Exhibit 2.1
Agreement
for the sale and purchase of the business and
assets of Crescent Lighting Limited
a) Hillgate (4) Limited
b) Fiberstars, Inc.
c) Crescent Lighting Limited
d) M B Xxxxxxxx Esq
e) Ms C Xxxxxxxx
Dated 19 November 1998
Contents
1. Definitions and interpretation..............................................1
2. Sale of the Business and the Assets........................................13
3. Consideration..............................................................14
4. Value Added Tax............................................................17
5. Completion.................................................................17
6. Completion Accounts........................................................19
7. Apportionments.............................................................21
8. Post Completion............................................................21
9. Liabilities................................................................22
10. Contracts.................................................................22
11. Debts.....................................................................23
12. Employees.................................................................24
13. Restrictive covenants.....................................................25
14. Warranties................................................................26
15. Warranty Claims...........................................................27
16. Limitations on Warrantors' liability......................................27
17. Conduct of Warranty Claims................................................29
18. Purchasers' remedies......................................................29
19. Fiberstars Warranties.....................................................30
20. The Escrow Account, Claims and Further Limitations........................30
21. Guarantee.................................................................32
22. Indemnities...............................................................33
23. Property..................................................................33
24. General...................................................................33
25. Announcements.............................................................36
26. Costs and expenses........................................................36
27. Notices...................................................................36
28. Governing law and jurisdiction............................................37
*Schedule 1
Schedule 2....................................................................38
1. Capacity.............................................................38
2. Arrangements between the Business and the Vendor or the Warrantors...38
3. Other interests of the Vendor........................................38
4. Accuracy and adequacy of information.................................38
5. Insolvency...........................................................39
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6. Preparation and contents of the Accounts.............................39
7. Accounting records...................................................40
8. Management accounts..................................................41
9. Events since the Accounts Date.......................................41
10. Contracts and commitments...........................................42
11. Terms of trade......................................................42
12. Product liability...................................................42
13. Licences and consents...............................................43
14. Competition and trade regulation law................................43
15. Compliance with law.................................................44
16. Litigation and disputes.............................................44
17. Ownership and condition of the Assets...............................45
18. Charges and encumbrances over the Assets............................45
19. Intellectual Property...............................................45
20. Directors and Employees.............................................47
21. Industrial relations and legislation................................47
22. Pensions............................................................47
23. Title...............................................................48
24. Encumbrances........................................................48
25. Planning Matters....................................................49
26. Statutory Obligations...............................................49
27. Leasehold Properties................................................49
28. Environmental Matters...............................................50
29. Tax.................................................................50
30. Year 2000...........................................................51
*Schedule 3
*Schedule 4
*Schedule 5
*Annexure A - Contracts
*Annexure B - Employees
*Annexure C - Fixed Assets
*Annexure E - Intellectual Property Licences
*Annexure G - Motor Vehicles
*Annexure H - Moveable Assets
*Annexure F - Leasing Agreements
All of the exhibits, schedules or annexures to this Agreement as marked (*) have
been omitted from this Form 8-K.
The Registrant agrees to furnish supplementally a copy of any omitted exhibit,
schedule or annexure to the Securities and Exchange Commission upon request.
ii
This Agreement is made the 19th day of November 1998
Between:
(1) Hillgate (4) Limited (company number: 3642724) whose registered office
is at Xxxxxxxx Xxxxx, 00 Xxx Xxxxxx, Xxxxxx XX0X 0XX, XX ("Hillgate");
(2) Fiberstars, Inc. a California Corporation whose principal place of
business is at 0000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, XXX
("Fiberstars");
(3) Crescent Lighting Limited (company number 2297342) whose registered
office is at Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxx Xxxxxx, Xxxxxx, XX ("the
Vendor").
(4) Xxxxxxx Xxxxxxxx Xxxxxxxx of Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx
XX0 0XX, XX ("Xx Xxxxxxxx"); and
(5) Xxxxxxx Xxxxxxxx of Sadgrove Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxx XX0 0XX, XX
("Xx Xxxxxxxx").
Background:
(A) The Vendor has agreed to sell to the Purchasers (as defined below) and
the Purchasers have agreed respectively to purchase the Assets (as
defined below) with a view to carrying on the Business (as defined
below) as a going concern in succession to the Vendor on the terms of
this Agreement.
(B) Xx Xxxxxxxx and Xx Xxxxxxxx, as the shareholders of the Vendor and in
consideration, inter alia, of the Purchasers acquiring the business of
the Vendor, have agreed to jointly and severally guarantee the
obligations of the Vendor under this Agreement and to join with the
Vendor in giving warranties and indemnities on a joint and several
basis under the terms of this Agreement.
It is agreed as follows:
1. Definitions and interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
words have the following meanings:
"the Accounts" the Vendor's audited balance sheet as at and
its audited profit and loss account for the
year ended on the Accounts Date, including all
documents required by law to be annexed to
them;
"the Accounts Date" 28 February 1998;
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"this Agreement" this Agreement (including any schedule or
annexure to it and any document referred to in
it or in agreed form);
"Assets" the assets to be sold pursuant to clause 2;
"Assumed Liabilities" any liability, obligation or debt of or claim
against (other than for the avoidance of doubt
any claim by the Purchasers against the Vendor
(and/or Guarantors) under this Agreement) the
Vendor (whether actual or contingent, asserted
or unasserted) which either is:
(a) expressly assumed by the Purchasers
under the terms of this Agreement; or
(b) a trade or other liability of the Vendor
directly relating to the Business which
has been incurred in the ordinary course
of business and which is either:
(i) in the amount of (pound)10,000 or
less (whether incurred individually
or in aggregate if part of a
similar series of events during any
12 month period) ;
(ii) if greater than (pound)10,000
(whether incurred individually or
in aggregate if part of a similar
series of events during any 12
month period) and is listed and
where reasonably practicable
quantified in Schedule 5;
but for the avoidance of doubt excluding the
Liabilities and excluding any
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liabilities relating to the Property and the
Lease (other than those expressly assumed
under Schedule 1 Part II);
"Bank Accounts" the Vendor's bank accounts with Lloyds Bank
plc, Holborn Circus, London Account No's
0084189, 0742666, 59016291;
"Business" the business of purchasing, manufacturing and
distributing commercial lighting equipment now
carried on by the Vendor;
"Business Day" a day (other than a Saturday or a Sunday) on
which clearing banks are open for business in
the City of London;
"Cash" Cash in hand of the Vendor or in the Vendor's
bank accounts on the Transfer Date and all
cheques and securities representing it.
"Completion" the performance by the parties of the
obligations set out in clause 5 (Completion);
"Completion Accounts" means the accounts of the Business prepared at
the Transfer Date in accordance with clause 6
and schedule 4;
"Consideration" the aggregate purchase price for the Business
and Assets referred to in sub-clause 3.1;
"the Consideration new common stock par value $0.0001 per share
Stock" of Fiberstars calculated in accordance with
sub-clause 3.1;
"Contracts" (a) any Leasing Agreements;
(b) any Intellectual Property Licences; and
(c) save for the contracts of employment,
all undischarged
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contracts, pending contracts, commitments
and orders entered into by or on behalf
of the Vendor in the ordinary course of
the Business and where such contract has
a value greater than(pound)5,000 in
aggregate such contract has been listed
in annexure A;
"Dangerous any substance (whether in the form of a solid,
Substance" liquid, gas or vapour) the generation,
transportation, storage, treatment, use or
disposal of which (whether alone or in
combination with any other substance) gives
rise to a risk of causing harm to human
health, comfort or safety or harm to any other
living organism or causing damage to the
Environment or any waste (as defined in the
Environmental Protection Act 1990);
"Debts" all amounts owing to the Vendor on the
Transfer Date (whether or not then due and
payable) in relation to the Business as
identified in the Completion Accounts and
accounted for in calculating the Net Asset
Value;
"Disclosure Letter" the letter of the same date as this Agreement
in the agreed form from the Warrantors to the
Purchasers disclosing exceptions to the
Warranties;
"Employees" all the employees of the Vendor engaged in the
Business whose names are set out in annexure B
and "Employee" means any of them;
"Environment" the environment as defined in Section 1(2),
Environmental Protection Xxx 0000;
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"Environmental any consent, approval, authorisation, permit,
Consent" exemption, filing requirement, licence or
registration from time to time required by the
Business under Environmental Law;
"Environmental Law" any common or statutory law, regulation,
directive, treaty, code of practice, circular,
guidance note and the like, in each case of
any jurisdiction, in force or enacted relating
to the Environment, any Dangerous Substance,
human health, comfort, safety or the welfare
of any other living organism;
"Escrow Agent" Bank of San Francisco (or such other body as
may be agreed to by Fiberstars and the
Vendor).
"Escrow Agreement" an agreement in the agreed form between (1)
the Purchasers, (2) the Warrantors and (3) the
Escrow Agent;
"Escrow Release Date" 1 May 1999
"Escrow Stock" new common stock par value $0.0001 per share
of Fiberstars calculated in accordance with
sub-clause 3.1 and deposited with the Escrow
Agent at, or as soon as reasonably practicable
after, Completion;
"the Expert" an independent chartered accountant to be
nominated by the Vendor and the Purchasers and
in default of agreement between them within 5
Business Days of the obligation to appoint
arising, on the request of either party by the
President for the time being of the Institute
of Chartered Accountants in England and Wales;
"Fiberstars' the warranties set out in clause 19;
Warranties"
5
"Financial Records" all accounting, financial and taxation records
relating to the Business for the 6 years
ending on the accounting reference date of the
Vendor next following Completion;
"Fixed Assets" all fixtures and fittings, plant, machinery,
equipment and other tangible assets physically
attached to the Property and owned by the
Vendor in relation to the Business at the
Transfer Date including those listed in
annexure C;
"Goodwill" the goodwill and other know-how of the
Business including without limit any customer
lists and the right to sell to such customers
and the exclusive right for the Purchasers to
represent themselves as carrying on the
Business in succession to the Vendor and to
use the Name and any other trade names owned
by the Vendor and associated with the
Business;
"Guarantors" Xx Xxxxxxxx and Xx Xxxxxxxx;
"ICTA" the Income and Corporation Taxes Xxx 0000;
"Intellectual Property" patents, trade marks or names and service
marks (whether or not registered) registered
designs, design rights, copyrights, domain
names, utility models, moral rights, the right
to apply for and applications for any of the
preceding items, together with the rights in
inventions, processes, software, know-how,
trade or business secrets, confidential
information or any process or other similar
right or asset capable of protection, owned,
or licensed (which for the avoidance of doubt
shall not be transferred with full title
guarantee) in relation to the Business;
"Intellectual Property any licences and other agreements
6
Licences" granted by third parties to the Vendor for the
use of the Intellectual Property including
those listed in annexure E;
"the Lease" any lease (including underleases) under which
the Property is held, particulars of which are
set out in schedule 1;
"Leasing Agreements" any leasing, conditional sale, credit sale,
hire purchase and like agreements to which the
Vendor is a party, under which title to assets
used by the Vendor in or in relation to the
Business does not pass or has not passed to
the Vendor, including any listed in annexure
F;
"Liabilities" all claims, liabilities, obligations and debts
of the Vendor for the period up to and
including the Transfer Date whether matured or
unmatured, fixed or contingent including but
not limited to, any and all liabilities in
respect of and bank loans, overdrafts and
other loans owing by the Vendor other than the
Assumed Liabilities;
"Management the unaudited management accounts of the
Accounts" Vendor for the period from the Accounts Date
to the Management Accounts Date (comprising a
consolidated balance sheet, trading account
and profit and loss account for the Vendor)
and all notes, reports, statements and
documents annexed or attached thereto;
"Management Accounts the date hereof;
Date"
"Material Adverse any event, change or effect that is materially
Change" adverse to the condition (financial or
otherwise), properties, assets, liabilities,
operations, results of operations or prospects
of the Business taken as a whole;
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"Motor Vehicles" the motor vehicles owned and used by the
Vendor in relation to the Business including
those listed in annexure G;
"Moveable Assets" all plant, machinery, equipment, tools,
furniture and other tangible assets not
physically attached to the Property and owned
and used by the Vendor in relation to the
Business at the Transfer Date including those
listed in annexure H;
"the Name" Crescent, Crescent Lighting or any
representation or application of it, whether
in terms of packaging, get-up or otherwise, as
used in the Business on or before the Transfer
Date and any other name owned by the Vendor
which is similar to it or capable of being
confused with it;
"NASDAQ" the NASDAQ National Market, maintained by the
NASDAQ Stock Market, Inc.;
"Net Asset Surplus" the amount (if any) by which the Net Asset
Value exceeds the sum of(pound)247,000;
"Net Asset Value" the aggregate value of the Assets less any
Assumed Liabilities (taking into account items
once only) as at the Transfer Date calculated
in accordance with the provisions of clause 6
and schedule 4;
"notice" includes any notice, demand, consent or other
communication;
"Pension Scheme" the Small Self Administered Scheme of Xx
Xxxxxxxx ;
"Planning Acts" 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, the
Planning and
8
Compensation Xxx 0000 and all other statutes
containing provisions relating to town and
country planning;
"Product liabilities of the Vendor (whether actual or
Liabilities" contingent) in respect of products
manufactured, assembled, sold or supplied or
services provided on or before the Transfer
Date by the Vendor in relation to the Business
including, for the avoidance of doubt, any
after sales or maintenance liabilities and
including without limitation any liability
resulting from the Vendor's trading (directly
or indirectly) with Helsinki Energy and the
Co-operative Insurance Societ to products
manufactured, or manufactured under license
from Fiberstars by the Vendor, or supplied by
Fiberstars;
"Property" the leasehold property, details of which are
set out in part 2 of schedule 1;
"the Purchasers" Hillgate and Fiberstars or either of them and
the term "the Purchaser" shall be construed
accordingly;
"Purchasers' Pricewaterhouse Coopers of 0 Xxxxxxxxxx Xxxx,
Xxxxxxxxxxx" Xxxxxxx, XX;
"Records" the Financial Records, sales literature, price
lists, advertising and publicity material,
customer and supplier lists, stock records,
lists of outstanding and unfulfilled orders
and contracts, and other files, books,
correspondence and other records relating to
the Business and the Employees, held on
whatever medium, excluding any which the
Vendor is required by law to retain;
"Service Agreement" a service agreement in the agreed form to be
entered into at Completion by Xx Xxxxxxxx,
Hillgate and Fiberstars;
9
"Statement of a Statement of Apportionments, relating to the
Apportionments" Business and Assets prepared in accordance
with schedule 4;
"Stock" all stock-in-trade, raw materials, components,
finished and unfinished goods, bought-in
goods, consumables, stores, packaging
materials, packages and work in progress owned
by the Vendor relating to the Business as at
the Transfer Date (whether situated at the
Property or otherwise);
"Taxation" all forms of taxation and statutory,
governmental, supra-governmental, state,
provincial, local governmental or municipal
impositions, duties, contributions and levies
(including withholdings and deductions),
whether domestic or foreign, including but not
limited to Capital Gains Tax, Inheritance Tax,
VAT, Stamp Duty, Stamp Duty Reserve Tax,
customs and other import duties, PAYE,
National Insurance contributions and Income
Tax required to be deducted whenever imposed
an costs and interest relating to any such
matters and "Tax" shall be construed
accordingly;
"Transfer Date" the date on which Completion occurs;
"TUPE Regulations" the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"United Kingdom" or the United Kingdom of Great Britain and
"UK" Northern Ireland;
"United States" or "US" the United States of America;
"VAT" value added tax;
"VATA" Value Added Tax Xxx 0000 and all other
statutes statutory instruments, regulations
and notices containing provisions relating to
VAT;
10
"Vendors Claims" all rights and claims of the Vendor against
third parties relating to any of the Assets or
otherwise arising (whether before or after
Completion) out of or in connection with the
Business under any warranties, conditions,
guarantees, indemnities or insurance policies
or otherwise;
"the Warranties" the representations referred to in clause 14
(Warranties) and set out in schedule 2 and
"Warranty" means any of them; and
"the Warrantors" the Vendor, Xx Xxxxxxxx and Xx Xxxxxxxx or any
of them;
"Warranty Claim" a claim by the Purchasers against the
Warrantors that any Warranty is untrue or
inaccurate in any respect or is misleading;
"Year 2000 conformity" that neither performance nor functionality is
affected by dates prior to, during and after
the Year 2000, in particular:
Rule 1: No value for current date will cause
any interruption in operation;
Rule 2: Date-based functionality must behave
consistently for dates prior to,
during and after Year 2000;
Rule 3: In all interfaces and data storage,
the century in any date must be
specified either explicitly or by
unambiguous algorithms or inferencing
rules;
Rule 4: Year 2000 must be recognised as a leap
year;
(all as defined by the British Standards
11
Institution in Document DISC
PD2000-1).
1.1 In this Agreement, unless the context otherwise requires:
(a) words in the singular include the plural and vice versa and words
in one gender
(a) include any other gender;
(b) a reference to a statute or statutory provision includes:
(i) any subordinate legislation (as defined in Section 21(1),
Interpretation Act 1978) made under it;
(ii) any repealed statute or statutory provision which it
re-enacts (with or without modification); and
(iii) any statute or statutory provision which modifies,
consolidates, re-enacts or supersedes it;
(c) a reference to:
(i) any party includes its successors in title and permitted
assigns;
(ii) a "person" includes any individual, firm, body corporate,
association or partnership, government or state (whether or
not having a separate legal personality);
(iii) clauses and schedules are to clauses and schedules of this
Agreement and references to sub-clauses and paragraphs are
references to sub-clauses and paragraphs of the clause or
schedule in which they appear;
(iv) any provision of this Agreement is to that provision as
amended in accordance with the terms of this Agreement;
(v) any document being "in the agreed form" means in a form
which has been agreed by the parties on or before the date
of this Agreement and for identification purposes signed by
them or on their behalf by their solicitors; and
(vi) "indemnify" and "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless
from all actions, claims and proceedings from time to time
made against him and all loss or damage and all reasonable
payments, costs or expenses made or incurred by that person
as a consequence of or which would not have arisen but for
that circumstance;
(d) except as set out in sub-clause 1.1, terms defined in the
Companies Xxx 0000 have the meanings attributed to them by that
Act;
(e) "sterling" and the sign "(pound)" mean pounds sterling in the
currency of the United Kingdom, "dollars" and the sign "$" means
dollars in the currency of the United States;
12
(f) the table of contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
(g) where any liability or obligation is undertaken by 2 or more
persons, the liability of each of them unless expressly stated
otherwise shall be joint and several; and
(h) where any statement is qualified by the expression "so far as the
Warrantors are aware" or "to the best of the Warrantors'
knowledge and belief" or any similar expression the Warrantors
shall be deemed to have knowledge of anything of which it would
have known about had they made due and careful enquiry.
2. Sale of the Business and the Assets
2.1 The Vendor with full title guarantee shall sell to Hillgate and
Hillgate shall purchase as at the Transfer Date:
(a) the Fixed Assets;
(b) the Moveable Assets;
(c) the Motor Vehicles;
(d) the Stock;
(e) the Cash;
(f) the Records;
(g) the Debts;
(h) the benefit (so far as they can lawfully be assigned, transferred
to or held in trust for the Purchasers) of the Vendor's Claims;
(i) the benefit of the Contracts; and
(j) the benefit of negotiations for a new lease for the Property;
(k) all other tangible property, rights and assets owned by the
Vendor and employed, exercised or enjoyed in or in connection
with the Business;
2.2 The Vendor with full title guarantee shall sell to Fiberstars and
Fiberstars shall purchase at the Transfer date:
(a) the Goodwill;
(b) the Intellectual Property;
(c) the Name; and
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(d) all other intangible property, rights and assets owned by the
Vendor and employed, exercised or enjoyed in or in connection
with the Business.
2.3 The Property shall be dealt with in accordance with clause 23 and
schedule 1.
2.4 The Business and Assets are sold free from all charges and encumbrances
(whether monetary or not) and all other rights exercisable by third
parties (including those which the Vendor does not, and could not
reasonably be expected to, know about) and the covenant implied by
Section 3(1), Law of Property Xxx 0000 shall be extended accordingly.
2.5 Title in, and risk of loss or damage to, the Assets shall pass to the
Purchasers on the Transfer Date. From the Transfer Date the Vendor
shall hold the Assets on trust for the Purchasers absolutely until they
shall have been delivered, formally transferred or assigned to the
Purchasers, and shall act in accordance with the Purchasers'
instructions in respect of any Asset which it so holds as trustee.
2.6 Immediately on Completion, Fiberstars will licence to Hillgate for its
use any Intellectual Property, the Name and any necessary Goodwill.
2.7 For the avoidance of doubt, the Pension Scheme shall not be included in
the Assets bought and sold under this Agreement.
3. Consideration
3.1 The Consideration is the payment by the Purchasers to the Vendor of the
sum of (pound)1,616,000 (exclusive of VAT) to be satisfied by:
(a) the payment of (pound)1,131,200 in cash at Completion;
(b) the allotment and issue of the Consideration Stock valued in the
aggregate amount of (pound)323,200;
(c) the allotment and issue of the Escrow Stock valued in the
aggregate amount of (pound)161,600 to the Escrow Agent to be held
in accordance with the Escrow Agreement;
The values of the Consideration Stock and the Escrow Stock are based
upon the average of the closing price per share of Fiberstars stock on
the ten (10) trading days on NASDAQ immediately preceding Completion
(such price being $4.08 per share, the "Closing Price");
3.2
(a) The Consideration Stock and the Escrow Stock will be acquired for
the Vendor's own account, for investment and not with a view to,
or for resale in connection with, any distribution or public
offering thereof.
14
(b) The Vendor is not a "U.S. Person" as that term is defined in Rule
902 of Regulation S including but not limited to: (i) a natural
person resident in the United States (which term includes the
United States of America, its territories and possessions, any
State of the United States, and the District of Columbia); (ii) a
partnership or corporation organised or incorporated under the
laws of the United States; (iii) the estate of which any executor
or administrator is a U.S. Person or (iv) any trust of which any
trustee is a U.S. Person.
(c) The Vendor understands that the Consideration Stock and the
Escrow Stock have not been registered under the United States
Securities Act of 1933, as amended (the "Securities Act") and are
being issued in reliance upon a "safe harbour" transaction from
the registration and prospectus delivery requirements of the
Securities Act pursuant to Regulation S, that Fiberstars has no
present intention of registering the Consideration Stock and the
Escrow Stock, and that the Vendor must therefore bear the
economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Securities
Act or is exempt from registration.
(d) The Vendor has satisfied itself as to the full observance of the
laws of its jurisdiction in connection with any invitation to
subscribe for the Consideration Stock and the Escrow Stock or any
use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Consideration
Stock and the Escrow Stock, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental
or other consents that may need to be obtained an (iv) the income
tax and other tax consequences, if any, that may be relevant to
the purchase, holding, redemption, sale or transfer of the
Consideration Stock and the Escrow Stock. The Vendor's
subscription and payment for, and its continued beneficial
ownership of the Consideration Stock and the Escrow Stock, will
not violate any applicable securities or other laws of its
jurisdiction.
(e) The Vendor was outside of the United States at the time the buy
order for the Consideration Stock and the Escrow Stock was
originated and no offer to purchase the Consideration Stock and
the Escrow Stock was made in the United States.
(f) All subsequent offers and sales of the Consideration Stock and
Escrow Stock will be made outside of the United States in
compliance with Regulation S, pursuant to registration of the
Consideration Stock and Escrow Stock under the Securities Act or
pursuant to an exemption from such registration. In any event the
Vendor will not resell the Consideration Stock and the Escrow
Stock to or for the account of U.S. Persons or within the United
States (a) until after the end of the one (1) year period
commencing on the date of the Completion; and without an opinion
of counsel of the holder of the Consideration Stock or Escrow
Stock reasonably satisfactory to Fiberstars, stating that the
Consideration Stock and the Escrow Stock are saleable in
accordance with Regulation S and the Securities Act.
15
(g) During the negotiation of the transactions contemplated herein,
the Vendor and its representatives (i) have been offered access
to all publicly available reports, proxy statements and other
information concerning Fiberstars filed by Fiberstars with the
Securities and Exchange Commission, (ii) have been afforded
sufficient access to other information concerning Fiberstars to
which a reasonable investor would attach significance in making
investment decisions and (iii) have been afforded an opportunity
to ask questions, and receive answers from knowledgeable persons
concerning Fiberstar's business, operations, financial condition,
assets, liabilities and other matters to the extent relevant to a
reasonable investor, in order to evaluate the merits and risk of
the prospective investment contemplated herein.
(h) The Vendor and its representatives have been solely responsible
for the Vendor's own "due diligence" investigation of Fiberstars
and its management and business, for its own analysis of the
merits and risks of this investment, and for its own analysis of
the fairness and desirability of the terms of the investment. In
taking any action or performing any role relative to the
arranging of the proposed investment, the Vendor has acted solely
in its own interest.
(i) The Vendor has such knowledge and experience in financial
business matters so that it is capable of evaluating the risks
and merits of purchasing the Consideration Stock and the Escrow
Stock and protecting its interests therewith. The Vendor is able
to bear the economic risk of the purchase of the Consideration
Stock and the Escrow Stock pursuant to the terms of this
Agreement, including a complete loss of the Vendor's investment
in the Consideration Stock and the Escrow Stock.
(j) The Vendor has the full right, power and authority to enter into
and perform the Vendor's obligations under this Agreement, and
this Agreement constitutes a valid and binding obligation of the
Vendor enforceable in accordance with its terms except as limited
by applicable bankruptcy, insolvency, reorganisation, moratorium
or other laws of general application relating to or affecting
enforcement of creditors rights and rules or laws concerning
equitable remedies.
(k) No consent, approval or authorisation of or designation,
declaration or filing with any governmental authority on the part
of the Vendor is required in connection with the valid execution
and delivery of this Agreement.
(l) The Vendor hereby acknowledges and agrees that the offer and sale
of the Consideration Stock and the Escrow Stock are intended to
comply with Regulation S and that the representations, warranties
and agreements it makes herein will be relied by the Company in
order to comply with Regulation S. However, such attempted
compliance shall not be an exclusive election and Fiberstars may
rely upon the representations, warranties and agreements made
herein for the purpose of other exemptions under the Securities
Act.
16
3.3 The Consideration shall be apportioned between the Assets on the basis
set out in schedule 3.
4. Value Added Tax
4.1 The parties intend that the transfer of the Business and Assets under
this Agreement shall constitute a transfer as a going concern and shall
use all reasonable endeavours to secure that the transfer of the Assets
under this Agreement is treated as neither a supply of goods nor a
supply of services for the purposes of VAT.
4.2 Hillgate undertakes that after Completion it shall carry on Business as
a going concern and will have use of the Assets in carrying on the
Business.
4.3 Hillgate and the Vendor warrant to each other that they are and will be
at or immediately after Completion duly registered for the purposes of
VAT.
4.4 The Vendor shall not ask HM Customs & Excise for permission to retain
such of the Financial Records as relate to VAT and on Completion it
shall deliver them to the Purchasers. The Purchasers shall, for 6 years
from the end of the Vendor's accounting period next following
Completion:
(a) preserve these records; and
(b) allow the Vendor and its agents on giving reasonable notice and
at all reasonable times to have access to, and at its expense to
take copies of, these records.
4.5 If VAT is not charged on Completion but is subsequently charged on all
or part of the transfer of the Assets or the Business the Purchasers
shall, in addition to any amount expressed in clause 3 (Consideration)
to be payable by the Purchasers to the Vendor, pay the amount of the
VAT (together with any penalty of interest providing that such penalty
or interest did not arise from any unreasonable delay in the Vendor
notifying the Purchasers) to the Vendor within 15 Business Days of the
Vendor delivering an appropriate VAT invoice to the Purchasers and a
copy of the demand from HM Customs & Excise for the payment of any
amount due by way of penalty and interest.
4.6 If there is any disagreement between the Purchasers' HM Customs &
Excise office and the Vendor's HM Customs & Excise office as to whether
VAT should be chargeable on the transfer of the Business and Assets
under this Agreement (or any part of them), the VAT will not be
regarded as lawfully chargeable for the purposes of this Agreement
until agreement on the position has been reached by the relevant
offices of HM Customs & Excise.
5. Completion
5.1 Completion shall take place at such location as the parties may decide,
on the date hereof.
5.2 On Completion:
17
(a) the Vendor shall permit the Purchasers to enter into and take
possession of the Business and shall deliver or cause to be
delivered to the Purchasers:
(i) vacant possession of the Property (under the terms of
clause 22 and Schedule 1);
(ii) if required by the Purchasers duly executed agreements in
the Agreed Form for the assignment or novation of the
benefit of the Contracts to the Purchasers, or as the
Purchasers shall direct, and all requisite consents and
licences therefor;
(iii) a duly executed assignment in the Agreed Form to vest the
Goodwill in Fiberstars or as the Purchasers shall direct;
(iv) if required by the Purchasers, duly executed assignments
and licences in the Agreed Form of the Intellectual
Property (including without limit any required assignments
of any trade marks);
(v) such irrevocable instruction to the banks of the Vendor as
may be necessary to procure the automatic transfer to the
Purchasers of any payment that any customer of the Business
may make to such bank after the date hereof;
(vi) at the Property, the Assets which are capable of transfer
by delivery;
(vii) any instruments of transfer (other than those mentioned
above) which the Purchasers may reasonably require to vest
title in the Assets together with all deeds and documents
of title relating to the Assets;
(viii) those Records which are not stored at the Property;
(ix) releases from the holders of all outstanding charges over
the Business and/or any of the Assets (including without
limitation a deed of release to a debenture dated 9 January
1989 granted by the Vendor to Lloyds Bank plc ("the
Bank"));
(x) written confirmation from the Bank of the balance of the
Bank Accounts as at Completion and that it will change the
owner of the Bank Accounts from the Vendor to Hillgate;
(xi) a special resolution passed by the shareholders of the
Vendor, changing its name to a name which is in no way
similar to the Name, together with a cheque in the sum of
(pound)10 made payable to Companies House; and
(xii) two copies of the Service Agreement duly executed by Xx
Xxxxxxxx;
18
(b) when the Vendor has complied with the provisions of sub-clause
(a) the Purchasers shall:
(i) pay the sum of (pound)1,131,200 of the Consideration to the
Vendor by telegraphic transfer to the client account of the
Vendor's solicitors at the Royal Bank of Scotland plc, 0
Xxxxx Xxxxxx, Xxxxxx, XX0X 0XX account number 00000000,
sort code 15-80-00;
(ii) procure that Fiberstars delivers to the Vendor, as soon as
reasonably practicable, a duly executed stock certificate
in respect of the Consideration Stock;
(iii) procure that Fiberstars delivers to the Escrow Agent, as
soon as reasonably practicable, the Escrow Stock to be held
in accordance with clause 20 and the Escrow Agreement.
5.3 If any of the requirements of sub-clause 5.2 are not complied with on
the date set for Completion under sub-clause 5.1, the Purchasers (in
the case of failure of the Vendor to comply with the requirements of
sub-clause 5.2(a)) or the Vendor (in the case of failure by the
Purchasers to comply with the requirements of sub-clause 5.2(b)(i))
may:
(a) defer Completion to a date not more than 28 days after that date
(in which case the provisions of this sub-clause shall also apply
to Completion as so deferred); or
(b) proceed to Completion so far as practicable (including, at the
Purchasers' or, as the case may be, the Vendor's option,
completion of the purchase of some only of the Assets) but
without prejudice to any other rights which it or they may have
under this Agreement.
5.4
(a) The Warrantors undertake jointly and severally to indemnify the
Purchasers against any loss, expense or damage which the
Purchasers may suffer as a result of any document delivered to
them by the Warrantors under this clause being unauthorised,
invalid or for any other reason ineffective.
(b) The Purchasers undertake jointly and severally to indemnify the
Vendor against any loss, expense or damage which the Vendor may
suffer as a result of any document delivered to it by the
Purchasers under this clause being unauthorised, invalid or for
any other reason ineffective.
6. Completion Accounts
6.1 The Purchasers shall procure as soon as practicable after Completion
and in any event within 25 Business Days after the Completion Date (the
"First Period") the preparation of the Completion Accounts on the basis
of the accounting policies set out in schedule 4.
19
6.2 The Purchasers' Accountants will review the Completion Accounts within
20 days of the end of the First Period ("the Second Period") and will
issue to the Purchasers a draft report ("the Report") stating that:
(a) the Completion Accounts have been properly prepared on the basis
set out in the agreement;
(b) on the basis of the Completion Accounts, the amount of the Net
Asset Value.
6.3 Upon receipt of the Report and the Completion Accounts the Vendor shall
review the same and the Vendor and its agents shall be allowed all
reasonable facilities (including the provision of all working papers)
to enable them to conduct such review and in particular to satisfy
themselves that the Completion Accounts are prepared in accordance with
the provisions of this Clause and Schedule 4 and that they agree the
Net Asset Value. If the Vendor shall fail to notify the Purchasers that
it does not agree the Net Asset Value as certified within 10 Business
Days after the end of the Second Period (the "Third Period") the Vendor
shall be deemed to have agreed the Net Asset Value as set out in the
Report.
6.4 If the Vendor shall notify the Purchasers that it does not agree the
Net Asset Value as set out in the Report the Purchasers and the Vendor
shall negotiate in good faith to agree prior to the end of the period
being 5 Business Days after the end of the Third Period (the "Fourth
Period") the Net Asset Value and if the Purchasers and the Vendor shall
fail to agree the Net Asset Value as reported or otherwise on or before
the end of the Fourth Period then the matter shall be referred by the
Vendor and Purchasers jointly to the Expert.
6.5 The Vendor and the Purchasers shall be entitled to make written
representations to the Expert but subject thereto the Expert shall be
entitled to determine the procedure to be followed in his determination
in so doing:
(a) the Expert shall act as an expert and not as an arbitrator and
his decision shall, in the absence of manifest error, be final
and binding on the parties;
(b) all the costs of the Expert shall be shared equally by the Vendor
and the Purchasers unless the Expert decides otherwise;
(c) the Vendor and the Purchasers shall each procure that the Expert
is afforded all facilities and access to personnel, premises,
papers, accounts, records and such other documents as may
reasonably be required by him in order to reach his decision;
(d) the Vendor and the Purchasers (or their professional advisers on
their behalf) shall each be entitled to make one submission (or
more at the request or with the agreement of the Expert) (whether
written or oral or a combination of both) to the Expert in
relation to any item or question referred to him;
20
(e) the Vendor and the Purchasers shall each use all reasonable
endeavours to procure that the Expert issues his determination
within 30 Business Days of the initial reference to him under
sub-clause (a) and shall accordingly co-operate with the Expert
and with each other in agreeing, and complying with, any
procedural requirements and any timetable suggested by the Expert
or the other party; and
6.6 If the Net Asset Value as agreed or determined in accordance with this
Clause is less than (pound)247,000 then the Vendor and Fiberstars
forthwith shall instruct the Escrow Agent to retain such amount of
Escrow Stock equivalent to any shortfall on a (pound)1 to (pound)1
basis from (pound)247,000 in accordance with the terms of the Escrow
Agreement and clause 20.
7. Apportionments
The provisions of Schedule 4 shall apply to all Apportionments..
8. Post Completion
8.1 Forthwith after Completion:
(a) the Vendor shall wholly discontinue carrying on the Business;
(b) the parties shall, at the Purchasers' expense, send to the
suppliers and customers of the Business letters in a form agreed
between them; and
(c) Hillgate shall file the special resolution referred to in
sub-clause 5.2(a) at Companies House and shall forward the
Certificate of Incorporation on Change of Name to the Vendor
forthwith upon receipt.
8.2 For a period of 12 months after the Transfer Date, the Vendor and the
Guarantors shall, forthwith upon receipt, forward to the Purchasers any
notices, correspondence, information or enquiries which relate to the
Business.
8.3 The Vendor shall preserve or procure the preservation of all books,
documents and records relating to the Business in respect of the period
prior to Completion which it retains following Completion (if any) for
a period of 7 years, and shall allow, upon being given reasonable
notice and during business hours, the Purchasers and/or their agents or
accountants access to, and at its own expense to take copies of them.
8.4 The Purchasers shall preserve, or procure the preservation of Financial
Records of the Business for a period of 7 years and shall permit and
allow, upon giving reasonable notice and during business hours, the
Vendor and/or its agents, or accountants access to, and at its own
expense to take copies of, them.
8.5 If one party receives any monies after Completion which belong to the
other party, the recipient shall (subject to any provisions to the
contrary contained in this Agreement) hold them on trust for and
account to that other party for them within 5 Business Days of receipt.
21
8.6 The Vendor warrants without limitation (including any limitations
contained in clauses 16 and 20 of this Agreement) that all direct
debits, standing orders, BACs or other periodic payments have been paid
when due from the Bank Accounts and that all presented cheques have
been paid in and that the balances of the Bank Accounts at Completion
is as certified by the Bank.
8.7 If any payment into or out of the Bank Accounts whether prior to, at or
after Completion relates to a payment made or received not in relation
to the Business and Assets acquired by the Purchaser, the parties
hereby undertake to deal with such payment on a timely basis so that
any liability or credit is accounted to or for by the rightful person
to whom it belongs or is owned by.
9. Liabilities
9.1 Save as expressly provided in this Agreement, the Vendor shall be
solely responsible for the Liabilities, shall duly and punctually pay
and discharge the Liabilities and shall indemnify the Purchasers fully
at all times from and against them.
9.2 The Purchasers shall not be responsible for any liability in respect of
the Business or Assets other than the Assumed Liabilities and the
Vendor shall indemnify the Purchasers accordingly.
9.3 Subject to the provisions of clause 20 (Escrow Account and Claims) the
Purchasers shall, at the request and on behalf of the Vendor, meet and
discharge all claims in respect of the Product Liabilities and the
Vendor shall indemnify the Purchasers (at cost) for all costs, charges
and expenses incurred by the Purchasers in so doing.
10. Contracts
10.1 With effect from Completion, the Purchasers shall assume the
obligations (to the extent that such obligations are not material or
have been disclosed) and become entitled to the benefits of the Vendor
under the Contracts.
10.2 The Vendor undertakes with effect from Completion to assign to the
order of the Purchasers (and at the Purchasers' costs) or to procure
such assignment all the Contracts which are capable of assignment
without the consent of other parties.
10.3 If any Contract cannot be assigned by the Vendor to the Purchasers
except by an agreement of novation or with a consent to assignment or
without the assignment constituting an event of default or termination,
no assignment will take place by virtue of this Agreement until the
relevant parties are legally able to do so, but:
(a) the Vendor and the Purchasers shall (at the request of the
Purchasers) together take all reasonable steps to procure that
the Contract be novated or to obtain the consent or waiver to the
event of default or to the termination;
22
(b) unless or until the Contract has been novated or assigned or the
provision waived, the Vendor shall continue its corporate
existence and hold it in trust for the Purchasers and their
successors;
(c) the Purchasers shall, at their own cost and for their own
benefit, to the extent they are permitted to do so by the other
party to the Contract perform the Vendor's obligations under the
Contract arising after the Transfer Date and shall carry out and
complete it (or shall procure that it is carried out and
completed), to the extent that it has not previously been carried
out or completed, in the ordinary course in a proper and
workmanlike manner and in accordance with its respective terms;
and (unless the Purchasers are prevented by the other party to
the Contract from performing it) the Purchasers shall indemnify
the Vendor against the defective or negligent performance or
non-performance after the Transfer Date of the Contract.
10.4 If prior to the Transfer Date, the Vendor has sub-contracted the
performance of any Contract to any person, the Purchasers shall, on
behalf of the relevant customer, seek or accept delivery from such
person of the goods or other products or services in respect of which
that Contract was made and shall make it available to, or for
collection by, such customer.
11. Debts
11.1 The Vendor shall give the Purchasers such assistance and information as
the Purchasers may reasonably require to assist the Purchasers to
collect the Debts, including, if so requested by the Purchasers and at
the Purchasers cost, jointly sending a letter concerning the transfer
of the Debts to the debtors.
11.2 During the period of 5 months from the Transfer Date:
(a) the Purchasers shall do all it reasonably can to collect the
Debts substantially in accordance with the usual debt collection
procedures and practices from time to time adopted by the Vendor.
Any payment received from a debtor which is not allocated to a
particular debt shall be allocated first to the earliest
outstanding Debt of that debtor. The Vendor shall pay to the
Purchasers within 3 Business Days of receipt any payment received
during this period in respect of any of th Debts;
(b) the Purchasers shall within 10 Business Days of the end of this
period supply to the Vendor a statement in writing of the amount
of the Debts remaining uncollected by the Purchasers. The Vendor
shall be given reasonable access to the Purchasers records of the
Business for the purposes of ensuring that the provisions of this
clause have been observed and of verifying the statement;
(c) if at the end of this period any of the Debts have not been
collected by the Purchasers then where the amount of such
uncollected Debts, if not recovered in full during a period of 20
Business Days from any policy of insurance or third
23
party would result in the Net Asset Value as determined by the
Completion Accounts suffering a shortfall beneath the level of
(pound)247,000 or such lesser sum of the Net Asset Value if it
has already been agreed or determined, then the Purchasers be
able to cancel such value of Escrow Shares as equals the sterling
value of such shortfall in accordance with clause 20 of this
Agreement.
(d) subject to compliance by the Vendor with sub-clause (c), the
Purchasers shall assign to the Vendor, at the cost of the Vendor,
those Debts which have not been collected at the end of this
period and the Vendor shall thereafter be free to take such
action in respect of the Debts as the Vendor in its absolute
discretion deems appropriate. The Purchasers shall pay to the
Vendor within 3 Business Days of receipt any payment on account
of the Debts assigned to the Vendor pursuant t this sub-clause;
and
(e) any disputes, differences or questions arising from the
provisions of this clause shall at the request of either party be
referred to an Expert who shall act as an expert and not as an
arbitrator and his decision shall, save in respect of manifest
error, be final and binding on the parties. The costs of the
Expert shall be shared equally between the parties unless the
Expert otherwise decides.
12. Employees
12.1
(a) The parties acknowledge and agree that, pursuant to the TUPE
Regulations, the contracts of employment between the Vendor and
each of the Employees will (subject to the provisions of
sub-clause 12.5) have effect from the Transfer Date as if made
originally made between Hillgate and each Employee;
(b) The Vendor acknowledges and warrants that it has complied with
Regulation 10 of the TUPE Regulations.
12.2 The Vendor shall fully indemnify and keep the Purchasers indemnified
against all costs, claims, losses, liabilities, damages, penalties,
fines and expenses which the Purchasers may incur in relation to any
Employee or any other person employed in the Business prior to the
Transfer Date:
(a) arising out of or in connection with any claim made by or on
behalf of any person which relates to his employment by the
Vendor prior to the Transfer Date where such claim arises from
the failure of the Vendor to act as a reasonably prudent and
responsible employer would have done towards his employees or
where the Vendor has failed to follow any applicable regulations
or laws relating to its employees to its knowledge and
notwithstanding the generality of this clause and withou limit
any claim which arises by the failure of the Vendor to pay any
sums which should in accordance with its customary practise have
been paid up to the Transfer Date including without limitation,
all wages and salaries, sick pay,
24
maternity pay, any liability to taxation, bonus, expenses,
commissions, Profit Related Pay and other sums payable in respect
of any period up to the Transfer Date;
(b) arising out of or in connection with a dismissal, redundancy or
termination of employment by the Vendor of any employee and which
the Purchasers may incur pursuant to the TUPE Regulations; and
(c) incurred by the Purchasers in the dismissal, redundancy or
termination of employment of any person (other than an Employee)
whose employment transfers to the Purchasers as a consequence of
the TUPE Regulations;
12.3 The Purchasers shall indemnify and keep the Vendor indemnified against
all costs, claims, losses, liabilities and expenses whatsoever arising
out of or in connection with any claim made by or on behalf of any
Employee which relates to his employment by the Purchasers after the
Transfer Date and also to his employment prior to the Transfer Date
where such claims, losses, etc, directly relate to matters which would
have occurred even if the Vendor had acted as a reasonably prudent and
responsible employer and had abided by all relevant rules and
regulations in relation to such employees.
12.4 As soon as reasonably practicable after Completion the parties shall
together deliver to the Employees a letter, in the agreed form, between
them notifying the Employees of the transfer of their employment to the
Purchasers.
12.5 The parties acknowledge and agree that after Completion the Purchasers
shall have no responsibility or liabilities whether past, present or
future to either the Vendor or Xx Xxxxxxxx under the Pension Scheme and
the Vendor and Guarantors agree to indemnify and keep indemnified the
Purchasers against any such liabilities or responsibilities.
13. Restrictive covenants
13.1 In order to assure to the Purchasers the full benefit of the Business
and the Goodwill, the Vendor and the Guarantors in consideration of the
Purchasers acquiring the Business and Assets severally undertake with
the Purchasers that they shall not either alone or in conjunction with
or on behalf of any other person, do any of the following things:
(a) within 3 years after Completion carry on or be engaged, concerned
or interested in (except as a holder of shares in a listed
company which confer not more than one per cent of the votes
which could normally be cast at a general meeting of that
company) any business which competes with any material part of
the Business as now carried on;
(b) except in the circumstances referred to in sub-clause 24.10(b)
(Confidentiality), disclose to any other person any information
which is secret or confidential to the business or affairs of the
Business or use any such information to the detriment of the
Business for so long as that information remains secret or
confidential;
25
(c) in relation to a business which is competitive or likely to be
competitive with the Business as carried on at Completion, use
any trade or business name or distinctive xxxx, style or logo
used by or in the Business at any time during the 3 years before
Completion or anything intended or likely to be confused with it;
(d) neither before nor within 3 years after Completion solicit or
seek to entice away, any Employee whether or not such person
would commit a breach of his contract of employment by reason of
leaving the service of the Purchasers; or
(e) neither before nor within 3 years after Completion accept orders
from any person to whom the Business has sold or has supplied its
goods or services in the 3 years before Completion in respect of
similar goods or services.
13.2 Each undertaking contained in sub-clause 13.1 shall be construed as a
separate and independent undertaking.
14. Warranties
14.1 The Warrantors jointly and severally represent, warrant and undertake
to the Purchasers that each of the Warranties is true and accurate in
all respects and not misleading at the date of this Agreement.
14.2 The Warrantors acknowledge that they give the Warranties with the
intention of inducing the Purchasers to enter into this Agreement and
that the Purchasers do so in reliance on the Warranties.
14.3 Each of the Warranties is a separate and independent Warranty and shall
not be limited by reference to any other Warranty or anything in this
Agreement.
14.4 The Warranties are qualified by the facts and circumstances fairly
disclosed in the Disclosure Letter.
14.5 If this Agreement contains an untrue statement made by the Vendor or
the Warrantors and that statement also constitutes a misrepresentation
which the Purchasers relied on in entering this Agreement:
(a) the Purchasers' only remedy in respect of the untrue statement is
in damages for breach of this Agreement;
(b) the Warrantors are not liable (in equity or tort, under the
Misrepresentation Act 1967) in respect of the misrepresentation;
and
26
(c) the Purchasers may not terminate or rescind this Agreement as a
result of the statement or the misrepresentation, any other
breach of this Agreement or a matter giving rise to a Warranty
Claim.
14.6 Clause 14.5 and clause 16 do not affect the Warrantors' liability or
the Purchasers' rights or remedies in respect of a fraudulent
misrepresentation.
15. Warranty Claims
15.1 The Warrantors undertake to disclose in writing to the Purchasers
anything which is or may constitute a Warranty Claim or be inconsistent
with the contents of the Disclosure Letter as soon as it comes to its
notice at any time either before, at the time of, or after Completion.
15.2 If, in respect of or in connection with any Warranty Claim, any amount
payable to the Purchasers by the Warrantors is subject to Taxation, the
amount to be paid to the Purchasers by the Warrantors shall be such so
as to ensure that the net amount retained by the Purchasers after such
Taxation has been taken into account is equal to the full amount which
would be payable to the Purchasers had the amount not been subject to
Taxation.
15.3 If any Warranty Claim is made, the Warrantors shall not make any claim
against any employee (other than any fellow Warrantor) of the Business
on whom it may have relied before agreeing to any terms of this
Agreement or authorising any statement in the Disclosure Letter.
15.4 Any amount paid by the Warrantors to the Purchasers in respect of any
of the provisions of this Agreement shall be treated as paid to the
Purchasers by way of pro rata reduction in the consideration payable
for the purchase of the Business and the Assets.
16. Limitations on Warrantors' liability
16.1 The Warrantors' are not liable in respect of a Warranty Claim unless
and until the amount of such claim, when aggregated with the amount of
other Warranty Claims, exceeds (pound)20,000 in which case the
Warrantors shall, subject to clause 16.2-16.9, be liable for the full
amount of the Warranty Claim. Claim.
16.2 The Warrantors' total liability in respect of all Warranty Claims is
limited to (pound)1,616,000 (less any amount of Taxation that the
Vendor has paid in relation to the Consideration and has not been able
to recover having used all reasonable endeavours to do so or any value
lost on the Consideration Stock or Escrow Stock from Completion to the
date of notification of the Warranty Claim). Claim).
16.3 The Warrantors are not liable for a Warranty Claim unless the
Purchasers have given the Warrantors or any of them written notice of
the Warranty Claim, stating in reasonable detail the nature of the
Warranty Claim and, if practicable, the amount claimed on or
27
before of expiration of 18 months from Completion or in the case of any
Warranty Claim relating to Taxation, not later than 6 years from
Completion.
16.4 A Warranty Claim notified in accordance with clause 16.3 and not
satisfied, settled or withdrawn is unenforceable against the Warrantors
on the expiry of the period of 12 months starting on the day of
notification of the Warranty Claim, unless proceedings in respect of
the Warranty Claim have been issued and served on the Warrantors.
16.5 The Warrantors shall not be liable in respect of a Warranty Claim to
the extent that:
(a) the matter giving rise to the Warranty Claim would not have
arisen but for:
(i) an event, action, transaction or omission (an "Event")
after Completion by the Purchasers which the Purchasers
knew at the time of undertaking such event or action,
transaction or omission would give rise to a Warranty
Claim;
(ii) the passing of, or change in, after the date of this
Agreement a law, rule, regulation, interpretation of the
law or administrative practice of a government,
governmental department, agency or regulatory body;
(b) the matter giving rise to the Warranty claim arises wholly or
partially from an event occurring before Completion at the
specific written request or direction of the Purchasers and which
the Purchasers knew at the time of any such request or direction
would give rise to a Warranty Claim.
16.6 The Purchasers are not entitled to recover more than once in respect of
any one matter giving rise to a Warranty Claim.
16.7 Subject to clause 20, if the Warrantors pay to the Purchasers (or any
company associated with the Purchasers) an amount in respect of a Claim
(as defined in clause 20) and said company subsequently recovers from
another person or any insurance policy an amount (the "Sum Recovered")
in respect of the matter giving rise to the Claim:
(a) if the amount paid by the Warrantors in respect of the Claim is
more than the Sum Recovered, the Purchasers shall as soon as
reasonably practicable pay to the Warrantors the Sum Recovered
less any costs and expenses incurred by the Purchasers (or
associated company) in recovering such sum;
(b) if the amount paid by the Warrantors in respect of the Claim is
less than or equal to the Sum Recovered, the Purchasers shall as
soon as reasonably practicable pay to the Warrantors an amount
equal to the amount paid by the Warrantors less any costs and
expenses incurred by the Purchasers (or associated company) in
recovering such sum.
28
16.8 Nothing in this Agreement restricts or limits the Purchasers' general
obligation at law to mitigate any loss or damage which they may incur
in consequence of a matter giving rise to a Warranty Claim.
16.9 None of the above mentioned limitations shall apply to any Warranty
Claim which is the consequence of fraud, wilful concealment, dishonesty
or gross misconduct by the Warrantors or any of them.
17. Conduct of Warranty Claims
17.1 The Purchasers shall notify the Warrantors (or any of them) in writing
of:
(a) any claim made against them by a third party which may give rise
to a Warranty Claim; and
(b) any claim the Purchasers are entitled to bring against a third
party which claim is based on circumstances which may give rise
to a Warranty Claim.
17.2 The Purchasers shall not be liable for any delay in giving any notice
under sub-clause 17.1 and shall not by reason of such delay be
precluded from bringing any such claim against the Warrantors unless
where such delay is unreasonable in the circumstances and the
Warrantors have been materially prejudiced by such delay, in which case
in assessing damages in respect of any such Warranty Claim credit shall
be given to the Warrantors in respect of any damages which would not
have arisen pursuant to such Warranty Claim but for such unreasonable
delay.
17.3 The Purchasers shall procure that the conduct, negotiation, settlement
or litigation of the claim by or against such third party is, so far as
is reasonably practicable, carried out in accordance with the wishes of
the Warrantors, and at their cost subject to them giving timely
instructions to the Purchasers and providing reasonable security for
any costs and expenses which might be incurred by the Purchasers.
17.4 The Purchasers shall provide to the Warrantors and the Warrantors'
advisers reasonable access to premises and personnel and to any
relevant assets, documents and records within their power, possession
or control for the purpose of investigating any Warranty Claim and
enabling the Warrantors to take the action referred to in sub-clause
17.3 and shall allow the Warrantors and its advisers to take copies of
any relevant documents or records at the Warrantors' expense.
18. Purchasers' remedies
18.1 The rights and remedies of the Purchasers in respect of any breach of
the Warranties shall not be affected by Completion.
18.2 The Warrantors shall indemnify the Purchasers against all costs
(including legal costs on an indemnity basis as defined in Order 62 of
the Rules of the Supreme Court), expenses
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or other liabilities which the Purchasers may reasonably incur either
before or after the commencement of any action in connection with:
(a) the settlement of any Warranty Claim in favour of the Purchasers
(b) any legal proceedings in respect of any Warranty Claim in which
judgement is given for the Purchasers; or
(c) the enforcement of any such settlement or judgement.
19. Fiberstars Warranties
Fiberstars warrants to the Vendors that:
19.1 It is a corporation duly formed, validly existing and in good standing
under the laws of its state of incorporation, with all necessary
corporate power and authority under applicable laws to execute this
Agreement and to consummate the transactions contemplated by this
Agreement.
19.2 The Consideration Stock (and any Escrow Stock), upon its delivery to
the Vendor in accordance with the provisions of this Agreement, will
have been duly and validly authorised, issued and delivered by
Fiberstars and the Consideration Stock (and any Escrow Stock) will be
fully paid for and non-assessable.
19.3 Fiberstars has previously made available to the Warrantors, and the
Warrantors by their execution of this Agreement acknowledge receipt of,
the following documents filed by Fiberstars with the SEC:
(a) Fiberstars Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) Fiberstars Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998; and
(c) Fiberstars Proxy Statement dated May 15, 1998 with respect to the
annual meeting of stockholders held on June 24, 1998 ("the SEC
Documents"). As of their respective dates, none of the SEC
Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated in such
documents or necessary to make the statements in such documents
no misleading. As of their respective dates, the SEC Documents
complied in all material respects with the rules and regulations
under the Securities Acts.
20. The Escrow Account, Claims and Further Limitations
20.1 In order to ensure that the Warranties made by the Warrantors under
this Agreement are not breached, and in order to provide an initial
source of indemnification to the Purchasers pursuant to any Warranty
Claims, Product Liabilities, any shortfall in the Net
30
Asset Value, or any indemnity claim (including for the avoidance of
doubt and without limit an indemnity claim under the provisions of
clause 22 or Schedule 1) or other claim under this Agreement together
with any associated costs (together a "Claim"), the Vendor and the
Guarantors agree that the certificates representing the Escrow Stock
shall be deposited with the Escrow Agent in an escrow account ("the
Escrow Account") pursuant to the Escrow Agreement on or as soon as
reasonably practicable after the date of Completion to provide a source
from which the Purchasers can be reimbursed for any Claim.
20.2 Such Escrow Stock shall, subject to the provisions of this clause 20
and the Escrow Agreement, be held in the Escrow Account during the
period from Completion to the Escrow Release Date in accordance with
the terms of the Escrow Agreement. Any offsets or deductions made from
the Escrow Stock held in the Escrow Account on account of any Claim
shall be made on the last business day of the Hold Period, or at such
other time as set forth in the Escrow Agreement and shall be based on
the closing price per share of Fiberstars stock based on the average
ten (10) trading days on NASDAQ immediately preceding the date of
notification of the Claim.
20.3 The cancellation by Fiberstars of any Escrow Stock contained in the
Escrow Account in respect of any Claim shall not prejudice the right of
the Purchasers to recover any further sum due to them for that or any
other Claim not satisfied by the Escrow Account.
20.4 The Warrantors shall not be liable for any Claim (other than a Warranty
Claim) unless the amount of that individual Claim (or claims where such
claim results from a similar series of events within any 12 month
period) exceeds (pound)5,000 in which case the Warrantors shall be
liable for the whole amount and not just the excess.
20.5 Further, where any Claims are Claims in relation to the Property (under
the provisions of Schedule 1) or the Warrantors assume or incur any
costs in relation to the matters referred to in Schedule 1, the
Warrantors shall not be liable for the initial (pound)20,000 in
aggregate of any such Claims or costs which the Purchasers shall
reimburse to the Warrantors. For the avoidance of doubt the Warrantors
shall bear or be liable for any costs or Claims in excess of
(pound)20,000 aggregate.
20.6 Notwithstanding any other provision of this Agreement (other than
clause 8.6), the Vendor and the Guarantors (or any of them) shall not
be liable to make any payment to the Purchasers under any Claim that
the Purchasers may have (other than a claim resulting from a Net Asset
Value shortfall (in accordance with clause 6 (Completion Accounts) and
Schedule 4 of this Agreement) or payable in accordance with clause 11
(Debts) of this Agreement) until the aggregate amounts of any such
Claim or Claims exceeds the amount of the Net Asset Surplus, in which
case the Vendor and the Guarantors shall be jointly and severally
liable for the excess above the Net Asset Surplus only.
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20.7 For the avoidance of doubt, the disclosures and deemed disclosures
contained in the Disclosure Letter shall not release or reduce any
liability for a Claim other than a Warranty Claim.
21. Guarantee
21.1 In consideration of the Purchasers agreeing to buy the Business and
Assets on the terms of this Agreement the Guarantors jointly and
severally unconditionally and irrevocably guarantee:
(a) the due, punctual and full performance by the Vendor of all its
obligations under this Agreement;
(b) the payment by the Vendor when due of any amount payable under
this Agreement
as if the Guarantors were the principal obligors under this Agreement
and not merely a surety.
21.2 As an independent and primary obligation, without prejudice to Clause
21.1 the Guarantors hereby unconditionally and irrevocably agree to
indemnify and keep indemnified the Purchasers against all and any
losses, costs, claims, liabilities, damages, demands and expenses
suffered or incurred by the Purchasers arising from failure of the
Vendor to comply with any of its obligations or discharge any of its
liabilities under this Agreement or arising from the termination of
this Agreement or by reason of the Vendor not being at any time, or
ceasing to be, liable in respect of the obligations and liabilities
purported to be assumed by it in accordance with the express terms of
this Agreement.
21.3 The guarantee and indemnity set out in this clause is a continuing
guarantee and indemnity shall remain in full force and effect until all
the obligations of the Vendor guaranteed or indemnified by this clause
have been discharged in full. It is in addition to and shall not
prejudice nor be prejudiced by any other guarantee, indemnity or other
security or right against any third party which the Purchasers may have
for the due performance of these obligations.
21.4 The Guarantors acknowledge that their liability under this clause shall
not be discharged or affected in any way by time or any other
indulgence or concession being granted to the Vendor or by any other
act, omission, dealing, matter or thing whatsoever (including without
limitation any change in the memorandum or articles of association of
the Vendor any amendment to this Agreement or the liquidation,
dissolution, reconstruction or amalgamation of the Vendor or the
illegality or enforceability of this Agreement) which but for this
provision might operate to release the Guarantors from their
obligations under this clause
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22. Indemnities
The Warrantors agree to indemnify and keep indemnified the Purchasers
against all and any losses, costs, claims, liabilities, damages,
demands and expenses suffered or incurred by the Purchasers arising
from any of the following matters;
22.1 Any fine, prosecution, claim or other payment levied by the Health and
Safety Executive ("HSE") or otherwise against the Business for any
failure to put in place, comply with or observe relevant health and
safety procedures unless such claim etc. resulted from any Employee
being alerted to its ability to bring a claim as a direct result of any
health and safety audit undertaken after Completion.
22.2 Any breach or non compliance by the Business of the provisions of the
Commercial Agents (Council Directives/Regulations 1993 or Directive
86/653 E.E.C.).
23. Property
The provisions of Schedule 1 shall apply.
24. General
24.1 Entire Agreement
This Agreement sets out the entire agreement and understanding between
the parties and supersedes all prior agreement understandings or
arrangements (oral or written) in respect of the subject matter of this
Agreement.
24.2 Assignment
(a) This Agreement shall be binding upon and enure for the benefit of
the successors of the parties but, except as set out in
sub-clause (b), shall not be assignable by any party without the
prior written consent of the other.
(b) The Purchasers may subject to obtaining the consent of the Vendor
and the Warrantors (which shall not be unreasonably withheld or
delayed) assign the benefit of this Agreement (including, without
limitation, the Warranties) to any successor in title or any
subsequent purchaser of the Business.
24.3 Variation
No purported variation of this Agreement shall be effective unless it
is in writing and signed by or on behalf of each of the parties.
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24.4 Effect of Completion
Except to the extent already performed, all the provisions of this
Agreement shall, so far as they are capable of being performed or
observed, continue in full force and effect notwithstanding Completion
24.5 Invalidity
If any provision of this Agreement is found by any court or competent
authority to be invalid, unlawful or unenforceable in any jurisdiction,
that provision shall be deemed not to be a part of this Agreement, but
it shall not affect the enforceability of the remainder of this
Agreement nor shall it affect the validity, lawfulness or
enforceability of that provision in any other jurisdiction.
24.6 Releases and waivers
(a) The rights, powers and remedies conferred on any party by this
Agreement and remedies available to any party are cumulative and
are additional to any right, power or remedy which it may have
under general law or otherwise.
(b) Any party may, in whole or in part, release, compound,
compromise, waive or postpone, in its absolute discretion, any
liability owed to it or right granted to it in this Agreement by
any other party or parties without in any way prejudicing or
affecting its rights in respect of that or any other liability or
right not so released, compounded, compromised, waived or
postponed.
(c) No single or partial exercise, or failure or delay in exercising
any right, power or remedy by any party shall constitute a waiver
by that party of, or impair or preclude any further exercise of,
that or any right, power or remedy arising under this Agreement
or otherwise.
24.7 Further assurance
After Completion, the Vendor and the Guarantors shall at the
Purchasers' cost execute such documents and take such steps as the
Purchasers may reasonably require to vest the full title to the
Business and Assets in the Purchasers and to give the Purchasers the
full benefit of this Agreement
24.8 Counterparts
(a) This Agreement may be executed in any number of counterparts and
by the parties on separate counterparts, but shall not be
effective until each party has executed at least one counterpart.
(b) Each counterpart, when executed, shall be an original of this
Agreement and all counterparts shall together constitute one
instrument.
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24.9 Restrictive Trade Practices Act 1976
No provision of this Agreement, or of any agreement or arrangement of
which it forms part, which is subject to registration under the
Restrictive Trade Practices Act 1976 shall take effect until the day
after the date on which particulars of this Agreement, and/or any
agreement or arrangement of which it forms part, have been supplied to
the Director-General of Fair Trading in accordance with those Acts and
the parties agree to furnish such particulars within 3 months of the
date of this Agreement.
24.10 Confidentiality
(a) Except as referred to in sub-clause (b), each party shall treat
as strictly confidential all information received or obtained as
a result of entering into or performing this Agreement which
relates to the provisions or subject matter of this Agreement, to
any other party to this Agreement or the negotiations relating to
this Agreement.
(b) Any party may disclose information which would otherwise be
confidential if and to the extent:
(i) it is required to do so by law or any securities exchange
or regulatory or governmental body to which it is subject
wherever situated;
(ii) it considers it necessary to disclose the information to
its professional advisers, auditors and bankers provided
that it does so on a confidential basis;
(iii) the information has come into the public domain through no
fault of that party; or
(iv) each party to whom it relates has given its consent in
writing
24.11 Default interest
If any party defaults in the payment when due of any sum payable under
this Agreement (whether payable by agreement or by an order of a court
or otherwise), the liability of that party shall be increased to
include interest on that sum from the date when such payment was due
until the date of actual payment at a rate per annum of 2 per cent.
above the base rate from time to time of National Westminster Bank PLC.
Such interest shall accrue from day to day and shall be compounded
annually.
24.12 Set-off
Subject to the provisions of clause 20, the Purchasers shall be
entitled to set off the amount of any Warranty Claim or any other claim
under this Agreement against any sum standing to the credit in the
Escrow Account or due from it to the Vendor under this Agreement.
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25. Announcements
25.1 Subject to sub-clause 25.2, no announcement concerning the terms of
this Agreement shall be made by or on behalf of any of the parties
without the prior written consent of the others, such consent not to be
unreasonably withheld or delayed.
25.2 Any announcement or circular required to be made or issued by any party
by law or under the regulations of NASDAQ, the United States Securities
and Exchange Commission, the London Stock Exchange Limited or the City
Code on Takeovers and Mergers issued by the Panel on Takeovers and
Mergers may be made or issued by that party without consent if it has
first sought consent and given the other parties a reasonable
opportunity to comment on the subject matter and form of the
announcement or circular (given the time scale within which it is
required to be released or despatched).
26. Costs and expenses
26.1 Except as expressly referred to in this Agreement, each party shall
bear its own costs and expenses incurred in the preparation, execution
and implementation of this Agreement save that subject to Completion
occurring Fiberstars shall remit to the Vendor any reasonable legal
costs (exclusive of VAT) incurred by the Warrantors as soon as
practicable following completion in preparation, negotiation and
execution of this Agreement in excess of (pound)10,000, subject to it
being satisfied of the validity of such legal costs.
26.2 The Purchasers shall pay all stamp and other transfer duties and
registration fees applicable to any document to which it is a party and
which arise as a result of or in consequence of this Agreement.
27. Notices
27.1 Any notice to a party under this Agreement shall be in writing signed
by or on behalf of the party giving it and shall, unless delivered to a
party personally, be left at, or sent by prepaid first class post,
prepaid recorded delivery or facsimile to the address of the party as
set out on page 1 of this Agreement or as otherwise notified in writing
from time to time.
27.2 Except as referred to in sub-clause 27.3, a notice shall be deemed to
have been served:
(a) at the time of delivery if delivered personally;
(b) 48 hours after posting in the case of an address in the United
Kingdom and 120 hours after posting for any other address; or
(c) 2 hours after transmission if served by facsimile on a Business
Day prior to 3pm or in any other case at 10 am on the Business
Day after the date of despatch.
36
If the deemed time of service is not during normal business hours in
the country of receipt, the notice shall be deemed served at or, in the
case of faxes, 2 hours after the opening of business on the next
Business Day of that country.
27.3 The deemed service provisions set out in sub-clause 27.2 do not apply
to:
(a) a notice served by post, if there is a national or local
suspension, curtailment or disruption of postal services which
affects the collection of the notice or is such that the notice
cannot reasonably be expected to be delivered within 48 hours or
120 hours (as appropriate) after posting; and
(b) a notice served by facsimile, if, before the time at which the
notice would otherwise be deemed to have been served, the
receiving party informs the sending party that the notice has
been received in a form which is unclear in any material respect,
and, if it informs the sending party by telephone, it also
despatches a confirmatory telex or facsimile within 2 hours.
27.4 In proving service it will be sufficient to prove:
(a) in the case of personal service, that it was handed to the party
or delivered to or left in an appropriate place for receipt of
letters at its address;
(b) in the case of a letter sent by post, that the letter was
properly addressed, stamped and posted;
(c) in the case of facsimile, that it was properly addressed and
despatched to the number of the party.
27.5 A party shall not attempt to prevent or delay the service on it of a
notice connected with this Agreement.
28. Governing law and jurisdiction
28.1 Save for the Escrow Agreement which shall be governed by and be subject
to the jurisdiction of the State of California, USA;
(a) this Agreement shall be governed by and construed in accordance
with English Law; and
(b) each of the parties irrevocably submits for all purposes in
connection with this Agreement to the non-exclusive jurisdiction
of the courts of England.
This Agreement is made on the date appearing at the head of page 1.
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Schedule 2
(The Warranties)
The Warrantors
1. Capacity
1.1 The Warrantors have the requisite power and authority to enter into and
perform this Agreement.
1.2 The Warrantors are not bankrupt, have not proposed a voluntary
arrangement and have not made or proposed any arrangement or
composition with their creditors or any class of their creditors.
1.3 This Agreement constitutes and imposes valid legal and binding
obligations on the Warrantors fully enforceable in accordance with its
terms.
2. Arrangements between the Business and the Vendor or the Warrantors
There are no contracts, arrangements, engagements, orders or
liabilities, actual or contingent outstanding or remaining in whole or
in part to be performed affecting the Business between the Vendor or
Warrantors or any person connected (within the meaning of Section 839,
ICTA) with a shareholder of the Vendor.
3. Other interests of the Vendor
The Vendor has not or does not intend to acquire any interest, direct
or indirect, in any business which has a close trading relationship
with or which competes or is likely to compete with the Business.
Information
4. Accuracy and adequacy of information
4.1 The information contained in the schedules and appendices to this
Agreement and the data and information provided by the Vendor to
compile the Completion Accounts is accurate and complete.
4.2 The information contained in the Disclosure Letter and so far as the
Warrantors are aware any other written information including without
limit any business plan, forecasts and projections of the Vendor
supplied to the Purchasers or their advisers by or on behalf of the
Vendor or the Guarantors or their advisers is complete and accurate and
is not misleading because of any omission or ambiguity or for any other
reason and where the information is expressed as an opinion, it is
truly and honestly held and not given casually, recklessly or without
due regard for its accuracy and there has been no Material
38
Adverse Change affecting any such information which renders it untrue
or incomplete since the date of receipt of such information by the
Purchasers.
Financial matters
5. Insolvency
5.1 No distress, execution, winding up petition or other process or event
of insolvency has been levied against the Vendor in relation to the
Business or the Assets nor action taken to repossess any goods of the
Business in the Vendor's possession.
5.2 No receiver (including an administrative receiver), trustee or
administrator has been appointed of the whole or any part of the assets
or undertaking of the Vendor which relates to or would or might affect
the Business or the Assets and the Warrantors are not aware of any
circumstances likely to give rise to the appointment of any such
receiver, trustee or administrator.
5.3 So far as the Warrantors are aware, the Vendor has not been a party to
any transaction with any third party or parties which relates to or
would or might affect the Business or any of the Assets and which
would, if any such third party went into liquidation or had a
bankruptcy or administration order made in relation to it, constitute
(in whole or in part) a transaction at an undervalue, preference or
invalid floating charge or otherwise would or might constitute any
other transaction or transfer at an undervalue or involving an
unauthorised reduction of capital.
6. Preparation and contents of the Accounts
6.1 To the extent that the Accounts relate to the Business they were
prepared in accordance with the requirements of all relevant statutes
and generally accepted accounting practices including, without
limitation, all applicable Financial Reporting Standards issued by the
Accounting Standards Board, Statements of Standard Accounting Practice
issued by the Institute of Chartered Accountants of England and Wales
and Statements from the Urgent Issues Task Force current at the
Accounts Date.
6.2 Without prejudice to the generality of sub-paragraph 6.1:
(a) the Accounts:
(i) give a true and fair view of the state of affairs of the
Business at the Accounts Date and the profits or losses of
the Business for the financial period ending on that date;
(ii) contain full provision or reserve for all liabilities and
for all capital and revenue commitments of the Business as
at the Accounts Date;
(iii) disclose all the assets of the Business as at the Accounts
Date and none of the values placed in the Accounts on any
of those assets was in excess of
39
its market value at the Accounts Date;
(iv) make adequate provision for bad and doubtful debts;
(v) do not include any figure which is referable to the value
of an intangible asset; and
(vi) make adequate provision for depreciation of the fixed
assets of the Business having regard to their original cost
and life.
(b) in the Accounts:
(i) in valuing work-in-progress no value was attributed in
respect of eventual profits and adequate provision was made
for such losses as were at the time of signature of the
Accounts by directors of the Vendor reasonably foreseeable
as arising or likely to arise; and
(ii) slow-moving stock was written down appropriately,
redundant, obsolete, obsolescent or defective stock was
wholly written off and the value attributed to any other
stock did not exceed the lower of cost (on a first in,
first out basis) and net realisable value (or replacement
value) at the Accounts Date.
6.3 The profits and losses of the Business shown in the Accounts were not,
save as disclosed in the Accounts or in any note accompanying them, to
any material extent affected by any extraordinary, exceptional, unusual
or non-recurring income, capital gain or expenditure or by any other
factor known to the Vendor rendering any such profit or loss for such
period exceptionally high or low.
7. Accounting records
7.1 The accounting records of the Vendor comply with the requirements of
Sections 221 and 222, Companies Xxx 0000, do not contain or reflect any
material inaccuracy or discrepancy and present and reflect in
accordance with generally accepted accounting principles and standards
the financial position of and all transactions entered into by the
Vendor or to which it has been a party.
7.2 All relevant financial books and records of the Business are in the
possession of the Vendor or otherwise under its direct control.
7.3 Where any of the records of the Business are kept on computer, the
Vendor:
(a) is the owner of all hardware and a licensee of all software
necessary to enable it to use the records as they have been used
in the Business to the date of this Agreement and to Completion;
(b) does not share any hardware or software relating to the records
with any person;
40
and
(c) maintains adequate back up records and support in the event of
any fault or failure of such computer hardware and software.
8. Management accounts
The Management Accounts of the Vendor relating to the Business for the
period from the Accounts Date to the Management Accounts Date have been
prepared on a basis consistent with the Accounts, fairly reflect the
trading position of the Business as at their date and for the period to
which they relate and are not affected by any extraordinary,
exceptional, unusual or non-recurring income, capital gain or
expenditure or by any other factor known by the Vendor rendering
profits or losses for the period covered exceptionally high or low.
9. Events since the Accounts Date
9.1 Since the Accounts Date there has been no material change in:
(a) the financial or so far as the Warrantors are aware the trading
position or prospects of the Business;
(b) the value or state of assets or amount or nature of liabilities
as compared with the position disclosed in the Accounts; or
(c) in the turnover, direct or indirect expenses or the margin of
profitability of the Business as compared with the position
disclosed for the equivalent period of the last financial year.
9.2 The Vendor has since the Accounts Date carried on the Business in the
ordinary course and without interruption, so as to maintain it as a
going concern and paid its creditors in the ordinary course and within
the credit periods agreed with such creditors.
9.3 Since the Accounts Date no supplier of the Business has ceased or
restricted supplies or threatened so to do, there has been no loss or
material curtailment of the business transacted with any customer which
at any time in the preceding financial year represented one per cent or
more of the turnover of the Business and the Vendor is not aware of any
circumstances likely to give rise to any of the above.
9.4 Since the Accounts Date, in relation to the Business the Vendor has
not:
(a) incurred or committed to incur:
(i) material capital expenditure; or
(ii) any liability whether actual or contingent except for full
value or in the ordinary course of business;
41
(b) acquired or agreed to acquire:
(i) any asset for a consideration higher than its market value
at the time of acquisition or otherwise than in the
ordinary course of business; or
(ii) any business or substantial part of it or any share or
shares in a body corporate; or
(c) disposed of or agreed to dispose of, any of its assets except in
the ordinary course of business and for either the lower of their
net book or market value;
Trading and Contracts
10. Contracts and commitments
10.1 True and complete details of the Contracts (including copies where
possible) have been given to the Purchasers.
10.2 None of the Contracts at Completion:
(a) have material adverse consequences in terms of expenditure or
revenue;
(b) relate to matters outside the ordinary course of the Business or
were entered into other than on arms' length terms;
(c) can be terminated in the event of any change in the underlying
ownership or control of the Business or would be materially
affected by such change.
10.3 In relation to the Business there are no outstanding bids, tenders,
sales or service proposals which are material or which, if accepted,
would be likely to result in a loss.
10.4 The Warrantors are not aware of any actual, potential or alleged
breach, invalidity, grounds for termination, grounds for rescission,
grounds for avoidance or grounds for repudiation of any Contract.
11. Terms of trade
The Vendor has not given any guarantee or warranty (other than any
implied by law) or made any representation in respect of any product or
services sold or supplied by the Business nor has it accepted any
liability to service, maintain, repair or otherwise do or refrain from
doing anything in relation to such goods or services after they have
been sold or supplied by it.
12. Product liability
So far as the Warrantors are aware, in relation to the Business, the
Vendor has not manufactured, sold or provided any product or service
which does not in every respect
42
comply with all applicable laws, regulations or standards or which is
defective or dangerous or not in accordance with any representation or
warranty, express or implied, given in respect of it.
13. Licences and consents
13.1 So far as the Warrantors are aware all licences, consents, permissions,
authorisations and approvals required for the carrying on of the
Business are contained in the Disclosure Letter and all of them have
been obtained by the Business and are in full force and effect.
13.2 So far as the Warrantors are aware all reports, returns and information
required by law or as a condition of any such licence, consent,
permission, authorisation or approval to be made or given to any person
or authority in connection with the Business have been made or given to
the appropriate person or authority and there are no circumstances
(including the purchase of the Business by the Purchasers) which
indicate that any licence, consent, permission, authorisation or
approval might not be renewed in whole or in part or is likely to be
revoked, suspended or cancelled or which may confer a right of
revocation, suspension or cancellation.
14. Competition and trade regulation law
14.1 So far as the Warrantors are aware in relation to the Business, the
Vendor is not nor has it been a party to, or is or has been concerned
in any agreement or arrangement, or is conducting or has conducted
itself, whether by omission or otherwise, in a manner which:
(a) contravenes, is invalidated in whole or in part by or has been,
or should have been, registered under the Restrictive Trade
Practices Acts 1976 and 1977;
(b) contravenes the provisions of the Resale Prices Xxx 0000, the
Trade Description Acts 1968 and 1972, the Fair Trading Act 1973
or any secondary legislation made under either of those Acts; or
(c) infringes Articles 85 or 86 of the Treaty of Rome or any
regulation or directive made under it or any other anti-trust or
similar legislation in any jurisdiction in which the Business is
carried on or where its activities may have any effect.
14.2 In relation to the Business, the Vendor has not:
(a) given an undertaking to, or is subject to, any order of or, so
far as the Warrantors are aware, investigation by, or has
received any request for information from;
(b) received, nor so far as the Vendor is aware, is likely to receive
any process, notice or communication, formal or informal by or on
behalf of; or
(c) been or is a party to, or is or has been concerned in, any
agreement or arrangement in respect of which an application for
negative clearance and/or exemption has been made to;
43
the Office of Fair Trading, the Monopolies and Mergers
Commission, the Secretary of State, the European Commission or
any other governmental or other authority, department, board,
body or agency of any country having jurisdiction in anti-trust
or similar matters in relation to the Business.
15. Compliance with law
15.1 The Vendor has not in relation to the Business committed nor is it
liable for, and no claim has been or, so far as the Warrantors are
aware, will be made that it has committed or is liable for, any
criminal, illegal, unlawful or unauthorised act or breach of any
obligation or duty whether imposed by or pursuant to statute, contract
or otherwise.
15.2 The Vendor has not in relation to the Business received notification
that any investigation or inquiry is being, or has been, conducted by,
or received any request for information from any governmental or other
authority, department, board, body or agency in respect its affairs
and, so far as the Warrantors are aware at Completion, there are no
circumstances which would give rise to such investigation, inquiry or
request.
15.3 None of the activities, contracts or rights of the Business is ultra
xxxxx, unauthorised, invalid or unenforceable or in breach of any
contract or covenant and all documents in the enforcement of which it
may be interested are valid.
16. Litigation and disputes
16.1 Except for actions to recover any debt incurred in the ordinary course
of the Business owed to the Vendor where each individual debt and its
costs outstanding amounts to less than (pound)1,000:
(a) the Vendor is not in relation to the Business engaged in any
litigation, arbitration, administrative or criminal proceedings,
whether as plaintiff, defendant or otherwise;
(b) so far as the Warrantors are aware, no litigation, arbitration,
administrative or criminal proceedings by or against the Vendor
relating to the Business are threatened or expected ; and
(c) so far as the Warrantors are aware, there are no facts or
circumstances likely to give rise to any litigation, arbitration,
administrative or criminal proceedings against the Vendor in
relation to the Business.
16.2 The Vendor is not in relation to the Business subject to any order or
judgement given by any court or governmental or other authority,
department, board, body or agency or has not been a party to any
undertaking or assurance given to any court or governmental or other
authority, department, board, body or agency which is still in force,
nor, so far as the Warrantors are aware, are there any facts or
circumstances likely to give rise to it becoming subject to such an
order or judgement or to be a party to any such undertaking
44
or assurance.
Assets
17. Ownership and condition of the Assets
17.1 Each of the Assets is owned both legally and beneficially by the Vendor
free from any third party rights and, if capable of possession, is in
its possession.
17.2 Each item of Equipment is:
(a) in good repair and condition; and
(b) not expected to require replacement or additions within 12 months
of Completion.
17.3 So far as the Warrantors are aware the Assets comprise all assets
necessary for the continuation of the Business as it is currently
carried on and no Asset is shared by the Business with any other
person.
17.4 The Business does not depend upon any assets, facilities or services
owned or supplied by the Guarantors.
18. Charges and encumbrances over the Assets
18.1 No option, right to acquire, mortgage, charge, pledge, lien (other than
a lien arising by operation of law in the ordinary course of trading)
or other form of security or encumbrance or equity on, over or
affecting the Assets is outstanding and, apart from this Agreement,
there is no agreement or commitment to give or create any of them and
no claim has been made by any person to be entitled to any of them.
18.2 No floating charge created by the Vendor has crystallised and there are
no circumstances likely to cause such a floating charge to crystallise.
18.3 The Vendor has not received notice from any person intimating that it
will enforce any security which it may hold over any of the Assets and
there are no circumstances likely to give rise to such a notice.
19. Intellectual Property
19.1 So far as the Warrantors are aware complete and accurate details of all
Intellectual Property and copies of all licences and other agreements
relating to it are contained in the Disclosure Letter.
19.2 So far as the Warrantors are aware all Intellectual Property is either:
(a) in the sole legal and beneficial ownership of the Vendor free
from all licences, charges or other encumbrances; or
45
(b) the subject of binding and enforceable licences from third
parties in favour of the Vendor:
(i) of which no notice to terminate has been received;
(ii) all parties to which have fully complied with all
obligations in those licences; and
(iii) in relation to which no disputes have arisen;
and nothing has been done (including the sale of the Business to
the Purchasers) or omitted to be done which would jeopardise the
validity, enforceability or subsistence of any Intellectual
Property or any such licences.
19.3 So far as the Warrantors are aware any Intellectual Property which is
capable of registration has been registered or is the subject of an
application for registration, and is or will when duly registered be
valid, binding and enforceable and:
(a) in the case of registrations, all renewal fees have been paid by
their due date and all such action necessary to preserve the
registration has been taken; and
(b) in the case of pending applications, the Vendor is aware of no
reason why any such applications should not proceed to grant.
19.4 No licences, registered user or other rights have been granted or
agreed to be granted by the Vendor to any person in respect of any
Intellectual Property.
19.5 So far as the Warrantors are aware, at no time during the past 6 years
has there been any unauthorised use or infringement by any person of
any Intellectual Property.
19.6 So far as the Warrantors are aware, none of the processes employed, or
products or services dealt in by the Business infringes any rights of
any third party relating to intellectual property nor makes the Vendor
liable to pay a fee or royalty and no claims have been made, threatened
or so far as the Warrantors are aware are pending, in relation to any
such Intellectual Property against the Vendor.
19.7 Except in the ordinary course of business and on a confidential basis,
no disclosure has been made of any of the confidential information,
know how, technical processes, financial or trade secrets or customer
or supplier lists of the Business.
19.8 Any names used by the Business other than the corporate name of the
Vendor are contained in the Disclosure Letter and so far as the
Warrantors are aware do not infringe the rights of any person.
Employment
46
20. Directors and Employees
20.1 Complete and accurate details of the terms and conditions of employment
of all the Employees, including their dates of birth and commencement
of employment, their remuneration (including bonus, commission, profit
sharing, share options, permanent health insurance, medical expenses
insurance, life assurance and pension benefits), notice periods and any
arrangements or assurances (whether or not legally binding) for the
payment of compensation on termination of employment have been provide
to the Purchasers.
20.2 The Vendor has maintained up-to-date, adequate and suitable records
regarding the service and terms and conditions of employment of each of
the Employees.
20.3 True and complete copies of all contracts of employment and other
documents relating to the employment of the Employees are contained in
the Disclosure Letter.
20.4 Since the Accounts Date there has been no material alteration in the
terms of employment or any material change in the number of employees
employed in the Business.
20.5 Other than salary for the current month and accrued holiday pay, no
amount is owing to any Employee.
20.6 No Employee has given notice or is under notice of dismissal nor are
there any service contracts between the Vendor and any of the Employees
which cannot be terminated by the Vendor by 12 weeks' notice or less
without giving rise to a claim for damages or compensation (other than
a statutory redundancy payment).
21. Industrial relations and legislation
21.1 In relation of the Business, the Vendor is not a party to any contract,
agreement or arrangement with any trade union or other body or
organisation representing any of the Employees.
21.2 In relation to the Employees, the Vendor has complied with all relevant
legislation (including without limit the TUPE Regulations and The
Working Time Regulations 1998) conditions of service, customs and
practices and, where relevant, all collective agreements and
recognition agreements for the time being.
21.3 No dispute has arisen between the Vendor and any Employees or category
of the Employees nor are there any circumstances known to the
Warrantors at the Transfer Date which are likely to give rise to any
such dispute.
22. Pensions
22.1 The Vendor has no plans, schemes or arrangements in relation to death,
disability or retirement of any of the Employees.
47
Properties
23. Title
23.1 The Property comprises all the properties presently owned, occupied,
held, controlled or otherwise used by the Vendor in relation to the
Business and the Vendor is in actual and exclusive occupation and is
the legal and beneficial lessee of the Property.
23.2 The Vendor will assign with full title guarantee.
23.3 The Property is occupied or otherwise used by the Vendor by right of
ownership or under a lease, the terms of which permit its occupation or
use as tenant and not under any provision allowing the parting of or
sharing of possession with group or associated companies and the
Warrantors know no outstanding circumstances which would restrict the
continued possession and enjoyment of the Property or any part of it by
the Vendor.
23.4 All deeds and documents necessary to prove title to the Property are in
the possession and control of the Vendor and consist of original deeds
and documents or properly examined abstracts.
23.5 No person is in adverse possession of the Property or so far as the
Warrantors are aware has acquired or is acquiring any rights or
overriding interests (as defined by Section 70, Land Registration Act
1925) adversely affecting the Property.
23.6 The Vendor has not had occasion to make any claim or complaint in
relation to any neighbouring property or its use or occupation and
there are no disputes, claims, actions, demands or complaints in
respect of the Property which are ongoing nor are any disputes, claims,
actions, demands or complaints anticipated and no notices materially
affecting the Property have been given or received and not complied
with.
24. Encumbrances
24.1 The Property is not subject to any outgoings other than business rates,
water rates and insurance premiums and, in the case of leasehold
properties, rent, insurance rent and service charges and any other
payments due under the Lease.
24.2 So far as the Warrantors are aware the Property is not subject to any
restrictive covenant, reservation, stipulation, easement, profits a
prendre, wayleave, licence, grant, restriction, overriding interest,
agreement for sale, estate contract, option, right of pre-emption or
other similar agreement or right vested in third parties.
24.3 Where sub-paragraphs 2.1 to 2.2 inclusive have been disclosed against
in the Disclosure Letter, the obligations and liabilities imposed and
arising under the disclosed matter have been fully observed and
performed and any payments in respect of it which are due and payable
have been duly paid.
48
25. Planning Matters
So far as the Warrantors are aware :-
25.1 The use of the Property is a lawful and permitted use for the purposes
of the Town and Country Planning Xxx 0000.
25.2 Planning permission has been obtained, or is deemed to have been
granted for the purposes of the Planning Acts for the Property, no
permission is the subject of a temporary or personal consent, or has
been modified or revoked; no application for planning permission is
awaiting decision; no planning permission has been granted within the
last 3 months and the validity of no planning permission is currently
or may be challenged.
25.3 Building regulation consents have been obtained with respect to all
development, alterations and improvements to the Property.
25.4 In respect of the Property, the Vendor has complied, and is continuing
to comply, in all respects with:
(a) planning permissions, orders and regulations issued under the
Planning Acts, the London Building Acts and building regulation
consents and by-laws for the time being in force;
(b) all agreements under Section 52, Town and Country Xxxxxxxx Xxx
0000 and planning obligations under Section 106, Town and Country
Planning Xxx 0000;
(c) all agreements made under Sections 00 xxx 000, Xxxxxxxx Xxx 0000,
Section 33, Local Government (Miscellaneous Provisions) Xxx 0000,
Xxxxxxx 00, Xxxxxx Xxxxxx Xxx 0000 and Xxxxxxx 000, Xxxxx
Xxxxxxxx Xxx 0000.
25.5 All claims and liabilities under the Planning Acts or any other
legislation have been discharged and no claim or liability, actual or
contingent, is outstanding.
26. Statutory Obligations
The Vendor has not received notice that it has not complied with all
applicable statutory and by-law requirements with respect to the
Property, and in particular with the requirements as to fire
precautions under the Fire Precautions Xxx 0000 and under the Public
Health Acts, the Offices, Shops and Railway Premises Xxx 0000, the
Health and Safety at Work Xxx 0000, the Xxxxxxxxx Xxx 0000 and the
Shops Acts 1950 to 1956.
27. Leasehold Properties
27.1 The Lease is valid and in full force and the Warrantors know of no
circumstances which would entitle any landlord or other person to
exercise any power of entry or take possession of the Property.
49
27.2 The Vendor has paid the rent to the Superior Landlord and received no
notice of breach of the covenants on the part of the tenant and the
conditions contained in any Lease to which it is a party, and the last
demands (or receipts for rent if issued) were unqualified.
27.3 So far as the Warrantors are aware all licences, consents and approvals
required from the landlord and any superior landlords for the grant of
each Lease and during the continuance of each Lease have been obtained
and any covenants on the part of the tenant contained in those
licences, consents and approvals have been duly performed and observed.
27.4 So far as the Warrantors are aware there is no obligation to reinstate
the Property by removing or dismantling any alteration made to it by
the Vendor or any of its predecessors in title and the Vendor has not
incurred or is likely to incur any liability for dilapidation.
27.5 The Vendor has not in the past been the tenant of or guarantor of any
leasehold premises not listed in schedule 1 in respect of which any
obligations or liabilities could still accrue to the Vendor.
Environment
28. Environmental Matters
So far as the Warrantors are aware:
28.1 Details of all or any Environmental Consents held by the Vendor are
contained in the Disclosure Letter and are valid and subsisting.
28.2 The Vendor has not received any notification or informal indication
that further Environmental Consents will be required under
Environmental Law in order for it to continue its present business.
28.3 In relation to the Business, the Vendor has complied with Environmental
Laws and has never received any notification under Environmental Law
requiring it to take or omit to take any action.
28.4 In relation to the Business, the Vendor has not been threatened with
any investigation or enquiry by any organisation, or received any
complaint, in connection with the Environment.
Taxation
29. Tax
29.1 All documents relating to the Assets or the Business in respect of
which stamp duty is chargeable have been duly and properly stamped.
50
29.2 The Vendor has disclosed to the Purchasers details of the input tax
incurred in respect of each of the Assets to which Part VA, Value Added
Tax (General) Regulations 1995 (capital goods scheme) may apply
(irrespective of whether credit was obtained for all such input tax)
and, in respect of each such item, the extent to which it was used in
making taxable supplies in the first interval for the purposes of
Regulation 37D of those Regulations.
29.3 The Vendor has not elected to waive exemption for VAT purposes, and is
not aware of any election to waive exemption made by any other person,
in respect of any land or buildings comprised in the Business.
29.4 None of the Assets agreed to be sold under this Agreement are the
subject of any security in favour of HM Customs & Excise under
paragraph 4, Schedule 11, VATA or Section 157, Customs and Excise
Management Xxx 0000.
29.5 So far as the Warrantors are aware, all proper records have been kept
and all proper returns and payments have been made as required by law
for the purposes of VAT in connection with the Business.
29.6 None of the Assets agreed to be sold under this Agreement are the
subject of any distraint, charge, power of sale or mortgage in favour
of the Inland Revenue for the purposes of inheritance tax nor are there
any circumstances which may give rise to them.
30. Year 2000
30.1 So far as the Warrantors are aware, the products, systems and services
of the Business which are dependant in any way on automatic
instructions or any computer hardware or software meet Year 2000
conformity.
30.2 So far as the Warrantors are aware, the products, systems and services
of the Business will not be affected, in terms of performance or
functionality, by the use of dates before, during and after the Year
2000.
51
Signed by )
for and on behalf of Hillgate (4) Limited )
in the presence of: )
Signature of witness:
Name:
Address:
Occupation:
Signed by )
for and on behalf of Fiberstars, Inc. )
in the presence of: )
Signature of witness:
Name:
Address:
Occupation:
Signed by Xxxxxxx Xxxxxxxx Xxxxxxxx )
for and on behalf of Crescent Lighting Limited )
in the presence of: )
Signature of witness:
Name:
Address:
Occupation:
52
Signed by )
Xxxxxxx Xxxxxxxx Xxxxxxxx )
in the presence of: )
Signature of witness:
Name:
Address:
Occupation:
Signed by Xxxxxxx Xxxxxxxx Xxxxxxxx )
as a duly appointed attorney of )
Xxxxxxx Xxxxxxxx )
in the presence of: )
Signature of witness:
Name:
Address:
Occupation:
53
