and/or
Minor Seller in respect of the Ordinary Shares and Preference Shares
listed opposite their names in Part A and Part B of Schedule 7 (Ownership
of the Securities) (subject, in the case of Option Shares, to compliance
by the relevant Seller and/or Minor Seller (as relevant) with the
obligations set out in clause 2.9(B) and return of a properly executed
form of election as required by the Exercise Proposal).
4.3 The Purchase Price shall be calculated as at the close of business on the
Business Day prior to the Completion Date.
4.4 Each Preference Shareholder acknowledges that payment of the relevant
Price per Share by the Purchaser in accordance with paragraph 9 of
Schedule 2 (Completion Arrangements) is in full and final settlement of
any entitlement such Preference Shareholder may have pursuant to article
5.2 of the Articles of Association.
5. ESCROW
5.1 At Completion:
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(A) all of the Sellers (or their attorneys) together with the attorneys
of those Minor Sellers who hold Drag-Along Shares shall sign the
Escrow Agreement and deliver it to the Escrow Agent;
(B) the Purchaser shall pay the Purchase Price less the Escrow Amount to
the Sellers' Agent; and
(C) the Purchaser shall pay the remainder of the Purchase Price to the
Escrow Agent for deposit into the Escrow Account.
5.2 In respect of clause 5.1(B) the Sellers and the Company will procure that
the Sellers' Agent holds the part of the Purchase Price attributable to
the Minor Sellers on trust and on behalf of such Minor Sellers and pay to
such Minor Sellers the Price per Ordinary Share in respect of each
Drag-Along Share within five Business Days following Completion and in
relation to any Option Shares pay such amount as is due to them in
accordance with the Exercise Proposal.
5.3 In respect of clause 5.1(C), each of the Sellers shall procure that, as
set out in the Drag-Along Notice, the Minor Sellers who hold Draft-Along
Shares shall agree to the withholding by the Purchaser of an amount
equivalent to such part of the Escrow Amount as is attributable to the
Drag-Along Shares and to the payment by the Purchaser of the amount so
withheld into the Escrow Account so as to form part of the Escrow Amount.
5.4 Subject to the interests of the Purchaser therein and the restrictions set
out in this agreement and the Escrow Agreement, the Sellers and the Minor
Sellers (to the extent they hold Drag-Along Shares) shall be treated as
the owner of the Escrow Amount. Any interest or other income earned
thereon shall be owned by the Sellers and Minor Sellers (to the extent
they hold Drag-Along Shares) and shall be released from the Escrow Account
pursuant to the terms of the Escrow Agreement.
5.5 The Escrow Agent shall hold the Escrow Amount and all interest and other
amounts earned thereon in escrow subject to the terms and conditions of
the Escrow Agreement, and the distribution of any funds from the Escrow
Account shall be governed by the terms and conditions of the Escrow
Agreement.
5.6 Following payment to the Sellers' Agent in accordance with clause 5.1(B),
the Purchaser shall not be concerned with the distribution of such amounts
between the Sellers and the Minor Sellers and such payment shall be a
complete and valid discharge in respect of the amount so paid.
6. COMPLETION
6.1 Completion shall take place at 2 p.m. on the Completion Date at the
offices of the Purchaser's Solicitors at Xxx Xxxxxxx Xxx, Xxxxxx XX0X 0XX.
6.2 On or before the Completion Date, the Sellers shall do those things listed
in Schedule 2 (Completion arrangements).
19
6.3 The Purchaser shall not be obliged to complete this agreement unless each
Seller complies fully with the requirements of Schedule 2 (Completion
arrangements) so far as they relate to the Seller in question.
6.4 The Purchaser shall not be obliged to complete the sale and purchase of
any of the Sale Shares or the Drag-Along Shares unless the sale and
purchase of all the Sale Shares and the Drag-Along Shares is completed
simultaneously. This sub-clause shall not limit any other clause of this
agreement and in particular clause 18 (Remedies and waivers).
6.5 If the obligations of the Sellers under sub-clause 6.2 and Schedule 2
(Completion arrangements) are not complied with in a material manner on or
prior to the Completion Date the Purchaser may:
(A) defer Completion (so that the provisions of this clause 6 shall
apply to Completion as so deferred); or
(B) proceed to Completion as far as practicable (without limiting its
rights under this agreement); or
(C) terminate this agreement by notice in writing to the Sellers'
Representative.
6.6 If the agreement is terminated in accordance with sub-clause 6.5 in
circumstances where any Seller has breached its obligations under
sub-clause 6.2, all obligations of the parties under this agreement shall
end except for those expressly stated to continue without limit in time
but (for the avoidance of doubt) all rights and liabilities of parties
which have accrued before termination shall continue to exist.
6.7 Payment by telegraphic transfer for the consideration per Sale Share and
Drag-Along Share stated in clause 4.2 (Consideration) in accordance with
paragraphs 9 and 10 of Schedule 2 (Completion arrangements) shall
constitute payment of the consideration for the Shares and shall discharge
the obligations of the Purchaser under clause 2 (Purchaser's Offer and
Drag-Along) and the Purchaser shall not be concerned to see that the
moneys transferred are applied in paying the Sellers or the Minor Sellers
in accordance with their respective entitlements.
7. WARRANTIES AND COVENANTS
7.1 Subject to the limitations and exclusions set out in clause 8 (Purchaser's
remedies and Warrantors' limitations on liability) and Schedule 4
(Exclusions and limitations on liability):
(A) in respect of the Title and Capacity Warranties, each of the Sellers
warrants to the Purchaser; and
(B) in respect of the Warranties other than the Title and Capacity
Warranties, each of the Management Warrantors warrants to the
Purchaser,
20
that the relevant Warranties given are accurate in all respects at the
date of this agreement and that the Warranties will continue to be
accurate in all material respects (and for these purposes any
qualification of a Warranty by reference to materiality shall be
disregarded) up to and including Completion as if repeated immediately
before Completion by reference to the facts and circumstances subsisting
at that date on the basis that any reference in the Warranties, whether
express or implied, to the date of this agreement is substituted by a
reference to the Completion Date.
7.2 The Warranties are qualified by matters fairly disclosed in the Disclosure
Letter in the absence of any fraud or dishonesty on the part of any of the
Warrantors or their agents or advisers.
7.3 The Warrantors accept that the Purchaser is entering into this agreement
in reliance upon the terms of the Warranties made by the Warrantors.
7.4 The Purchaser acknowledges that:
(A) the Warranties are the only warranties of any kind given by or on
behalf of the Warrantors on which the Purchaser may rely on entering
this agreement; and
(B) it does not rely on and has not been induced to enter into this
agreement on the basis of any warranties, representations,
covenants, undertakings or any other statement whatsoever other than
expressly set out in this agreement or the Tax Covenant.
7.5 Both before or at the time of Completion the Management Warrantors
undertake to disclose in writing to the Purchaser anything which is a
breach of any of the Warranties immediately it comes to the notice of any
of them save for any matter which as at the date of this agreement has
been notified by the Purchaser to the Management Warrantors.
7.6 The Warrantors undertake (if any claim is made against any of them in
connection with the sale of the Sale Shares to the Purchaser) not to make
any claim against any member of the Group or any director, employee or
adviser of any member of the Group on whom any of them may have relied
before agreeing to any terms of this agreement or of the Tax Covenant or
authorising any statement in the Disclosure Letter, but so that this shall
not preclude any Warrantor from claiming against any other Warrantor under
any right of contribution or indemnity to which he may be entitled.
7.7 Subject to clause 8.13, each of the Warranties shall be construed as a
separate and independent warranty and (except where expressly provided to
the contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Warranty or any other term of this
agreement.
7.8 If any deductions or withholdings are required by law to be made from any
of the sums payable in respect of any breach of any of the Warranties by
the Warrantors, the Warrantors shall be obliged to pay to the Purchaser
such sum (to be satisfied exclusively from the Escrow Account) as will,
after the deduction or withholding has
21
been made, leave the Purchaser with the same amount as it would have been
entitled to receive in the absence of any such requirement to make a
deduction or withholding.
7.9 The only Warranties which shall apply in relation to:
(A) property matters shall be those set out in paragraphs 13, 24 and 30
of Schedule 3 (Warranties);
(B) environmental matters shall be those set out in paragraph 25 of
Schedule 3 (Warranties);
(C) Intellectual Property Rights and Information Technology matters
shall be those set out in paragraphs 4, 7, 8, 9,11,13,18.2 - 18.6,
22, 23, 26.16(B) and 26.17 of Schedule 3 (Warranties);
(D) employment matters shall be those set out in paragraphs 7, 8,
9,11.1(F), 13, 18.2-18.4, 18.6,19, 22,23,26,29 and 41 of Schedule 3
(Warranties): and
(E) tax matters shall be the Tax Warranties.
7.10 The Sellers shall use reasonable endeavours to obtain counterparts of the
Domain Name Transfer duly executed by the registrant of the Domain Name on
or before Completion.
8. PURCHASER'S REMEDIES AND WARRANTORS' LIMITATIONS ON LIABILITY
8.1 No liability shall attach to the Warrantors in respect of claims under the
Warranties if and to the extent that the exclusions and limitations set
out in Schedule 4 (Exclusions and limitations on liability) apply, in the
absence of any fraud or dishonesty on the part of any of the Warrantors or
their agents or advisers.
8.2 The total aggregate liability in respect of the Warranties (other than the
Title and Capacity Warranties) the Tax Covenant and clauses 8.8 to 8.12,
including all legal and other costs and expenses, shall not in any event
exceed the amount in the Escrow Account (excluding any accrued interest)
from time to time.
8.3 (A) If, between the time of this agreement and Completion, the Purchaser
becomes aware (whether it does so by reason of any disclosure made
under clause 7 (Warranties and covenants) or not) that there has
been a breach of the Warranties, clause 10 (Conduct of business
before Completion) or Schedule 6 (Conduct of business before
Completion), the Purchaser may terminate this agreement provided
such breach constitutes a Material Adverse Effect but otherwise
shall not be entitled to terminate this agreement.
(B) If the agreement is terminated in accordance with sub-clause 8.3(A)
all obligations of the Purchaser under this agreement shall end
except for those expressly stated to continue without limit in time
but (for the avoidance of doubt) all rights and liabilities of the
parties which have accrued before termination shall continue to
exist.
22
(C) For the avoidance of doubt but without limiting clause 18 (Remedies
and waivers), the Purchaser's right to terminate this agreement in
accordance with sub-clause 8.3(A) is not exclusive of any rights,
powers and remedies provided by law.
8.4 If a right to terminate this agreement under clause 8.3(A) arises which
the Purchaser does not exercise prior to Completion or if, following
Completion, the Purchaser becomes aware (whether it does so by reason of
any disclosure made pursuant to clause 7 (Warranties and covenants) or
not) that there has been any breach of the Warranties, clause 10 (Conduct
of business before Completion) or Schedule 6 (Conduct of business prior to
Completion), the Purchaser shall not be entitled to terminate this
agreement but shall be entitled to claim damages or exercise any other
right, power or remedy under this agreement.
8.5 If the Sellers default in the payment when due of any sum payable under
this agreement (whether determined by agreement or pursuant to an order of
a court or otherwise), the liability of the Sellers shall be increased to
include interest on such sum from the date when such payment is due until
the date of actual payment (as well after as before judgment) at a rate
per annum of four per cent, above the base rate from time to time of
National Westminster Bank PLC. Such interest shall accrue from day to day
and shall be compounded annually.
8.6 The parties acknowledge that any claim pursuant to this clause 8
(Purchaser's remedies and Warrantors' limitations on liability) that is:
(A) notified in writing by the Purchaser to the Escrow Agent and no
objection to such claim is delivered by the Sellers' Representative
to the Escrow Agent within 15 Business Days after delivery of such
notice, both in accordance with the Escrow Agreement;
(B) agreed between the Sellers' Representative and the Purchaser; or
(C) proven in a court of competent jurisdiction,
(A "SETTLED CLAIM"),
shall be satisfied out of the Escrow Account in accordance with the Escrow
Agreement.
8.7 The Sellers other than the Management Warrantors acknowledge that,
notwithstanding that they are not individually providing the Purchaser
with warranties in terms of the Warranties other than the Title and
Capacity Warranties, and that they are not parties to the Tax Covenant,
the amount of the Purchase Price payable to them is subject to reduction
pursuant to the operation of the Escrow Agreement by reference to the
amount of any claim in respect of such Warranties or under the Tax
Covenant that is a Settled Claim or any amount payable under clauses 8.8
to 8.12.
8.8 The Sellers agree that if the Purchaser can demonstrate that the actual
Debt Repayment Amount at the close of business on the Completion Date is
greater than the Debt Repayment Amount set out in the Debt Certificate,
then the Purchaser shall be
23
entitled within the 30 days following Completion to withdraw from the
Escrow Account an amount equal to the difference in those amounts in
accordance with the Escrow Agreement. No rights of withdrawal will apply
after the aforementioned thirty day period has elapsed.
8.9 The Sellers agree that if the actual amount of the Company Transaction
Liabilities exceeds the amount deducted from the Purchase Price in respect
thereof in clause 4.1(D) (Consideration), then the Purchaser shall be
entitled to withdraw from the Escrow Account an amount equal to the
difference in those amounts in accordance with the Escrow Agreement.
8.10 The Sellers agree that if the Options Proposals extend to a number of
Vested Options, Accelerated Options or Unvested Options (excluding the New
Options) greater in the aggregate than the numbers set out in Schedule 7
(Ownership of the Securities) the Purchaser shall be entitled to withdraw
from the Escrow Account an amount equal to:
(A) any costs arising to the Company or any member of the Purchaser's
Group by reason of the Exercise Proposal being applicable to a
greater number of Vested Options, Accelerated Options or Unvested
Options than the number specified in Schedule 7 (Ownership of the
Securities); plus
(B) any difference in what the Purchase Price would have been if
calculated using the actual number of Vested Options, Accelerated
Options or Unvested Options instead of the number specified in
Schedule 7 (Ownership of the Securites).
8.11 The Sellers agree that the Purchaser shall be entitled to withdraw from
the Escrow Account an amount equal to any sum due and payable by the
Company or any of the Subsidiaries under the Altavista OEM Distribution
Agreement dated 29 January 2001 (as amended) in respect of under paid
royalties at the Completion Date.
8.12
(A) Subject to the following sub-clauses of this clause and clause 8.14,
the Purchaser shall be entitled to withdraw from the Escrow Account
an amount equal to 50 per cent, of any IPR Claim Liabilities.
(B) The Sellers shall procure that the Sellers' Representative shall
provide the Escrow Agent with confirmations and/or instructions as
requested by the Escrow Agent and/or the Purchaser from time to time
in respect of any withdrawals requested by the Purchaser which are
permitted in accordance with this clause 8.12.
(C) The Purchaser undertakes that it shall not withdraw any sums from
the Escrow Account pursuant to sub-clause (A) unless prior to any
such withdrawal it has incurred an obligation in respect of the IPR
Claim Liabilities of an amount equal to twice the sum which it
proposes to withdraw from the Escrow Account, and the Purchaser
shall upon request from time to time by the Sellers' Representative
promptly provide reasonable evidence that it has incurred any such
sums.
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(D) Following the first anniversary of the Completion Date and at and
following such time as a determination by the Expert in accordance
with clause 8.14 is received by the Purchaser and the Sellers'
Representative (but not otherwise), the Purchaser shall, subject to
sub-clause (C), be entitled to withdraw from the Escrow Account an
amount representing 50 per cent, of the aggregate IPR Claim
Liabilities it has incurred since the period from the first
anniversary of the Completion Date, and thereafter 50 per cent, of
any further IPR Claim Liabilities which are incurred by the
Purchaser.
(E) To the extent that by reason of sums recovered by the Purchaser
and/or any member of its Group from the person bringing the IPR
Claim which are directly referable to that IPR Claim the amount
actually contributed towards the IPR Claim Liabilities from the
Escrow Account as a result of withdrawals by the Purchaser under
this clause 8.12 exceeds 50 per cent of such IPR Claim Liabilities,
the Purchaser shall procure that a payment is made promptly to the
Seller's Agent on behalf of the Sellers and the Minor Sellers so
that the aggregate amount contributed from the Escrow Amount does
not exceed 50 per cent, of such IPR Claim Liabilities from time to
time.
(F) For the avoidance of doubt neither clause 9 nor Schedule 4 shall
apply to this clause 8.12.
8.13 Notwithstanding any other provision of this agreement and the Schedules to
it, the Purchaser agrees that:
(A) it shall not be entitled to bring any claim for a breach of the
Warranties or any of them to the extent that any such claim
constitutes an IPR Claim; and
(B) the Sellers' sole liability and the Purchaser's sole remedy in
respect of any IPR Claim shall be restricted to claims made pursuant
to Clause 8.12 and not otherwise (save in the case of fraud on the
part of any Seller) provided that the Purchaser shall remain
entitled to terminate this agreement prior to Completion occurring
if any IPR Claim should amount to a Material Adverse Effect.
8.14
(A) As soon as practicable following the notification by the Purchaser
of an IPR Claim, the Purchaser and the Sellers' Representative shall
meet (together with their respective counsel) with the intention of:
(i) agreeing upon procedures to establish an appropriate
proportion of the sum then held in the Escrow Account that
should, in accordance with the principles set out in this
clause, be retained in the Escrow Account following the first
anniversary of the Completion Date if the IPR Claim should not
by that time have given rise to a Settled Claim (the "RETAINED
AMOUNT");
(ii) subject to sub-clause (F), sharing information concerning the
IPR Claim;
25
(iii) agreeing upon a law firm with expertise in the areas of law in
the jurisdiction relevant to the IPR Claim (an "EXPERT") who
shall, in the absence of agreement between the Purchaser and
the Sellers' Representative of the Retained Amount, be
instructed to advise the relevant members of the Purchaser's
Group and the Sellers' Representative jointly on the amount of
the Retained Amount.
(B) To the extent that at the first anniversary of the Completion Date:
(i) any IPR Claims have arisen that have not become Settled
Claims; and
(ii) the Purchaser and the Sellers' Representative have not agreed
the Retained Amount in respect of such IPR Claims,
then, notwithstanding any other term of this agreement or the Escrow
Agreement, no amount shall be released from the Escrow Account to
either the Purchaser or the Sellers, the Purchaser shall cease to be
entitled to withdraw sums from the Escrow Account in accordance with
clause 8.12 pending determination of the applicable Retained Amount
under this clause (after which point such right of withdrawal shall
be as stated in clause 8.12(D)) and the Sellers' Representative
shall be entitled to require that an Expert is instructed.
(C) The Expert shall be selected by the Purchaser, following
consultation with the Sellers' Representative, within 10 Business
Days of a request from the Sellers' Representative made on or after
the first anniversary of the Completion Date.
(D) The terms of reference of the Expert shall be such as are agreed
between the Purchaser and the Sellers' Representative (acting in
good faith) but shall include that:
(i) the Expert should analyse the information available to the
Purchaser relating to each IPR Claim for which a Retained
Amount has not been agreed and seek the views of the Purchaser
and the Sellers' Representative (and their respective counsel)
on the merits of such IPR Claims;
(ii) the Expert, in light of the information available to him,
shall propose an amount that he believes should be reserved
from the Escrow Account on a reasonably prudent basis to meet
the IPR Claim Liabilities;
(iii) the Expert shall act as an expert and not as an arbitrator and
his opinion of the quantum of the Retained Amount shall be
final and binding on the parties;
(iv) he shall be requested to provide his opinion as soon as
practicable following the date of his instruction and in any
event by no later than 90 Business Days following the date of
his instruction.
26
(E) Subject to sub-clause (F) below, the Purchaser shall procure that
the Expert is provided promptly with all such information as he
reasonably requests in relation to the IPR Claims which is available
to the Purchaser or members of its Group and that the legal advisers
to the relevant members of the Group co-operate with the Expert with
respect to informing him of the status of and developments in
respect of the IPR Claims.
(F) The procedures described in sub-clause (A)(i) to (iii) and the
instructions to and terms of reference of the Expert set out in or
established pursuant to this clause 8.14 shall not require the
Purchaser or any member of its Group to disclose information to any
person in circumstances where the privileged nature of such
information may reasonably be concluded, on the basis of written
legal advice obtained by the Purchaser from its external legal
advisers, to be jeopardised. Where privilege may be so jeopardised,
the Purchaser and the Sellers' Representative shall modify the
process accordingly, whilst adhering as closely as possible to the
principles established in this clause 8.14.
(G) The costs of the Expert shall be paid as to 50 per cent, out of the
Escrow Account balance (and the Purchaser shall, and the Sellers
shall procure that the Sellers' Representative shall, instruct the
Escrow Agent to this effect) and as to 50 per cent, by the
Purchaser.
8.15 Subject to clause 8.13, except as stated expressly in this clause, this
clause and Schedule 4 (Limitations on liability) shall not limit any other
clause of this agreement and in particular clause 18 (Remedies and
waivers).
9. NOTICE OF AND CONDUCT OF CLAIMS
9.1 If the Purchaser becomes aware of a matter which may give rise to any
Claim or claim, action or demand against it or matter likely to give rise
to any of these which may result in a Claim (other than a claim in respect
of a breach of the Tax Warranties) (a "THIRD PARTY CLAIM"), the Purchaser
shall as soon as reasonably practicable thereafter give notice thereof in
writing to the Sellers' Representative, stating in reasonable detail the
nature of the matter on a without prejudice basis, if practicable, the
amount claimed, and the provisions of this agreement which the Purchaser
alleges have been or may have been breached. The Purchaser shall give
access to such books, records and personnel as the Sellers' Representative
shall reasonably request.
9.2 If the Purchaser becomes aware of a Third Party Claim of which notice has
been or may be given by the Purchaser under clause 9.1 the Purchaser
shall, subject to being fully indemnified by the Sellers against all
liabilities and reasonable costs incurred in doing so:
(A) take or procure such action to be taken as the Sellers'
Representative shall reasonably request (having regard to the nature
and size of the claim) to avoid, dispute, resist, appeal, compromise
or defend such Third Party Claim or any adjudication in respect of a
Third Party Claim;
27
(B) consult with the Sellers' Representative on all aspects of any
proceedings in defence of a Third Party Claim;
(C) where the Sellers' Representative has confirmed that the matter
giving rise to the Third Party Claim would be recoverable under the
Warranties and the total amount of the Third Party Claim when
aggregated with the amount of other claims notified exceeds the
amount specified in paragraph 1 (A)(ii) of Schedule 4:
(1) not admit liability in respect of a Third Party Claim, nor
compromise, nor settle any proceedings in defence of a Third
Party Claim, without the written consent of the Sellers'
Representative (such consent not to be unreasonably withheld
or delayed); and
(2) ensure (or, as appropriate, shall co-operate to procure that
the Company shall ensure), at the request in writing of the
Sellers' Representative, that the Sellers are placed in a
position to take on or take over the conduct of all
proceedings and/or negotiations of whatsoever nature arising
in connection with the Third Party Claim in question and
provide (or, as appropriate, co-operate to procure that the
Company provides) such information and assistance as the
Sellers may reasonably require in connection with the
preparation for and conduct of such proceedings and/or
negotiations.
9.3 Nothing in sub-clause 9.1 or 9.2 shall restrict or limit the Purchaser's
general obligation at law to mitigate a loss which it may incur as a
result of a matter giving rise to a Claim.
9.4 Nothing in this clause 9 shall oblige the Purchaser or any member of the
Purchaser's Group to take any steps or action or to procure or allow any
steps or action to be taken that would be reasonably likely to have a
prejudicial effect on any material corporate or business relationship, or
on the business of the Purchaser's Group and the liability of the Sellers
hereunder shall not be affected by any failure to mitigate loss resulting
from any such determination made by the Purchaser in good faith.
10. CONDUCT OF BUSINESS BEFORE COMPLETION
10.1 The Sellers will procure that, between the time of this agreement and
Completion, each member of the Group will carry on business in the normal
course and not do anything outside of the normal course without the
consent in writing of the Purchaser (which shall not be unreasonably
withheld). In particular, but without limitation, the matters listed in
Schedule 6 (Conduct of business before Completion) shall require the prior
consent in writing of the Purchaser.
10.2 The Purchaser acknowledges that the Company may satisfy all or any part of
the Indebtedness on or before the Completion Date provided that the Net
Working Capital of the Company does not fall below zero. The Sellers will
procure that the Company will not do anything which will cause the Net
Working Capital to fall below zero.
28
11. SELLERS' REPRESENTATIVE AND SELLERS' AGENT
11.1 Each of the Sellers hereby agrees to appoint the Sellers' Representative,
and the Sellers' Representative agrees to accept such appointment, as
their respective attorney with full power and authority to act on their
behalf (including by signing documents on their behalf) for all purposes
and all circumstances contemplated by the Escrow Agreement and this
agreement, including administering the rights of the Sellers under the
Escrow Agreement and agreeing any Settled Claims in accordance with this
agreement.
11.2 The Sellers hereby agree that the Sellers' Representative may enter into a
written contract on terms to be agreed by them with the Sellers' Agent
pursuant to which the Sellers' Agent may perform the functions
contemplated by clause 2.9(A)(iv), clause 5.2 and certain other
arrangements relating to the distribution of the Purchase Price and the
Escrow Amount. If the written contract terminates for any reason prior to
such functions being undertaken, the Sellers' Representative may enter
into such other arrangements as he sees fit for the purposes of procuring
that such activities are undertaken.
11.3 The Sellers' Representative shall have full authority to propose,
negotiate and/or agree any modification to or variation of this agreement
and the Escrow Agreement provided that any amendment to this agreement or
the Escrow Agreement that may adversely affect the rights or obligations
of any Seller under the Escrow Agreement shall require the prior written
consent of such adversely affected Seller.
11.4 The Sellers' Representative shall use all reasonable efforts, based on
contact information available to the Sellers' Representative, to keep the
Sellers reasonably informed with respect to any claims against the Escrow
Account. If at any time during the term of the Escrow Agreement the
Sellers' Representative is likely to be absent from the United Kingdom for
10 days or more, or otherwise is unable to act for any reason, he shall
appoint an alternate by notice in writing to the Purchaser and to the
Principal Sellers.
11.5 At any time during the term of the Escrow Agreement, the Sellers may
appoint a new representative as the Sellers' Representative on 10 Business
Days written notice to the new representative (copied to the Sellers'
Representative) bearing the signatures of a majority of the Sellers.
11.6 If at any time the Sellers' Representative is unable or unwilling to act
in his capacity as Sellers' Representative or resigns as Sellers'
Representative, the Sellers may appoint a new representative as the
Sellers' Representative on 10 Business Days written notice to the
Purchaser (copied to the Sellers' Representative) bearing the signatures
of a majority of the Sellers.
12. RESTRICTIONS ON SELLERS' BUSINESS ACTIVITIES
12.1 Each of the persons listed in Part A of Schedule 9 (Accepting Employees)
undertakes that he will not, either alone or in conjunction with or on
behalf of any other person, do any of the following things:
29
(A) neither pending nor within two years after the Completion Date, be
engaged or directly or indirectly interested in carrying on business
within the United Kingdom, the United States and any other country
in which the Company carries on business as at the date of this
agreement in competition with the business of any member of the
Group as it is carried on at the date of Completion. This clause
shall not prevent the holding of shares in a listed company for
investment purposes only where such person does not exercise,
directly or indirectly, any management function in the company
concerned or any material influence in that company, which shall be
taken to be the case if the shares do not confer more than five per
cent, of the votes which could normally be cast at a general meeting
of the company;
(B) disclose to any other person or use any information which is
Confidential Business Information for so long as that information
remains Confidential Business Information;
(C) without limitation to the provisions of this clause, in relation to
a business which is competitive or likely to be competitive with the
business of any member of the Group as carried on at the Completion
Date, use any trade or business name or distinctive xxxx, style or
logo used by or in the business of any member of the Group at any
time during the two years before Completion or anything intended or
likely to be confused with it;
(D) neither pending nor within two years after Completion, solicit the
custom, in relation to goods or services sold to any person by any
member of the Group in the course of its business within the United
Kingdom, the United States and any other country in which the
Company carries on business as at the date of this agreement during
the two years before the Completion Date, of that person in respect
of similar goods or services within such countries;
(E) neither pending nor within two years after Completion, solicit or
entice away from the employment of any member of the Group any
person at present an employee of any member of the Group; and
(F) assist any other person to do any of the foregoing things.
12.2 Each undertaking contained in this clause 12 shall be construed as a
separate undertaking and if one or more of the undertakings is held to be
against the public interest or unlawful or in any way an unreasonable
restraint of trade, the remaining undertakings shall continue to bind the
persons listed in Part A of Schedule 9 (Accepting employees).
13. INTELLECTUAL PROPERTY RIGHTS, BUSINESS INFORMATION AND DOMAIN NAMES
Without prejudice to paragraph 22 of Schedule 3 (Warranties), in the event
that any Seller:
(A) owns any Intellectual Property Rights;
30
(B) possesses any Business Information which a Group member does not
possess; or
(C) holds a legal or beneficial interest in any internet domain name
registration,
which, in each case, have been used by any Group member, then the relevant
Seller shall promptly notify the Purchaser of this fact in writing and
promptly transfer such Intellectual Property Rights, deliver such Business
Information or, as the case may be, procure the surrender or the transfer
of such internet domain name(s) to the Purchaser or such person as the
Purchaser may nominate for such purpose for nominal consideration.
14. ACCESS, BOOKS AND RECORDS
As from the date of this agreement, the Purchaser and any persons
authorised by it, upon reasonable notice and subject to giving such
undertaking as to confidentiality as the Sellers shall reasonably require,
will be given full access to the premises and all the Books and Records
and title deeds of the Group and the directors and employees of the Group
and each member of the Group will be instructed to give promptly all
information and explanations to the Purchaser or any such persons as they
may request.
15. EFFECT OF COMPLETION
Any provision of this agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at or before Completion and all Warranties and covenants to be performed
after Completion as contained in or entered into pursuant to this
agreement shall remain in full force and effect notwithstanding
Completion.
16. SEVERAL LIABILITY
Without prejudice to the availability of the Escrow Amount to satisfy
claims for breach of Warranty or under the Tax Covenant or pursuant to
clauses 8.8 to 8.12 in accordance with the terms of this agreement and the
Escrow Agreement, the obligations of the Sellers under this agreement
shall be several and not joint.
17. RELEASE OF SELLERS
The Purchaser may release, or compromise the liability of, any Seller or
grant time or other indulgence to any Seller without releasing or reducing
the liability of any other Seller.
18. REMEDIES AND WAIVERS
18.1 No delay or omission by any party to this agreement in exercising any
right, power or remedy provided by law or under this agreement or any
other documents referred to in it shall:
(A) affect that right, power or remedy; or
31
(B) operate as a waiver thereof.
18.2 The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or further
exercise of it or the exercise of any other right, power or remedy.
18.3 The rights, powers and remedies provided in this agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
19. ASSIGNMENT
The Purchaser may at any time assign all or any part of the benefit of, or
its rights or benefits under, this agreement and any agreements referred
to in clause 21 (Entire agreement) to a subsidiary or holding company of
the Purchaser or any subsidiary of such a holding company.
20. FURTHER ASSURANCE
20.1 Each of the Sellers shall from time to time at its own cost, on being
required to do so by the Purchaser, now or at any time in the future, do
or procure the doing of all such acts and/or execute or procure the
execution of all documents in a form satisfactory to the Purchaser which
is necessary for giving full effect to this agreement.
20.2 The Purchaser shall from time to time at its own cost, on being required
to do so by any of the Sellers or the Sellers' Representative, now or at
any time in the future, do or procure the doing of all such acts and/or
execute or procure the execution of all documents in a form satisfactory
to such requesting person which is necessary for giving full effect to
this agreement.
21. ENTIRE AGREEMENT
21.1 This agreement, the Tax Covenant, the Disclosure Letter and any other
documents referred to in this agreement (the "SHARE PURCHASE DOCUMENTS")
constitute the whole and only agreement between the parties relating to
the sale and purchase of the Shares.
21.2 Except in the case of fraud, no party shall have any right of action
against any other party to this agreement arising out of or in connection
with any draft, agreement, undertaking, representation, warranty, promise,
assurance or arrangement of any nature whatsoever, whether or not in
writing, relating to the subject matter of the Share Purchase Documents
made or given by any person at any time prior to the date of this
agreement except to the extent that it is repeated in the Share Purchase
Documents.
21.3 This agreement may only be varied in writing signed by each of the
parties.
32
22. NOTICES
22.1 Except where expressly stated otherwise, notice under this agreement shall
only be effective if it is in writing. Faxes, writing on the screen of a
visual display unit and e-mail are permitted.
22.2 Notices under this agreement shall be sent to a party at its address or
number and for the attention of the individual set out below:
Party and title of
individual Address
------------------ -----------------
Purchaser 000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx
XX 00000
Delaware
Attention: General
Counsel
Principal Sellers c/- Sellers'
Representative
Xxxxx Xxxx Wokingham
Berkshire
Xxxxxxx Xxxxxx Newbury
Berkshire
Xxxx Xxxxxxxxx Wilmcote
Stratford upon Avon
Company 000 Xxxxxxxxxx
Xxxx
Xxxxxxxx Xxxxxxxx
Xxxxxxxxx
Xxxxxxxxx
XX00 0XX
Attention: Chief
Executive
33
Provided that a party may change its notice details on giving notice to
the other party of the change in accordance with this clause.
22.3 Any notice given under this agreement shall, in the absence of earlier
receipt, be deemed to have been duly given as follows:
(A) if delivered personally, on delivery;
(B) if sent by first class post, two clear Business Days after the date
of posting; and
(C) if sent by facsimile or e-mail, when despatched.
22.4 Any notice given under this agreement outside Working Hours in the place
to which it is addressed shall be deemed not to have been given until the
start of the next period of Working Hours in such place.
22.5 The provisions of this clause shall not apply in relation to the service
of Service Documents.
23. ANNOUNCEMENTS
23.1 Other than as provided for in this agreement, no announcement concerning
the sale of the Shares or any ancillary matter shall be made by the
Sellers without the prior written approval of the Purchaser. This
sub-clause does not apply in the circumstances described in sub-clause
23.2.
23.2 The Sellers may after consultation with the other party, make an
announcement concerning the sale of the Shares or any ancillary matter if
required by:
(A) law;
(B) existing contractual obligations; or
(C) any securities exchange or regulatory or governmental body to which
that party is subject, wherever situated, including (amongst other
bodies) the US Securities Exchange Commission whether or not the
requirement has the force of law.
23.3 The restrictions contained in this clause shall apply without limit in
time.
24. CONFIDENTIALITY
24.1 Each party shall treat as confidential all information obtained as a
result of entering into or performing this agreement which relates to:
(A) the provisions of this agreement;
(B) the negotiations relating to this agreement;
34
(C) the subject matter of this agreement; or
(D) the other party.
24.2 Notwithstanding the other provisions of this clause, any party may
disclose confidential information:
(A) if and to the extent required by law or for the purpose of any
judicial proceedings;
(B) if and to the extent required by existing contractual obligations;
(C) if and to the extent required by any securities exchange or
regulatory or governmental body to which that party is subject
wherever situated, including (amongst other bodies) the US
Securities Exchange Commission, whether or not the requirement for
information has the force of law;
(D) if and to the extent required to vest the full benefit of this
agreement in that party;
(E) to its professional advisers, partners, auditors and bankers;
(F) if and to the extent the information has come into the public domain
through no fault of that party; or
(G) if and to the extent the other party has given prior written consent
to the disclosure.
Any information to be disclosed pursuant to sub-clauses (A), (B) or (C)
shall be disclosed only after notice to the other parties.
24.3 The restrictions contained in this clause shall apply without limit in
time.
24.4 Nothing in this agreement shall condition or restrict the use of any
Business Information proprietary to or in the possession of any Group
member by the Purchaser, any Group member or such other persons as the
Purchaser or any Group member may authorise to use such Business
Information from time to time.
25. COSTS AND EXPENSES
25.1 Except as otherwise stated in sub-clause 25.3 and any other provision of
this agreement, each party shall pay its own costs and expenses in
relation to the negotiations leading up to the sale and purchase of the
Shares and the preparation, execution and carrying into effect of this
agreement and all other documents referred to in it.
25.2 Other than in connection with fees incurred by the Company in connection
with the establishment of the online data room by Xxxxxxx Data Corporation
(which shall not exceed L 20,000 (inclusive of amounts equal to any
applicable VAT), the Sellers confirm
35
that no expense of whatever nature relating to the sale and purchase of
the Shares has been or is to be borne by any member of the Group and
undertake to the Purchaser to pay to the Purchaser the full amount of any
invoices presented to the Company in relation to fees incurred by any
member of the Group notwithstanding this confirmation.
25.3 At Completion the Purchaser agrees to pay to the Sellers' Agent an amount
equal to the Sellers' aggregate reasonably documented costs and expenses
together with all financial advisers, financial sponsors, legal counsel
and other advisers fees incurred up to a maximum of an amount equal to
99.5 per cent, of the sum of US$ 3,375,000 plus the Transaction Expenses.
This payment (up to the aforementioned maximum threshold) shall include
any and all fees and expenses of Credit Suisse First Boston (Europe)
Limited and the Sellers' Solicitors arising in connection with the
Transaction.
26. COUNTERPARTS
26.1 This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
26.2 Each counterpart shall constitute an original of this agreement, but all
the counterparts shall together constitute but one and the same
instrument.
27. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
The parties to this agreement do not intend that any term of this
agreement should be enforceable, by virtue of the Contracts (Rights of
Third Parties) Xxx 0000, by any person who is not a party to this
agreement.
28. CHOICE OF GOVERNING LAW
This agreement is to be governed by and construed in accordance with
English law.
29. JURISDICTION
29.1 Subject to clause 8.14, the courts of England are to have jurisdiction to
settle any dispute arising out of or in connection with this agreement.
Any Proceedings may be brought in the English courts.
29.2 This jurisdiction agreement is for the benefit of the Purchaser. The
Purchaser is therefore to retain the right to bring Proceedings in any
court which has jurisdiction other than by virtue of this jurisdiction
agreement. The Sellers have the right to bring Proceedings only in the
courts of England and not in any other courts.
29.3 This clause shall not limit the right of the Purchaser to bring
Proceedings, to the extent permitted by law, in the courts of more than
one jurisdiction at the same time.
29.4 The Sellers waive (and agree not to raise) any objection, on the ground of
forum non conveniens or on any other ground, to the taking of Proceedings
by the Purchaser in any court in accordance with this clause. Each party
also agrees that a judgment
36
against it in Proceedings brought in any jurisdiction in accordance with
this clause shall be conclusive and binding upon it and may be enforced in
any other jurisdiction.
29.5 Each party irrevocably submits and agrees to submit to the jurisdiction of
the English courts and of any other court in which Proceedings may be
brought in accordance with this clause.
30. AGENT FOR SERVICE
30.1 The Purchaser irrevocably appoints Veritas Software Limited of 000 Xxxxx
Xxxxx, Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxx Xxxxxxx to be its
agent for the receipt of service of process in England. It agrees that any
Service Document may be effectively served on it in connection with
Proceedings in England and Wales by service on its agent.
30.2 Any Service Document shall be deemed to have been duly served if marked
for the attention of the Managing Director, Veritas Software Limited at
000 Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxx Xxxxxxx or
such other address within England and Wales as may be notified to the
party wishing to serve the Document and:
(A) left at the specified address; or
(B) sent to the specified address by first class post.
In the case of (A), the Service Document will be deemed to have been duly
served when it is left. In the case of (B), the Service Document shall be
deemed to have been duly served two clear Business Days after the date of
posting.
30.3 If the agent at any time ceases for any reason to act as such, the
Purchaser shall appoint a replacement agent having an address for service
in England or Wales and shall notify the Sellers of the name and address
of the replacement agent. Failing such appointment and notification, the
Sellers shall be entitled by notice to the Purchaser to appoint a
replacement agent to act on the Purchaser's behalf. The provisions of this
clause applying to service on an agent apply equally to service on a
replacement agent.
30.4 A copy of any Service Document served on an agent shall be sent by post to
the Purchaser. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
30.5 "SERVICE DOCUMENT" means a claim form, order or judgment issued out of the
courts of England and Wales/document relating to or in connection with any
Proceedings.
37
EXECUTED by the parties:
Signed by )
XXXXX XXXXX ) /s/ Xxxxx Xxxx*
Signed by )
XXXXXX XXXXXX ) /s/ Xxxxx Xxxx*
Signed by )
XXXXXX XXXXXXXX ) /s/ Xxxxxx Xxxxxxxx
Signed by )
XXXXX XXXX ) /s/ Xxxxx Xxxx
FINANCIAL TECHNOLOGY )
VENTURES LP acting by its )
General Partner ) /s/ Signature Illegible
FINANCIAL TECHNOLOGY )
MANAGEMENT LLC )
Signed for and on behalf of )
FINANCIAL TECHNOLOGY VENTURES )
(Q) LP acting by its General Partner ) /s/ Signature Illegible
FINANCIAL TECHNOLOGY )
MANAGEMENT LLC )
Signed for and on behalf of )
FINANCIAL TECHNOLOGY VENTURES ) /s/ Signature Illegible
II LP acting by its General Partner )
FINANCIAL TECHNOLOGY MANAGEMENT II LLC )
Signed for and on behalf of )
FINANCIAL TECHNOLOGY VENTURES ) /s/ Signature Illegible
II (Q) LP acting by its General Partner )
FINANCIAL TECHNOLOGY MANAGEMENT II LLC )
Signed by ) /s/ Xxxxxx Xxxxxxx
XXXXXX XXXXXXX )
Signed for and on behalf of )
GREENWOOD NOMINEES LIMITED ) /s/ Signature Illegible
ACCOUNT CNEAF )
Signed by ) /s/ Xxxxx Xxxx*
XXXXXXX XXXXXX )
Signed for and on behalf of )
INDEX VENTURES II (JERSEY) LP )
acting by its General Partner ) /s/ Xxxxxx X. Xxxxx
INDEX VENTURE ASSOCIATES )
II LIMITED )
Signed for and on behalf of )
INDEX VENTURES II GMBH & CO KG ) /s/ Xxxxxx X. Xxxxx
acting by its Special Limited Partner )
Signed for and on behalf of )
INDEX VENTURE (SLP) II LIMITED (JERSEY) )
INDEX VENTURES II (DELAWARE) LP ) /s/ Xxxxxx X. Xxxxx
acting by its General Partner )
INDEX VENTURE ASSOCIATES )
II LIMITED )
Signed for and on behalf of )
INDEX VENTURES II PARALLEL )
ENTREPRENEUR FUND (JERSEY-A) LP ) /s/ Xxxxxx X. Xxxxx
acting by its General Partner )
INDEX VENTURE ASSOCIATES )
II LIMITED )
Signed for and on behalf of )
INDEX VENTURES II PARALLEL )
ENTREPRENEUR FUND (JERSEY-B) LP ) /s/ Xxxxxx X. Xxxxx
acting by its General Manager )
INDEX VENTURE ASSOCIATES )
II LIMITED )
Signed for and on behalf of ) /s/ Xxxxxx X. Xxxxx
INDEX VENTURE MANAGEMENT SA )
Signed by )
XXXX XXXXXXX )
Signed by )
XXXXXX BROTHERS HOLDINGS PLC ) /s/ Illegible - Director
Signed for and on behalf of )
XXXXXX BROTHERS EUROPEAN )
VENTURE CAPITAL, LP, ) /s/ Xxxx Xxxxxxxxx
acting by its General Partner )
LB OFFSHORE PARTNERS LIMITED )
acting by XXXXX XXXXXX )
Signed for and on behalf of )
XXXXXX BROTHERS PARTNERSHIP )
ACCOUNT 2000/2001, LP, )
acting by its General Partner ) /s/ Xxxx Xxxxxxxxx
LBI GROUP INC. )
acting by XXXXX XXXXXX )
Signed for and on behalf of )
XXXXXX BROTHERS OFFSHORE )
PARTNERSHIP ACCOUNT 2000/2001, LP, ) /s/ Xxxx Xxxxxxxxx
acting by its General Partner )
LB OFFSHORE PARTNERS LIMITED )
acting by XXXXX XXXXXX )
Signed by X-X ) /s/ Xxxxx Xxxx*
TECHNOLOGIES LIMITED )
Signed by ) /s/ Xxxxx Xxxx*
XXXX XxXXXXXXX )
Signed by )
XXXXXX NEXTGEN LLC ) /s/ Xxxxx Xxxx*
by its duly authorised officer )
Signed by MOSAIC )
PRIVATE EQUITY (I) LTD )
acting by its sole director ) /s/ Xxxxx Xxxx*
MOSAIC CAPITAL MANAGEMENT )
LTD acting by )
Signed by ) /s/ Xxxxx Xxxx*
MOSAIC PRIVATE EQUITY (II) )
LIMITED )
Signed by ) /s/ Xxxxx Xxxx*
XXXXX XXXXXX )
Signed by ) /s/ Xxxxx Xxxx*
XXXX XXXXXXXXX )
Signed by ) /s/ Xxxxx Xxxx*
XXXX XXX XXXXXXX )
Signed for and on behalf of )
VERITAS SOFTWARE ) /s/ Xxxx Xxxxx, its President, CEO
CORPORATION ) and chairman of the Board
Signed by ) /s/ Xxxxx Xxxx
KVAULT SOFTWARE LIMITED)
Signed by ) /s/ Signature Illegible
XXXXX XXXX )
*By power of attorney
List of Omitted Schedules to the Share Purchase Agreement:
Schedule 1: Conditions to Completion
Schedule 2: Completion Arrangements
Schedule 4: Exclusions and Limitations on Liability
Schedule 5: Tax Covenant
Schedule 6: Conduct of Business Before Completion
Schedule 7: Ownership of the Securities
Schedule 8: Calculation of Purchase Price
Schedule 9: Accepting Employees
Schedule 10: Property
Schedule 11: Form of Drag-Along Notice
Schedule 12: Debt Certificate
Schedule 13: Escrow Agreement
Schedule 14: Basic Information About the Company
Schedule 15: Basic Information About the Subsidiaries
Schedule 16: Option Proposals Letter
Schedule 17: Proprietary Software
SCHEDULE 3
(WARRANTIES)
1. OWNERSHIP OF THE SHARES
1.1 Each of the Sellers is the sole beneficial owner of the Preference Shares
and the Ordinary Shares set opposite his name in section (i) of Part A of
Schedule 7 (Ownership of the Shares).
1.2 There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting the
Sale Shares or any of them and there is no agreement or commitment to give
or create any and no claim has been received by any Sellers from any
person to be entitled to any.
2. CAPACITY OF THE SELLERS
2.1 Each Seller has the requisite capacity, power and authority to enter into
and perform its obligations under this agreement and to execute, deliver
and perform any obligations it may have under each document to be
delivered by that Seller at Completion.
2.2 The obligations of each Seller under this agreement constitute, and the
obligations of each Seller under each document to be delivered by that
Seller at Completion will when delivered constitute, binding obligations
of that Seller in accordance with their respective terms.
2.3 The execution and delivery of, and the performance by each Seller of its
obligations under, this agreement and each document to be delivered by
that Seller at Completion will not:
(A) result in a breach of any provision of the memorandum or articles of
association of any Seller that is a body corporate; or
(B) result in a breach of, or constitute a default under, any instrument
by which any Seller is bound; or
(C) result in a breach of any order, judgment or decree of any court or
governmental agency by which any Seller is bound; or
(D) require the consent of the shareholders of any Seller that is a body
corporate, or the shareholders of the Company or of any other
person.
3. GROUP STRUCTURE AND CORPORATE MATTERS
3.1 The Sale Shares and the Drag Shares are all the issued shares in the
capital of the Company at the date of this agreement and other than as set
out in sections (ii) and (iii) of Part A and sections (ii), (iii) and (iv)
of Part B of Schedule 7 (Ownership of the Securities) there are no options
over any shares in the Company or any Subsidiary.
43
3.2 The Vested Options, Unvested Options and Accelerated Options granted under
the Option Schemes are the only options to subscribe for Ordinary Shares
that have been granted by the Company or any Subsidiary.
3.3 The Shares and all shares held by any member of the Group in any other
member of the Group have been validly issued and allotted and are fully
paid up and each allotted share in each Subsidiary is beneficially owned
by the Company.
3.4 There is no agreement or commitment outstanding which calls for the
allotment, issue or transfer of, or accords to any person the right to
call for the allotment, issue or transfer of, any shares (including the
Shares) or debentures in or securities of any member of the Group.
3.5 Other than as set out in the articles of association of each member of the
Group, none of the Shares nor any shares held by any member of the Group
in any other member of the Group are subject to any rights of pre-emption
or restrictions on transfer.
3.6 In the period from 16 July 2004 to the date of signature of this
agreement, no steps have been taken to accelerate any of the Vested
Options or Unvested Options.
3.7 The Company has not:
(A) repaid or redeemed or agreed to repay or redeem any shares of any
class of its share capital or otherwise reduced or agreed to reduce
any class of its issued share capital or purchased any of its own
shares or carried out any transaction having the effect of a
reduction of capital; or
(B) made, or resolved or agreed to make, any issue of shares or other
securities by way of capitalisation of profits or reserves,
and no adjustment has been, or has fallen due to be, made to the
conversion price of the Preference Shares pursuant to clause 6 of the
Articles of Association.
3.8 The execution and delivery of, and the performance by each Seller and/or
the Company of its obligations under, this agreement and each document to
be delivered by that Seller and/or the Company at Completion will not:
(A) result in a breach of any provision of the memorandum or articles of
association of any member of the Group;
(B) result in a breach of, or constitute a default under, any instrument
by which any member of the Group is bound;
(C) result in a breach of any order, judgment or decree of any court or
governmental agency by which any member of the Group is bound; or
(D) require the consent of or any waiver or action by the shareholders
of the Company or of any other person.
44
3.9 Each member of the Group (other than the Company) of which basic
information is given in Schedule 15 (Basic information about the
Subsidiaries) is a wholly-owned subsidiary of the Company and its results
are consolidated in the consolidated financial statements which form part
of the Accounts.
3.10 Schedule 15 (Basic information about the Subsidiaries) lists all the
Subsidiaries of the Company and no member of the Group has any interest in
any other body corporate, unincorporated body, undertaking or association
which is not a member of the Group and so listed.
3.11 There is no option, right to acquire, mortgage, pledge, charge, lien or
other form of security or encumbrance or equity on, over or affecting the
shares in any Subsidiary or any of them and there is no agreement or
commitment to give or create any and no claim has been made by any person
to be entitled to any.
3.12 XYZ KVS Inc. and KVS Software Ltd are not trading companies.
3.13 The copies of the memorandum and articles of association of each member of
the Group which are attached to the Disclosure Letter are complete and
accurate in all respects, have attached to them copies of all resolutions
and other documents required by law to be so attached and fully set out
the rights and restrictions attaching to each class of share capital of
the member of the Group to which they relate.
3.14 The statutory books (including all registers and minute books) of each
member of the Group have been properly kept and contain in all material
respects an accurate record of the matters which are required to be dealt
with in those books and no notice or written allegation that any of them
is incorrect or should be rectified has been received.
3.15 All documents which are required to be delivered by any member of the
Group to the Registrar of Companies have been properly so delivered.
3.16 No member of the Group has any branch, agency, place of business or
permanent establishment outside the United Kingdom, the United States,
France, Australia, the Netherlands, Denmark and Germany.
3.17 The Company is duly qualified to carry on business in all jurisdictions in
which it carries on business.
3.18 There are no powers of attorney granted by any member of the Group which
are still in force, and no person as agent or otherwise, is entitled or
authorised to bind or commit the Company (other than its directors or
officers).
4. COMPLIANCE WITH LAWS
Each member of the Group complies, and has since its incorporation
complied, in all material respects with all applicable laws and
regulations (excluding laws and regulations pertaining to Intellectual
Property Rights).
45
5. TRANSACTION COSTS AND TRANSACTION LIABILITIES
5.1 The Company has not incurred any obligation to pay any costs and expenses
in relation to the negotiations leading up to the sale and purchase of the
Shares and the preparation, execution and carrying into effect of this
agreement and all other documents referred to in it.
5.2 Details of all Company Transaction Liabilities to the extent that these
have been disclosed or invoiced to the Company are set out in the
Disclosure Letter.
6. ACCURACY OF INFORMATION
6.1 The factual information set out in section (i), Part A and section (i),
Part B of Schedule 7 (Ownership of the Securities) and Schedules 10
(Property), 14 (Basic information about the Company) and 15 (Basic
information about the Subsidiaries) is true and accurate in all respects.
7. ACCOUNTS
7.1 The Accounts:
(A) were prepared in accordance with applicable law and accounting
principles and practices generally accepted in the United Kingdom at
the time they were audited;
(B) subject to paragraph (A), were prepared on the same basis and in
accordance with the same accounting principles and practices,
consistently applied, as the audited financial statements for the
previous financial period; and
(C) show a true and fair view of the state of affairs of the members of
the Group to which they relate, and of the Group as a whole at each
accounting reference date to which the Accounts relate and of the
profits or losses of the members of the Group to which they relate,
and of the Group as a whole for each accounting period to which the
Accounts relate.
7.2 At the Accounts Date no member of the Group had any liability (whether
actual, contingent, unquatified or disputed) or outstanding capital
commitment which is not adequately disclosed or provided for in the
Accounts.
7.3 Neither the profits nor the financial position of any member of the Group
has since incorporation been adversely affected by any contract or
arrangement between any member of the Group and any Seller which was not
of an entirely arm's length nature;
8. THE MANAGEMENT ACCOUNTS
8.1 The Management Accounts were prepared on the same basis and in accordance
with the same accounting principles and practices, consistently applied,
as the Accounts.
46
8.2 The Management Accounts show a reasonable representation of the state of
affairs of members of the Group to which they relate at each date to which
they relate and of the profits or losses of the members of the Group to
which they relate for each accounting period to which they relate,
provided always that it is acknowledged by the Purchaser that the
Management Accounts have not been audited.
9. ACCOUNTING RECORDS
The accounting records of each member of the Group have been kept on a
proper and consistent basis (save as required by local law or applicable
accounting principles and practice generally applicable in the United
Kingdom at the relevant time, no material change in the methods or bases
of valuation or accountancy treatment having been made for at least six
years prior to the Accounts Date or since), are up-to-date and in all
material respects contain accurate details of the business activities of
the member of the Group concerned and of all matters required by the
Companies Acts to be entered in them.
10. EVENTS SINCE THE ACCOUNTS DATE
10.1 Since the Accounts Date:
(A) there has been no material adverse change in the financial or
trading position or prospects of any member of the Group and so far
as each of the Management Warrantors is aware no circumstance has
arisen which gives rise to any such change;
(B) the business of each member of the Group has been carried on in the
ordinary and usual course and no onerous contract has been entered
into by any member of the Group;
(C) no asset has been acquired or disposed of on capital account which
is material to the Group or has been agreed to be acquired or
disposed of and no contract involving expenditure by it on capital
account in excess of L 10,000 has been entered into by any member of
the Group;
(D) no debts or other receivables of any member of the Group have been
factored or sold or agreed to be sold;
(E) no member of the Group has offered price reductions or discounts or
allowances on services which is reasonably likely to have a material
effect on its profitability or otherwise offered such services on
terms materially less beneficial to the Group Member than usual in
the period prior to the Accounts Date;
(F) there has been no change in the interest of the Group in any other
member of the Group;
47
(G) no resolution in general meeting or written resolution of
shareholders of any member of the Group has been passed other than
resolutions relating to the routine business of annual general
meetings; and
(H) no change in the accounting reference period of any member of the
Group has been made.
10.2 All book debts shown in the Accounts have been realised for an aggregate
sum not being less than that shown in the Accounts and so far as each of
the Management Warrantors is aware no indication has been received that
any debt now owing to any member of the Group is bad or doubtful.
11. CONTRACTS AND COMMITMENTS
11.1 No member of the Group is a party to nor does it have or has any liability
(present or future) under:
(A) any guarantee, indemnity (other than those given in connection with
infringement of Intellectual Property Rights), surety relationship
or letter of credit (other than as described in paragraph 15 of this
Schedule 3);
(B) other than in connection with the Properties, any contract for rent,
lease, hire, hire purchase, credit sale, conditional sale or
purchase by instalments calling for payments in excess of
L 2,500 per annum;
(C) any agency, distributorship or management agreement in relation to
which revenues, commissions or expenses are in excess of
L 10,000 per annum;
(D) any contract or arrangement which, restricts its freedom to carry on
its business in any part of the world in such manner as it may think
fit or the ability to transfer the whole or any part of its
business;
(E) any joint venture agreement or arrangement, partnership rights or
obligations or any other similar agreement or arrangement;
(F) any contract or arrangement which relates to matters outside the
ordinary business of that member of the Group;
(G) any contract or arrangement in which any director of any member of
the Group or any person connected with any such director is
interested, either directly or indirectly, but excluding any
contract or arrangement relating to either the terms upon which such
director is employed or to Vested Options, Accelerated Options and
Unvested Options;
(H) any contract or arrangement (other than a contract relating to
Intellectual Property Rights) which cannot be terminated by that
member on three months' notice or less without payment of
compensation of any special fees; or
48
(I) any contract or arrangement which according to its terms can be
terminated in the event of any change in the underlying ownership or
control of that member, or where the terms of such contract or
arrangement provide for a material amendment in terms upon such
change.
11.2 So far as each of the Management Warrantors is aware no member of the
Group is under any obligation, nor is any of them a party to any contract,
which is material and cannot readily be fulfilled or performed by it on
time and without undue or unusual expenditure of money or effort.
11.3 Copies of each agreement, document or other material evidencing,
summarising or otherwise containing the terms and conditions of any
material rights or obligations of any member of the Group, any contracts
or arrangements which are of a material value the Group in terms of
expenditure or revenue expectations and any contracts that are of
fundamental importance to the activities of any member of the Group are
attached to the Disclosure Letter.
11.4 Except as disclosed in the Disclosure Letter, no member of the Group has
given any guarantee, indemnity, warranty, or made any representation
(including by way of side letter or ancillary agreement), in respect of
goods or services supplied or contracted to be supplied by it or accepted
any liability or obligation that would apply after any such goods or
services had been supplied by it, including without limitation, in respect
of the functionality or future functionality of any products or services.
11.5 So far as each of the Management Warrantors is aware there is no breach,
invalidity, or grounds for determination, rescission, avoidance or
repudiation of any contract to which any member of the Group is a party
and no notice has been received by any member of the Group alleging any of
the foregoing.
11.6 No member of the Group has outstanding any bid or tender or sale or
service proposal which is substantial in relation to its business and, if
accepted, would be reasonably likely to result in a loss.
12. GRANTS AND ALLOWANCES
No member of the Group has applied for or received any grant, allowance,
aid or subsidy from any supranational, national or local authority or
government agency during the last six years.
13. INSURANCES
13.1 Each member of the Group has maintained insurance cover against risks
normally insured against by companies carrying on a similar business, and
in particular has maintained all insurance required by statute and product
liability insurance.
13.2 Details of the insurance policies in respect of which any member of the
Group has an interest (including risks, amount of insurance, excess
payable and other key terms) are included in the Disclosure Letter, all
such policies are in full force and effect and are not
49
50
void or voidable, no claims are outstanding and, so far as the Management
Warrantors are aware no event has occurred which might give rise to any
claim under them.
14. TRADING
14.1 Details of the revenues earned by the Group by customer in respect of the
largest 25 customers by product of the Group in the financial period ended
on the Accounts Date and the period since the Accounts Date are set out in
the Disclosure Letter.
14.2 No substantial customer (details of which are referred to in paragraph
14.1) or supplier of any member of the Group has during the 12 months
preceding the date of this agreement ceased or, so far as the Management
Warrantors are aware, indicated an intention to cease trading with that
member.
14.3 Neither in the financial period ended on the Accounts Date nor in the
period since the Accounts Date has any person (or any person together with
other persons connected with him) purchased from or sold to any member of
the Group more than L150,000 of sales or purchases made by the Group
during that period.
15. BANK ACCOUNTS AND BORROWINGS
15.1 Details of all bank accounts maintained by each member of the Group are
set out in or attached to the Disclosure Letter. These details include in
each case:
(A) the name and address of the bank with whom the account is kept and
the number and nature of the account;
(B) all direct debit or standing order or similar authorities applicable
to the account.
15.2 Since the date of the most recent monthly Management Accounts no payment
out of any of the accounts has been made, except for payments in the
ordinary course of trading. Amounts represented by cheques, warrants,
mandates or other payment instructions issued or given by any member of
the Group which at the date of this agreement remain outstanding or unpaid
or unperformed do not exceed in the aggregate L60,000.
15.3 Details of all overdraft, loan and other financial facilities available to
any member of the Group and the amounts outstanding under them are set out
in the Disclosure Letter. Details of all debentures, charges, guarantees
and indemnities given to secure those facilities are set out in the
Disclosure Letter.
15.4 Except for the borrowings referred to in paragraphs 15.1 and 15.3 no
member of the Group has any outstanding loan capital, nor has any member
of the Group incurred or agreed to incur any borrowing which it has not
repaid or satisfied, nor is any member of the Group a party to or under
any obligation in relation to:
(A) any loan agreement, debenture, acceptance credit facility, xxxx of
exchange, promissory note, finance lease, debt or inventory
financing, discounting or factoring arrangement or sale and lease
back arrangement; or
51
(B) any other arrangement the purpose of which is to raise money or
provide finance or credit.
15.5 No member of the Group holds or is liable on any share or security which
is not fully paid up or which carries any liability.
15.6 No member of the Group has lent or agreed to lend any money which has not
been repaid to it or owns the benefit of any debt present or future (other
than debts due to it in respect of the sales made in the normal course of
trading).
15.7 So far as the Management Warrantors are aware, no event which is or, with
the passing of any time or the giving of any notice, certificate,
declaration or demand, would become an event of default under or any
breach of any of the terms of any loan capital, borrowing, debenture or
financial facility of any member of the Group or would entitle any third
party to call for repayment prior to normal maturity has occurred or been
alleged.
15.8 Except for the borrowings referred to in paragraph 15.3, no member of the
Group has borrowed any amount, from whatever source, after the Accounts
Date.
16. INSOLVENCY
16.1 No order has been made, no petition has been presented, no meeting has
been convened to consider a resolution and no resolution has been passed
for the winding up of any member of the Group.
16.2 No administration order has been made or petition presented or application
made for such an order and no administrator has been appointed or notice
given or filed or step taken or procedure commenced with a view to the
appointment of an administrator in respect of any member of the Group.
16.3 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of any member of the Group or all or any of
its assets.
16.4 No composition or similar arrangement with creditors including but not
limited to a voluntary arrangement under Part 1 Insolvency Act 1986 has
been proposed in respect of any member of the Group.
16.5 No moratorium under Schedule A1 Insolvency Xxx 0000 is in force nor has
any step been taken or procedure commenced with a view to entering into
such a moratorium in respect of the company.
16.6 No event analogous to any of the foregoing has occurred in relation to any
member of the Group outside England and Wales.
16.7 No member of the Group is insolvent, or unable to pay its debts within the
meaning of section 123 Insolvency Xxx 0000.
16.8 No unsatisfied judgment is outstanding against any member of the Group.
52
17. LICENCES
17.1 All licences, consents and other permissions and approvals required for or
in connection with the carrying on of the business now being carried on by
each member of the Group:
(A) have been obtained and are in full force and effect; and
(B) are listed in and attached to the Disclosure Letter
17.2 So far as each of the Management Warrantors is aware all reports, returns
and information required by law or as a condition of any licence, consent,
permission or approval referred to in paragraph 17.1 to be made or given
to any person or authority in connection with the business of any member
of the Group have been made or given to the appropriate person or
authority.
17.3 So far as each of the Management Warrantors is aware there is no
circumstance which indicates that any licence, consent, permission or
approval is reasonably likely to be varied, revoked or not renewed, or
which is reasonably likely to confer a right of variation or revocation.
18. LITIGATION AND CLAIMS
18.1 No member of the Group is engaged in any litigation, arbitration or other
dispute resolution process, or administrative or criminal proceedings,
whether as claimant, defendant or otherwise. No litigation, arbitration or
other dispute resolution process, or administrative or criminal
proceedings by or against any member of the Group is pending. So far as
the Management Warrantors are aware, there is no fact or circumstance
likely to give rise to any litigation, arbitration, mediation or
administrative or criminal proceedings nor is any such litigation
threatened or expected.
18.2 The documents attached to the Disclosure Letter which relate to any
proceedings involving or relating to any member of the Group contain only
information which has already been made available to the parties to the
proceedings and do not include any information or advice which is
privileged.
18.3 No member of the Group has received written notification that any
investigation or inquiry is being or has been conducted by any
governmental or other body in respect of the affairs of any member of the
Group.
18.4 No member of the Group has committed or is liable for any criminal or
illegal act whether imposed by or pursuant to statute or otherwise, and no
claim that it has or is remains outstanding against any such member.
18.5 So far as each of the Management Warrantors is aware, no member of the
Group has provided any service which does not in any material respect
comply with all applicable laws, regulations or standards.
53
18.6 No inducement (financial or otherwise) has been given to any person by or
on behalf of any member of the Group with a view to that member of the
Group entering into any contract or other arrangement or obtaining any
benefit. No such inducement has been received by any Senior Employee (as
defined in warranty 26) or, as far as the Management Warrantors are aware,
any other employee of any member of the Group.
18.7 So far as each of the Management Warrantors is aware, the Company has
conducted its business in all material respects in compliance with all
applicable laws, rules and regulations.
19. DATA PROTECTION
19.1 Each member of the Group has complied with all relevant requirements of
the Data Protection Act 1984 at all times while that Act was in force and
with all relevant requirements of the Data Protection Act 1998 (including,
without limitation, the data protection principles set out in each of
those Acts respectively).
19.2 No member of the Group has received a notice (including, without
limitation, any information or enforcement notice), letter or complaint
from the Information Commissioner alleging breach by it of the Data
Protection Xxx 0000 or the Data Protection Xxx 0000 which has not been
fully satisfied or requesting information relating to its data protection
policies or practices which has not been fully responded to and so far as
the Management Warrantors are aware there are no circumstances which might
give rise to any such notice, letter or complaint being served, given or
made.
19.3 No individual has been awarded compensation from any member of the Group
under the Data Protection Xxx 0000 or the Data Protection Xxx 0000 which
has not been paid in full, no claim for such compensation is outstanding
and so far as the Management Warrantors are aware no circumstances exist
which might lead to any claim for compensation being made.
19.4 No order has been made against any member of the Group for the
rectification, blocking, erasure or destruction of any data under the Data
Protection Xxx 0000 or the Data Protection Xxx 0000 which has not been
fully complied with, no application for such an order is outstanding and
so far as the Management Warrantors are aware no circumstances exist which
might lead to any application for such an order being made.
19.5 So far as the Management Warrantors are aware, no warrant has been issued
under schedule 4 of the Data Protection Xxx 0000 or schedule 9 of the Data
Protection Xxx 0000 authorising the Information Commissioner (or any of
his or her officers or servants) to enter any of the premises of any
member of the Group.
19.6 The Group has at all times complied with all applicable laws and
regulations relating to privacy, data protection and the collection and
use of personal information and user information gathered or accessed in
the course of the operations of the group. So far as each of the
Management Warrantors is aware no claims are pending or threatened against
any member of the Group by any person or entity alleging a violation of
such person's or entity's privacy, personal or confidentiality rights
under any such laws or regulations.
54
19.7 With respect to all personal and user information referred to in paragraph
19.6 above, each member of the Group has at all times taken all reasonable
steps (including, without limitation, implementing and monitoring
compliance with adequate measures with respect to technical and physical
security) to ensure that such information is protected against loss and
against unauthorised access, use, modification, disclosure or other
misuse. So far as each of the Management Warrantors is aware there has
been no unauthorised access to or other misuse of that information.
20. COMPETITION AND TRADE REGULATION
No member of the Group has given an undertaking to, or is subject to any
order of or investigation by, or has received any request for information
from, any court or governmental authority (including, without limitation,
any national competition authority, the European Commission and any
sectoral regulator) under any anti-trust or similar legislation in any
jurisdiction in which any member of the Group has assets or carries on or
intends to carry on business or where its activities may have an effect.
21. OWNERSHIP AND CONDITION OF ASSETS
21.1 A member of the Group owns or has a valid licence to use all assets that
are necessary to carry on its business in the manner it is being carried
out as at the date of this agreement.
21.2 Each of the assets included in the Accounts or acquired by any member of
the Group since the Accounts Date (other than current assets sold,
realised or applied in the ordinary course of business) is owned both
legally and beneficially by a member of the Group free from any third
party rights, and each of those assets capable of possession is in the
possession of a member of the Group.
21.3 Other than as referred to in Schedule 7 (Ownership of the Securities),
there is no option, right to acquire, mortgage, charge, pledge, lien
(other than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on, over or
affecting the whole or any part of the undertaking or assets of any member
of the Group (including any investment in any other member of the Group)
and there is no agreement or commitment to give or create any and no claim
has been made by any person to be entitled to any.
22. INTELLECTUAL PROPERTY RIGHTS
22.1 No member of the Group uses or otherwise carries on its business under any
name other than its corporate name.
22.2 Details of all registered Intellectual Property Rights (and applications
for any such right) and material unregistered Intellectual Property Rights
owned by each member of the Group are set out in the Disclosure Letter and
the specified member of the Group is the sole legal and beneficial owner
of such rights free from all security interests, mortgages, charges,
options, liens, encumbrances and other rights.
55
22.3 Without limiting the generality of paragraph 22.2, one or more Group
members are the sole legal and beneficial owners of all Intellectual
Property Rights relating to Enterprise Vault and all other Proprietary
Software free from all charges, options, encumbrances and other rights.
The items listed in Part 1 of Schedule 17 (Proprietary Software) comprise
all of the Group's "Enterprise Vault" product. Enterprise Vault is the
only software product of the Group members. Enterprise Vault and the items
listed in Part 2 of Schedule 17 (Proprietary Software) comprise all of the
computer software in which any Group members owns any Intellectual
Property Rights.
22.4 All Intellectual Property Rights relating to the Proprietary Software are
owned by a Group member either by virtue of:
(A) Intellectual Property Rights vesting in a Group member by operation
of law or by virtue of the execution of the confidentiality and
inventions assignment agreement in the form disclosed in the
Disclosure Letter;
(B) Intellectual property Rights assigned to a Group member pursuant to
the Sale of Business Agreement between KVault Software plc and
Compaq Computer Corporation dated 3rd December 1999;
(C) Intellectual property Rights assigned to a Group member pursuant to
the agreements with contractors disclosed in the Disclosure Letter;
or
(D) Intellectual property Rights assigned to a Group member pursuant to
the Consultancy and Support Services Agreement between KVault
Software Limited and Pulse Train Software Limited dated 3rd March
2003 disclosed in the Disclosure Letter.
22.5 All current and past directors, officers and employees of any Group member
who have worked on any Proprietary Software have entered into
confidentiality and inventions assignment agreements with a Group member
in the form disclosed in the Disclosure Letter or in a form having
substantially similar effect and all current and past contractors of any
Group member who have worked on any Proprietary Software are disclosed in
the Disclosure Letter and have entered into the relevant agreement
disclosed in the Disclosure Letter.
22.6 A Group member possesses all Business Information which has been used in
the past three years to correct, maintain, support and develop Enterprise
Vault and the other Proprietary Software.
22.7 No Group member has used any open source software or any other freely
shared or freely distributed software ("Open Source Software") and,
without limiting the generality of the foregoing, none of the Proprietary
Software incorporates or is derived in any manner (in whole or in part)
from any such software. Without limiting the generality of the foregoing,
no Group member has used and none of the Proprietary Software contains any
computer source code which:
(A) is distributed through GNU's General Public Licence or
Lessor/Library General Public Licence;
56
(B) is made available by any person with any requirement that any
software (or part thereof) into Which such software is incorporated
be made available to any person or persons (whether in source code
format or otherwise), be licensed to any person or persons under
terms which allow the creation of derivative works, reverse
engineering, reverse assembly or decompilation, be licensed to any
person or persons with any right of redistribution or be usable by
any person or persons with immunity from the enforcement of any
Intellectual Property Rights; or
(C) would otherwise oblige any Group member to make any Proprietary
Software (or part thereof) available to any person or persons or
make any Proprietary Software (or part thereof) useable by any
person or persons with immunity from the enforcement of any
Intellectual Property Rights.
22.8 All renewal, application and other official registry fees relating to the
registered Intellectual Property Rights owned by each member of the Group
which are due and payable have been paid and no such fees will become
payable within 120 days of Completion.
22.9 All steps required to be taken for the maintenance, protection and
enforcement of all registered Intellectual Property Rights owned by each
member of the Group (including, without limitation, the filing of
responses to office actions by patent, copyright and trade xxxx
authorities and other registry documentation) have been taken, no further
actions need to be taken with the relevant registries in respect of the
maintenance or protection of such registered Intellectual Property Rights
by any member of the Group within 120 days of Completion and, so far as
each of the Management Warrantors are aware, no other further actions need
to be taken for the maintenance, protection or enforcement of such
registered Intellectual Property Rights by any member of the Group within
120 days of Completion.
22.10 The Intellectual Property Rights owned by each member of the Group are
valid and subsisting and, so far as each of the Management Warrantors is
aware, enforceable, and no member of the Group has done or omitted to do
anything which could prejudice the validity, subsistence or, so far as
each of the Management Warrantors is aware, the enforceability of such
Intellectual Property Rights. Each of the registered trade marks and
service marks forming part of the Intellectual Property Rights owned by
the Group members has been used in the five year period preceding the date
of this agreement. There is no circumstance which is reasonably likely to
give rise to any opposition to or prevent any application for registration
of Intellectual Property Rights made by or on behalf of any Group member
from proceeding to grant.
22.11 Details of all licences and other agreements which are subsisting and
effective and relate to Intellectual Property Rights and/or Confidential
Business Information (including, without limitation, licences in, licences
out, consulting agreements, research and development agreements, letters
of consent, settlement agreements, undertakings and co-operation
agreements) entered into any member of the Group are set out in the
Disclosure Letter. According to their terms, no such licences or other
agreement may be terminated, amended, varied or suspended as a result of
the change in the underlying ownership or control of any member of the
Group or otherwise on account of
57
the transaction contemplated by this agreement and neither of the
foregoing will, according to the terms of such licences and other
agreements, result in the loss, transfer or encumbrance of any Group
member's Intellectual Property Rights or cause any Group member, the
Purchaser or any Affiliate of the Purchaser to be bound by any restrictive
covenant which is additional to any of those currently in force or to be
bound by any restrictive covenant which does not apply to such person
prior to Completion.
22.12 No member of the Group or, so far as each of the Management Warrantors is
aware, any other party to any licence or other agreement required to be
disclosed pursuant to paragraph 22.11 of this Schedule is in breach of
such licence or other agreement.
22.13 No member of the Group is obliged by contract or deed to grant any
licence, sub-licence or assignment in respect of any Intellectual Property
Rights or Business Information owned or used by any member of the Group.
22.14 So far as each of the Management Warrantors is aware, no person is
infringing or making unauthorised use of or has infringed or made
unauthorised use of any Intellectual Property Rights or Business
Information owned by any member of the Group.
22.15 No activities, products or services of any member of the Group infringe or
make unauthorised use of or have since 3 December 1999 infringed or made
unauthorised use of the Intellectual Property Rights or Business
Information of any person. No Group member has received any communication
(whether written or otherwise) from any person alleging any such
infringement or unauthorised use or proposing that any Group member take a
licence to use any other person's Intellectual Property Rights or Business
Information. No Group member has obtained any written legal opinion or
memorandum concerning any actual or potential infringement or unauthorised
use of any person's Intellectual Property Rights or Business Information.
Each Group member has taken all reasonable steps to ensure that the
Proprietary Software does not incorporate any other person's Intellectual
Property Rights or Business Information.
22.16 Each member of the Group either legally and beneficially owns or has a
right to use all Intellectual Property Rights and Business Information
used to carry on the business conducted by that member of the Group in the
manner carried on in the past 12 months.
22.17 No current or former shareholder, member, partner, director, officer or
employee of any Group member (or any successor in title to any of the
foregoing) owns or retains any rights in any Intellectual Property Rights
or Confidential Business Information used by any Group member. No internet
domain name used by any Group member has been registered by or on behalf
of any current or former shareholder, member, partner, director, officer
or employee of any Group member (or any successor in title to any of the
foregoing).
22.18 None of the Intellectual Property owned by or Business Information
proprietary to any member of the Group is the subject of any litigation
or, in respect of applications for registration and registered
Intellectual Property Rights, any opposition proceedings, revocation
proceedings or other administrative proceedings.
58
22.19 Each Group member has taken all reasonable steps to preserve the
confidentiality of all its Confidential Business Information and all third
party Confidential Business Information which has come into its
possession.
22.20 No member of the Group is a party to any confidentiality agreement,
exclusive licence or other agreement or is subject to any duty which, in
each case, restricts its use or disclosure of any of its Intellectual
Property Rights or Business Information in any manner.
22.21 None of the operations of any member of the Group give rise, or is
reasonably likely to give rise, to any royalty or like payment obligation
(other than any agreement disclosed pursuant to paragraph 22.11 of this
Schedule) and no claims have been received from any employee to pay
compensation pursuant to section 40 Patents Xxx 0000, or any like
provision in any other jurisdiction.
22.22 No member of the Group has assigned any Intellectual Property Rights or
any rights in Confidential Business Information to any person in the two
years prior to the date of this agreement.
22.23 All items or equipment sold by Group members to which any registered
Intellectual Property Rights pertain are marked with notifications and
indications such that the relevant Group member may enforce its rights in
all jurisdictions in which such products are sold.
23. INFORMATION TECHNOLOGY
23.1 Details of all Information Technology owned by each member of the Group
are set out in the Disclosure Letter and the specified member of the Group
is the sole legal and beneficial owner of all such Information Technology
free from all security interests, mortgages, charges, options, liens,
encumbrances and other rights.
23.2 Details of all Information Technology used by or on behalf of any member
of the Group but not owned by such Group member are set out in the
Disclosure Letter.
23.3 All Information Technology required to be disclosed under paragraphs 23.1
or 23.2 of this Schedule is in good working order and has been maintained
in accordance with good industry practice.
23.4 Details of all agreements and arrangements relating to Information
Technology (including, without limitation, development, security, disaster
recovery, EDI, source code escrow, computer bureau services, maintenance
and support, facilities management, website hosting, domain name
registration and use and outsourcing agreements) entered into by, or
pursuant to which any material benefit is obtained by any member of the
Group are set out in the Disclosure Letter.
23.5 No member of the Group nor any other party is in breach of any agreement
or arrangement required to be disclosed pursuant to paragraph 23.4 of this
Schedule and no such agreement or arrangement may be terminated in
accordance with its terms as
59
a result of the transaction contemplated by this agreement or any change
in the underlying ownership or control of any member of the Group.
23.6 None of the Information Technology owned or used by any member of the
Group or internet domain names used by or registered by or on behalf of
any member of the Group is the subject of any litigation or other dispute
or claim and so far as each of the Management Warrantors is aware, no
litigation, dispute or claim is expected in relation to any domain name
used by or registered by or on behalf of any member of the Group.
23.7 No member of the Group has experienced any material disruption in or to
its business or operations in the past three years as a result of: (a) any
security breach in relation to any Information Technology; or (b) any
failure or sub-standard performance of any Information Technology (whether
arising from any defect, bug, error, virus or other malicious code,
insufficient capacity, improper configuration, inability to properly
process dates or for any other reason whatsoever). So far as the
Management Warrantors are aware, no circumstance exists which is
reasonably likely to give rise to any such disruption.
23.8 Each member of the Group either legally and beneficially owns or has a
contractual right to use all Information Technology used in the operation
of the business conducted by it in the manner carried on currently or at
any time in the year preceding the date of this agreement and to fulfil
any existing contracts and commitments and such ownership and contractual
rights shall not be prejudiced as a direct or indirect result of the
transaction contemplated by this agreement.
23.9 No member of the Group has disclosed any computer source code relating to
any Proprietary Software to any person and, so far as each of the
Management Warrantors is aware, no such computer source code has otherwise
become known by any person. No person has any contractual right
(contingent or otherwise) to obtain any disclosure of such source code.
23.10 No member of the Group is a party to any agreement or arrangement, or
otherwise subject to any duty (whether by contract or by deed) which (in
either case) restricts the free use or disclosure by it of any computer
source codes or other Business Information relating to any of the
Proprietary Software.
23.11 Details of all domain names registered in the name of or used by any
member of the Group are set out in the Disclosure Letter. No claim or
demand has been received in the last three years by any member of the
Group from any person seeking to challenge or dispute any member of the
Group's use or registration of any of the domain names required to be
disclosed by this paragraph 23.11. All registrations in relation to such
domain names have been maintained and all related fees and necessary
administrative steps have been (respectively) paid and taken.
23.12 Details of all websites currently operated by or on behalf of any member
of the Group (whether or not directed at or accessible by the public) are
disclosed in the Disclosure Letter.
60
23.13 So far as each of the Management Warrantors is aware, there are no actual
or suspected material defects or errors in the Proprietary Software.
23.14 None of the Proprietary Software contains any:
(A) "time bomb", "logic bomb" or other program designed by any Group
member to disable the Proprietary Software (or any part thereof) or
otherwise cause the Proprietary software (or any part thereof) to
operate in any manner other than as described in the relevant user
documentation; or
(B) functionality which would permit any Group member or any other
person to access the Proprietary Software to use it in any manner or
for any purpose not authorised by or known to the user of the
Proprietary Software, to alter the Proprietary Software or any
connected Information Technology or to cause any damage, loss or
corruption of data or any damage to any, storage media, software or
other connected Information Technology.
23.15 So far as each of the Management Warrantors is aware, none of the
Proprietary Software contains any virus, worm, Trojan horse or other
malicious code designed to make the Proprietary Software or any connected
Information Technology operate in any manner not intended by its user.
Each Group member has used best industry practice methods and procedures
to prevent the Proprietary Software from being infected with or containing
any such code.
23.16 None of the Information Technology used by any Group member has resulted
in or will result in any Open Source Software being created, distributed,
compiled or linked.
24. PROPERTY
24.1 Relevant Properties
The Relevant Properties are the only Properties owned, used or occupied by
the Group or in respect of which the Group has any estate, interest, right
or liability. Each of the Relevant Properties is used and occupied for the
purpose of the business of a member of the Group.
24.2 TITLE
In relation to each Relevant Property:
(A) the Property Owner is solely legally and beneficially entitled to
such Relevant Property and has good marketable title to it;
(B) the Property Owner has under its control all of the title deeds and
documents necessary to prove its title to such Relevant Property and
the documents of title consist of original documents or properly
examined abstracts;
(C) none of the Relevant Properties are subject to any sub-lease,
tenancy or right of occupation;
61
24.3 Encumbrances
(A) There are no mortgages or charges, legal or equitable, fixed or
floating, affecting any of the Relevant Properties and no person has
or claims to have any lien on any of the Relevant Properties or the
documents of title.
(B) There are no agreements for sale, estate contracts, options, rights
of pre-emption or similar matters affecting any Relevant Property.
(C) Any covenants, restrictions and other encumbrances affecting any
Relevant Property have been and are being complied with.
24.4 Planning matters
Each Relevant Property is presently used for the purpose which is the
permitted use under applicable planning legislation and there are no
enforcement notices, stop notices or breach of condition notices in
respect of the Relevant Property.
24.5 Statutory obligations
The Property Owner has not received any notice alleging breach of any
statutes, orders or regulations relating to the Relevant Property.
24.6 Compulsory purchase
None of the Relevant Properties is the subject of a compulsory purchase
order, notice to treat or a notice of entry and no proposals have been
published for its compulsory acquisition.
24.7 Outgoings
None of the Relevant Properties is subject to the payment of any outgoings
other than the uniform business rate or water rates (and, in the case of
leaseholds, the rents, insurance and service charge reserved by the Lease)
all of which have been paid to date.
24.8 Disputes, notices and claims
There are no outstanding disputes, actions, claims, demands notices or
complaints in respect of any Relevant Property nor do any of the Group or
the relevant Property Owner expect any.
24.9 Leasehold property
In relation to each Relevant Property which is leasehold:
(A) the Relevant Property is held under the terms of the lease (the
"LEASE") briefly referred to in Schedule 10 (Property) and no
collateral assurances, undertakings or concessions have been made by
any party to the Lease;
62
(B) the Lease is a head lease and contains no unusual or onerous
provisions, no rights for the lessor to determine the Lease (other
than rights of re-entry for non-payment of rent or breach of
covenant by the lessee) and no rights to renew;
(C) there are no rent reviews outstanding or exercisable by the lessor
from a date prior to the Completion Date;
(D) the documents of title to the Relevant Property include any consents
required for the grant of the Lease of the current annual rent
having been agreed or determined (where it is not the same as that
originally reserved by the Lease) and of all reversioners' consents
required under the Lease having been obtained;
(E) the rent and all other outgoings payable under the Lease have been
paid to date.
24.10 Liabilities
The Group has not at any time assigned or otherwise disposed of any
Property in respect of which it has a continuing liability (contingent or
otherwise) for payment of rent and/or for any other liability arising
under the terms of the lease under which that Property was held.
25. THE ENVIRONMENT
In this paragraphs 25:
"DANGEROUS SUBSTANCE" means any natural or artificial substance
(whether in the form of a solid, liquid, gas
or vapour, alone or in combination with any
other substance) capable of causing
significant harm to man or any other living
organism, or capable of damaging the
environment or public health or welfare;
"ENVIRONMENTAL LAWS" means all applicable statutes and
subordinate legislation, common laws or
civil code, bylaws, regulations, directives,
circulars, guidance notes, codes of practice
insofar as they relate to Environmental
Matters;
"ENVIRONMENTAL MATTERS" means matters relating to the pollution or
protection of the environment, or health and
safety, including without limitation
relating to Dangerous Substances;
"ENVIRONMENTAL PERMITS" means any registration, permit, licence,
consent, authorisation or other approval
required by Environmental Laws in relation
to
63
the carrying on of the business of any
member of the Group or in relation to any
Relevant Properties;
25.1 Each member of this Group has complied at all times and in all material
respects with Environmental Law and Environmental Permits, and no member
of the Group has received any written notice or other communication
alleging any non-compliance with the same.
25.2 No member of the Group is or has been involved in any litigation
proceedings, claim or complaint by any person in relation to Environmental
Matters and, so far as each of the Management Warrantors is aware, none is
threatened or is reasonably likely to arise.
25.3 All environmental and health and safety audits, assessments, reviews,
investigations and reports in the possession or control of any member of
the Group relating to any Relevant Property or any of the activities of
the Group have been disclosed.
25.4 No member of the Group has disposed of, dumped, released, deposited,
buried or emitted any Dangerous Substance at, on, from or under any
Property.
26. EMPLOYMENT
For the purposes of this paragraph 26, "Group Employee" means any person
employed by any member of the Group, "Senior Employee" means any director of any
member of the Group, together with any Group Employee who is entitled to salary
at an amount in excess of L60,000 per annum (or the relevant local
currency equivalent of this amount), and "Contractor" means any person engaged
to work directly by any member of the Group or for a period of over 5 hours per
week in the business of the Group other than as an employee.
26.1 A list of the names, jobs and the entirety of the terms of employment or
appointment of each Senior Employee is scheduled to the Disclosure Letter.
26.2 Details of the jobs and the terms of employment of each Group Employee
other than the Senior Employees are scheduled to the Disclosure Letter.
These details include job description, start date, employing company,
salary and benefits, business location and notice period. There are no
fixed term employees. Other than as disclosed pursuant to warranties 26.1
and 26.2, no member of the Group employs any person.
26.3 (A) True, complete and accurate copies of all the staff handbooks and
written policies (together with a description of any material
unwritten policies) which apply to Group Employees are annexed to
the Disclosure Letter. The Disclosure Letter identifies which terms,
conditions and policies apply to which Group Employees. Without
prejudice to the generality of (a) above, copies of the following
are scheduled to the Disclosure Letter:
(i) the terms of all share incentive schemes, share option schemes
or profit sharing, bonus, commission or other incentive
schemes applicable to any Group Employee;
64
(ii) the terms on which any Group Employee or director of any
member of the Group receives any benefit otherwise than in
cash; and
(iii) the terms of any arrangement which relates to terms and
conditions which apply on redundancy or severance (whether or
not legally binding).
and such copies are true, complete and accurate in all material
respects.
(B) There are 12 Contractors in total. The Disclosure Letter sets out
all the terms on which each of these Contractors is engaged, and
also briefly describes the location, start date, and function of
each of them.
26.4 Other than salary for the month current as at Completion, no amounts or
benefits will fall to be paid or provided after Completion which have in
whole or in part been earned by reference to the period prior to
Completion. All obligations to pay or provide salaries, wages and other
benefits to any Group Employee or former employee in respect of the period
prior to Completion will as at Completion have been paid or discharged in
full to the extent due.
26.5 Each Group Employee (other than one who performs the majority of his work
in the United States) may be dismissed without damages or compensation
(other than statutory compensation) by giving at any time the period of
notice specified in respect of that Group Employee in the disclosures
against warranties 26.1 and 26.2 above. True and complete copies of all
employment agreements and offer letters for all employees who performs the
majority of their work in the United States are set out in the Disclosure
Letter, and except as set forth therein or otherwise in the Disclosure
Letter, there is no agreement, plan, policy, or other arrangement that
would require any member of the Group to give advance notice or provide
severance pay or benefits upon termination of employment of any such
employees. Each Contractor's engagement is terminable by the relevant
member of the Group without any right to compensation on the date, or by
giving the notice specified in, the disclosures against warranty 26.3(C).
26.6 No person other than a Group Employee or Contractor works in the business
of any member of the Group. No Group Employee or Contractor is engaged
(whether wholly or in part) to work outside the United Kingdom, the United
States, Australia, the Netherlands, Denmark and Germany. The Disclosure
Letter identifies which Group Employees and Contractors work in which
jurisdiction.
26.7 No Senior Employee has given notice terminating his contract of employment
or is under notice of dismissal. So far as each Management Warrantor is
aware, no Senior Employee is expected to resign or leave his employment as
a result of the transaction contemplated by this Agreement.
26.8 Since the Accounts Date:
(A) no change has been made in the salary, benefits, or other terms of
engagement of any Group Employee, and
65
(B) no change has been made in the terms of engagement of any
Contractor,
and so far as each Management Warrantor is aware no such change, and no
negotiation or request for such a change, is due or expected within twelve
months from the date of this agreement.
26.9 (A) No trade union, works council, staff association or other body
representing employees is recognised in any way for bargaining,
information or consultation purposes in relation to the Group
Employees and there has neither been any request (whether verbal or
written) for such recognition, nor, so far as each Management
Warrantor is aware, is there any reason to expect such a request.
(B) No member of the Group is engaged or involved in any:
(i) formal dispute with any employee, or
(ii) dispute with any trade union, staff association or any other
body representing workers,
and so far as each Management Warrantor is aware, there are no
circumstances which may give rise to either of these things.
(C) No dispute has arisen within the last three years between any member
of the Group and any group of employees or category of its employees
(or any trade union, appropriate representatives or other body
representing all or any of those employees).
26.10 No member of the Group has any outstanding undischarged liability to pay
to any governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with the
employment or engagement of personnel (including, without limitation,
PAYE).
26.11 No litigation, arbitration, mediation, labour disputes, labour grievances,
administrative or criminal proceedings by or on behalf of any employee or
former employee of any member of the Group including (without limitation)
charges of unfair dismissal or labour practices or discrimination
complaints are current or pending or (so far as each Management Warrantor
is aware), threatened or expected.
26.12 No Group Employee will, as a result of the entering into of this Agreement
or Completion, be entitled to receive any payment or benefit (including,
without limitation, an enhanced severance package on a subsequent
termination) or be entitled to treat either such event as amounting to a
breach of his terms and conditions of employment or to treat himself as
redundant or dismissed or released from any obligation.
26.13 No notice or communication has been given or statement or representation
made by or on behalf of any member of the Group to any Group Employee
concerning the sale and purchase of the Company or the Group which
concerns or is reasonably likely to affect the employment of any Group
Employee after Completion. Since the Accounts Date no amount has been paid
or benefit provided to any employee or former employee other
66
than as required by the terms of that individual's service contract as
disclosed in the Disclosure Letter. No member of the Group has promised to
pay any amounts or provide any benefits to any employee or former employee
where that promise may have given rise to an obligation to be satisfied on
or after Completion other than to the extent required by the terms of that
individual's service contract as disclosed in the Disclosure Letter.
26.14 Each member of the Group has complied at all times with all obligations
owed to and in respect of its employees including under legislation,
regulations, collective agreements and terms and conditions of employment.
No liability has been incurred which remains outstanding by any member of
the Group for breach of contract of employment or breach of applicable
employment legislation. No member of the Group has in the last 12 months
been a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981).
26.15 A list of showing the total Group Employees (but not their names) who have
been absent from work due to ill-health or injury for a total of 15 days
or more over the 12 months prior to the date of this Agreement is set out
in the Disclosure Letter. Each member of the Group has maintained records
of terms and conditions of employment, payments of statutory sick pay and
statutory maternity pay, PAYE and National Insurance deductions,
disciplinary and health and safety matters, and records of working time,
and all such records are adequate in all material respects. The Disclosure
Letter details the periods of absence and any payments received or due to
those Group Employees who are on long term sickness leave, maternity leave
or other long term leave of absence and have a contractual or statutory
right to return to work.
26.16 No member of the Group has ever had any dispute with an employee,
director, former employee or former director or contractor or former
contractor concerning:
(A) any actual or attempted competition or preparation to compete by
that individual (whether on his own behalf or on behalf of any other
person) with the business (or any part of the business) of any
member of the Group, or
(B) any actual or attempted use or disclosure or preparation to use or
disclose other than for the benefit of the Group any member of the
Group's Intellectual Property, confidential information, trade
secrets or business contacts (including customers, suppliers and
staff).
26.17 No employee, director, contractor, former employee, former director or
former contractor has ever claimed or disputed ownership of any member of
the Group's Intellectual Property, confidential information (including,
without limitation, business contacts) or trade secrets.
26.18 The Option Schemes have at all times complied with and been duly
administered in accordance with and will until Completion continue to
comply with and to be duly administered in accordance with, all applicable
laws, regulations and requirements (including without limitation, the
provisions of their governing documents). No options over shares in any
member of the Group have been granted except under the rules of the Option
Schemes. Schedule 7 (Ownership of the Securities) accurately details all
67
outstanding options over shares in any member of the Group, showing who
holds the options and whether they are vested or unvested, and the
Disclosure Letter accurately details the terms to which they are subject
(including without limitation the circumstances in which they become
exercisable and their exercise price). All returns and notifications to
the UK Inland Revenue or to tax authorities outside the UK which are
required to be made in respect of the EMI options and any unapproved
options have been duly made.
26.19 No claims or actions against any member of the Group under any worker's
compensation policy or long-term disability policy are current or pending
or (so far as each Management Warrantor is aware) threatened, or expected.
27. THE ACCOUNTS AND TAX
27.1 No member of the Group has any liability in respect of Taxation (whether
actual or contingent) that is not fully disclosed or provided for in the
Accounts and, in particular, has no outstanding liability for:
(A) Taxation in any part of the world assessable or payable by reference
to profits, gains, income, gross receipts or distributions earned,
received or paid or arising or deemed to arise on or at any time
prior to the Accounts Date or in respect of any period starting
before the Accounts Date; or
(B) purchase, value added, sales or other similar tax in any part of the
world referable to transactions effected on or before the Accounts
Date
that is not provided for in full in the Accounts.
27.2 The amount of the provision for deferred Taxation in the Accounts in
respect of each member of the Group resident in the United Kingdom for Tax
purposes was, at the Accounts Date, adequate and fully in accordance with
accounting practices generally accepted in the United Kingdom and commonly
adopted by companies carrying on businesses similar to those carried on by
that member of the Group and, in particular, was in accordance with FRS 19
(in the case of members of the Group incorporated in the United Kingdom).
27.3 If all facts and circumstances which are now known to each member of the
Group or any of the Sellers had been known at the time the Accounts were
drawn up, the provision for deferred Taxation that would be contained in
the Accounts would be no greater than the provision which is so contained.
28. TAX EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date:
(A) no member of the Group has declared, made or paid any distribution
within the meaning of ICTA 1988;
(B) no accounting period of any member of the Group has ended;
68
(C) there has been no disposal of any asset (including trading stock) or
supply of any service or business facility of any kind (including a
loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the
consideration actually received or receivable for such disposal or
supply was less than the consideration which could be deemed to have
been received for tax purposes;
(D) no event has occurred which will give rise to a tax liability on any
member of the Group (other than such member resident in the U.S. for
Tax purposes) calculated by reference to deemed (as opposed to
actual) income, profits or gains or which will result in any member
of the Group becoming liable to pay or bear a tax liability directly
or primarily chargeable against or attributable to another person,
firm or company (other than any other member of the Group);
(E) no disposal has taken place or other event occurred which will or
may have the effect of crystallising a liability to Taxation (other
than in the U.S.) which should have been included in the provision
for deferred Taxation contained in the Accounts if such disposal or
other event had been planned or predicted at the Accounts Date;
(F) no member of the Group has made any payment or incurred any
obligation to make a payment (in either case in excess of L20,000)
which will not be deductible in computing trading profits for the
purposes of corporation tax, or be deductible as a management
expense of an investment company or a company with investment
business;
(G) no member of the Group has been a party to any transaction for which
any tax clearance provided for by statute has been or could have
been obtained;
(H) no member of the Group has paid or become liable to pay or acted
(directly or through an agent or other representative) in such
manner as to incur a liability (or potential liability) to pay any
interest or penalty in connection with any tax or otherwise paid any
tax after its due date for payment or become liable to pay any tax
the due date for payment of which has passed or become prospectively
liable to pay any tax the due date for payment of which will arise
in the 30 days after the date of this agreement.
29. TAX RETURNS, DISPUTES, RECORDS AND CLAIMS, ETC.
29.1 Each member of the Group has made or caused to be made all proper returns
required to be made, and has supplied or caused to be supplied all
information required to be supplied, to any revenue authority, including
(but without limitation) the Inland Revenue and H.M. Customs and Excise.
29.2 There are no disputes or disagreements which may in aggregate give rise to
a liability to any member of the Group in excess of L20,000 outstanding
nor are any contemplated at the date of this agreement with any revenue
authority, including (but without limitation) the Inland Revenue and H.M.
Customs and Excise, regarding liability or potential liability to any tax
or duty (including in each case penalties or interest)
69
recoverable from any member of the Group or regarding the availability of
any relief from tax or duty to any member of the Group and there are no
circumstances which make it likely that any such disputes or disagreements
will commence.
29.3 The Company or one or more other members of the Group has sufficient
records relating to past events, including any elections made, to
calculate the tax liability or relief which would arise on any disposal or
on the realisation of any material asset owned at the Accounts Date by any
member of the Group or acquired by any such member since that date but
before Completion.
29.4 Each member of the Group has duly submitted all claims and disclaimers or
withdrawals of claims which have been assumed to have been made for the
purposes of the Accounts.
29.5 The amount of tax chargeable on any member of the Group during any
accounting period ended on or within six years before the Accounts Date
has not, to any material extent, depended on any concession, agreement or
other formal or informal arrangement with any revenue authority, including
(but without limitation) the Inland Revenue or H.M. Customs and Excise.
29.6 No member of the Group has received any notice from any revenue authority,
including (but without limitation) the Inland Revenue, which required or
will or may require such member to withhold tax from any payment made
since the Accounts Date or which will or may be made after the date of
this agreement.
29.7 No member of the Group has been a member of an affiliated, consolidated,
combined or unitary group.
29.8 No member of the Group which is a U.S. corporation is a party to, or has
"participated", within the meaning of U.S. Treasury Regulations section
1.6011-4(c)(3), in a "listed transaction" within the meaning of U.S.
Treasury Regulations Section 1.6011-4(b)(2).
29.9 During the five-year period ending on the date hereof, no member of the
Group was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Code.
29.10 No election has been made under U.S. Treasury Regulations Section 1.7701-3
or any similar provision of U.S. state or local Tax law to treat any
member of the Group as an association, corporation or partnership, and no
member of the Group is disregarded as an entity for U.S. federal, state or
local Tax purposes.
29.11 No claim has been made by any revenue authority in a jurisdiction where
the members of the Group do not file Tax returns that the Company is or
may be subject to Taxation in that jurisdiction.
70
30. STAMP DUTY AND STAMP DUTY RESERVE TAX
30.1 All documents which are in the possession of any member of the Group the
stamping of which is required in order to establish or enforce a right for
any member of the Group have been duly stamped.
30.2 Since the Accounts Date no member of the Group has incurred any liability
to stamp duty reserve tax.
31. VALUE ADDED TAX
31.1 Each of the Company and KVS Limited is treated for the purposes of section
43 VATA 1994 as a member of a group of companies (the "VAT Group") of
which the representative member is the Company (the "Representative
Member") and no company which is not a member of the Group is a member of
the VAT Group nor has any such company been a member of the VAT Group
within the last six years.
31.2 The Representative Member has made, given, obtained and kept full,
complete, correct and up-to-date returns, records, invoices and other
documents appropriate or required for the purposes of VATA 1994 and is not
in arrears with any payments or returns due and has not been required by
the Commissioners of Customs and Excise to give security under paragraph 4
of Schedule 11 VATA 1994.
31.3 The Representative Member has not, since the date 12 months before the
Accounts Date, been in default in respect of any prescribed accounting
period as mentioned in section 59 or section 59A VATA 1994.
31.4 No member of the Group has, within the six years ending on the Accounts
Date, been registered for the purposes of VATA 1994 otherwise than as part
of the VAT Group referred to in paragraph 31.1 above and no such member
has, within that period, been a member of any other group for the purposes
of VATA 1994.
31.5 Full details of any claim made by the Representative Member for bad debt
relief under section 36 VATA 1994 have been disclosed in the Disclosure
Letter.
31.6 There is no land in which any member of the Group has an interest, or over
which any member of the Group has a right, or which any member of the
Group has a licence to occupy, that is (in any such case) land in relation
to which an election made under paragraph 2 of Schedule 10 to VATA 1994
("election to waive exemption") has effect or will have effect so as (in
either such case) to render any supply made by any member of the Group of,
or in respect of, any interest in, right over or licence to occupy such
land a supply that will be taxable at the standard rate of VAT or (as the
case may be) a supply that would be so taxable but for any disapplication
of such election in circumstances prescribed by relevant provisions of
VATA 1994.
31.7 The Disclosure Letter contains full details of any assets of each member
of the Group to which the provisions of Part XV Value Added Tax
Regulations 1995 (the Capital Goods Scheme) apply an] in particular:
71
(A) the identity (including, in the case of leasehold property, the term
of years), date of acquisition and cost of the asset; and
(B) the proportion of input tax for which credit has been claimed
(either provisionally or finally in a tax year and stating which).
31.8 Neither the Representative Member nor any other member of the Group has,
at any time within the last six years, acted as agent of any person not
resident in the United Kingdom for the purposes of section 47 VATA 1994 or
been appointed as a VAT representative of any person for the purposes of
section 48 VATA 1994.
31.9 No member of the Group (other than the Company and KVS Limited) is
registered for the purposes of VATA 1994 or is required to be so
registered or has at anytime within the last six years been required to be
so registered.
32. DUTIES, ETC.
All VAT, import duty and other Taxes or charges payable to H.M. Customs
and Excise upon the importation of goods and all excise duties or taxes of
a similar nature payable to H.M. Customs and Excise or any other revenue
authority in respect of any assets (including trading stock) imported,
owned or used by any member of the Group have been paid in full.
33. TAX ON DISPOSAL OF ASSETS
On a disposal of all its assets by any member of the Group for:
(A) in the case of each asset owned by that member of the Group at the
Accounts Date, a consideration equal to the value attributed to that
asset in preparing the Accounts; or
(B) in the case of each asset acquired since the Accounts Date, a
consideration equal to the consideration given for the acquisition
then either:
(i) in respect of any asset falling within (A) above, the
liability to tax (if any) which would be incurred by that
member of the Group in respect of that asset would not exceed
the amount taken into account in respect of that asset in
computing the maximum liability to deferred Taxation as stated
in the Accounts; or
(ii) in respect of any asset within (B) above, no tax liability
would be incurred by that member of the Group in respect of
that asset.
34. CLOSE COMPANY
No member of the Group is or has ever been a close company as defined in
ICTA 1988.
72
35. NON-DEDUCTIBLE REVENUE OUTGOINGS
No member of the Group is under any obligation to make any future payment
(i) which has been taken into account in preparing the Accounts and is of
a type which is currently treated as a deductible revenue outgoing or (ii)
of a revenue nature which has not been taken into account in preparing the
Accounts, provided that in either (i) or (ii) the payment is in excess of
L20,000, which will be prevented (whether on the grounds of being a
distribution or for any other reason) from being deductible for
corporation tax purposes, whether as a deduction in computing the profits
of a trade or as an expense of management or as a charge on income or as a
non-trading debit under Chapter II Part IV Finance Xxx 0000, by reason of
any statutory provision, other than section 74(1)(f) ICTA 1988 (capital).
36. DEDUCTIONS AND WITHHOLDINGS
Each member of the Group has made all deductions in respect, or on
account, of any tax from any payments made by it which it is obliged or
entitled to make and has accounted in full to the appropriate authority
for all amounts so deducted.
37. INTRA-GROUP TRANSACTIONS
No member of the Group has, at any time within the last six years,
acquired any asset from any other company (including another member of the
Group) which was, at the time of the acquisition, a member of the same
group of companies as that member for the purposes of section 171 of the
TCGA 1992.
38. RESIDENCE
38.1 The country which is given in Schedule 14 (Basic information about the
Company) or Schedule 15 (Basic Information about the Subsidiaries) as the
tax residence of the Company or any other member of the Group is the only
country whose tax authorities seek to charge tax on the worldwide profits
or gains of the Company for that member of the Group.
38.2 No member of the Group has ever paid tax on income, profits or gains to
any tax authority in any other country except that mentioned in Schedule
14 (Basic Information about the Company) or Schedule 15 (Basic information
about the Subsidiaries) other than, in respect of any member of the Group
resident in the U.S. for Tax purposes, amounts in respect of withholding
tax.
39. GROUP ARRANGEMENTS
39.1 The person specified as shareholder in Schedule 15 (Basic information
about the Subsidiaries) which relates to each member of the Group (apart
from the Company) is the beneficial owner of all the shares in that member
of the Group and no such shares are held such that any profit on the sale
of those shares would be a trading receipt.
39.2 There are no circumstances by virtue of which section 410 or 413 ICTA 1988
would prevent each member of the Group being treated as a member of the
same group of
73
companies as each other such member for the purposes of Chapter IV Part X
ICTA 1988 for any accounting period commencing on or before the date of
this agreement.
39.3 No member of the Group resident in the United Kingdom for Tax purposes has
made any surrender of or claim for (i) group relief or (ii) a refund of
tax within section 102 Finance Act 1989 which involves any company which
is not a member of the Group.
39.4 No member of the Group resident in the United Kingdom for Tax purposes has
received any payment in respect of a surrender of group relief or of a tax
refund which could, in any circumstances, be due to be repaid to any
company other than another member of the Group.
40. NON-ARM'S LENGTH TRANSACTIONS
No member of the Group is a party to any transaction or arrangement under
which it may be required to pay for any asset or services or facilities of
any kind an amount which is in excess of the market value of that asset or
services or facilities or will receive any payment for any asset or
services or facilities of any kind that it has supplied or provided or is
liable to supply or provide which is less than the market value of that
asset or services or facilities.
41. PENSIONS
41.1 Other than pursuant to the disclosed terms of the Pension Schemes and the
US Employee Plans listed in the disclosures against warranty 41.8, there
is no arrangement to which any member of the Group contributes or pays or
is or may be required to contribute or pay or under which any member of
the Group has any liability (whether such liability is actual, contingent
or future) under which benefits of any kind (including without limitation,
post-retirement medical benefits) are payable to or in respect of any
person on retirement, death or disability or on the attainment of a
specified age or on the completion of a specified period of service or at
any time following retirement. Without limitation, no member of the Group
has at any time participated in any pension scheme (whether or not a
Pension Scheme) in respect of which it may be required to make a payment
pursuant to Section 75 of the UK Pensions Xxx 0000, or otherwise as a
result of the value of the scheme's liabilities exceeding the value of the
scheme's assets.
41.2 No member of the Group has any obligation (whether actual, contingent or
future) in relation to a Pension Scheme other than to pay contributions at
the fixed rate shown in the Disclosure Letter in respect of those of its
employees from time to time who are members of the Pension Scheme and no
individual has or ever has had any entitlement or prospective right to
benefits under a Pension Scheme other than to such benefits (if any) as
may be purchased on the open market in exchange for the assets derived
from those contributions in respect of the individual or from
contributions made by the individual himself; in particular, no individual
is entitled to benefits under a Pension Scheme calculated by reference to
salary or earnings. No one other than Xxxxxxx Xxxxxx is or ever has been a
member of the Kilo Software Directors Pension Trust, and other than on and
in respect of his death no other person has or ever has had any right
74
to benefit from that arrangement. The Kilo Software Directors Pension
Trust is not contracted-out.
41.3 All the governing documents of the Pension Schemes (showing, without
limitation, the terms on which employer and employee contributions must be
paid) are scheduled to the Disclosure Letter as are all communications
with members of the Pension Schemes which are not reflected in those
governing documents, all agreements with insurance companies relating to
the Pension Schemes, and any other material which would be required for a
pension lawyer to make an informed assessment of each member of the
Group's liabilities or potential liabilities in connection with each
Pension Scheme. All employee communication material issued by or on behalf
of any member of the Group (including without limitation, material
relating to investment options under any group personal pension
arrangement contributed to by any member of the Group) in relation to any
Pension Scheme has at all times been true, complete and not misleading in
all material respects and there have been no complaints concerning the
administration of member requests to switch investment options under any
Pension Scheme.
41.4 All contributions due from any member of the Group to the Pension Schemes
have been made on or by the date due for payment and no member of the
Group. The Kilo Software plc Death in Service Scheme governed by a trust
deed dated 6 February 2002 (as amended) and the Group Income Protection
Plan with Friends Provident (Policy No. G16718) are both exempt approved
schemes. All benefits payable to or in respect of any employee of any
member of the Group under the Kilo Software plc Death in Service Scheme
governed by a trust deed dated 6 February 2002 (as amended) and the Group
Income Protection Plan with Friends Provident (Policy No. G16718) are
fully insured with and administered by an insurance company and no member
of the Group has any administrative or compliance obligations or potential
liabilities whatsoever in relation to any of the Pension Schemes (other
than to pay fixed rate premiums and contributions at the rate set out in
the Disclosure Letter). No member of the Group has done or omitted to do
anything whereby any policy of insurance which insures any employee
benefits may be avoided.
41.5 To the extent that any failure to do so might reasonably be expected to
give rise to a liability on any member of the Group, the Pension Schemes
have at all times complied with and been duly administered in accordance
with and will until Completion continue to comply with and to be duly
administered in accordance with, all applicable laws, regulations and
requirements (including without limitation, the provisions of their
governing documents). Each employee of each member of the Group (whether
engaged on a full-time contract, a part-time contract, a fixed term
contract or a permanent contract) is and has always been eligible to
participate in the Pension Schemes on the same terms and basis as each
other such employee.
41.6 No agreements undertakings or assurances have been given to any past,
present or prospective officer or employee of any member of the Group as
to the continuance, introduction, increase or improvement of any
retirement, death or disability benefits.
41.7 There are not in respect of any of the Pension Schemes or the benefits
thereunder any actions, suits or claims except for claims for benefits in
the ordinary course pending or
75
threatened in any forum, and so far as the Principal Sellers are aware
there are no grounds on which to expect any such actions, suits or claims.
41.8 The Sellers have provided or made available to the Purchaser in the
Disclosure Letter correct and complete copies of:
(i) all documents embodying each US Employee Plan, other than
legally-mandated plans, programs and arrangements and each
Employment Agreement including (without limitation) all amendments
thereto and all related trust documents, administrative service
agreements, group annuity contract, group insurance contracts,
summary plan description, policies pertaining to fiduciary liability
insurance covering the fiduciaries for each Plan;
(ii) the most recent annual report (Form 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA
or the Code in connection with each US Employee Plan;
(iii) all Internal Revenue Service "IRS" determination, opinion,
notification and advisory letters, and all applications and
correspondence to or form the IRS or the Department of Labor with
respect to any such application or letter,
(iv) all written communications material to any Group Employees relating
to any US Employee Plan and any proposed US Employee Plans, in each
case, relating to any amendments, termination, establishments,
increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material
liability to Company or its Subsidiaries;
(v) all correspondence to or from any governmental entity relating to
any US Employee Plan; and
(vi) the most recent plan year's discrimination tests for each US
Employee Plan.
41.9 (i) the Company and its Subsidiaries have performed all obligations
required to be performed by it under, is not in default or violation
of, and has no Knowledge of any default or violation by any other
party to each US Employee Plan, and each US Employee Plan has been
established and maintained in all material respects in accordance
with its terms and in material compliance with all applicable laws,
statues, orders, rules and regulations, including but not limited to
ERISA and the Code;
(ii) no "prohibited transaction," within the meaning of Section 4975 of
the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 4975 of the Code or Section 408 of ERISA (or any
administrative class exemption issued thereunder), has occurred with
respect to any US Employee Plan;
(iii) there are no actions, suits or claims pending, or, to the knowledge
of the Company, threatened or reasonably anticipated against any US
Employee Plan, except for claims for benefits in the ordinary
course;
76
(iv) there are no audits, inquiries or proceedings pending or, to the
knowledge of Company, threatened by the IRS, DOL or any other
governmental entity with respect to any US Employee Plan; and
(v) neither Company nor any ERISA Affiliate is subject to any penalty or
tax with respect to any US Employee Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code.
41.10 Neither Company nor any Subsidiary or other affiliate has ever maintained,
sponsored, or contributed to or been obligated to contribute to, any
multiemployer plan, as defined in Section 3(37) of ERISA, any plan subject
to Title IV of ERISA or Section 412 of the Code, or any "funded welfare
plan" within the meaning of Section 419 of the Code. Any US Employee Plan
intended to be qualified under Section 401 (a) of the Code and each trust
intended to qualify under Section 501 (a) of the Code:
(i) has obtained a favourable determination, notification, advisory
and/or opinion letter, as applicable, as to its qualified status
from the IRS and the Company is not aware of any event, condition or
circumstance that has adversely affected or is likely to adversely
affect such qualified status, and
(ii) incorporates or has been amended to incorporate all provisions
required to comply with the Tax Reform Act of 1986 and subsequent
legislation, except to the extent that there is still a remaining
period of time under applicable Treasury Regulations or IRS
pronouncements in which to incorporate such provisions.
41.11 No US Employee Plan provides health benefits that are not fully insured
through an insurance contract nor provides, or reflects or represents any
liability to provide post-termination life, health or other welfare
benefits to any person for any reason, except as may be required by
Section 4980B of the Code or other applicable statute.
