Exhibit 2iD
DATED 12 DECEMBER 1997
(1) THE INDIVIDUALS LISTED IN SCHEDULE 1
(2) OPTELECOM UK LIMITED
AGREEMENT
FOR THE ACQUISITION OF THE ENTIRE
ISSUED SHARE CAPITAL OF
PARAGON AUDIO VISUAL LIMITED
FRERE CHOLMELEY XXXXXXXX
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000-000 0000
Fax: 0000-000 0000
Internet: xxxx@xxxxxx.xxx
Ref: NSPB/LKH
INDEX
Page No.
--------
1. INTERPRETATION ...................................... 1
2. AGREEMENT FOR SALE .................................. 4
3. CONSIDERATION ....................................... 4
4. COMPLETION .......................................... 4
5. SELLERS' OBLIGATIONS ON COMPLETION .................. 4
6. PURCHASER'S OBLIGATIONS ON COMPLETION ............... 5
7. WARRANTIES .......................................... 5
8. GENERAL PROVISIONS .................................. 7
SCHEDULE 1
The Sellers .................................................. 10
SCHEDULE 2
Paragon ...................................................... 11
SCHEDULE 3
The Properties ............................................... 12
SCHEDULE 4
Tax Covenant ................................................. 13
SCHEDULE 5
Warranties ................................................... 19
i
AGREED FORM DOCUMENTS:
Completion board minutes
Written resolution
ii
THIS AGREEMENT is made on December 12, 1997
BETWEEN:
(1) THE INDIVIDUALS whose names and addresses are set out in
schedule 1;
(2) ADVENTATUM LIMITED a company registered in England and
Wales under number 20030 whose registered office is at
Xxxxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xx. Helier, Jersey,
Channel Islands ("Adventatum");
(3) MODELEDGE LIMITED a company registered in England and Wales under
number 1871218 whose registered office is at 00 Xxxxx Xxxxxx, Xxxxxx
XX0X 0XX ("Modeledge"); and
(4) OPTELECOM UK LIMITED a company registered in England and Wales under
number 3427882 whose registered office is at 0 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX (xxx
"Purchaser").
BACKGROUND:
A. On 12 December 1997 the Sellers, Optelecom, Inc. and
Paragon Audio Visual Limited ("Paragon") entered into an
agreement relating to arrangements for the acquisition
by Optelecom, Inc. of Paragon ("Master Agreement").
B. The Purchaser is the wholly owned subsidiary of Optelecom, Inc.
C. Adventatum Limited is the nominee of Mr Xxxx Xxxxx, Mr Xxxxx Xxxxx
and Modeledge Limited.
D. This Agreement is the Stock Purchase Agreement referred
to in the Master Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
A. In this Agreement:
"Accounts" means the draft balance sheet of Paragon as at the
Accounts Date, and the draft profit and loss account of Paragon for
the period ended on the Accounts Date, in each case with all notes
and attached reports or statements;
1
"Accounts Date" means 31 August 1997;
"business day" means a day (excluding a Saturday, Sunday
or public holiday) on which banks in London and New York
are open for the full range of banking business;
"Claim" means any claim for breach of any of the
Warranties or any claim under the Tax Covenant;
"Completion" means completion of the sale and purchase
of the Shares in accordance with this Agreement;
"Completion Date" means the date when Completion takes place
in accordance with this Agreement;
"Disclosure Documents" means the documents attached to the
Disclosure Letter;
"Disclosure Letter" means the disclosure letter from the
Sellers to the Purchaser, dated with the date of this
Agreement;
"Employee" means an employee of Paragon;
"Encumbrance" means any right or interest of any third party,
including any mortgage, charge, lien, option, encumbrance, right of
pre-emption or first refusal, or any agreement to create any such
right or interest;
"Intellectual Property Rights" means (whether registered or
unregistered) patents, trade marks, service marks, trade names,
registered designs, design rights, copyrights, moral rights, renewal
rights, reversionary rights, rights relating to confidential
information or know-how and any other intellectual property rights,
applications for the grant of any such rights, and all analogous or
similar rights or forms of protection anywhere in the world;
"Leases" means the leases of the leasehold properties
referred to in part 1 of schedule 3;
"Optelecom" means Optelecom, Inc. the parent company of the
Purchaser;
"Paragon" means Paragon Audio Visual Limited, details of
which are set out in schedule 2;
"Properties" means the leasehold properties referred to in
schedule 3;
"Purchaser's Solicitors" means Frere Cholmeley Xxxxxxxx of 0
Xxxx Xxxxxxxxx Xxxxxx,
0
Xxxxxx XX0X 0XX;
"Sellers" means each of the Warrantors and Adventatum;
"Sellers' Solicitors" means Xxxxxx Xxxxxxxxx of 00 Xxxxx
Xxxxxx, Xxxxxx, XX0X 0XX;
"Shares" means all the issued shares of Paragon, being 998
ordinary shares of (pound)1 each;
"Taxation" has the meaning given to it in the Tax Covenant;
"Tax Covenant" means the provisions of schedule 4;
"Taxes Act" means the Income and Corporation Taxes Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"Town and Country Planning Acts" means the Town and Country Planning
Xxx 0000 and every other statute relating to planning for the time
being in force;
"VATA" means the Value Added Tax Xxx 0000;
"Warranties" means the warranties and representations set
out in schedule 5; and
"Warrantors" means Mr Xxxxxx Xxxxx, Mr Xxxxxx Xxxxx, Mr Xxxx
Xxxxx and Mr Xxxxx Xxxxx.
B. In this Agreement, unless expressly stated otherwise:
1. a reference to a person or people includes a reference to
any entity which has legal personality by the law of any
applicable country or territory;
2. a reference to a statute or a provision of a statute
includes a reference to any amendment, repeal or reenactment
of it, any subordinate legislation (as defined in s.21(1)
Interpretation Act 1978) made under it and any previous
statute or provision re-enacted by it, in any case before or
after the date of this Agreement;
3. a reference to the "agreed form" of a document is to a form
of that document initialled by or on behalf of the Sellers
and the Purchaser before execution of this Agreement, with
any amendments which they subsequently agree in writing;
4. a reference to any action, legal document, remedy,
proceedings, status or other legal concept shall, in respect
of any foreign jurisdiction, relate to whatever in that
3
jurisdiction most closely corresponds to the relevant
English term;
5. a reference to an agreement includes any form of
arrangement, whether or not in writing and whether or not
legally binding; and
6. a reference to any Seller includes his personal
representatives.
C. Headings shall be disregarded in construing this Agreement.
D. People will be taken to be connected if they would be treated as
connected for the purposes of s.839 Taxes Act as in effect on the
date of this Agreement.
E. The expressions "subsidiary undertaking" and "financial year" have
the meanings given to them by the Companies Xxx 0000 as in effect on
the date of this Agreement.
F. The ejusdem generis rule shall not apply in the construction of this
Agreement, and accordingly general words shall not be given a
restrictive meaning by reason of their being followed or preceded by
words indicating a particular class or examples of acts or matters.
G. All obligations of the Sellers under this Agreement are joint and
several unless expressly stated otherwise.
II. AGREEMENT FOR SALE
A. The Sellers agree to sell and the Purchaser agrees to buy the Shares.
B. The Sellers shall sell the Shares free from all Encumbrances and
otherwise with full title guarantee, together with the right to all
dividends and other distributions declared, made or paid by Paragon
on or after the date of this Agreement and all other rights attaching
to them on or after that date. For the avoidance of doubt, the
Distribution Amount (as defined in the Master Agreement) shall be
paid to the Sellers in accordance with clause 1.03 of the Master
Agreement before the Shares are sold under this Agreement.
C. Each Seller and Modeledge waives all rights of pre-emption in respect
of any of the Shares, whether conferred by the articles of
association of Paragon or in any other way.
D. Mr. Xxxx Xxxxx, Mr. Xxxxx Xxxxx and Modeledge each confirm his or its
agreement to the sale by Adventatum of the Shares subject to and in
accordance with the terms of this Agreement.
4
III. CONSIDERATION
The consideration for the sale of the Shares shall be the payment by
the Purchaser to the Sellers of the aggregate sum of $1.5 million in
accordance with clause 6. Each Seller shall be entitled to the amount
set against his or its name in column 4 of schedule 1.
IV. COMPLETION
Completion shall take place in accordance with the Master Agreement.
X. XXXXXXX' OBLIGATIONS ON COMPLETION
A. On Completion, the Sellers shall deliver to the Buyer or to the
Buyer's solicitors:
1. stock transfer forms in respect of the Shares duly completed
in favour of the Buyer or its nominees and executed by the
relevant registered holders;
2. the share certificates in respect of the Shares in the
name of the relevant transferors;
3. the statutory registers and minute books of Paragon duly
written up to Completion (with any unissued share
certificates), and the certificate of incorporation, the
certificate(s) of incorporation on change of name and the
seal of Paragon;
4. the documents relating to the Properties listed in part
2 of schedule 3;
5. unconditional receipts for rent and any charges due
under any of the Leases on the last rent day before the
Completion Date;
6. cheque books and bank mandates in respect of all bank
accounts operated by Paragon, together with statements from
the relevant banks showing the balance on those accounts
drawn up to the last business day before the Completion
Date, and details of all credits and debits on those
accounts since that day and all uncleared cheques as at
Completion; and
7. a written resolution duly executed by each Seller to adopt
new Articles of Association of Paragon in such form as the
Purchaser shall decide.
5
VI. PURCHASER'S OBLIGATIONS ON COMPLETION
On Completion, the Purchaser shall by telegraphic or electronic
transfer pay the sum of $1.5 million into the following bank account
of the Sellers' Solicitors:
Account name: Xxxxxx Xxxxxxxxx client dollar account
Account number: 00000000
Sort code: 15-99-00
Bank name and address: Messrs X. Xxxxx & Co., 00 Xxxxx
Xxxxxx, Xxxxxx XX0X 0XX
The payment of any sum to the Sellers' Solicitors shall discharge the
Purchaser's obligation under clause 3 to make that payment to the
Sellers, and the Purchaser shall not be concerned to ensure that each
Seller receives his due proportion of that payment.
VII. WARRANTIES
A. The Warrantors represent and warrant that subject only to matters
disclosed by the Disclosure Letter, each of the Warranties is
accurate and not misleading as at the date of this Agreement.
B. Modeledge represents and warrants that the Warranties contained in
paragraphs 1.1, 1.2 and 3.2 of Schedule 5 are accurate and not
misleading as at the date of this Agreement.
C. Adventatum represents and warrants that the Warranties contained in
paragraphs 1.1 and 1.2 of Schedule 5 are accurate and not misleading
as at the date of this Agreement.
D. In the event of a breach of any of the Warranties, the Warrantors or
(in respect of the Warranties given by Adventatum), Adventatum shall
on demand pay to the Purchaser or (at the Purchaser's option) to
Paragon (but without restricting the Purchaser's ability to claim
damages on any other basis) an amount equal to the diminution in the
assets of Paragon and/or the increase in the liabilities of Paragon
caused by that breach.
E. A matter shall be regarded as disclosed by the Disclosure Letter only
to the extent that accurate information about that matter is
contained in the Disclosure Letter in sufficient detail to identify
the nature and scope of that matter and the Warranties which are to
be regarded as qualified by it.
F. Each of the Warranties is separate and to be construed independently
of the others.
G. The Warrantors, Modeledge and Adventatum acknowledge that the
Purchaser is entering into this Agreement in reliance on the
Warranties.
6
H. Each Warrantor unconditionally and irrevocably releases any right
which he may have in respect of information or advice supplied by any
Employee on which he may have relied in connection with the giving of
the Warranties or the preparation of the Disclosure Letter. The
Purchaser accepts the benefit of this clause as trustee and agent for
the Employees. In exercising such right the Purchaser may take such
actions as it considers appropriate in its sole discretion.
I. The limitations contained in clause 8.01(b) of the Master Agreement
shall apply to limit or exclude, in accordance with its terms, any
liability which the Sellers might otherwise have under the Tax
Covenant or in respect of a breach of the Warranties, provided that
no provision of clause 8.01(b) of the Master Agreement shall apply to
any such liability arising from or in connection with any fraudulent
breach of the Warranties.
J. Schedule 4 (Tax Covenant) shall have effect on Completion.
K. Where any statement in this Agreement or the Disclosure Letter is
qualified by reference to the knowledge, awareness or belief of any
of the Sellers, each Seller shall be deemed to know, be aware of and
believe all matters which any of his professional advisers, the other
Sellers and their professional advisers know, are aware of or
believe, or which any of them would have known, been aware of or
believed, if they had made due and careful enquiries in connection
with all relevant matters.
VIII. GENERAL PROVISIONS
A. Severability
The unenforceability or illegality for any reason of any provision of
this Agreement (including without limitation any obligation of any of
the Sellers) shall not affect the enforceability of any of the other
provisions of this Agreement (including any obligation of any other
Seller).
B. Assignment
The Purchaser may assign (at law or in equity) any or all of its
rights under this Agreement (so that, without limitation, each of the
Warranties shall on assignment be deemed to have been given to that
assignee). References in this Agreement to the Buyer are references
to a person who for the time being is entitled to exercise any of
those rights.
C. Costs
Each party shall pay the costs and expenses (together with VAT) of
its advisers and agents incurred in connection with this Agreement.
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D. Notices
1. Any notice (which for the purposes of this clause includes
any request, instruction, waiver, consent or copy notice
given pursuant to this Agreement shall be in writing and in
English. Each such notice shall be delivered by hand or sent
by facsimile or pre-paid registered post (or pre-paid
airmail if sent internationally). Notices shall be given as
follows:
to the Purchaser Xx Xxxxxx X. Xxxxxx,
Optelecom Inc.,
0000 Xxxxxxx Xxxx,
Xxxxxxxxxxxx,
XX00000
X.X.X.
Tel: 0-000000 0000
Fax: 0-000000 0000
with a copy (which shall not constitute notice) by
courier to the Purchaser's Solicitors ref NSPB; and
to the Sellers Xx Xxxxx X. Xxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxx
Xxxxxxx
Xxxxxxxxx XX00 0XX
Tel: 00 0000-000000
Fax: 00 0000 000000
to Modeledge WHSS Limited
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 00 000000 0000
Fax: 00 000000 0000
Any party may nominate, by notice given to the other parties
in accordance with this clause, another person, address or
facsimile number for the receipt of notices, subject to
clause 8.4(b). Any such nomination shall take effect five
business days after it is
8
received.
2. Notices to the Sellers under this Agreement shall be valid
if given only to the individual named in clause 8.4(a), and
that individual (or in the event of his death any of his
personal representatives) shall exclusively be entitled to
give notices on behalf of the Sellers, unless in either case
the Purchaser is otherwise notified by a majority in number
of the Sellers nominating any other Seller for the purpose.
A notice to any Seller for the time being authorised to
receive and give notices on behalf of the Sellers shall be
valid notwithstanding the death of that Seller if it is
given in accordance with this clause 8.4.
E. Cumulative Rights
No exercise or partial exercise of any right or failure to exercise
any right shall prevent the exercise of any other right. References
throughout this Agreement to the rights of any party are to rights or
remedies of that party at law and/or in equity.
F. Waivers
No failure to exercise or delay in exercising any right shall
constitute a waiver of that right by any party, and no course of
conduct or acquiescence shall constitute such a waiver other than a
notice to that effect given to the other party specifying this clause
and the right in question. If the Purchaser releases or waives any
liability of any Seller for any obligation which is both joint and
several, the remaining Sellers shall continue to be severally and
together to be jointly liable for that obligation.
G. No set-off etc
All sums payable under this Agreement shall be paid without set-off,
counter-claim or deduction and free of all withholdings.
H. Law
This Agreement and the documents to be entered into under it shall be
governed by and construed in accordance with English law. Each of the
parties irrevocably submits to the non-exclusive jurisdiction of the
English courts in respect of any matter arising from or in connection
with this Agreement or any such document.
ACCORDINGLY this Agreement has been entered into by each of the parties on the
date set out on page 1.
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SCHEDULE 1
The Sellers
(1) (2) (3) (4)
Name Address Shares Held Amount Payable
---- ------- ----------- --------------
(US$)
Andrew Sean 00 Xxxxxx Xxx 237 356,212
Xxxxx Xxxxxxxx
Xxxxxxxxx XX00 0XX
Xxxxxx Xxxx 00 Xxxxxx Xxx 237 356,212
Xxxxx Xxxxxxxx
Xxxxxxxxx XX00 0XX
Adventatum Wellington House 524 787,576
Jersey Limited Union Street
St. Helier
Jersey
10
SCHEDULE 2
Paragon
1. Date of incorporation : 13 April 1994
2. Registered number : 2918877
3. Previous names : Canarysound Limited
4. Directors : Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxx
Xxxx Xxxxx Xxxxx
5. Secretary : WMSS Limited
6. Auditors : X X Xxxxx & Co
7. Accounting Reference Date : 31 August
8. Registered Office : Xxxxx 0 xxx 00, Xxxxxxx
Xxxxxxxx Xxxxx, Xxxxxx End,
Beedon, Newbury, Berkshire
XX00 0XX
9. Authorised Share Capital : (pound)1,000 divided into 1,000
shares of(pound)1 each
10. Issued Share Capital : (pound)998 divided into 998 shares
of(pound)1 each
11. Shareholders :
Name of Registered Name of Beneficial Number of Shareholder Owner
------------------ ------------------ --------------------- -----
Shares
------
Xxxxxx Xxxx Xxxxx Xxxxxx Xxxx Xxxxx 237
Xxxxxx Xxxxx Xxxxxx Xxxxx 237
Adventatum Jersey Xxxx Xxxxx Xxxxx 237
Limited
Xxxxx Xxxxxx Xxxxx 237
11
Modeledge Limited 50
12. Charges : None
12
SCHEDULE 3
The Properties
1. Leasehold Properties
Xxxxxx Xxxxx, Xxxx 0, Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxx End, Beedon,
Xxxxxxx, Xxxxxxxxx XX00 0XX.
Xxxxxx Xxxxx, Xxxx 00, Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxx End, Beedon,
Newbury, Berkshire RG20 8RY.
2. Documents to be delivered on Completion
[Xxxxxx Xxxxxxxxx to draft]
13
SCHEDULE 4
Tax Covenant
1. DEFINITIONS
1.1 In this schedule:
"Claim for Taxation" means any claim, assessment, notice, demand or
other document issued or action taken by or on behalf of any person,
authority or body (including Paragon) responsible for the assessment,
collection or recovery of Taxation anywhere in the world by which
Paragon is liable or is sought to be made liable to make any payment
of Taxation or is denied or sought to be denied a Relief;
"Event" means (without limitation) any payment, event, transaction or
series of transactions of whatever nature, act, omission or
occurrence, whether or not Paragon or the Buyer is a party to it, and
includes completion of the sale of the Shares to the Buyer;
"Relief" means any relief from Taxation, any loss, allowance,
exemption, set-off or deduction in computing or against any profits,
income or gains or credit against Taxation or any right to repayment
of Taxation; and
"Taxation" means all forms of taxation, duty, rate, impost,
contribution including social security contributions, charge or levy
(in the nature of taxation) imposed by any body or authority
whatsoever, in the United Kingdom or elsewhere, including any payment
which Paragon may be or become bound to make as a result of any
enactment relating to taxation, whenever enacted, including under any
settlement of any Claim for Taxation and including any interest,
surcharge, penalty or fine in relation to any of these, whether or
not such Taxation is attributable to, chargeable against or
recoverable from any other person.
1.2 For the purposes of this schedule:
(a) any reference to any Event includes any Event which is
deemed to have occurred pursuant to any enactment
whenever enacted;
(b) any reference to income, profits or gains earned, accrued or
received includes any income, profits or gains which are
deemed to be earned, accrued or received pursuant to any
enactment whenever enacted;
(c) any reference to an Event occurring on or before Completion
includes the combined result of two or more Events, the
first of which has taken place or the commencement of which
has occurred on or before Completion;
14
(d) any reference to "loss" includes cancellation,
counteraction, counterclaim, nullification, disallowance
and clawback and "lost" shall be construed accordingly;
(e) references to Taxation include:
(i) the loss, in whole or part, of any Relief which
would (were it not for the Claim for Taxation in
question) have been available to or which has been
claimed by Paragon; and
(ii) the utilisation against profits or against a
Taxation liability (in either case in respect of
which but for that utilisation, Paragon would have
had a liability to pay Taxation in respect of which
a Claim could have been made under this schedule)
of any Relief which is not available before
Completion but arises in respect of an Event or
Events occurring after Completion;
and in any such case the amount of the Relief so lost or, if
that Relief is deducted from or set against income or
profits, the amount of Taxation which would have been saved
thereby but for that loss, shall be treated as an amount of
Taxation for which a liability on Paragon has arisen and
fallen due.
2. COVENANT TO PAY
2.1 Subject to schedule 6, the Warrantors shall pay, as directed by the
Buyer, to the Buyer or to Paragon an amount equal to:
(a) any Taxation for which Paragon is or may become liable in
respect of or arising from any Event occurring on or before
Completion or by reference to any income, profits or gains
earned, accrued or received on or before Completion;
(b) any inheritance tax for which Paragon is or may become
liable which:
(i) is at Completion a charge on any of the shares or
assets of Paragon or gives rise to a power to sell,
mortgage or charge any of the shares or assets of
Paragon; or
(ii) after Completion becomes a charge on or gives rise
to a power to sell, mortgage or charge any of the
shares or assets of Paragon, being a liability in
respect of inheritance tax payable as a result of
the death of any person within seven years after a
transfer of value (or a deemed transfer of value)
if a charge on or power to sell, mortgage or charge
any such shares or assets existed at Completion or
would, if the death had occurred immediately before
15
Completion and the inheritance tax payable as a
result had not been paid, have existed at
Completion; or
(iii) arises as a result of a transfer of value by or to
Paragon occurring on or before Completion (whether
or not in conjunction with the death of any person
whenever occurring);
(c) without prejudice to the generality of paragraph 2.1(a), any
liability of Paragon under s.767A Taxes Act or any
legislation introduced after the date of this Agreement
extending such provisions as announced in the Press Release
Inland Revenue 7 of 2 July 1997 paragraphs 15-25 Company
Purchase Schemes: Collection of Outstanding Tax (together
with any related liability for interest) as being a person
to whom sub-section (2) of that section applies by virtue of
circumstances existing at any time before Completion;
(d) all costs and expenses incurred or payable by the Buyer
and/or Paragon in connection with or in consequence of any
matter for which a Claim is made by the Buyer under this
schedule, including the costs and expenses of taking or
defending any action under this schedule;
(e) any Taxation for which Paragon is or may become liable in
respect of or arising from the sale of the Paragon Assets
(as defined in the Master Agreement);
(f) any Taxation or other costs and expenses for which Paragon
may become liable as a result of adjustments to any accounts
of Paragon after the Completion Date made in order to comply
with the law, Statements of Standard Accounting Practice,
statements of the Urgent Issues Task Force and other
generally accepted accounting princples then in force.
2.2 In determining for the purposes of this schedule whether a charge on
or power to sell, mortgage or charge any of the shares or assets of
Paragon exists at any time, the fact that any inheritance tax is not
yet payable or may be paid by instalments shall be disregarded, and
that inheritance tax shall be treated as becoming due and a charge or
power to sell, mortgage or charge as arising on the date of the
transfer of value or other date or event on or in respect of which it
becomes payable or arises.
2.3 The provisions of s.213 Inheritance Tax Act 1984 shall not apply to
any payments falling to be made under this schedule.
16
3. TIME FOR PAYMENT
A payment to be made by the Warrantors under paragraph 2 shall be
made in cleared funds on or before the relevant payment date, which
shall be ascertained as follows:
(a) insofar as that payment represents Taxation to be borne by
Paragon, the payment date shall be the last business day
before the day on which payment of the relevant Taxation is
due;
(b) insofar as that payment represents Taxation which would have
been payable but for the utilisation of a Relief arising
after Completion as referred to in paragraph 1.2(e)(ii), the
payment date shall be the date on which payment of the
relevant Taxation would have been due but for the
utilisation of the relevant Relief;
(c) insofar as that payment relates to a claim under paragraph
1.2(e)(i), the payment date shall be the earliest date on
which Taxation becomes payable which would not have been
payable had the relevant Relief not been so lost or, where
the Relief is a repayment of Taxation, the date the
repayment would have been obtained;
(d) in any other case, seven days after the date on which a
notice setting out details of the amount claimed is
delivered to the Warrantor.
4. DEFENCE OF CLAIMS
4.1 Within a reasonable time after the Buyer becomes aware of a Claim for
Taxation which could give rise to a liability under this schedule or
under the Warranties contained in paragraph 18 of Schedule 5, it
shall notify the Warrantors in writing, specifying the nature of that
claim in reasonable detail. Subject to paragraph 4.2, the Buyer shall
then take or ensure that Paragon shall take such action to avoid,
resist, appeal or compromise the Claim for Taxation as the Warrantor
may reasonably request, provided that the Warrantor has first
indemnified and secured the Buyer to its reasonable satisfaction
against all liabilities or losses, costs, damages and expenses
(including interest on overdue Taxation) which the Buyer and Paragon
may incur as a result of or in connection with any such action taken
by the Buyer or Paragon.
4.2 Neither the Buyer nor Paragon shall be obliged to appeal against any
Claim for Taxation raised on it if, within 15 days of having given
the Warrantor written notice of the receipt of that Claim for
Taxation, the Buyer has not received instructions in writing from the
Warrantors to do so. For the avoidance of doubt the Warrantor shall
not be entitled to request Paragon to apply for a postponement of the
payment of any Taxation or to take over (at their own expense) the
conduct of all proceedings relating to the Claim for Taxation in
question.
17
4.3 Notwithstanding paragraph 4.1 above:
(a) Paragon and the Buyer shall be kept fully informed of all
matters pertaining to the Claim for Taxation and shall be
entitled to see copies of all correspondence pertaining
thereto;
(b) the Warrantor shall make no settlement or compromise of the
Claim for Taxation or agree any matter in the conduct
thereof which is likely to affect the future liability to
Taxation of Paragon or the Buyer without the prior approval
of Paragon or the Buyer as appropriate;
(c) any appointment of solicitors, counsel or other
professional advisers shall be subject to the prior
written approval of the Buyer;
(d) the Buyer shall not be obliged to take any action or cause
Paragon to take any action pursuant to paragraph 4.1 which
the Buyer believes to be likely to affect the future
liability to Taxation of Paragon or the Buyer;
(e) if the Warantor fails to comply with the provisions of
paragraphs 4.1 and 4.3 or delay unreasonably in giving any
such requests as are mentioned in paragraph 4.1, the Buyer
and Paragon shall be free without reference to the Warrantor
to pay, settle or otherwise deal with the Claim for Taxation
on such terms as they may in their absolute discretion think
fit and without prejudice to their rights and remedies under
this schedule.
4.4 The provisions of paragraph 4.1 shall not apply if it is alleged that
the Warrantor or Paragon have committed fraud, wilful default or
neglect in relation to any Taxation.
4.5 All requests and instructions given by the Warrantors for the
purposes of this paragraph 4 shall be given by Mr Xxxxxx Xxxxx (the
"Representative") on their behalf. The Buyer and Paragon shall be
entitled to rely on the requests and instructions of the
Representative as the duly appointed representative of the
Warrantors, and any unreasonable delay in giving or failure to give
requests or instructions on the part of the Representative shall
constitute failure or delay by the Warrantors under paragraph 4.3(e).
The Buyer and Paragon shall not be subject to any claim by, or
liability to, any of the Warrantors on the ground that it has not
complied with the provisions of this paragraph 4 if it has acted in
accordance with the requests and instructions of the Representative.
5. GROSSING-UP
If any sum payable by the Warrantor to the Buyer or Paragon under
this schedule is subject
18
to Taxation, then the sum so payable shall be grossed up by such
amount or amounts as will ensure that after payment of Taxation,
there shall be left a sum equal to the sum that would otherwise be
payable under this schedule. For this purpose the availability of any
Relief shall be ignored in determining whether any sum is subject to
Taxation.
6. EFFECT OF DISCHARGE OF CLAIM
For the avoidance of doubt, the Warrantor shall remain liable in
accordance with the terms of this schedule notwithstanding that any
Taxation giving rise to a liability to make a payment under paragraph
2 is or has been discharged or suffered by the relevant Company,
whether before or after the date of this Agreement and whether by
payment or by the loss or utilisation of any Relief or right to
repayment of Taxation.
19
SCHEDULE 5
Warranties
1. CAPACITY AND AUTHORITY
1.1 No petition for a bankruptcy order has been presented, and no
bankruptcy order has been made, in respect of any Warrantor,
Adventatum or Modeledge.
1.2 None of the Warrantors, Adventatum or Modeledge requires the consent
of any third party to enter into or perform his or its obligations
under this Agreement or is prohibited by any court order from doing
so.
2. ACCURACY AND ADEQUACY OF INFORMATION
2.1 The information in schedules 2 and 3 is complete and accurate.
2.2 The information in the Disclosure Letter and the Disclosure Documents
is complete, accurate and not misleading.
2.3 Each document comprised within the Disclosure Documents is a complete
and accurate copy of the original, and no such document has been
amended (orally or in writing) or superseded.
2.4 All forecasts and projections given by or on behalf of the Sellers to
the Buyer or any of its professional advisers for the two years
ending 31 August 1999 were prepared with due care on the basis of the
assumptions set out in the Disclosure Documents. All of those
assumptions were made in good faith, were reasonable when made and
remain reasonable.
3. SHARE CAPITAL
3.1 The Shares represent the entire issued and allotted share capital of
Paragon.
3.2 The Shares are legally owned by the Warrantors and are beneficially
owned by the Warrantors and Xx Xxxxx Xxxxxx free from all
Encumbrances.
3.3 No person has or is entitled to acquire the right (conditional or
not) to subscribe for, or to convert any security into, any share or
security in Paragon (including pursuant to an option or warrant).
3.4 No person has claimed to be entitled to any Encumbrance in respect of
any issued or unissued
20
share or security in Paragon.
3.5 No share in Paragon was allotted at a discount or otherwise than as
fully paid up.
3.6 No share in Paragon was transferred at an undervalue for the purposes
of ss.238 or 339 Insolvency Act 1986 during the five years' period
ending on the date of this Agreement.
3.7 Paragon has not purchased its own shares or redeemed or forfeited any
shares.
3.8 The copy of the articles of association of Paragon included in the
Disclosure Documents sets out all of the rights and restrictions
attaching to the issued shares in the capital of that company, and
embodies or has annexed to it a copy of each resolution and agreement
required by s.380 Companies Xxx 0000 to be so embodied or annexed.
3.9 Paragon does not have any interest in any shares, debentures or other
securities of any person and is not under a subsisting obligation to
acquire any such interest. Paragon does not have, and never has had,
any subsidiary undertakings.
4. FINANCIAL INFORMATION
4.1 The Accounts give a true and fair view of the state of affairs of
Paragon as at the Accounts Date and of its profit or loss for the
period ended on the Accounts Date in accordance with the requirements
of the Companies Xxx 0000.
4.2 The Accounts were prepared in accordance with the requirements of all
relevant Statements of Standard Accounting Practice, Financial
Reporting Standards, statements from the Urgent Issues Task Force and
other generally accepted accounting principles then in force.
4.3 The Accounts make full provision for or disclose all bad or doubtful
debts and all liabilities of Paragon as at the Accounts Date, whether
actual, contingent or disputed.
4.4 The audited accounts of Paragon for each of the last three financial
years ended on the Accounts Date were prepared applying the same
accounting policies and bases.
4.5 The profits of Paragon as disclosed in the Accounts were not affected
by extraordinary or exceptional item or any matter rendering those
profits unusually high.
4.6 The accounting records of Paragon comply with the requirements of
s.221 Companies Xxx 0000.
4.7 The unaudited monthly management accounts of Paragon for the period
ended on 30
21
November 1997 were derived from the accounting records of Paragon,
were compiled with due care, applying the same accounting policies
and bases as those used in the management accounts for the previous
twelve monthly periods, and are not considered misleading by the
Warrantors.
5. POSITION SINCE THE ACCOUNTS DATE
5.1 Since the Accounts Date, Paragon has carried on its business in the
ordinary and proper course, and there has been no material adverse
change in the financial or trading position or prospects of Paragon.
There are no circumstances which might give rise to such a change,
other than circumstances likely to affect generally the industry in
which Paragon operates.
5.2 Without limiting the generality of paragraph 5.1, since the Accounts
Date:
(a) there has been no increase or decrease in turnover or stocks
of finished goods/work in progress or operating expenses by
comparison with the same period in the previous financial
period;
(b) there has been no material increase or decrease in the cost
of materials used by Paragon in its business or in the cost
of services supplied to Paragon;
(c) Paragon has not disposed of or acquired, and has not agreed
and is not negotiating to dispose of or acquire, any
business or any shares in a body corporate, or any other
asset outside the ordinary and proper course of business;
(d) Paragon has not created or incurred, or agreed or is
negotiating to create or incur, any debt or any other
obligation or liability, whether actual or contingent,
except for full value and in the ordinary and proper course
of business;
(e) no customer of or supplier of Paragon has ceased to deal, or
has indicated an intention to cease to deal or deal on a
smaller scale, with Paragon, or has changed or indicated
that it wishes to change the terms on which it deals with
Paragon;
(f) Paragon has not written off, regarded as irrecoverable or
released any debt or right, in whole or part, or repaid
wholly or in part any debt in advance of the due date for
repayment, or in any case agreed to do so;
(g) no Employee has been made redundant or been dismissed, no
person has been employed by Paragon whose basic salary is
more than (pound)10,000 per annum, and there has been no
increase in basic salary or benefits, and no such increase
is under negotiation;
22
(h) no dividend or other distribution has been declared,
paid or made by Paragon except as provided in the
Accounts; and
(i) no resolution of the shareholders of Paragon has been
passed.
6. BOOKS, RECORDS AND RETURNS
6.1 The statutory registers and minute books of, and all other records
required to be kept by, Paragon have been duly kept and are in the
possession of Paragon.
6.2 No claim has been made by any person that any of the statutory
registers of Paragon is incorrect.
6.3 All notices and other documents required to be given or delivered by
Paragon to the Registrar of Companies or any other governmental,
regulatory or other body of competent jurisdiction have been given or
delivered in accordance with all relevant requirements.
7. AGREEMENTS AND TRADING ARRANGEMENTS
In this paragraph 7, references to any agreement to which Paragon is
party include references to any agreement by which Paragon is bound
or under which it enjoys rights, and references to Material
Agreements are to subsisting agreements to which Paragon is party and
which are material to the conduct of Paragon's business.
7.1 All Material Agreements are in writing.
7.2 A copy of each Material Agreement is included in the Disclosure
Documents, and an original counterpart of that agreement is in the
possession or under the control of Paragon.
7.3 All Material Agreements are valid and binding, and no such agreement
is voidable.
7.4 Neither Paragon nor any other party is in default (nor, with the
lapse of time, will be in default) under any agreement to which
Paragon is party, being a default which would be material in the
context of the financial or trading position or prospects of Paragon,
no claim alleging any such default has been made by or against
Paragon and there are no circumstances which might give rise to any
such default.
7.5 Paragon is not a party to any subsisting agreement, is not in the
course of negotiating any agreement and has not submitted an offer or
tender which is capable of being converted into an agreement:
23
(a) which involves or may involve obligations, restrictions
or expenditure of an unusual, onerous or exceptional
nature, or which is or is likely to be loss-making;
(b) which imposes limits on Paragon's ability to carry on
any business in any part of the world or which restricts
its ability to use or disclose information;
(c) which provides for any financial commitment of any party
to be adjusted with reference to any index of retail
prices or other index;
(d) which cannot be terminated without cost to Paragon on less
than 3 months' notice or which has a fixed term of more than
1 year;
(e) which requires further expenditure of more than
(pound)50,000 in aggregate (excluding supply agreements with
Studio Systems Electronics Limited);
(f) which establishes any joint venture, consortium,
partnership or profit or other income (or loss) sharing
arrangement;
(g) pursuant to which Paragon has disposed of any shares or
business and remains subject to any actual or contingent
liability;
(h) pursuant to which Paragon has advanced money (including to
any Seller) other than trade credit extended in the ordinary
and proper course of business;
(i) which entitles any third party to any commission or
broker's or finder's fee in connection with the
acquisition by the Purchaser of the Shares;
(j) which provides for Paragon to receive any sum, right or
other asset, or discharge any liability, whose amount or
value is expressed in or by reference to any foreign
currency or any change in foreign exchange rates;
(k) under which any sole or exclusive rights are granted by
or to Paragon;
(l) which is subject to registration or has been registered
under the Restrictive Trade Practices Xxx 0000;
(m) which is a finance lease, hire purchase, rental or credit
sale agreement or which otherwise provides for the purchase
of any asset or the right to purchase any asset by way of
periodical payment; or
(n) for the provision of services to Paragon by a director of
Paragon or any other person,
24
including without limitation any consultancy agreement.
7.6 Paragon has not given or received notice terminating any subsisting
agreement to which it is party.
7.7 There is no outstanding guarantee, indemnity, security agreement,
comfort letter or other analogous or similar agreement given by or
for the benefit of Paragon.
7.8 Paragon has not been a party to any agreement during the three years'
period ending on the date of this Agreement to or by which any Seller
or any person connected with any Seller (including, without
limitation, Modeledge) was or is a party or bound, or in which any
Seller or any such person was or is otherwise interested.
7.9 Paragon has not been a party to any agreement during the three years'
period ending on the date of this Agreement which was entered into
otherwise than on arm's length terms.
7.10 None of the Warrantors or Paragon has commissioned any report from
any financial or management consultants during the three years'
period ending on the date of this Agreement.
7.11 There is no subsisting power of attorney or other written authority
authorising any person to bind Paragon.
7.12 The Disclosure Letter contains accurate details of all customers (or
groups of connected customers) responsible for more than 5% of the
turnover of Paragon, and of all suppliers (or groups of connected
supplies, since the Accounts Date or in the financial period ending
on the Accounts Date.
8. ASSETS
The Warranties contained in this paragraph 8 are given in respect of
all the assets of Paragon other than the Properties.
8.1 Paragon is the sole legal and beneficial owner, free from any
Encumbrance, of each asset necessary for the continuation of
Paragon's business in the manner currently conducted, and no person
has claimed to be entitled to an Encumbrance in respect of any such
asset.
8.2 All of the tangible assets owned by Paragon, or which Paragon has the
right to use, are located at one of the Properties or are under the
control of Paragon.
8.3 All charges in favour of Paragon which require registration under
Part XII Companies Act 1985 have been duly registered.
25
8.4 None of the stock of Paragon is obsolete, unusable, or unsaleable by
it in the ordinary course of its business in accordance with its
current price list.
8.5 The levels of stocks are adequate to support expected demand for
products during the period of one week starting on the date of this
Agreement.
9. PLANT AND MACHINERY
9.1 The plant registers of Paragon comprise a complete and accurate
record of all the plant, equipment, machinery and vehicles owned or
in the possession of Paragon.
9.2 All plant, equipment, machinery and vehicles owned or used by Paragon
are in good working order, have been properly and regularly
maintained and comply with all applicable safety laws and regulations
currently in force.
10. INTELLECTUAL PROPERTY RIGHTS
10.1 Paragon has not used any confidential information in circumstances
which might entitle a third party to make a claim against it, and no
third party has made or threatened to make a claim against Paragon in
respect of any such rights or information.
10.2 Paragon has not committed any act constituting an actionable
passing-off in relation to a business carried on by a third party.
10.3 All information not at present in the public domain which is owned by
Paragon is properly documented in records held by Paragon, and no
such information has been disclosed, and Paragon is not obliged to
disclose it, to any person other than its professional advisers, the
Purchaser and its professional advisers and Employees for the proper
performance of their duties.
10.4 Paragon does not trade or carry on business under, or use, any name
or style other than its corporate name.
11. DEBT
11.1 The Disclosure Documents contain accurate details of each bank
accounts operated by Paragon and copies of all documents establishing
or varying the overdraft and other bank facilities of Paragon.
11.2 The Disclosure Documents contain complete and accurate details of all
the debts of Paragon as at the close of business on the day preceding
the date of this Agreement, other than trade
26
debts incurred in the ordinary and proper course of business.
11.3 No sum is owing by Paragon to its auditors, solicitors or other
professional advisers, and no accrual has been made by Paragon in
respect of any such sum.
11.4 Paragon has not factored or discounted any debts owing to it or has
agreed to do so or has engaged in any financing which is not required
to be disclosed in its accounts.
11.5 There has not occurred any event of default or other circumstance
which would (or which would with the lapse of time) entitle any
person to call for early repayment under any agreement relating to
any debt of Paragon or to enforce any security given by Paragon,
including without limitation any breach of any borrowing limits
imposed on Paragon.
11.6 No person has threatened to call for early repayment of or to enforce
any security relating to any debt of Paragon and there are no
circumstances which might give rise to any such threat.
11.7 Paragon has not obtained any grant, allowance or financial aid from
any governmental or other agency, body or authority which is or might
still be repayable in whole or part.
11.8 Paragon does not have any credit cards in issue in its own name.
11.9 The Disclosure Documents contain complete and accurate lists of the
trade debtors and creditors of Paragon which are unpaid at 60 days
after invoice.
11.10 The Disclosure Documents contain complete and accurate details of all
advances made by Paragon which are still outstanding on the date of
this Agreement.
12. INSURANCE
12.1 The Disclosure Documents contain complete and accurate details of all
the subsisting insurance policies of Paragon.
12.2 No subsisting insurance policy of Paragon is subject to any special
or unusual terms.
12.3 Paragon has not been refused insurance during the 3 years' period
ending on the date of this Agreement.
12.4 All premiums due in relation to the subsisting insurance policies of
Paragon have been paid, and there are no circumstances which might
give rise to any such policy being void or voidable or the premiums
being increased.
27
12.5 The Disclosure Documents contain complete and accurate details of all
insurance claims made by Paragon during the period of two years
ending on the date of this Agreement, whether or not still
outstanding, and there are no circumstances which might give rise to
a claim or notification under any insurance policy of Paragon.
13. CONSEQUENCES OF PURCHASE
The sale of the Shares to the Purchaser will not:
(a) create or accelerate any obligation of Paragon
(including the repayment of any debt) or cause or
require Paragon to lose any right or lose or dispose of any
asset or any interest in any asset (including by the
creation or crystallisation of any Encumbrance over any
asset);
(b) cause any event of default or breach by Paragon, relieve any
person of any obligation or give any person a right of
termination or any other right under any agreement to or by
which Paragon is a party or by which it is bound.
14. LITIGATION AND COMPLIANCE WITH LAW
14.1 Neither Paragon nor any person for whose acts or defaults it may be
liable is engaged, or has during the two years ended on the date of
this Agreement been engaged, whether as plaintiff, defendant or in
any other capacity, in any civil, criminal, arbitration, regulatory
or other proceedings in any jurisdiction.
14.2 No such proceedings as are referred to in paragraph 14.1 are
threatened or expected by or against Paragon or any person for whom
it may be liable, and no claims have been made or threatened or are
expected against Paragon, and there are no other circumstances, which
might give rise to any such proceedings.
14.3 Paragon has conducted its business in accordance with all applicable
laws and regulations.
14.4 Paragon has not manufactured or supplied any goods, services or
rights which are or were, or may become, faulty or defective, or
which do not or did not accord with any conditions, warranties or
representations expressly or impliedly made by Paragon, or which (in
the case of goods) carry any false or misleading trade description
within the meaning of the Trade Descriptions Xxx 0000.
14.5 Paragon has not done or omitted to do any act or thing in
contravention or breach of any of the following:
28
(a) the Fair Trading Xxx 0000;
(b) the Resale Prices Xxx 0000;
(c) the Competition Xxx 0000;
(d) the Treaty of Rome.
14.6 Paragon has unconditionally obtained all licences, authorisations and
consents necessary to carry on its business as conducted at the date
of this Agreement. All those licences, authorisations and consents
are in full force and effect, there has been no breach of their terms
and there are no circumstances which might cause them not to be
renewed.
14.7 Paragon has not given to a court or a governmental or other agency or
body in any country any undertaking or assurance that is still in
force.
14.8 No investigation or enquiry concerning Paragon by any governmental or
other agency or body in any country (including without limitation the
Director General of Fair Trading, the Monopolies and Mergers
Commission or the European Commission) has taken place or is in
progress, threatened or expected, and there are no circumstances
which might give rise to any such investigation or enquiry.
14.9 No notice has been served on Paragon by the Director General of Fair
Trading under s.36 Restrictive Trades Practices Xxx
0000.
14.10 No inspectors have been appointed under s.431 or 432 Companies Xxx
0000 to investigate the affairs of Paragon or of any other company of
which any Seller was a shareholder or officer.
14.11 Paragon does not have any agency, branch or other place of business
outside the United Kingdom.
15. INSOLVENCY
15.1 Paragon is able to pay its debts as they fall due, does not have
liabilities of a greater amount than the value of its assets, taking
into account contingent and prospective liabilities, and is not
deemed unable to pay its debts within the meaning of s.123(1)(a)
Insolvency Xxx 0000.
15.2 No order has been made, petition presented or resolution passed for
the winding up of Paragon and no meeting has been convened to
consider any such resolution.
29
15.3 No petition has been presented for an administration order to be made
in relation to Paragon.
15.4 No receiver, manager or administrative receiver has been appointed in
respect of the whole or part of any of the property, assets and/or
undertaking of Paragon,
15.5 Paragon has not convened a meeting of its creditors nor is proposing
to do so, and Paragon has not made a proposal to its creditors under
Part I Insolvency Act 1986 for a composition in satisfaction of its
debts or a scheme or arrangement of is affairs, nor has proposed a
composition or arrangement with its creditors or any class of them,
whether under s.425 Companies Xxx 0000 or in any other way, nor in
any case is proposing to do so.
15.6 No judgment, decree or order for payment of money given or made by
any court in any country against Paragon remains unsatisfied.
15.7 Paragon has not been party to any transaction which might constitute
in whole or in part a transaction at an undervalue or a preference
for the purposes of ss. 238, 239, 339 or 340 Insolvency Xxx 0000.
16. EMPLOYEES
16.1 The Disclosure Documents contain complete and accurate details of the
name, date of birth, employer, date of commencement of employment,
period of continuous employment, notice period, basic annual salary,
non-cash benefits and restrictive covenants of or payable or
applicable to each present Employee and copies of all subsisting
written employment contracts with all such Employees.
16.2 The Disclosure Documents contain complete and accurate details of
each share option or share incentive scheme or employee share
ownership plan or trust operated by Paragon.
16.3 There is no outstanding claim against Paragon by any person who is
now or has been an Employee, no dispute has arisen within the last
five years between Paragon and a material number or category of
Employees, and there are no circumstances which might give rise to
any such claim or dispute.
16.4 The employment of each present Employee may be terminated by not more
than three months' notice without liability on the part of Paragon to
make any payment to that Employee.
16.5 Paragon does not operate a share option or share incentive scheme and
has not established an employee share ownership plan or trust.
Paragon has never contributed to or maintained, or had any obligation
to contribute to or maintain, any pension scheme or retirement
benefits scheme.
30
16.6 Paragon is not party to a subsisting contract for services (including
without limitation a consultancy agreement) with a director of
Paragon.
16.7 No Employee has given or been given a period of notice of termination
of employment which has not yet expired.
16.8 The Company has not entered into any union membership, security of
employment, recognition or other collective agreement or any other
agreement with a trade union or another body or organisation
representing any Employees.
17. PROPERTY
17.1 The Properties are legally and beneficially owned, used and occupied
exclusively by Paragon.
17.2 Paragon does not have any interest or estate in or over, or is
contractual licensee of, land within the meaning of the Law of
Property Xxx 0000 other than the Properties nor has it entered into
any agreement to buy or sell any such interest in land which has not
been completed.
17.3 Paragon has good and marketable title to each of the Properties and
title to each of the Properties is duly registered at H.M. Land
Registry with title absolute or is not registered only because that
interest was not capable of registration at the time of grant of the
relevant Leases.
17.4 The Properties are free from any land charge, local land charge,
caution, restriction, inhibition or notice.
17.5 Paragon is unconditionally entitled for the term of the relevant
Lease to all rights of way and easements which are necessary for the
present use and enjoyment of, and the passage of services to and
from, each of the Properties.
17.6 There are no outstanding or threatened disputes or claims relating to
any of the Properties or orders or notices affecting the Properties
(whether served by a landlord, tenant, local authority or any other
person), and there are no circumstances which might give rise to any
such dispute or to any such notice or order being served or made.
17.7 The present user of each of the Properties is a permitted use under
the Town and Country Planning Acts, and no development of or
building, erection, alteration or improvement on any of the
Properties contravenes the Town and Country Planning Acts or any
applicable bye-laws or building regulations.
31
17.8 No planning consent in relation to any of the Properties has been
issued within the three months' period ending on the date of this
Agreement.
17.9 There are no compulsory purchase notices, orders or resolutions or
blight notices affecting the Properties or any private access to any
of them, and there are no circumstances which might lead to any being
made.
17.10 There is no agreement or planning obligation affecting the Properties
under s.18 Public Health Xxx 0000, s.52 Town and Country Planning Xxx
0000, s.38 and 000 Xxxxxxxx Xxx 0000, s.33 Local Government
(Miscellaneous Provisions) Xxx 0000, x.000 Xxxx xxx Xxxxxxx Xxxxxxxx
Xxx 0000, x.000 Xxxxx Xxxxxxxx Xxx 0000 or any provision in
legislation of a similar nature, and Paragon is required to enter
into any such agreement or obligation.
17.11 The requirements of all statutes and bye-laws affecting any of the
Properties have been duly complied with.
17.12 Each of the Properties is in a good and substantial state of repair
and condition and fit for the purpose for which it is currently used.
17.13 There are no development, redevelopment, reinstatement or fitting-out
works or repairs outstanding or proposed in respect of any of the
Properties.
17.14 All rents, service charges and other sums due from Paragon under the
Leases have been paid, and the latest demands (or receipts for rent
if issued) were unqualified, and all other covenants on the part of
the tenant contained in the Leases have been duly performed.
17.15 Paragon has not at any time been the tenant of or a guarantor in
respect of any leasehold property save for the leasehold property
demised under the Leases.
17.16 All licences and consents required from the landlords and any
superior landlords under any of the Leases have been obtained, and
the covenants on the part of the tenant contained in those licences
and consents have been performed.
17.17 There are no rent reviews in progress or outstanding under any of the
Leases at the date of this Agreement.
17.18 The Leases are valid and subsisting and there are no side letters,
collateral assurances, undertakings or concessions which have been
made by any party to any of the Leases.
18. TAXATION
32
General
18.1 All returns, computations and notices which are or have been required
to be made or given by Paragon for any Taxation purpose:
(a) have been made or given within the requisite periods and
on a proper basis and are up to date and correct; and
(b) none of them is, or is likely to be, the subject of any
outstanding queries or disputes with the Inland Revenue or
other Taxation authority.
18.2 All information required to be provided to the Inland Revenue, HM
Customs & Excise or any Taxation authority has been duly provided by
Paragon within the requisite period and is complete, accurate and up
to date.
18.3 Paragon is not, and has not in the last six years been involved in,
and the Warrantors, having made all due enquiries, have no reason to
anticipate, any dispute with or investigation, audit or discovery by
any Taxation authority concerning any matter likely to affect the
liability of Paragon to Taxation.
18.4 The Disclosure Letter contains full and accurate particulars of all
matters in respect of which Paragon is required to make a return or
provide information to the relevant Taxation authorities and in
respect of which the time for making such return or providing such
information will expire on or after Completion.
18.5 No accounting period of Paragon for corporation tax purposes has
ended since the Accounts Date.
18.6 The provisions or reserve for Taxation appearing in the Accounts of
Paragon are sufficient (on the basis of the rates of taxation current
at the date hereof) to cover all Taxation for which Paragon was at
the Accounts Date or may after that date become, or have become,
liable to pay or account on or in respect of or by reference to any
profits, gains or income (whether deemed or actual) for any period
ended on or before the Accounts Date or in respect of any
distribution or transaction made or entered into, or deemed made or
entered into, on or before the Accounts Date.
18.7 Paragon:
(a) has duly and punctually paid all Taxation which it has
become liable to pay before the date of this Agreement;
33
(b) has duly deducted and accounted for all Taxation due to
have been deducted or accounted for by it before the
date of this Agreement; and
(c) is not and has not at any time within the last six years
been liable to pay interest on or penalties in respect of
any unpaid Taxation or default in respect of any Taxation
matter.
18.8 In respect of the period commencing immediately after the Accounts
Date and ending on Completion, Paragon will not have any liability
for Taxation which has not been either paid prior to Completion or
provided for in the Accounts, other than Taxation on profits realised
in the ordinary course of trading.
18.9 Paragon is not and will not become liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or amounts
corresponding thereto) in consequence of the failure by any other
person to discharge that Taxation within any specified period or
otherwise, where such Taxation relates to a profit, income or gain,
transaction, event, omission or circumstance arising, occurring or
deemed to arise or occur (whether wholly or partly) prior to
Completion.
18.10 Paragon has not made, or committed to, any payment of a revenue
nature since the Accounts Date which is not wholly deductible in
computing its taxable profits.
18.11 Paragon has not entered into any transaction or series of
transactions, scheme or arrangement of which the main purpose, or one
of the main purposes, was the avoidance or reduction of a Taxation
liability and for which there was no commercial purpose.
19. VAT
19.1 Paragon is registered for the purposes of value added tax and has
complied at all times with all statutory requirements, regulations,
notices, orders, directions or conditions relating to value added
tax, including the terms of any agreement made with HM Customs &
Excise.
19.2 Paragon has not at any time been, or applied to be, a member of a
group registration for the purposes of value added tax.
19.3 No transaction or arrangement has been effected as a result of which
Paragon is or may be liable for any value added tax chargeable
against any other person.
19.4 All supplies made by Paragon in the current prescribed accounting
period for value added tax purposes are taxable and not exempt
supplies.
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20. Chargeable Gains
The book value of each of the capital assets of Paragon in or adopted
for the purposes of the Accounts of Paragon does not exceed the
amount deductible under section 38 Taxation of Chargeable Gains Xxx
0000 (excluding any indexation allowance) and the Group Company has
all necessary records to calculate any future liability to
corporation tax on capital gains in respect of each such capital
asset.
21. Groups
Paragon does not have and has never had any subsidiaries.
22. Capital Allowances
If the plant and machinery of Paragon were disposed of in total for a
consideration equal to its book value in or adopted for the purposes
of the Accounts of Paragon, no balancing charge under the Capital
Xxxxxxxxxx Xxx 0000 not fully provided for in the Accounts would
arise.
23. Residence
Paragon is and has at all times been resident in the United Kingdom
and not elsewhere for taxation purposes, has no branch, agent or
permanent establishment outside the UK and is not liable to pay
Taxation under the laws of any territory other than the UK.
24. Inheritance Tax
24.1 Paragon is not liable, and there are no circumstances in existence as
a result of which it may become liable, to be assessed to Taxation as
donor or donee of any gift, or transferor or transferee of value.
24.2 No circumstances exist under which any power within Section 212
Inheritance Tax Act 1984 could be exercised in relation to, and there
is no Inland Revenue charge within the meaning of Section 237
Inheritance Tax Act 1984 attaching to or over, any shares or
securities in or assets of Paragon.
25. Stamp Taxes
25.1 There are no circumstances or transactions to which Paragon is, or
has been, a party which may result in Paragon becoming liable to or
accountable for stamp duty reserve tax or any penalty in respect of
such stamp duty reserve tax.
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25.2 All documents to which Paragon is a party and/or which relate to or
are necessary to prove the title of Paragon to any asset owned or
possessed by it and/or contain material rights on the part of Paragon
are in the United Kingdom and have been duly stamped.
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SIGNED by XXXXXX XXXX XXXXX ) /s/ A. S. Xxxxx
------------------------
SIGNED by XXXXXX XXXXX ) /s/ X. Xxxxx
------------------------
SIGNED by XXXXX XXXXXX XXXXX ) /s/ X. X. Xxxxx
------------------------
SIGNED by XXXX XXXXX XXXXX ) /s/ M. D. Xxxxx
------------------------
EXECUTED as a DEED by XXXXX XXXXXX ) /s/ X. Xxxxxx, Attorney
------------------------
as lawful attorney for MODELEDGE )
LIMITED )
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SIGNED by XXXXX XXXXXX as lawful ) /s/ X. Xxxxxx, Attorney
attorney for ADVENTATUM JERSEY LIMITED) ------------------------
SIGNED by ) /s/ X. X. Xxxxxxxx
------------------------
for and on behalf of: )
OPTELECOM UK LIMITED )
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