EX-2.1
SHARE ACQUISITION AGREEMENT DATED FEBRUARY 29, 2000 BY AND BETWEEN
PHARMACOPEIA AND THE PERSONS NAMED THEREIN
DATED February 29, 2000
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(1) THE PERSONS WHOSE NAMES AND ADDRESSES ARE SET
OUT IN PART A OF THE FIRST SCHEDULE
(2) PHARMACOPEIA INC
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SHARE ACQUISITION AGREEMENT
for the exchange of the entire issued share capital of
SYNOPSYS SCIENTIFIC SYSTEMS
LIMITED
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(ALPHA)(BETA)(CHI)(DELTA)(EPSILON)(PHI)
2 Xxxxxxxxx' Xxx, Xxxxxx XX0X 0XX
Tel: 0000 000 0000 Fax: 0000 000 0000
Execution
Date: 250200
Ref: C507/303701
CONTENTS
CLAUSE HEADING
1 Definitions and Interpretations
2 Sale and Purchase of the Shares
3 Consideration
4 Completion
5 Warranties and Representations
6 Breach of Warranty
7 Limitation of liability
8 Purchaser's Warranties
9 Undertakings by the Vendors
10 Restrictions on the Managing Vendors
11 [Clause intentionally deleted]
12 Nature of obligations
13 Announcements
14 General
15 Communications
16 Proper Law
SCHEDULE DESCRIPTION
1 Details of the Vendors
2 Particulars of the Company
3 The Properties
4 Warranties
5 Protection for Vendors
6 Tax Deed
Appendix A The Accounts
DOCUMENTS IN THE AGREED FORM
Disclosure Letter
Directors' Letter of Resignation
Auditors' resignation
Letters of release from Vendors
Completion Board Minutes
Certificate of Title
THIS AGREEMENT is made on 29th February 2000 BETWEEN:-
(1) The persons whose names and addresses are set out in Part A of
the first schedule ("THE VENDORS");
(2) PHARMACOPEIA, INC a corporation incorporated in the state of
Delaware, United States of America and having its principal
office at 0000 Xxxxxxxx Xxxxx, Xxx Xxxxx, XXX 00000-0000 ("THE
PURCHASER"),
RECITALS
(A) The Purchaser has offered to purchase the Shares and the
shares in Synopsys Scientific Systems arising upon the
exercise of any options granted at the date hereof under the
terms of the Share Option Scheme for a Consideration to be
satisfied by cash and/or the issue of Consideration Shares in
such proportion as the holders of the Shares shall elect.
(B) The holders of the Shares at the date of this Agreement have
agreed to sell the Shares to the Purchaser on the terms set
out in this Agreement.
(C) Prior to the exchange of the Agreement the Company has
resolved to pay US$250,000 (or the sterling equivalent) to the
EBIT.
1 DEFINITIONS AND INTERPRETATION
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1.1 In this agreement unless the context otherwise requires:-
"ACCOUNTS" means the published statutory accounts of the
Company relating to the accounting reference period ended on
the Balance Sheet Date together with the notes, reports and
other documents annexed to them in the form set out in
Appendix A;
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"AGREED FORM" means in a form agreed by and signed by or on
behalf of the parties to this agreement;
"ORDINARY SHARES" means Ordinary Shares of L1 each in the
Company;
"ASSOCIATE" means any person with whom any of the Vendors may
be connected within the meaning of section 839 of the Taxes
Act or for whom any of them may be a personal representative;
"AUDITORS" means the auditors for the time being of the
Company;
"BALANCE SHEET DATE" means 31 March 1999;
"PREFERRED SHARES" means Preferred Ordinary Shares of L1 each
in the Company;
"BUSINESS DAY" means a day on which banks generally are open
in the City of London for the transaction of normal banking
business;
"COMPANIES ACT" means the Companies Xxx 0000 (as amended or
re-enacted by the Companies Act 1989);
"COMPANY" means Synopsys Scientific Systems Limited details of
which are set out in the second schedule;
"COMPLETION" means the date upon which completion of the sale
and purchase of the Shares takes place pursuant to this
agreement;
"CONSIDERATION" means the consideration for the Shares as
referred to in clause 3 and columns 4 and 5 of the First
Schedule;
"CONSIDERATION SHARES" means the Common Stock of the Purchaser
to be issued to the Vendors pursuant to clause 3;
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"DISCLOSURE LETTER" means the letter in the Agreed Form from
the Vendors to the Purchaser dated as at the date of this
agreement;
"EBIT" means the Synopsys Scientific Systems employee benefit
trust established pursuant to a deed of settlement a copy of
which is annexed to the Disclosure Letter;
"EVENT" includes any act, omission, transaction or
circumstance (including any of such matters provided for under
this agreement);
"MANAGING VENDORS" means each and any of APF Xxxx, XX
Xxxxxxxxxx, J Xxxxxxx, G Xxxxxxxxx and P Xxxxx;
"OPTIONHOLDERS" means the persons whose names and addresses
are set out in Part B of the First Schedule and "OPTION" shall
refer to an option granted to an Optionholder as set out in
Part B of the First Schedule;
"PENSION SCHEME" means the Vendor's pension scheme as referred
to in the Fourth schedule;
"PROPERTIES" means the properties briefly described in the
Property Schedule or any part of or interest in any such
properties (and a reference to the "property" is to either or
both of those properties);
"PROPERTY SCHEDULE" means the Third Schedule;
"PURCHASER'S SOLICITORS" means Titmuss Sainer Dechert of 2
Xxxxxxxxx' Xxx, Xxxxxx XX0X 0XX;
"REVENUE" means all fiscal authorities (national or local)
whether of the United Kingdom or elsewhere;
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"SECURITIES ACT" means the Securities Act of 1933 of the
United States of America;
"SHARES" means the whole of the issued and allotted share
capital of the Company at Completion.;
"SHARE OPTION SCHEME" means the Synopsys Scientific Systems
Inland Revenue Approved Executive Share Option Scheme;
"TAXATION" means all forms of taxation, duties (including
stamp duty), levies, imposts, charges, withholdings, national
insurance and other contributions, rates and PAYE liabilities
(including any related or incidental penalty, fine, interest
or surcharge) whether of the United Kingdom or elsewhere;
"TAX DEED" means a deed in the form set out in the Sixth
Schedule duly executed by the Covenantors referred to in it;
"TAXES ACT" means the Income and Corporation Taxes Xxx 0000;
"TRUST VENDORS" means the trustees of the AJD Katritzky
Revocable Trust and KB (CI) Nominees Limited;
"VENDORS' SOLICITORS" means Xxxxxx Xxxxxx, of Kings Court, 00
Xxxx Xxxxxx, Xxxxx, XX0 0XX;
"WARRANTIES" means the representations, warranties and
undertakings on the part of the Vendors contained in the
Fourth Schedule and which are made by the Vendors pursuant to
clause 5;
1.2 In this agreement unless the context otherwise requires:-
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1.2.1 any reference to a clause, schedule or appendix (other than to
a schedule to a statutory provision) is a reference to a
clause of or schedule or appendix to this agreement; and the
schedules and appendices form part of and are deemed to be
incorporated in and in references to this agreement;
1.2.2 any reference to a statute or statutory provision includes a
reference to that provision as amended, re-enacted or replaced
and any regulations or orders made under such provisions from
time to time whether before or after the date of this
agreement and any former statutory provision replaced (with or
without modification) by the provision referred to except to
the extent that any amendment, re-enactment or replacement
coming into force after the date of this agreement would
increase or extend the liability of the parties to one
another;
1.2.3 any reference to persons includes a reference to firms,
corporations or unincorporated associations;
1.2.4 any reference to the singular includes a reference to the
plural and vice versa; and any reference to the masculine
includes a reference to the feminine and vice versa;
1.2.5 a reference to an SSAP is a reference to a Statement of
Standard Accounting Practice which has been adopted as an
accounting standard by the Accounting Standards Board;
1.2.6 any agreement, warranty, representation, indemnity, covenant
or undertaking on the part of two or more persons shall be
deemed to be given or made by such persons severally and
proportionately namely in
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the proportion which the Consideration received or receivable
by a Vendor pursuant to this agreement bears to the total
Consideration;
1.2.7 any matter which shall be relevant to any of the Vendors and
which be known to at least one of the Vendors shall be deemed
to be known by the other Vendors as well;
1.2.8 words and expressions defined in the Companies Act bear the
same respective meanings; and
1.2.9 any reference to indemnifying any person against any
circumstance includes indemnifying and holding that person
harmless from all actions, claims, demands and proceedings of
any nature from time to time made against that person and all
losses, damages, payments, awards costs or expenses made,
suffered or incurred by that person as a consequence of that
circumstance.
1.3 Headings and titles are used for ease of reference only and do
not affect the interpretation of this agreement.
1.4 Unless otherwise specified in this agreement, if any statement
is qualified by the expression "TO THE BEST OF THE VENDORS'
KNOWLEDGE INFORMATION AND BELIEF" or "SO FAR AS THE VENDORS
ARE AWARE" or any similar expression, that expression shall be
deemed to include a warranty by the makers thereof that the
statement has been made by them after due and careful enquiry.
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2 SALE AND PURCHASE OF THE SHARES
-------------------------------------------------
2.1 The Vendors shall sell the Shares to the Purchaser and the
Purchaser, relying on the Warranties and the other obligations
of the Vendors under this agreement, shall purchase the
Shares.
2.2 The Vendors shall transfer the Shares with full title
guarantee (except for the Trustee Vendors who shall transfer
the Shares owned by them with limited title guarantee) free
from all liens, charges, encumbrances and adverse claims (and
whether or not the Vendors know or could reasonably be
expected to know about such matters) together with all rights
now or hereafter attaching to them including all dividends
declared or payable or distributions made or proposed on or
after the date of this agreement.
2.3 The Vendors irrevocably and unconditionally waive (and shall
procure such a waiver by their nominee(s) of) all rights of
pre-emption or other restrictions on transfer which they or
such nominee(s) may have, whether under the Articles of
Association of the Company or otherwise, in respect of the
transfer to the Purchaser or its nominee(s) of the Shares or
any of them and shall execute and deliver (or procure the
execution and delivery of) all such deeds of waiver in respect
thereof as the Purchaser may require.
2.4 The Purchaser shall not be obliged to complete the exchange of
some only of the Shares unless the exchange of all the Shares
is completed simultaneously in accordance with the provisions
of this agreement.
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3 CONSIDERATION
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3.1 The aggregate consideration for the sale and purchase of the
Shares shall be US$24,750,000 (twenty four million, seven
hundred and fifty thousand) to be satisfied by:
3.1.1 the issue and allotment by Pharmacopeia to the Vendors of the
Consideration Shares in the amounts set out in column 4 of
Part A of Schedule 1; and
3.1.2 the payment of cash consideration to the Vendors in the
amounts set out in column 5 of Part A of Schedule 1.
3.2 The cash consideration shall be payable on completion by CHAPS
transfer to Xxxxxx Xxxxxx client account at The Royal Bank of
Scotland, account number 00000000, sort code 16-23-37. Payment
to the above account will be good and sufficient discharge and
Pharmacopeia will not be further concerned as to the
application of the monies so paid.
3.3 The Consideration Shares shall be issued fully paid (or
credited as fully paid), non-assessable, and shall rank pari
passu in all respects with the issued and outstanding shares
of common stock of the Purchaser (other than in respect of
registration), including the right to receive all dividends or
distributions declared, paid or made after the date of this
Agreement. The parties acknowledge that the Consideration
Shares have not been registered pursuant to the Securities
Act, as amended.
3.4 No fractional Consideration Shares shall be issued and the
Purchaser shall, where any fractional Consideration Share
would result, be entitled to limit
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the Consideration Shares to the nearest lower whole number of
Consideration Shares resulting.
3.5 The Purchaser agrees unconditionally to offer no later than 3
March 2000 to purchase all Ordinary Shares issued before that
date upon the exercise of an Option at the same price per
share as the Shareholders including cash/shares to be
satisfied in cash and/or Consideration Shares at the election
of the Optionholder On terms that the completion of such
purchase is completed no later than 3 March 2000 and the
provisions of clauses 3.2,3.3 and 3.4 shall apply.
3.6 Pharmacopeia covenants with each of the Vendors that within 7
days of Completion it will procure that the Company
contributes US$250,000 (or the Sterling equivalent of this
amount) to the EBIT in accordance with the resolution of the
board of the Company referred to in Recital (C).
3.7 The Company has been notified in writing by each of the
Optionholders that each Optionholder intends to exercise his
Option in full and to accept the offer of the Purchaser as
referred to in clause 3.5 when such offer is made.
3.8 The Purchaser undertakes, subject to receipt of necessary
information from the Vendors, to use its best endeavours to
file with the US Securities Exchange Commission, as soon as
practicable, but in no event later than thirty (30) days after
Completion, a registration statement to enable the resale of
the Consideration Shares by the Vendors, and use its
reasonable efforts, subject to receipt of all necessary
information from the Vendors, to
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cause the registration statement to become effective as soon
as practicable, but in no event later than ninety (90) days
after Completion. The Vendors undertake to comply with the
applicable provisions of the Securities Act and other
applicable securities laws in connection with their
disposition of their Consideration Shares pursuant to such
registration statement.
4 COMPLETION
----------------------------
4.1 Completion shall take place at the offices of the Purchaser's
Solicitors immediately after the exchange of this agreement
when the parties shall comply with their respective
obligations as set out in this clause.
4.2 The Vendors shall deliver to the Purchaser or (at the option
of the Purchaser) to its nominee(s):-
4.2.1 duly executed share transfers in respect of the Shares in
favour of the Purchaser or as it may direct, together with the
relevant share certificates or other documents of title and
any power of attorney or other authority under which such
transfers have been executed and an indemnity in such form as
the Purchaser shall require in relation to any missing
certificates;
4.2.2 written resignations and releases executed as deeds in the
Agreed Form from all persons (other than any directors or
secretaries remaining at the request of the Purchaser or
appointed at the instance of the Purchaser) who, on or
immediately prior to Completion, may be directors or
secretaries of the Company, resigning their offices and
releasing the Company from all claims and rights of action
whether by way of compensation, remuneration, redundancy
payments or otherwise except
10
for accrued remuneration and reasonable expenses (if any) for
the month then current at the respective rates disclosed in
the Disclosure Letter;
4.2.3 [Clause deleted]
4.2.4 the unqualified resignation with effect from Completion of the
present Auditors as auditors of the Company by a notice in
accordance with section 392 of the Companies Act which shall
contain a statement in accordance with section 394 of the
Companies Act together with confirmation that they have no
claims against the Company for unpaid fees or expenses;
4.2.5 the common seal, the certificates of incorporation and copies
of the Memorandum and Articles of Association (containing
copies of all such resolutions and agreements as are referred
to in section 380 of the Companies Act) of the Company and the
registers and books required by the Companies Act to be kept
by it all of which shall be written up to date as at
Completion;
4.2.6 certificate of title in the Agreed Form to the Property and
all deeds and documents of title relating to the Property
(including all insurances policies, premium receipts,
maintenance contracts and other documents relating to the
Property) and certified copies of any documents being held by
mortgagees;
4.2.7 a letter from the Vendors specifying the whereabouts of any
other documents, books and records of the Company which are
not held at the
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Property and directing the holders of them to deliver them up
to the Purchaser's authorised representatives immediately upon
request;
4.2.8 service agreements in the Agreed Form between the Company and
each of Dr GA Xxxxxxxxx, Dr J Hayward, Mr APF Xxxx, Dr PLM
Xxxxx and Xx XX Xxxxxxxxxx signed by each of those
individuals;
4.2.9 powers of attorney in the Agreed Form executed by each Vendor;
4.2.10 the Tax Deed; and
4.2.11 if required by the Purchaser, evidence to the satisfaction of
the Purchaser that any person executing this agreement or any
document to be executed pursuant to it has authority to do so.
4.2.13 a deed of termination, in Agreed Form, in relation to the
Shareholders' Agreement relating to the Company amongst the
Vendors.
4.3 The Vendors shall on the Completion Date:-
4.3.1 procure that none of them or any of their Associates has any
claims or rights of action against the Company and that the
Company is not in any way obligated or indebted to any of them
or to any such Associates save in relation to their terms of
employment with the Company; and
4.3.2 procure that each of them and their Associates shall have
repaid to the Company all sums which may be owed by any of
them to the Company on any account whatsoever, whether or not
such sums shall be due and payable on or before the Completion
Date;
4.3.3 deliver to the Purchaser's Solicitors letters executed as
deeds in the Agreed Form confirming that they have complied
with clauses 4.3.1 and
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4.3.2 and irrevocably and unconditionally releasing the
Company from all obligations and liabilities as contemplated
by clause 4.3.1.
4.4 The Vendors shall procure that a Board Meeting of the Company
will be held which will transact the matters referred to in
the board minutes of the Company in the Agreed Form.
4.5 Subject to the conclusion of the matters referred to in the
previous provisions of this clause:-
4.5.1 the Purchaser shall pay to the Vendors the cash consideration
and allot and issue the Consideration Shares to the Vendors
and deliver to the Vendors' Solicitors:-
4.5.1.1 the Vendors shall be entered in the Purchaser's Stock Transfer
Books as the holders of those shares and definitive share
certificates in the names of the Vendors in respect of the
Consideration Shares shall be delivered as soon as practical
after Completion;
4.5.1.2 a counterpart Tax Deed duly executed by the Purchaser;
5 WARRANTIES AND REPRESENTATIONS
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5.1 The Vendors represent and warrant to and undertake with the
Purchaser that, save only as and to the extent fairly
disclosed to the Purchaser in this agreement or in the
Disclosure Letter, each of the Warranties:-
5.1.1 is true and accurate; and
5.1.2 is not affected or limited by any previous or other
disclosures, express or implied, to the Purchaser, its
officers, representatives or professional advisers.
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5.2 Each of the Warranties, covenants, indemnities and
undertakings set out in this agreement or the Tax Deed is
separate and independent.
5.3 The Vendors agree with the Purchaser for itself and as trustee
for the Company and each of their respective officers and
employees to irrevocably and unconditionally waive any rights
remedies or claims which they may have in respect of any
misrepresentation in or omission from any information or
advice supplied or given by the Company or its respective
officers, employees or agents and on which they have relied in
giving the Warranties, unless such misrepresentation or
omission was made fraudulently in preparing the Disclosure
Letter or in agreeing to give the Tax Deed.
6 BREACH OF WARRANTY
------------------------------------
6.1 Without restricting the rights or the ability of the Purchaser
to claim damages on any basis if it shall be found that any
matter which is the subject of any of the Warranties is not as
represented, warranted or undertaken then, if the Purchaser
shall so elect by notice in writing to them, the Vendors shall
on demand pay to the Purchaser a sum equal to the amount by
which the value (or amount) at the date of this agreement of
any asset or liability of the Company (computed for this
purpose on the basis that full provision was made for the
facts and circumstances in relation to which such breach
arose) was less or, in the case of a liability, greater than
the value (or amount) at the date of this agreement
respectively of such asset or liability (computed for this
purpose on the
14
assumption that the facts and circumstances had been such as
to involve no such breach) and including all costs and
expenses incurred by the Company and/or the Purchaser as a
result of such breach, subject to the limitations on liability
specified in clause 7 and the Fifth Schedule of this
agreement.
6.2.1 Each of the Vendors will forthwith notify (in writing) the
Purchaser of any matter or thing which becomes known to the
relevant Vendor after the date of this agreement (whether or
not prior to Completion) which is inconsistent with any of the
Warranties or would or is likely to give rise to a claim under
the Warranties or the Tax Deed of an amount in excess of
L5,000.
6.2.2 Any matter or thing notified under clause 6.2.1 shall not be
and shall not be deemed to be a disclosure for the purpose of
qualifying or limiting the liability of the Vendors pursuant
to this agreement or the Tax Deed.
7 LIMITATION OF LIABILITY
-----------------------------------------
7.1 The following provisions of this clause 7 and the Fifth
Schedule shall operate to limit the liability of the Vendors
under the Agreement, the Warranties and/or the Tax Deed and
references to "BREACH", "CLAIM" and "LIABILITY" (and any
similar expression) shall, unless the context otherwise
requires, be references to a breach of or a claim or liability
arising under the Warranties and/or the Tax Deed
notwithstanding any other provisions contained in this
agreement.
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7.2 No claim shall be made under the Warranties or under the Tax
Deed unless the Vendors shall have been given written notice
of that claim specifying in reasonable detail the matter which
gives rise to the breach or claim, the nature of the breach or
claim and the amount claimed as soon as practicable just after
the Purchaser becomes aware of the breach by or on behalf of
the Purchaser prior to the first anniversary of Completion
other than such a liability which shall arise from fraud or
wilful default in which case there shall be no limitation.
Provided that the Vendors liability in respect of any claim
shall absolutely determine (if such claim has not been
satisfied settled or withdrawn) if legal proceedings in
respect of such claim have not been commenced within six
months (or in the case of a liability relating to Taxation, 18
months) of the service of the notice of such claim and for
this purpose proceedings shall not be deemed to have commenced
unless they have been properly issued and reasonable steps
have been taken to validly serve them on the Vendors.
8 PURCHASER'S WARRANTIES
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The Purchaser warrants to the Vendors as follows:
8.1 The Purchaser has the full power and authority to issue and
allot the Consideration Shares.
8.2 The Purchaser has full power and authority to enter into this
agreement and the other documents to be executed in connection
with it all of which constitute or will immediately after
Completion constitute legal and valid binding obligations on
the Purchaser enforceable in accordance with their respective
terms.
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8.3 The Purchaser is a corporation duly organised and validly
existing under the laws of its state of incorporation with
full corporate power and authority to effect the transactions
contemplated by this agreement.
8.4 The Purchaser is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the
business conducted by it or the property it owns, leases or
operates requires it to so qualify, and where the failure to
so qualify will have a material adverse effect on the
Purchaser.
8.5 The Purchaser has all requisite corporate power and authority
to enter into and deliver this Agreement to perform its
obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby by the Purchaser have been duly authorised
by all necessary corporate action on the part of the
Purchaser.
8.6 This Agreement has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding
obligation of the Purchaser enforceable against it in
accordance with its terms.
8.7 Neither the execution and delivery of this Agreement by the
Purchaser nor the consummation of the transactions
contemplated hereby will:
8.7.1 conflict with, or result in a breach of any provision of the
Purchaser Articles or the Purchaser By-Laws;
8.7.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an Event that, with
the giving of notice, the passage of time or otherwise, would
constitute a default) to terminate, accelerate,
17
modify or call a default under, or resulting in the creation
of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Purchaser or any of its
subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other
instrument or obligation to which the Purchaser or any of its
subsidiaries is a party, except for such breaches, defaults or
other occurrences which would not, individually or in the
aggregate, have a material adverse effect;
8.7.3 violate any order, writ, injunction or decree, except for such
violations, individually or in the aggregate, which would not
have a material adverse effect on the Purchaser and its
subsidiaries taken as a whole;
8.7.4 require any action or consent or approval of, or review by, or
registration or filing by the Purchaser or any of its
affiliates with any third party or any local, domestic,
foreign or multi-national court, arbitral, tribunal,
administrative agency or commission or other governmental or
regulatory body, agency, instrumentality or authority (a
"GOVERNMENTAL Authority").
8.8 The Purchaser has filed with the Securities and Exchange
Commission (the "COMMISSION") all forms, reports, schedules,
statement and other documents required to be filed by it since
1 January 1996 under the Exchange Act or the Securities Act
(such documents as supplemented and amended since the time of
filing, collectively, the PURCHASER'S SEC DOCUMENTS). The
Purchaser's SEC Documents, including, without
18
limitation, any financial statements or schedules included
therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness
and the dates of mailing, respectively and in the case of any
of the Purchaser's SEC Documents amended or superseded by a
filing prior to the date of this Agreement, then on the date
of such amending or superseding filing):
8.8.1 did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
and
8.8.2 complied in all material respects with the applicable
requirements of the Securities and Exchange Act of 1934
(together with the rules and regulations thereunder, the
EXCHANGE ACT) and the Securities Act, as the case may be. The
financial statements of the Purchaser included in the
Purchaser SEC Documents at the time filed (and, in the case of
registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively, and, in
the case of any of the Purchaser's SEC Documents amended or
superseded by a filing prior to the date of the Agreement then
on the date of such amending or superseding filing) (i)
complied as to form in all material respects with the
published rules and regulations of the Commission with respect
thereto, (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
during the periods involved
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(except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q of the
Commission), and except that unaudited financial statements
may not contain footnotes and are subject to year-end
adjustments which will not individually or in the aggregate,
be material in magnitude, and (iii) fairly present (subject in
the case of unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of the
Purchaser and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations for
the periods then ended.
8.9 The Purchaser and each of its subsidiaries is in compliance,
and at all times since 1 January 1996 has been in compliance,
with all applicable laws, statutes, orders, rules,
regulations, policies or guidelines promulgated, or
judgements, decisions or orders entered by an Governmental
Authority (collectively, APPLICABLE LAWS) relating to the
Purchaser and each of its subsidiaries or their respective
business or properties, except where the failure to be in
compliance with such Applicable Laws (individually or in the
aggregate) would not have a material adverse effect on the
business, results of operations or financial condition on the
Purchaser. No investigation or review by any Governmental
Authority with respect to the Purchaser or any of its
subsidiaries is pending, or, to the knowledge of the
Purchaser, threatened, nor has any Governmental Authority
indicated in writing an intention to conduct the same other
than those the outcome of which would not have a
20
material adverse effect on the business, results of operations
or financial condition on the Purchaser.
8.10.1 Except as stated in the Purchaser's SEC Documents, there is no
suit, claim, action, proceeding, hearing, notice of violation,
demand letter or investigation (an ACTION) pending or, to the
knowledge of the Purchaser (or its executive officers or
directors), threatened against the Purchaser, any of its
subsidiaries or any of their respective executive officers or
directors that, individually or in the aggregate, would have a
material adverse effect on the business, or financial
condition of the Purchaser. Neither the Purchaser nor any of
its subsidiaries is subject to any outstanding order, writ,
injunction or decree that, individually or in the aggregate,
that would have a material adverse effect on the Purchaser and
its subsidiaries, taken as whole.
8.10.2 There is no Action presently pending or to the knowledge of
the Purchaser (or its executive officers or directors),
threatened against the Purchaser or any of its subsidiaries
relating to any alleged hazard or alleged defect in design,
manufacture, materials or workmanship, including without
limitation any failure to warn or alleged breach of express or
implied warranty or representation, relating to any produce
manufactured, distributed or sold by or on behalf of the
Purchaser or any of its subsidiaries which, if adversely
determined, would have a material adverse effect on the
business, results of operations or financial condition of the
Purchaser.
21
8.11 Since 30 September 1999, there has been no material adverse
change in the business, results of operations or financial
condition of the Purchaser other than any Event, occurrences
and developments that would not, individually or in the
aggregate, have or reasonably be expected to have a material
adverse effect on the business, results of operations or
financial condition of the Purchaser or a material adverse
effect on the liability of the Purchaser to consummate the
transaction contemplated hereby.
8.12 The Board of Directors of the Purchaser, at a meeting duly
called and held, has determined that this Agreement and the
transactions contemplated hereby, including the Acquisition,
taken together are in the best interests of the Purchaser and
its stockholders.
9 UNDERTAKINGS BY THE VENDORS
---------------------------------------------
9.1 The Vendors undertake to the Purchaser that as soon as
possible following Completion they will procurethe execution
of any document which the Purchaser may reasonably require
them to have executed so as to vest effectively the beneficial
and legal ownership of the Shares in the Purchaser or as it
may direct free from all liens, charges, encumbrances and
adverse claims and otherwise to give effect to the terms of
this agreement;
9.2 Subject to clause 7 and the Fifth Schedule, the Vendors shall
indemnify the Company against all claims which may be made
against it by any person whose resignation from office or
relinquishment of rights the Vendors may be obliged to procure
in order to comply with this agreement
22
by reason of the resignation or removal from office or
termination of employment of such person and against all costs
incurred by it which are incidental to any such claim.
9.3 The Vendors undertake with the Purchaser that, if and for so
long as they remain the registered holders of any of the
Shares after Completion, they will hold the Shares and the
dividends and other distributions of profits or surplus or
other assets in respect of such Shares and all rights arising
out of or in connection with them in trust for the Purchaser
and will at all times after Completion deal with and dispose
of such Shares, dividends, distributions and rights as the
Purchaser shall direct and (if so requested by the Purchaser)
execute all instruments of proxy or other documents which may
be necessary or proper to enable the Purchaser to attend and
vote at any meeting of the Company.
10. RESTRICTIONS ON THE MANAGING VENDORS
------------------------------------------------------
10.1 In this clause:-
"BUSINESS" means the business of the development, licensing
and maintenance of chemical database, software systems and
chemical data content and the provision of consultancy
services to support pharmaceutical discovery research or any
part thereof now carried on by the Company;
"DIRECTLY OR INDIRECTLY" means (without prejudice to the
generality of the expression) either alone or jointly or in
partnership with any other person, firm or company or (except
as the holder for investment purposes only of
23
securities in any company not exceeding 3 per cent in nominal
value of the securities of that class in issue or shares) as
the holder of any interest in or as an employee director agent
or representative of or consultant to any other person firm or
company; and
"RESTRICTION AREA" means any or all of the following:
- United Kingdom
- the European Union (other than the United Kingdom); and
- the USA
- Japan;
"RESTRICTION PERIOD" means the period of 3 years from
Completion.
10.2 Each of the Managing Vendors severally undertakes to the
Purchaser (for itself and for the benefit of the Company) that
he will not (other than for and on behalf of the Company)
without the prior written consent of the Purchaser directly or
indirectly:-
10.2.1 at any time during the Restriction Period in the Restriction
Area be engaged or concerned or interested or participate in
or carry on any business which is in competition with the
Business anywhere in the Restricted Area;
10.2.2 at any time during the Restriction Period in the Restriction
Area in relation to a business which is the same as or in
competition with the Business, canvass, solicit or entice the
custom of or deal with or supply any goods or services which
are the same as or in competition with the goods and services
of the Business to any person who at the date of this
agreement or at any time during the period of two years prior
to Completion has been a
24
customer or client of or in the habit of dealing with the
Business in respect of such goods and services and with whom
the Vendor shall have had personal contact during such two
year period; or
10.2.3 at any time during the Restriction Period offer employment to
or employ or offer or conclude any contract for services with
any person who as at Completion shall be a director, employee,
consultant or agent of the Company entitled to emoluments
(including commission if any) exceeding the annual rate of
L25,000; or
10.2.4 at any time during the Restriction Period in the Restriction
Area knowingly assist any competitor of the Company to a
material extent in carrying on or developing any business
which is in competition with the Business; or
10.2.5 at any time during the Restriction Period in the Restriction
Area seek to contract with or engage any person who has been
contracted with or engaged to manufacture, assemble, supply or
deliver products, goods, materials or services to the Company
in respect of such goods and services at any time during the
period of twelve months prior to Completion; or
10.2.6 at any time employ, solicit or entice or endeavour to entice
any employee earning in excess of L25,000 of the Company away
from the Company; or
10.2.7 at any time entice or endeavour to entice any person to breach
his contract for services with the Company;
10.2.8 except as required by law at any time disclose to any person
or use for his own benefit (or that of any other person) any
information or know-how of
25
a confidential nature concerning and relating to the goodwill
of the Company including (without limitation) information and
know-how as to products, processes, techniques, suppliers,
customers, finances, business policy and expansion or forward
planning programmes which he shall have acquired before
Completion; or
10.2.9 at any time falsely represent himself as being connected with
or interested in the Company; or
10.2.10 except as required by law at any time do or say anything
likely or calculated to lead any person, firm or company to
withdraw from or cease to continue offering to the Company any
rights (whether of purchase, sale, import, distribution,
agency or otherwise) then enjoyed by it or in any other way to
cease to do business or reduce the amount of business it
transacts with the Company or any member of the Company's
group; or
10.2.11 at any time carry on a business under the name "Synopsys
Scientific Systems" or any part combination or abbreviation
thereof or any similar or other name likely to confuse or
mislead any part of the public.
10.3 Each of the Managing Vendors acknowledges and agrees with the
Purchaser that:-
10.3.1 each of the sub-clauses contained in clause 10.2 constitutes
an entirely separate severable and independent covenant by and
restriction on him;
10.3.2 the duration, extent and application of each of the
restrictions contained in clause 10.2 are no greater than is
necessary for the protection of the
26
goodwill and trade connections of the Business and the value
of the Company; and
10.3.3 if any restriction contained in clause 10.2 shall be found
void but would be valid if some part thereof were deleted such
restriction shall apply with any such deletion as may be
necessary to make it valid and effective].
11. CLAUSE DELETED INTENTIONALLY
12 NATURE OF OBLIGATIONS
12.1 Each of the obligations, representations, warranties,
indemnities and undertakings entered into or made by or on
behalf of any of the parties to this agreement (excluding any
obligation fully performed at Completion) shall continue in
full force and effect notwithstanding Completion taking place.
12.2 The rights and remedies of the Purchaser in respect of a
breach of any provision of this agreement or pursuant to the
Tax Deed shall not be affected by Completion or by whether the
matters constituting such breach or other matters were known
or could have been known by the Purchaser prior to Completion
and no such actual or constructive knowledge shall in any way
constitute a waiver of any of the Purchaser's rights.
12.3 Any right or remedy of the Purchaser in respect of a breach of
any provision of this agreement shall be in addition and
without prejudice to all other rights and remedies of the
Purchaser and the exercise or failure to exercise any such
right or remedy by the Purchaser shall not constitute a waiver
or by the Purchaser of that or of any of its other rights or
remedies.
27
12.4 None of the rights or obligations referred to in this
agreement may be assigned or transferred to any other person
without the prior written consent of all the parties to this
agreement.
13 ANNOUNCEMENTS
None of the parties to the agreement will either before or
after Completion, and in relation to the Purchaser only for a
period of 1 year after Completion, make any announcement or
issue any circular to the press or shareholders or the
employees, suppliers or customers of the Company (otherwise
than as required by law or in accordance with the requirements
of The Stock Exchange or the Panel on Takeovers and Mergers or
the US Securities and Exchange Commission) or the employees,
suppliers or customers of the Company concerning the terms and
conditions of this agreement without the text of such
announcement or circular first being approved by the other
parties (such approval not to be unreasonably withheld or
delayed) but nothing shall restrict the Vendors from making
such disclosures to the directors of the Company as may be
reasonably necessary for the proper performance by such
directors of their duties.
14 GENERAL
14.1 This agreement together with any other documents which this
agreement expressly requires shall be signed shall constitute
the entire understanding and agreement between the parties to
it in relation to the subject matter of this agreement.
28
14.2 Any variation of this agreement shall be binding only if it is
recorded in a document signed by or on behalf of the parties
to this agreement.
14.3 Each party shall pay its own costs in relation to the
negotiations leading up to the sale of the Shares and to the
preparation, execution and carrying into effect of this
agreement and of all the other documents referred to in it.
14.5 Time shall be of the essence of this agreement.
14.6 This agreement may be signed in any number of separate
counterparts but shall not take effect until each party has
signed at least one counterpart.
15 COMMUNICATIONS
15.1 All communications between the parties with respect to this
agreement shall be in writing and delivered by hand or sent by
pre-paid post, (first class if inland, airmail if overseas) or
facsimile telecopier ("FAX") to the address of the addressee
as set out in this agreement, or to such other address or fax
number in England as the addressee may from time to time have
notified for the purposes of this clause [or as specified in
clause 15.2].
15.2 Communications shall be deemed to have been received:-
15.2.1 if delivered by hand, on the day of delivery;
15.2.2 if sent by first class post, two Business Days after posting
exclusive of the day of posting (or five Business Days in the
case of a posting to an address outside the United Kingdom);
29
15.2.3 if sent by fax at the time of transmission or, if the time of
transmission is not during the addressee's normal business
hours, at 9.30 a.m. on the next Business Day;
15.3 Communications addressed to the Vendors shall be sent to:
Xxxxxx Xxxxxx, Kings Court, 12 King Street, Leeds,
Fax No.0000 000 0000
and marked for the attention of "Xxx Xxxxxxx";
Communications addressed to the Purchaser shall be sent to:
1. Titmuss Xxxxxx Xxxxxxx, 0 Xxxxxxxxx' Xxx,
Xxxxxx XX0X 0XX
Fax No. 0000 000 0000/2830
and marked for the attention of "Xxxxx Xxxxx"
2. Dechert Price & Xxxxxx, Princeton Pike Corporate
Center, XX Xxx 0000, Xxxxxxxxx, XX 00000-0000, XXX
Fax No. (000) 000 0000
and marked for the attention of "Xxxxx Xxxxxx".
3. The Purchaser, 0000 Xxxxxxxx Xxxx, Xxx Xxxxx, XX
00000-0000, XXX
Fax No. 000 000 000 0000
and marked for the attention of "Xxx Xxxxxx"
15.4 In proving service:-
15.4.1 by delivery by hand, it shall be necessary only to produce a
receipt for the communication signed by or on behalf of the
addressee;
30
15.4.2 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; and
15.4.3 by fax it shall be necessary only for the communication or a
confirmatory letter to have been delivered by hand or sent by
first class post on the same day but failure of the addressee
to receive such confirmation shall not invalidate the relevant
communication deemed given by fax.
16 PROPER LAW
----------------------------
16.1 This agreement shall be governed by English Law and the
parties irrevocably submit to the non-exclusive jurisdiction
of the English Courts provided, however, that the issuance
sale, resale or transfer of any of the Consideration Shares
shall be governed by the US Federal Securities Laws to the
extent applicable.
16.2 The Vendors irrevocably nominate and instruct the Vendors'
Solicitors and the Purchaser irrevocably nominates and
instructs the Purchaser's Solicitors to receive service of any
notice or proceedings required to be served upon or given to
them or any of them pursuant to this agreement.
31
FIRST SCHEDULE
----------------------
PART A - THE VENDORS
----------------------
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5
-------- -------- -------- -------- --------
Name and address Number of Ordinary Number of Preferred Consideration Shares US$ Cash
Shares held Shares held to be Consideration
issued
XXXXXXX XXXXX 4,000 Nil Nil 3,266,895
XXXXXXX XXXX
00 Xx Xxxxx Xxxx
Xxxxx
Xxxx Xxxxxxxxx
XX0 0XX
XXXXX XXXXXXX 2,500 Nil Nil 2,041,810
XXXXXXXXXX
0 Xxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxxxx
Xxxxxxxx
XX0 0XX
XXXXXX XXXXXXX 4,500 Nil Nil 3,675,257
00 Xxxxxxx Xxxxx
Xxxxxxxx
Xxxxx
Xxxx Xxxxxxxxx
XX00 0XX
XXXX XXXXXXX 5,500 Nil 12,454 3,799,808
XXXXXXXXX
"Stoneycroft"
00 Xxxxxxxx
Xxxxxxxx-xx-Xxxxx
Xxxxx
XX00 0XX
32
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5
-------- -------- -------- -------- --------
XXXX XXXX 3,500 Nil Nil 2,858,533
XXXXXXX XXXXX
Holme Farm Cottage
Wothersome
Wetherby
Xxxxx
Xxxx Xxxxxxxxx
XX00 0XX
XXXXX XXXXXXXX XXXXXXXXX Nil 3,033 Nil 2,477,123
KATRITZKY REVOCABLE TRUST
0000 Xxxxx Xxxx
00 Xxxxxx
Xxxxxxxxxx
Xxxxxxx
00000
XXX
K B (CI) NOMINEES LTD Nil 3,034 6,688 2,106,249
West Centre
St Helier
Jersey
UNIVERSITY OF LEEDS INNOVATIONS Nil 1,214 Nil 991,503
LTD
000 Xxxxxxxxx Xxxx
Xxxxx
Xxxx Xxxxxxxxx
XX0 0XX
---------------------------------------------------------------------------------------------------------------------
TOTAL 20,000 7,281 19,142 21,217,178
33
PART B THE OPTIONHOLDERS
-------------------------
COLUMN 1 NO. OF SHARES/ COLUMN 2 COLUMN 3 COLUMN 4
-------- OPTIONS -------- -------- --------
---------------
Name 2000 Options 2002 Options $ Cash Value
XXX XXXXXX 401 401 175 470,433
XXXXXXX XXXXX XXXXXXX 175 150 122,509
XXXX*
XXXXXXXXXXX XXXXX 150 361 294,837
XXXXX XXXXXXX 361 150 122,509
XXXXXXXXXX*
XXXXXX XXXXXXX* 150 150 122,509
XXXX XXXXXXX 150 150 122,509
XXXXXXXXX*
XXXX XXXX XXXXXXX 150 150 122,509
XXXXX*
XXXXXX XXXXXXX 375 375 306,271
XXXXXX XXXX 361 361 294,837
XXXXXX XXXXXX 200 200 163,345
XXXX XXXXXXX 150 150 122,509
XXXXX XXXXXXXX 250 250 204,181
-----------------------------------------------------------------------------------------------------------
TOTAL 3023 1123 1900 2468,958
34
SECOND SCHEDULE
---------------
THE COMPANY
-----------
Registered number:- 02708693
Date of Incorporation:- 22 April 1992
Incorporated under the Companies Acts 1985 1985 and 1989
and 1989
Registered Office:- 0 Xxxxx Xxxx Xxxx
Xxxxxxxxxx
Xxxxx
Xxxx Xxxxxxxxx
XX0 0XX
Authorised Capital:-
Issued Capital:- L27,281 divided into 20,000
Ordinary Shares
7,281 Preference Shares
Shareholders:- See First Schedule
Directors:- Xxxxxxx Xxxxx Xxxxxxx
Xxxx
Xxxxxx Xxxxxx Xxxxxxxx
Xx. Xxxxx Xxxxxxx Xxxxxxxxxx
Xx. Xxxxxx Xxxxxxx
Xx.Xxxx Xxxxxxx Xxxxxxxxx
Xx. Xxxx Xxxx Xxxxxxx Xxxxx
Dr. Ederyn Xxxxxxxx
Xxxxxxx Xxxxxxx
Secretary:- Xxxxx Xxxxxxx Xxxxxxxxxx
Accounting Reference Date:- 31 March
Subsisting Mortgages and Charges:- Debenture to Fixed and Floating
Lloyds Bank PLC
8 December 1997
35
THIRD SCHEDULE
THE PROPERTIES
1. BRIEF DESCRIPTION: LAND AND BUILDINGS KNOWN AS 0 XXXXX XXXX XXXX
XXXXXXXXX XXXXX XXXXX XXX XX THE ATTACHED PLAN.
2. TENURE: FREEHOLD
3. REGISTERED TITLE NUMBER: WYK 401148
36
FOURTH SCHEDULE
WARRANTIES
GENERAL
1.1 THE VENDORS
1.1.1 The Vendors are the beneficial and legal owners of the Shares
as set out in the First Schedule and are entitled to sell the
Shares to the Purchaser free from all liens charges and
encumbrances without the consent of any third party.
1.1.2 Each of the Vendors has full power and authority to enter into
this agreement and the other documents to be executed in
connection with it, all of which constitute (or will when
executed constitute) legal and valid binding obligations on
them enforceable in accordance with their respective terms.
1.1.3 No bankruptcy order has been made in respect of any of the
Vendors or a petition for such an order presented.
1.1.4 No application has been made in respect of any of the Vendors
for an interim order under section 253 Insolvency Xxx 0000.
1.1.5 None of the Vendors is unable to pay any debt as that
expression is defined in section 268 Insolvency Xxx 0000.
1.1.6 No person has been appointed by the court to prepare a report
in respect of any of the Vendors under section 273 Insolvency
Xxx 0000.
1.1.7 No interim receiver has been appointed of the property of any
of the Vendors under section 286 Insolvency Xxx 0000.
37
1.1.8 None of the Vendors has ever been disqualified from acting as
a director.
1.2 THE SHARES
1.2.1 The Shares will at Completion constitute the whole of the
issued and allotted share capital of the Company and are fully
paid or credited as fully paid.
1.2.2 There are no options, rights to subscribe for, calls or
contracts for the issue of any shares in the Company available
to any person and all options outstanding immediately
preceding the date of this Agreement have been exercised and
the underlying shares issued other than as specified in Part B
of the First Schedule.
1.3 ACCURACY OF DISCLOSURE LETTER
All statements of fact and information in the Disclosure
Letter contained or referred to in the Disclosure Letter are
true and not misleading, all documents annexed to the
Disclosure Letter are true copies and all statements of
opinion in the Disclosure Letter have been made after due and
careful enquiry and are reasonably believed to be correct and
nothing has been omitted from the Disclosure Letter which
renders any of such statements incomplete, inaccurate or
misleading.
1.4 LICENCES TO PURCHASE SHARES
All necessary licences, authorisations, orders, grants,
consents, permissions and approvals to the purchase of the
Shares by the Purchaser have been obtained and remain in full
force and effect and there are no circumstances which indicate
that any of such licences, authorisations,
38
orders, grants, consents, permissions or approvals may be
revoked or not renewed, in whole or in part.
1.5 CONSIDERATION SHARES
1.5.1 Each Vendor understands that the offer and sale of the
Consideration Shares being issued pursuant to this agreement
has not been registered but that Pharmacopeia will use its
best endeavours in the terms set out in Clause 3.8.
1.5.2 Each Vendor acknowledges receipt of and has read, carefully
considered and fully understands this agreement and
Purchaser's Annual Report on Form 10-K for the year ended 31
December 1998, Purchaser's Quarterly Reports on Form 10-Q for
the first three quarters ended 30 September 1999 and the
Purchaser's Notice of 1999 Annual Meeting and Proxy Statement
and all other documents, including exhibits, related to
Purchaser and its consolidated operations requested by and
furnished to such Vendor (such documents are herein
collectively referred to as the "Purchaser Information"). No
Vendor has been furnished with or solicited by any offering
literature, leaflet, public promotional meeting, circular,
newspaper or magazine article, radio or television
advertisement, or any other form of general advertising.
1.5.3 Each Vendor is able to (i) bear the economic risk of its
investment in the Consideration Shares and (ii) hold the
Consideration Shares for an indefinite period of time.
39
1.5.4 Each Vendor understands the business in which Purchaser is
engaged and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits
and risks of his investment in the Consideration Shares and of
making an informed investment decision with respect thereto.
Each Vendor has obtained sufficient information to evaluate
the merits and risks of its investment and to make such a
decision.
1.5.5 In making its decision to invest in the Consideration Shares,
each Vendor has relied upon independent investigations made by
it and by its professional advisors. Each Vendor and its
advisors have been given the opportunity to obtain information
and to examine this agreement and the exhibits hereto and to
ask questions of, and to receive answers from, Purchaser or
any person acting on its behalf concerning the Consideration
Shares, Purchaser and terms and conditions of this investment,
and to obtain any additional information to verify the
accuracy of any information previously furnished. All such
questions have been answered to such Vendor's full
satisfaction.
1.5.6 Save as set out in this Agreement, each Vendor confirms that
neither Purchaser nor any of its affiliates or agents have
made any representations or warranties (oral or written)
concerning such Vendor's investment in the Consideration
Shares, Purchaser, its business, prospects or anticipated
financial results, or other matters.
40
1.5.7 The Consideration Shares are being purchased solely for such
Vendor's own account, as principal, for investment and not for
the interest of any other Person or entity and not with a view
to, or in connection with, any resale, distribution,
subdivision, or fractionalisation of the Consideration Shares.
1.5.8 Each Vendor who receives Consideration Shares understands
that:
1.5.8.1 such Vendor must bear the economic risk of the investment for
an indefinite period of time because the Consideration Shares
cannot be resold unless such sale is subsequently registered
under the Securities Act and state securities laws or unless
an exemption from such registration is available, as
established by an opinion of counsel satisfactory to
Purchaser;
1.5.8.2 the certificate(s) evidencing each of the Consideration Shares
will bear the following legend:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities or "blue sky" laws, and may
not be offered, sold, assigned, transferred, pledged or
otherwise disposed of unless registered pursuant to the
provisions of such act and blue sky laws or an exemption
therefrom is available as established by a written opinion of
counsel acceptable to the Company.
1.5.8.3 no federal or state agency has passed on or made any
recommendations or endorsements of the investment in the
Consideration Shares.
41
1.5.8.4 each Vendor's investment in Purchaser involves certain risks
in that, among other factors, successful operation of
Purchaser may depend on factors beyond the control of
Purchaser.
THE COMPANY
2.1 THE COMPANY
2.1.1 The Company is a private company limited by shares
incorporated in England and the information set out in the
second schedule is correct.
2.1.2 The Company's sole business is that of the development,
licencing and maintenance of chemical databases, software
systems and chemical data content and the provision of
consultancy services to support pharmaceutical discovery
research and it has never carried on any other business.
2.2 SUBSIDIARIES
The Company does not have and never has had any subsidiaries
or subsidiary undertakings and nor does the Company control or
take part in the management of any other company or business
organisation and it has never done so or agreed to do so, and
the Company is not, never has been and has not agreed to
become the registered holder or beneficial owner of any share
or loan capital in any company.
2.3 DIRECTORS
The Company does not have any directors, shadow directors or
alternate or associate directors other than the persons listed
in the second schedule.
2.4 TRADING NAMES ETC
42
The Company uses (and since its incorporation has used) no
name other than its corporate name for any purpose.
2.5 AGENTS
2.5.1 No person is authorised to act as agent for the Company or to
bind the Company otherwise than the directors of the Company
acting as the Board.
2.5.2 There are no powers of attorney given by the Company which are
in force.
2.6 OVERSEAS AGENCIES
The Company does not have any branch, agency or any permanent
establishment outside the United Kingdom.
2.7 SHARE CAPITAL
2.7.1 Since the Balance Sheet Date, no share or convertible
securities or options for any such securities of the Company
(or any rights or interests therein) have been created,
allotted or issued or agreed to be created, allotted or
issued.
2.7.2 There are no outstanding rights to call for the creation,
allotment, issue, transfer or conversion at any time of any
share or loan capital of the Company (or any rights or
interests therein).
2.7.3 No shares in the capital of the Company have been issued and
no transfer of shares in the capital of the Company has been
registered otherwise than in accordance with the Articles of
Association of the Company from time to time in force and all
such transfers have been duly stamped.
2.8 STATUTORY AND OTHER REGULATIONS
43
2.8.1 The 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.
2.8.2 All licences, authorisations, orders, grants, consents,
permissions and approvals necessary to the proper carrying on
of the business of the Company have been obtained and:-
2.8.2.1 the Vendors are not aware of any material breach of any of
their terms or conditions; and
2.8.2.2 the Company has not received any notice and the Vendors are
not aware of any circumstances which indicate that any of them
may be revoked or not renewed, in whole or in part.
2.8.3 So far as the Vendors are aware the Company nor any of its
officers is not in material breach of or has failed to comply
in full with any statutory or municipal rules, regulations and
provisions applying to or affecting the business or activities
of the Company.
2.8.4 All documents required by the Companies Act or any other
legislation to be filed with the Registrar of Companies in
respect of the Company have been duly filed and were correct
and due compliance has been made with all other legal
requirements in connection with the formation of the Company
and its conduct and all issues and allotments of shares,
debentures and other securities.
44
2.8.5 So far as the Vendors are aware, there are no investigations
or enquiries (pending, threatened or in existence) by or on
behalf of any governmental or other body in respect of the
affairs of the Company.
2.9 DATA PROTECTION ACT
The Company has complied with all material requirements of the
Data Protection Xxx 0000 and in particular:-
2.9.1 has registered as a data user under that Act for all purposes
for which registration is required by the business as carried
on by the Company;
2.9.2 has complied with the data protection principles; and
2.9.3 the Company has not received any notice letter or complaint
alleging a breach by it of the provisions of the Data
Protection Act 1984 and has no reason to believe that
circumstances exist which may give rise to such a notice
letter or complaint.
2.10 STATUTORY BOOKS AND MEMORANDA AND ARTICLES OF ASSOCIATION
2.10.1 The Register of Members and other books required by the
Companies Act to be kept by the Company contain an accurate
and complete record of the matters with which they should deal
and there has been no notice of any proceedings to correct or
rectify any such books.
2.10.2 The copy of the Memorandum and Articles of Association of the
Company attached to the Disclosure Letter is complete and
accurate in all respects and has embodied in it or annexed to
it a copy of every such resolution and agreement as is
referred to in section 380 of the Companies Act.
45
2.11 RESOLUTIONS
No resolutions of any kind of the Company or any class of its
members (other than those relating to business at an Annual
General Meeting which is not special business) have ever been
passed.
2.12 INSOLVENCY
2.12.1 The Company has never been a party to any transaction to which
the provisions of sections 238 to 246 (inclusive) of the
Insolvency Xxx 0000 may be applicable.
2.12.2 No order has been made or petition presented or resolution
passed for the winding up or administration of the Company, no
receiver or administrator or administrative receiver has been
appointed or could lawfully be appointed by any person of the
Company's business or assets or any part thereof, the Company
is not insolvent and has not stopped payment and is not unable
to pay its debts (within the meaning of section 123 of the
Insolvency Act 1986) and the Company is capable of meeting its
liabilities as and when they fall due and for the foreseeable
future.
2.13 PURCHASE OF SHARES
2.13.1 No person is entitled to receive from the Company any fees,
brokerages or other commissions in connection with the
purchase or sale of shares in the Company.
2.13.2 The Company has not at any time acted in breach of section 151
of the Companies Act and nor has it ever given financial
assistance in connection
46
with the acquisition of its own or any holding company's
shares in accordance with the provisions of section 155 of the
Companies Act.
2.13.3 The Company has never reduced, purchased or redeemed its share
capital or agreed to do so.
2.14 REGISTRATION OF CHARGES
All charges in favour of the Company have (if appropriate)
been registered in accordance with the Companies Act.
2.15 POSSESSION OF DOCUMENTS
All title deeds relating to the assets of the Company and an
executed copy of all agreements to which 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, the Company are
in its possession.
2.16 SEAL
The Company has a common seal.
2.17 FINANCIAL SERVICES ACT
The Company does not carry on or purport to carry on in the
United Kingdom any investment business within the meaning of
the Financial Services Xxx 0000.
3. THE ACCOUNTS
------------------------------
3.1 THE ACCOUNTS
The Accounts:-
3.1.1 have been prepared in accordance with the historical cost
convention;
47
3.1.2 comply with the requirements of the Companies Act, all other
relevant statutes, all relevant SSAP's, all pronouncements
issued or adopted by the Accounting Standards Board and other
generally accepted accounting principles ("GAAP") applicable
to a United Kingdom company and have been audited in
accordance with the Auditing Standards issued by the Auditing
Practices Board;
3.1.3 have been prepared on the same bases and policies of
accounting as the published statutory accounts of the Company
for the preceding three accounting reference periods (and in
particular there has been no change in any practice or policy
or in any methods or bases of valuation or any accountancy
treatment relating to the keeping of any such accounts);
3.1.4 give a true and fair view of the state of affairs of the
Company at the Balance Sheet Date and of its profit or loss
for the financial period ended on the Balance Sheet Date;
3.1.5 disclose all the assets and liabilities of the Company as at
the Balance Sheet Date;
3.1.6 contain proper provision or reserves or appropriate notes in
respect of all liabilities (whether actual or contingent,
quantified or disputed) of the Company as at the Balance Sheet
Date;
3.1.7 contain proper provision or reserves for Taxation assessed or
liable to be assessed on the Company or for which it is or may
become liable up to the Balance Sheet Date and any liability
to pay Taxation which has been deferred for any reason;
48
3.1.8 contain proper provision for depreciation and for any
obsolescence of assets (all rates of depreciation being
consistent over the three financial years preceding the
Balance Sheet Date) and the policy of depreciation has been
applied in accordance with SSAP 12;
3.1.9 contain proper and adequate provision or reserves for any
foreseeable losses which may arise on completion and/or on
realisation of stock or work-in-progress (the method and bases
of valuing of which have been accepted by the Revenue); and
the value attributed to the remaining stock and the raw
materials included in work in progress and finished stock did
not exceed the lower of cost and net realisable value as at
the Balance Sheet Date;
3.1.10 fully disclose all capital and leasing commitments of the
Company; and
3.1.11 are not affected by any extraordinary or non-recurring items.
3.2 PAST ACCOUNTS
The published statutory accounts of the Company for the three
accounting reference periods preceding the period to which the
Accounts relate comply with the same criteria as described in
relation to the Accounts in paragraph 3.1 in relation to the
periods in respect of which and the date to which they were
each prepared.
3.3 BOOK DEBTS SHOWN IN THE ACCOUNTS
The debts shown in the Accounts (less the amount of any
provision or reserve in the Accounts calculated on the same
basis as that applied in the published statutory accounts of
the Company for the preceding three
49
accounting reference periods) were good and collectable in
full in the ordinary and normal course of business and have
realised the net amount thereof and none of those debts:-
3.3.1 was at the Balance Sheet Date subject to any counter-claim or
set off (except to the extent of any such provision or
reserve); or
3.3.2 has subsequently been released on terms that any debtor pays
less than the full book value of his debt or has been written
off or has proved to any extent irrecoverable or is now
regarded as irrecoverable (in whole or in part).
3.4 ACCOUNTING RECORDS
All accounts, books, ledgers, financial and other records of
whatsoever kind of the Company are in the possession of the
Company have been properly kept in accordance with good
business practice and completed in accordance with generally
accepted accounting principles and standards and statutory
requirements, and disclose with reasonable accuracy the
current financial and contractual position of the Company and
contain a record of its assets and liabilities.
3.5 MANAGEMENT ACCOUNTS
The Management Accounts for the period from the Balance Sheet
Date to 31 January 2000 a copy of which is annexed to the
Disclosure Letter have been prepared by the Company with due
care and attention in accordance with the same accounting
policies as the Accounts and show a reasonably accurate and
fair view of the state of affairs and profit or loss of the
50
Company as at the date and for the period in respect of which
they have been prepared and are not affected by any
exceptional or non-recurring items; but it is hereby
acknowledged that they have not been prepared on a statutory
basis nor have they been audited and nor do they address
taxation arising on profits of the Company for the current
accounting period.
4. THE PROPERTIES
--------------------------------
4.1 The Property comprises all the properties owned, occupied or
otherwise used in connection with their business by the
Company.
4.2 The information supplied by the Company on which the
Certificates of Title is based is true, complete and accurate
in all respects and is not misleading.
4.3 The Certificate of Title provided on behalf of the Vendors is
true, complete and accurate in all respects and not
misleading.
5. FIXED AND CURRENT ASSETS
5.1 OWNERSHIP OF ASSETS
The Company is the sole owner with good and marketable title
free from all liens, charges, encumbrances, options or adverse
claims (including any hiring, licensing or rental agreements
or reservations of title) of all the assets included in the
Accounts or acquired after the Balance Sheet Date which it
owns or reputedly owns (subject to sales of current assets in
the ordinary and normal course of its trading) or which are
now in its possession or under its control or which it uses in
its business and the
51
Company has not agreed to create or grant any lien, charge,
option or other encumbrance over such assets.
5.2 ASSETS USED IN THE BUSINESS
5.2.1 The assets owned by the Company together with any assets held
under any hire or hire purchase rental or leasing agreement
(the material details of which are contained in the Disclosure
Letter) comprise all the assets necessary for the continuation
of the Company's business as now carried on.
5.2.2 The Company does not use and there is no necessity for it to
use in the course of its business any asset which belongs to
or is hired, leased or licenced to or is otherwise in the
possession or under the control of the Vendors (or any of
them) or any of their Associates.
5.3 PLANT AND MACHINERY
5.3.1 The plant, machinery, vehicles and other equipment owned by or
used in connection with the business of the Company ("PLANT
AND MACHINERY"):-
5.3.1.1 are in a good and safe state of repair and condition, having
regard to its age and usage;
5.3.1.2 are in the possession and (save for those items the subject of
the hire, hire purchase, rental or leasing agreements listed
in the Disclosure Letter) control of the Company; and
5.3.2 The plant registers of the Company comprise a complete and
accurate record of all the Plant and Machinery.
52
5.3.3 Maintenance contracts are in full force and effect in respect
of all Plant and Machinery which is of a kind which is normal
or prudent to have maintained by independent or specialist
contractors;
5.4 COMPUTER EQUIPMENT AND SOFTWARE
5.4.1 The Company has in force maintenance contracts for all items
of computer hardware (including operating systems) and
software support contracts for all items of software which it
uses and there is no reason to believe that these maintenance
and support contracts will not be renewed by the other
contracting party upon their expiry (if so required by the
Company) upon substantially similar terms to those now
applicable.
5.4.2 The Company did not suffer any failures or breakdowns of or
bugs in the computer hardware or software which it now uses
during the year preceding the date of this agreement which had
a material effect on the business of the Company.
5.4.3 The Company has operated and used all items of computer
hardware used by it in accordance with the manufacturers
recommendations including (without limitation) any
recommendations as to environmental conditions and power
supply.
5.5 COMPUTER SOFTWARE
5.5.1 In this paragraph and paragraphs 5.6 and 5.7:-
"SOFTWARE" means the computer software owned by the Company
listed in the Disclosure Letter including all programs and
data in such software and all manuals and operator guides
relating to such software;
53
"THIRD PARTY SOFTWARE" means the computer software licensed to
the Company listed in the Disclosure Letter (each a "Software
Licence") including all programs and data in such software and
all manuals and operator guides relating to such software; and
"SOURCE CODES" means the source codes which are included in or
relate to the Software and the source codes which are included
in or relate to the Third Party Software in each case
deposited on magnetic media, all information in human readable
form necessary to enable a reasonably skilled programmer or
analyst to maintain or enhance the Software and the Third
Party Software without the assistance of any other person or
reference to any other materials, including, all maintenance
tools (test programs and program specifications), proprietary
or third party system utilities (compiler and assembler
descriptions), a description of the system/program generation
and all comments, logic manuals and flow charts made by
developers of such source codes which relate to such source
codes.
5.5.2 The Software and the Third Party Software is all the computer
software owned, used, required or supplied by the Company in
connection with its business.
5.5.3 The Company has in force software support contracts for all
items of Third Party Software, the terms of which have been
disclosed in the Disclosure Letter and there is no reason to
believe that these software support contracts will not be
renewed by the other contracting party upon
54
their expiry (if so required by the Company) upon
substantially similar terms to those now applicable.
5.5.4 The Company did not suffer any failures or bugs in or
breakdowns of the Software or the Third Party Software during
the year preceding the date of this agreement which has had a
material effect on the business of the Company or which
otherwise has had a material and continuing effect on the
Software or Third Party Software.
5.5.5 None of the Company's employees or independent contractors
involved in the development of the Software were, during the
period of such development, under any obligation to any third
party (whether in relation to any previous service contract or
contract for services or otherwise) which would or might have
an adverse effect on the Company's claim to ownership of the
Software or the Source Codes of the Software.
5.5.6 The Company has complied in all material respects with all its
obligations pursuant to any arrangements which require the
Company to develop or supply any of the Software or the Third
Party Software. In particular, any Software or Third Party
Software so developed or supplied conforms in all material
respects to the specifications contained or referred to in the
relevant arrangement and is fully capable of performing all
tasks and functions for which it has been developed or
supplied.
5.5.7 The Company has used all reasonable care and skill in the
development of the Software and has carried out reasonable
investigations and taken all other steps which may be
reasonable so as to ensure that any Third Party
55
Software which the Company supplies with or for use in
conjunction with any of the Software is capable of being used
for the particular tasks and functions for which it is
supplied.
5.5.8 All manuals and operator guides relating to the Software and
the Third Party Software are sufficient to enable the
Purchaser to make full, proper and efficient use of the
Software and the Third Party Software.
5.5.9 The Company owns and is in possession of up to date and
accurate copies of the Source Codes of the Software. The
Company is either in possession of up to date and accurate
copies of the Source Codes of the Third Party Software or has
in force escrow agreements in respect of such Source Codes the
terms of which have been fully disclosed in the Disclosure
Letter and such agreements are enforceable by the Company in
accordance with their terms and there has not been any default
(or any Event which with notice or lapse of time or both would
constitute a default) under any of them by the Company or by
any party to such agreements.
5.5.10 The Software Licences authorise the Company to use the
computer software that is not owned by the Company in the ways
in which they are in fact used or are required to be used in
connection with the business of the Company as it is now
carried on.
5.5.11 The Software Licences are enforceable by the Company in
accordance with their terms and there has not been any default
(or any Event which with notice or lapse of time or both would
constitute a default) under any of them by the Company or by
any other party to such Software Licences.
56
5.5.12 No licence of Software by the Company contains any obligation
other than the provision of support for the Software licensed.
5.6 INTEGRITY OF COMPUTER SYSTEMS
5.6.1 The Company has taken proper precautions to preserve the
availability confidentiality and integrity of its computer
systems and has had such systems reviewed on a regular basis
by independent experts in the field.
5.6.2 All computer software (including all programs and data in such
software) used by the Company is reliable and readable. All
media on which such software is stored are in good readable
condition and contain no programs or data which are either
intended to or which may have the effect of modifying,
deleting or otherwise impairing such software (or any of the
programs or data in such software) or any other programs or
data which are either intended to or which may have the effect
of impairing any computer hardware.
5.6.3 The Vendors are not aware of any case where unauthorised
access to the Company's computer systems has taken place, or
where any of the software or data in those computer systems
has been modified without the Company's express authority or
where fraud has been committed against the Company by use or
abuse of its computer systems whether alone or in conjunction
with any third party.
5.6.4 No event has occurred which indicates the Company's computer
systems have been adversely affected by the advent of the year
2000 and so far as the Vendors are aware the Company's
computer systems are fully
57
"millennium compliant". For the purposes of this warranty,
"millennium compliant" means that neither performance nor
functionality is or will be affected by dates prior to, during
or after the year 2000.
5.7 LEASED ASSETS
No circumstance has arisen or is likely to arise in relation
to any asset held by the 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 a qualifying purpose for the
purposes of sections 39, 40 and 00 Xxxxxxx Xxxxxxxxxx Xxx
0000.
5.8 BOOK DEBTS
5.8.1 None of the debts which are due to the Company at the date of
this agreement and which shall have arisen after the Balance
Sheet Date are now or have at any time been overdue by more
than [twelve] weeks nor have any of those debts been written
off or to the knowledge of the Vendors will prove to be
irrecoverable to any extent.
5.8.2 So far as the Vendors are aware the full amount of all debts
which shall be owing to the Company at Completion (whenever
arising) will be recovered in full free of any counter-claim
or set off (less the amount of any provision or reserve which
has been calculated on the same basis as that applied in the
Accounts or disclosed in the Disclosure Letter) in the
ordinary and normal course of business and in any event not
later than twelve weeks after Completion.
58
5.8.3 So far as the Vendors are aware since the Balance Sheet Date
no other obligations due to the Company have been written off
or written down or have proved to be irrecoverable in whole or
in part or are now regarded as irrecoverable nor has there
been any agreement for the release of any person under any
liability to the Company.
INTELLECTUAL PROPERTY
6.1 DEFINITIONS
In this Part 6:-
"INTELLECTUAL PROPERTY RIGHTS" includes patents, trade marks,
service marks, registered designs, design rights,
semi-conductor, topography rights, copyrights, database
rights, know-how, get up, confidential information, business
names, internet domain names and any other similar protected
rights in any country together with pending applications for
registration or recording thereof;
"LICENSED RIGHTS" means the Intellectual Property Rights not
owned by the Company but used or required by the Company in
connection with its businesses including the Intellectual
Property Rights in the Third Party Software and the Source
Codes of the Third Party Software;
"SOFTWARE", "THIRD PARTY SOFTWARE" and "SOURCE CODES" shall
bear the same meanings given to those expressions in paragraph
5.5.
6.2.1 Full details of the Licensed Rights have been disclosed in the
Disclosure Letter to the Purchaser. The Company has a licence
to use the Licensed Rights. All such licences are in full
force and effect, the terms of such licences have been fully
disclosed in the Disclosure Letter and such
59
licences are enforceable by the Company in accordance with the
terms and there has not been any default (or any Event which
with notice or lapse of time or both would constitute a
default) under any of them by the Company or by any other
party to such licences.
6.2.2 The Company is the sole beneficial owner the Intellectual
Property Rights in the Software and the Source Codes of the
Software, free from liens, charges and encumbrances, each of
such Rights is valid and enforceable and none of them is being
claimed, opposed or attacked by any other person.
6.2.3 All formulae, processes and other information forming part of
the Licensed Rights (including know-how and confidential
information) are adequately documented and to the extent that
they are confidential or material to the business of the
Company have not been (and nor is there any agreement that
they will be) disclosed to any third party.
6.2.4 All documents material to the originals of all licences to the
Licensed Rights are in the possession of the Company.
6.3 NO INFRINGEMENTS
The business of the Company (and of any licensee under a
licence granted by the Company) as now carried on does not and
is not likely to infringe any Intellectual Property Rights of
any other person or give rise to a liability to pay
compensation pursuant to sections 40 and 41 Patents Xxx 0000.
6.4 NO RIGHTS GRANTED BY THE COMPANY
60
6.4.1 No right has been granted by or on behalf of the Company or
any of the Vendors to any person to do any thing which would
or might otherwise infringe the Licensed Rights and no act has
been done or omission occurred whereby they or any of them
have ceased or might cease to be valid and enforceable.
6.4.2 No right has been granted by or on behalf of the Company or
any of the Vendors to any person to do any thing which would
or might otherwise infringe the Intellectual Property Rights
in the Software otherwise by way of a non-exclusive licence to
use the Software granted on a commercial basis in the ordinary
course of the business of the Company.
6.4.3 The terms of any licence granted by or on behalf of the
Company or any of the Vendors to use the Software have been
fully disclosed in the Disclosure Letter and such licences are
enforceable by the Company in accordance with their terms and
there has not been any default (or any Event which with notice
or lapse of time or both would constitute a default) under any
of them by the Company or by any other party to such licences.
6.4.4 Every copy of the Software supplied pursuant to the licences
referred to in paragraph 6.4.3 has included appropriate
copyright notices and effective protection against copying and
against access to the Source Codes of the Software.
6.4.5 No right has been granted by or on behalf of the Company or
any of the Vendors to any person to do any thing which would
or might otherwise
61
infringe the Intellectual Property Rights in the Source Codes
of the Software and no act has done or omission occurred
whereby they or any of them have ceased or might cease to be
valid and enforceable.
FINANCIAL POSITION
7.1 EVENTS SINCE THE BALANCE SHEET DATE
Since the Balance Sheet Date:-
7.1.1 there has been no adverse change in the financial or trading
position of the Company;
7.1.2 the business of the Company has been carried on in the
ordinary and normal course, without any interruption and
without any alteration in its nature, conduct, scale, scope or
manner and no unusual or abnormal contract differing from the
ordinary contracts necessitated by the nature of its business
has been entered into by the Company;
7.1.3 there has been no change in:-
7.1.3.1 the manner or time of payment of creditors or the issue of
invoices or collection of debts; or
7.1.3.2 the policy of reserving for debtors;
7.1.4 no substantial supplier or customer of the Company (being a
supplier who, during the period covered by the Accounts
supplied more than 5% of the invoice value of all of the
Company's purchases or a customer who during the period
covered by the Accounts purchased more than 5% of the invoice
value of all of the Company's sales) has ceased or
substantially reduced its trade with the Company;
62
7.1.5 no asset has been acquired or disposed of or has been agreed
to be acquired or disposed of (save for assets acquired or
disposed of in the ordinary and normal course of business on
arm's length terms) and no contract involving expenditure by
it on capital account has been entered into by the Company;
7.1.6 the Company has not paid or become liable to pay any
management, service or other such charges to the Vendors or to
any person with whom the Vendors are connected (within the
meaning of section 839 Taxes Act) other than in respect of
goods and services supplied in the ordinary and normal course
of business on commercial terms;
7.1.7 the Company has neither disbursed nor received any cash except
in the ordinary and normal course of its business and all
amounts received by or on behalf of the Company have been
deposited with its bankers and appear in the appropriate books
of account;
7.1.8 the Company has not declared, paid or made any dividends or
other distributions within the meaning of the Taxes Act;
7.1.9 the Company has not made any loans or incurred any borrowings
except in the ordinary and normal course of its business; and
7.1.10 the accounting reference period of the Company has not ended
or been extended.
7.2 AMOUNTS DUE TO CREDITORS
7.2.1 The amounts now due by the Company to its creditors do not
exceed L750,000.
63
7.2.2 The aged creditor analysis annexed to the Disclosure Letter
accurately shows the amounts owed by the Company to its trade
creditors as at 31 January 2000 and the dates of the invoices
pursuant to which such debts shall be due.
7.2.3 There are no sums due by, or liabilities or obligations of,
the Company to any of the Vendors or the Vendors' associates
or affiliates.
7.4 BANK AND OTHER BORROWINGS
7.4.1 Full details of all limits on the Company's bank overdraft and
other borrowing facilities together with true, complete and
accurate copies of all letters of credit, guarantees and other
financial instruments issued on behalf of or for the benefit
of the Company and which remain in force are contained in the
Disclosure Letter.
7.4.2 The total amount borrowed by the Company does not exceed any
limitation on its borrowing contained in its Memorandum or
Articles of Association or in any other document which it is a
party and the amount borrowed from its bankers does not exceed
its overdraft facilities (if any).
7.4.3 No overdraft or other financial facilities of the Company are
dependent upon a guarantee of, or a security provided by, the
Vendors or any third party.
7.4.4 The Company does not have outstanding and has not agreed to
create or issue any loan capital; nor has it factored or
discounted any of its debts (or agreed to do so), or been
engaged in financing of a type which would not require to be
shown or reflected in the Accounts; or borrowed any money
64
which it has not repaid (save for borrowings not exceeding the
amounts shown in the Accounts).
7.4.5 The Company has not since the Balance Sheet Date, repaid, or
become liable to repay, any loan or indebtedness in advance of
its stated maturity.
7.4.6 Neither the acquisition of the Shares by the Purchaser nor the
compliance of any terms of this agreement will entitle (and no
other Event has occurred which would entitle) any third party
(with or without the giving of notice) to call for the
repayment of any indebtedness of the Company prior to its
normal maturity date.
TAXATION
8.1 DEFINITIONS
In this Part 8:
"ACT" means advance corporation tax;
"CAA" means the Capital Xxxxxxxxxx Xxx 0000;
"IHTA" means the Inheritance Tax Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TMA" means the Taxes Management Xxx 0000;
"VAT" means value added tax;
"VATA" means the Value Added Tax Xxx 0000.
8.2 GENERAL
8.2.1 All returns, amended returns, computations and payments which
should be or should have been made by the Company for any
fiscal purpose have been prepared on a proper basis and
submitted within the prescribed time limits and are up to date
and correct and none of them is now the subject
65
or likely to be the subject of any dispute with the Inland
Revenue or HM Customs and Excise or other authority concerned
and will not give rise to any disallowance of relief,
forfeiture, loss of allowance or credit, assessment,
adjustment or set off (including any claim for interest on
unpaid Taxation) by the Revenue.
8.2.2 All particulars furnished to the Revenue in connection with
the application for any consent or clearance on behalf of the
Company accurately disclosed all facts and circumstances
material to the decision of the Revenue, any such consent or
clearance is valid and effective and any such transaction for
which such consent or clearance has previously been obtained
has been carried into effect only in accordance with the terms
of the relevant application and consent for clearance.
8.2.3 The Company is not the subject of a back duty investigation or
in-depth enquiry by any fiscal authority and there are no
known facts which may give rise to the same.
8.2.4 All income tax under the PAYE system and payments due in
respect of employees' contributions to national insurance and
graduated state pension have been properly deducted by the
Company and (together with any employer's contribution) have
been fully and correctly paid to the appropriate authority and
proper records thereof have been maintained.
8.2.5 All Taxation required to be deducted from any payments made by
the Company which it is obliged or entitled to make has been
deducted and accounted in full to the appropriate authority.
66
8.2.6 The Company has never been requested to furnish information
pursuant to notices served under section 745 or 778 Taxes Act.
8.2.7 No transactions have been undertaken falling within sections
765 or 765A Taxes Act.
8.2.8 The Company is not and has at no time been an investment
company, a close investment company or an investment trust
company for Taxation purposes.
8.2.9 The Company has not since the Balance Sheet Date taken any
action which has had, or might have, the result of altering or
prejudicing or in any way disturbing any arrangement or
agreement which it has previously negotiated with the Revenue.
8.2.10 The Taxation computations for all accounting periods of the
Company ended on or before the last accounts date to which tax
computations have been agreed with the Revenue or if not known
the last accounts date of the Company, have been agreed with
the Revenue.
8.2.11 The Company is and has always been resident only in the United
Kingdom for Taxation purposes and has never carried on any
trade, business or other activities outside the United Kingdom
other than the export of its goods and/or services in the
ordinary and normal course of its business.
8.3 TAXABLE PROFITS
8.3.1 The Company has not directly or indirectly paid any
remuneration, emoluments or compensation for loss of office or
made any gratuitous payment or transferred any assets to any
of its present or former directors
67
or employees, the cost of which will not be deductible for
Taxation purposes.
8.3.2 The Company has not made and is under no obligation pursuant
to which it is or at any time may become liable to make any
payment of interest, annuity or other annual payment such as
may be disallowed as a deduction as a set-off or as a charge
on income or otherwise be unrelieved for corporation tax
purposes whether by virtue of section 125 or section 787 Taxes
Act or otherwise.
8.3.3 No transactions or arrangements involving the Company have
taken place or are in existence such that the provisions of
section 770 Taxes Act could be or have been applied.
8.3.4 There have been no Events or circumstances such that sections
343 or 768 Taxes Act have been or could be applied.
8.4 CAPITAL ASSETS
8.4.1 Save as provided for in the Accounts the values attributed to
each of the assets of the Company as at the Balance Sheet Date
is such that on any disposal of any of those assets which is
treated for Taxation purposes as being for a consideration
equal to such value (ignoring any reliefs and allowances
available to the Company other than amounts falling to be
deducted under section 38 TCGA) no chargeable gain or
allowable loss would arise.
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8.4.2 Since the Balance Sheet Date no asset has been acquired
otherwise than by way of a bargain made at arm's length and
for a consideration equal to its market value.
8.4.3 The Company is not subject to any contingent liability as is
mentioned in section 49 TCGA.
8.4.4 The Company has not effected or been a party to any demerger
such as is mentioned in sections 213 to 218 Taxes Act.
[8.4.5 The Company has never made a claim pursuant to sections 23 or
24 TCGA.
8.4.6 The Company has never been a party to a transaction falling
within section 17 TCGA.
8.4.7 The Company has not received any asset by way of gift as
mentioned in section 282 TCGA.
8.4.8 The Company does not own any shares or securities acquired as
a "new holding" under the provisions of sections 126 to 130
TCGA.
8.4.9 Neither the Company nor any company which was a member of the
same group of companies at the relevant time has made any
claim under sections 152, 153 or 247 TCGA.
8.4.10 The Company has not been a party to or involved in any share
for share exchange nor any scheme of reconstruction or
amalgamation such as are mentioned in sections 135 and 136
TCGA.
8.4.11 The Company has not been a party to any depreciatory
transactions within the meaning of sections 176 and 177 TCGA.
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8.4.12 The Company has not been subject to any claim or election
under section 35 or Schedule 4 TCGA, whether made by itself or
any other person.
8.4.13 The Company has never made an election under paragraph 4 of
Schedule 2 TCGA.
8.4.14 The Company will not be subject to corporation tax on the
disposal of any debt owing to the Company.
8.4.15 Each and every loan made by the Company is a "qualifying loan"
for the purpose of section 253 TCGA.
8.4.16 The Company is not entitled to any loss to which section 18
TCGA applies.
8.4.17 The Company does not own and has not owned and has never
issued any relevant discounted securities or qualifying
corporate bonds (as defined in Schedule 13 Finance Xxx 0000 or
section 117 TCGA respectively).
8.4.18 The Company has sufficient information contained in its
records to calculate any chargeable gain or allowable loss
which may arise as the result of the disposal of assets owned
by the Company at the Balance Sheet Date.
8.5 CAPITAL ALLOWANCES
8.5.1 The book value of each of the assets of the Company in or
adopted for the purposes of the Accounts on which capital
allowances are calculated separately does not exceed the
written down value of such asset for the purposes of the CAA
and the aggregate book value of plant and machinery for which
capital allowances have been claimed under Part II of that Act
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does not exceed the written down value of the qualifying
expenditure under that Act.
8.5.2 The Company has not been a party to or involved in any
transaction whereby a balancing allowance would be denied or
reduced by virtue of section 5 CAA.
8.5.3 No allowances have been claimed by the Company which are
liable to be reduced or withdrawn by virtue of sections 1(6),
42 or 47 CAA.
8.5.4 No capital expenditure has been incurred which is subject to
the provisions of section 75 CAA.
8.6 GROUP ARRANGEMENTS
8.6.1 The Company has never been a member of any group of companies
for any Taxation purpose.
8.6.2 The Company has not ceased to be a member of a group of
companies for the purposes of sections 178 and 179 TCGA and
will not cease to be a member of such a group as a result of
Completion.
8.6.3 The Company has not at any time within the period of six years
ending with the date of this agreement, acquired any assets
other than trading stock from any company which, at the time
of the acquisition, was a member of the same group (as defined
in section 170 TCGA) as the Company.
8.6.4 The Disclosure Letter sets out full details of any surrender
or agreement to surrender, or acceptance or agreement to
accept the surrender, by the Company of any amount by way of
group relief under the provisions of sections 402, 403 and 407
to 413 Taxes Act.
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8.6.5 All claims for group relief made by the Company were valid and
have been or will be allowed by way of relief from corporation
tax and the Company is not and will not, as a result of
anything done before the date of this agreement, become liable
to make any payment for an amount surrendered by any other
company under or in connection in with the provisions of
section 402 Taxes Act.
8.6.6 The Company is not and has not at any time been party to any
arrangement falling within section 410 Taxes Act.
8.6.7 The Company has not made or purported to make any election
under section 247 Taxes Act.
8.6.8 The Company has not made nor received nor purported to make or
receive any surrender of the benefit of ACT under section 240
Taxes Act.
8.6.9 The Company is not liable to be assessed to any Taxation under
the provisions of section 190 TCGA.
8.7 DISTRIBUTIONS AND ADVANCE CORPORATION TAX
8.7.1 The Company has not at any time done anything which could be
treated as a distribution for the purposes of sections 209 or
210 Taxes Act.
8.7.2 No Event or series of Events has occurred which might cause
the disallowance of the carry forward of losses or excess
charges or such that any of sections 245 or 245A or 245B Taxes
Act have applied or could apply.
8.7.3 The Company has not issued any share capital to which the
provisions of section 249 Taxes Act or section 141 TCGA could
apply nor does it own
72
any such share capital nor granted options or rights to any
person which entitles that person to require the issue of any
share capital.
8.7.4 The Company will be entitled in respect of any qualifying
distribution made by it to a full set off of its corresponding
payment of ACT under section 239(1) Taxes Act or in so far as
there is no set off under section 239(1) or in so far as any
set off is restricted under section 239(3).
8.7.5 The Company has not received a capital distribution to which
the provisions of section 189 TCGA could apply.
8.7.6 The Company has not made or received any distribution which is
an exempt distribution within sections 213 to 218(I)
(inclusive) Taxes Act.
8.8 STAMP DUTY
8.8.1 All instruments (other than those which have ceased to have a
legal effect) executed by the Company (and which are or were
subject to stamp duty) have been duly stamped and the Company
has not executed any other instrument relating to any property
situate in, or to any matter or thing done or to be done in,
any part of the United Kingdom.
8.8.2 The Company has no liability to stamp duty reserve tax.
8.8.3 No relief or exemption has been obtained from stamp duty under
section 42 Finance Xxx 0000 or sections 75-79 (inclusive)
Finance Xxx 0000.
8.9 ANTI-AVOIDANCE
8.9.1 The Company has not entered into or been a party to any
pre-ordained series of transactions, composite transactions or
any other schemes or arrangements into which steps were
inserted which served no purpose other than the saving of
Taxation.
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8.9.2 The Company has not been party to any other transaction or
arrangement of any nature which could give rise to a charge to
Taxation under Part XVII Taxes Act.
8.10 CLOSE COMPANY
8.10.1 The Company has never been a close company for the purposes of
the Taxes Act.
8.10.2 The Company has no loan outstanding to which the provisions of
sections 419 and 420 Taxes Act would apply.
8.10.3 The Company has not held and does not hold shares in a company
not being another member of a group of companies (including
the Company) as defined in section 170 TCGA which has made any
such transfer as was referred to in section 125 TCGA.
8.10.4 The Company is not liable to be assessed to inheritance tax by
virtue of section 202 IHTA.
8.10.5 There is no potential liability or any unsatisfied liability
to inheritance tax attached or attributable to the shares in
or to any assets of the Company such that they are or may
hereafter become subject to an Inland Revenue charge as
mentioned in section 237 and 238 IHTA.
8.10.6 No liability to inheritance tax attributable to the shares in
or to any assets of the Company is being settled by
installments.
8.10.7 The Company is not entitled to any interest in possession in
settled property.
8.10.8 No person is actually or potentially liable to inheritance tax
attributable to the value of any of the shares and in
consequence no person has or may
74
acquire the power to raise the amount of such tax by sale or
mortgage of or by a terminal charge on any of the shares as
mentioned in section 212 IHTA.
8.10.9 The Company has not made any transfers of value within section
94 IHTA.
8.11 EVENTS SINCE THE BALANCE SHEET DATE
Since the Balance Sheet Date:-
8.11.1 the Company has not disposed of any asset (including trading
stock) or made any supply of any service or business facility
of any kind (including a loan of money or the letting, hiring
or licensing of any property whether tangible or intangible)
in circumstances where the consideration actually received or
receivable for such disposal or supply is less than the
consideration which could be deemed to have been received for
the purposes of Taxation;
8.11.2 no Event has occurred which gives rise to a liability to
Taxation to the Company on deemed (as opposed to actual)
income, profits or gains or which results in the Company
becoming liable to pay or bear a liability to Taxation
directly or primarily chargeable against or attributable to
another person, firm or company;
8.11.3 the Company has not made or received any distributions for any
Taxation purpose;
8.11.4 the Company has not surrendered or claimed any ACT under
Chapter V Taxes Act or any losses by way of group relief under
the Taxes Act;
75
8.11.5 the Company has not paid any remuneration (including
emoluments as defined by section 131 and sections 153-168
Taxes Act) to any officer, director or employee or to any
member of his family or household in excess of such amount as
will be deductible in computing the taxable profits of the
Company;
8.11.6 no payment has been made by the Company which will not be
deductible for the purposes of corporation tax (or any
corresponding tax on profits in any relevant foreign
jurisdiction), either in computing the profits of the Company
or in computing the corporation tax or corresponding tax
chargeable on it; and
8.11.7 no accounting period (as defined in section 12 Taxes Act) of
the Company has ended as referred to in section 12(3) of that
Act.
8.12 VALUE ADDED TAX
8.12.1 In relation to VAT the Company has complied with all statutory
provisions, rules, regulations, orders and directions and made
all necessary returns; and within the prescribed time limits
provided all necessary information and documents to HM Customs
and Excise and paid all amounts due to the proper person.
8.12.2 The Company has at all times kept and preserved in all
material respects complete correct and up-to-date records,
invoices and other documents required for the purposes of VAT.
8.12.3 The Company has not been required by HM Customs and Excise to
give security under paragraph 4 of schedule 11 to the VATA.
76
8.12.4 All VAT payable upon the importation of goods and all duties
of customs and excise payable in respect of any assets
(including trading stock) imported or owned by the Company
have been paid in full.
8.12.5 The Company is not liable and will not (in respect of anything
done before Completion) be liable to any interest, penalty or
surcharge in respect of VAT and in particular (but without
prejudice to the generality of the foregoing) the Company is
and will not be so liable to any penalty, interest or
surcharge pursuant to sections 59, 63 to 70 and 74 VATA.
8.12.6 The Company is not and has not at any time been a member of a
group of companies for VAT purposes.
8.12.7 The Company is not and has not agreed to become an agent,
manager or factor for the purposes of sections 47 or 48 VATA
of any person who is not resident in the United Kingdom.
8.12.8 The Company has not incurred any expenditure in the ten years
preceding Completion on capital items such that the provisions
of Part XV of The Value Added Tax Regulations 1995 may apply
to the Company.
8.12.9 The Company obtains credit for all input tax paid or suffered
by it.
8.13 VAT ON PROPERTY
8.13.1 The Company does not own the fee simple in any building or
civil engineering work which is uncompleted or which was
completed (within the meaning of Note (2) to Group 1 Schedule
9 VATA) less than three years before the date of this
agreement.
8.13.2 The Disclosure Letter contains full particulars of:
77
8.13.2.1 any election under paragraph 2 Schedule 10 VATA to waive
exemption from VAT in relation to any land made by the Company
or by any member or former member of any group of companies of
which the Company is or was registered for VAT purposes; and
8.13.2.2 any agreement or other arrangement to which the Company is a
party whereby the Company has agreed not to waive exemption
from VAT pursuant to paragraph 2 Schedule 10 VATA in relation
to any land.
8.13.3 he Company has not given or accepted any certificate as to
zero-rating under the provisions referred to in section 62
VATA.
8.13.4 The Warranties contained in this paragraph 8.13 shall apply as
if references to the Company include not only the Company but
also every other company which is or was at any time a member
of the same group of companies for VAT purposes or for which
an application to become such a group member has been made
within the preceding three months (including without
limitation any parent of the Company or parent or subsidiary
of such parent).
8.14 EMPLOYEE SHARE SCHEMES
8.14.1 The Disclosure Letter contains full details of all share
schemes (including those approved by the Inland Revenue and
unapproved schemes) which the Company operates or in which its
UK employees are entitled to participate, together with copies
of any approvals issued by the Inland Revenue in respect of
such schemes and nothing has been done to prejudice the
approved status of any such schemes.
78
8.14.2 The Disclosure Letter contains full details of any issue of
shares or an interest in shares by the Company in the
circumstances described in section 77 to 89 Finance Xxx 0000
and the Company has complied with section 85 Finance Xxx 0000.
8.14.3 The Disclosure Letter contains a copy of the rules of any
profit related pay schemes which the Company operates or has
operated, or in which its UK employees are or have been
entitled to participate, in any year commencing prior to
Completion, together with copies of any approvals issued by
the Inland Revenue in respect of such schemes, and nothing has
been done to prejudice the approved status of any such schemes
which have at all times been operated in accordance with any
rules governing the scheme and relevant Taxation legislation.
8.15 SECONDARY LIABILITY
8.15.1 No transaction or Event has occurred in consequence of which
the Company is or may be held liable for any Taxation or
deprived of reliefs or allowances otherwise available to it or
may be otherwise held liable for any Taxation for which some
other company or person was primarily liable (whether by
reason of any such other company being or having been a member
of the same group of companies or otherwise).
8.15.2 The Company is not, nor will it become, liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or any
amount corresponding to Taxation) in consequence of the
failure by any other person to discharge that Taxation or
amount within any specified period or otherwise, where the
Taxation or amount relates to a profit, income or
79
gain, transaction, Event, omission or circumstances arising,
occurring or deemed to arise or occur (whether wholly or
partly) before Completion.
8.16 INHERITANCE TAX
8.16.1 No shares in or assets of the Company were acquired by it or
(as the case may be) the Vendors in circumstances such that
they continued to be subject to any Inland Revenue charge to
which they were subject immediately prior to such acquisition
or such that, if they had been subject to an Inland Revenue
charge immediately prior to such acquisition, they would have
continued to be subject to it.
8.16.2 No shares in or assets of the Company are subject to any such
power of sale, charge or mortgage as is mentioned in section
212 IHTA and there are no circumstances which might lead to
such a power arising.
8.17 PAYMENTS EQUIVALENT TO TAX
8.17.1 The Company has not in the previous seven years entered into
any indemnity, guarantee or covenant under which the Company
has agreed or can be procured to meet or pay a sum equivalent
to or by reference to another person's liability to Taxation.
8.17.2 The Company is not liable nor has any Event or omission
occurred in consequence of which the Company could at any time
become liable to make a payment to any person as a result of
the discharge by that person of any liability of the Company
to Taxation incurred on or before Completion.
8.18 LOAN RELATIONSHIPS
80
All interest, discounts or premiums payable by the Company in
respect of its loan relationships within the meaning of
Chapter II of Part IV of the Finance Xxx 0000 are capable of
being brought into account as a debit for the purposes of that
Chapter as and to the extent that they are from time to time
recognised in the Company's accounts (assuming that the
accounting policies and methods adopted for the purpose of the
Accounts continue to be so adopted).
8.19 CUSTOMS DUTIES
The Company has complied with all statutory provisions, rules,
regulations, orders and directions and made all necessary
returns in relation to the collection and payment of customs
duties, excise duties and other charges having an equivalent
effect and has provided all necessary information and
documentation and paid all amounts due to HM Customs and
Excise in relation to such charges within the prescribed time
limits.
8.20 WITHDRAWAL OF RELIEFS
No relief which has been treated as an asset in preparing the
Accounts could or might effectively be withdrawn, postponed,
restricted or otherwise lost as a result of the sale and
purchase under this Agreement or any other Event or
circumstance occurring or arising at any time after the
Balance Sheet Date.
8.21 TAX ADMINISTRATION
In relation to the Company, the Disclosure Letter gives full
details of:
8.21.1 all determinations made under section 41A TMA;
81
8.21.2 all directions reducing any amounts so determined pursuant to
section 41B TMA;
8.21.3 all assessments to Taxation made by the Revenue, and any such
determinations under section 41A TMA and directions under
section 41B TMA, which are subject to appeal or have otherwise
not become final at the date of this agreement; and
8.21.4 all payments of Taxation, and claims for repayment of
Taxation, made in respect of any period for which no
assessment to Taxation has been issued or become final (and
whether pursuant to section 10 Taxes Act or otherwise).
CONTRACTS AND COMMITMENTS
9.1 CAPITAL COMMITMENTS
The Company had no capital commitments at the Balance Sheet
Date and since then the Company has not made any capital
expenditure or incurred any capital commitments.
9.2 SUBSISTING CONTRACTS
The Disclosure Letter contains true, complete and accurate
copies (incorporating all the terms which currently apply) of
every contract, covenant, commitment or arrangement to which
the Company is a party and in respect of which any party to
them has or may have any outstanding liability and which:-
9.2.1 is of an unusual or abnormal nature, or outside the ordinary
and normal course of business;
9.2.2 is for a fixed term of more than six months;
82
9.2.3 is of a long-term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months
after the date on which it was entered into or undertaken);
9.2.4 is incapable of termination in accordance with its terms, by
the Company, on sixty days' notice or less;
9.2.5 is of a loss-making nature (that is, known to be likely to
result in a loss to the Company on completion or performance);
9.2.6 cannot readily be fulfilled or performed by the Company on
time without undue, or unusual, expenditure of money, effort
or personnel;
9.2.7 involves payment by the Company by reference to fluctuations
in the index of retail prices, or any other index or in the
rate of exchange for any currency;
9.2.8 involve an aggregate outstanding expenditure by or an
aggregate outstanding payment to the Company of more than
L25,000;
9.2.9 involves, or is likely to involve, the supply of goods the
aggregate sales (or purchase) value of which will represent in
excess of 10 per cent of the turnover for the preceding
financial year of the Company;
9.2.10 is a contract for hire or rent, hire purchase, or purchase by
way of credit sale or periodical payment;
9.2.11 is a contract whereby the Company has been appointed to act or
has appointed someone else to act as an agent or as a
distributor or franchisee;
9.2.12 is an agreement for the supply of services (other than for
gas, water or electricity or maintenance contracts); or
83
9.2.13 is capable of being terminated or altered in any way as a
consequence of the Purchaser's acquisition of any Shares.
and (save as so disclosed) the Company has not entered into
any such contract, covenant, commitment or arrangement;
9.3 MORTGAGES ETC
The Company has not created nor has it agreed to create any
loan capital or any mortgage, debenture, lien, charge or other
similar encumbrance or security interest over all or any of
its property, assets, undertaking, goodwill, reserves or share
capital.
9.4 GUARANTEES ETC
There are no guarantees, suretyships, indemnities or similar
commitments (whether secured or unsecured) given by the
Company in respect of which obligations or liabilities
(whether actual or contingent) are still outstanding.
9.5 NO LOANS
The Company has not made any loans or advanced any monies or
credit to any person, firm or company (other than credit given
on normal commercial terms in the ordinary and normal course
of business).
9.6 NO PARTNERSHIP ETC
The Company is not a member of any partnership, joint venture,
trade association, society or other group, whether formal or
informal and whether or not having a separate legal identity,
nor is any such body relevant to nor does any such body have
any material influence over the business of the Company as now
carried on.
84
9.7 DISCOUNTS, REBATES AND SIMILAR ARRANGEMENTS
The Disclosure Letter contains:-
9.7.1 full details of the policy and practice of the Company with
respect to the offer or grant by it to any of its customers of
discounts, over-riders, rebates, allowances and other special
terms or similar arrangements;
9.7.2 full details of all discounts, over-riders, rebates,
allowances and other special terms or similar arrangements
offered or granted to the Company by any of its suppliers;
9.7.3 full details of all agreements and arrangements for the
importing of goods from overseas together with full details of
arrangements with overseas distributors, agents and commission
houses for such importing; and
9.7.4 full details of the policy and practice of the Company with
respect to the offer or grant by it to any of its clients of
any other special terms.
9.8 FORWARD CONTRACTS
The Company does not have any unmatched open positions with
respect to forward purchases and/or sales of any commodity,
stock or foreign currency and none of such open positions will
involve the Company in a loss.
9.9 OUTSTANDING OFFERS
There is no offer or tender (or the like) given or made by the
Company which is still outstanding and capable of giving rise
to a contract merely by the unilateral act of any third party.
9.10 INSIDER CONTRACTS
85
None of the Vendors nor any of their Associates nor any person
in which any of them has or had any interest (direct or
indirect, either solely or jointly with any other party and
whether as shareholder, employee, director, consultant or
otherwise) has (or has ever had) a trading relationship with
the Company nor have any of them ever entered into any other
type of transaction or arrangement with the Company (other
than in the capacity as a shareholder or employee of the
Company); and none of them provides (or has in the past
provided) goods or services in competition with the Company.
9.11 NON-ARMS LENGTH CONTRACTS
The Company is not a party to, nor have its profits or
financial position during the three years prior to the date
hereof been affected by, any contract or arrangement which is
not of an entirely arms-length nature made on open market
terms.
9.12 DEFAULTS, ETC
9.12.1 None of the obligations owed by any third party to the Company
is unenforceable and no Event has occurred as regards the
Company which would entitled any third party to terminate any
contract or benefit enjoyed by the Company or call in any
money before the normal due date therefor.
9.12.2 Neither the Company nor any other party to any agreement,
commitment, transaction or arrangement with the Company is in
default under any such agreement and there are no
circumstances likely to give rise to such a default.
86
9.13 LIABILITIES
9.13.1 There are no liabilities (including contingent liabilities)
which are outstanding on the part of the Company other than
those liabilities disclosed in the Accounts or the Management
Accounts or incurred, in the ordinary and normal course of
trading, since the Balance Sheet Date.
9.13.2 There is no indebtedness or liability due, owing or incurred
by the Company to the Vendors or any of their Associates
whether actually or contingently, whether solely or jointly
with any other person and whether as principal or surety and
there is no such indebtedness or liability due, owing or
incurred to the Company by the Vendors or any of their
Associates.
9.13.3 There are no outstanding liabilities or commitments on the
Company arising from any arrangements for the disposal of any
shares, property or other assets (other than in the ordinary
and normal course of business) previously owned by the
Company.
9.14 PAYMENTS TO CREDITORS
The Company has at all times paid its creditors within the
times agreed with such creditors and there are no debts owing
by the Company which are overdue for payment.
9.15 GOVERNMENT GRANTS
9.15.1 The Company has not applied for, or received, any grant,
subsidy or financial assistance from any government department
or agency or any local or other authority, whether under any
of the Industry Acts, or a
87
regional development grant, or temporary employment subsidy or
otherwise.
9.15.2 The Company has not done (or omitted to do) any act or thing
which could result in 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.
9.16 RESTRICTIVE PRACTICES
The Company is not a party to any agreement, practice or
arrangement which contravenes or is subject to registration
under the Restrictive Trade Practices Xxx 0000, the Resale
Prices Xxx 0000 or the Competition Xxx 0000 or which
contravenes the provisions of the Fair Trading Act 1973 or
which would or might either result in a reference to a
"consumer trade practice" within the meaning of Section 13 of
the Fair Trading Act 1973 or to the Consumer Protection
Advisory Committee under Part II of that Act or contravene any
of the provisions of Article 85 or 86 of the Treaty of Rome or
any other anti-trust or consumer protection legislation.
9.17 NO DISCLOSURES OF CONFIDENTIAL INFORMATION
The Company has never disclosed to any person (save in the
ordinary and normal course of business or other than to the
Purchaser or to its professional advisers) any of its secret
or confidential information (including any of its know-how,
trade connections, price lists, lists of customers or
suppliers, financial information, profit margins or
88
projections); and so far as the Vendors are aware no
unauthorised disclosure of such information has ever been
made.
9.18 NO RESTRICTIONS ON COMPANY
The Company is not a party to any secrecy or confidentiality
agreement or arrangement which may restrict the use or
disclosure of information nor has it given any covenants
limiting or excluding its right to do business and/or compete
in any area or field with any other person.
9.19 RELATIONSHIPS WITH THIRD PARTIES
9.19.1 No person presently doing business with the Company nor any
customer or supplier who is in the habit of purchasing from or
selling to the Company (as the case may be) is, so far as the
Vendors are aware, likely to cease to do so or otherwise
substantially reduce its purchases from or supplies to the
Company during the twelve calendar months following
Completion.
9.19.2 Neither more than 5 per cent of the aggregate amount of all
the purchases nor more than 5 per cent. of the aggregate
amount of all the sales of the Company in any trading period
of 52 weeks are obtained from or made to the same supplier or
customer (together with any person, firm or company in any way
connected with such supplier or customer).
9.19.3 There is no contract or arrangement (whether written or oral)
to which the Company is a party which will or may be
determined or under which any right of the Company may be
adversely affected (or pursuant to which any other party may
require the adoption of terms less favourable to the Company
than those subsisting in the absence of any change) by reason
of
89
the sale of the Shares to the Purchaser or the implementation
of any provision of this agreement.
10. PENSIONS
--------------------------
10.1 DEFINITIONS
For the purpose of paragraphs 10.2 to 10.5:
"APPROVED" means approved by the Inland Revenue for the
purposes of Chapter I or Part XIV of the Taxes Act and a
reference to "APPROVAL" is to be construed accordingly.
"DISCLOSED SCHEMES" means the Synopsys Scientific Systems
Executive Pension Scheme established pursuant to a trust deed
dated 26 March 1999 ("THE EXECUTIVE SCHEME"), the Group
Personal Pension Plan, the Group Life Assurance Plan and the
Group Dependants Plan; and
"EMPLOYEE" means a director or employee or former employee or
former director of the Company.
10.2 WARRANTIES
10.2.1 GENERAL PENSION WARRANTIES
(1) Save for the Disclosed Schemes there is not in
operation, and no proposal has been announced to
enter into or establish, any agreement, arrangement,
custom or practice
90
(whether legally enforceable or not and whether
Approved or not and whether funded or otherwise) for
the payment of, or payment of a contribution towards,
a pension, allowance, lump sum or other similar
benefit on retirement, death, termination of
employment (whether voluntary or not) or during
periods of sickness or disablement, for the benefit
of an Employee or an Employee's dependants.
(2) All data and information disclosed in relation to
the Disclosed Schemes is up-to-date and complete.
10.2.2 SPECIFIC PENSION WARRANTIES
(1) No discretion or power has been exercised (or
practice followed) under the Disclosed Schemes in
relation to any of the Employees to:
(a) augment benefits (whether in relation to
early retirement or otherwise):
(b) admit to membership a person who would not
otherwise have been eligible for admission
to membership;
(c) admit to membership a person on terms which
provided for or envisaged the payment of a
transfer value or transfer of assets from
another scheme to the Disclosed Schemes in a
case in which the payment or transfer has
not been made or has not been made in full;
(d) provide a benefit which would not otherwise
be provided;
(e) pay a contribution which would not otherwise
have been paid.
(2) Each benefit (except a refund of contributions)
payable under the Disclosed Schemes on the death of a
member of the Disclosed Scheme or during periods of
sickness or disability of the member
91
is, at the date of this Agreement, fully insured
under a policy effected with an insurance company of
good repute. To the best of the Vendors knowledge
each member has been covered for that insurance by
that insurance company at its usual rates and on its
usual terms for person in good health and all
insurance premiums payable have been paid.
(3) No plan, proposal or intention to amend, discontinue
(in whole or in part) or exercise a discretion in
relation to the Disclosed Schemes has been
communicated to a member of the Disclosed Schemes.
(4) Each employee who has been admitted to or promised
admission to membership of the Executive Scheme has
been admitted or promised admission on terms which
are consistent with the continued treatment of the
Executive Scheme as Approved and (if applicable) the
provisions of Part II of Schedule 6 to the Finance
Xxx 0000. The substance of the terms of admission or
promised admission have been communicated to the
Employee.
(5) There has been no breach of the trusts of the
Executive Scheme.
(6) There is no civil, criminal, arbitration,
administrative or other proceedings or dispute (which
includes, without limitation, contact with OPAS to or
the Pensions Ombudsman) in relation to any Employee
concerning the Executive Scheme by or against the
trustees or administrator of the Executive Scheme,
the Vendor or
92
the Company and none is pending or threatened. The
Vendor is not aware of a matter in relation to any
Employee which might give rise to a proceeding or
dispute of that type.
(7) All employer and member contributions due to the
Executive Scheme have been paid to the trustees in
accordance with the payments schedule (as required
by, and defined in, Section 87 of the Pensions Act
1995).
(8) All fees, charges and expenses of whatever nature
(including, without limitation, all levies to be paid
under the Pensions Act 1995) with respect to the
Disclosed Schemes have been paid and no services have
been rendered for which an account or invoice has not
been delivered.
(9) No claim has been made or threatened against the
Vendor or the trustees or administrators of the
Disclosed Schemes, or against any person whom the
Vendor is or may be liable to indemnify or
compensate, in connection with the Disclosed Schemes
(other than routine claims for benefits), there are
no circumstances which may give rise to any such
claim and the Vendor has not given any indemnity to
any person in connection with the Disclosed Schemes.
10.2.3 COMPLIANCE
(1) The Executive Scheme is Approved and there is no
matter which might have the Inland Revenue reason to
withdraw Approval.
93
(2) The Executive Scheme is a contracted-out scheme for
the purposes of the Xxxxxxx Xxxxxxx Xxx 0000 and has
been administered in accordance with the
contracting-out requirements of that Act. The Company
holds a current contracting-out certificate issued in
relation to the Disclosed Scheme.
(3) The Executive Scheme has been designed to comply
with, and has been administered in accordance with
all applicable legal and administrative requirements
(including, without limitation, Article 141 of the
Treaty of Rome as it applies to the eligibility of an
Employee to join the Executive Scheme) and the
trusts, powers and provisions of the Executive
Scheme.
10.2.4 THE PENSIONS ACT 1995
The Executive Scheme complies in all respects with the
provisions of the Pensions Xxx 0000.
10.2.5 SEX-EQUALITY
(1) The Executive Scheme has been operated at all times
in accordance with the documents constituting the
same (as lawfully amended from time to time) and all
applicable laws and, without limitation to the
foregoing, all decisions made by the trustees and
administrators of the Executive Scheme have been made
in accordance with their powers and duties as the
trustees or administrators respectively.
(2) No part-time Employee or former Employee has either:
94
(a) been excluded from membership of the
Executive Scheme; or
(b) been provided with benefits under the
Executive Scheme which are different from
those provided for, or in respect of,
full-time Employees or former Employees or
do not comply with the requirements of
Article 141 of the Treaty of Rome.
(3) The Executive Scheme has not accepted any transfer
value from a pension arrangement ("the Playing
Scheme") in respect of an Employee or former
Employee where the Paying Scheme in relation to such
transfer value did not comply with the requirements
of Article 142 of the Treaty of Rome (which, for the
avoidance of doubt, includes obligations in respect
of part-timers).
OFFICERS AND EMPLOYEES
11.1 DETAILS
The Disclosure Letter contains an accurate and complete list
of all officers and employees of the Company as at the date of
this agreement, showing all remuneration payable and other
benefits provided or which the Company is bound to provide
either now or in the future.
11.2 STATUTORY NOTICES
All appropriate notices have been properly issued under the
Employment Rights Xxx 0000 to all employees (including
directors) of the Company.
11.3 WORKING TIME REGULATIONS
95
11.3.1 The Company has complied in full with its obligations under
the Working Time Regulations 1998 (THE "1998 REGULATIONS") in
relation to the business and, in particular and without
limitation, with its record keeping obligations under
Regulations 5(4) and 9 of the 1998 Regulations and the
requirements under Regulations 4, 6, 7 and 8 of the 1998
Regulations.
11.3.2 The Disclosure Letter contains true and complete copies of:-
11.3.2.1 all relevant agreements entered into pursuant to the 1998
Regulations (or, if in standard form, a copy of the standard
form) and a list of all workers covered by any such agreement;
and
11.3.2.2 a list of all workers whom the Company regards as falling
within the terms of Regulation 20 or 21 of the 1998
Regulations.
11.4 TERMS OF EMPLOYMENT AND CONSULTANCY
The Disclosure Letter contains true, complete and accurate
copies (incorporating all the terms which currently apply or a
memorandum of such terms) of all service agreements,
consultancy agreements and letters of engagement which have
been made with any employee or consultant of the Company and
of specimens of the standard terms of employment on which any
employee of the Company is now employed together with a note
showing which employees are employed under which type of
standard terms.
11.5 NO BONUS OR COMMISSION ARRANGEMENTS
The Company is not bound or accustomed to make periodical or
other payments (other than normal fixed salaries and wages) to
employees, ex-
96
employees, officers, consultants or others and no employee,
officer or consultant has remuneration on a profit sharing or
commission basis or by reference to the turnover, profits,
sales or assets of the Company.
11.6 NO SHARE OPTION SCHEME
The Company does not have and never has had any share option,
share incentive, profit sharing or any other similar scheme
other than the Share Option Scheme.
11.7 INCREASES SINCE BALANCE SHEET DATE
Since the Balance Sheet Date:-
11.7.1 no remuneration or benefit has been paid or given or agreed to
be paid or given to any officer, employee or consultant of the
Company who is now entitled to remuneration at the rate of at
least L25,000 per annum except at the rates in force on that
date;
11.7.2 no general increase in the wages of the employees of the
Company or any section or class of such employees has been
made or agreed to be made (whether legally binding or not)
either with the employees or their representatives nor has any
negotiation or demand for such increase been entered into by
or made to the Company; and
11.7.3 the Company has not received or been notified of any wage
claim.
11.8 TERMINATION OF EMPLOYMENT
11.8.1 All contracts of employment between the Company and its
officers or employees are lawfully determinable by the Company
without
97
compensation by notice (not exceeding the relevant statutory
minimum period of notice).
11.8.2 No director or executive of the Company, who is in receipt of
remuneration in excess of L20,000 per annum has given or
received notice terminating his employment, except as
expressly contemplated in this agreement, and no such
executive will be entitled to give such notice as a result of
the sale of the Shares to the Purchaser.
11.8.3 The Company has no reason to dismiss (nor does it wish to
dismiss) any of its employees who is entitled to remuneration
of at least L25,000 per annum.
11.9 CLAIMS BY OR AGAINST EMPLOYEES
11.9.1 The Company is not now, nor is it likely to be and has not
since the Balance Sheet Date been, engaged in any legal
proceedings or arbitration whether as plaintiff or defendant
with any trade union or any person who is or has at any time
been a director or an employee of the Company.
11.9.2 No person who is or was a director or employee of the Company
has any right or made any claim (which has not yet been
settled) to any compensation or other payment by reason of the
termination of his employment (whether such termination
constitutes unfair or wrongful dismissal redundancy or
otherwise) or any breach by the Company of his terms of
engagement or employment; there are no circumstances likely to
lead to any such claims being made; and no gratuitous payment
has been made or promised by the Company in connection with
the termination or
98
proposed termination of employment of any past or present
director or employee.
11.9.3 No order has been or may be made for the reinstatement or
re-engagement of any employee of the Company.
11.10 INDUSTRIAL RELATIONS
There is not and never has been any strike, picket, lock-out,
go-slow, work-to rule or any other form of industrial dispute
taken or threatened against the Company and to the best of
knowledge, information and belief of the Vendors there are no
facts or circumstances which might lead to any such industrial
dispute.
11.11 TRADE UNION RECOGNITION
No claim has been made by any trade union for recognition or
for any improvement or amendment to the terms or conditions of
employment of any employees of the Company and no claim for
recognition has been referred to the Advisory Conciliation and
Arbitration Service or to the Central Arbitration Committee
nor is any trade union recognised by the Company in respect of
any class of employees for any purpose whatsoever.
INSURANCE
12.1 FULL COVER
The Company is and has been at all material times fully
covered by valid insurance against the normal risks for the
type of business carried on and assets and stock-in-trade
owned or used by it (including adequate insurance for the full
reinstatement value of such business, assets and
99
stock-in-trade and against loss of profit) and nothing has
been done or omitted to be done which could make any policy of
insurance void or voidable.
12.2 DETAILS OF INSURANCE COVER
The Disclosure Letter contains copies of all policies of
insurance maintained by the Company (or which is maintained by
a third party but in which the Company has an interest) and
the cover afforded under such policies (including details of
current premiums, excess levels, any unusual terms or
conditions contained in such policies, a history of claims
made by the Company at any time under any insurance policies
and circumstances which have arisen and may give rise to a
claim under such policies).
12.3 PREMIUMS PAID
All premiums payable in respect of any insurance policy in
which the Company has an interest have been duly paid.
12.4 NO OUTSTANDING CLAIMS
There are no claims outstanding by the Company under any
insurance policy nor, so far as the Vendors are aware, are
there any circumstances likely to give rise to any such claim
or which would or might be required under any insurance policy
to be notified to the insurers or which might lead to any
liability under such insurance policies being avoided by the
insurers or the premiums being increased.
12.5 EFFECT OF THIS AGREEMENT
100
No cover afforded by any policy of insurance which is
maintained by the Company or which is maintained by a third
party but in which the Company has an interest will terminate
or be terminable at the option of the insurer or any third
party by reason of the implementation of this agreement.
LITIGATION AND LEGAL PROCEEDINGS
13.1 DEFAULTS BY THE COMPANY
So far as the Vendors are aware the Company is not and since
the Balance Sheet Date has not been:-
13.1.1 in default under any agreement, deed, instrument, arrangement
or covenant to which it is a party or in respect of any other
obligations or restrictions binding upon it;
13.1.2 liable in respect of any representations or warranties
(whether express or implied) or other matters giving rise to a
duty of care on the part of the Company; or
13.1.3 liable to any fine or penalty as a result of committing or
omitting to do any act or thing which could give rise to such
a liability; or
13.1.4 subject to any order or judgment given by any Court or
government agency and has not been party to any undertaking or
assurance given to any Court or governmental agency which is
still in force; or
13.1.5 in default under any provisions existing by reason of
membership of any association or body.
13.2 LEGAL PROCEEDINGS
101
The Company is not and has not since the Balance Sheet Date
been engaged and so far as the Vendors are aware there are no
circumstances likely to lead to the Company becoming engaged
in any legal proceedings (civil or criminal) or arbitration as
plaintiff, defendant or otherwise howsoever except as
plaintiff in normal debt collection and in respect of which
the aggregate amount of debts due to the Company does not
exceed L500.
13.3 DISPUTES WITH GOVERNMENT DEPARTMENTS
There is no dispute with any revenue or other government,
local authority, administrative, official department entity or
agency in the United Kingdom or elsewhere, in relation to the
affairs of the Company and so far as the Vendors are aware
there are no facts which may give rise to any such dispute.
13.4 PERSONAL INJURY CLAIMS
There are no claims pending or threatened against the Company
by an employee or third party in respect of any accident or
injury which are not fully covered by insurance.
13.5 DEMANDS TO PAY
No demand has been served upon the Company under section 123
of the Insolvency Xxx 0000 and the Company has not received
notice (whether formal or informal) from any lenders of money
to the Company requiring repayment or intimating the
enforcement by such lenders of any security
102
which they may hold over any assets of the Company and there
are no circumstances likely to give rise to any such notice
being given.
13.6 ADVERTISING MATERIALS
So far as the Vendors are aware, all advertising and marketing
materials used in connection with the Company's business
comply with all legal requirements in all countries in which
these materials are used or proposed to be used. Such
materials are not defamatory and there are no grounds under
which such materials could be challenged for any reason
whatsoever including, without limitation, defamation, trade
libel or any analogous law.
14. ENVIRONMENTAL MATTERS
So far as the Vendors are aware the Company has complied with,
all legislation (including regulations, codes of practice,
circulars and guidance notes made thereunder) relating to
environmental matters, including (but without limitation)
14.1 waste;
14.2 contaminated land;
14.3 discharges to (i) land and (ii) ground and surface water and
(iii) sewers;
14.4 emissions to air;
14.5 noise;
14.6 dangerous, hazardous or toxic substances and materials;
14.7 nuisance;
14.8 health and safety;
103
and the Vendors are not aware of any actions, claims or
proceedings (whether actual or potential) nor has any other
reason to believe that the Vendor has or is likely to have any
liability in relation to such matters.
104
FIFTH SCHEDULE
PROTECTION FOR THE VENDORS
1. The Purchaser acknowledges that in entering into this
agreement:
1.1 It has not relied on any warranties, representations,
covenants, undertakings, indemnities or other statements
whatsoever (whether expressed or implied and whether written
or oral), other than those expressly set out in this agreement
and the Purchaser further acknowledges that the Vendors have
not given any such warranties, representations, covenants,
undertakings or indemnities; and
1.2 No information, advice or assurances it or anyone on its
behalf may have received from the Vendors, the Vendors'
advisers or anyone else on the Vendors' behalf in relation to
the Company or this agreement or its negotiation may be
legally relied upon in any manner, save in each case for any
information, advice or assurances which are expressly set out
or referred to in the Warranties, the Tax Deed and this
agreement.
2. No right or rescission shall be available to the Purchaser by
reason of any breach of the Warranties or the Tax Deed nor
shall the Purchaser have the right to claim that any such
breach constitutes repudiation of the agreement.
3. The Vendors shall not be liable under the Warranties or the
Tax Deed in relation to:
3.1 Any matter or Event properly and adequately provided for or
reserved or specifically noted in the Accounts;
105
3.2 Any matter where the claim arises or is increased as a result
of the imposition of Taxation as a consequence of any change
in the law or change in any practice or procedure published by
any Taxation Authority coming into force after Completion with
retrospective effect or to the extent that that claim arises
or is increased by an increase in rates of Taxation after
Completion with retrospective effect;
3.3 Any liability for Taxation which would not have arisen but for
any claim, election, surrender, revocation or disclaimer made,
or notice or consent given after Completion (other than on the
giving or doing of which was taken into account in preparing
the Accounts) under the provision of any enactment or
regulation relating to Taxation;
3.4 Any claim which arises or is increased because of timing
differences or changes in accounting practice or policy in the
future accounts of the Company from those adopted in the
Accounts;
3.5 Any liability for Taxation which would not have arisen or
would have been reduced or eliminated but for a failure or
omission on the part of the Company or the Purchaser after
Completion to make any claim, election, surrender or
disclaimer or to give any notice or consent or do any other
thing under or in connection with a provision of any enactment
or regulation relating to Taxation;
3.6 Any claim which would not have arisen or would have been
reduced or eliminated but for an act, omission, Event,
transaction, arrangement or default performed or allowed to
occur by the Purchaser or the Company
106
after Completion otherwise than in the ordinary course of
business and which the Purchaser knew or ought reasonably to
have known would have given rise to a claim under this
agreement;
3.7 Any claim arising as a result of the Company ceasing to be
resident in the United Kingdom for Taxation purposes.
3.8 Any liability for Taxation which is in respect to actual
income, profits or gain of the Company arising in the ordinary
and normal course of business in the period from the Balance
Sheet Date to Completion.
4. The Vendors shall not be liable for any claim under the
Warranties in relation to any matter or Event fairly disclosed
in the Disclosure Letter.
5. The Vendors shall not be liable for any claim under the
Warranties in relation to any claim which has been or is made
good otherwise than by the Purchaser.
6. The aggregate liability of each of the Vendors in respect of
all claims under the Warranties and the Tax Deed (including
interest and costs) shall not in any circumstances exceed ten
per cent of the value of the Consideration attributed to that
Vendor (as set out in columns 4 and 5 of Schedule 1). For the
purposes of this clause the value of the Consideration Shares
shall be an amount equal to the number of Consideration Shares
issued to the Vendor multiplied by US$55.575.
7. Notwithstanding any other provisions of this agreement the
aggregate liability of the Vendor Trustees in respect of any
claim or claims for breach of the Warranties, Indemnities or
under the Tax Deed shall not
107
exceed the value of (calculated in accordance with clause 8)
the trust assets from time to time of the trust fund of which
he is a trustee (and for the avoidance of doubt the relevant
time for assessing such value shall be the due date for
payment of such claim), provided that the Vendor Trustees
shall retain in cash or an equivalent sufficient amount to
meet their maximum potential liability pursuant to this
agreement and, in particular, clause 7 and this Fifth
Schedule.
8. For the purposes of clause 7 the value of the trust assets at
any time shall be:
8.1 the realisable value of those assets comprised in the trust
assets which are in the hands or under the control of the
trustees less
8.2 the estimated amount of any expenses which would be incurred
in connection with the realisation of the assets comprised in
the trust assets and any liability which would arise on such
realisation
8.3 the amount of all liabilities incurred in the proper
administration of the Trusts, whether in respect of taxation
or otherwise (actual, future or contingent) of the trustee and
the trusts.
9. If the Vendors at any time pay to the Purchaser or the Company
an amount pursuant to a claim in respect of the Warranties
and/or the Tax Deed and the Purchaser or the Company
subsequently becomes entitled to recover from some other
person any sum in respect of any matter giving rise to such
claim, the Purchaser shall, and shall procure that the Company
shall, take all necessary steps as are, in the Purchaser's
sole discretion,
108
commercially reasonable to enforce such recovery and shall
forthwith repay to the Vendors so much of the amount paid by
them to the Purchaser or the Company as does not exceed the
sum recovered from such other person less all reasonable
costs, charges and expenses and tax properly incurred by the
Purchaser or the Company in recovering that sum from such
other person.
10. The Vendor shall have no liability under the Warranties or Tax
Deed more than once in respect of the same loss arising out of
or in respect of the same act, matter or thing.
109
SIXTH SCHEDULE
TAX DEED
THIS DEED is made on 2000
BETWEEN:-
(1) The persons whose names and addresses are set out in the
schedule hereto ("COVENANTORS"); and
(2) PHARMACOPEIA, INC a company incorporated in Delaware, United
States of America and having its principal office at 0000
Xxxxxxxx Xxxxx, Xxx Xxxxx, XXX 00000-0000 ("PURCHASER").
1. INTRODUCTION
1.1 By an Agreement ("AGREEMENT") of even date herewith and made
between (1) the Covenantors and (2) the Purchaser, the
Purchaser agreed to purchase the Shares (as defined in the
Agreement).
1.2 The Agreement provides that the Covenantors will deliver today
a duly executed deed in this form.
2. DEFINITIONS AND INTERPRETATION
2.1 In this deed expressions defined in the Agreement shall bear
the same meanings unless the context otherwise requires or
unless they are expressly given different meanings.
2.2 In this deed unless the context otherwise requires:-
"CLAIM" means any notice, demand, assessment, letter or other
document issued, or action taken, by or on behalf of the
Revenue or any other governmental or statutory authority, body
or official, whether of the
000
Xxxxxx Xxxxxxx or elsewhere, whereby the Company is or is
sought to be placed under a liability to Taxation;
"COMPANY" means Synopsys Scientific Systems Limited
(registered number 02708693) and/or Synopsys Scientific
Systems Inc.;
"EVENT" includes any act, transaction or circumstance,
including (without limitation) any change in the residence of,
or the death of, any person, the execution of the Agreement
and Completion;
"PURCHASER'S RELIEF" means:
(i) any Relief shown as an asset in the Accounts;
(ii) any Relief of the Company arising in respect of or in
consequence of any Event which occurs after
Completion;
(iii) any Relief of the Purchaser whenever arising;
"RELIEF" includes any loss, allowance, exemption, set-off,
credit or deduction relevant to the computation of any
Taxation or any right to repayment of Taxation;
"TAXATION" includes all forms of taxation, duties (including
stamp duty), levies, imposts, charges, withholdings, national
insurance and other contributions, in the nature of taxation
and PAYE liabilities (including any related penalty, fine,
interest or surcharge) whether of the United Kingdom or
elsewhere.
2.3 The covenants contained in this deed shall be construed as
separate and independent and none of them shall be affected or
restricted by any other except to the extent that any payment
made by the Covenantors and
111
received by the Purchaser in respect of one covenant shall
discharge the same liability under the other covenants which
shall arise out of the same subject matter.
3. COVENANTS
3.1 The Covenantors jointly and severally covenant with the
Purchaser to pay to the Purchaser an amount equal to:-
3.1.1 any liability to Taxation of the Company in respect of, by
reference to or in consequence of any income, profits or gains
earned, accrued or received or deemed to have been earned,
accrued or received on or before Completion;
3.1.2 any liability to Taxation of the Company in respect of, or in
consequence of any Event which occurred or is deemed to have
occurred on or before Completion;
3.1.3 any liability to Taxation of the Company for which it is not
primarily liable in respect of, by reference to or in
consequence of any Event which occurred or is deemed to have
occurred on or before Completion and which is payable by the
Company by virtue of the person who is primarily liable
failing to discharge such liability;
3.1.4 any Taxation for which the Company would have become liable
pursuant to clauses 3.1.1 to 3.1.3 (inclusive) but for the
utilisation or set off of a Purchaser's Relief;
3.1.5 any Taxation incurred by the Purchaser in respect of any
amounts received from the Covenantors pursuant to this deed
provided always that this sub-
112
clause 3.1.5 shall only apply where the Purchaser is
Pharmacopeia, Inc and shall not apply to any successors or
assigns of Pharmacopeia, Inc; and
3.1.6 all reasonable costs and expenses actually and properly
incurred by the Purchaser in enforcing the provisions of this
deed.
3.2.1 All sums payable by the Covenantors under the covenants
contained in this deed shall be paid free and clear of all
deductions or withholdings or rights of counterclaim or
set-off unless the deduction or withholding is required by
law.
3.2.2 If the Covenantors are required by law to make any deduction
or withholding from any payment under this deed, 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 a net sum equal to the sum it would have received
had no deduction or withholding been required to be made
provided always that this sub-clause 3.2.2 shall only apply
where the Purchaser is Pharmacopeia, Inc and shall not apply
to any successors or assigns of Pharmacopeia, Inc.
4. EXCLUSIONS
4.1 The covenants in clause 3.1 shall not apply to any liability
to Taxation to the extent that:-
4.1.1 a specific provision or reserve in respect of it was made in
the Accounts; or
113
4.1.2 the Company is liable in respect of actual income, profits or
gains of the Company arising in the ordinary and normal course
of business in the period from the Balance Sheet Date to
Completion; or
4.1.3 such liability has arisen or has been increased by the
Purchaser's failure to comply with its obligations under this
deed.
4.2 For the purposes of clause 4.1 none of the following shall be
regarded as occurring in the ordinary and normal course of
business of the Company:-
4.2.1 an event giving rise to a liability under Part XVII Taxes Act;
4.2.2 a distribution within the meaning given by Part VI with
Section 418 Taxes Act;
4.2.3 an acquisition, disposal or supply or deemed acquisition
disposal or supply of assets, goods, services or business
facilities of any kind (including a loan of money or a
letting, hiring or licensing of tangible or intangible
property) for a consideration which is treated for Taxation
purposes as different from the actual consideration;
4.2.4 an event which results in the Company being liable for
Taxation for which it is not primarily liable; and
4.2.5 an event in respect of which Taxation arises as a result of a
failure by the Company to deduct, withhold, or account for
Taxation.
4.3 The provisions of clauses 7.2 and 7.3 and the Fifth Schedule
of the Agreement which refer to the Tax Deed shall apply
hereto as if set out in full.
5. WAIVER
114
No delay or omission of the Purchaser in exercising any rights
under this deed shall prejudice such rights or be construed as
a waiver or partial waiver of such rights, nor shall it
exclude the further exercise of such rights.
6. PAYMENT
6.1 Subject to clause 6.2 and 6.3 the Covenantors shall pay any
amounts due under this deed in sterling in cleared funds:
6.1.1 two Business Days prior to the date on which the Taxation in
question is payable to the taxation authority demanding it; or
6.1.2 if later, two Business Days prior to the date to which payment
of the Taxation in question is deferred following application
to the appropriate authority, official, court, tribunal or
body of the jurisdiction concerned; or
6.1.3 if later, five business days after the Purchaser serves notice
on the Covenantors demanding such payment.
6.2 If the Covenantors are or become liable to make a payment
under clause 3.1.4, the Covenantors shall pay such amount in
cleared, immediately available funds on or before the later of
the date on which the Taxation would have become payable to
the authority or official or person demanding it but for the
utilisation or set off of the relevant Relief and five
business days after the Purchaser serves notice on the
Covenantors demanding such payment.
115
6.3 If the Covenantors are or become liable to make a payment
under clause 3.1.6, the Covenantors shall pay such amount in
cleared, immediately available funds on or before the date
which is the later of:
6.3.1 two business days prior to the date on which such costs or
expenses are to be paid as notified by the Purchaser to the
Covenantors; or
6.3.2 the fifth day after the Purchaser serves written notice on the
Covenantors demanding such payment; or
6.3.3 the date on which the Claim to which such costs and expenses
relate is payable under this deed.
6.4 Any sums not paid by the Covenantors on the due date for
payment as specified in this clause shall bear interest (which
shall accrue from day to day after as well as before any
judgment for the same) at the annual rate of 1 percentage
points above the base rate of Barclays Bank plc from time to
time from the due date up to and including the day of actual
payment of such sums, such interest to be compounded quarterly
and paid by the Covenantors on demand by the Purchaser.
7. CONDUCT OF CLAIMS
7.1 The Purchaser shall or shall procure that the Company shall
give notice to the Covenantors as soon as reasonably
practicable after it shall become aware of any Claim in
respect of which a claim may be made pursuant to this deed.
7.2 The Purchaser shall and shall procure that the Company shall
provide such relevant information and documentation as the
Covenantors may
116
reasonably request to avoid, dispute, resist, appeal,
compromise or defend any Claim and any adjudication in respect
thereof ("DISPUTE") subject to the Purchaser and the Company
being indemnified to the Purchaser's reasonable satisfaction
by the Covenantors against all losses, costs, expenses,
interest, penalties and surcharges thereby incurred.
7.3 Subject to the provisions of this clause 7, any dispute
relating to a liability to Taxation shall be conducted by the
Covenantors but:
7.3.1 the Covenantors shall keep the Purchaser fully informed of all
relevant matters and shall promptly forward or procure to be
forwarded to the Purchaser copies of all relevant
correspondence and other relevant information and
documentation;
7.3.2 all communications written or otherwise relating to the
dispute which are to be transmitted to a Taxation authority
shall first be submitted to the Purchaser for approval and
shall only be finally transmitted if such approval is given
(such approval not to be unreasonably withheld or delayed);
7.3.3 the appointment of solicitors or other professional advisers
shall be subject to the prior written approval of the
Purchaser;
7.3.4 the Covenantors shall make no settlement or compromise of the
dispute nor agree any matter in the conduct of such dispute
which is likely to increase the amount thereof or adversely
affect the future liability of the Purchaser or the Company to
Taxation without the prior approval of the Purchaser (such
approval not to be unreasonably withheld or delayed).
117
7.4 The Purchaser or the Company may without reference to any of
the Covenantors admit, settle, discharge, compromise or
otherwise deal with any outstanding or future Claim (without
prejudice to their rights under this deed) if:
7.4.1 the Covenantors serve a notice on the Company or the Purchaser
to the effect that in relation to any such dispute the
Covenantors do not wish to take up or continue the conduct
thereof;
7.4.2 a period of 10 business days has expired following the service
of notice by the Purchaser or, as the case may be, the Company
on the Covenantors pursuant to clause 7.1 where either the
Covenantors have not made a request to the Purchaser in
accordance with clause 7.2 or the Covenantors have made such a
request but have failed to provide a duly executed indemnity
in the manner stipulated by the Purchaser within the said
period;
7.4.3 a period of 10 business days has expired following the service
of notice (other than a notice under clause 7.1) by the
Purchaser or the Company on the Covenantors to the effect that
the Covenantors are not properly and effectively conducting
the dispute, if by the expiry of that period the Covenantors
have not taken reasonable steps so to conduct the dispute; or
7.5 The Covenantors shall be bound to accept for the purposes of
the covenants contained in this deed any admission,
settlement, discharge or compromise of any Claim and the
outcome of any proceedings relating
118
thereto made or arrived at in accordance with the procedures
set out in clause 7.4.
7.6 If the Covenantors do not exercise their right to request the
Purchaser to take action pursuant to clause 7.2, they shall
supply the Company and the Purchaser free of charge with all
relevant information, books, papers and other documents in the
possession or under the control of all or any of them and
shall give or procure the giving (as appropriate) of such
statements and other reasonable co-operation by the
Covenantors as the Company or the Purchaser may reasonably
request or require for the purpose of resisting any Claim.
8. CORRESPONDING BENEFITS
8.1 If any liability to Taxation which has resulted in payment
having been made or becoming due from the Covenantors under
this deed gives rise to a Relief or right to a repayment of
Taxation for the Company which would not otherwise have
arisen, then, as and when the liability of the Company to make
an actual payment of or in respect of Taxation is reduced by
reason of that Relief or, in the case of a repayment of
Taxation, as and when the repayment is received, the amount by
which the liability is reduced or the amount of the repayment
(the RELEVANT AMOUNT) shall be dealt with as follows:
8.1.1 the Relevant Amount shall first be set off against any payment
then due from the Covenantors under this deed; and
119
8.1.2 to the extent that there is any excess, a refund shall be made
forthwith to the Covenantors of any previous payment or
payments made by the Covenantors under this deed and not
previously refunded under this paragraph up to the amount of
such excess, and
8.1.3 to the extent that the excess referred to in paragraph 8.1.2
is not exhausted under that paragraph, the remainder of the
excess shall be carried forward for set off against any future
payment or payments which becomes due from the Covenantors
under this deed.
8.2 If, at any time, the Purchaser or the Company become aware of
any Relief, repayment or excessive provision for taxation to
which paragraph 8.1 may apply, the Purchaser shall as soon as
reasonably practicable give full details in writing to the
Covenantors.
9. PURCHASERS COVENANT
9.1 The Purchaser agrees with and undertakes to the Covenantors to
pay to the Covenantors an amount equal to any Taxation payable
by any of the Covenantors or any company controlled by any of
the Covenantors (other than the Company) arising as a result
of or in respect of any failure by the Company or the
Purchaser to pay any Taxation which is the primary liability
of the Company and/or the Purchaser save where such Taxation
gives rise to a liability of the Covenantors under clause 3
above which the Covenantors have not satisfied.
120
9.2 The provisions of paragraphs 6 and 7 shall apply to the
covenant in paragraph 9.1 as they apply to the covenants in
paragraph 3 mutatis mutandis.
10. REDUCTION OF PURCHASE PRICE
Any amounts payable pursuant to this deed shall be deemed to
constitute a reduction in the Consideration.
11. ASSIGNMENT
The provisions of clause 12.4 of the Agreement shall apply
equally to this deed.
12. NOTICES
The provisions of clause 15 and 16.2 of the Agreement shall
apply equally to this deed.
13. LAW
The provisions of clause 16 of the Agreement shall apply
equally to this deed.
121
SCHEDULE
COVENANTORS
Xxxxxxx Xxxxx Xxxxxxx Xxxx
00 Xx Xxxxx Xxxx
Xxxxx
Xxxx Xxxxxxxxx
XX0 0XX
Xxxxx Xxxxxxx Xxxxxxxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxxxx
Xxxxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxx
Xxxxx
Xxxx Xxxxxxxxx
XX00 0XX
Xxxx Xxxxxxx Xxxxxxxxx
"Stoneycroft"
00 Xxxxxxxx
Xxxxxxxx-xx-Xxxxx
Xxxxx
Xxxxx Xxxxxxxxx
XX00 0XX
Xxxx Xxxx Xxxxxxx Xxxxx
Holme Farm Cottage
Wothersome
Xxxxxxxx
Xxxx Xxxxxxxxx
XX00 0XX
Xxxxx Xxxxxxxx Xxxxxxxxx Xxxxxxxxx
Revocable Trust
0000 Xxxxx Xxxx
00 Xxxxxx
Xxxxxxxxxx
Xxxxxxx 00000
XXX
122
K B (CI) Nominees Ltd
West Centre
St Helier
Jersey
University of Leeds
Innovations Ltd
000 Xxxxxxxxx Xxxx
Xxxxx
Xxxx Xxxxxxxxx
XX0 0XX
123
SIGNED AS A DEED by )
XXXXXXX XXXXX XXXXXXX XXXX ) /s/ XXXXXXX XXXXX XXXXXXX XXXX
in the presence of:- )
SIGNED AS A DEED by )
XXXXX XXXXXXX XXXXXXXXXX ) /s/ XXXXX XXXXXXX XXXXXXXXXX
in the presence of:- )
SIGNED AS A DEED by )
XXXXXX XXXXXXX ) /s/ XXXXXX XXXXXXX
in the presence of:- )
SIGNED AS A DEED by )
XXXX XXXXXXX XXXXXXXXX ) /s/ XXXX XXXXXXX XXXXXXXXX
in the presence of:- )
SIGNED AS A DEED by )
XXXX XXXX XXXXXXX XXXXX ) /s/ XXXX XXXX XXXXXXX XXXXX
in the presence of:- )
124
SIGNED AS A DEED by the trustee(s) of )
XXXXX JULIENNE DIETLINDE ) /s/ XXXXX XXXXXXXX XXXXXXXXX
XXXXXXXXX REVOCABLE TRUST ) KATRITZKY REVOCABLE TRUST
in the presence of:- )
EXECUTED AS A DEED by )
K B (CI) NOMINEES LTD ) /s/ K B (CI) NOMINEES LTD
acting by )
)
and )
)
Director:
Director/Secretary:
EXECUTED AS A DEED by )
UNIVERSITY OF LEEDS ) /s/ UNIVERSITY OF LEEDS
INNOVATIONS LTD ) /s/ INNOVATIONS LTD
acting by )
)
and )
)
Director:
Director/Secretary:
125
EXECUTED AS A DEED by )
PHARMACOPEIA, INC. ) PHARMACOPEIA
acting by ) /s/ XXXXXX X. XXXXXXX
)
President and Chief Executive Officer:
126
EXECUTED AS A DEED by
PHARMACOPEIA INC.
acting by
/s/ XXXXXX X. XXXXXXX
-------------------------------------
President and Chief Executive Officer
EXECUTED AS A DEED by
KB(CI) NOMINEES LIMITED
acting by
--------------------------------------- -----------------------------
Director Director
EXECUTED AS A DEED by
UNIVERSITY OF LEEDS INNOVATIONS LIMITED
acting by
--------------------------------------- -----------------------------
Director Director
EXECUTED AS A DEED by
Or for and on behalf of )
XXXXXXX XXXXX XXXXXXX XXXX /s/ XXXXXXX XXXXX XXXXXXX XXXX
--------------------------------
APF Xxxx
XXXXX XXXXXXX XXXXXXXXXX /s/ XXXXX XXXXXXX XXXXXXXXXX
--------------------------------
XX Xxxxxxxxxx
XXXXXX XXXXXXX /s/ XXXXXX XXXXXXX
--------------------------------
J Xxxxxxx
XXXX X. XXXXXXXXX /s/ XXXX X. XXXXXXXXX
--------------------------------
GA Xxxxxxxxx
127
XXXX XXXX XXXXXXX XXXXX /s/ XXXX X. X. XXXXX
--------------------------------
PLM Xxxxx
XXXXX XXXXXXXX XXXXXXXXX
XXXXXXXXX TRUST /s/ XXXXX X. DIETLINDE
--------------------------------
Trustee
in the presence of this witness
------------------------------- Witness full name
-------------------------------
------------------------------- Address
-------------------------------
-------------------------------
------------------------------- Occupation
128
