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EXHIBIT 10.9
AGREEMENT
dated as of
October 13, 1999
by and among
SYNAPTICS, INCORPORATED,
and
THE PRINCIPAL SHAREHOLDERS OF
ABSOLUTE SENSORS LIMITED
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TABLE OF CONTENTS
PAGE
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TERMS OF THE OFFER.......................................................... 2
1.1 Issue of Synaptics' Stock and Cash Consideration................... 2
1.10 Taking of Necessary Action; Further Action......................... 3
SECTION 2 - CLOSING......................................................... 3
2.1 Closing Date....................................................... 3
2.2 Actions at the Closing............................................. 3
2.3 Payment............................................................ 4
2.4 Purchase of Common Stock........................................... 4
SECTION 3 - SECURITIES LAW COMPLIANCE....................................... 5
3.1 Securities Act Exemption........................................... 5
3.2 Stock Restrictions................................................. 5
3.3 Corporate Securities Law........................................... 6
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS
REGARDING THE COMPANY....................................................... 6
4.1 Organization Standing and Power; Subsidiaries...................... 6
4.2 Articles of Association............................................ 7
4.3 Capital Structure.................................................. 7
4.4 Authority.......................................................... 8
4.5 No Conflicts; Required Filings and Consents........................ 8
4.6 Financial Statements............................................... 9
4.7 Absence of Undisclosed Liabilities................................. 9
4.8 Absence of Certain Changes......................................... 9
4.9 Litigation......................................................... 11
4.10 Restrictions on Business Activities................................ 11
4.11 Permits; Company Products; Regulation.............................. 12
4.12 Title to Property.................................................. 13
4.13 Intellectual Property.............................................. 15
4.14 Environmental Matters.............................................. 17
4.15 Taxes.............................................................. 19
4.16 Employees.......................................................... 29
4.17 Certain Agreements Affected by the purchase of the Shares
by Offeror ....................................................... 31
4.18 Pensions........................................................... 31
4.19 Material Contracts................................................. 33
4.20 Interested Party Transactions...................................... 35
4.21 Insurance.......................................................... 35
4.22 Compliance With Laws............................................... 36
4.23 Minute Books....................................................... 36
4.24 Complete Copies of Materials....................................... 36
4.25 Brokers' and Finders' Fees......................................... 36
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4.26 Year 2000.......................................................... 36
4.27 Inventory.......................................................... 37
4.28 Accounts Receivable................................................ 37
4.29 Customers and Suppliers............................................ 38
4.30 Third Party Consents............................................... 38
4.31 No Commitments Regarding Future Products........................... 38
4.32 Representations Complete........................................... 38
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS
REGARDING THEIR SHAREHOLDER STATUS.......................................... 39
5.1 Power, Authorization and Validity.................................. 39
5.2 Title to Stock..................................................... 39
5.3 No Violation....................................................... 40
5.4 Acknowledgment..................................................... 40
SECTION 6 - REPRESENTATIONS AND WARRANTIES OF OFFEROR....................... 40
6.1 Organization, Standing and Power................................... 40
6.2 Capital Structure.................................................. 41
6.3 Authority.......................................................... 41
6.4 No Conflict; Required Filings and Consents......................... 41
6.6 Absence of Certain Changes......................................... 42
6.7 Litigation......................................................... 42
6.8 Governmental Authorization......................................... 43
6.9 Compliance With Laws............................................... 43
SECTION 7 - CONDITIONS TO CLOSING........................................... 43
7.1 Conditions to Obligations of Each Party............................ 43
7.2 Additional Conditions to Obligations of the Principal Shareholders. 44
7.3 Additional Conditions to the Obligations of Offeror................ 45
SECTION 8 - ESCROW AND INDEMNIFICATION...................................... 47
8.1 Survival of Representations and Warranties......................... 47
8.2 Escrow Fund........................................................ 47
8.3 Indemnification.................................................... 47
8.4 Damages Threshold.................................................. 48
8.5 Escrow Period...................................................... 49
8.6 Distributions; Voting.............................................. 49
8.7 Method of Asserting Claims......................................... 49
8.8 Stockholders' Representative; Power of Attorney.................... 50
SECTION 9 - TERMINATION; SURVIVAL AND EFFECT OF TERMINATION................. 50
9.1 Termination........................................................ 50
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9.2 Survival........................................................... 50
COVENANTS OF THE PRINCIPAL SHAREHOLDERS..................................... 51
10.1 Conduct of Business of the Company................................. 51
10.2 No Solicitation.................................................... 54
10.3 Access; Confidentiality............................................ 55
10.4 Public Announcements............................................... 55
10.7 Cooperation........................................................ 56
10.6 Employees of the Business.......................................... 56
10.8 Notification of Claims............................................. 56
10.9 Further Acts....................................................... 56
SECTION 11 - COVENANTS OF OFFEROR........................................... 56
11.1 Blue Sky Laws...................................................... 56
11.2 Conduct of Business of Offeror..................................... 57
SECTION 12 - MISCELLANEOUS.................................................. 57
12.1 Survival of Warranties............................................. 57
12.2 Notices............................................................ 57
12.3 Interpretation..................................................... 58
12.4 Counterparts....................................................... 58
12.5 Entire Agreement; Nonassignability; Parties in Interest............ 58
12.6 Binding Effect and Assignment...................................... 59
12.7 Severability....................................................... 59
12.8 Remedies Cumulative................................................ 59
12.9 Governing Law...................................................... 59
12.10 Rules of Construction.............................................. 59
12.11 Waiver of Restrictions............................................. 59
12.12 Amendments and Waivers............................................. 59
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AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of the 13th day of
October, 1999 (the "Effective Date"), by and among Synaptics, Incorporated, a
California corporation ("Synaptics" or "Offeror"), and certain principal
shareholders of Absolute Sensors Limited, a corporation incorporated under the
laws of England (the "Company"), listed on Exhibit A (each individually, a
"Principal Shareholder" and collectively, the "Principal Shareholders"). The
Offeror and Principal Shareholders are collectively referred to as the
"Parties."
RECITALS
1. The Company is in the business of the design, manufacturing, marketing and
sale of pen input solutions for portable information devices such as
computers, personal digital assistants and telephones incorporating
inductive sensing technology known as Spiral technology and similar
technology.
2. The Principal Shareholders own the number of outstanding Ordinary Shares
of the Company listed beside their names on Exhibit A. All of the
remaining outstanding shares of the Company's capital stock and securities
convertible into or exercisable for shares of the Company's capital stock
are also listed on Exhibit A and are owned or will be owned at the Closing
Date by the shareholders and option holders listed on Exhibit A. These
shareholders, together with the Principal Shareholders, are defined as the
"Shareholders" under this Agreement.
3. Offeror wishes to offer (the "Offer") to purchase from all Shareholders
all of the outstanding Ordinary Shares of the Company held by them as of
the Closing on the terms and conditions set forth in the general offer
memorandum referred to in Section 10.3 below and attached to this
Agreement as Exhibit B (the "Offer Document").
4. The Principal Shareholders wish to undertake to accept the Offer in
respect of all of the outstanding Ordinary Shares of the Company held by
them as of the Closing on the terms and conditions set forth in the Offer
Document.
5. The Offer does not extend to any securities convertible into or
exercisable for shares of the Company's capital stock and all such
securities shall have been terminated as of the Closing.
6. The Parties intend that the transactions contemplated hereby and by the
Offer Document will not constitute a plan of reorganization under the
provisions of Section 368(a) of the U.S. Internal Revenue Code of 1986, as
amended (the "Code") as it is intended that the transactions will
constitute a taxable stock purchase for U.S. tax purposes.
7. Offeror intends to make an election under Section 338(g) of the Code and
similar provisions of applicable state laws.
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AGREEMENT
In consideration of the mutual promises, agreements, warranties and provisions
contained in this Agreement, the Parties agree as follows:
SECTION 1
TERMS OF THE OFFER.
1.1 ISSUE OF SYNAPTICS' STOCK AND CASH CONSIDERATION. Subject to the terms and
conditions of this Agreement, Offeror agrees to issue the Offer Document
forthwith pursuant to when it will offer to purchase ("the Purchase") at
the Closing (as defined below), all of the Ordinary Shares of the Company
outstanding as of the Closing (the "Shares") (which Shares shall
constitute all of the outstanding capital stock of the Company as of the
Closing) for an aggregate purchase price (assuming that the Offer is
accepted in respect of all of the Shares) of (a) $1,450,000 in cash
denominated in U.S. Dollars (the "Cash Consideration") and (b) 832,000
shares of Synaptics' Common Stock (subject to adjustment to reflect fully
the effect of any stock split, reverse split or stock dividend and subject
to increase as a result of Section 1.4 below) (the "Synaptics' Stock").
Subject to the terms and conditions of this Agreement, the Principal
Shareholders agree forthwith to accept the Offer in respect of all of the
Ordinary Shares of the Company held by them as of the Closing for the Cash
Consideration Per Share and Synaptics' Stock Per Share set forth in
Section 1.2 below.
1.2 SYNAPTICS' STOCK AND CASH CONSIDERATION PER SHARE. Subject to the terms
and conditions of this Agreement, each Shareholder will be entitled to
receive at the Closing, and at such later times as specified in this
Agreement, (i) that portion of the Cash Consideration payable at the
relevant time, rounded to the nearest cent, equal to the Cash
Consideration divided by the aggregate number of Shares outstanding as of
the Closing (the "Cash Consideration Per Share"), and (ii) that number of
shares of Synaptics' Stock deliverable at the relevant time equal to the
total number of shares of Synaptics' Stock divided by the aggregate number
of Shares outstanding as of the Closing (the "Synaptics' Stock Per Share")
and multiplied in each case by the number of Shares in respect of which
the relevant Shareholder has accepted the Offer.
1.3 TERMINATION OF OPTIONS. It is a condition of the Offeror's obligation to
effect the Purchase that effective immediately prior to the Closing and
contingent upon consummation of the Purchase, all options, warrants and
other rights to purchase shares of the Company's capital stock that have
not been exercised as of the Closing (other than those granted to
Competitive Technologies, Inc.) and obligations to issue shares or options
to employees under any bonus scheme of the Company shall terminate without
any action on the part of the holder thereof. In addition, as of the
Closing, the outstanding capital stock of the Company shall consist solely
of Ordinary Shares held by the Shareholders.
1.4 FRACTIONAL SHARES. No fraction of a share of Synaptics' Stock will be
issued to a Shareholder under this Agreement. Instead each Shareholder
shall receive such number of shares of Synaptics' Stock determined by
aggregating all fractional shares
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of Synaptics' Stock to which the Shareholder would otherwise be entitled,
and then rounding up to the nearest whole share.
1.5 TAKING OF NECESSARY ACTION; FURTHER ACTION. If at any time after the date
of this Agreement, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Offeror with full
right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company as of the Closing, each Principal
Shareholder shall take all such lawful and necessary action, so long as
such action is not inconsistent with this Agreement and so long as the
.Principal Shareholder has the power to take such action.
1.6 ACCEPTANCE OF OFFER. The Principal Shareholders hereby undertake to accept
the Offer in respect of all of the outstanding Ordinary Shares of the
Company held by them as of the Closing on the terms and conditions set
forth in the Offer Document.
SECTION 2
CLOSING
2.1 CLOSING DATE. Unless this Agreement is earlier terminated pursuant to
Section 9, the closing of the purchase pursuant to the Offer (the
"Closing") shall be held at the offices of Venture Law Group, 0000 Xxxx
Xxxx Xxxx, Xxxxx Xxxx, XX 00000 at 4:00 p.m. California time on the date
upon which the Offer becomes or is declared unconditional in all respects,
unless another time and place is agreed upon between the Principal
Shareholders' Representative and the Offeror orally or in writing, such
time and date being referred to herein as the "Closing Date."
2.2 ACTIONS AT THE CLOSING. At the Closing, the Principal Shareholders and
Offeror shall take such actions and execute and deliver such agreements
and other instruments and documents as necessary or appropriate to effect
the transactions contemplated by this Agreement in accordance with its
terms, including without limitation the following:
(a) The Offer shall have become or been declared unconditional pursuant
to the terms of the Offer Document;
(b) Each of the Principal Shareholders shall procure that The Generics
Group AG will deliver to Offeror a duly executed Deed of Tax
Covenant in the form attached hereto as Exhibit C (the "Deed of Tax
Covenant");
(c) The Principal Shareholders will deliver an updated Balance Sheet of
the Company in a form reasonably acceptable to Offeror dated as of a
date as close as reasonably practicable to the Closing Date;
(d) Offeror, certain of the Principal Shareholders of the Company and
certain other entities listed on Exhibit A to the Agreement shall
enter into a Deed of Non-Competition in the form attached hereto as
Exhibit D (the "Deed of Non-Competition");
(e) The Principal Shareholders shall cause a board meeting of the
Company to be held at which:
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(i) the transfers of the Shares which have been acceded to the
Offeror will be approved for registration (subject to their
being duly stamped, which shall be at the cost of the
Offeror);
(ii) resignation letters of all directors (except for Xxx Xxxxxxx
and Xxxxx Xxx) and the secretary of the Company will be
tendered and accepted so as to take effect at the close of the
meeting;
(iii) all persons nominated by the Offeror (in the case of directors
subject to any maximum number imposed by the relevant articles
of association) will be appointed directors and secretary;
(iv) all existing instructions and authorities to bankers will be
revoked and will be replaced with alternative instructions,
mandates and authorities in such form as the Offeror may
require;
(v) the accounting reference date will be changed to June 30; and
(vi) Ernst & Young will be appointed auditors.
(f) The Principal Shareholders shall procure delivery to the Offeror's
UK Counsel, CMS Xxxxxxx XxXxxxx, of the Company's statutory books.
2.3 PAYMENT OF CASH CONSIDERATION. The payment of the Cash Consideration set
forth below shall be allocated among the Shareholders pursuant to the
formula set forth in Section 1.2 above (and subject to Section 12.13):
(a) An aggregate of $450,000 of the Cash Consideration shall be paid to
the Shareholders at the Closing; and
(b) An aggregate of $1,000,000 of the Cash Consideration shall be paid
to the Shareholders on the six month anniversary of the Closing
Date.
2.4 ISSUANCE OF SYNAPTICS' STOCK. The issuance of shares of Synaptics' Stock
set forth below Shall be allocated among the Shareholders pursuant to the
formula set forth in Section 1.2 above:
(a) An aggregate of 632,000 shares of Synaptics' Stock (subject to
adjustment to reflect fully the effect of any stock split, reverse
split or stock dividend and subject to increase as a result of
Section 1.4 above) shall be issued to the Shareholders at the
Closing; and
(b) Subject to the conditions set forth below, at the times specified
below after the Closing, an aggregate of up to 200,000 shares of
Synaptics' Stock (subject to adjustment to reflect fully the effect
of any stock split, reverse split or stock dividend and subject to
increase as a result of Section 1.4 above) shall be delivered
(subject to the Escrow provisions provided below and in Section 8)
to the Shareholders in accordance with the following formula: For
each Company product sold for the PDA/Windows CE/mobile
communications market over the twenty-four (24) month period
following the Closing Date which incorporates Spiral technology, as
determined by Offeror in good faith
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(the Principal Shareholders Representative having the right, upon
reasonable notice to Offeror, to review the determination by Offeror
and to examine such books and records of Offeror as shall be
reasonably necessary to conduct such review), the Shareholders will
in the aggregate be entitled to one share of Synaptics' Stock, up to
a maximum of 200,000 shares (subject to adjustment to reflect fully
the effect of any stock split, reverse split or stock dividend);
provided, however that the Offeror will not be required to deliver
shares of Synaptics' Stock more frequently than once during each six
(6) month period following the Closing. Notwithstanding the
foregoing, until the Escrow Termination Date, all shares of
Synaptics' Stock that each Principal Shareholder is entitled to
receive under this Section 2.4(b) shall be deposited by Offeror into
the Escrow Fund. Synaptics shall have the right at any time to waive
the conditions set forth in this Section 2.4(b) and issue to the
Shareholders all remaining Shares which have not already been issued
to the Shareholders under this Section 2.4(b) and to deposit all
Shares to be issued under this Section 2.4(b) to the Principal
Shareholders into the Escrow Fund prior to the Escrow Termination
Date.
SECTION 3
SECURITIES LAW COMPLIANCE
3.1 SECURITIES ACT EXEMPTION. The Synaptics' Stock to be issued pursuant to
the Offer shall not be registered under the Securities Act of 1933, as
amended ("Securities Act"), and is being issued in reliance upon the
exemption contained in Regulation S of the Securities Act, or such other
exemptions as may be available, and in reliance upon the representations
and warranties of the Shareholders contained in the Offer Document.
3.2 STOCK RESTRICTIONS. The certificates representing the shares of Synaptics'
Stock issued pursuant to the Offer shall bear a restrictive legend or
legends (and stop transfer orders shall be placed against the transfer
thereof with Offeror's transfer agent), stating substantially as follows:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED EXCEPT (i) IN COMPLIANCE WITH REGULATION S UNDER THE
ACT, (ii) PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR (iii) PURSUANT TO AN
AVAILABLE EXEMPTION UNDER SUCH ACT AND, IF REQUESTED BY THE COMPANY,
AFTER DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH TRANSACTION IS SO EXEMPT. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
ACT."
(b) Any legend required by the securities laws of any state.
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3.3 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT
OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR
25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED, UNLESS THE SALE IS SO EXEMPT.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS REGARDING THE
COMPANY
In this Agreement, any reference to any event, change, condition or effect
being "material" with respect to any entity or group of entities means any
material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible
assets), liabilities, business, operations, results of operations or
prospects of such entity or group of entities. In this Agreement, any
reference to a "Material Adverse Effect" with respect to any entity or
group of entities means any event, change or effect that, when taken
individually or together with all other adverse changes and effects, is or
is reasonably likely to be materially adverse to the condition (financial
or otherwise), properties, assets, liabilities, business, operations,
results of or prospects of such entity and its subsidiaries, taken as a
whole, or to prevent or materially delay consummation of the transactions
contemplated under this Agreement or otherwise to prevent such entity and
its subsidiaries from performing their obligations under this Agreement.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after due and diligent inquiry of officers,
directors and other employees of such party reasonably believed to have
knowledge of such matters.
Except as disclosed in a document of the same date as this Agreement and
delivered by the Principal Shareholders to Offeror prior to the execution
and delivery of this Agreement and referring to the representations and
warranties in this Agreement (the "Company Disclosure Schedule"), each
Principal Shareholder in consideration of the Offeror agreeing to make the
Offer and issue the Offer Document hereby jointly and severally represents
and warrants to Offeror as follows:
4.1 ORGANIZATION STANDING AND POWER; SUBSIDIARIES. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of England, and each subsidiary of the Company, if any, (each a
"Subsidiary") is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of
the Company and each Subsidiary has the requisite corporate power and
authority and all necessary government approvals to own, lease and operate
its properties and to carry on its business as now being conducted and as
proposed to be conducted, except where the failure to have such power,
authority and
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governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. Each of the Company and each
Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that
would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. A true and complete list of all the Subsidiaries,
together with the jurisdiction of incorporation of each Subsidiary, is set
forth in Section 4.1 of the Company Disclosure Schedule. The Company is
the owner of all outstanding shares of capital stock of each Subsidiary
and all such shares are duly authorized, validly issued, fully paid and
nonassessable. All of the outstanding shares of capital stock of each
Subsidiary are owned by the Company free and clear of all liens, charges,
claims or encumbrances or rights of others. There are no outstanding
subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of
any Subsidiary, or otherwise obligating the Company or any Subsidiary to
issue, transfer, sell, purchase, redeem or otherwise acquire any such
securities. Except as set forth in the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for,
any equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business association or entity.
4.2 ARTICLES OF ASSOCIATION. The Principal Shareholders have delivered a true
and correct copy of the Memorandum and Articles of Association and all
other charter documents, as applicable, of the Company and each
Subsidiary, each as amended to date, to Offeror. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its Memorandum
or Articles of Association or equivalent organizational documents.
4.3 CAPITAL STRUCTURE. The authorized capital stock of the Company consists of
2,000,000 Ordinary Shares, of which there were issued and outstanding as
of the Effective Date 739,276 Ordinary Shares. There are no other
outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting
securities other than pursuant to the exercise of options outstanding as
of the Effective Date to purchase Ordinary Shares under the Company's S01
and SO2 Share Option Scheme (the "Company Stock Option Plan"). All
outstanding shares of the Company's capital stock are duly authorized,
validly issued, fully paid and non-assessable and are free of any liens or
encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the Articles of Association of
the Company or any agreement to which the Company is a party or by which
it is bound. All outstanding Ordinary Shares and options to purchase
Ordinary Shares of the Company were issued in compliance with all
applicable UK and U.S. federal and state securities laws. As of the close
of business on the Effective Date, options to purchase 130,858 Ordinary
Shares pursuant to the Company Stock Option Plan were outstanding. Section
4.3 of the Company Disclosure Schedule sets forth the number of
outstanding options and all other rights
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to acquire shares of the Company's capital stock pursuant to the Company
Stock Option Plan or otherwise and the exercise price therefor. Except (i)
for the rights created pursuant to this Agreement, (ii) for the Company's
right to repurchase any unvested shares under the Company Stock Option
Plan and (iii) as set forth in this Section 4.3 and Section 4.3 of the
Company Disclosure Schedule, there are no options, warrants, calls,
rights, commitments, agreements or arrangements of any character to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary
to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary
to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no contracts, commitments or agreements
relating to voting, purchase or sale of the Company's capital stock (i)
between or among the Company and any of its shareholders and (ii) to the
actual knowledge (having made no independent inquiry) of the Principal
Shareholders', between or among any of the Company's shareholders. The
terms of all outstanding stock options of the Company provide, or will
provide, as of the Closing, that such options shall terminate effective
immediately prior to the Closing Date. True and complete copies of all
agreements and instruments relating to or issued under the Company Stock
Option Plan have been made available to Offeror and such agreements and
instruments have not been amended, modified or supplemented, and there are
no agreements to amend, modify or supplement such agreements or
instruments in any case from the form made available to Offeror, except
that Offeror understands such agreements will be amended to provide that
the options to purchase the Company's Ordinary Shares shall terminate upon
the Closing without any further action of the option holder.
4.4 AUTHORITY. [INTENTIONALLY OMITTED].
4.5 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Principal
Shareholders does not, and the consummation of the transactions
contemplated hereby and by the Offer Document will not, conflict
with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or
loss of any benefit under (i) any provision of the Articles of
Association of the Company or its Subsidiaries, as amended, or (ii)
any material mortgage, indenture, lease, contract or other agreement
or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, role or regulation
applicable to the Company or any Subsidiary or any of their
properties or assets.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality
("Governmental Entity") is required by or with respect to the
Company or any Subsidiary in connection with the
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execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or by the Offer Document, except
for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the Securities Act of 1933, as amended (the "Securities Act"),
applicable state securities laws and the securities laws of any
foreign country; (ii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would
not have a Material Adverse Effect on the Company and would not
prevent, or materially alter or delay any of the transactions
contemplated by this Agreement.
4.6 FINANCIAL STATEMENTS. Section 4.6 of the Company Disclosure Schedule
includes a true, correct and complete copy of the Company's audited
financial statements for the fiscal year ended December 31, 1998, (the
"Audited Financial Statements") and its unaudited financial statements
(balance sheet, profit and loss account and statement of cash flows) on a
consolidated basis as at, and for the nine month period ended September
30, 1999 (the "Unaudited Financial Statements") (collectively, the
"Financial Statements"). The Audited Financial Statements have been
prepared in accordance with the SSAPs, the legal principles set out in
Schedules 4 and 4A CA 85, rulings and abstracts of the Urgent Issues Task
Force of the Accounting Standards Board Limited and guidelines,
conventions, rules and procedures of accounting practice in the United
Kingdom which are regarded as permissible by the Accounting Standards
Board Limited ("UK GAAP") applied on a consistent basis throughout the
periods indicated and with each other. The Audited Financial Statements
accurately set out and describe the financial condition and operating
results of the Company and its consolidated Subsidiaries as of the dates,
and for the periods, indicated therein, subject to normal year-end audit
adjustments. The Unaudited Financial Statements have been prepared on the
same basis as the Audited Financial Statements and using the same
accounting policies as were used in the preparation of the Audited
Financial Statements and show a materially accurate view of the assets and
liabilities and trading position of the Company. The Company has
maintained a standard system of accounting established and administered in
accordance with UK GAAP.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor any Subsidiary
has material obligations or liabilities of any nature (matured or matured,
fixed or contingent) in excess of $25,000 individually or in the aggregate
other than (i) those set forth or adequately provided for in the Balance
Sheet for the period ended September 30, 1999 (the "Company Balance
Sheet"), and (ii) those incurred in the ordinary course of business since
the Company Balance Sheet Date and consistent with past practice.
4.8 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.8 of the
Company Disclosure Schedule, since September 30, 1999 (the "Company
Balance Sheet Date") there has not been, occurred or arisen any:
(a) transaction by the Company or any Subsidiary except in the ordinary
course of business as conducted on that date and consistent with
past practices;
(b) amendments or changes to the Articles of Association of the Company,
except as required under this Agreement;
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14
(c) capital expenditure or commitment by the Company or any Subsidiary,
in any individual amount or in the aggregate exceeding $25,000;
(d) destruction of, damage to, or loss of any assets (including, without
limitation, intangible assets), business or customer of the Company
or any Subsidiary (whether or not covered by insurance) which would
constitute a Material Adverse Effect;
(e) labor trouble or claim of wrongful dismissal or other unlawful labor
practice or action;
(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates, any change in
policies in making or reversing accruals) by the Company;
(g) revaluation by the Company or any Subsidiary of any of their
respective assets;
(h) declaration, setting aside, or payment of a dividend or other
distribution in respect to the capital stock of the Company, or any
direct or indirect redemption, purchase or other acquisition by the
Company of any of its capital stock, except repurchases of the
Company Common Stock from terminated Company employees or
consultants at the original per share purchase price of such shares;
(i) sale, lease, license or other disposition of any of the assets or
properties of the Company or any Subsidiary, except in the ordinary
course of business and not in excess of $25,000, in the aggregate;
(j) termination or material amendment of any material contract,
agreement or license (including any distribution agreement) to which
the Company or any Subsidiary is a party or by which it is bound;
(k) loan by the Company or any Subsidiary to any person or entity, or
guaranty by the Company or any Subsidiary of any loan, except for
(i) travel or similar advances made to employees in connection with
their employment duties in the ordinary course of business,
consistent with past practices and (ii) trade payables not in excess
of $25,000 in the aggregate and in the ordinary course of business,
consistent with past practices;
(l) waiver or release of any right or claim of the Company or any
Subsidiary, including any write-off or other compromise of any
account receivable of the Company or any Subsidiary, in excess of
$25,000 in the aggregate;
(m) commencement or notice or threat of commencement of any lawsuit or
proceeding against or, to the Company's directors' or the Principal
Shareholders' knowledge, investigation of the Company or any
Subsidiary or their respective affairs;
(n) notice of any claim of ownership by a third party of the Company's
or any Subsidiary's Intellectual Property (as defined in Section
4.13 below) or of
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15
infringement by the Company or any Subsidiary of any third party's
Intellectual Property rights;
(o) issuance or sale by the Company or any Subsidiary of any of its
shares of capital stock, or securities exchangeable, convertible or
exercisable therefor, or of any other of its securities;
(p) change in pricing or royalties set or charged by the Company or any
Subsidiary to its customers or licensees or in pricing or royalties
set or charged by persons who have licensed Intellectual Property to
the Company or any Subsidiary;
(q) any event or condition of any character that has or could reasonably
be expected to have a Material Adverse Effect on the Company; or
(r) agreement by the Company, any Subsidiary or any officer or employee
of either on behalf of such entity to do any of the things described
in the preceding clauses (a) through (q) (other than negotiations
with Offeror and its representatives regarding the transactions
contemplated by this Agreement).
4.9 LITIGATION. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to Principal Shareholders' knowledge,
threatened against the Company or any Subsidiary or any of their
respective properties or any of their respective officers or directors (in
their capacities as such). There is no judgment, decree or order against
the Company or any Subsidiary or, to the Principal Shareholders'
knowledge, any of their respective directors or officers (in their
capacities as such), including any judgment, decree or order that could
prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement. All litigation to which the Company is a
party (or, to the knowledge of the Principal Shareholders, threatened to
become a party) is disclosed in the Company Disclosure Schedule.
4.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree binding upon the Company or any Subsidiary
which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any current or future business
practice of the Company or any Subsidiary, any acquisition of property by
the Company or any Subsidiary or the overall conduct of business by the
Company or any Subsidiary as currently conducted or as proposed to be
conducted by the Company or by any Subsidiary. Neither the Company nor any
Subsidiary has entered into any agreement under which the Company or any
Subsidiary is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area,
during any period of time or in any segment of the market.
4.11 PERMITS; COMPANY PRODUCTS; REGULATION.
(a) Each of the Company and each Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders
necessary for the Company or that Subsidiary, to own, lease and
operate its properties or to carry on its business as it is now
being conducted (the "Company Authorizations") and no
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16
suspension or cancellation of any Company Authorization is pending
or, to the Principal Shareholders' knowledge, threatened, except
where the failure to have, or the suspension or cancellation of, any
Company Authorization would not have a Material Adverse Effect on
the Company. Neither the Company nor any Subsidiary is in conflict
with, or in default or violation of, (i) any laws applicable to the
Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected, (ii) any Company
Authorization or (iii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary or any property or
asset of the Company or any Subsidiary is bound or affected, except
for any such conflict, default or violation that would not,
individually or in the aggregate have a Material Adverse Effect on
the Company.
(b) Except as would not have a Material Adverse Effect on the Company,
there have been no written notices, citations or decisions by any
governmental or regulatory body that any product produced,
manufactured, marketed or distributed at any time by the Company or
any Subsidiary (the "Products") is defective or fails to meet any
applicable standards promulgated by any such governmental or
regulatory body. To the knowledge of the Principal Shareholders, the
Company has complied in all material respects with the laws,
regulations, policies, procedures and specifications with respect to
the design, manufacture, labeling, testing and inspection of the
Products. Except as disclosed in Section 4.11(b) of the Company
Disclosure Schedule, there have been no recalls, field notifications
or seizures ordered or, to the Principal Shareholders' knowledge,
threatened by any such governmental or regulatory body with respect
to any of the Products.
(c) The Company has obtained, in all countries where either the Company
or a Subsidiary is marketing or has marketed its Products, all
applicable licenses, registrations, approvals, clearances and
authorizations required by local, state or federal agencies in such
countries regulating the safety, effectiveness and market clearance
of the Products currently or previously marketed by the Company or
any Subsidiary in such countries, except for any such failures as
would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Principal Shareholders have identified
and made available for examination by Offeror all information
relating to regulation of its Products, including licenses,
registrations, approvals, permits, device listing, inspections, the
Company's recalls and product actions, audits and the Company's
ongoing field tests. The Principal Shareholders have identified in
writing to Offeror all international locations where regulatory
information and documents are kept.
4.12 TITLE TO PROPERTY.
(a) The Company and each Subsidiary has good and marketable title to all
of its respective properties, interests in properties and assets,
real and personal, reflected in the Company Balance Sheet or
acquired after the Company
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17
Balance Sheet Date (except properties, interests in properties and
assets sold or otherwise disposed of since the Company Balance Sheet
Date in the ordinary course of business), or with respect to leased
properties and assets, valid leasehold interests in, free and clear
of all mortgages, liens, pledges, charges or encumbrances of any
kind or character, except (i) the lien of current taxes not yet due
and payable, (ii) such imperfections of title, liens and easements
as do not and will not materially detract from or interfere with the
use of the properties subject thereto or affected thereby, or
otherwise materially impair business operations involving such
properties and (iii) liens securing debt which is reflected on the
Company Balance Sheet. The plants, property and equipment of the
Company and Subsidiaries that are used in the operations of their
businesses are in good operating condition and repair. All
properties used in the operations of the Company and its
Subsidiaries are reflected in the Company Balance Sheet to the
extent UK GAAP requires the same to be reflected.
(b) Section 4.12(b) of the Company Disclosure Schedule also sets forth a
true, correct and complete list of all equipment, plant and
machinery (including fixed plant and machinery) (the "Equipment")
owned or leased by the Company and its Subsidiaries, and such
Equipment is, taken as a whole, (i) adequate for the conduct of the
Company's business, consistent with its past practice and (ii) in
good operating condition (except for ordinary wear and tear).
(c) The Company has no liability (whether actual, contingent or
otherwise) as tenant, assignee, guarantor, covenantor or otherwise
arising from or relating to any estate, interest or right in any
land other than the real properties of which short particulars are
set out in Section 4.12(c) of the Company Disclosure Schedule (the
"Properties," and "Property" shall be construed accordingly). The
Company has a good and marketable title to each Property for the
estate or interest set out in Section 4.12(c) of the Company
Disclosure Schedule, free from any mortgages or charges, any
agreements for sale or lease, options or rights of pre-emption and
any covenants, restrictions, stipulations, easements or other
encumbrances which materially adversely affect the use, enjoyment or
value of the Property. Any leases, underleases, tenancies, licenses
or other agreements or arrangements giving rise to rights of
occupation to which any Property is subject (the "Letting
Documents") are referred to in Section 4.12(c) of the Company
Disclosure Schedule. Otherwise the Company is in actual occupation
of each of the Properties on an exclusive basis and, except by
virtue of the Letting Documents, no person, other than the Company,
has any right (actual or contingent) to possession, occupation or
use of or interest in the Properties. The documents of title
relating to each Property consist of original documents or properly
examined abstracts, all of which are in the possession of the
Company or are unconditionally held to its order. Where necessary
all title deeds are fully stamped with ad valorem stamp duty and a
produced document stamp.
(d) Complete and accurate copies of all Leases and Letting Documents
have been delivered to the Offeror and the Company has not committed
any breach
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18
thereof. The Company has complied in all material respects with all
laws, regulations, restrictions, covenants and obligations
(including all covenants binding the Company contained in any Lease
or Letting Document) relating to the Property, the Company has not
received any notice or allegation of any breach of such laws,
regulations, restrictions, covenants or obligations from any person
and there are no circumstances likely to give rise to the service of
any such notice or allegation.
(e) There are appurtenant to the Property all rights and easements
necessary for the use and enjoyment of the Property or (if there are
no such rights and easements) none are required. There are adequate
facilities and all necessary consents for the supply of all usual
services to and the discharge of effluent from the Property. The
Company has not had occasion to make any claim or complaint in
relation to any neighboring property or its use or occupation and
there are no disputes, claims, actions, demands or complaints which
are outstanding or which are expected by the Company in relation to
any Property and no notices materially affecting the Property have
been given or received. The Property is not subject to any outgoings
other than the uniform business rate or water rates (and sums due
under any Lease including rent, insurance and service charge) and
all such payments have been made to date.
(f) The current use of each Property is as set out in Section 4.12(c) of
the Company Disclosure Schedule and is a lawful use under the Town
and Country Planning Xxx 0000, the Planning (Listed Buildings and
Conservation Areas) Xxx 0000, the Planning (Hazardous Substances)
Xxx 0000, the Planning (Consequential Provisions) Xxx 0000 and the
Planning and Compensation Xxx 0000 and all other statutes regulating
the development, design, use and control of property, and is being
and has been carried out in accordance with valid planning
permissions. No enforcement proceedings have been commenced or
notices served and no such proceedings or notices have been
proposed.
(g) No planning permission contains unusual or otherwise unduly onerous
conditions, is the subject of an existing challenge as to its
validity or has been issued within the six months immediately before
the date of this Agreement. There is no outstanding order, notice or
other requirement of any local or other authority affecting the
Property or involving expenditure in compliance with it nor any
circumstances which may result in any such order or notice being
made or served. All buildings and structures on the Properties are
in good and substantial repair and condition. No buildings or
structures have been constructed or extensions or major alternations
carried out within the last six years.
(h) In relation to each Property where the Company's tenure is leasehold
(i) any consents required for the grant of or under the covenants
contained in the Lease have been obtained; (ii) the last installment
of rent was paid to and was accepted by the landlord or its agents
without qualification; (iii) All steps in rent reviews have been
duly taken and no rent reviews are or should be currently under
negotiation or the subject of a reference to an expert or arbitrator
or the courts and, where appropriate, evidence of the agreement or
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19
determination of the current rent has been placed with the documents
of title; (iv) Sections 24 to 28 Landlord and Xxxxxx Xxx 0000 have
not been excluded in relation to the tenancy created by the Lease.
(i) In relation to each Property which is subject to Letting Documents
(i) any consents required for the grant of or under the covenants
contained in the Letting Documents have been obtained; (ii) all rent
and additional rent, service charges or other payments under the
Letting Documents have been paid to date and there is no subsisting
breach of the covenants contained in the Letting Documents; (iii)
the Property is not subject to any tenancy which is being continued
after the contractual expiry date; (iv) in respect of every Letting
Document which is not a new tenancy as defined in section 28 LTCA,
the present tenant and each of its predecessors in title and any
surety for any of them has given a covenant to the Company to
observe and perform the obligations of the tenant throughout the
term and no such persons have been released or are or may be
entitled to be released.
4.13 INTELLECTUAL PROPERTY.
(a) The Company and each of its Subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use all patents,
patent rights, trademarks, trademark rights, trade names, trade name
rights, service marks, copyrights, and any applications for any of
the foregoing, mask works, mask work rights, net lists, schematics,
industrial models, inventions, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs
or applications (in both source code and object code form), and
tangible or intangible proprietary information or material
("Intellectual Property") that are used or proposed to be used in
the business of the Company or any Subsidiary as currently conducted
or as proposed to be conducted by the Company or any Subsidiary.
(b) Section 4.13 of the Company Disclosure Schedule lists (i) all
patents and patent applications and all registered and unregistered
trademarks, trade names and service marks, copyrights, and mask work
rights, included in the Intellectual Property, including the
jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such
issuance and registration has been filed, all of which Intellectual
Property has been validly assigned to the Company by Scientific
Generics, Ltd., (ii) all licenses, sublicenses and other agreements
to which the Company or any Subsidiary is a party and pursuant to
which any person is authorized to use any Intellectual Property, and
(iii) all licenses, sublicenses and other agreements as to which the
Company or any Subsidiary is a party and pursuant to which the
Company or any Subsidiary is authorized to use any third party
patents, trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or
form a part of any products of the Company or any Subsidiary that
are, individually or in the aggregate, material to the business of
the Company or any Subsidiary. Neither the Company nor any
Subsidiary is in violation of any license, sublicense or agreement
described in Section 4.13 of the Company Disclosure Schedule.
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20
The execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated hereby, will neither
cause the Company or any Subsidiary to be in violation or default
under any such license, sublicense or agreement, nor entitle any
other party to any such license, sublicense or agreement to
terminate or modify such license, sublicense or agreement. Except as
set forth in Section 4.13 of the Company Disclosure Schedule, the
Company is the sole and exclusive owner or licensee of, with all
right, title and interest in and to (free and clear of any liens),
the Intellectual Property, and has sole and exclusive rights (and is
not contractually obligated to pay any compensation to any third
party in respect thereof) to the use thereof or the material covered
thereby in connection with the services or products in respect of
which Intellectual Property is being used.
(c) So far as the Principal Shareholders are aware, there is no material
unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property rights of the Company or any Subsidiary,
any trade secret material to the Company or any Subsidiary or any
Intellectual Property right of any third party to the extent
licensed by or through the Company or any Subsidiary, by any third
party, including any employee or former employee of the Company or
any Subsidiary. Neither the Company nor any Subsidiary has entered
into any agreement to indemnify any other person against any charge
of infringement of any Intellectual Property, other than
indemnification provisions contained in purchase orders arising in
the ordinary course of business.
(d) All patents, registered trademarks, service marks and copyrights
held by the Company or any Subsidiary are valid and existing and so
far as the Principal Shareholders are aware, there is no assertion
or claim (or basis therefor) challenging the validity of any
Intellectual Property of the Company or any Subsidiary. The Company
has not been sued in any suit, action or proceeding which involves a
claim of infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary
right of any third party. So far as the Principal Shareholders are
aware, neither the conduct of the business of the Company and each
Subsidiary as currently conducted or contemplated nor the
manufacture, sale, licensing or use of any of the products of the
Company or any Subsidiary as now manufactured, sold or licensed or
used, nor the use in any way of the Intellectual Property in the
manufacture, use, sale or licensing by the Company or any Subsidiary
of any products currently proposed, infringes on or will infringe or
conflict with, in any way, any license, trademark, trademark right,
trade name, trade name right, patent, patent right, industrial
model, invention, service xxxx or copyright of any third party. All
registered trademarks, service marks and copyrights held by the
Company are valid and subsisting. So far as the Principal
Shareholders are aware, no third party is challenging the ownership
by the Company or any Subsidiary, or validity or effectiveness of,
any of the Intellectual Property. Neither the Company nor any
Subsidiary has brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or
agreement involving Intellectual Property against any third party.
There are no pending, or to the best of Principal Shareholders'
knowledge, threatened
-16-
21
interference, re-examinations, oppositions or nullities involving
any patents, patent rights or applications therefor of the Company
or any Subsidiary, except such as may have been commenced by the
Company or any Subsidiary. There is no breach or violation of or
threatened or actual loss of rights by the Company under any
licenses to which the Company is a party.
(e) The Company has secured valid written assignments from all
consultants and employees who contributed to the creation or
development of Intellectual Property of the rights to such
contributions that the Company does not already own by operation of
law.
(f) The Company has taken all reasonable steps to protect and preserve
the confidentiality of all Intellectual Property not otherwise
protected by patents, patent applications or copyright
("Confidential Information"). Each of the Company and its
Subsidiaries has a policy requiring each of its employees and
contractors to execute proprietary information and confidentiality
agreements substantially in the Company's standard forms and all
current and former employees and contractors of the Company and each
Subsidiary have executed such an agreement. All use, disclosure or
appropriation of Confidential Information owned by the Company or a
Subsidiary to a third party has been pursuant to the terms of a
written agreement between the Company or the applicable Subsidiary
and such third party. All use, disclosure or appropriation of
Confidential Information not owned by the Company or a Subsidiary
has been pursuant to the terms of a written agreement between the
Company or a Subsidiary and the owner of such Confidential
Information, or is otherwise lawful.
4.14 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined as follows:
(i) "ENVIRONMENTAL AND SAFETY LAWS" shall mean any and all laws,
whether civil, criminal or administrative (including, without
limitation, European Community or European Union regulations,
directives, decisions and recommendations, statutes and
subordinate legislation; regulations, orders and ordinances;
leases or licenses or other agreements (including agreements
of the nature referred to at paragraph 44 of Chapter IV of the
draft statutory Guidance to Part IIA of the Environment
Protection Act 1990) which are binding on the Company; permits
and licenses required to be issued; codes of practice,
circulars, guidance notes and the like, common law, local laws
and bye-laws; and judgments, notice, orders, directions,
instructions or awards of any person having legal and/or
regulatory authority or any court of law or tribunal in any
jurisdiction), as each may be amended from time to time, that
are intended to assure the protection of the environment, or
that classify, regulate, call for the remediation of, require
reporting with respect to, or list or define air, water,
groundwater, solid waste, hazardous or toxic substances,
materials, wastes, pollutants or contaminants; which regulate
the manufacture, handling, transport, use, treatment, storage
or disposal of Hazardous Materials (as defined
-17-
22
below) or materials containing Hazardous Materials; or which
are intended to assure the protection, safety and good health
of employees, workers or other persons, including the public
in each case if and to the extent that they are legally
binding on the Company.
(ii) "HAZARDOUS MATERIALS" shall mean any toxic or hazardous
substance, material or waste or any pollutant or contaminant,
or infectious or radioactive substance or material, including
without limitation, those substances, materials and wastes
defined in or regulated under any Environmental and Safety
Laws; petroleum or petroleum products including crude oil or
any fractions thereof; natural gas, synthetic gas, or any
mixtures thereof; radon; asbestos; or any other pollutant or
contaminant.
(iii) "PROPERTY" shall mean all real property leased or owned by
the Company or its Subsidiaries either currently or in the
past.
(iv) "FACILITIES" shall mean all buildings and improvements on the
Property of the Company or its Subsidiaries.
(b) The Company represents and warrants as follows: (i) no methylene
chloride or asbestos is contained in or has been used at or released
from the Facilities; (ii) all Hazardous Materials and wastes have
been disposed of in accordance with all Environmental and Safety
Laws; and (iii) the Company and its Subsidiaries have received no
notice (verbal or written) of any noncompliance of the Facilities or
of its past or present operations with Environmental and Safety
Laws; (iv) no notices, administrative actions or suits are pending
or threatened relating to Hazardous Materials or a violation of any
Environmental and Safety Laws; (v) there has not been in the past,
and there is not now, any contamination, disposal, spilling,
dumping, incineration, discharge, storage, treatment or handling of
Hazardous Materials on, under or migrating to or from the Facilities
or Property (including without limitation, soils and surface and
ground waters); (vi) there have not been in the past, and are not
now, any underground tanks or underground improvements at, on or
under the Property including without limitation, treatment or
storage tanks, sumps, or water, gas or oil xxxxx; (vii) there are no
polychlorinated biphenyls ("PCBs") deposited, stored, disposed of or
located on the Property or Facilities or ---- any equipment on the
Property containing PCBs at levels in excess of 50 parts per
million; (viii) there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde
in the Facilities; (ix) the Facilities and the Company's and its
Subsidiaries uses and activities therein have at all times complied
with all Environmental and Safety Laws; (x) the Company and its
Subsidiaries have all the permits and licenses required to be issued
and are in full compliance with the terms and conditions of those
permits; and (xi) neither the Company nor any of its Subsidiaries is
liable for any off-site contamination nor under any Environmental
and Safety Laws.
4.15 TAXES.
(a) The following terms shall be defined as follows:
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23
(i) "TAXATION" or "TAX" shall mean all forms of taxation including any
charge, tax, duty, levy, impost, withholding or liability wherever
chargeable imposed for support of national, state, federal,
municipal or local government or any other person and whether of the
UK or any other jurisdiction; and any penalty, fine, surcharge,
interest, charges or costs payable in connection with any taxation
within (a) above;
(ii) "TAXATION AUTHORITY" shall mean the Inland Revenue, Customs &
Excise, the Department of Social Security and any other governmental
or other authority whatsoever competent to impose any Taxation,
whether in the United Kingdom or elsewhere;
(iii) "TAXATION STATUTE" means any directive, statute, enactment, law, or
regulation or similar measure, wheresoever enacted or issued, coming
into force or entered into providing for or imposing any Taxation
and shall include orders, regulations, instruments, bye-laws or
other subordinate legislation made under the relevant statute or
statutory provision and any such measure which amends, extends,
consolidates or replaces, or which has been amended, extended,
consolidated or replaced by, any such measure; and
(iv) "ACCOUNTS DATE" means December 31, 1998.
(b) GENERAL.
(i) All notices, returns, computations and registrations of the Company
for the purposes of Taxation have been made punctually on a proper
basis and are correct and none of them is, or is likely to be, the
subject of any dispute with any Taxation Authority. All information
supplied by the Company for the purposes of Taxation was when
supplied and remains complete and accurate in all material respects.
All Taxation which the Company is liable to pay prior to Closing has
been or will be so paid prior to Closing. The Company has not within
the period of six years ending on the date of this Agreement paid or
become liable to pay any penalty, fine, surcharge or interest
charged by virtue of the provisions of the Taxes Management Act (the
"TMA") or any other Taxation Statute.
(ii) All income tax deductible and payable under the PAYE system and/or
any other Taxation Statute has, so far as is required to be
deducted, been deducted from all payments made or treated as made by
the Company and all mounts due to be paid to the Inland Revenue
prior to the date of this Agreement have been so paid, including all
Tax chargeable on benefits provided for directors, employees or
former employees of the Company or any persons required to be
treated as such. All deductions and payments required to be made
under any Taxation Statute in respect of national insurance and
social security contributions (including employer's contributions)
have been so made. All payments by the Company to any person which
ought to have been made under deduction of Tax have been so made and
the Company (if required by law to do so) has accounted to the
Inland Revenue for the Tax so deducted. Proper
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24
records have been maintained in respect of all such deductions
and payments and all applicable regulations have been complied
with. Section 4.15(b)(ii) of the Company Disclosure Schedule
contains details so far as they affect the Company of all
current dispensations agreed with the Inland Revenue in
relation to PAYE and all notifications given by the Inland
Revenue under section 166 the Income and Corporation Taxes Act
1988 (the "TA 88").
(iii) The Company has not been subject to any visit, audit,
investigation, discovery or access order by any Taxation
Authority and there are no circumstances existing which make
it likely that a visit, audit, investigation, discovery or
access order will be made. The Company is and always has been
resident for Taxation purposes only in the jurisdiction in
which it is incorporated.
(iv) Full provision or reserve has been made in the Accounts for
all Taxation assessed or liable to be assessed on the Company
or for which it is accountable in respect of income, profits
or gains earned, accrued or received or deemed to be earned,
accrued or received on or before the Accounts Date, including
distributions made down to such date or provided for in the
Financial Statements and proper provision has been made in
the Financial Statements for deferred Taxation in accordance
with generally accepted accounting principles.
(v) The amount of Taxation chargeable on the Company during any
accounting period ending on or within the six years before
the Accounts Date has not depended on any concessions,
agreements or other formal or informal arrangements with any
Taxation Authority. The Company has not entered into or been
a party to any scheme or arrangement of which the main
purpose, or one of the main purposes, was the avoidance of or
the reduction in or the deferral of a liability to Taxation.
(vi) The Company has not without the prior consent of the Treasury
carried out or agreed to carry out any transaction under
section 765 TA 88 which would be unlawful in the absence of
such consent and has, where relevant, complied with the
requirements of section 765A(2) TA 88 (supply of information
on movement of capital within the EU) and any regulations
made or notice given under that provision. All particulars
furnished to any Taxation Authority in connection with an
application for clearance or consent by the Company or on its
behalf or affecting the Company has been made and obtained on
the basis of full and accurate disclosure to the relevant
Taxation Authority of all relevant material facts and
considerations; and any transaction for which clearance or
consent was obtained has been carried into effect only in
accordance with the terms of the relevant clearance or
consent.
(vii) The Company has sufficient records relating to past events to
permit accurate calculation of the Taxation liability or
relief which would arise upon a disposal or realisation on
closing of each asset owned by the Company at the Accounts
Date or acquired by the Company since that
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date but before Closing. The Company has duly submitted all
claims and disclaimers the making of which has been assumed
for the purposes of the Financial Statements. Section
4.15(a)(vii) of the Company Disclosure Schedule contains full
particulars of all matters relating to Taxation in respect of
which the Company is or at Closing will be entitled (a) to
make any claim (including a supplementary claim), disclaimer
or election for relief under any Taxation Statute; (b) to
appeal against any assessment or determination relating to
Taxation; (c) to apply for a postponement of Taxation. No
shares or securities have been issued by the Company to which
the provisions of section 140A or 140D TA 88 have been or
could be applied.
(c) CORPORATION TAX.
(i) If each of the capital assets of the Company was disposed of on the
date of this Agreement for a consideration equal to the book value
of that asset in, or adopted for the purposes of, the Financial
Statements or, in the case of assets acquired since the Accounts
Date, equal to the consideration given upon its acquisition, no
liability to corporation tax on chargeable gains or balancing
charges under the Capital Xxxxxxxxx Xxx 0000 (the "CAA") would
arise and for the purpose of determining the liability to
corporation tax on chargeable gains there shall be disregarded any
relief and allowances available to the Company other than amounts
falling to be deducted under section 38 Taxation of Chargeable Gains
Act 1992 (the "TCGA").
(ii) All expenditure which the Company has incurred or may incur under
any subsisting commitment on the provision of machinery, plant or
buildings has qualified or will qualify (if not deductible as a
trading expense for trade carried on by the Company) for
writing-down allowances or industrial building allowances (as the
case may be) under CAA and where appropriate notices have been given
to the Inland Revenue under section 118 Finance Xxx 0000.
(iii) The Company has not made any claim for capital allowances in respect
of any asset which is leased to or from or hired to or from the
Company and no election affecting the Company has been made or
agreed to be under sections 53 or 55 CAA in respect of such assets.
The Company is not a lessee under a lease to which the provisions of
Schedule 12 FA 1997 apply or could apply. The Company has not made
any election under section 37 CAA nor is it taken to have made such
an election under section 37(8)(c) CAA. The Company does not own and
has not owned a long life asset (within the meaning of section 38A
CAA) in respect of which any claim for capital allowances would be
subject to the provisions of section 38E-38G CAA. None of the assets
of the Company expenditure on which has qualified for a capital
allowance under Part I CAA has at any time been used otherwise than
as an industrial building or structure.
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(iv) No distribution within the meaning of sections 209, 210 and 211 TA
88 has been made (or will be deemed to have been made) by the
Company after 5th April, 1965 except dividends shown in its audited
accounts and the Company is not bound to make any such distribution.
No elections have been made pursuant to section 246A TA 88 in
respect of any dividends and nor has the Company made a distribution
to which the provisions of paragraph 2 of Schedule 7 FA 1997 have
been, or could be, applied. The Company has not received a dividend
in respect of which the payer has made an election under section
246A TA 88 nor a distribution to which the provisions of paragraph 2
of Schedule 7 FA 1997 have been, or could be, applied.
(v) The Company has not any time after 6th April, 1965 repaid, redeemed
or repurchased or agreed to repay, redeem or repurchase or granted
an option under which it may become liable to purchase any shares of
any class of its issued share capital nor has the Company after that
date capitalised or agreed to capitalise in the form of shares or
debentures any profits or reserves of any class or description or
otherwise issued or agreed to issue any share capital other than for
the receipt of new consideration (within the meaning of Part VI TA
88) or passed or agreed to pass any resolution to do so. The Company
has not been engaged in nor been a party to any of the transactions
set out in sections 213 to 218 inclusive TA 88 nor has it made or
received a chargeable payment as defined in section 218(1) TA 88. No
securities (within the meaning of section 254(1) TA 88) issued by
the Company and remaining in issue at the date of this Agreement
were issued in such circumstances that the interest payable thereon
falls to be treated as a distribution under either sections
209(2)(d), 209(2)(da) or 209(2)(e) TA 88, nor has the Company agreed
to issue such securities in such circumstances. The Company has not
received any capital distribution to which the provisions of section
189 TCGA could apply.
(vi) The Company has not entered into any transaction to which the
provisions of section 779 or 780 TA 88 have been or could be
applied. The Company has not since 31st March, 1982 received any
foreign loan interest in respect of which double taxation relief
will or may be restricted under section 798 TA 88. No rents,
interest, annual payments or other sums of an income nature paid or
payable by the Company or which the Company is under an existing
obligation to pay in the future are or may be wholly or partially
disallowable as deductions, management expenses or charges in
computing profits for the purposes of corporation tax by reason of
the provisions of sections 74, 79, 125, 338, 339, 779 to 784
inclusive, 787 or 788 TA 88 or any other statutory provision or
otherwise. No rent is or has been payable by the Company to which
the provisions of sections 33A and 33B TA 88 could have applied
prior to their ceasing to have effect. No claim has been made by the
Company under sections 584, 585 or 723 TA 88 or under section 279
TCGA. The Company has not made or agreed to make any payment to or
provided or agreed to provide any benefit for any director or former
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27
director, officer or employee of the Company, whether as
compensation for loss of office, termination of employment or
otherwise, which is not allowable as a deduction in
calculating the profits of the Company for Taxation purposes
whether up to or after the Accounts Date.
(vii) Intentionally deleted.
(viii) The Company is not a party to any transaction or arrangement
under which it may be required to pay for any asset or any
services or facilities of any kind an amount which is in
excess of the market value of that asset or those services or
facilities, neither is or was the Company a party to any
transaction or arrangement to which the provisions of section
770A and Schedule 28AA TA 88 may apply and nor will the
Company receive any payment for an asset or any services or
facilities of any kind that it has supplied or provided or is
liable to supply or provide which is less than the market
value of that asset or those services or facilities. The
Company has not disposed of or acquired any asset in
circumstances falling within section 17 or 19 TCGA nor given
or agreed to give any consideration to which section
128(1)(2) TCGA could apply. No allowable loss has accrued to
the Company to which section 18(3) TCGA will apply.
(ix) The Company is not owed a debt, other than a debt on a
security, on the disposal or satisfaction of which a
liability to corporation tax on chargeable gains will arise
by reason of section 251 TCGA. No claim for relief has been
allowed to the Company pursuant to sections 253 and 254 TCGA
in respect of any loan and no chargeable gain has or is
likely to arise pursuant to section 253 (5), (6), (7) or (8)
or section 254 (9) or (10) TCGA. The Company has not acquired
benefits under any policy of assurance otherwise than as the
original holder of legal and beneficial title.
(x) No claim or election affecting the Company has been made (or
assumed to be made) under sections 140, 140C or 187 TCGA. No
allowable loss which might accrue on the disposal by the
Company of any share in or security of any company is likely
to be reduced by virtue of the provisions of sections 176 and
177 TCGA. The Company has not been a party to any scheme or
arrangement whereby the value of an asset has been materially
reduced as set out in sections 30-34 TCGA. No asset owned by
the Company is subject to a deemed disposal and
re-acquisition under Schedule 2 TCGA so as to restrict the
extent to which the gain or loss over the period of ownership
may be apportioned by reference to straightline growth.
(xi) The Company has made no claim under any of the following (a)
section 280 TCGA (tax on chargeable gains payable by
installments); (b) section 24(2) TCGA (assets of negligible
value); (c) section 242(2) TCGA (small part disposals of
land); or (d) section 139 FAA 1993 (deferral of unrealized
exchange gains).
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(xii) The Company has not received any assets by way of gift as
mentioned in section 282 TCGA and the Company has not held,
and does not hold, shares in a company to which section 125
TCGA could apply.
(xiii) There has not accrued or arisen any income, profit or gain in
respect of which the Company may be liable to corporation tax
by virtue of the provisions of section 13 TCGA or Chapter IV
of Part XVII TA 88. The Company has not been served with a
notice in respect of the unpaid corporation tax liability of
any company pursuant to section 191 TCGA.
(xiv) No notice of the making of a direction under section 747 TA
88 has been received by the Company and no circumstances
exist which would entitle the Inland Revenue to make such a
direction or to apportion any profits of a controlled foreign
company to the Company pursuant to section 752 TA 88. The
Company has not been a party to any transaction or
arrangement whereby it is or may in future become liable for
Taxation under or by virtue of section 42A TA 88 or
regulations made under that Act or under section 126 FA 1995.
(xv) No scheme registered under Chapter III of Part V TA 88
applies to the Company or any of its employees and no
application for registration of a scheme so applying has been
made. The Company has not received a payment out of funds
held for the purposes of an exempt approved scheme in respect
of which an amount is recoverable by the Inland Revenue under
section 601 TA 88.
(xvi) Section 14.5(c)(xvi) of the Company Disclosure Schedule
contains full particulars of all claims and elections made
(or assumed to be made) under sections 23, 152-162 or 165,
175, 247, 248 TCGA insofar as they could affect the
chargeable gain or allowable loss which would arise in the
event of a disposal by the Company of any of its assets, and
indicate which assets (if any) so affected would not on a
disposal give rise to relief under Schedule 4 TCGA. Section
4.15(c)(xvi) of the Company Disclosure Schedule contains full
particulars of elections made under (a) Regulation 10 The
Exchange Gains and Losses (Alternative Method of Calculation
of Gain or Loss) Regulations 1994 and whether or not such
elections have been varied; and (b) Regulations 3 or 4 The
Local Currency Elections Regulations 1994 and such election
is still valid.
(xvii) All interests, discounts and premiums payable by the Company
in respect of its loan relationships (within the meaning of
section 81 Finance Act 1996) are eligible to be brought into
account by the Company as a debit for the purposes of Chapter
II of Part IV Finance Act 1996 at the time and to the extent
that such debits are recognized in the statutory accounts of
the Company. Section 14.5(c)(xvii) of the Company Disclosure
Schedule contains full particulars of any debtor relationship
(within the meaning of section 103 Finance Act 1996) of the
Company which relates to a relevant discounted security
(within the meaning of paragraph 3 of Schedule 13 Finance Act
1996) to which paragraph 17 or 18 of Schedule
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9 Finance Xxx 0000 applies. Section 14.5(c)(xvii) of the
Company has not been a party to a loan relationship which had
an unallowable purpose (within the meaning of paragraph 13 of
Schedule 9 Finance Act 1996). The Company Disclosure Schedules
contains full particulars of: (a) any loan relationships to
which the Company is a party to which paragraph 8 of Schedule
15 Finance Act 1996 has applied or will apply on the
occurrence of a relevant event (within the meaning of
paragraph 8(2) of Schedule 15 Finance Act 1996); (b) the
amount of any deemed chargeable gain or deemed allowable loss
that has arisen or will arise on the occurrence of such
relevant event; and (c) any election made pursuant to
paragraph 9 of Schedule 15 Finance Xxx 0000. The Company has
not entered into any transaction to which paragraph 11 of
Schedule 9 Finance Xxx 0000 applies.
(d) CORPORATION TAX - GROUPS OF COMPANIES.
(i) Section 4.15(d)(i) of the Company Disclosure Schedule contains full
particulars of all arrangements and agreements relating to group
relief (as defined by section 402 TA 88) to which the Company is or
has been a party and all claims by the Company for group relief were
when made and are now valid and have been or will be allowed by way
of relief from corporation tax. The Company has not made nor is
liable to make any payment under any arrangement or agreement save
in consideration for the surrender of group relief allowable to the
Company by way of relief from corporation tax. The Company has
received all payments due to it under any arrangement or agreement
for any surrender of group relief made by it and the payments are
not liable to be refunded in whole or in part; (d) no such payment
exceeds or could exceed the amount permitted by section 402(6) TA
88; and (e) no arrangements such as are specified in section
410(1)-(6) TA 88 exist or existed for any period of account in
respect of which a surrender has been made or purports to have been
made.
(ii) Section 4.15(d)(iii) of the Company Disclosure Schedule contains
full particulars of all arrangements and agreements to which the
Company is or has been a party relating to the surrender of advance
corporation tax made or received by the Company under section 240 TA
88 and (a) the Company has not paid nor is liable to pay for the
benefit of any advance corporation tax which is or may become
incapable of set-off against the Company's liability to corporation
tax; (b) the Company has received all payments due to it under any
arrangement or agreement for any surrender of advance corporation
tax made by it and the payments are not liable to be refunded in
whole or in part; (c) no such payment exceeds or could exceed the
amount permitted by section 240(8) TA 88; and (d) no arrangements
such as are specified in section 240(11) TA 88 whereby any person
could obtain control of the Company exist or existed for any period
in respect of which a claim under section 240 TA 88 has been made or
purports to have been made.
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(iii) Section 4.15(d)(iii) of the Company Disclosure Schedule contains
full particulars of all arrangements and agreements relating to the
transfer of tax refunds to which the Company is or has been a party
and (a) all claims by the Company for the transfer of tax refunds
were when made and are now valid and have been or will be allowed by
way of discharging the liability of the Company to pay any
corporation tax; (b) the Company has not made nor is liable to make
any payment under any arrangement or agreement save in consideration
for the transfer of tax refunds allowable to the Company by way of
discharge from liability to corporation tax and equivalent to the
Taxation for which the Company would have been liable but for the
transfer; (c) the Company has received all payments due to it under
any such arrangement or agreement or transfer of tax refunds made by
it and the payments are not liable to be refunded in whole or in
part; (d) no such payment exceeds or could exceed the amount
permitted by section 102(7) Finance Xxx 0000; and (e) no
arrangements such as specified in section 410(1)-(6) TA 88 exist or
existed for any period in respect of which a claim under section 102
FA 1989 has been made or purports to have been made.
(iv) No tax has been or may be assessed on the Company pursuant to
section 190 TCGA in respect of any chargeable gain accrued prior to
the date of this Agreement and the Company has not at any time
within the period of six years ending with the date of this
Agreement transferred any asset other than trading stock including
without limitation any transfer by way of share exchange within
section 135 TCGA to any company which at the time of disposal was a
member of the same group as defined in section 170 TCGA. The
execution or completion of this Agreement or any other event since
the Accounts Date will not result in any chargeable asset being
deemed to have been disposed of and re-acquired by the Company for
Taxation purposes pursuant to section 178 or 179 TCGA or as a result
of any other Event since the Accounts Date.
(v) Section 4.15(d)(v) of the Company Disclosure Schedule contains full
particulars of all elections made by the Company under section 247
TA 88 and all such elections are now in force and the Company has
not paid any dividend without advance corporation tax or made any
payment without deduction of income tax in the circumstances
specified in section 247(6) TA 88 and no assessment has been made on
the Company in respect of advance corporation tax which ought to
have been paid or income tax which ought to have been deducted. The
Company has no capital losses the set-off of which are or may be
restricted by section 177A and Schedule 7A TCGA.
(e) CLOSE COMPANIES. The Company has at all times been a close company within
the meaning of sections 414 and 415 TA 88. The Company has not in any
accounting period beginning after 31st March, 1989 been a close
investment-holding company as defined in section 13A TA 88. No
distribution within
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section 418 TA 88 has ever been made by the Company. Any loans or
advances made or agreed to be made by the Company within sections
419 and 420 or 422 TA 88 have been disclosed and the Company has not
released or written off or agreed to release or write off the whole
or any part of any such loans or advances.
(f) INHERITANCE TAX. The Company has made no transfers of value within
sections 94 and 202 ITA nor has the Company received a transfer of
value such that liability might arise under section 199 ITA nor has
the Company been party to associated operations in relation to a
transfer of value as defined by section 268 ITA. There is no
unsatisfied liability to inheritance tax attached to or attributable
to the Shares or any asset of the Company and none of them is
subject to an Inland Revenue charge as mentioned in section 237 and
238 ITA. No asset owned by the Company nor the Shares are liable to
be subject to any sale, mortgage or charge by virtue of section 212
ITA.
(g) VAT.
(i) The Company is a taxable person duly registered for the purposes of
value added tax ("VAT"). The Company has complied with all statutory
provisions, rules, regulations, orders and directions in respect of
VAT, has promptly submitted accurate returns, and the Company
maintains full and accurate VAT records, has never been subject to
any interest, forfeiture, surcharge or penalty nor been given any
notice under sections 59 or 64 Value Added Tax Act ("VATA") nor been
given a warning within section 76(2) VATA nor has the Company been
required to give security under paragraph 4 of Schedule 11 VATA. VAT
has been duly paid or provision has been made in the Accounts for
all amounts of VAT for which the Company is liable.
(ii) All supplies made by the Company are taxable supplies and the
Company has not been and will not be denied full credit for all
input tax by reason of the operation of sections 25 and 26 VATA and
regulations made thereunder or for any other reasons and no VAT paid
by the Company is not input tax as defined in section 24 VATA and
regulations made thereunder.
(iii) The Company is not and has not been for VAT purposes a member of any
group of companies other than the Group and no act or transaction
has been effected in consequence of which the Company is or may be
held liable for any VAT arising from supplies made by another
company and no direction has been given nor will be given by H M
Customs & Excise under Schedule 9A VATA as a result of which the
Company would be treated for the purposes of VAT as a member of a
group.
(iv) The Company has not been or agreed to be party to any transaction or
arrangement in relation to which a direction has been or could be
made under paragraph 1 of Schedule 6, VATA or to which paragraph
2(3A) of Schedule 10 VATA applied. The Company is not and has not
agreed to become liable for VAT by virtue of section 47 and 48 VATA.
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(v) The Company or its relevant associate for the purposes of paragraph
3(7) of Schedule 10 VATA has exercised the election to waive
exemption from VAT (pursuant to paragraph 2 of Schedule 10 VATA)
only in respect of those Properties listed (as having been the
subject of such an election) in the Company Disclosure Schedule and
(a) neither the Company nor its relevant associate has any intention
or obligation to exercise such an election in respect of any other
of the Properties; (b) all things necessary for the election to have
effect have been done and in particular any notification and
information required by paragraph 3(6) of Schedule 10 VATA has been
given and any permission required by paragraph 3(9) of Schedule 10
VATA has been properly obtained; (c) a copy of the notification and
of any permission obtained from H M Customs & Excise in connection
with the election has been disclosed to the Company; (d) no election
has or will be disapplied or rendered ineffective by virtue of the
application of the provisions of paragraph 2 (3AA) of Schedule 10
VATA; (e) in no case has the Company charged VAT, whether on rents
or otherwise, which is not properly chargeable; and (f) the Company
has not agreed to refrain from making an election in relation to any
of the Properties.
(vi) The Company does not own and has not at any time within the period
of ten years preceding the date of this Agreement owned any assets
which are capital items subject to the Capital Goods Scheme under
Part XV of the VAT Regulations 1995. The Company has not made any
claim for bad debt relief under section 36 VATA and details of any
claim it could make have been disclosed. The Company has not entered
into any self billing arrangement in respect of supplies made by any
other person nor has it at any time agreed to allow any such person
to make out VAT invoices in respect of supplies made by the Company.
(h) STAMP DUTY. All stampable documents wheresoever executed (other than those
which have ceased to have any legal effect) to which the Company is a
party have been duly stamped or stamped with a particular stamp denoting
that no stamp duty is chargeable. Since the Accounts Date there have been
and are no circumstances or transactions to which the Company is or has
been a party such that a liability to stamp duty or any penalty in respect
of such duty will arise on the Company. Since the Accounts Date the
Company has not incurred any liability to or been accountable for any
stamp duty reserve tax and there has been no agreement within section
87(1) FA 1986 which could lead to the Company incurring such a liability
or becoming so accountable.
4.16 EMPLOYEES.
(a) The particulars shown in Section 4.16(a) of the Company Disclosure
Schedule are true and complete and show in respect of each director,
officer and employee of the Company his date of birth, the date on
which he commenced continuous employment with the Company for the
purposes of Employment Rights Act 1996 (the "ERA") and all
remuneration payable and other benefits
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provided or which the Company is bound to provide (whether now or in
the future) to each such person and include full particulars of all
remuneration arrangements (particularly profit sharing, incentive
and bonus arrangements to which the Company is a party whether
legally binding or not) and each director, officer and employee of
the Company is listed there. The Company is not a party to any
agreement or arrangement with or commitment to any trade unions or
staff association nor are any of its employees members of any trades
union or staff association.
(b) There is no contract of service in force between the Company and any
of its directors, officers or employees which is not terminable by
the Company without compensation (other than any compensation
payable under Parts X and XI ERA) on one month's notice given at any
time or otherwise in accordance with section 86 ERA. There are no
consultancy or management services agreements in existence between
the Company and any other person, firm or company, and there are no
agreements or other arrangements (binding or otherwise) between the
Company or any employers' or trade association of which the Company
is a member and any Trade Union. There are no outstanding pay
negotiations with any employees or Trade Unions.
(c) There are no amounts owing to present or former directors, officers
or employees of the Company other than not more than one month's
arrears of remuneration accrued or due or for reimbursement of
business expenses incurred within a period of three months preceding
the date of this Agreement and no moneys or benefits other than in
respect of remuneration or emoluments of employment are payable to
or for the benefit of any present or former director, officer or
employee of the Company, nor any dependant of any present or former
director, officer or employee of the Company.
(d) Save to the extent (if any) to which provision or allowance has been
made in the Company Balance Sheet or as set forth in Section 4.16(c)
of the Company's Disclosure Schedule (i) no liability has been
incurred or is anticipated by the Company for breach of any contract
of employment or for services or for severance payments or for
redundancy payments or protective awards or for compensation for
unfair dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee or for sex or race
discrimination or for any other liability accruing from the
termination or variation of any contract of employment or for
services; (ii) no gratuitous payment has been made or promised by
the Company in connection with the actual or proposed termination,
suspension or variation of any contract of employment or for
services of any present or former director, officer or any dependant
of any present or former director, officer or employee of the
Company; and (iii) the Company has not made or agreed to make any
payment to or provided or agreed to provide any benefit for any
present or former director, officer or employee of the Company.
(e) The Company has in relation to each of its employees (and so far as
relevant to each of its former employees) complied with (a) all
obligations imposed on it by all relevant statutes, regulations and
codes of conduct and practice affecting
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its employment of any persons and all relevant orders and awards
made thereunder and has maintained current, adequate and suitable
records regarding the service, terms and conditions of employment of
each of its employees; and (b) all collective agreements,
recognition agreements and customs and practices for the time being
affecting its employees or their conditions of service.
(f) The Company is not in breach of any of the following provisions of
the following Acts or of any regulations made under any of such
Acts: section 21 Children and Young Persons Xxx 0000; sections 00,
00, 00 xxx 00 Xxxxx Xxx 0000; section 155 Xxxxxxxxx Xxx 0000;
section 33 Health and Safety at Work etc. Xxx 0000. There is no
liability or claim against the Company outstanding or anticipated
under the Equal Pay Xxx 0000, the Sex Discrimination Acts 1975 and
1986, the Race Relations Xxx 0000, the ERA, the Transfer of
Undertakings (Protection of Employment) Regulations 1981 ("TUPE"),
the Social Security and Housing Benefits Xxx 0000, the Social
Security Contributions and Benefits Xxx 0000, Trade Union and Labour
Relations (Consolidation) Xxx 0000 ("TULRCA") or the Trade Union
Reform and Employment Rights Xxx 0000. Within a period of one year
preceding the date of this Agreement, the Company has not given
notice of any redundancies to the Secretary of State or started
consultations with any independent trade union under the provisions
of Part IV TULRCA or under TUPE nor has the Company failed to comply
with any such obligation under Part IV TULRCA.
(g) No present director, officer or employee of the Company has given or
received notice terminating his employment except as expressly
contemplated under this Agreement and Completion of this Agreement
will not entitle any employee to terminate his employment or trigger
any entitlement to a severance payment or liquidated damages.
Furthermore, the Principal Shareholders are not aware that either
Xxx Xxxxxxx or Xxxxx Xxx intend to terminate their employment
relationship with the Company. The Company has complied with all
recommendations made by the Advisory Conciliation and Arbitration
Service and with all awards and declarations made by the Central
Arbitration Committee in respect of its employees.
(h) Other than the Company Stock Option Plan, the Company does not have
in existence nor is it proposing to introduce, and none of its
directors, officers or employees participates in (whether or not
established by the Company), any employee share trust, share
incentive scheme, share option scheme or profit sharing scheme for
the benefit of all or any of its present or former directors,
officers or employees or the dependants of any of such persons or
any scheme under which any present or former director, officer or
employee of the Company is entitled to a commission or remuneration
of any other sort calculated by reference to the whole or part of
the turnover, profits or sales of the Company including any profit
related pay scheme established under Chapter III, Part VTA 88.
(i) No dispute exists or can reasonably be anticipated between the
Company and a material number or category of its employees or any
Trade Union(s) and so far
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as the Principal Shareholders are aware there are no wage or other
claims outstanding against the Company by any person who is now or
has been a director, officer or employee of the Company. The Company
has not had during the last three years any strike, work stoppages,
slow-down or work-to-rule by its employees or lock-out, nor, so far
as the Principal Shareholders are aware, is any anticipated, which
has caused, or is likely to cause, the Company to be materially
incapable of carrying on its business in the normal and ordinary
course.
(j) The Company has not been a party to any relevant transfer as defined
in TUPE nor has the Company failed to comply with any duty to inform
and consult any Trade Union under the said regulations within the
period of one year preceding the date of this Agreement.
4.17 CERTAIN AGREEMENTS AFFECTED BY THE PURCHASE OF THE SHARES BY OFFEROR.
Neither the execution and delivery of this Agreement nor the consummation
of the transaction contemplated hereby will (i) result in any payment
(including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director or
employee of the Company or any of its Subsidiaries, (ii) materially
increase any benefits otherwise payable by the Company or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
4.18 PENSIONS.
(a) "PENSION SCHEMES" shall mean agreements or arrangements (whether
legally enforceable or not) for the payment of any pensions,
allowances, lump sums or other like benefits on retirement for the
benefit of any present or former director, officer or employee of
the Company or of any of the Subsidiaries or for the benefit of the
dependants of any such persons;
(b) GENERAL. True and complete copies of the following have been
delivered to the Offeror in relation to each Pension Scheme: Trust
deeds and rules and all other deeds; Booklets currently in force and
any subsequent announcements to scheme members; Latest finalized
actuarial valuation together with any subsequent valuation in draft
and any subsequent written actuarial advice not included in such
valuations; Details of members, pensioners and deferred pensioners
(including dates of birth, sex, entry and current salary and
pensionable salary and name of employer); Details of contributions
by members and the employer in the last three years; List of
investments; and investment agreements; Scheme accounts and trustee
reports for the last three years; Evidence of Inland Revenue
approval; contracting-out certificate (if applicable); SSAP 24
disclosures in the employer's accounts for the last three years;
Insurance policies and certificates and details of premiums paid;
Details of ex-gratia pensions and any discretionary increases in
benefits given in the last three years; Details of arrangements for
the selection of trustees in accordance with sections 16 to 21
Pensions Act 1995 including copies of notices to members; Statement
of investment principles prepared in accordance with section 35
Xxxxxxxx Xxx 0000; Any correspondence with the Occupational Pensions
Regulatory Authority in relation to the Pension
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Scheme; and all letters or agreements for the appointment of
professional advisers pursuant to section 47 Pensions Xxx 0000; Any
actuarial certificates pursuant to section 67 Pensions Xxx 0000.
(c) In relation to each Pension Scheme no power to augment benefits has
been exercised; no discretion has been exercised to admit an
employee to membership of the pension scheme who would not otherwise
be eligible; no discretion has been exercised to provide a benefit
which would not otherwise be provided; all benefits (other than a
refund of contributions with interest where appropriate) payable
under the pension scheme on the death of a member while in an
employment to which the pension scheme relates or during a period of
sickness or disability of a member are fully insured by a policy
with an insurance company of good repute. Each member has been
covered for insurance by the insurance company at its normal rates
and on its normal terms for persons in good health and all premiums
payable have been paid; there are no contributions to the Pension
Scheme which are due but unpaid and have remained unpaid for more
than one month and in any event contributions have been paid which
are at least equal to and by the due date specified in any schedule
of contributions or payments applicable under section 58 or 87
Xxxxxxxx Xxx 0000; no take-over protection provision will be
triggered by Completion; no payment has been made out of the Pension
Scheme to any participating employer; no amendment has been made in
contravention of section 67 of the Pensions Xxx 0000; each Pension
Scheme of the Company is sufficiently funded on an ongoing basis
using the assumptions used in the last actuarial valuation to secure
at least the benefits accrued to Completion (other than those which
are insured) and in addition is sufficiently funded to meet the
minimum funding requirement as defined in section 56 Xxxxxxxx Xxx
0000; other than benefits payable on death as disclosed, each
Pension Scheme of the Company provides only money purchase benefits
within the meaning of section 000 Xxxxxxx Xxxxxxx Xxx 0000.
(d) Each Pension Scheme (i) is either approved by the Board of Inland
Revenue for the purposes of Chapter I of Part XIV TA 88 or is a
scheme under which the benefits provided or to be provided are
consistent with the approval of the scheme by the Board of Inland
Revenue for such purposes and is a scheme in respect of which an
application for such approval has been made and has not been
withdrawn or refused and the Board of Inland Revenue have not given
notice to the applicant that they believe the application has been
dropped; (ii) is established under irrevocable trusts; (iii) has
been administered in accordance with the preservation requirements
under the Xxxxxxx Xxxxxxx Xxx 0000, the equal access requirements of
that Act, the contracting-out requirements of that Act (where
applicable), the Pensions Xxx 0000, and all other applicable laws
(including Article 119 of the Treaty of Rome), regulations and
requirements of any competent governmental body or regulatory
authority and the trusts and rules of the Pension Scheme; (iv) has
not been the subject of any report of wrongdoing or irregularities
to the Occupational Pensions Regulatory Authority nor, so far as the
Principal Shareholders are aware, are there any circumstances which
would justify such a report; (v) is a scheme in respect of which all
actuarial, consultancy, legal
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and other fees, charges or expenses have been paid and for which no
services have been provided for which an account or invoice has not
been rendered; and (vi) has no investment in employer-related assets
as defined in section 40 Pensions Xxx 0000.
(e) No claim has been threatened or made or litigation commenced against
the trustees or administrator of any Pension Scheme or against the
Company or any other person whom the Company is or may be liable to
indemnify or compensate in respect of any matter arising out of or
in connection with any Pension Scheme. So far as the Principal
Shareholders are aware, there are no circumstances which may give
rise to any such claim or litigation. There are no unresolved
disputes under the Pension Scheme's internal dispute resolution
procedure.
4.19 MATERIAL CONTRACTS.
(a) Subsections (i) through (ix) of Section 4.19(a) of the Company
Disclosure Schedule contain the names, parties and dates of all
contracts and agreements to which the Company or any Subsidiary is a
party and that are material to the business, results of operations,
or condition (financial or otherwise), of the Company and the
Subsidiaries taken as a whole (such contracts, agreements and
arrangements as are required to be set forth in Section 4.19(a) of
the Company Disclosure Schedule being referred to herein
collectively as the "Material Contracts"). "Material Contracts"
shall include, without limitation, the following and shall be
categorized in the Company Disclosure Schedule as follows:
(i) each contract and agreement (other than routine purchase
orders and pricing quotes in the ordinary course of business
covering a period of less than one year) for the purchase of
inventory, spare parts, other materials or personal property
with any supplier or for the furnishing of services to the
Company or any Subsidiary under the terms of which the Company
or any Subsidiary: (A) paid or otherwise gave consideration of
more than $25,000 in the aggregate during the calendar year
ended December 31, 1998, (B) is likely to pay or otherwise
give consideration of more than $25,000 in the aggregate
during the calendar year ended December 31, 1999, (C) is
likely to pay or otherwise give consideration of more than
$25,000 in the aggregate over the remaining term of such
contract, or (D) cannot be canceled by the Company or such
Subsidiary without penalty or further payment of less than
$25,000;
(ii) each customer contract and agreement (other than routine
purchase orders, pricing quotes with open acceptance and other
tender bids, in each case, entered into in the ordinary course
of business and covering a period of less than one year) to
which the Company or any Subsidiary is a party which (A)
involved consideration of more than $25,000 in the aggregate
during the calendar year ended December 31, 1998, (B) is
likely to involve consideration of more than $25,000 in the
aggregate during the calendar year ended December 31, 1999,
(C) is
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likely to involve consideration of more than $25,000 in the
aggregate over the remaining term of the contract, or (D)
cannot be canceled by the Company or such Subsidiary without
penalty or further payment of less than $25,000;
(iii) (A) all distributor, manufacturer's representative, broker,
franchise, agency and dealer contracts and agreements to which
the Company or any Subsidiary is a party (specifying on a
matrix, in the case of distributor agreements, the name of the
distributor, product, territory, termination date and
exclusivity provisions) and (B) all sales promotion, market
research, marketing and advertising contracts and agreements
to which the Company or any Subsidiary is a party which: (1)
involved consideration of more than $25,000 in the aggregate
during the calendar year ended December 31, 1998 or (2) are
likely to involve consideration of more than $25,000 in the
aggregate during the calendar year ended December 31, 1999 or
(3) are likely to involve consideration of more than $25,000
in the aggregate over the remaining term of the contract;
(iv) all management contracts with independent contractors or
consultants (or similar arrangements) to which the Company or
any Subsidiary is a party and which (A) involved consideration
or more than $25,000 in the aggregate during the calendar year
ended December 31, 1998, (B) are likely to involve
consideration of more than 25,000 in the aggregate during the
calendar year ended December 31, 1999, or (C) are likely to
involve consideration of more than $25,000 in the aggregate
over the remaining term of the contract;
(v) all contracts and agreements (excluding routine checking
account overdraft agreements involving xxxxx cash amounts)
under which the Company or any Subsidiary has created,
incurred, assumed or guaranteed (or may create, incur, assume
or guarantee) indebtedness or under which the Company or any
Subsidiary has imposed (or may impose) a security interest or
lien on any of their respective assets, whether tangible or
intangible, to secure indebtedness;
(vi) all contracts and agreements that limit the ability of the
Company or any Subsidiary or, after the Closing Date, Offeror
or any of its affiliates, to compete in any line of business
or with any person or in any geographic area or during any
period of time, or to solicit any customer or client;
(vii) all contracts and agreements between or among the Company or
any Subsidiary, on the one hand, and any affiliate of the
Company (other than a wholly owned subsidiary), on the other
hand;
(viii)all contracts and agreements to which the Company or any
Subsidiary is a party under which it has agreed to supply
products to a customer at specified prices, whether directly
or through a specific distributor, manufacturer's
representative or dealer; and
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(ix) all other contracts or agreements (A) which are material to
the Company and its Subsidiaries or the conduct of their
respective businesses or (B) the absence of which would have a
Material Adverse Effect on the Company or (C) which are
believed by the Company to be of unique value even though not
material to the business of the Company.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company, each Material Contract, is a
legal, valid and binding agreement, and none of the Material
Contracts has been canceled by the other party; the Company and the
Subsidiaries are not in receipt of any claim of default under any
such agreement; and none of the Company or any of the Subsidiaries
anticipates any termination of or change to, or receipt of a
proposal with respect to, any such agreement as a result of the
purchase of the Shares by Offeror or otherwise. The Company has
furnished Offeror with true and complete copies of all such
agreements together with all amendments, waivers or other changes
thereto.
4.20 INTERESTED PARTY TRANSACTIONS. Neither the Company nor any Subsidiary is
indebted to any director, officer, employee or agent of the Company or any
Subsidiary (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to the
Company or any Subsidiary.
4.21 INSURANCE. The Company and each of its Subsidiaries have policies of
insurance and bonds of the type and in the amounts customarily carried by
persons conducting businesses or owning assets similar to those of the
Company and its Subsidiaries. There is no material claim pending under any
of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid and the
Company and its Subsidiaries are otherwise in compliance with the terms of
such policies and bonds. The Principal Shareholders have no knowledge of
any threatened termination of, or material premium increase with respect
to, any of such policies.
4.22 COMPLIANCE WITH LAWS. Each of the Company and each of its Subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute,
law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for such violations or
failures to comply as could not reasonably be expected to have a Material
Adverse Effect on the Company.
4.23 STATUTORY BOOKS; MINUTE BOOKS; STATUTORY RETURNS. The statutory books
(including all registers and minute books) of the Company have been
properly kept and contain an accurate and complete record of the matters
which should be dealt with in those books, and no notice or allegation
that any of them is incorrect or should be rectified has been received.
The Company has complied with the provisions of the Companies Acts (as
defined in CA 85) and the Companies Xxx 0000 and all returns, particulars,
resolutions and other documents required to be filed with or delivered to
the Registrar of Companies or to any other authority whatsoever by the
Company have
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been correctly and properly prepared and so filed or delivered. The minute
books of the Company and its Subsidiaries made available to Offeror
contain a complete and accurate record of the matters that they should
deal with.
4.24 COMPLETE COPIES OF MATERIALS. The Company has delivered or made available
true and complete copies of each document which has been requested by
Offeror or its counsel in connection with their legal and accounting
review of the Company and its Subsidiaries.
4.25 BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
4.26 YEAR 2000.
(a) "MILLENNIUM-COMPLIANT" in relation to any hardware and/or software
shall mean that its operation, functionality and performance will
not (before, during or after 2000) be adversely affected by reason
of any date information or any change of such information, and that
(i) no value for current date will cause any interruption in the
operation of the hardware and/or software; (ii) all manipulations of
time-related data will produce the correct results for all valid
date values within the application domain; (iii) date-based
functionality will behave consistently and correctly for all dates
before, during and alter 2000; (iv) in all interfaces and data
storage the correct century is specified (explicitly or by
unambiguous algorithms or inferencing rules) without human
intervention; (v) where any date information is represented without
a century, the correct century is unambiguous for all manipulations
involving that information; and (vi) 2000 is recognized as a leap
year.
"MILLENNIUM-COMPLIANCE FAILURE" shall mean the failure of any
hardware and/or software to be Millennium-compliant (whether in some
only or in all respects).
(b) The hardware and/or software used by the Company are
Millennium-compliant and neither such hardware and/or software nor
any services relating to hardware and/or software owned or used by
the Company or to any other aspect of the Company data processing or
data transfer requirements will be affected by any
Millennium-compliance failure. The Company has established a project
("the Year 2000 Project") for investigating and addressing the
potential adverse effects on the Company's business of any
Millennium-compliance failure (including in relation to any hardware
and/or software belonging to or used by the Company's clients,
customers, trading partners and suppliers). The methodology and key
personnel of the Year 2000 Project, together with a summary of the
material findings and actions of the Year 2000 Project to date
(including any financial provision or reserve made in relation to
such findings) have been set out in Section 4.26 of the Company
Disclosure Schedule. The Company has diligently pursued such
methodology, and the summary discloses a tree and fair view of the
Company's readiness for any Millennium-compliance failure.
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4.27 INVENTORY. The inventories shown on the Company Balance Sheet or
thereafter acquired by the Company consist of items of a quantity and
quality usable or salable in the ordinary course of business. Since the
Company Balance Sheet Date, the Company has continued to replenish
inventories in a normal and customary manner consistent with past
practices. The Company has not received written or oral notice that it
will experience in the foreseeable future any difficulty in obtaining, in
the desired quantity and quality and at a reasonable price and upon
reasonable terms and conditions, the raw materials, supplies or component
products required for the manufacture, assembly or production of its
products. The values at which inventories are carried reflect the
inventory valuation policy of the Company, which is Consistent with its
past practice and in accordance with UK GAAP applied on a consistent
basis. Since January 1, 1999 due provision has been made on the books of
the Company in the ordinary course of business consistent with past
practices to provide for all slow-moving, obsolete, or unusable
inventories at their estimated useful scrap values and such inventory
reserves are adequate to provide for such slow-moving, obsolete or
unusable inventory and inventory shrinkage.
4.28 ACCOUNTS RECEIVABLE.
(a) The Principal Shareholders have made available to Offeror a list of
all accounts receivable of the Company and each Subsidiary reflected
on the Company Balance Sheet ("Accounts Receivable") along with a
range of days elapsed since invoice.
(b) All Accounts Receivable of the Company and its Subsidiaries arose in
the ordinary course of business and are carried at values determined
in accordance with UK GAAP consistently applied. No person has any
lien on any of such Accounts Receivable and no request or agreement
for deduction or discount has been made with respect to any of such
Accounts Receivable.
4.29 CUSTOMERS AND SUPPLIERS. As of the date hereof, no customer which
individually accounted for more than 10% of the Company's gross revenues
during the 12 month period preceding the date hereof, and no supplier of
the Company, has canceled or otherwise terminated, or made any written
threat to the Company to cancel or otherwise terminate its relationship
with the Company, or has at any time on or after August 31, 1999 decreased
materially its services or supplies to the Company in the case of any such
supplier, or its usage of the services or products of the Company in the
case of such customer, and to the Principal Shareholder's knowledge, no
such supplier or customer intends to cancel or otherwise terminate its
relationship with the Company or to decrease materially its services or
supplies to the company or its usage of the services or products of the
Company, as the case may be. To the Principal Shareholder's knowledge,
from and after the date hereof, no customer which individually accounted
for more than 10% of the Company's gross revenues during the 12 month
period preceding the Effective Date intends to cancel or otherwise
terminate its relationship with the Company or to decrease materially its
usage of the services or products of the Company. The Company has not
knowingly breached, so as to provide a benefit to the Company that was not
intended by the parties, any
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agreement with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of the Company.
4.30 THIRD PARTY CONSENTS. No consent or approval is needed from any third
party in order to effect the purchase of the Shares by Offeror, this
Agreement or any of the transactions contemplated hereby.
4.31 NO COMMITMENTS REGARDING FUTURE PRODUCTS. The Company has made no sales to
customers that are contingent upon providing future enhancements of
existing products, to add features not presently available on existing
products or to otherwise enhance the performance of its existing products
(other than beta or similar arrangements pursuant to which the Company's
customers from time to time test or evaluate products). The products the
Company has delivered to customers substantially comply with published
specifications for such products and the Company has not received material
complaints from customers about its products that remain unresolved.
Section 4.31 of the Company Disclosure Schedule accurately sets forth a
complete list of products in development (exclusive of mere enhancements
to and additional features for existing products).
4.32 REPRESENTATIONS COMPLETE. None of the representations or warranties made
by the Principal Shareholders in this Agreement or in any attachment
hereto, including the Company Disclosure Schedule, when all such documents
are read together in their entirety, contains any untrue statement of a
material fact, or omits to state any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which they were made, not misleading in each case so
as to have a Material Adverse Effect on the Company. Offeror hereby
confirms that as of the Effective Date it is not aware of any breach of
any warranty so as to give rise to a warranty claim under this Agreement.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
SHAREHOLDERS REGARDING THEIR SHAREHOLDER STATUS
Each Principal Shareholder in consideration of the Offeror agreeing to
make the Offer and issue the Offer Document hereby represents and warrants
to Offeror, as to himself, herself or itself, as the case may be, as
follows:
5.1 POWER, AUTHORIZATION AND VALIDITY. The Principal Shareholder has all
requisite legal and, to the extent applicable, corporate power, and
authority to enter into and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby and by the Offer
Document. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby and by the Offer
Document have been duly and validly approved and authorized by all
necessary action, including, if applicable, corporate action, by or on
behalf of such Principal Shareholder. This Agreement has been duly
executed and delivered by such Principal Shareholder and constitutes a
valid and binding obligation of the Principal Shareholder, subject to the
laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance,
injunctive relief and equitable remedies. No consent, approval, order or
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authorization of, or registration, declaration or filing with, any
Governmental Entity, is required by or with respect to the Principal
Shareholder in connection with the execution and delivery of this
Agreement by the Principal Shareholder or the consummation by the
Shareholder of the transactions contemplated hereby and by the Offer
Document.
5.2 TITLE TO STOCK. The Principal Shareholder is the sole owner of the Shares
or options to purchase the Shares reflected next to such Principal
Shareholder's name on Exhibit A and has or will have, as of the Closing,
good, valid and marketable title to such Shares free and clear of all
restrictions, claims, liens, charges, encumbrances and equities
whatsoever. The Principal Shareholder represents that he, she or it has or
will have, as of the Closing, full right, power and authority to sell,
transfer and deliver the Shares to Offeror, and, upon delivery of the
certificate or certificates therefor duly endorsed for transfer to Offeror
and Offeror's payment for and acceptance thereof, will transfer to Offeror
good, valid and marketable title thereto free and clear of any
restriction, claim, lien, charge, encumbrance or equity whatsoever. The
Principal Shareholder is not party to any voting trust, agreement or
arrangement affecting the exercise of the voting rights of the Shares.
There is no action, proceeding, claim or, to the Principal Shareholder's
knowledge, investigation against the Principal Shareholder or the
Principal Shareholder's assets, properties or, as applicable, any of the
Principal Shareholder's respective officers or directors, pending or, to
the Principal Shareholder's knowledge, threatened, at law or in equity, or
before any court, arbitrator or other tribunal, or before any
administrative law judge, hearing officer or administrative agency
relating to or in any other manner impacting upon the Shares held by such
Principal Shareholder.
5.3 NO VIOLATION. The execution, delivery and performance of this Agreement,
and the consummation of the Purchase and the other transactions
contemplated by this Agreement and by the Offer Document do not and will
not conflict with or result in a violation of the Articles of Association,
partnership agreement or other applicable charter document of the
Principal Shareholder, or conflict with, or (with or without notice or
lapse of time, or both) result in a termination, breach, impairment or
violation of, or constitute a default or result in the creation or
imposition of any lien, charge or encumbrance upon any of the Principal
Shareholder's Shares under, (a) any instrument, indenture, lease, mortgage
or other agreement or contract to which the Principal Shareholders is a
party or to which such Principal Shareholder or any of such Principal
Shareholder's assets or properties may be subject or (b) any federal,
state, local or foreign judgment, writ, decree, order, ordinance, statute,
rule or regulation applicable to the Principal Shareholders or the
Principal Shareholder's assets or properties. The consummation of the
Purchase and the other transactions contemplated by this Agreement will
not require the consent of any third person with respect to the rights,
licenses, franchises, leases or agreements of the Principal Shareholder.
5.4 ACKNOWLEDGMENT. The Principal Shareholder hereby acknowledges that the
Principal Shareholder has read this Agreement, the Offer Document, the
Deed of Tax Covenant, the Escrow Agreement and the other documents to be
delivered in connection with the consummation of the transactions
contemplated hereby and has made an independent examination of the
transactions contemplated hereby (including the tax consequences
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thereof). The Principal Shareholder acknowledges that the Principal
Shareholder has had an opportunity to consult with and has relied solely
upon the advice, if any, of the Principal Shareholder's legal counsel,
financial advisors, or accountants with respect to the transactions
contemplated hereby to the extent the Principal Shareholder has deemed
necessary, and has not been advised or directed by Offeror, the Company or
their respective legal counsel or other advisors in respect of any such
matters and has not relied on any such parties in connection with this
Agreement and the transactions contemplated hereby.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF OFFEROR
Offeror hereby represents and warrants to the Company and the Principal
Shareholders as follows:
6.1 ORGANIZATION, STANDING AND POWER. Offeror is a corporation duly organized,
validly existing and in good standing under the laws of California.
Offeror has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted and is
duly qualified to do business and is in good standing in each jurisdiction
in which the failure to be so qualified and in good standing would have a
Material Adverse Effect on Offeror. Offeror has delivered a true and
correct copy of its Articles of Incorporation and Bylaws or other charter
documents, as applicable, each as amended to date, to the Principal
Shareholders' Representative. Offeror is not in violation of any material
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents.
6.2 CAPITAL STRUCTURE. The authorized capital stock of Offeror consists of
25,000,000 shares of Common Stock, no par value, of which 4,782,608 shares
were issued and outstanding as of the close of business on June 30, 1999
and 12,000,000 shares of Preferred Stock, no par value, of which 8,170,207
shares were issued and outstanding as of the close of business on June 30,
1999, and are convertible into 11,073,439 shares of Common Stock. As of
the close of business on June 30, 1999, 375,499 shares are subject to
outstanding, unexercised options under Offeror's 1986 Incentive Stock
Option Plan and 1986 Supplemental Stock Option Plan, and 1,849,916 shares
are subject to outstanding, unexercised options under Offeror's 1996 Stock
Option Plan. There are no other outstanding shares of capital stock or
voting securities of Offeror other than shares of Offeror Common Stock
issued after June 30, 1999 upon the exercise of options issued under the
Offeror Stock Option Plan before or after such date. As of the close of
business on June 30, 1999, there are warrants outstanding to purchase
32,000 shares of the Company's Common Stock. Other than as contemplated
under this Agreement, there are no other options, warrants, calls, rights,
commitments or agreements of any character to which Offeror is a party or
by which either of them is bound obligating Offeror to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of Offeror or
obligating Offeror to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. The shares of Offeror
Common Stock to be issued pursuant to the Offer will be duly authorized,
validly issued, fully paid, and non-assessable.
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6.3 AUTHORITY. Offeror has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Offeror. This Agreement has been
duly executed and delivered by Offeror and constitutes the valid and
binding obligation of Offeror enforceable against the Offeror in
accordance with its terms, subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of
law governing specific performance, injunctive relief and equitable
remedies.
6.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not,
conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation
or loss of a benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Offeror, as amended, or (ii) any material
mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
Offeror or its properties or assets.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by
or with respect to Offeror in connection with the execution and
delivery of this Agreement by Offeror or the consummation by Offeror
of the transactions contemplated hereby, except for (i) any filings
as may be required under applicable state securities laws and the
securities laws of any foreign country, (ii) such filings as may be
required under the HSR Act, and (iii) consents, authorizations,
filings, approvals and registrations which, if not obtained or made,
would not have a Material Adverse Effect on Offeror and would not
prevent, materially alter or delay any the transactions contemplated
by this Agreement.
6.5 Offeror has provided to the Principal Shareholders Representative a true,
correct and complete copy of the Company's draft audited financial
statements for the fiscal year 30 June 1999 (the "Audited Financial
Statements"), and its unaudited financial statements (balance sheet,
statement of operations and statement of cash flows) on a consolidated
basis as at, and for the three month period ended September 25, 1999 (the
"Unaudited Financial Statements"). The Audited Financial Statements have
been prepared in accordance with the relevant accounting standards and
legal principles and US Generally Accepted Accounting Principles ("US
GAAP") applied on a consistent basis throughout the periods indicated and
with each other. The Audited Financial Statements accurately set out and
describe the financial condition and operating results of Offeror and the
consolidated subsidiaries of Offeror as of the date, and for the periods
indicated thereon subject to normal year-end audit adjustments. The
Unaudited Financial Statements have been prepared on the same basis as the
Audited Financial Statements and using the same accounting policies as
were used in the preparation of the Audited Financial Statements and show
a materially accurate view of the assets and liabilities and trading
position of Offeror. Offeror has maintained a
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standard system of accounting established and administered in accordance
with US GAAP.
6.6 ABSENCE OF CERTAIN CHANGES. Since September 25, 1999 (the "Offeror Balance
Sheet Date"), Offeror has conducted its business in the ordinary course in
a manner consistent with past practice and there has not occurred: (i) any
change, event or condition (whether or not covered by insurance) that has
resulted in, or might reasonably be expected to result in, a Material
Adverse Effect to Offeror; (ii) any declaration, setting aside, or payment
of a dividend or other distribution with respect to the shares of Offeror,
or any direct or indirect redemption, purchase or other acquisition by
Offeror of any of its shares of capital stock; (iii) any material
amendment or change to Offeror's Articles of Incorporation or Bylaws; or
(iv) any negotiation or agreement by Offeror to do any of the things
described in the preceding clauses (i) through (iii) (other than
negotiations with the Company and its representatives regarding the
transactions contemplated by this Agreement).
6.7 LITIGATION. There is no private or governmental action, suit, proceeding,
claim, arbitration or investigation pending before any agency, court or
tribunal, foreign or domestic, or, to the knowledge of Offeror or any of
its subsidiaries, threatened against Offeror or any of its subsidiaries or
any of their respective properties or any of their respective officers or
directors (in their capacities as such) that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect
on Offeror. There is no judgment, decree or order against Offeror or any
of its subsidiaries or, to the knowledge of Offeror or any of its
subsidiaries, any of their respective directors or officers (in their
capacities as such) that could prevent, enjoin, or materially alter or
delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect on Offeror.
6.8 GOVERNMENTAL AUTHORIZATION. Each of Offeror and its subsidiaries has
obtained each federal, state, county, local or foreign governmental
consent, license, permit, grant, or other authorization of a Governmental
Entity that is required for the operation of Offeror's or any of its
subsidiaries' business ("Offeror Authorizations"), and all of such Offeror
Authorizations are in full force and effect, except where the failure to
obtain or have any of such Offeror Authorizations could not reasonably be
expected to have a Material Adverse Effect on Offeror.
6.9 COMPLIANCE WITH LAWS. Each of Offeror and each of its subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute,
law or regulation with respect to the conduct of its business, or the
ownership or operation of its business, except for such violations or
failures to comply as could not reasonably be expected to have a Material
Adverse Effect on Offeror.
SECTION 7
CONDITIONS TO CLOSING
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations under
this Agreement of each Party hereto shall be subject to the satisfaction
on or prior to the Closing of each of the following conditions, any of
which may be waived, in writing,
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by agreement of Offeror or the Principal Shareholders'
Representative (defined in Section 8.8 below):
(a) CONDITIONS TO OBLIGATIONS OF EACH PARTY. No temporary restraining
order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be
any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the transactions
contemplated hereby, which makes the consummation of such
transactions illegal.
(b) GOVERNMENTAL APPROVAL. Offeror and each Principal Shareholder shall
have timely obtained from each Governmental Entity all approvals,
waivers and consents, if any, necessary for consummation of or in
connection with the transactions contemplated hereby, including,
without limitation, such approvals, waivers and consents as may be
required under the HSR Act, under the Securities Act and under any
state or foreign securities laws.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE PRINCIPAL SHAREHOLDERS. The
obligations of the Principal Shareholders under this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, by the
Principal Shareholders' Representative:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of Offeror in this Agreement that is
expressly qualified by a reference to materiality shall be true in
all respects as so qualified, and each of the representations and
warranties of Offeror in this Agreement that is not so qualified
shall be true and correct in all material respects, on and as of the
Closing as though such representation or warranty had been made on
and as of the Closing (except that those representations and
warranties which address matters only as of a particular date shall
remain true and correct as of such date), and (ii) Offeror shall
have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to
be performed and complied with by Offeror as of the Closing.
(b) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of Offeror
and its subsidiaries, taken as a whole.
(c) CERTIFICATES OF OFFEROR.
(i) COMPLIANCE CERTIFICATE OF OFFEROR. The Principal Shareholders'
Representative shall have been provided with a certificate
executed on behalf of Offeror by its President or its Chief
Financial Officer to the
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effect that, as of the Closing, each of the conditions set
forth in Section 7.2(a) and (b) above has been satisfied with
respect to Offeror.
(ii) CERTIFICATE OF SECRETARY OF OFFEROR. The Principal
Shareholders' Representative shall have been provided with a
certificate executed by the Secretary or Assistant Secretary
of Offeror certifying:
(A) Resolutions duly adopted by the Board of Directors of
Offeror authorizing the execution of this Agreement and
the execution, performance and delivery of all
agreements, documents and transactions contemplated
hereby; and
(B) the incumbency of the officers of Offeror executing this
Agreement and all agreements and documents contemplated
hereby.
(d) GOOD STANDING. The Principal Shareholders' Representative shall have
received a certificate or certificates of the Secretary of State of
the State of California and any applicable franchise tax authority
of such state, certifying as of a date no greater than three
business days prior to the Closing that Offeror has filed all
required reports, paid all required fees and taxes and is, as of
such date, in good standing and authorized to transact business as a
domestic corporation.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF OFFEROR. The obligations of
Offeror under this Agreement shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may
be waived, in writing, by Offeror:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of the Principal Shareholders in
Section 5 of this Agreement that is expressly qualified by a
reference to materiality shall be true in all respects as so
qualified, and each of the representations and warranties of the
Principal Shareholders in Section 5 of this Agreement that is not so
qualified shall be true and correct in all material respects, on and
as of the Closing as though such representation or warranty had been
made on and as of the Closing (except that those representations and
warranties which address matters only as of a particular date shall
remain true and correct as of such date), and (ii) the Principal
Shareholders shall have performed and complied in all material
respects with or shall have caused or procured the Company to
perform and comply with all covenants, obligations and conditions of
this Agreement required to be performed and complied with by them as
of the Closing.
(b) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities,
business, operations, results of operations or prospects of the
Company and its subsidiaries, taken as a whole. Without limiting the
foregoing, a material adverse change shall be deemed to occur if (i)
the Company's Current Assets (defined as cash, accounts receivables,
inventories, deposits and prepaids) minus Current Liabilities
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(defined as trade accounts payable, accrued vacation, bonuses,
commissions, taxes, current portion of long term liabilities, and
accrued amounts for goods and services received but not invoiced) as
of the Closing Date, as determined in good faith by Offeror and the
Principal Shareholders' Representative, acting together, is less
than zero minus $80,000; or (ii) either Xxx Xxxxxxx or Xxxxx Xxx
terminates or has informed the Company or a Principal Shareholder in
writing or otherwise of his intention to terminate his employment
relationship with the Company.
(c) CERTIFICATES OF THE COMPANY AND THE PRINCIPAL SHAREHOLDERS.
(i) COMPLIANCE CERTIFICATE OF THE COMPANY. Offeror shall have been
provided with a certificate executed on behalf of a director
of the Company to the effect that, as of the Closing, each of
the conditions set forth in Section 5.3(b) above has been
satisfied.
(ii) COMPLIANCE CERTIFICATE OF PRINCIPAL SHAREHOLDERS. Offeror
shall have been provided with a certificate executed by each
Principal Shareholder to the effect that, as of the Closing,
each of the conditions set forth in Section 5.3(a) above has
been satisfied.
(iii) CERTIFICATE OF SECRETARY OF THE COMPANY. Offeror shall have
been provided with a certificate executed by the Secretary of
the Company certifying the Articles of Association of the
Company, as in effect immediately prior to the Closing,
including all amendments thereto.
(d) THIRD PARTY CONSENTS. Offeror shall have been furnished with
evidence satisfactory to it that the Company has obtained those
consents, waivers, approvals or authorizations of those third
parties whose consent or approval are required in connection with
this Agreement.
(e) INJUNCTIONS OR RESTRAINTS; CONDUCT OF BUSINESS. In addition, no
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal or regulatory restraint provision limiting or restricting
Offeror's conduct or operation of the business of the Company and
its subsidiaries, following the Closing shall be in effect, nor
shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign,
seeking the foregoing be pending.
(f) SHAREHOLDER DOCUMENTS. Offeror shall have received from each
Shareholder a duly executed and delivered acceptance form in the
Offer Document, including the Release of Claim, Stock Transfer Form,
and irrevocable Power of Attorney contained therein, and the
certificate or certificates representing all of the Shares held by
such Shareholder or a letter of indemnity reasonably acceptable to
Offeror, in each case, from Shareholders representing at least 98%
of the issued share capital of the Company provided that this
condition shall not be satisfied if more than ten Shareholders do
not so accept the Offer as of the Closing Date.
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(g) ADDITIONAL CONDITIONS. Such additional actions set forth in this
Agreement that are required to be completed as of the Closing shall
have been completed, including without limitation the actions set
forth in Sections 1.3 and 2.2.
(h) MIRVO STOCK. Genetics Group AG shall procure that Scientific
Generics Ltd. shall use best efforts to transfer to the Company 20%
of the shares of Series A Preferred Stock of Zowie (formerly Mirvo
Toys, Inc.) held by it as of the Effective Date, which based on
documentation provided to the Company would be 129,033 shares.
(i) NEW ISSUES. No further shares in the Company shall be issued between
the Effective Date and Closing.
SECTION 8
ESCROW AND INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All covenants to be performed
prior to the Closing Date, and all representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the consummation of the Purchase and continue until the two year
anniversary of the Closing Date (the "Escrow Termination Date"); provided
that if any claims for indemnification have been asserted with respect to
any such representations and warranties prior to the Escrow Termination
Date, the representations and warranties on which any such claims are
based shall continue in effect until final resolution of any claims. All
covenants to be performed after the Closing Date shall continue
indefinitely.
8.2 ESCROW FUND. As soon as practicable after the Closing Date, all shares of
Synaptics' Stock that each Principal Shareholder is entitled to receive in
the Purchase pursuant to Section 2.4(b) and subject to the conditions set
forth in Section 2.4(b) (the "Escrow Shares") shall, without any act of
any Principal Shareholders, be registered in the name of, and be deposited
with a financial institution selected by Offeror and reasonably acceptable
to the Principal Shareholders' Representative as escrow agent (the "Escrow
Agent"), such deposit to constitute the escrow fund (the "Escrow Fund")
and to be governed by the terms set forth herein and in the Escrow
Agreement attached hereto as Exhibit E (the "Escrow Agreement"); provided,
however, Generics Group AG shall contribute to the Synaptics' Escrow
additional Synaptics' Stock equal to the number of Escrow Shares Inter
Ikea Finance SA would have contributed to the Escrow if it were a
Principal Shareholder under this Agreement. In the event that any Damages
(as defined below) arise, the Escrow Fund shall be available to compensate
the Indemnified Persons (defined below) pursuant to the indemnification
obligations of the Principal Shareholders pursuant to Section 8.3 and in
accordance with the Escrow Agreement.
8.3 INDEMNIFICATION.
(a) INDEMNIFIED DAMAGES. Subject to the limitations set forth in this
Section 8, from and after the Closing Date, the Principal
Shareholders shall protect,
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defend, indemnify and hold harmless Offeror and its affiliates,
officers, directors, employees, representatives and agents and the
Company (each an "Indemnified Person" and collectively "Indemnified
Persons") from and against in the case of Sections 8.3(a)(i) and
8.3(a)(iii) below, 100% of, and in the case of Section 8.3(a)(ii)
below, 50% of any and all losses, costs, damages, liabilities, fees
(including without limitation attorneys' fees) and expenses
(including amounts required to be paid by the Company or the
Principal Shareholders as set forth in Section 12.13) (collectively,
the "Damages"), that any of the Indemnified Persons incurs by reason
of or in connection with (i) any claim, demand, action or cause of
action alleging misrepresentation, breach of, or default in
connection with any of the representations, warranties, covenants,
indemnities or agreements of the Principal Shareholders contained in
this Agreement or the Offer Document, including any exhibits or
schedules attached hereto or thereto which becomes known to Offeror
during the Escrow Period, (ii) any legal proceedings duly served
during the Escrow Period upon an Indemnified Person by Wacom, Inc.
or any members of its group alleging breach or infringement by the
Company of any patent held by Wacom, Inc. or any members of its
group as a consequence of an Indemnified Person seeking to exploit
the Company's technology existing as of the Closing Date, as
demonstrated by the Company's records as of the Closing Date.
Damages in each case shall be net of the amount of any insurance
proceeds and indemnity and contribution actually recovered by
Offeror and, where applicable, the Offeror shall pursue any claim it
or the Company may have under any applicable insurance policy or
against any person from whom such indemnity or contribution may be
recoverable or (iii) any commission or compensation in the nature of
a finder's fee for which the Company is responsible as a result of
the transactions contemplated by this Agreement, including without
limitation any fees owing under agreements with Xxxxxx Xxxxxxx.
(b) EXCLUSIVE CONTRACTUAL REMEDY AND LIMITATIONS. Offeror and the
Principal Shareholders each acknowledge that Damages, if any, would
relate to unresolved contingencies existing at the Closing Date,
which if resolved at the Closing Date would have led to a reduction
in the total consideration Offeror would have agreed to pay in
connection with the Purchase. Resort to the Escrow Fund shall be the
exclusive contractual remedy of Offeror for any Damages if the
Purchase closes. The maximum liability of any Principal Shareholder
for any breach of a representation, warranty or covenant of the
Principal Shareholder shall be limited to Escrow Shares in which
such Principal Shareholder has an interest that are held pursuant to
the Escrow Agreement; provided, however, that nothing herein shall
limit the liability of the Principal Shareholders for Damages: (i)
arising from any breach by such Shareholder of representation,
warranty or covenant if the Purchase does not close, (ii) in
connection with any breach by such shareholder of the Offer
Document, Deed of Tax Covenant, Non-Competition Agreement or Escrow
Agreement, and (iii) arising from such person's or entity's fraud or
intentional misrepresentation.
8.4 DAMAGES THRESHOLD. Notwithstanding the foregoing, Offeror may not receive
any amount of the Escrow Shares from the Escrow Fund unless and until a
certificate
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signed by an officer of Offeror (an "Officer's Certificate") identifying
Damages in the aggregate amount in excess of $100,000 has been delivered
to the Escrow Agent and such amount is determined pursuant to this Section
8 and the terms of the Escrow Agreement to be payable, in which case
Offeror shall receive Escrow Shares equal in value to the full amount of
such Damages without deduction; provided, however, any amounts required to
be paid by the Principal Shareholders as set forth in Sections 8.3(a)(ii),
8.3(a)(iii) or 12.13 shall not be subject to the above $100,000 threshold
and may be paid, at Offeror's option, out of the Escrow Shares. In
determining the amount of any Damages attributable to a breach, any
materiality standard contained in a representation, warranty or covenant
of Offeror shall be disregarded.
8.5 ESCROW PERIOD. Subject to the following requirements, the Escrow Fund
shall remain in existence until the Escrow Termination Date (the "Escrow
Period"). Upon the expiration of the Escrow Period, the Escrow Fund shall
terminate with respect to all Escrow Shares; provided, however, that the
number of Escrow Shares, which, in the reasonable judgment of Offeror,
subject to the objection of the Principal Shareholders' Representative (as
defined in Section 8.8 below) and the subsequent arbitration of the claim
in the manner provided in the Escrow Agreement, are necessary to satisfy
any unsatisfied claims specified in any Officer's Certificate delivered to
the Escrow Agent prior to the expiration of such Escrow Period with
respect to facts and circumstances existing on or prior to the Escrow
Termination Date shall remain in the Escrow Fund (and the Escrow Fund
shall remain in existence) until such claims have been resolved. As soon
as all such claims have been resolved, the Escrow Agent shall deliver to
the Principal Shareholders all Escrow Shares and other property remaining
in the Escrow Fund and not required to satisfy such claims. Deliveries of
Escrow Shares to the Principal Shareholders pursuant to this Section 8.5
and the Escrow Agreement shall be made in proportion to their respective
original contributions to the Escrow Fund.
8.6 DISTRIBUTIONS; VOTING.
(a) Any shares of Synaptics' Stock or other equity securities issued or
distributed by Offeror (including shares issued upon a stock split)
("New Shares") in respect of the Escrow Shares that have not been
released from the Escrow Fund shall be added to the Escrow Fund and
become a part thereof. When and if cash dividends on Escrow Shares
in the Escrow Fund shall be declared and paid, they shall be
retained in escrow pending final distribution of the Escrow Fund and
will not be immediately distributed to the beneficial owners of the
Escrow Shares. Such dividends will become part of the Escrow Fund
and will be available to satisfy Damages. Offeror shall pay any
taxes on such dividends out of the Escrow Fund.
(b) Each Principal Shareholder shall have voting rights with respect to
that number of Escrow Shares contributed to the Escrow Fund on
behalf of such Principal Shareholder (and on any voting securities
added to the Escrow Fund in respect of such Escrow Shares) so long
as such Escrow Shares or other voting securities are held in the
Escrow Fund. As the record holder of such shares, the Escrow Agent
shall vote such shares in accordance with the instructions of the
Principal Shareholders having the beneficial interest therein and
shall promptly deliver copies of all proxy solicitation materials to
such
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Principal Shareholders. Offeror shall show the Synaptics' Stock
contributed to the Escrow Fund as issued and outstanding on its
balance sheet.
8.7 METHOD OF ASSERTING CLAIMS. All claims for indemnification by any
Indemnified Person pursuant to this Section 8 shall be made in accordance
with the provisions of the Escrow Agreement.
8.8 REPRESENTATIVE OF THE PRINCIPAL SHAREHOLDERS; POWER OF ATTORNEY. The
Director of Finance of Generics Group Ltd., currently Xxxxxx Xxxxx, shall
be appointed as agent and attorney-in-fact (the "Principal Shareholders'
Representative") for each Principal Shareholder for and on behalf of the
Principal Shareholders, to give and receive notices and communications on
behalf of the Principal Shareholders, to enter into and perform the Escrow
Agreement, to authorize delivery to Offeror of Escrow Shares or other
property from the Escrow Fund in satisfaction of claims by Offeror or any
other Indemnified Person, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators
with respect to such claims, and to take all actions necessary or
appropriate in the judgment of Principal Shareholders' Representative for
the accomplishment of the foregoing.
SECTION 9
TERMINATION; SURVIVAL AND EFFECT OF TERMINATION
9.1 TERMINATION. Notwithstanding anything herein to the contrary, this
Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing Date:
(a) By mutual written consent of Offeror and the Principal Shareholders'
Representative;
(b) By Offeror, if any of the conditions set forth in Sections 7.1 and
7.3 shall have become reasonably incapable of fulfillment prior to
October 31, 1999, through no fault of Offeror, and such condition(s)
shall not have been waived in writing by Offeror;
(c) By the Principal Shareholders' Representative, if any of the
conditions set forth in Sections 7.1 and 7.2 shall have become
reasonably incapable of fulfillment prior to October 31, 1999,
through no fault of the Principal Shareholders, and such
condition(s) shall not have been waived in writing by the Principal
Shareholders' Representative;
(d) By either Offeror or the Principal Shareholders' Representative if
(i) the other (Offeror on the one hand or any Principal Shareholder
on the other) has breached this Agreement in any material respect,
or (ii) the Closing does not occur on or before October 31, 1999
(unless such date is extended by the mutual agreement of Offeror and
a majority in interest of the Shareholders), but only if the failure
to consummate such transaction on or before such date did not result
from the failure by the party(ies) seeking such termination to
fulfill any condition set forth in Section 7 which is a condition
precedent to the
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obligation of the other under this Agreement to consummate the
transactions contemplated hereby.
9.2 SURVIVAL. If this Agreement is terminated prior to Closing and the
transactions contemplated hereby are not consummated as described above,
this Agreement shall become void and of no further force and effect,
except for the provisions of Section 9 (relating to termination); Section
10.5 (relating only to the obligations of confidentiality and not those
regarding access of information); Section 10.6 (relating to disclosure,
except that the first sentence regarding access to records shall be of no
further force and effect); and Section 12 (relating to certain
miscellaneous provisions).
SECTION 10
COVENANTS OF THE PRINCIPAL SHAREHOLDERS
10.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, the Principal Shareholders shall cause or
procure the Company (except to the extent expressly contemplated by this
Agreement or as consented to in writing by Offeror), to carry on its and
its Subsidiaries' business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, to pay and to cause
its Subsidiaries to pay debts and Taxes when due subject (i) to good faith
disputes over such debts or Taxes and (ii) to Offeror's consent to the
filing of material tax returns if applicable, to pay or perform other
obligations when due, and to use best efforts consistent with past
practice and policies to preserve intact its and its Subsidiaries' present
business organization, keep available the services of its and its
Subsidiaries' present officers and key employees and preserve its and its
Subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
Subsidiaries, to the end that its and its Subsidiaries' goodwill and
ongoing businesses shall be unimpaired at the Closing Date. The Principal
Shareholders shall cause or procure the Company to promptly notify Offeror
of any event or occurrence not in the ordinary course of its or its
Subsidiaries' business, and of any event which could have a Material
Adverse Effect. Without limiting the foregoing, except as expressly
contemplated by this Agreement, the Principal Shareholders shall cause or
procure the Company or any of its Subsidiaries to not do, allow or permit
any of thc following, without the prior written consent of Offeror:
(a) CHARTER DOCUMENTS. Cause or permit any amendments to the Memorandum
or Articles of Association, except as permitted under this
Agreement;
(b) ISSUANCE OF SECURITIES. Issue, deliver or sell or authorize or
propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities
convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of its Ordinary Shares
pursuant to the exercise of stock options, warrants or other rights
therefor outstanding as of the date of this Agreement and the
issuance of shares of its Ordinary Shares as provided in Section
10.2 below;
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(c) DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any dividends on
or make any other distributions (whether in cash, stock or property)
in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or repurchase, redeem
or otherwise acquire, directly or indirectly, any shares of its
capital stock;
(d) STOCK OPTION PLANS, ETC. Authorize cash payments in exchange for any
options or other rights granted under any of the Company's stock
plans.
(e) MATERIAL CONTRACTS. Enter into any material contract or commitment,
or violate, amend or otherwise modify or waive any of the terms of
any of its material contracts, other than in the ordinary course of
business consistent with past practice;
(f) INTELLECTUAL PROPERTY. Transfer to any person or entity any rights
to its Intellectual Property other than in the ordinary course of
business consistent with past practice;
(g) EXCLUSIVE RIGHTS. Enter into or amend any agreements pursuant to
which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its
products or technology;
(h) DISPOSITIONS. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material,
individually or in the aggregate, to its and its Subsidiaries'
business, taken as a whole, except in the ordinary course of
business consistent with past practice;
(i) INDEBTEDNESS. Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) AGREEMENTS. Enter into any agreement in which the obligation of the
Company exceeds $50,000 or which shall not terminate or be subject
to termination for convenience within 180 days following execution
of such agreement or any agreement not in the ordinary course of
business and consistent with past practice;
(k) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an amount in
excess of $25,000 in any one case or $50,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise) arising other than in the
ordinary course of business, other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in the
Company Financial Statements;
(l) CAPITAL EXPENDITURES. Make any capital expenditures, capital
additions or capital improvements except in the ordinary course of
business and consistent with past practice and not exceeding $50,000
in the aggregate;
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(m) INSURANCE. Materially reduce the amount of any material insurance
coverage provided by existing insurance policies;
(n) TERMINATION OR WAIVER. Terminate or waive any right of substantial
value, other than in the ordinary course of business;
(o) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or amend any
employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee (except that it may hire a
replacement for any current director level or officer level employee
if it first provides Offeror advance notice regarding such hiring
decision), pay any special bonus or special remuneration to any
employee or director, or increase the salaries or wage rates of its
employees;
(p) SEVERANCE ARRANGEMENT. Grant any severance or termination pay (i) to
any director or officer or (ii) to any other employee except (A)
payments made pursuant to standard written agreements outstanding on
the date hereof or (B) payments made in the ordinary course of
business in accordance with its standard past practice not exceeding
$50,000 in the aggregate;
(q) LAWSUITS. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the
material impairment of a valuable aspect of its business, provided
that it consults with Offeror prior to the filing of such a suit, or
(iii) for a breach of this Agreement;
(r) ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets which
are material, individually or in the aggregate, to its and its
Subsidiaries' business, taken as a whole;
(s) TAXES. Other than in the ordinary course of business, make or change
any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material tax return
or any amendment to a material tax return, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;
(t) NOTICES. Fail to give any notices or other information required to
be given to the employees of the Company, any collective bargaining
unit representing any group of employees of the Company, and any
applicable government authority under applicable law in connection
with the transactions provided for in this Agreement;
(u) REVALUATION. Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
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(v) OTHER. Take, or agree in writing or otherwise to take, any of the
actions described in Sections 10.1(a) through (u) above.
10.2 CASH CONTRIBUTIONS BY GENERICS GROUP AG AND OFFEROR. In order to ensure
the obligations of the Principal Shareholders under Section 10.1 above and
to ensure that as of the Closing Date the Company's Current Assets (as
defined in Section 7.3(b)) minus Current Liabilities (as defined in
Section 7.3(b) are no less than zero minus $80,000, Generics Group AG
shall make capital contributions to the Company to fund (I) all
liabilities (including legal fees and expenses of the Company and the
Shareholders in connection with this Agreement and the Offer Document,
which shall be the sole responsibility of the Company and the Shareholders
pursuant to Section 12.13) incurred by the Company through September 22,
1999 and (ii) for liabilities incurred by the Company after September 22,
1999, all liabilities incurred by the Company (including legal fees and
expenses of the Company and the Shareholders in connection with this
Agreement and the Offer Document) except liabilities to be assumed by
Offeror in the Closing as set forth below. Offeror hereby assumes fifty
percent (50%) of normal business expenses (as determined by Offeror in
good faith) incurred by the Company after September 22, 1999 and before 1
October 1999 and thereafter all such normal business expenses; provided,
however Offeror shall (subject to the following proviso of this Section
10.2) have no obligations under this Section 10.2 if the Purchase does not
occur and Offeror's obligations under this Section 10.2 shall in no event
(except as set forth below) exceed $80,000; provided further, however, if
the Purchase does not occur because the conditions in Section 7.3(f) are
not fulfilled through no fault of a Principal Shareholder, Offeror's
obligations under this Section 10.2 shall remain, but instead shall not
exceed $160,000. Generics Group AG shall be issued additional Ordinary
Shares of the Company prior to the Closing at a price not to exceed 7.60
pounds sterling per Share in consideration of capital contributions made
pursuant to this Section 10.2.
10.3 TRANSACTIONS WITH SHAREHOLDERS. The Principal Shareholders shall use their
best efforts and cooperate with Offeror to enable the Offeror to issue a
general offer memorandum, in the form attached as Exhibit B to the
Shareholders for the purpose of procuring executed acceptances of the
Offer and all documents contemplated thereby, by the other Shareholders
prior to the Closing. The Principal Shareholders shall indemnify and hold
harmless the Indemnified Parties for all Damages incurred as a result of
or in connection with any and all claims by any Shareholders based upon or
resulting from information provided to such Shareholder that has not been
provided by Offeror in connection with the sale of the Shares by such
Shareholder to the Offeror under this Agreement.
10.4 NO SOLICITATION. The Principal Shareholders will not, directly or
indirectly, (i) take any action to solicit, initiate, entertain or
encourage any Takeover Proposal (defined below) or (ii) engage in
negotiations with, or disclose any nonpublic information relating to the
Company or any of it Subsidiaries to, or afford access to the properties,
books or records of the Company or any of its Subsidiaries to, any person
that has advised the Company that it may be considering making, or that
has made, a Takeover Proposal. The Principal Shareholders will promptly
notify Offeror after receipt of any Takeover Proposal or any notice that
any person is considering making a Takeover Proposal or any request for
nonpublic information relating to the Company or any of
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its Subsidiaries or for access to the properties, books or records of the
Company or any of its Subsidiaries by any person that has advised the
Company that it may be considering making, or that has made, a Takeover
Proposal and will keep Offeror fully informed of the status and details of
any such Takeover Proposal notice or request. For purposes of this
Agreement, "Takeover Proposal" means any offer or proposal for, or any
indication of interest in, a Purchase or other business combination
involving the Company or any of its Subsidiaries or the acquisition of any
significant equity interest in, or a significant portion of the assets of,
the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
10.5 ACCESS; CONFIDENTIALITY. The Principal Shareholders shall cause or procure
the Company to make available all books, records, facilities, employees,
non-employee agents (such as patent and regulatory counsel) and
information necessary for Offeror to evaluate the business, operations,
properties and financial condition of the Company. Offeror shall keep
confidential and shall not make use of any information treated by the
other party as confidential (including, without limitation, the existence
of this Agreement), obtained from the other party concerning the assets,
properties, business or operations of the other party other than to legal
counsel, consultants, financial advisors, key employees, lenders and
investment bankers where such disclosure is related to the performance of
obligations under this Agreement or the consummation of the transactions
contemplated under this Agreement (all of whom shall be similarly bound by
the provisions of this Section 10.3), except as may be required to be
disclosed by applicable law. Notwithstanding the foregoing, the foregoing
confidentiality restrictions shall not apply to any information which (a)
becomes generally available to the public through no fault of the
receiving party or its employees, agents or representatives; (b) is
independently developed by the receiving party without benefit of the
above-described information (and such independent development is
substantiated in writing), or rightfully received from another source on a
non-confidential basis; (c) when such disclosure is required by a court or
governmental authority or is otherwise required or permitted by law
(including, without limitation, filings required or permitted to be made
with the SEC or any other governmental or regulatory agency) or is
necessary to establish rights under this Agreement or any agreement
contemplated hereby(and the disclosing party has taken all reasonable
efforts to limit the scope of such disclosure and to protect the
confidential nature of the information disclosed).
10.6 PUBLIC ANNOUNCEMENTS. All parties hereto agree that Offeror will be
responsible for any press release or publication with respect to the
existence of this Agreement or the transactions contemplated hereby and
further agree to cooperate in good faith with respect to any such press
release or public statement, and, except as may be required by law,
further agree not to issue any such press release or public statement
without the prior written consent of Offeror (in the case of a publication
proposed by the Company and/or a Shareholder). Offeror agrees to provide
any such press release or public statement to the Principal Shareholder
Representative in advance of publication and provide the Principal
Shareholder Representative a reasonable opportunity to review and approve
such publication.
10.7 COOPERATION. Each Party hereto will fully cooperate with the other
parties, their counsel and accountants in connection with any steps
required to be taken as part of
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its obligations under this Agreement. Each party will use reasonable
efforts to cause all conditions to this Agreement to be satisfied as
promptly as possible and to obtain all consents and approvals necessary
for the due and punctual performance of this Agreement and for the
satisfaction of the conditions hereof. No party will undertake any course
of action inconsistent with this Agreement or which would make any
representations, warranties or agreements made by such party in this
Agreement untrue or any conditions precedent to this Agreement unable to
be satisfied at or prior to the Closing. Principal Shareholders will use
their best efforts and cause or procure the Company to assist Offeror (at
Offeror's cost) as may be necessary to comply with the securities and blue
sky laws of all jurisdictions that are applicable in connection with the
issuance of Synaptics' Stock pursuant hereto.
10.8 EMPLOYEES OF THE BUSINESS. Between the date of this Agreement and the
Closing Date, the Principal Shareholders shall cooperate with Offeror to
enable it to determine the employment terms of Company employees after the
Closing Date, including allowing Offeror, if reasonably acceptable to the
Principal Shareholders' Representative, to discuss directly with employees
of the Company their employment with Offeror after the Closing Date.
10.9 NOTIFICATION OF CLAIMS. From the date of this Agreement to and including
the Closing Date, the Principal Shareholders shall and shall cause or
procure the Company to promptly notify Offeror in writing of the
commencement or threat of any claims, litigation or proceedings against or
affecting the Company of which the Company and/or the Principal
Shareholders have knowledge.
10.10 FURTHER ACTS. After the Closing Date, each party hereto, at the request of
and without any further cost or expense to the other parties will take any
further actions necessary or desirable to carry out the purposes of this
Agreement and to vest in Offeror the full benefit of the rights, powers
and remedies conferred upon the Offeror or this Agreement. In addition,
without in any way limiting the generality of the foregoing, and, to the
extent required, the Principal Shareholders hereby agree to procure
Scientific Generics Ltd. to take any and all further actions necessary or
desirable to carry out the assignment to the Company of all Intellectual
Property.
SECTION 11
COVENANTS OF OFFEROR
11.1 BLUE SKY LAWS. Offeror shall take such steps as may be necessary to comply
with the securities and Blue Sky Laws of all jurisdictions which are
applicable to the issuance of the Synaptics' Stock pursuant hereto.
11.2 CONDUCT OF BUSINESS OF OFFEROR. During the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, Offeror agrees (except to the extent that
the Principal Shareholders'
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Representative shall otherwise consent in writing) that Offeror shall
promptly notify the Principal Shareholders' Representative of any event or
occurrence or emergency that is not in the ordinary course of business of
Offeror and that is material and adverse to the business of Offeror.
SECTION 12
MISCELLANEOUS
12.1 SURVIVAL OF WARRANTIES. The representations, warranties and agreements set
forth in this Agreement or in any instrument delivered pursuant to this
Agreement (excluding the Offer Document, Deed of Tax Covenant and the Deed
of Non-Competition) shall survive the Closing and (except to the extent
that survival is necessary to effectuate the intent of such provisions,
including the provisions of Section 8) shall terminate on the second
anniversary of the Closing Date. The representations, warrants and
agreements set forth in the Offer Document, Deed of Tax Covenant and Deed
of Non-Competition shall survive in perpetuity, except as otherwise set
forth in such agreements or deeds.
12.2 NOTICES. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed
facsimile, or forty-eight (48) hours after being deposited in the regular
mail as certified or registered mail (airmail if sent internationally)
with postage prepaid, if such notice is addressed to the party to be
notified at such party's address or facsimile number as set forth below,
or as subsequently modified by written notice,
(a) if to Offeror, to:
Synaptics, Incorporated
0000 Xxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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(b) if to the Company, to:
Absolute Sensors Limited
Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxxx, XX0 0XX XX
Attention: Managing Director
Facsimile No.: 01223-875201
Telephone No.: 00000-000000
(c) if to the Principal Shareholders' Representative, to:
Director of Finance for the Generics Group Ltd.
The Generics Group Ltd.
Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxxx, XX0 0XX XX
Facsimile No.: 01223-875201
Telephone No.: 00000-000000
with a copy to:
The Generics Group Ltd.
Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxxx, XX0 0XX XX
Attention: Managing Director
Facsimile No.: 01223-875201
Telephone No.: 00000-000000
12.3 INTERPRETATION. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that
the information referred to has been made available if requested by the
party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the
Effective Date. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
12.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.
12.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This Agreement
and the documents referred to herein are the product of all of the parties
hereto, and constitute the entire agreement between such parties
pertaining to the subject matter hereof and thereof, and merge all prior
negotiations and drafts of the parties with regard to the transactions
contemplated herein and therein. Any and all other written or oral
agreements existing between the parties hereto regarding such transactions
are expressly cancelled and are not intended to confer upon any other
person any rights or remedies hereunder.
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12.6 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties
hereto and their respective successors and permitted assigns; provided,
however, that except as otherwise specifically provided herein, neither
this Agreement nor any of the rights, interests or obligations of the
parties hereto may be assigned by operation of law or otherwise by a Party
hereto without the prior written consent of the other Parties hereto.
12.7 SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the economic position
enjoyed by each party as close as possible to that under the provision
rendered unenforceable. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance
of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
12.8 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such party, and the exercise by a party of any one remedy will
not preclude the exercise of any other remedy.
12.9 GOVERNING LAW. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the
State of California, without giving effect to principles of conflicts of
law. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within Santa Xxxxx County, State of
California, in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein, agrees that process may
be served upon them in any manner authorized by the laws of the State of
California for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction,
venue and such process.
12.10 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution
of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party
drafting such agreement or document.
12.11 WAIVER OF RESTRICTIONS. Principal Shareholders shall procure that all
other shareholders of the Company waive any restrictions on transfer
applicable to their shares with respect to the transfers pursuant to the
Offer.
12.12 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
waived only with the written consent of the Parties or their respective
successors and assigns. Any amendment or waiver effected in accordance
with this Section 12.11 shall be binding upon the parties and their
respective successors and assigns.
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12.13 FEES. The Principal Shareholders (as to each such Shareholder, jointly and
severally) agree to pay the fees and expenses of their legal counsel,
financial advisors and other agents incurred in connection with the
negotiation, execution and carrying out of their obligations under this
Agreement. The Offeror shall pay fifty per cent of the fees of the
financial advisor retained by the Company in connection with the approval
by its directors of the Offer Document if the Purchase does not occur
through no fault of the Company or the Principal Shareholders; and
provided further however that Offeror shall in no event be required to pay
in excess of L15,000 hereunder. Fees and expenses of the Principal
Shareholders and the Company invoiced to the Company will be deducted by
Offeror from the Cash Consideration or the Escrow Shares to which the
Principal Shareholders are entitled, at Offeror's sole election.
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The parties have duly executed this Stock Purchase Agreement as of the date
first above written.
SYNAPTICS INCORPORATED
Name: Xxxxxxx Xxx
-------------------------------
By: /s/ Xxxxxxx Xxx
---------------------------------
Title President
-------------------------------
THE GENERICS GROUP AG
Name: Xxxxxx Xxxxxxx Edge Name: Xxxxxx Xxxx Xxxxx
------------------------------- -------------------------------
By: /s/ Xxxxxx Xxxxxxx Edge By: /s/ X X Xxxxx
--------------------------------- ---------------------------------
Title Director Title Director
------------------------------- -------------------------------
XXXXX XXX
Name: Xxxxx Xxx
-------------------------------
Signature: /s/ Xxxxx Xxx
--------------------------
XXX XXXXXXX
Name: Xxx Xxxxxxx
-------------------------------
Signature: /s/ Xxx Xxxxxxx
--------------------------
PRINCIPAL SHAREHOLDERS'
REPRESENTATIVE
Name: Xxxxxx Xxxx Xxxxx
-------------------------------
Signature: /s/ X X Xxxxx
--------------------------
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