DATED: JULY 21, 2000
XXXXX XXXXXXXX AND OTHERS
-and-
XXXXXX XXXXX AND OTHERS
-and-
GLOBAL SOURCES LIMITED
--------------------------------
AGREEMENT
for the sale and purchase
of the entire issued share
capital of Philips & Xxxxxxxx Limited
--------------------------------
EYTON XXXXXX XXXXXXXX
SECKLOE HOUSE
000 XXXXX 00XX XXXXXX
XXXXXX XXXXXX
XX0 0XX
THIS AGREEMENT is made the July 21, 2000
BETWEEN
(1) THOSE PERSONS whose names and addresses are set out in Column 1 of Part
1 of Schedule 1 ("the A Shareholders").
(2) THOSE PERSONS whose names and addresses are set out in Column 1 of Part
2 of Schedule 1 ("the B Shareholders").
(3) GLOBAL SOURCES LIMITED a Delaware corporation whose main office is at
000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000 ("the
Purchaser")
1. INTERPRETATION
1.1 In this Agreement, including the Schedules the following words and
expressions have the following meanings, unless they are inconsistent
with the context:
`A' SHAREHOLDERS ACCOUNTANTS" means Horwarth Xxxxx Xxxxxxxxx of Xxxxxx
Xxxxx, 00 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx
"AGREED FORM" means the form agreed between the `A' Shareholders and
the Purchaser on or prior to the date of this Agreement and either
annexed to this Agreement or initialled for the purpose of
identification by their respective solicitors
"ARTICLES" means the new articles of association of the company in the
Agreed Form to be adopted pursuant to the Resolution
"A SHARES" means 10,625 "A" ordinary shares of(pound)1 each in the
capital of the Company
"B SHARES" means 2,500 "B" ordinary shares of(pound)1 each in the
capital of the Company
1
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
dealings in sterling deposits by and between banks may be carried on in
the London Interbank Market and on which banks are open for business in
London
"CA" means Companies Xxx 0000 as amended by Companies Xxx 0000
"CAA" means Capital Xxxxxxxxxx Xxx 0000
"CLAIM" means a Warranty Claim and/or a Tax Deed Claim
"COMPANIES ACTS" means CA and the former Companies Acts (within the
meaning of CA s 735(1))
"COMPANY" means Xxxxxxxx & Xxxxxxxx Limited registered number 2658545
"COMPLETION" means completion of the purchase of the Shares in
accordance with clause 6
"COMPUTER SYSTEMS" means the Hardware, the Software and the
Telecommunications Equipment
"CONFIDENTIAL INFORMATION" means information (however stored) relating
to or connected with the business customers or financial or other
affairs of any of the Group Companies details of which are not in the
public domain including, without limitation, information concerning or
relating to:
(i) the Intellectual Property and any other property of any of the
Group Companies in the nature of intellectual property;
(ii) any technical processes, future projects, business development
or planning, commercial relationships and negotiations; and
(iii) the marketing of goods or services including, without
limitation, customer, client and supplier lists, price lists,
sales targets, sales statistics, market share statistics,
market research reports and surveys and advertising or other
promotional materials and details of
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contractual arrangements and any other matters concerning the clients
or customers of or other persons having dealings with any of the Group
Companies
"CONSIDERATION STOCK" means the common stock par value $ 0.0001 per
share, credited as fully paid, in the capital of the Purchaser to be
allotted to the Vendors accordance with clause 3.1
"DISCLOSURE LETTER" means the letter and its annexures of the same date
as this Agreement from the "A" Shareholders to the Purchaser
identifying itself as the Disclosure Letter referred to in this
Agreement and disclosing various matters relating to the Warranties
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, option, restriction, equity, right to acquire, right of
pre-emption, right of retention of title, third party right or
interest, other encumbrance or any other form of security interest or
any obligation (including any conditional obligation) to create any of
the same
"ENVIRONMENTAL LEGISLATION" means common law or any existing or
proposed United Kingdom or European Community Legislation, including
directives, regulations, codes of practice and guidance notes made
thereunder, relating to environmental and health and safety matters
"FA" means Finance Act
"FRS" means a Financial Reporting Standard issued by the Accounting
Standards Board Limited Institute of Chartered Accountants in England
and Wales and in force as at the date of this Agreement
"GROUP COMPANIES" means the Company and its Subsidiaries for the time
being and "GROUP" shall be construed accordingly
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"HARDWARE" means the computer hardware and peripherals used by the
Group Companies in the ordinary course of their business
"ICTA" means Income and Corporation Taxes Act 1988
"INITIAL CONSIDERATION" means the sum of $3,000,000
"INITIAL CONSIDERATION ISSUE PRICE" means $2.20 per Consideration Stock
"INTELLECTUAL PROPERTY" includes patents, inventions, know-how, trade
secrets and other confidential information, registered designs,
copyrights, design rights, rights affording equivalent protection to
copyright, database rights and design rights, semi conductor,
topography rights, trade marks, service marks, business names, domain
names, trade names, logos, moral rights, registrations or applications
to register any of the aforesaid items, rights in the nature of any of
the aforesaid items in any country or jurisdiction, rights in the
nature of unfair competition rights and rights to xxx for passing-off
"INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property used, or
required to be used, by any of the Group Companies in, or in connection
with, its business
"IHTA" means Inheritance Tax Xxx 0000
"LAST ACCOUNTS DATE" means 31st December 1999 (being the date to which
the Principal Accounts have been prepared)
"MANAGEMENT ACCOUNTS" means the unaudited profit and loss accounts of
the Group Companies for the period ended on 30th June 2000 and the
unaudited balance sheets of the Group Companies as at 30th June 2000 in
the Agreed Form
"NASDAQ OTC BULLETIN BOARD" means the NASD sponsored and operated
inter-dealer automated quotation system for securities not included in
the NASDAQ system
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"PENSION SCHEMES" means the Scottish Widows Group PPP Scheme and the
XxXxxxxx Directors Retirement and Death Benefit Scheme
["PLANNING ACTS" means Town and Country Planning Xxx 0000, Planning
(Listed Buildings and Conservation Areas) Xxx 0000, Planning (Hazardous
Substances) Xxx 0000, Planning (Consequential Provisions) Xxx 0000,
Planning and Compensation Act 1991]
"PREFERENCE SHARES" shall have the meaning given to it by the Articles
"PRINCIPAL ACCOUNTS" means the audited balance sheet as at the Last
Accounts Date and audited profit and loss account for the year ended on
the Last Accounts Date of each Group Company, and the directors' report
and notes
"PROPERTIES" means the leasehold properties of the Group Companies
shortly described in Schedule 5
"PURCHASER'S ACCOUNTANTS" means such firm of accountants as the
Purchaser may appoint from time to time
"PURCHASE PRICE ADJUSTMENT CONSIDERATION" shall have the meaning given
to it by Schedule 7
"PURCHASER'S SOLICITORS" means emwlaw, Seckloe House, 101 North 00xx
Xxxxxx, Xxxxxxx Xxxxxx Xxxxxx, XX0 0XX
"PURCHASER WARRANTIES" means the warranties of the Purchaser contained
in clause 7 and Part 2 of Schedule 3
"RELEVANT EMPLOYEE" means any past or present employee of the Group or
of any predecessor to all or part of its business
5
"RESOLUTION" means the written resolution in the Agreed Terms whereby
the Company resolves, inter alia, to adopt the Articles, to increase
the authorised share capital of the Company and to authorise the
directors to allot Preference Shares
"RESTRICTIVE COVENANT DEEDS" means the deeds in the Agreed Form between
each of the "A" Shareholders and the Purchaser containing certain
restrictive covenants to be entered into at Completion
"SEC" the United States Securities and Exchange Commission
"SERVICE AGREEMENTS" means the service agreements between each of the
`A' Shareholders and the Company in the Agreed Form
"SHARES" means the "A" Shares and "B" Shares comprising the whole of
the issued and allotted share capital of the Company
"SOFTWARE" means the computer software used in the course of any of the
Group Companies' business, the rights to which either vest legally and
beneficially in a Group Company or are owned by any third party and
licensed to a Group Company
"SSAP" means a Statement of Standard Accounting Practice issued by
Accounting Standards Board Limited and in force as at the date hereof
"SUBSIDIARY" means The XxXxxxxx Partnership Limited (Company Number
2659327)
"TAXATION" has the meaning ascribed to that term in the Tax Deed
"TAX AUTHORITY" has the meaning ascribed to that term in the Tax Deed
"TAX DEED" means a deed in the form set out in Schedule 4
"TAX DEED CLAIM" means any claim by the Purchaser under the Tax Deed
6
"TCGA" means Taxation of Chargeable Gains Xxx 0000
"TELECOMMUNICATIONS EQUIPMENT" means the telecommunications equipment
(including all equipment used as part of any of the Group Companies
computer networks) used by any of the Group Companies
"TMA" means Taxes Management Xxx 0000
"VATA" means Value Added Tax Xxx 0000
"VENDORS" means the "A" Shareholders and/or the "B" Shareholders
"VENDORS SOLICITORS" means Field Xxxxxxx Xxxxxx of The Old Coroner's
Court, Xx.0 Xxxxxx Xxxxxx, XX Xxx 000, Xxxxxxx, Xxxxxxxxx XX0 0XX
"WARRANTIES" means the warranties of the "A" Shareholders contained in
clause 7 and Part 1 of Schedule 3
"WARRANTY CLAIM" means any claim made by the Purchaser for breach of
any of the Warranties
1.2 In this Agreement, unless the context otherwise requires:-
(a) all words in the singular include the plural and vice versa
and words in one gender include any other gender;
(b) a reference to:-
(i) a "person" includes any individual, firm, body, corporate,
association or partnership, government or state (whether or
not having a separate legal personality);
(ii) clauses and schedules are to clauses and schedules of this
Agreement and references to sub-clauses and paragraphs are
references to sub-clauses and paragraphs of the clause or
schedule in which they appear;
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(iii) any provision of this Agreement is to that provision as
amended in accordance with the terms of this Agreement;
(iv) "indemnity" and "indemnifying" any person against any
circumstances includes indemnifying and keeping him harmless
from all actions, claims and proceedings from time to time
made against him and all loss or damage and all payments,
costs or expenses (including any liability to Taxation arising
from receipt of any sums in connection with such indemnity)
made or incurred by that person as a consequence of or which
would not have arisen but for that circumstance; and
(c) general words shall not be given a restrictive meaning:-
(i) if they are introduced by the word "other" by reason of the
fact that they are preceded by words indicating a particular
class of act, matter or thing; or
(ii) by reason of the fact that they are followed by particular
examples intended to be embraced by those general words;
(d) `subsidiary' and `holding company' shall have the meanings
ascribed thereto in sections 736 and 736a CA and shall include
respectively any `subsidiary undertaking' as defined in
section 258, 259 and 260 CA.
2. AGREEMENT FOR SALE
2.1 Subject to the terms and conditions of this Agreement, each of the
Vendors shall sell the number of Shares set opposite his name in column
2 of Part I of Schedule 1 and in column 2 of Part 2 of Schedule 1 with
full title guarantee and the Purchaser (relying on the Warranties and
the Tax Deed) shall purchase the Shares free from all Encumbrances
whatsoever and with all rights attaching to them, with effect from the
date of this Agreement.
2.2 Each of the Vendors hereby waives any pre-emption rights he may have in
relation to any of the Shares under the articles of association of the
Company or otherwise.
8
2.3 Neither the Vendors nor the Purchaser shall be obliged to complete the
sale and purchase of any of the Shares unless the sale and purchase of
all the Shares is completed simultaneously.
3. PURCHASE CONSIDERATION
3.1 The purchase consideration for the sale of the Shares shall be the
aggregate of:
3.1.1 the Initial Consideration to be satisfied by the allotment to the
Vendors at Completion of such number of Consideration Stock (excluding
fractions) as shall at the Initial Consideration Issue Price have the
value nearest to but not less than the Initial Consideration; and
3.1.2 the Purchase Price Adjustment Consideration (as defined in Schedule 7)
3.2 The Vendors shall be entitled to the Initial Consideration as nearly as
may be in proportion to their holdings of the Shares.
3.3 The "A" Shareholders shall be entitled to the Purchase Price Adjustment
Consideration as nearly as may be in proportion to their holdings of
the "A" shares.
3.4 Consideration Stock shall be issued on terms that they will rank pari
passu in all respects with remainder of the common stock par value
$0.0001 in the capital of the Purchaser in issue at the date of
allotment except as set out at clause 3.5.
3.5 Consideration Stock shall first rank for dividend in respect of the
accounting period in which they are allotted after the record date for
any dividend distribution) but shall not rank for dividends declared or
paid with respect to any prior accounting period
3.6 The `A' Shareholders shall only sell Consideration Stock through the
Purchaser's from time to time preferred market maker.
3.7 Notwithstanding any other provision of this Agreement the total amount
of Purchase Price Adjustment Consideration payable to the "A"
Shareholders shall not exceed $5,000,000.
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4. RESTRICTION ON SALE OF COMMON STOCK
4.1 The Purchaser acknowledges that the Vendors may wish to sell some of
their Consideration Stock at the earliest time permitted. The Purchaser
therefore undertakes to use its best endeavours to file with SEC:-
4.1.1 a registration statement in Form S-4 or in such other available form
which may be mutually acceptable to the parties ("Registration
Statement") as soon as reasonably practicable after Completion and in
any case prior to 30th September 2000 registering under the United
States Securities Act of 1933 ("Securities Act"), for the offer and
sale in the future of up to all of the Consideration Stock issued by
the Purchaser to satisfy the Initial Consideration;
4.1.2 a Registration Statement as soon as reasonably practicable after the
relevant date for payment of any part of the Purchase Price Adjustment
Consideration and in any case prior to the expiry of the financial
quarter next following the Financial quarter in which the relevant date
for payment falls registering under the Securities Act for the offer
and sale in the future of up to all of the Consideration Stock issued
by the Purchaser to satisfy the Purchase Price Adjustment
Consideration;
4.1.3 notification of the acquisition of the Group on Form 8-K within the
period prescribed by the Act;
4.1.4 financial statements for the Purchaser for the period to 30th June 2000
including the Group's audited financial statements for the period
ending on the Last Accounts Date and the Group's unaudited financial
statements for the quarters ending 31st March 2000 and 30th June 2000
prior to 30th September 2000
4.2 The Purchaser agrees:-
4.2.1 to use its commercially reasonable endeavours to cause the Registration
Statement to be declared effective by the SEC within a time frame which
is as soon as practicable in the circumstances;
4.2.2 provide such number of copies of the Registration Statement to the `A'
Shareholders as they may reasonably request in order to facilitate the
public sale or other disperstion of the Consideration Stock covered by
such Registration Statement;
5. BLANK
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6. COMPLETION
6.1 Completion shall take place at the offices of the Vendors' Solicitors
immediately following exchange of this Agreement when, subject to
clause 6.5, all the transactions mentioned in the following sub-clauses
shall take place.
6.2 At Completion the Vendors shall deliver or procure the delivery to the
Purchaser of:
6.2.1 duly completed and signed transfers in favour of the Purchaser or as it
may direct in respect of the Shares together with the relevant share
certificates;
6.2.2 duly completed and signed transfers in favour of the Purchaser or as it
may direct of all shares in the capital of the Subsidiary which are not
registered in the name of a Group Company together with the share
certificate in respect of all the issued shares in the Subsidiary ;
6.2.3 such consents or documents (if any) as may be required to give evidence
of the title of each of the Vendors to his Shares and his capacity to
sell or transfer such Shares;
6.2.4 the Tax Deed, Service Agreements and the Restrictive Covenant Deeds
duly executed by the `A' Shareholders;
6.2.5 the resignations of Xxxxx Xxxxxx and Xxxxx X'Xxxxxx and the secretary
from their respective offices in each Group Company, with a written
acknowledgement in the form of a Deed from Xxxxx Xxxxxx in the Agreed
Form that he has no claim against any Group Company in respect of
breach of contract, compensation for loss of office, redundancy or
unfair dismissal or on any other grounds whatsoever, except only for
accrued remuneration and reimbursable business expenses (if any) up to
Completion;
6.2.6 the resignation of the Company's Auditors (to take effect from
Completion) confirming that they have no outstanding claims of any kind
against any Group Company and containing a statement under CA s 394(1)
to the effect that there are no circumstances which should be brought
to the attention of the members or creditors of any Group Company;
6.2.7 the statutory books of each Group Company complete and written
up-to-date and their certificates of incorporation and common seal (if
any);
6.2.8 all documents of title to the Properties and to any registered
Intellectual Property Rights of the Company;
11
6.2.9 the appropriate forms to amend the mandates given by each Group Company
to its bankers;
6.2.10 written confirmation from the Vendors that there are no subsisting
guarantees given by any Group Company in their favour and that after
compliance with clause 6.4.4 none of the Vendors will be indebted to
any Group Company or vice versa;
6.2.11 bank statements showing the financial situation of each Group Company
with their bankers at close of business on the day before Completion
(or at the latest possible date before Completion accompanied by
reconciliation statements made up to close of business on the day
before Completion) with written confirmation from the `A' Shareholders
that no transactions will have been entered into the effect of which
would be to cause such financial situations to differ from those
apparent from such statements;
6.2.12 an irrevocable power of attorney in such form as the Purchaser may
reasonably require executed by each registered holder of Shares in
favour of the Purchaser appointing the Purchaser to be his lawful
attorney for the purpose of receiving notices of and attending and
voting at all meetings of the members of the relevant Group Company in
respect of the Shares to be transferred by such holder hereunder from
the date of Completion to the day on which the Purchaser or its nominee
is entered in the register of members of the relevant Group Company as
the holder of such Shares
6.2.13 Certified copies of:-
(a) the Principal Accounts signed by the directors of each Group
Company;
(b) the minutes of a General Meeting of each Group Company to
which the Principal Accounts were presented.
6.3 The Vendors shall procure that board meetings and shareholder meetings
of each Group Company shall be held at which:
6.3.1 such persons as the Purchaser may nominate shall be appointed
additional directors of each Group Company and emw Secretarial Limited
shall be appointed Secretary of each Group Company;
6.3.2 the transfers referred to in clause 6.2.1 or 6.2.2 (as the case may be)
shall be approved (subject to stamping);
6.3.3 the resignations referred to in clauses 6.2.5 and 6.2.6 shall be
submitted and
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accepted;
6.3.4 such other business as is set out in the board minutes (in the Agreed
Form) shall be conducted.
6.3.5 the Resolution shall be passed
6.4 Upon completion of the matters referred to in clause 6.2-6.3 inclusive
the Purchaser shall:
6.4.1 as soon as reasonably practicable and in any event within 8 business
days of Completion procure the allotment and issue of the Consideration
Stock to be allotted and issued pursuant to clause 3.1.1;
6.4.2 deliver to the Vendors' Solicitors counterparts of the Tax Deed and the
Restrictive Covenant Deeds duly executed by the Purchaser.
6.4.3 deliver to the Vendors' Solicitors the Service Agreements duly executed
by the Company;
6.4.4 procure that the Company shall forthwith upon release of the personal
guarantees pursuant to clause 9.1.1 and upon subscription for the
Preference Shares pursuant to clause 9.1.2 repay to each of Xxxxx
Xxxxxxxx and Xxxxxx Xxxxxxxx the sum of (pound)10,000 by way of
repayment of their respective directors loan accounts.
6.5 The Purchaser may in its absolute discretion waive any requirements
contained in clauses 6.2 and 6.3, and shall not be obliged to complete
the purchase of any of the Shares unless the purchase of all the Shares
is completed in accordance with this Agreement, but may instead:
6.5.1 rescind this Agreement without prejudice to any other remedy it may
have and without incurring liability to the `A' Shareholders; or
6.5.2 defer Completion to a date not more than 28 days after the date set by
clause 6.1; or
6.5.3 proceed to Completion so far as practicable but without prejudice to
its rights under this Agreement.
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7. WARRANTIES
7.1 The `A' Shareholders jointly and severally warrant to the Purchaser
that save as fully and fairly set out in the Disclosure Letter, the
Warranties are true and accurate in all respects at the date of this
Agreement and acknowledge that the Purchaser is entering into this
Agreement in reliance upon the Warranties.
7.2 Where any Warranty or other statement contained in this Agreement is
qualified by a reference (howsoever expressed) to the awareness,
knowledge, information or belief of the person by whom such Warranty or
statement is given or made, such person shall be deemed (except where
otherwise expressly provided to the contrary) to have given to the
Purchaser an additional warranty that, or to the effect that, he has
made all reasonable enquiries regarding, and where reasonably
practicable verified, all facts and circumstances relevant to such
Warranty or other statement.
7.3 Each of the Warranties is separate, independent and without prejudice
to any other Warranty and, except where expressly stated otherwise, no
clause contained in this Agreement shall govern or limit the extent or
application of any other clause.
7.4 The rights and remedies of the Purchaser in respect of any breach of
any of the Warranties shall not be affected by Completion, by any
investigation made by it or on its behalf into the affairs of any Group
Company, by its rescinding, or failing to rescind this Agreement, or
failing to exercise or delaying the exercise of any right or remedy or
by any other event or matter whatsoever, except a specific and duly
authorised written waiver or release, and no single or partial exercise
of any right or remedy shall preclude any further or other exercise.
7.5 None of the information supplied by any Group Company or its employees
or professional advisers prior to the date of this Agreement to any of
the `A' Shareholders or their advisers in connection with the
Warranties, the Tax Deed or the contents of the Disclosure Letter, or
otherwise in relation to the business or affairs of any Group Company,
shall be deemed a representation, warranty or guarantee of its accuracy
by the Group Company to the `A' Shareholders, and the `A' Shareholders
14
hereby waive any claims against the Group Company which they might
otherwise have in respect of it.
7.6 Notwithstanding any rule of law or equity to the contrary, any release,
waiver or compromise or any other arrangement of any kind whatsoever
which the Purchaser may agree to or effect in relation to one of the
`A' Shareholders in connection with this Agreement, and in particular
the Warranties, shall not affect the rights and remedies of the
Purchaser as regards any other of the `A' Shareholders.
7.7 If there is any breach or non-fulfilment of any of the Warranties
resulting in:
(i) the value of any of the assets of any of the Group Companies
being or becoming less than it would have been had the
relevant circumstances been as so warranted; or
(ii) any of the Group Companies having incurred or incurring any
liability or an increase in any liability which it would not
have incurred had the relevant circumstances been as so
warranted;
then the `A' Shareholders agree to pay to the Purchaser on demand (at
the option of the Purchaser) an amount equal to either:
(i) the reduction in value of the assets of (as the case may be)
the liability or increased liability thereby incurred by the
Group Company or Group companies; or
(ii) an amount equal to the reduction caused in the value of the
Shares.
7.8 The Purchaser warrants to each of the Vendors that the Purchaser
Warranties are true and accurate in all respects at the date of this
Agreement and acknowledges that the Vendors are entering into this
agreement in reliance upon the Purchaser Warranties.
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8. `A' SHAREHOLDERS' PROTECTION
8.1 The `A' Shareholders and the Purchaser agree that the provisions of
Schedule 6 shall apply to limit the liability of the `A' Shareholders
for any Claim.
9. POST COMPLETION UNDERTAKINGS
9.1 The Purchaser shall:-
9.1.1 as soon as reasonably practicable and in any event within 1months of
Completion procure the release of each of Xxxxxx Xxxxxxxx and Xxxxx
Xxxxxxxx from the personal guarantees given by them relating to the
indebtedness owed by the Subsidiary to Barclays Bank plc and pending
such release shall indemnify Xxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx from
any claim made by Barclays Bank plc under such guarantees;
9.1.2 as soon as reasonably practicable but in any event within one calendar
month from Completion subscribe for (pound)104,000 Preference Shares at
par;
9.1.3 as soon as reasonably practicable but in any event within two months
from Completion) subscribe for (pound)84,000 Preference Shares at par;
9.1.4 as and when required subscribe for such additional Preference shares at
par as shall be sufficient to fund the payment by the Subsidiary of
payments of principal and interest to Barclays Bank plc in respect of
the Subsidiary's overdraft and small business loan.
9.2 The `A' Shareholders shall procure that the Vendor's Solicitors at no
additional cost to the Group carry out as soon as reasonably
practicable but in any event within two calendar months of Completion
the following in connection with the pre-completion restructure of the
Group:-
9.2.1 completion of stamping formalities;
9.2.2 the writing up of the statutory books of each Group Company; and
9.2.3 the filing of all necessary forms with Companies House.
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10. PURCHASE PRICE ADJUSTMENT RING FENCE PROVISIONS
10.1 During the interval between the signing of this agreement and 30 June
2003 the `A' Shareholders and the Purchaser shall, unless with the
consent of the `A' Shareholders or the Purchaser (as the case may be):
10.1.1 subject to any management policies and reporting procedures adopted
from time to time by the Purchaser, carry on the business of the Group
(the "Business") in the normal course of that Business and allow the
`A' Shareholders to have day to day operation management and control of
that Business;
10.1.2 use the same accountancy policies, practices, principles and treatment
in the Business as are consistent with those of the Group as at
Completion (subject to any changes required by law);
10.1.3 procure that the Group insures and keeps insured with an insurance
office of repute;
10.1.3.1 its assets against loss or damage and against such other risks and in
such manner and to such extent as shall be prudent and in accordance
with good commercial practice having regard to the character and value
of the assets;
10.1.3.2 maintain keyman insurance in respect of the `A' Shareholders;
10.1.4 not in respect of the Business:-
10.1.4.1 except in the ordinary course of business enter into, amend renew or
terminate any commitment or any material or long term contract or
onerous obligation in excess of (pound)40,000;
10.1.4.2 enter into any agreement, trade or otherwise act in a manner which is
not on bona fide arm's length terms;
10.1.4.3 enter into any partnership or (otherwise than joint marketing ventures
in the ordinary course of business) joint venture or acquire or dispose
of any business, undertakings or securities;
10.1.4.4 dispose of any assets other than cars or stock which is disposed of in
the ordinary and proper course of the Business;
10.1.4.5 engage any consultant or employee unless such engagement is terminable
on less than thirteen weeks' notice and will not involve payment of
remuneration in excess of (pound)60,000 per annum per employee;
10.1.4.6 raise the salaries (by more than 5 per cent per annum) of any of, or
otherwise vary the terms of employment in any material respect of, any
of its employees;
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10.1.4.7 waive any rights against, or terminate (other than for breach
warranting summary dismissal) the employment of, any of its senior/key
employees (being those earning in excess of a basic salary of
(pound)40,000 per annum), other than the `A' Shareholders;
10.1.4.8 issue or commit to issue any securities or any debentures or other
instrument whether or not convertible into such securities;
10.1.4.9 grant any option, right to acquire, mortgage, charge, pledge, lien or
other form of security or Encumbrance or enter into any agreement or
commitment to give or create any of the foregoing other than in the
ordinary course of the Business;
10.1.4.10 sell or otherwise dispose of a Group Company
10.1.4.11allow the Group to set up or acquire any subsidiary or purchase or
acquire any shares or securities in any other company or any business
or undertaking (or part thereof) of any company or person(s);
10.1.4.12petition for the liquidation of a Group Company or permit or procure
the passing of a resolution to wind up a Group Company voluntarily;
10.1.4.13directly or indirectly request or procure the appointment of a
receiver or an administrator over the whole or any part of the assets
or undertaking of a Group Company;
10.1.4.14otherwise than in the ordinary course of the Business allow any Group
Company to guarantee or enter into any agreement of surety or indemnity
for any obligation of the Purchaser or the `A' Shareholders (as the
case may be) nor charge or otherwise encumber the assets of a Group
Company or any part thereof as security for any such obligations as
aforesaid;
10.1.5 The Purchaser shall not, in relation to a Group Company, take any
action with the express intention of restricting the ability of the
Group to earn such level of profits and turnover which the Group might
reasonably have expected to have earned in the normal and ordinary
course of business as hitherto carried on.
10.2 The Purchaser or the `A' Shareholders (as the case may be) shall not
unreasonably withhold or delay consent in relation to Clause10.1.
10.3 During the interval between the signing of this agreement and 30 June
2003 the `A' Shareholders shall in respect of the Company:
18
10.3.1 send copies of audited Accounts to the Purchaser within 30 days of
their being produced and adopted by the relevant board of directors;
10.3.2 answer fully and fairly all reasonable requests for information made by
the Purchaser concerning the affairs of the Business; and
10.3.3 procure that the Purchaser and all persons reasonably authorised by
them shall be given reasonable access to the premises and employees of
the Business and all the books and records of the Business.
11. GENERAL
11.1 No announcement of any kind shall be made by the Parties in respect of
the subject matter of this Agreement unless specifically agreed between
the parties prior to the announcement being made or an announcement is
required pursuant to legislation or the requirements of any recognised
investment exchange, and then only if the proposed wording of any such
announcement has been approved by the Purchaser (such approval not to
be unreasonably withheld or delayed).
11.2 If this Agreement ceases to have effect the Purchaser will release and
return to each Group Company all documents concerning it provided to
the Purchaser or its advisers in connection with this Agreement, and
will not use or make available to any other person any information
which it or its advisers have been given in respect of any Group
Company and which is not in the public domain.
11.3 This Agreement shall be binding upon each party's successors and
assigns and personal representatives (as the case may be) but, except
as expressly provided below, none of the rights of the parties under
this Agreement or the Warranties may be assigned or transferred.
11.4 Subject to clause 11.5, all expenses incurred by or on behalf of the
parties, including all fees of solicitors and accountants employed by
any of them in connection with the negotiation, preparation or
execution of this Agreement and the Tax Deed shall be borne solely by
the party who incurred the liability and no Group Company shall have
any liability in respect of them.
19
11.5 The Purchaser shall as soon as reasonably practicable and in any
event within 8 business days of Completion pay to the Vendors'
Solicitors against production of invoices by electronic transfer
of Funds to the nominated account of the Vendors' Solicitors the
legal and/or accountancy costs of the Vendors provided that the
liability of the Purchaser under this clause 11.5 shall not exceed
(pound)20,000 (inclusive of VAT)
11.6 Time shall be of the essence of this Agreement, both as regards
the dates and periods specifically mentioned and as to any dates
and periods which may by agreement in writing between or on behalf
of the `A' Shareholders and the Purchaser be substituted for them.
11.7 The `A' Shareholders shall procure the passing of such
resolutions, execute such documents and waivers and generally do
everything reasonably further required by the Purchaser
effectively to comply with their obligations under this Agreement
and to vest the beneficial and legal ownership of the Shares in
the Purchaser (or its nominees).
11.8 This Agreement, the Tax Deed and any documents in the Agreed Form
and the Disclosure Letter, comprises the entire agreement between
the parties in relation to the matters referred to herein and
supersedes any previous agreement or arrangement between the
parties hereto or any of them in relation to the sale of the
Shares (or any of them) or any interest in the Company and the
parties acknowledge that no claim shall arise in respect of any
agreement or arrangement so superseded.
11.9 No delay or omission on the part of the Purchaser in exercising
any right, power or privilege hereunder shall operate to impair
such right, power or privilege or be construed as a waiver
thereof and no single or partial exercise or non-exercise of any
right, power or privilege shall in any circumstances preclude any
further or other exercise thereof or the exercise of any other
right, power or privilege.
11.10 Save as otherwise specifically provided herein, any variation of
this Agreement shall be binding only if it is recorded in a
document signed by or on behalf of all the parties hereto.
20
11.11 This Agreement may be executed in any number of documents or
counterparts each in the like form, all of which taken together
shall constitute one and the same document, and any party may
execute this Agreement by signing any one or more of such
documents or counterparts.
11.12 This Agreement shall be construed according to and governed by
the law of England and each of the parties submits to the
exclusive jurisdiction of the English courts.
11.13 No right or obligation under this Agreement may be assigned,
transferred or delegated by any party.
11.14 All communications between the parties with respect to this
Agreement shall be delivered by hand or sent by first-class post
to the address or facsimile number of the addressee as set out
below, or to such other address or facsimile number as the
addressee may from time to time have notified for the purpose of
this clause.
11.15 Communications shall be deemed to have been received:
11.15.1 if sent by first-class post: 5 business days after posting
exclusive of the day of posting;
11.15.2 if delivered by hand or if sent by facsimile transmission on the
business day immediately following the day of delivery or
transmission (as the case may be).
11.16 Communications addressed to the Vendors shall be sent to the
addresses given for the Vendors at Schedule 1. Communications
addressed to the Purchaser shall be marked for the attention of
Xxxxxxx Xxxxxxx and sent to Global Sources Limited, facsimile
number 001 212 504 6666 and for the attention of Xxx Xxxxxx and
sent to emw law, facsimile number 01908 236753.
11.17 In proving service:
11.17.1 by delivery by hand: it shall be necessary only to produce a
receipt for the communication signed by or on behalf of the
addressee;
11.17.2 by post: it shall be necessary only to prove that the
communication was contained in an envelope which was duly
addressed and posted in accordance with this clause;
11.17.3 by facsimile transmission: it shall be necessary to prove that
the facsimile was transmitted to the correct number and that the
sender has printed confirmation of transmission.
21
SCHEDULE 1
PART I
`A' SHAREHOLDERS
----------------
(1) (2) (3) (4)
`A' Shareholders name and Number of A Shares Entitlement to Initial Entitlement to Purchase Price
address Consideration Adjustment Consideration
Xxxxxx Xxxxxxxx 5000 38% 40%
00 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxxxxx
00 Xxxxxxxxxx XxxxXxxxxx on 5000 38% 40%
Xxxxxx
Xxxxxxx
Xxxxxxxxxxx XX0 0XX
Xxxxx X'Xxxxxx
00 Xxxxx Xxxxxxxx
Xxxxxxxxx 000 4.8% 20%
Xxxxxxxxx
XX00 0XX
22
PART 2
`B' SHAREHOLDERS
----------------
(1) (2) (3)
`B' Shareholders name and address Number of `B' Shares Entitlement to Initial Consideration
Xxxxxx Xxxxx
Xxx Xxxxxxx Xxxxx Xxxx 0000 9.6%
Xx Xxxxxxxx Xxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxxx 4.8%
0 Xxxxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxxx XX00 0XX
Xxxxxxx MccGwire
0 Xxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxxx XX0 0XX 625 4.8%
23
SCHEDULE 2
DETAILS OF GROUP COMPANIES
--------------------------
Part 1: The Company
Registered Number: 2658545
Date of Incorporation: 29th October 1991
Registered Office: Xxxxxx Xxxxx, 00 Xxxxx Xxxx, Xxxxxxx
Authorised Share Capital: (pound)10,000 comprising 500,000 1 xxxxx `A' Ordinary Shares and 500,000 1
xxxxx `B' Ordinary Shares
Issued Share Capital: (pound)131.25 comprising 10,625 1 xxxxx `A' Ordinary Shares and 2,500 1
xxxxx `B' Ordinary Shares
Shareholders and Shareholdings Per Schedule 1
Directors: Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx
Secretary: Xxxxx Xxxxxxxx
Accounting Reference Date: 31st December
Charges: None
24
Part 2: The Subsidiary
Name of Subsidiary: The XxXxxxxx Partnership Limited
Registered Number: 2659327
Date of Incorporation: 31st October 1991
Registered Office: Xxxxxx Xxxxx, 00 Xxxxx Xxxx, Xxxxxxx
Authorised Share Capital: (pound)10,000 comprising 10,000(pound)1 ordinary shares
Issued Share Capital: (pound)105 comprising 105(pound)1 ordinary shares
Shareholders and Shareholdings: Xxxxxxxx and Xxxxxxxx Limited - 105 ordinary shares of(pound)1 each
Directors: Xxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxx Xxxxxx
Secretary: Xxxxxx Xxxxxxxx and Xxxxx X'Xxxxxx
Accounting Reference Date: 31st December
Charges:
Names, Addresses
and Descriptions of
Date and Description Amount Secured Short Particulars of Persons entitled to
of Instrument of Charge by the Charge Property Charged the Charge
----------------------- ------------- ---------------- ----------
All monies Fixed and floating charge Barclays Bank Plc
Debenture dated over the assets and
15th November 1995 undertaking to the Company
(pound)4,693.50 and all Money standing from A R Xxxxxxxx
Rent Deposit Deed dated other monies due time to time in a X X Xxxxxxxx
13th July 1994 designated deposit And E Xxxxxxx
account
25
SCHEDULE 3
----------
WARRANTIES
----------
1. ACCURACY OF INFORMATION
1.1 INFORMATION DISCLOSED TO PURCHASER CORRECT
1.1.1 All information disclosed in writing by any of the `A'
Shareholders, the `A' Shareholders' Solicitors or the `A'
Shareholders' Accountants to the Purchaser, the Purchaser's
Solicitors or the Purchaser's Accountants which is incorporated in
the disclosure bundle annexed to the Disclosure Letter relating to
the business, activities, affairs or assets or liabilities of any
Group Company was, when given, and is now accurate and
comprehensive in all respects.
1.2 DISCLOSURE LETTER
(a) The contents of the Disclosure Letter are true and
accurate in all respects.
1.3 SCHEDULES
1.3.1 The contents of the Schedules 1, 2 and 5 are true and accurate in
all respects.
2. CORPORATE MATTERS
2.1 SHARES AND SHARE CAPITAL
2.1.1 The Shares will at Completion constitute the whole of the issued
and allotted share capital of the Company.
2.1.2 There is and at Completion will be no Encumbrance on, over or
affecting the Shares and there is and at Completion will be no
agreement or arrangement to give or create any such Encumbrance
and no claim has been or will be made by any person to be entitled
to any of the foregoing.
2.1.3 The Company is the sole beneficial owner of the shares in the
Subsidiary free from any Encumbrance.
2.1.4 No share or loan capital has been issued or allotted, or agreed
to be issued or allotted, by any Group Company since the Last
Accounts Date.
2.1.5 Except as required by this Agreement, there are no agreements or
arrangements in force which provide for the present or future
issue, allotment or transfer of or grant to
26
any person the right (whether conditional or otherwise) to call
for the issue, allotment or transfer of any share or loan capital
of any Group Company (including any option or right of
pre-emption or conversion).
2.2 DIRECTORS AND SHADOW DIRECTORS
2.2.1 No person is a shadow director (within the meaning of CA s 741) of
a Group Company but is not treated as one of its directors for all
the purposes of that Act.
2.3 SUBSIDIARIES, ASSOCIATIONS AND BRANCHES
2.3.1 No Group Company:
(a) is the holder or beneficial owner of, or has
agreed to acquire any share or loan capital of any
company (whether incorporated in the United
Kingdom or elsewhere), other than the Subsidiary;
(b) has outside the United Kingdom any branch, agency
or place of business, or any permanent
establishment (as that expression is defined in
the relevant double taxation relief order current
at the date of this Agreement).
2.4 COMMISSIONS
2.4.1 No one is entitled to receive from any Group Company any finder's
fee, brokerage or other commission in connection with the sale and
purchase of the Shares under this Agreement.
2.5 MEMORANDA AND ARTICLES OF ASSOCIATION, STATUTORY BOOKS AND
RESOLUTIONS
2.5.1 The copy of the memorandum and articles of association of each
Group Company attached to the Disclosure Letter is accurate and
complete in all respects and has embodied in it or annexed to it a
copy of each such resolution as is referred to in CA s 380.
2.5.2 The register of members and other statutory books of each Group
Company have been properly kept and contain an accurate and
complete record of the matters with which they should deal.
2.5.3 No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received by the Company or the
Subsidiary.
27
2.5.4 Since the Last Accounts Date no alteration has been made to the
memorandum or articles of association of any Group Company and no
resolution of any kind of the shareholders of any Group Company
has been passed (other than resolutions relating to business at
annual general meetings which was not special business) and,
pending Completion, no resolution shall be passed without the
prior written consent of the Purchaser.
2.6 DOCUMENTS FILED
2.6.1 All returns, particulars, resolutions and documents required by
the Companies Acts or any other legislation to be filed with the
Registrar of Companies, or any other authority, in respect of each
Group Company have been duly filed and were correct.
2.6.2 Due compliance has been made with all the provisions of the
Companies Acts and other legal requirements in connection with the
formation of each Group Company, the allotment or issue of shares
debentures and other securities, the payment of dividends and the
conduct of its business.
2.6.3 All charges in favour of any Group Company have (if appropriate)
been registered in accordance with the provisions of CA ss 395,
409, 410 and 424.
2.7 POSSESSION OF DOCUMENTS
2.7.1 All title deeds relating to the assets of each Group Company, and
an executed copy of all agreements to which any Group Company is a
party, and the original copies of all other documents which are
owned by or which ought to be in the possession of any Group
Company are in its possession.
2.8 INVESTIGATION
2.8.1 There are not in existence or, so far as the `A' Shareholders are
aware pending, any investigations or enquiries by, or on behalf
of, any governmental or other body in respect of the affairs of
any Group Company.
3. CAPACITY AND INTERESTS OF THE `A' SHAREHOLDERS
3.1 CAPACITY
3.1.1 The `A' Shareholders are entitled to sell or procure the sale of
the full legal and beneficial ownership of the `A' Shares to the
Purchaser on the terms set out in this
28
Agreement without the consent of any third party.
3.1.2 Each `A' Shareholder has and will have full power and authority to
enter into and perform this Agreement, and every agreement or
transaction referred to in or contemplated by this Agreement,
which constitutes, or when executed will constitute, binding
obligations on him fully enforceable in accordance with their
terms.
3.2 `A' SHAREHOLDERS' OTHER INTERESTS AND LIABILITIES TO GROUP
COMPANIES
3.2.1 The `A' Shareholders do not have any rights or interests, directly
or indirectly, in any business other than those now carried on by
the Group Companies which are or are likely to be or become
competitive with the business of the Group Companies, save as
registered holder of beneficial owner of any class of securities
of any company which is listed on the Stock Exchange or dealt in
on the Unlisted Securities Market, and in respect of which a `A'
Shareholder holds and is beneficially interested in less than 3
per cent of any single class of the securities in that company.
3.2.2 There is no outstanding indebtedness of any `A' Shareholder or
`B' Shareholder to a Group Company.
4. ACCOUNTS
4.1 THE PRINCIPAL ACCOUNTS
4.1.1 The Principal Accounts were prepared in accordance with the
historical cost convention, and the bases and policies of
accounting adopted for the purpose of preparing the Principal
Accounts are the same as those adopted in preparing the audited
accounts of each Group Company in respect of the three last
preceding accounting periods.
4.1.2 The Principal Accounts:
(a) are accurate and give a true and fair view of the
assets and liabilities of each Group Company at
the Last Accounts Date and its profits for the
financial period ended on that date;
(b) comply with the requirements of the Companies Acts
and other relevant statutes;
(c) comply with all current SSAPs and FRSs applicable
to a United Kingdom company;
29
(d) are not affected by any extraordinary, exceptional
or non-recurring item;
4.1.3 No amount included in the Principal Accounts in respect of any
asset, whether fixed or current, exceeds its purchase price or
production cost (within the meaning of CA Sched 4) or (in the
case of current assets) its net realisable value on the Last
Accounts Date.
4.2 DEPRECIATION OF FIXED ASSETS
4.2.1 In the Principal Accounts and in the accounts of each Group
Company for the three preceding financial years, the fixed assets
of each Group Company have been depreciated in accordance with
SSAP12.
4.3 DEFERRED TAXATION
4.3.1 Where provision for deferred taxation is not made in the Principal
Accounts, full details of the amounts of such deferred taxation
have been disclosed in the Disclosure Letter.
4.4 ACCOUNTING REFERENCE DATE
4.4.1 The accounting reference date of each Group Company for the
purpose of CA s 244 is set out in Schedule 2 and there has not at
any time been any other such date.
4.5 BOOKS AND RECORDS
4.5.1 So far as the `A' Shareholders are aware all the accounts, books,
ledgers, financial and other records, of whatsoever kind, of each
Group Company:
(a) are in its possession;
(b) have been fully, properly and accurately kept and
completed;
(c) do not contain any material inaccuracies or
discrepancies of any kind;
(d) give and reflect a true and fair view of its
trading transactions, and its financial,
contractual and trading position.
4.6 MANAGEMENT ACCOUNTS
4.6.1 The Management Accounts have been prepared in accordance with the
accounting principles set out in the Disclosure Letter on a
consistent basis and are true and accurate in all material
respects, and show a true and fair view of the affairs and
30
profits and liabilities of the Group Companies as at and for the
period ended on the date to which they have been prepared.
5. TAXATION
5.1 The Taxation computations for all accounting periods of the Group
Companies ended on or before the date of Completion have been
agreed with the Inland Revenue.
5.2 Within the 6 year period preceding the date of Completion the
Group Companies have for Taxation purposes:
5.2.1 within the statutory time limits made all such returns, given all
such notices and provided all such information to the appropriate
Tax Authority and none of them is now or is likely to be the
subject of any dispute with such Tax Authority; and
5.2.2 maintained in all material respects all such records in relation
to Taxation as are required to be made or provided or maintained
by them.
5.3 Within the 6 year period preceding the date of Completion the
Group Companies have duly complied with their obligations in
relation to pay as you earn and earnings-related national
insurance contributions and their reporting obligations to the
Inland Revenue in connection with any benefits provided to their
employees and directors, and the Disclosure Letter contains full
details of all dispensations granted to the Group Companies by the
Inland Revenue relating to payments and benefits made or provided,
or treated as made or provided, to its current and former
directors, employees or officers or any persons required to be
treated as such.
5.4 All dividends or distributions declared, made or paid by the Group
Companies have been declared, made or paid in accordance with the
CA and the applicable provisions of their respective Articles of
Association, and all advance corporation tax ("ACT") has been duly
paid.
5.5 The Disclosure Letter discloses details of all:
5.5.1 outstanding claims, disclaimers, notices and elections which have
been given by or served on the Group Companies by any Tax
Authority;
31
5.5.2 subsisting formal or informal arrangements or agreements entered
into by each of the Group Companies with any Tax Authority with
regard to any of its Taxation affairs.
5.6 Each of the Group Companies is duly registered in accordance with
VATA and within the 6 year period preceding the date of Completion
has made, given, obtained and kept full, materially correct and
up-to-date records, invoices, and other documents appropriate or
required for the purposes thereof and is not in arrears with any
returns or payments due thereunder and is not subject to any
requirement of H M Customs & Excise to give security under
paragraph 4 of schedule 11 VATA.
5.7 Within the 24 months preceding the date of Completion none of the
Group Companies has been served with a penalty liability notice
under Section 64(2) VATA nor within the 12 months preceding the
date of Completion has been served with a surcharge liability
notice under Xxxxxxx 00 XXXX, xxx xxxx of the Group Companies is
in breach of any penalty liability notice or surcharge liability
notice served upon it.
5.8 Details of any claim for bad debt relief under section 36 VATA and
the Value Added Tax Regulations 1995/2518 Part XIX made by anyone
of the Group Companies are fairly disclosed in the Disclosure
Letter.
5.9 No Group Company owns any asset or has incurred any expense in
respect of which Part XV Value Added Tax Regulations 1995/2518
applies.
5.10 The Disclosure Letter contains full particulars of any election to
waive exemption made or agreed to be made under Schedule 10 VATA
paragraph 2 by (i) each Group Company or (ii) any person who in
relation to any Group Company is a relevant associate as defined
in paragraph 3(7) of that Schedule in respect of any property in
which any Group Company has an interest and no Event has occurred
as a result of which any such election is and may cease to be
valid and effective.
5.11 None of the Group Companies is involved in any dispute in relation
to Taxation and so far as the `A' Shareholders are aware no Tax
Authority has investigated any of the Group Companies within the 6
year period preceding the date of Completion nor has any Tax
Authority given written notice that it intends to investigate.
32
5.12 In the Principal Accounts (unless otherwise provided in the
deferred tax provision therein) the aggregate value attributed to
all of the assets of the Group Companies at the Last Accounts Date
is such that on any disposal of all of such assets for a
consideration equal to such value (and disregarding any statutory
right to claim any allowance or relief):
5.12.1 no liability to Taxation will arise; and
5.12.2 no balancing charge will be made on any of the Group Companies.
5.13 No liability to Taxation will arise on the disposal by any of the
Group Companies:
5.13.1 of any asset acquired since the Last Accounts Date but prior to
Completion for a price equal to the price actually paid for the
asset; or
5.13.2 of any asset treated as such in the Completion Accounts if that
asset were to be disposed of for consideration equal to the value
attributed thereto in the Completion Accounts.
5.14 Since the Last Accounts Date:
5.14.1 none of the Group Companies have entered into or been a party to
any transaction, otherwise than in the ordinary course of
business, which will or may give rise to a liability to Taxation,
and no accounting period of any of the Group Companies has
terminated;
5.14.2 no transaction has occurred which will result in any Group Company
becoming liable to pay or bear a liability to Taxation directly or
primarily chargeable against or attributable to another person
other than another Group Company;
5.14.3 no disposal has taken place or other event occurred which will, or
may have, the effect of crystallising a liability to Taxation
which would have been included in the provision for deferred
taxation contained in the Principal Accounts if such disposal or
other event had been planned or predicted at the Last Accounts
Date;
5.14.4 no Group Company has been a party to any transaction for which any
tax clearance provided for by statute has been, or could have
been, obtained.
5.15 Except as disclosed in the Principal Accounts none of the Group
Companies has any contingent liability to Taxation under section
132 FA 1988 or sections 190 to 191 TCGA.
33
5.16 Particulars of each claim under section 152 to 154 TCGA made prior
to the date of Completion which affects any asset owned by any of
the Group Companies on or after the Last Accounts Date are
disclosed in the Disclosure Letter.
5.17 None of the Group Companies has made any repayment of share
capital to which section 210 ICTA applies or issued any share
capital as paid up otherwise than by the receipt of new
consideration within the meaning of Part VI ICTA.
5.18 None of the Group Companies is under any actual liability to make
any payment of interest or any annual payment for which no relief
will be received by reason of section 125 ICTA or section 787 ICTA
or by reason of it being a distribution.
5.19 None of the Group Companies has ever been resident outside the
United Kingdom for Taxation purposes, nor has it ever carried on
any trade, business or other activities outside the United Kingdom
other than the export of its services in the ordinary and normal
course of its business.
5.20 Within the 6 year period preceding the date of Completion none of
the Group Companies has without the prior consent of the Treasury
caused permitted or entered into any of the transactions specified
in section 765 ICTA.
5.21 None of the Group Companies has in the six years preceding
Completion been a party to any transaction in respect of which it
is alleged to be liable to Taxation under the provisions of Part
XVII ICTA, and no Group Company has been or is a party to any
transaction which is liable to Taxation under the provisions of
Part XVII ICTA.
5.22 None of the Group Companies holds any shares as trading stock.
5.23 Within the 6 year period preceding the date of Completion none of
the Group Companies has incurred any expense or given any
consideration to which the provisions of section 418 ICTA would
apply and does not have outstanding any loan to which the
provisions of sections 419-420 ICTA would apply.
34
5.24 There is no unsatisfied liability to inheritance tax attached or
attributable to the assets of any of the Group Companies or their
shares and neither the assets nor the shares are subject to an
Inland Revenue charge as mentioned in section 237 IHTA.
5.25 No person has the power under section 212 IHTA to raise any
inheritance tax by sale or mortgage of or by a terminable charge
on any of the assets of any of the Group Companies.
5.26 No dispensation or notices have been granted by the Inland Revenue
to any of the Group Companies under section 166 ICTA.
5.27 None of the Group Companies has any outstanding liability for any
claim in respect of the incorrect operation of the taxation
regulations relating to contractors and subcontractors.
5.28 All payments due in respect of employees contributions to national
insurance and graduated state pension have been properly deducted
by the Group Companies and (together with any employers
contributions) have been fully, correctly and promptly paid to the
appropriate authority and proper records of all such deductions
and payments have been maintained.
5.29 All capital expenditure incurred by the Group Companies since the
Last Accounts Date and all capital expenditure which may be
incurred by the Group Companies under any existing contract has
qualified or will be capable of qualifying for capital allowances.
5.30 There are set out in the Disclosure Letter details of all capital
allowances claimed in respect of the accounting periods of the
Group Companies ended on the Last Accounts Date in respect of each
asset or pool of assets in respect of which separate computations
for capital allowances are required to be made or, as a result of
any election, are made.
5.31 Nothing has occurred since the Last Accounts Date as a result of
which any of the Group Companies could be required to bring a
disposal value into account or suffer a
35
balancing charge for the purpose of capital allowances under
section 4, 24, 87, 100 or 128 CAA or a withdrawal of first year
allowances or a recovery of excess relief under sections 46 or 47
CAA.
5.32 No Group Company has:
5.32.1 incurred any capital expenditure on the provision of machinery or
plant for leasing;
5.32.2 made any election under section 55 CAA;
5.32.3 made and is not likely to be taken to have made an election under
section 37 CAA;
5.32.4 made or agreed to make any election under section 59A CAA.
5.33 No Group Company owns any asset which is or is capable of being a
long-life asset as defined in section 38A CAA.
5.34 None of the Group Companies has incurred any expenditure on the
provision of any capital allowance bearing asset for leasing to a
third party.
5.35 None of the Group Companies has made any election under section 37
CAA nor is it taken to have made any such election under section
37(8)(c) CAA.
5.36 None of the Group Companies has obtained any capital allowances
under Chapter VI Part II CAA.
6. FINANCE
6.1 CAPITAL COMMITMENTS
6.1.1 There were no commitments on capital account outstanding at the
Last Accounts Date and since the Last Accounts Date no Group
Company has made or agreed to make any capital expenditure, or
incurred or agreed to incur any capital commitments nor has it
disposed of or realised any capital assets or any interest
therein.
36
6.2 DIVIDENDS AND DISTRIBUTIONS
6.2.1 Since the Last Accounts Date no dividend or other distribution (as
defined in ICTA Part XI as extended by ICTA s 418) has been or is
treated as having been declared, made or paid by any Group
Company.
6.2.2 All dividends or distributions declared, made or paid by each
Group Company have been declared, made or paid in accordance with
its articles of association and the applicable provisions of the
Companies Acts.
6.3 BANK AND OTHER BORROWINGS
6.3.1 Full details of all limits on each Group Company's bank overdraft
facilities or other borrowing facilities and arrangements are
accurately set out in the Disclosure Letter.
6.3.2 The total amount borrowed by each Group Company from each of its
bankers or other lenders does not exceed its respective overdraft
or other lending facilities.
6.3.3 The total amount borrowed by each Group Company (as determined in
accordance with the provisions of the relevant instrument) does
not exceed any limitation on its borrowing powers contained in its
articles of association, or in any debenture or other deed or
document binding upon it.
6.3.4 No Group Company has:
(a) outstanding, or has agreed to create or issue, any
loan capital;
(b) factored any of its debts, or engaged in financing
of a type which would not require to be shown or
reflected in the Last Accounts;
(c) borrowed any money which it has not repaid, save for
borrowings not exceeding the amounts shown in the
Last Accounts.
6.3.5 No Group Company has since the Last Accounts Date repaid or become
liable to repay any loan or indebtedness in advance of its stated
maturity.
6.3.6 No Group Company has received notice (whether formal or informal)
from any lenders of money to it, requiring repayment or intimating
the enforcement of any security the lender may hold over any of
its assets; and there are no circumstances likely to give rise to
any such notice.
6.4 LOANS BY AND DEBTS DUE TO GROUP COMPANIES
6.4.1 No Group Company has lent any money which has not been repaid to
it, or owns the benefit of any debt (whether or not due for
payment), other than debts which have
37
arisen in the ordinary course of its business; and no Group
Company has made any loan or quasi-loan contrary to the Companies
Acts.
6.5 LIABILITIES
6.5.1 There are no liabilities (including contingent liabilities) which
are outstanding on the part of any Group Company other than those
liabilities disclosed in the Principal Accounts or incurred in the
ordinary and proper course of trading since the Last Accounts
Date.
6.5.2 There has been no exercise, purported exercise or claim for any
charge, lien, encumbrance or equity over any of the fixed assets
of any Group Company; and there is no dispute directly or
indirectly relating to any of its fixed assets.
6.6 CONTINUATION OF FACILITIES
6.6.1 In relation to all debentures, acceptance credits, overdrafts,
loans or other financial facilities outstanding or available to
any Group Company (referred to in this clause as "Facilities"):
(a) the Disclosure Letter sets out full details and
there are attached to it accurate copies of all
documents relating to the Facilities;
(b) there has been no contravention of or non-compliance
with any provision of any of those documents;
(c) no steps for the early repayment of any indebtedness
have been taken or threatened;
(d) there have not been nor are there any circumstances
known to the `A' Shareholders whereby the
continuation of any of the Facilities might be
prejudiced, or which might give rise to any
alteration in the terms and conditions of any of the
Facilities;
(e) none of the Facilities is dependent on the guarantee
or indemnity of or security provided by a third
party other than a Group Company;
(f) without making specific enquiry no `A' Shareholder
has any knowledge, information or belief that, as a
result of the acquisition of the Shares by the
Purchaser or any other thing contemplated in this
Agreement, any of the Facilities might be terminated
or mature prior to its stated maturity.
38
6.7 GOVERNMENT GRANTS
6.7.1 Full details of all grants, subsidies or financial assistance
applied for or received by the Group Companies from any
governmental department or agency or any local or other authority
are set out in the Disclosure Letter.
6.7.2 No Group Company has done or omitted to do any act or thing which
could result in all or any part of any investment grant,
employment subsidy or other similar payment made, or due to be
made, to it becoming repayable or being forfeited or withheld in
whole or in part.
7. TRADING
7.1 CHANGES SINCE LAST ACCOUNTS DATE
7.1.1 Since the Last Accounts Date:
(a) the business of each Group Company has been
continued in the ordinary and normal course;
(b) there has been no deterioration in the turnover or
the financial or trading position or prospects of
any Group Company;
(c) each Group Company has paid its creditors in
accordance with their respective credit terms and in
accordance with its normal procedures, and there are
no amounts owing by any Group Company which have
been due for more than 12 weeks.
7.1.2 The value of the net realisable assets of each Group Company is
not now less than at the Last Accounts Date.
7.2 EFFECT OF SALE OF SHARES
7.2.1 The `A' Shareholders have no knowledge, information or belief that
after Completion (whether by reason of an existing agreement or
arrangement or otherwise) or as a result of the acquisition of the
Company by the Purchaser:
(a) any supplier of any Group Company will cease or be
entitled to cease supplying it or may substantially
reduce its supplies to it;
(b) any customer of any Group Company will cease or be
entitled to cease to deal with it or may
substantially reduce its existing level of business
with it;
39
(c) any Group Company will lose the benefit of any right
or privilege which it enjoys;
(d) any officer or senior employee of a Group Company
will leave or be entitled to a payment from any
Group Company.
7.2.2 Compliance with the terms of this Agreement does not and will not:
(a) conflict with, or result in the breach of, or
constitute a default under, any of the terms,
conditions or provisions of any agreement or
instrument to which any Group Company is a party, or
any provision of the memorandum or articles of
association of any Group Company or any encumbrance,
lease, contract, order, judgement, award,
injunction, regulation or other restriction or
obligation of any kind or character by which or to
which any asset of any Group Company is bound or
subject;
(b) relieve any person from any obligation to any Group
Company (whether contractual or otherwise), or
enable any person to determine any such obligation
or any right or benefit enjoyed by any Group
Company, or to exercise any right, whether under an
agreement with or otherwise in respect of any Group
Company;
(c) result in the creation, imposition, crystallisation
or enforcement of any Encumbrance whatsoever on any
of the assets of any Group Company;
(d) result in any present or future indebtedness of any
Group Company becoming due and payable or capable of
being declared due and payable prior to its stated
maturity.
7.3 CONDUCT OF BUSINESS IN ACCORDANCE WITH MEMORANDA AND ARTICLES OF
ASSOCIATION
7.3.1 Each Group Company has at all times carried on business and
conducted its affairs in all respects in accordance with its
memorandum and articles of association for the time being in
force.
7.3.2 Each Group Company is empowered and duly qualified to carry on
business in all jurisdictions in which it now carries on business.
40
7.4 JOINT VENTURES AND PARTNERSHIP
7.4.1 No Group Company is or has agreed to become a member of any joint
venture, consortium, partnership or other unincorporated
association and no Group Company is or has agreed to become a
party to any agreement or arrangement for sharing commissions or
other income.
7.5 AGREEMENTS RELATING TO THE MANAGEMENT AND BUSINESS
7.5.1 There are no arrangements or understandings (whether legally
enforceable or not) between a Group Company and any person who is
a shareholder or the beneficial owner of any interest in it, or in
any company in which any Group Company is interested, or any
association of any such person, relating to the management of any
Group Company's business, or the appointment or removal of
directors of any Group Company, or the ownership or transfer of
ownership or the letting of any of the assets of any Group
Company, or the provision, supplying or purchase of finance,
goods, services, or other facilities to, by or from any Group
Company, or in any other respect relating to its affairs.
7.6 AGENCY AGREEMENTS AND AGREEMENTS RESTRICTING BUSINESS
7.6.1 No Group Company is a party to any agency, distributorship,
marketing, purchasing, manufacturing or licensing agreement or
arrangement, or any restrictive trading or other agreement or
arrangement pursuant to which any part of its business is carried
on, or which in any way restricts its freedom to carry on the
whole or any part of its business in any part of the world in such
manner as it thinks fit.
7.6.2 No Group Company is a party to any undertaking or assurances given
to any court or governmental agency which is still in force.
7.7 UNFAIR TRADE AND RESTRICTIVE PRACTICES
7.7.1 No Group Company has committed or omitted to do any act or thing
which could give rise to any fine or penalty.
7.7.2 No Group Company is a party to any agreement, practice or
arrangement which in whole or in part:
(a) contravenes the provisions of the Trade Descriptions
Acts 1968 and 1972;
41
(b) would or might result in a reference of a consumer
trade practice, within the meaning of the Fair
Trading Act 1973 s 13, or be liable to reference to
the Consumer Protection Advisory Committee under
Part II of the said Act;
(c) contravenes the provisions of the Consumer Credit
Xxx 0000;
(d) contravenes or is invalidated (in whole or in part)
by or is subject to registration under the
Restrictive Trade Practices Acts 1976 and 1977;
(e) contravenes any provisions of the Treaty of Rome;
(f) contravenes any other anti-trust, anti-monopoly or
anti-cartel legislation or regulations.
7.7.3 No Group Company has engaged in any anti-competitive practice as
defined in the Competition Xxx 0000 or the Competition Xxx 0000.
7.8 LITIGATION, DISPUTES AND WINDING UP
7.8.1 No Group Company is engaged in any litigation or arbitration or
tribunal proceedings as plaintiff or defendant or third party.
7.8.2 There are no proceedings pending or threatened either by or
against any Group Company nor so far as the `A' Shareholders are
aware against any officers, agents or employees of any of the
Group Companies.
7.8.3 So far as the `A' Shareholders are aware there are no
circumstances which are likely to give rise to any litigation or
arbitration or tribunal proceedings.
7.8.4 There is no dispute with any revenue or other official department
in the United Kingdom or elsewhere, in relation to the affairs of
any Group Company, and so far as the `A' Shareholders are aware
there are no facts which are likely to give rise to any dispute.
7.8.5 There are no claims pending or threatened or so far as the `A'
Shareholders are aware capable of arising against any Group
Company by an employee or xxxxxxx or third party, in respect of
any accident or injury, which are not fully covered by insurance.
7.8.6 No order has been made or petition presented or resolution passed
for the winding up of any Group Company.
7.8.7 No order has been made or petition presented for an administration
order to be made for any Group Company nor has any distress,
execution or other process been levied in respect of any Group
Company which remains undischarged.
42
7.8.8 There is not any unfulfilled or unsatisfied judgment or court
order outstanding against any Group Company.
7.9 COMPLIANCE WITH STATUTES
7.9.1 No Group Company and none of its officers, agents or employees
(during the course of their duties in relation to it) has
committed or omitted to do any act or thing the commission or
omission of which is in contravention of any act, order,
regulation or the like (whether of the United Kingdom or
elsewhere) giving rise to any fine, penalty, default proceedings
or other liability on its part.
7.9.2 Each Group Company has conducted and is conducting its business in
all respects in accordance with all applicable laws and
regulations whether of the United Kingdom or elsewhere.
7.9.3 No Group Company carried on (or has, at any time when not an
authorised person under chapter III, Financial Services Xxx 0000,
carried on) investment business in the United Kingdom within the
meaning of the Financial Services Xxx 0000, s 1.
7.10 DATA PROTECTION
7.10.1 Each Group Company has fully complied with all relevant
requirements of the Data Protection Xxx 0000 and the Data
Protection Act 1998 including compliance with the following:
(a) the data protection principles established in that
Act;
(b) requests from data subjects for access to data held
by it;
(c) the requirements relating to the registration of
data users.
7.10.2 No Group Company has received a notice or allegation from either
the data protection registrar or a data subject alleging
non-compliance with the data protection principles or prohibiting
the transfer of data to a place outside the United Kingdom.
7.10.3 No individual has claimed or will have the right to claim
compensation from any Group Company under that Act for loss or
unauthorised disclosure of data.
7.11 DOCUMENTS STAMPED
7.11.1 All documents which in any way affect the right, title or interest
of any Group Company in or to any of its property, undertaking or
assets, or to which a Group
43
Company is a party, and which attract stamp duty have been duly
stamped with the correct amount of duty payable within the
requisite period for stamping.
7.12 BUSINESS NAMES
7.12.1 No Group Company uses a name for any purpose other than its full
corporate name.
7.13 TRANSACTIONS INVOLVING DIRECTORS
7.13.1 No Group Company has been a party to any transaction to which any
of the provisions of CA s 320 or s 330 may apply.
7.14 POWERS OF ATTORNEY AND AUTHORITY
7.14.1 No power of attorney given by any Group Company is in force.
7.14.2 There are not outstanding any authorities (express or implied) by
which any person may enter into any contract or commitment to do
anything on behalf of a Group Company.
7.15 LICENCES AND CONSENTS
7.15.1 Each Group Company has obtained all necessary licences and
consents from any person, authority or body for the proper
carrying on of its business (short particulars of each licence and
consent being set out in the Disclosure Letter) and all the
licences and consents are valid and subsisting.
7.15.2 No Group Company is in breach of any of the terms or conditions of
any of the licences or consents; and so far as the `A'
Shareholders are aware there are no factors that might in any way
prejudice the continuation or renewal of any of them.
7.16 SUBSISTING CONTRACTS
7.16.1 The Disclosure Letter contains accurate particulars of all
material contracts and engagements, whether written or oral, to
which any Group Company is a party at the date of this Agreement.
7.16.2 There is not now outstanding in respect of any Group Company any
agreement for the supply of services or for agency.
44
7.17 DEFAULTS UNDER AGREEMENTS BY GROUP COMPANY
7.17.1 No Group Company is :
(a) in default under any agreement or covenant to which
it is a party or in respect of any other obligations
or restrictions binding upon it;
(b) in default under any obligations existing by reason
of membership of any association or body;
(c) liable in respect of any representation or warranty
(whether express or implied) or any matter giving
rise to a duty of care on its part.
7.17.2 No threat or claim of default under any agreement, instrument or
arrangement to which any Group Company is a party has been made
and is outstanding against it; and so far as the `A' Shareholders
are aware there is nothing whereby any such agreement, instrument
or arrangement may be prematurely terminated or rescinded by any
other party or whereby the terms thereof may be worsened.
7.18 OTHER PARTY'S DEFAULTS
7.18.1 No party to any agreement with or under an obligation to any Group
Company is in default under it, being a default which would be
material in the context of any Group Company's financial or
trading position; and as far as the `A' Shareholders are aware
there are no circumstances likely to give rise to such a default.
7.19 OUTSTANDING OFFERS
7.19.1 No offer, tender or the like is outstanding which is capable of
being converted into an obligation of any Group Company by
acceptance or other act of some other person, firm or company.
7.20 DEFECTIVE PRODUCTS
7.20.1 No Group Company has manufactured, sold or supplied products which
are or were or will become in any material respect faulty or
defective or which do not comply in any material respect with any
warranties or representations expressly or impliedly made by it or
with all applicable regulations, standards and requirements.
45
7.21 SERVICE LIABILITIES
7.21.1 No Group Company is subject to any liability or obligation (save
as may be implied by law) to service, repair, maintain, take back
or otherwise do or not do anything in respect of any products that
have been or are after the date of this Agreement delivered by it.
7.22 PURCHASES AND SALES FROM OR TO ONE PARTY
7.22.1 Neither more than 25 per cent of the aggregate amount of all the
purchases, nor more than 25 per cent of the aggregate amount of
all the sales, of any Group Company are obtained or made from or
to the same supplier or customer (including any person in any way
connected with such supplier or customer) nor is any material
source of supply to any Group Company, or any material outlet for
the sales of any Group Company, in jeopardy or so far as the `A'
Shareholders are aware likely to be in jeopardy.
7.23 GUARANTEES AND INDEMNITIES
7.23.1 There is not now outstanding in respect of any Group Company any
guarantee, or agreement for indemnity or for suretyship, given by
it or for its accommodation.
7.24 INSIDER CONTRACTS
7.24.1 There is not now outstanding and there has not at any time during
the three years prior to the date of this Agreement been
outstanding any contract or arrangement to which any Group Company
is a party and which any `A' Shareholder or any director of any
Group Company is or has been interested, whether directly or
indirectly.
7.24.2 No Group Company is a party to, nor have its profits or financial
position during the three years prior to the date of this
Agreement been affected by, any contract or arrangement which is
not of an entirely arm's length nature.
7.25 MANAGEMENT REPORTS
7.25.1 There have been no reports concerning any Group Company, by
financial or management consultants within the period of three
years prior to the date of this Agreement.
46
8. EMPLOYMENT
8.1 EMPLOYEES AND TERMS OF EMPLOYMENT
8.1.1 Full particulars of the identities, dates of commencement of
employment, or appointment to office, and terms and conditions of
employment of all the employees and officers of each Group
Company, including without limitation profit sharing, commission
or discretionary bonus arrangements, are fully and accurately set
out in the Disclosure Letter.
8.1.2 There are no agreements or other arrangements (whether or not
legally binding) between any Group Company and any trade union or
other body representing employees.
8.1.3 No contract of service exists between any Group Company and a
director or employee in relation to which any relevant
requirements of CA s 319 have not been fulfilled.
8.1.4 Each Group Company has at all times complied with the Employment
Rights Act 1996 (as amended) and the EC Working Time Directive
93/204/EC (as implemented by the Working Time Regulations 1998) in
respect of all its employees.
8.2 BONUS SCHEMES
8.2.1 There are no schemes in operation by, or in relation to, any Group
Company whereunder any employee of any Group Company is entitled
to a commission or remuneration of any other sort, calculated by
reference to the whole or part of the turnover, profits or sales
of any Group Company.
8.2.2 No Group Company has registered a profit-related pay scheme under
the provisions of Part I Chapter I of the F(No2)A 1987.
8.3 CHANGES IN REMUNERATION
8.3.1 Since the Last Accounts Date or (where employment or holding of
office commenced after the beginning of such period) since the
commencing date of the employment or holding of office:
(a) no change has been made in the rate of remuneration,
or the emoluments or pension benefits, of any
officer, ex-officer or senior executive of any Group
Company (a senior executive being a person in
receipt of remuneration in excess of (pound)25,000
per annum);
47
(b) no change has been made in any other terms of
employment of any officer or senior executive.
8.3.2 No Group Company is bound or accustomed to pay any moneys other
than in respect of remuneration or emoluments of employment or
pension benefits to or for the benefit of any officer or employee
of any Group Company.
8.3.3 No negotiations for any increase in the remuneration or benefits
of any officer or employee of any Group Company are current or
likely to take place within six months after the date of
Completion.
8.4 TERMINATION OF CONTRACTS OF EMPLOYMENT
8.4.1 All subsisting contracts of service to which any Group Company is
a party are determinable at any time on three months' notice or
less without compensation (other than compensation in accordance
with the Employment Rights Act 1996 (as amended).
8.4.2 No executive of any Group Company, who is in receipt of
remuneration in excess of (pound)25,000 per annum, and no officer
of any Group Company has given or received notice terminating his
employment, except as expressly contemplated in this Agreement,
and no such executive or officer will be entitled to give such
notice as a result of the provisions of this Agreement.
8.5 INDUSTRIAL DISPUTES AND NEGOTIATIONS
8.5.1 None of the Group Companies or their respective employees is
involved in any industrial dispute, and there are no facts known
or which would on reasonable enquiry be known to any Group Company
or its directors or to the `A' Shareholders which might suggest
that there may be any industrial dispute involving a Group Company
or that any of the provisions of this Agreement may lead to any
such industrial dispute.
8.6 INDUSTRIAL AGREEMENTS
8.6.1 No Group Company has entered into any recognition agreement with a
trade union nor has it done any act which might be construed as
recognition.
48
9. ASSETS
9.1 OWNERSHIP OF ASSETS
9.1.1 The Group Companies owned at the Last Accounts Date and had good
and marketable title to and (except for current assets
subsequently sold or realised in the ordinary course of business)
still legally and beneficially own and have good and marketable
title to all assets included in the Principal Accounts (excluding
the Properties) and to all assets acquired since the Last Accounts
Date and not subsequently sold or realised as aforesaid and all
such assets are in the possession or under the control of the
Group Companies, are free from all Encumbrances and situated in
the United Kingdom.
9.1.2 No Group Company has created or granted or agreed to create or
grant any security interest or other Encumbrance in respect of any
of the fixed assets included in the Principal Accounts (excluding
the Properties) or acquired or agreed to be acquired since the
Last Accounts Date, otherwise than in the ordinary course of its
business.
9.1.3 Save as disclosed in the Principal Accounts none of the property,
assets, undertakings, goodwill or uncalled capital of any Group
Company (excluding the Properties) is subject to and no Group
Company has agreed to grant in respect of such property any
Encumbrance.
9.2 INSURANCE
9.2.1 All the buildings (for which Group Companies are responsible to
insure) and other assets and undertakings of each Group Company of
an insurable nature (excluding the Properties) are and have at all
material times been, insured in amounts representing their full
replacement or reinstatement value against a minimum of fire and
catastrophe perils plus theft and any other perils (including
terrorism) which might normally be insured against by persons
carrying on the same business as that carried on by such Group
Company [or are required under the terms of any lease)].
9.2.2 Each Group Company is now and has at all material times been
insured for any consequential losses to the business caused by
accident, damage, injury, third party loss (including product
liability), loss of profits and other risks normally insured
against by persons carrying on the same business.
9.2.3 All insurance is currently in full force and effect, and all
premiums payable in respect of insurance policies which have
become due have been duly paid and nothing has
49
been done or omitted to be done and so far as the `A' Shareholders
are aware no circumstances have arisen which could make any policy
of insurance void or voidable or which is likely to result in an
increase in premium.
9.2.4 None of the policies is subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the
normal rate.
9.2.5 No claim is outstanding or may be made under any of the said
policies and so far as the `A' Shareholders are aware no
circumstances exist which are likely to give rise to such a claim.
9.2.6 The information in the Disclosure Letter with respect to the
insurance policies is up to date and true and accurate in all
respects.
9.2.7 [The Group Companies have in force a professional indemnity policy
to cover liability for the Group Companies providing advice to
third parties.]
9.2.8 Each Group Company is now and has at all material times been
indemnified by insurance for its legal liabilities to employees
for claims made against the Group Companies for death, illness and
injury arising out of their employment and to third parties for
claims for injury or damage to property arising out of the Group
Companies business activities or products supplied.
9.2.9 Each Group Company has recovered all benefits of any claims that
it is entitled to and there are not now outstanding any claims to
which any of the Group Companies are entitled to.
9.3 LEASED ASSETS
9.3.1 No circumstance has arisen or is likely to arise in relation to
any asset held by a Group Company under a lease or similar
agreement whereby the rental payable has been or is likely to be
increased and, in particular, all such assets have at all relevant
times been used for qualifying purpose within the meaning of FA
1980 s 64 and FA 1982 s 70.
9.4 EQUIPMENT IN WORKING ORDER
9.4.1 The vehicles and other equipment used in connection with the
business of each Group Company:
(a) are in a good and safe state of repair and condition
(subject to fair wear and tear) and satisfactory
working order and have been regularly and properly
maintained;
50
(b) are in its possession and control, and are its
absolute property, save for those items the subject
of the hire purchase, leasing or rental agreements
listed in the Disclosure Letter, or in respect of
which the outstanding payments do not exceed
(pound)1,000 in aggregate;
(c) are not expected to require replacements or
additions at an aggregate cost in excess
of(pound)10,000 within six months from the date of
this Agreement;
(d) are all capable and so far as the `A' Shareholders
are aware (subject to normal wear and tear) will
remain capable throughout the respective periods of
time during which they are each written down to a
nil value in the accounts of the Group Companies (in
accordance with the normal recognised accountancy
principles consistently applied prior to the date
hereof) of doing the work for which there were
designed or purchased.
9.4.2 Maintenance contracts are in full force and effect in respect of
all assets of the Group Companies which it is normal or prudent to
have maintained by independent or specialist contractors and in
respect of all assets which any Group Company is obliged to
maintain by independent or specialist contractors and in respect
of all assets have been regularly maintained to a good technical
standard and in accordance with safety regulations usually
observed in relation to assets of that description and in
accordance with the terms and conditions of any applicable leasing
or similar agreement.
9.5 INTELLECTUAL PROPERTY RIGHTS AND TRADE SECRETS
9.5.1 All Intellectual Property Rights used or required by any Group
Company in connection with its business are in full force and
effect and are vested in and beneficially owned by it.
9.5.2 The Group Companies are the sole and unencumbered legal and
beneficial owners of the Intellectual Property Rights listed in
the Disclosure Letter and (where registration is possible) a Group
Company has been and is registered as proprietor, and each of
those Intellectual Property Rights is valid and enforceable and
not restricted in any way, and so far as the `A' Shareholders are
aware none of them is being used, claimed, opposed or attached by
any other person.
51
9.5.3 No right or licence has been granted to any person by any Group
Company to use in any manner or to do anything which would or
might otherwise infringe any of the Intellectual Property Rights
referred to above; and no act has been done or omission permitted
by any Group Company whereby they or any of them have ceased .
9.5.4 The business of each Group Company (and of any licensee under a
licence granted by any Group Company) as now carried on does not
and infringe any Intellectual Property Right of any other person
(or would not do so if the same were valid) or give rise to a
liability to pay compensation pursuant to the Patents Xxx 0000 ss
40 and 41 and all licences to any Group Company in respect of any
such protection are in full force and effect.
9.5.5 So far as the `A' Shareholders are aware none of the Intellectual
Property Rights is currently being infringed by any third party or
has been so infringed in the six year period preceding Completion
and no third party has threatened any such infringement.
9.5.6 All application and renewal fees and costs and charges regarding
the Intellectual Property Rights due on or before Completion have
been duly paid in full.
9.5.7 There are no outstanding claims against the Company for
infringement of any Intellectual Property used (or which has been
used) by it and no such claims have been settled by the giving of
any undertakings which remain in force.
9.5.8 Nothing has been done or omitted by any Group Company which would
enable any licensee under a licence granted by a Group Company to
be terminated or which in any way constitutes a breach of terms of
any licence.
9.6 CONFIDENTIAL INFORMATION
9.6.1 No Group Company uses any processes or is engaged in any
activities which involve the misuse of any confidential
information belonging to any third party and no allegations of
such misuse have been made.
9.6.2 No Group Company is aware of any actual or alleged misuse by any
person of any of its Confidential Information.
9.6.3 No Group Company has disclosed to any person any of its
Confidential Information except where such disclosure was properly
made in the normal course of the Group Company's business and was
made subject to an agreement under which the recipient is obliged
to maintain the confidentiality of such Confidential Information
52
and is restrained from further disclosing or using it other than
for the purposes for which it was disclosed by the Group Company.
9.6.4 Confidential Information used by each of the Group Companies is
kept strictly confidential and each of the Group Companies
operates and fully complies with procedures which maintain such
confidentiality, which confidentiality has not been breached.
9.6.5 No Group Company is a party to any secrecy agreement or agreement
which may restrict the use or disclosure of information.
9.7 COMPUTER SYSTEMS
9.7.1 The Computer Systems used in the course of the Group Companies'
business have been satisfactorily maintained and supported and
have the benefit of an appropriate maintenance and support
agreement terminable by the contractor by not less than 12 months'
notice and no notice has been given either by a Group Company or
the contractor terminating such agreement.
9.7.2 Disaster recovery plans are in effect and are adequate to ensure
that the Computer Systems can be replaced or substituted without
any material disruption to the business of the Group Companies.
9.7.3 In the event that any person providing maintenance or support
services for the Computer Systems ceases or is unable to do so,
the Group Companies have all necessary rights to obtain the source
code and all related technical and other information free of
charge and to procure the carrying out of such services by
employees or by a third party.
9.7.4 The Group Companies have sufficient technically competent and
trained employees to ensure proper handling, operation, monitoring
and use of the Computer Systems.
9.7.5 The Group Companies have adequate procedures to ensure internal
and external security of the Computer Systems, including
procedures for taking and storing on-site and off-site backup
copies of computer programs and data.
9.7.6 None of the Group Companies records systems, controls, data or
information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent upon or held by any means
(including any electronic, mechanical or photographic processes
whether computerised or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and
direct control of or under licence to the Group Companies.
53
9.7.7 All necessary back-up systems are utilised to ensure that in the
event of any fault in any Computer Systems used by the Group
Companies, no more than one day's data might be lost, and no such
faults have occurred in the last twelve months.
9.7.8 During the twelve months prior to the date of Completion, none of
the Computer Systems has failed whether by reason of bugs, or
equipment breakdown, or for any other reason ("Performance
Failure") such as to cause significant or repeated disruption,
interruption or loss to the business of any of the Group Companies
and the Warrantors are not aware of any circumstances existing at
the date of Completion which could result in the occurrence of a
Performance Failure.
10. PROPERTIES
10.1 TITLE
10.1.1 The Properties comprises the only properties occupied or otherwise
used in connection with its business by the Group.
10.1.2 The Properties were occupied or otherwise used by the Group in
connection with its business under a lease dated 27th July 1999
and made between A R Xxxxxxxx, X X Xxxxxxxx and X X Xxxxxxx (1)
and XxXxxxxx Partnership Limited (2). This lease expired on 10th
July 2000 and the Group remain in occupation as a tenant at will.
10.2 STATUTORY OBLIGATIONS
10.2.1 The `A' Shareholders have not received notice of any breach nor
are they aware of there being any breach of any applicable
statutory and byelaw requirements with respect to the Properties
and in particular (but without limitation) with requirements as to
fire precautions and means of escape in case of fire and with
requirements under the Public Health Acts the Housing Acts the
Highways Acts the Offices Shops and Railway Premises Act 1963 the
Health and Safety at Work etc Xxx 0000 and the Factory Acts.
10.2.2 The `A' Shareholders have not received notice of any breach nor
are they aware of there being any outstanding and unobserved or
unperformed obligations with respect to the Properties necessary
to comply with the requirements (whether formal or informal) of
any competent authority exercising statutory or delegated powers.
10.3 LEASEHOLDS
54
10.3.1 The Subsidiary has paid the rent and has not received notice of
any breach of and the 'A' Shareholders are not aware of any
breach of the covenants on the part of the tenant and the
conditions contained in the lease under which the Properties are
held, and the last demand (or receipts for rent if issued) was
unqualified.
10.3.2 All licences, consents and approvals required from the landlord
and any superior landlords and from their respective mortgagees,
if any, under the lease of the Properties have been obtained and
the covenants on the part of the Subsidiary contained in such
licences, consents and approvals have been duly performed and
observed.
10.3.3 The Group does not have any continuing liability in respect of
any other property formerly owned or occupied by the Group either
as original contracting party or by virtue of any direct covenant
having been given on a sale or assignment to the Group or as a
surety for the obligations of any other person in relation to
such property.
11. PENSION SCHEMES
11.1 Save for the Pension Schemes the Group is not a party to nor
participates in nor contributes to any scheme, agreement or
arrangement (whether legally enforceable or not) for the
provision of any pension, retirement, death, incapacity,
sickness, disability, accident or other like benefits (including
the payment after cessation of employment with the Company of
medical expenses) for any Relevant Employee or the widow,
widower, child or dependant of any Relevant Employee.
11.2 Save in relation to the existing pension and other employee
benefits payable by the Group as set out in the Bundle annexed to
the Disclosure Letter the Group:
(a) has not given any undertaking or assurance (whether
legally enforceable or not) as to the continuance,
introduction, improvement or increase of any benefit
of a kind described in paragraph 11.1, or
(b) is not paying and has not in the last two years paid
any such benefit,
to (in either case) any Relevant Employee or to any widow,
widower, child or dependant of any Relevant Employee.
55
11.3 All material details relating to the Pension Schemes are
contained in or annexed to the Disclosure Letter.
11.4 All benefits which are not money purchase benefits and which are
payable under the Pension Schemes on the death of any person
while in employment to which the Pension Schemes relate are
insured fully under a policy with an insurance company of good
repute and there are no grounds on which that company might avoid
liability under that policy. All other benefits payable, or
prospectively or contingently payable, under the Pension Schemes
are money purchase benefits. In this paragraph "money purchase
benefits" has the same meaning as in s. 181(1) Xxxxxxx Xxxxxxx
Xxx 0000.
11.5 Contributions to the Pension Schemes are not paid in arrears and
all contributions and other amounts which have fallen due for
payment have been paid punctually. No fee, charge or expense
relating to or in connection with the Pension Schemes have been
incurred but not paid. If any such fee, charge or expense has
been paid by any person other than the Pension Schemes the
Pension Schemes have reimbursed that person if and to the extent
that the Pension Schemes is or may become liable so to do.
11.6 Each Group Company has observed and performed those provisions of
the Pension Schemes which apply to it.
11.7 All documentation and records in respect of the Pension Schemes
are up to date and so far as the `A' Shareholders are aware
complete and accurate in all material respects.
11.8 Save for any deposit with a bank or building society the only
assets which the Pension Scheme has held are insurance policies
and annuity contracts with insurance companies of good repute.
11.9 The Pension Schemes:
(a) are exempt approved scheme (within the meaning of
s. 592(1) Income and Corporation Taxes Act 1988);
56
(b) have at all times complied with and had been
administered in accordance with all applicable
laws, regulations and requirements (including
those of the Board of Inland Revenue and of trust
law).
Neither the Pension Schemes nor the Group is engaged or
involved in any Proceedings which relate to or are
in connection with the Pension Schemes or the
benefits thereunder and no such Proceedings are
pending or threatened and so far as the `A'
Shareholders are aware there are no facts likely to
give rise to any such Proceedings. In this paragraph
11.10 "Proceedings" includes any litigation or
arbitration and also includes any investigation or
determination by the Pension Ombudsman or the
Occupational Pension Advisory Service and any
complaint under any internal dispute resolution
procedure established in connection with the Pension
Schemes
12. ENVIRONMENTAL MATTERS
12.1 No claim of any violation breach or infringement of Environmental
Legislation has been made against any Group Company.
12.2 No writ summons order enforcement notice prohibition notice or
other notice has been issued or served and no direction of the
Secretary of State or of any public local or other statutory
authority has been made with regard to the [Properties] and/or any
activities processes or substances in or over or under the
[Properties] pursuant to the Environmental Legislation and no
prosecutions have been instituted with respect thereto.
12.3 No offence has been committed by a Group Company on or in
connection with the [Properties] or any activities processes or
substances in on over or under the [Properties] pursuant to the
Environmental Legislation.
12.4 No notice, order, judgement, demand or letter requiring the taking
of remedial or other action under or pursuant to the Environmental
Legislation has been served on or received by any Group Company,
and the `A' Shareholders are not aware of any
57
circumstances that would cause such notice, order, judgement,
demand or letter to be served on any Group Company.
12.5 The Group Companies have not received or applied for any grants or
funds from any public local or other statutory authority in
connection with environmental improvements or reclamation on the
Properties.
12.6 Neither the Group Companies or so far as the `A' Shareholders are
aware the Properties nor the business of the Group Companies have
been the subject of any environmental audit any evaluation
assessment study or test.
58
SCHEDULE 3
----------
PART 2
------
PURCHASER WARRANTIES
--------------------
1. The Purchaser is a corporation duly formed, validly existing and
in good standing under the laws of its state of incorporation,
with all necessary corporate power and authority under applicable
laws to execute this Agreement and to consummate the transactions
contemplated by this Agreement.
2. The execution of this Agreement and the performance by the
Purchaser of its obligations under this Agreement have been duly
authorised by all necessary corporate action.
3. The Consideration Stock, upon its delivery to the Vendors in
accordance with the provisions of this Agreement, will have been
duly and validly authorised, issued and delivered by the
Purchaser and the Consideration Stock will be fully paid for .
4. The Purchaser previously made available to the Vendors and the
Vendors by their execution of this Agreement acknowledge receipt
of, the following documents filed by the Purchaser with the SEC:
SB-2/A 3 November 1999
10QSB 16 November 1999
424 B3 6 January 2000
424 B3 14 January 2000
NT 10-Q 15 February 2000
10QSB 22 February 2000
8K 20 March 2000
8K 11 May 2000
NT 10-Q 16 May 2000
5. Since 1st April 2000 there has been no material adverse change in
the financial or trading position or property of the Purchaser
PROVIDED THAT the Purchaser gives
59
no warranty in relation to movements in its stock price on NASDAQ
OTC Bulletin Board as a result of unusual market conditions nor
as a result of the announcement of the transactions contemplated
by this Agreement
60
SCHEDULE 4
TAX DEED
--------
THIS DEED is made the 2000
BETWEEN:
(1) The persons whose names and addresses are set out in the Schedule to
this Deed ("the Covenantors"); and
(2) Global Sources Limited (a Delaware Corporation) whose main office is at
[ ] ("the Purchaser").
RECITAL:
This Deed is entered into pursuant to an agreement ("the Agreement") made
between the Covenantors (1) and Xxxxxx Xxxxx and others (2) and the Purchaser
(3) relating to the sale of all the ordinary share capital of the Company.
THIS DEED WITNESSES THAT:
-------------------------
1. DEFINITIONS
1.1 In this Deed words and expressions defined in the Agreement shall,
except where otherwise provided or expressly defined below, have
the same meaning in this Deed and those provisions of the
Agreement dealing with construction or interpretation shall
(except where otherwise provided) apply as if expressly set out in
this Deed.
1.2 In this Deed the following expressions shall have the following
meanings:
"CLAIM" means any claim, notice, demand, assessment, letter or
other document issued, or claim made, or action taken, by or on
behalf of any Tax Authority from which it appears that the Company
is or may be subject to a liability for Taxation (whether or not
it is primarily payable by the Company and whether or not the
61
Company has or may have any right of reimbursement) for which the
Covenantors are or may be liable to make a payment to the
Purchaser under this Deed
"EVENT" means any event, act, transaction (including completion of
the Agreement in accordance with its terms) or omission of
whatever nature and without limitation any receipt or accrual of
any income or gains, and any distribution, failure to distribute,
acquisition, disposal, transfer, payment, loan or advance, and
references to an Event on or before any date shall be deemed to
include any combination of two or more Events only the first or
some of which shall have taken place or be deemed to have taken
place on or before that date
"RELIEF" means any relief, loss, allowance, exemption, set-off,
deduction, right to repayment or credit or other relief of a
similar nature in computing or against profits, income or gains of
any description or from any source, or credit against Taxation
pursuant to any legislation or otherwise
"TAX AUTHORITY" means any fiscal, revenue, statutory,
governmental, federal, state, provincial, municipal authority,
body or official thereof including the Inland Revenue and H M
Customs and Excise whether of the United Kingdom or elsewhere
"TAXATION" means any taxation, duty, levy, charge, impost or
contribution of whatever nature (whether or not the same is
primarily payable by the Company and whether or not the Company
has or may have any right of reimbursement against any other
person) imposed by any Tax Authority whenever imposed and any
interest surcharge penalty or fine in relation thereto except to
the extent that the same arise by reason of any failure or delay
on the part of the Purchaser in paying over to the relevant Tax
Authority any payment made hereunder by the Covenantors.
1.3 Any reference to profits includes income profits or gains
(including capital gains) of any description or from any source
and reference to profits earned accrued or received include
profits deemed to have been or treated as earned accrued or
received.
62
1.4 Any reference to a liability for Taxation shall include not only
liabilities of a Group Company to make payments of or in respect
of Taxation but also:
(a) the loss, reduction or set-off of any Relief where
such Relief has been taken into account in computing
and so reducing any provision or accrual for
Taxation which appears in the Principal Accounts (or
which but for such Relief would have appeared in the
Principal Accounts);
(b) the set-off or utilisation against profits or
Taxation of any Relief which is not available before
Completion and arises in respect of an Event
occurring after Completion where but for the set-off
or utilisation of such Relief the Company would have
had a liability for Taxation in respect of which the
Purchaser would have been able to make a claim
against the Covenantors under this Deed;
(c) the loss, reduction or set-off of a right to
repayment of Taxation; and
(d) and liability to make a payment by way of indemnity
or damages, or any other payment pursuant to a
contract or arrangement, in each case arising out of
or in connection with Taxation;
and in such circumstances the amount of the repayment which would
otherwise have been obtained or the amount of Taxation which would
have been saved by the Relief shall be treated as the amount of
the liability for Taxation as appropriate.
2. COVENANT TO PAY
2.1 Subject as provided below, the Covenantors for themselves and on
behalf of their respective personal representatives jointly and
severally covenant with the Purchaser that they will each pay to
the Purchaser an amount equal to:
2.1.1 any liability for Taxation of a Group Company which relates to an
Event occurring on or before Completion or in respect of any
profits earned accrued or received on or before Completion; and
2.1.2 any depletion or reduction in the value of the assets of a Group
Company or any increase in its liabilities arising as a result of
any liability of a Group Company to repay in whole or in part any
payment for group relief or payment for the surrender of surplus
advance corporation tax received on or before Completion; and
63
2.1.3 any reasonable costs and expenses properly incurred or payable by
the Purchaser or a Group Company in connection with or in
consequence of any of the foregoing; and
2.1.4 any liability for inheritance tax which:
2.1.4.1 has at Completion given rise to a charge on any of the shares or
assets of any Group Company or given rise to a power to sell
mortgage or charge any of the shares or assets of any Group
Company;
2.1.4.2 after Completion gives rise to a charge on any of the shares or
assets of any Group Company or gives rise to a power to sell
mortgage or charge any of the shares of any Group Company and
which arises as a result of a transfer of value occurring or being
deemed to occur on or before Completion (whether or not in
conjunction with the death of any person whenever occurring)
provided that any right to pay tax by instalments shall be
disregarded and the provisions of section 213 IHTA shall not apply
to any payment falling to be made under this sub-clause; and
2.1.5 any payment made by any Group Company between the Last Accounts
Date and Completion in circumstances where a liability would have
fallen upon the Covenantors under this clause 2.1.5 but for such
payment; and
2.1.6 any liability for Taxation of any Group Company or the Purchaser
arising as a result of or in consequence of the failure of any
person (other than any Group Company or the Purchaser) at any time
to pay any amount of Taxation under section 767A or 767AA ICTA or
otherwise, where the person who has failed to pay such Taxation is
a Covenantor, a company controlled by a Covenantor within the
meaning of sections 416 or 767B(4) or any person connected with
any Covenantor within the meaning of s839 ICTA or is a company
which at any time prior to Completion controlled or was controlled
by any Group Company within the meaning of Sections 416 or 767B(4)
ICTA.
3. EXCLUSIONS
3.1 The covenant in clause 2 shall not apply to any liability to
Taxation:
3.1.1 for which any Group Company is or may become liable as a result of
transactions affected in the ordinary course of its business after
the Last Accounts Date and on or before Completion provided that,
that for such purposes none of the following shall
64
be regarded as an Event which has occurred in the ordinary course
of the Company's business:
(a) any Event giving rise to a liability for Taxation
under Part VIII Taxes Management Act 1970 (charges
on non-residents);
(b) any Event giving rise to a liability for Taxation
under Part XVII Taxes Act 1988 (tax avoidance);
3.1.2 to the extent that liability is expressly
excluded or limited under the provisions of Schedule
6 to the Agreement;
3.1.3 is a liability to United Kingdom stamp duty on the transfer of the
Shares to the Purchaser.
4. MITIGATION
4.1 If the Company or the Purchaser receives a Taxation benefit or
makes a Taxation saving which it would not have received or made
but for the circumstances giving rise to a liability in respect of
which the Covenantors have made a payment under this Deed
(including, without prejudice to the foregoing, as a result of the
utilisation of advance corporation tax), then:
4.1.1 the Purchaser shall procure that full details of the Taxation
benefit or Taxation saving are given in writing to the Covenantors
forthwith and that such benefit or Taxation saving is utilised
promptly;
4.1.2 the amount of the Taxation benefit or Taxation saving (including
any interest or repayment supplement) shall, when and only to the
extent the utilisation results in an actual repayment of Taxation
or the reduction of any Taxation which would otherwise then be
payable to the relevant Taxation Authority to the extent it does
exceed the amount paid by the Covenantors in respect of the
relevant claim under clause 2 ("Relevant Amount"), first be set
against any sums then owing by the Covenantors under this Deed;
4.1.3 so far as not exhausted under clause 4.1.2 the Relevant Amount of
the Taxation benefit or Taxation saving shall be set against any
future liabilities of the Covenantors under this Deed or pursuant
to the Warranties relating to Taxation; and
4.1.4 so far as not exhausted under clauses 4.1.2 and 4.1.3 a refund of
the balance of any Relevant Amount shall be made to the
Covenantors, on the later of the first business day following the
7th anniversary of the date of Completion or the date upon which
65
any outstanding claim under this Deed or the Warranties relating
to Taxation is finally settled, of any payments previously made by
the Covenantors hereunder up to the amount of the excess.
4.2 Where the Covenantors have made a payment to the Purchaser
pursuant to the covenant contained in clause 2 and the Purchaser
is entitled to recover from any other person (other than a Group
Company or any of the Covenantors) any sum (other than one to
which clause 4.1 applies) in respect of the liability for Taxation
to which such payment related the Purchaser shall (at the written
request of and at the expense of the Covenantors and upon the
Covenantors providing an indemnity and security to the reasonable
satisfaction of the Purchaser against all losses, costs or
expenses which may thereby be incurred) take such action as the
Covenantors shall reasonably request to enforce such recovery
against the person in question. The Purchaser shall account to the
Covenantors for any sum so recovered (including any interest paid
by such person) less any Taxation (if any) on such sum up to an
amount not exceeding the related amount paid by the Covenantors
under clause 2 and not previously repaid to the Covenantors within
14 business days of the Purchaser obtaining the relevant recovery.
5. CONDUCT OF CLAIMS
5.1 The Purchaser shall:
5.1.1 notify the Covenantors in writing of any Claim which comes to its
notice; and
5.1.2 where a time limit for appeal applies to the Claim, give
notification as soon as reasonably possible after the date on
which the Claim comes to the notice of the Purchaser and in no
case later than 10 days before the later of 5 business days after
the Purchaser becomes aware of the Claim and the latest date for
making an appeal expires but, where no time limit applies or the
period to which the limit relates has not commenced, the
notification shall be given within 60 days of the Purchaser
becoming aware of the relevant Claim;
PROVIDED THAT the giving of such notice shall not be a condition
precedent to the liability of the Covenantors under this Deed.
66
5.2 Subject to the Covenantors indemnifying and securing the Purchaser
to its reasonable satisfaction in respect of any Taxation
additional Taxation losses fines penalties interest charges costs
and expenses the Purchaser shall (subject to clauses 5.3 and 5.4
below) take such action as [ ] (or such other person as may from
time to time be notified in writing to the Purchaser by the
Covenantors) on behalf of the Covenantors may reasonably require
to dispute, resist, appeal, compromise or defend such Claim to the
intent that the Covenantors shall (through such person) have the
right to have any such action conducted by professional advisers
nominated by them provided that:
(a) the Covenantors have been advised by their
solicitors or other professional advisers after
disclosure of all relevant information and documents
that it is reasonable to resist such Claim in the
manner proposed by the Covenantors;
(b) all communications written or otherwise relating to
a Claim which are to be transmitted to any Tax
Authority or its advisers or agents shall first be
submitted to the Purchaser for approval and shall
only be transmitted if such approval is given (such
approval not to be unreasonably withheld or
delayed);
(c) the Purchaser shall be kept fully informed of all
matters pertaining thereto and shall be entitled to
see copies of all relevant correspondence;
(d) no settlement or compromise of the Claim which is
the subject of the dispute nor any agreement of any
matter in the conduct of such dispute which is
likely to affect the future liability of the Company
in respect of Taxation or their relationships with
any Tax Authority shall be made by the Covenantors
without the prior written approval of the Purchaser
(such approval not to be unreasonably withheld or
delayed).
5.3 The Purchaser shall not be obliged to take any action pursuant to
this clause 5 which involves contesting a Claim beyond the first
appellate body (excluding the authority or body demanding the
Taxation the subject of the Claim and the General Commissioners,
Special Commissioners, Value Added Tax and Duties Tribunal or
similar body) in the jurisdiction concerned unless the Covenantors
shall have first
67
obtained a written opinion of a Tax Counsel of more than 7 years
standing confirming that the action will, on the balance of
probabilities, succeed.
5.4 If any of the Covenantors shall or (before the date of Completion)
the Company or any of its officers or employees shall have
committed acts or omissions which are alleged by any Taxation
Authority to be fraudulent, clause 5.2 shall not apply or shall
cease to have effect.
5.5 The Purchaser shall ensure so far as is able that a Claim is dealt
with solely under this clause and, so far as is reasonably
practicable, dealt with separately from other claims.
6. PAYMENTS
6.1 Where the Company is to make or has made any payment of Taxation
in respect of which the Covenantors are required pursuant to
clauses 2.1.1, 2.1.4, 2.1.5 or 2.1.6 above to pay the Covenantors
shall pay to the Purchaser an amount equal to the amount of such
payment five business days prior to the date on which the Taxation
in question is or was payable to the Taxation Authority, official
or person demanding the same.
6.2 Notice of the amount of the payment required to be made by the
Covenantors under clause 2.1.1 (in the case of the loss,
reduction, set-off or utilisation of some Relief or right to
repayment of Taxation) or under clause 2.1.2 above shall be
certified in writing by the Purchaser. If requested by and at the
expense of the Covenantors the notice of such amount shall be
certified by the Purchaser's auditors (acting as experts and not
as arbitrators) and shall (save for manifest error) be conclusive
and binding on the Covenantors. The Covenantors shall pay such
amount to the Purchaser on or before the fifth business day
following the date of demand.
6.3 The costs and expenses referred to in clause 2.1.3 above shall be
paid by the Covenantors on demand.
68
6.4 Any sum not paid under this Deed on the due date for payment
thereof shall bear interest (which shall accrue from day to day
after as well as before judgment) at the rate of 3 per cent per
annum above the base rate for the time being of [ ] Bank Plc.
7. WAIVER
7.1 No delay or omission of the Purchaser in exercising any right,
power or privilege hereunder shall impair such right, power or
privilege or be construed as a waiver thereof and any single or
partial exercise of any such right, power or privilege shall not
preclude the further or subsequent exercise of any right, power or
privilege. The rights and remedies of the Purchaser provided in
this Deed are cumulative and not exclusive of any rights and
remedies provided by law.
8. TAXATION
8.1 Subject to clause 8.2 and as hereinafter provided all payments
made by the Covenantors under this Deed shall be made gross free
of any rights of counterclaim or set-off and without any
deductions or withholdings of any nature.
8.2 If the Covenantors are required by law to make any deductions or
withholding from any payment hereunder they shall do so and the
sum due from the Covenantors in respect of such payment shall be
increased to the extent necessary to ensure that after the making
of such deduction or withholding the Purchaser receives and
retains (free and clear of any liability in respect of any such
deduction or withholding) a net sum equal to the sum it would have
received and retained had no deduction or withholding been
required to be made.
8.3 If the Purchaser is satisfied that any payment required to be made
by the Covenantors under this Deed will be or has been subject to
Taxation the Purchaser may demand in writing from the Covenantors
from time to time such amount (after taking into account any
Taxation payable in respect of such amount) as will ensure that
the Purchaser receives and retains a net sum equal to the sum it
would have received had the payment not been subject to Taxation.
Notice of such amount shall be
69
certified in writing by the Purchaser. If requested by and at the
expense of the Covenantors the notice of such amount shall be
certified by the Purchaser's auditors (acting as experts and not
as arbitrators) and shall be conclusive and binding on the
Covenantors. The Covenantors shall pay such amount to the
Purchaser on or before the fifth business day following the date
of demand.
9. GENERAL
9.1 [The provisions of clauses 11.3, 11.6, 11.9, 11.10, 11.11, 11.12,
11.13, 11.14, 11.15, 11.16 and 11.17 of the Agreement shall apply
to this Deed as if set out in full herein but with references
therein to `this Agreement' replaced with references to "this
Deed" and with references to "the Vendors" replaced with
references to "the Covenantors".]
70
SCHEDULE
NAMES AND ADDRESSES OF COVENANTORS
----------------------------------
Xxxxxx Xxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxxxx XX0 0XX
Xxxxx Xxxxxxxx
31 Springhill Road
Goring on Xxxxxx
Xxxxxxx
Xxxxxxxxxxx XX0 0XX
Xxxxx X'Xxxxxx
00 Xxxxx Xxxxxxxx
Xxxxxxxxx
Xxxxxxxxx
XX00 0XX
71
EXECUTED AND DELIVERED as a DEED )
and DELIVERED by Xxxxxx Xxxxxxxx in the)
presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
Occupation:..........................................
EXECUTED AND DELIVERED as a DEED )
and DELIVERED by Xxxxx Xxxxxxxx by in the )
presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
Occupation:..........................................
EXECUTED AND DELIVERED as a DEED )
and DELIVERED by Xxxxx X'Xxxxxx by in the )
presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
Occupation:..........................................
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EXECUTED as a DEED by )
GLOBAL SOURCES LIMITED )
In the presence of:- )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation...........................................
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SCHEDULE 5
SHORT PARTICULARS OF THE LEASEHOLD PROPERTIES
---------------------------------------------
All that leasehold property being ground floor offices and basement at Parkside,
Basingstoke Road, Spencers Wood, Reading being part only of the property
registered with Absolute Freehold Title under Title Number BK 280652 and for the
purposes of identification only edged red on Plan No. 1 annexed to a lease dated
27th July 1999 and made between (1) A R Xxxxxxxx, X X Xxxxxxxx and X X Xxxxxxx
and (2) The Subsidiary.
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SCHEDULE 6
`A' SHAREHOLDERS PROTECTION PROVISIONS
--------------------------------------
1. The Warranties (other than those contained in paragraphs 2.1 and
3.1 of Schedule 3) and, to the extent expressly provided in this
Schedule (but not otherwise), the covenants contained in clause 2
of the Tax Deed shall be qualified by the provisions of this
Schedule.
2. The `A' Shareholders shall not be liable in respect of any claim
under the Warranties to the extent that the matter or matters
giving rise to such claim are fairly disclosed in the Disclosure
Letter.
3. The liability of the `A' Shareholders in respect of any breach of
the Warranties (and to the extent expressly so provided in this
paragraph 3 but not otherwise) of the covenants contained in
clause 2 of the Tax Deed shall be limited as follows:
3.1 the aggregate maximum liability of any of the `A' Shareholders in
respect of all and any claims under the Warranties and under the
Tax Deed shall in each case in no event exceed the lower of the
Initial Consideration paid to him and the value from time to time
of the Consideration Stock allotted to him in respect of the
Initial Consideration;
3.2 the `A' Shareholders shall not be liable in respect of all and any
Warranty Claim made by the Purchaser under the Warranties unless
and until
3.2.1 the aggregate cumulative liability of the `A' Shareholders in
respect of all and any such claims exceeds (pound)30,000 in which
event the `A' Shareholders shall be liable for the entire amount
of such liability and not merely the excess of such liability over
(pound)30,000; and
3.2.2 the liability of the `A' Shareholders under any individual claim
(taken together with claims arising from the same subject matter
exceeds (pound)3,000.
4. The `A' Shareholders shall not be liable in respect of any Claim
unless notice of such claim shall have been given by the Purchaser
in the case of a claim in respect of the Warranties set out in
section [5] of Schedule 3 to this Agreement and a claim under the
Tax Deed before the expiry of 7 years from the date of this
Agreement, and in
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the case of all other claims before the expiry of 2 years from the
date of this Agreement.
5. No Warranty Claim shall be deemed to have been made unless notice
of such claim was made in writing to the `A' Shareholders
specifying in such reasonable detail as is then available to the
Purchaser the event or matter to which the claim relates and the
nature of the breach and an estimate based on the information then
available to the Purchaser of the amount of the claim.
6. Any claim in respect of which notice shall have been given in
accordance with paragraph 4 above shall (except in the case of a
claim in respect of the Warranties in section 5 of Schedule 3) be
deemed to have been irrevocably withdrawn and lapsed (not having
been previously satisfied, settled or withdrawn) if proceedings in
respect of such claim have not been issued and served on the `A'
Shareholders not later than the later of the expiry of the period
of 9 months after the date of such notice, or the expiry of the
period of 9 months after the date upon which a contingent
liability ceases to be contingent and becomes actual.
7. Where the Purchaser and/or any Group Company is or is likely to be
entitled to recover from some other person any sum in respect of
any matter giving rise to a claim for breach of the Warranties,
and such recovery will not, in the reasonable opinion of the
Purchaser, affect the future business relationships of the Group
Companies or their goodwill then, provided that the `A'
Shareholders indemnify and secure the Purchaser to its
satisfaction in respect of its costs, the Purchaser shall procure
that reasonable steps are taken to enforce such recovery and if
any sum is so recovered then either the amount then payable by the
`A' Shareholders in respect of that claim shall be reduced by an
amount equal to the sum so recovered (less the reasonable costs
and expenses of recovering it and any Taxation payable by the
Purchaser or a Group Company as a result of its receipt) or (if
any amount shall already have been paid by any of the `A'
Shareholders in respect of that claim) there shall be repaid to
the `A' Shareholders an amount equal to the amount so recovered
(less the reasonable costs and expenses of its recovery and any
Taxation payable by the Purchaser or a Group Company as a result
of its receipt) or (if less) the amount of such payment (to the
extent not previously repaid by the Purchaser).
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8. The `A' Shareholders shall have no liability (or such liability
shall be reduced) in respect of any Claim:
8.1 if and to the extent that provision or reserve for or in respect
of the liability or other matter giving rise to such claim has
been made in the Principal Accounts or in the Management Accounts;
8.2 save where otherwise indicated if and to the extent that such
claim occurs or is increased as a result of any change in Taxation
legislation after the date of this Agreement (or any Taxation
legislation not in force at the date of this Agreement) which
takes effect retrospectively or the withdrawal after the date of
this Agreement of any published concession or published general
practice previously made by the Inland Revenue or other taxing
authority;
8.3 if and to the extent that such claim occurs or is increased as a
result of any increase in the rate of Taxation in force at the
date of this Agreement;
8.4 if and to the extent that any claim occurs as a result of or is
otherwise attributable to the Purchaser or any Group Company
disclaiming after Completion any part of the benefit of capital or
other allowances against Taxation claimed by any Group Company on
or before the date of this Agreement;
8.5 if and to the extent that such claim is attributable to any
voluntary act or omission of or transaction or arrangement carried
out by the Purchaser or any Group Company after the date of
Completion otherwise than in the ordinary course of business or
pursuant to a legally binding obligation entered into by any Group
Company prior to Completion and otherwise than at the written
request of any of the `A' Shareholders;
8.6 if and to the extent that such claim would not have arisen or
would have been reduced or eliminated but for the failure or
omission on the part of any Group Company and otherwise than at
the written request of any of the `A' Shareholders to make any
claim, election, surrender or disclaimer or give notice or consent
or do any other thing under the provisions of any enactment or
regulation relating to Taxation after the date of Completion the
making giving or doing of which was taken into account in
computing the provision for Taxation in the Principal Accounts;
8.7 if and to the extent that such claim relates to a liability for
Taxation which would not have arisen but for any winding up or
cessation after the date of Completion of any trade or business
carried on by any Group Company;
77
8.8 if and to the extent such claim would not have arisen but for a
change of accounting policy or practice of any Group Company after
the date of Completion other than to comply with any law or
generally accepted accounting practice in force at the date of
Completion or would not have arisen but for a change in the
accounting reference date of any Group Company after Completion.
9. For the avoidance of doubt the Purchaser shall not be entitled to
recover damages in respect of any claim for breach of the
Warranties and/or of the covenants contained in the Tax Deed to
the extent it has already made recovery in respect of the same
loss or damage under this Agreement or the Tax Deed.
10. Any payment by the `A' Shareholders in respect of a Claim shall
pro tanto reduce the purchase price accordingly.
78
SCHEDULE 7
----------
PURCHASE PRICE ADJUSTMENT CONSIDERATION
1. INTERPRETATION
In this Schedule 7 the following words and expressions have the
following meanings:
"ADDITIONAL 2001 CONSIDERATION" means a sum equal to $1 for every
$1 by which the Group Profits in respect of the First Accounting
Period exceed $0, subject to a maximum payment of $750,000 and
subject to adjustment as provided by Schedule 7
"ADDITIONAL 2002 CONSIDERATION" means a sum equal to $1 for every
$1 by which the Group Profits in respect of the Second Accounting
Period exceed $0, subject to a maximum payment of $1,750,000 and
subject to adjustment as provided by Schedule 7
"ADDITION 2003 CONSIDERATION" means a sum equal to $1 for every $1
by which the Group's Profits in respect of the Third Accounting
Period exceed $0, subject to a
79
maximum payment of $2,500,000 and subject to adjustment as
provided by Schedule 7
"AGREED CLAIM" means a Claim (as defined in this Schedule 7) in
respect of which it has been finally determined by a court of
competent jurisdiction from which there is no appeal or from whose
judgment the `A' Shareholders or the Purchaser (as the case may
be) do or does not appeal within in any applicable time limit or
in respect of which it has been agreed between the parties that
the `A' Shareholders have a liability;
"CLAIM" means a Warranty Claim and/or a Tax Deed Claim which shall
be notified to the `A' Shareholders in accordance with this
Agreement and/or the Tax Deed prior to a Payment Date and which
shall specify the amount alleged to be due in respect of it from
the `A' Shareholders either to the Purchaser (on its own account
or as trustee for a Group Company) or to a Group Company;
"EXCHANGE RATE" means the average spot rate of Chase Manhattan
Bank prevailing in New York for the Foreign exchange market (and
for the purpose of calculating Group Profits, calculated at 11am
on the last Business Day of the Relevant Accounting Period
"FIRST ACCOUNTING PERIOD" means the twelve month financial period
of the Group ending 30th June 2001
"GROUP PROFITS" means the profits of the Group in any Relevant
Accounting Period before tax and dividend payments and as
converted (where appropriate) from pound sterling to US dollars of
the Exchange Rate
"PAYMENT DATES" means a date for payment of Purchase Price
Adjustment Consideration in accordance with the provision of this
Schedule 7
"PURCHASE PRICE ADJUSTMENT CONSIDERATION" means the additional
consideration calculated in accordance with Schedule 7 and being
the aggregate of Additional
80
2001 Consideration, Additional 2002 Consideration and Additional
2003 Consideration
"PURCHASE PRICE ADJUSTMENT CONSIDERATION ISSUE PRICE" means the
average between the bid price and the ask price of the common
stock of the Purchaser on the NASDAQ OTC Bulletin Board, as
calculated from the published NASDAQ OTC Bulletin Board List for
the ten dealing days up to and including the third dealing day
prior to the date that the Purchase Price Adjustment Consideration
becomes payable pursuant to this Schedule 7
"RELEVANT ACCOUNTING PERIOD" means any of the First Accounting
Period or the Second Accounting Period or the Third Accounting
Period (as the case may be)
"SECOND ACCOUNTING PERIOD" means the twelve month financial period
of the Group ending 30th June 2002
"THIRD ACCOUNTING PERIOD" means the twelve month financial period
of the Group ending 30th June 2003
2. CALCULATION OF THE GROUP'S PROFITS AND PURCHASE PRICE ADJUSTMENT
CONSIDERATION
2.1 The Group Profits in any Relevant Accounting Period shall be
established or determined pursuant to the provision of this
Schedule 7 provided that:
2.1.1 in the event that in any Relevant Accounting Period the Group
makes a loss than the amount of that loss shall be carried forward
to subsequent Relevant Accounting Periods for the purpose of
establishing Group Profits for subsequent Relevant Accounting
Periods;
2.1.2 in the event that in any Relevant Accounting period the Group
Profits exceed the maximum Purchase Price Adjustment Consideration
payable for that Relevant Accounting Period then any excess Group
Profits shall be carried forward to subsequent relevant Accounting
Periods for the purpose of establishing Group Profits for
subsequent Relevant Accounting Periods;
81
2.1.3 in the event that cumulative Group Profits for all of the Relevant
Accounting Periods is less than $2,250,000 then the Additional
2003 Consideration shall be zero;
2.1.4 Group Profits shall be calculated by reference to the Exchange
Rate;
2.1.5 there shall be added back to Group Profits the amount of any bonus
paid or payable to the `A' Shareholders pursuant to the provision
of clause 5 and Schedule 1 of the Service Agreements.
2.1.6 there shall be added back to Group Profits in the Relevant
Accounting Period in which the expense is incurred, any corporate
expenses directly attributable to the Purchaser.
2.2 The Purchaser undertakes to the `A' Shareholders to use its best
endeavours to procure that audited accounts of the Group for each
Relevant Accounting Period shall be prepared by the Company and an
audit report in respect of them certified by the Purchaser's
Accountants as soon as possible after, and in any event no later
than 3 months after, the end of the Relevant Accounting Period to
which they relate.
2.3.1 Immediately following the audit by the Purchaser's Accountants of
the Group's accounts for the Relevant Accounting Period, the
Purchaser will procure that the Purchaser's Accountants shall
deliver copies of them to the Purchaser, to the `A' Shareholders
and to the `A' Shareholders Accountants together with a schedule
showing their calculation of the Group's Profits for that Relevant
Accounting Period and their calculation of Additional 2001
Consideration, Additional 2002 Consideration or Additional 2003
Consideration (as the case may be).
2.3.2 The `A' Shareholders Accountants shall have 30 Business Days from
the date of delivery of the Group's accounts to them to review the
same (the "Review Period.
2.4 So as to enable the `A' Shareholders Accounts to verify that the
accounts and schedules have been prepared in accordance with the
provisions of this agreement the Purchaser agrees to direct the
Purchaser's Accountants to give the `A' Shareholders and the `A'
Shareholders Accountants reasonable access to and explanations of
any of the working papers of the Purchaser's Accountants and to
any records and documents the `A' Shareholders and the `A'
Shareholders Accountants may from time to time reasonably request.
2.5 The `A' Shareholders Accountants and the Purchaser's Accountants
shall within 15
82
Business Days of the expiry of the Review Period either issue a
joint certificate (the "Joint Certificate") (which shall be signed
by both of them) or shall notify the parties in writing that they
cannot reach agreement. The Joint Certificate shall state the
amount of the Group's Profits for the Relevant Accounting Period
and the amount of the Additional 2001 Consideration, Additional
2002 Consideration or Additional 2003 Consideration (as the case
may be). The Joint Certificate or notice in writing shall be
delivered to the Purchaser and to the `A' Shareholders as soon as
reasonably practicable following expiry of the 15 Business Days
period.
2.6.1 If no Joint Certificate is issued within 15 Business Days of the
expiry of the Review Period (or such longer period as is agreed in
writing by the Purchaser and the `A' Shareholders) then the
disagreement shall be referred to an independent accountant (the
"Independent Accountant") who shall determine the matter in
dispute and issue his certificate in that respect.
2.6.2 The Independent Accountant shall be nominated jointly by the `A'
Shareholders and the Purchaser or failing a nomination shall be
appointed at the request of either party at any time by the
President for the time being of the Institute of Chartered
Accountants in England and Wales.
2.6.3 In particular the Independent Accountant shall, where the Group's
Profits are in dispute, determine the Group's Profits for the
Relevant Accounting Period and give his certificate as to such the
Group's Profits and as to the amount of Additional 2001
Consideration, Additional 2002 Consideration or Additional 2003
Consideration (as the case may be)
2.6.4 The Independent Accountant shall be instructed to deliver his
certificate within 30 Business Days of his nomination or
appointment (or such longer period as the Purchaser and the `A'
Shareholder may agree) and shall act as an expert and not as an
arbitrator and (in the absence of obvious error) his decision
(which shall be communicated in writing to the `A' Shareholders
and the Purchaser) shall be final and binding on the `A'
Shareholders and the Purchaser. The fees and costs of the
Independent Accountant shall be payable and paid by the `A'
Shareholders and the Purchaser in the proportions the independent
Accountant directs and in the absence of such direction his fees
and costs shall be borne as to fifty per cent by the Purchaser and
as to fifty per cent by the `A' Shareholders;
83
2.7 The `A' Shareholders and the Purchasers shall procure that all
records and working papers and other information in their
possession or under their control as may be reasonably required by
the Independent Accountant to enable him to resolve the dispute
shall be made available as soon as possible on request.
2.8 The costs of the `A' Shareholders Accountants in connection with
the determination of the Group's Profits and Purchase Price
Adjustment Consideration shall, except where the Independent
Account otherwise decides, be paid by the `A' Shareholders and the
equivalent costs of the Purchaser Accountants shall be paid by the
Purchaser with the exception only of those costs properly
attributed to their audit responsibilities which shall be paid by
the Company.
2.9 The Group's Profits are to be determined by reference to the
audited opening balance sheet, and the closing balance sheet of
the Company for the Relevant Accounting Period which shall be
prepared adopting the historic accounting principles used by the
Group.
3. SATISFACTION OF PURCHASE PRICE ADJUSTMENT CONSIDERATION
3.1 Purchase Price Adjustment Consideration shall be satisfied by to
be satisfied by the allotment to the `A' Shareholders on the date
that the Purchase Price Adjustment Consideration becomes payable
of such number of Consideration Stock (excluding fractions) as
shall be n where:
n = e
-
b
where
b = the Purchase Price Adjustment Consideration Issue Price; and
e = the amount of Purchase Price Adjustment Consideration to which
the "A" Shareholders are entitled
3.2 Within five Business Days following the issue of the Joint
Certificate or of the certificate of the Independent Accountant
(as the case may be) where such certificate states that the
Purchase Price Adjustment Consideration is greater than nil, the
84
Purchaser shall deliver certificates in respect of the
Consideration Stock to the `A' Shareholders PROVIDED THAT in the
event that prior to the end of any Relevant Accounting Period any
`A' Shareholder ceases to be employed by the Company:-
3.2.1 as a result of his being convicted of a criminal offence committed
with regard to his employment;
3.2.2 because he is guilty of fraudulent activity in relation to the
Group;
3.2.3 because he has committed a breach of his Service Agreement
warranting summary dismissal;
3.2.4 as a result of his leaving voluntarily (other than as a result of:
3.2.4.1 death;
3.2.4.2 prolonged illness or incapacity necessitating the
absence from work of the `A' Shareholder for a
continuous period of 6 months;
3.2.4.3 circumstances which are found by a court of
competent jurisdiction to qualify as constructive
dismissal;
the `A' Shareholder concerned shall not be entitled to receive
such Purchase Price Adjustment Consideration as is or would have
been payable to him in respect of that and all subsequent
Relevant Accounting Periods.
4. SET OFF RIGHTS
4.1 If, prior to a Payment Date, the Purchaser makes a Claim which
becomes, prior to a Payment, an Agreed Claim, which Agreed Claim
remains on a Payment Date unsatisfied, then the Purchaser shall be
entitled to deduct the amount of the Agreed Claim from the amount
of the Purchase Price Adjustment Consideration provided always
that any deduction made by the Purchaser pursuant to this clause
shall be made from the `A' Shareholders strictly in the
proportions in which the `A' Shareholders are entitled to receive
Purchase Price Adjustment Consideration.
85
SIGNED by XXXXXX XXXXXXXX )
in the presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation:..........................................
SIGNED by XXXXX XXXXXXXX )
in the presence of: )
)
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
SIGNED by XXXXX X'XXXXX )
in the presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
86
SIGNED by XXXXXX XXXXX )
in the presence of: )
)
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
SIGNED by XXXXX XXXXXX )
in the presence of: )
)
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
SIGNED by XXXXXXX XxXXXXX )
in the presence of: )
)
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
87
SIGNED by [ ] for and on )
behalf of GLOBAL SOURCES LIMITED )
in the presence of: )
Signature: ..........................................
Name: ...............................................
Address: ............................................
.....................................................
.....................................................
Occupation: .........................................
88
