Exhibit 10.1
DATED 17th JULY, 2000
INTERX PLC
INTERX MEDIA PLC
and
XXXX MICROPRODUCTS INC.
--------------------------
AGREEMENT
for the sale and purchase of
the whole of the issued share capital of
Ideal Hardware Limited
----------------------------
XXXXX & OVERY
London
CONTENTS
Clause Page
1. Definitions...................................................1
2. Sale and Purchase.............................................5
3. Consideration.................................................6
4. Completion Accounts...........................................6
5. Condition Precedent...........................................6
6. Warranties....................................................7
7. Limitations on Warranty Claims................................8
8. Covenants up to Completion...................................12
9. Rescission...................................................14
10. Completion...................................................14
11. Exit Charge..................................................16
12. Employees....................................................16
13. Loans........................................................17
14. Guarantees...................................................17
15. Protective Covenants.........................................18
16. Independent Accountant.......................................19
17. Agreed Claims................................................20
18. Whole agreement..............................................21
19. Announcements................................................21
20. Notices......................................................21
21. General......................................................22
22. Governing Law and Jurisdiction...............................25
23. Rights of Third Parties......................................26
24. Guarantee....................................................26
25. Access to Books and Records; Cooperation with Purchaser......28
Schedules
1. Particulars of Newco............................................29
2. Particulars of the Subsidiaries.................................30
3. Warranties......................................................33
4. Scheduled Intellectual Property.................................60
5. Pro forma Completion Accounts...................................61
THIS AGREEMENT is made on 17th July, 2000 BETWEEN:
(1) INTERX PLC (registered number 1876997) whose registered office is at
Xxxxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxxx, Xxxxxx, XX0 0XX ("InterX");
(2) INTERX MEDIA PLC (formerly called Ideal Hardware plc) (registered
number 3621733) whose registered office is at Xxxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxxx, Xxxxxx XX0 0XX (the "Seller"); and
(3) XXXX MICROPRODUCTS INC. whose principal executive office is at
0000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000-0000, XXX (the
"Purchaser").
WHEREAS:
(A) Newco (as defined below) is a private company limited by shares short
particulars of which are set out in Schedule 1 having an authorised
capital of (pound)1,000,000 divided into 1,000,000 ordinary shares of
(pound)1 each, all of which have been issued fully paid or credited as
fully paid (the "Shares").
(B) With effect from midnight on 2nd June, 2000 the Seller transferred all
of the assets and certain specified liabilities of the Seller to Newco
with a view to Newco carrying on the business as a going concern in
succession to the Seller.
(C) The Seller is beneficially entitled to the Shares.
(D) Newco is the beneficial owner of the entire issued share capitals of
the Subsidiaries.
(E) The Seller wishes to sell and the Purchaser wishes to purchase the
whole of the issued share capital of Newco for the consideration and
upon the terms and subject to the conditions set out in this agreement.
(F) InterX has agreed to guarantee certain obligations of the Seller
pursuant to this agreement.
IT IS AGREED as follows:
1. Definitions
(1) In this agreement:
"Accounts" means all of the audited balance sheets as at the Accounts
Date and the audited profit and loss accounts for the year ended on the
Accounts Date for the Seller and the notes to them and any directors'
and auditors' reports annexed or attached to them in the Agreed Form;
"Accounts Date" means 30th July, 1999;
"Agreed Claim" means a claim which has been (a) accepted by the Seller
as to its validity and its amount; (b) determined to be valid by a
Queen's Counsel in accordance with clause 17; or (c) adjudicated by a
court of competent jurisdiction as being recoverable by the Purchaser
(such adjudication carrying no right of appeal or in respect of which
the relevant party has indicated that it does not intend to appeal);
"Agreed Form" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification by
the Seller's Solicitors and the Purchaser's Solicitors;
"Business" means the business formerly carried on by the Seller and
which was transferred to Newco with effect from midnight on 2nd June,
2000 pursuant to the Hivedown Agreement and which has been carried on
since that time by Newco;
"Claim" means a claim under the Warranties or the Tax Deed, submitted
by the Purchaser to the Seller in accordance with the notice provisions
in clause 6, which is not an Agreed Claim;
"Completion" means completion of the sale and purchase of the Shares in
accordance with clause 10;
"Completion Accounts" has the meaning set out in clause 4;
"Completion Accounts Date" means 29th July, 2000 if Completion occurs
on or before 11th August, 2000 or the date of Completion if Completion
occurs after 11th August, 2000;
"Computer Systems" means all computer systems used by any Group Company
at any time, including computing and electronic and technical equipment
linked to a computer, hardware, Software, programs, data, electronic
data, processing systems and all associated equipment and materials
from time to time;
"Confidential Information" means all business information belonging or
relating to any member of the Group and their respective businesses,
customers, suppliers, assets, liabilities, plans and projections, which
is confidential (whether or not so stated or marked and whether or not
in tangible form);
"Consideration" means the aggregate of the Initial Consideration and
the Deferred Payment, if the Deferred Payment is payable by the
Purchaser or the Initial Consideration less the Deferred Payment if the
Deferred Payment is payable by the Seller;
"Damages" means all losses, damages, liabilities, obligations,
penalties, fines, interest and reasonable expenses including court
costs and reasonable legal fees and expenses;
"Deferred Payment" means the amount (if any) payable by the Seller or
the Purchaser, as the case may be in accordance with Schedule 5;
"Disclosure Letter" means the letter of the same date as this agreement
from the Seller to the Purchaser a copy of which is in the Agreed Form;
"Employees" means all those persons particulars of whom are set out in
the Disclosure Letter;
"Employment Acts" means the Employment Rights Xxx 0000, the Sex
Discrimination Xxx 0000, the Race Relations Xxx 0000, the Trade Union
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and Labour Relations (Consolidation) Xxx 0000, the Disability
Discrimination Xxx 0000, the Equal Pay Xxx 0000, the Transfer of
Undertakings (Protection of Employment) Regulations 1981, the Working
Time Regulations 1998, the Health and Safety at Work etc. Xxx 0000;
"Environmental Matters" means any activity involving Hazardous Material
or having or likely to have a polluting effect on the environment
including (without limitation) noise, vibrations, smells and dust.
"Event" has the meaning as defined in the Tax Deed;
"Exit Charge" has the meaning set out in clause 11;
"Final Disclosure Letter" means the letter from the Seller to the
Purchaser to be given at Completion in accordance with clause 6(3),
Part A of which is in Agreed Form;
"Group Companies" or "Group" means the Company and the Subsidiaries and
"Group Company" means any of them;
"Hazardous Material" means any substance or material which either alone
or together with other substances or materials is capable of causing
harm to human health, harm to any living organism or damage to the
environment.
"Hivedown Agreement" means the agreement dated 5th June, 2000 between
the Seller and Newco relating to the hivedown of the Business;
"Independent Accountant" has the meaning set out in clause 16;
"Initial Consideration" has the meaning set out in clause 3;
"InterX Debtor" has the meaning set out in Schedule 5;
"Intellectual Property" means any know-how, patents, trade marks,
service marks, domain names, designs, design rights, copyrights,
utility model, logos, confidential processes and information,
inventions, discoveries and improvements, trading and business names,
database rights, moral rights, get-up, other intellectual property
rights and any rights in the nature of intellectual property rights (in
each case whether registered or not and including application for
registration thereof) and all rights or forms of protection of a
similar nature or having equivalent or similar effect or any other
matters which may subsist in any part of the world including all
Proprietary Information, Technical Information and Confidential
Information;
"Leases" means the leases in relation to the Properties, each in Agreed
Form;
"Loans" means the aggregate net amount due as at Completion from the
Group Companies to members of the Seller's Group (other than the InterX
Debtor, which is dealt with in accordance with Schedule 5);
"Newco" or the "Company" means Ideal Hardware Limited (registered
number 3969946);
"Options" means the options in respect of the Properties in the Agreed
Form;
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"Properties" means the properties known as the freehold land and
buildings on the south side of Xxx Xxxx and the east side of Mount Road
Tolworth being the whole of the land registered at HM Land Registry
with absolute title under title number SGL287800 (and comprising the
buildings now known as Fountain Court) and the freehold land and
buildings known as Cox House Xxxxx Road Chessington being the whole of
the land registered at HM Land Registry with absolute title under title
number TGL 152423 (including the building known as Thrust House) and
"Property" means either of them as the context may require;
"Proprietary Information" means confidential information and business
secrets relating to any member of the Group including technical,
commercial and financial information and names and lists of customers
of and suppliers of any member of the Group but excluding any such
information which after Completion comes to be in the public domain
other than by reason of a default by the Sellers in the performance of
their obligations hereunder;
"Purchaser's Group" means the Purchaser and subsidiaries of the
Purchaser (other than the Group Companies);
"Purchaser's Solicitors" means Xxxxxxx Xxxx of 00 Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"Relief" has the meaning as defined in the Tax Deed;
"Right to Repayment" has the meaning as defined in the Tax Deed;
"Security Interest" means any mortgage, charge (fixed or floating),
pledge, lien, hypothecation, assignment, security interest or other
encumbrance or equity of any kind securing any obligation of any
person, any right conferring a priority of payment in respect of any
obligation of any person or any retention of title clause or provision
(including an agreement or commitment to cause any of the same);
"Seller's Group" means InterX and its subsidiaries excluding the Group
Companies;
"Seller's Solicitors" means Xxxxx & Overy of Xxx Xxx Xxxxxx, Xxxxxx
XX0X 0XX;
"Software" means any and all computer programs in both source and
object code form, including all modules, routines and sub-routines
thereof and any manuals or other documentation relating thereto;
"subsidiary" means a subsidiary for the purposes of the Companies Xxx
0000;
"Subsidiaries" means the companies details of which are set out in
Schedule 2;
"Taxation" has the meaning assigned to it in the Tax Deed;
"Taxes Act" means the Income and Corporation Taxes Xxx 0000;
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"Tax Deed" means the tax deed to be entered into at Completion by the
Seller and the Purchaser in the Agreed Form;
"Taxation Statute" includes all statutes, statutory instruments,
enactments, laws, bye-laws, directives, decrees, ordinances,
regulations and other legislative provisions imposing or relating to
Taxation;
"Technical Information" means all data, formulae, methods, techniques,
recipes, specifications and other industrial information and techniques
used by any Group Company;
"VATA" means the Value Added Tax Xxx 0000; and
"Warranties" means the warranties contained in clauses 6(1), 6(2) and
Schedule 3.
(2) In this agreement any reference, express or implied, to an enactment
includes references to:
(a) that enactment as re-enacted, amended, extended or applied by
or under any other enactment before or after the signature of
this agreement;
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made before or after the signature
of this agreement under that enactment, as re-enacted,
amended, extended or applied as described in paragraph (a)
above, or under any enactment referred to in paragraph (b)
above;
and "enactment" includes any legislation in any jurisdiction, except to
the extent that any enactment or subordinate legislation made, enacted,
re-enacted, amended, extended or applied after the signature of this
agreement creates or increases a liability of the Seller under this
agreement or the Tax Deed provided that the exception in this subclause
shall not apply to section 179 of the Taxation of Chargeable Gains Xxx
0000.
(3) Where any statement is qualified by the expression "so far as the
Seller is aware" or "to the best of the Seller's knowledge, information
and belief" or any similar expression that statement shall be deemed to
be made on the basis of the actual knowledge of Xxxxx Xxxxxx, Xxxxx
Xxxxxxxxx, Xxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxx, Xxxx Xxxxxx and Xxxxxx Xxxxxx or the knowledge that
such persons ought reasonably to have had, such persons being deemed to
have made all appropriate enquiries of senior employees employed within
the Business.
(4) Words denoting persons shall include bodies corporate and
unincorporated associations of persons.
(5) Subclauses (1) to (4) above apply unless the contrary intention
appears.
(6) The headings in this agreement do not affect its interpretation.
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2. Sale and Purchase
(1) Subject to clause 5, the Seller shall sell or procure the sale of the
Shares and the Purchaser shall purchase the Shares with full title
guarantee and free from all charges, liens, encumbrances, equities and
claims whatsoever and together with all rights attaching to them.
(2) The Purchaser will not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed
simultaneously.
3. Consideration
The consideration for the sale of the Shares (subject to adjustment as
provided in this agreement) shall be the sum of (pound)13,182,178 (the
"Initial Consideration") payable in cash on Completion less the
Deferred Payment, if the Deferred Payment is payable by the Seller, or
plus the Deferred Payment, if the Deferred Payment is payable by the
Purchaser.
4. Completion Accounts
(1) As soon as reasonably practicable after Completion and in any event
within 15 business days of Completion the Purchaser shall procure that
the Company prepares and delivers to the Seller a draft balance sheet
of the Company as at the close of business on the Completion Accounts
Date (the "Draft Completion Accounts") and the Seller and Purchaser
shall in good faith use all reasonable endeavours to approve and agree
the Draft Completion Accounts as soon as reasonably practicable
following delivery by the Purchaser of the Draft Completion Accounts.
(2) The Draft Completion Accounts shall be in the form contained in, and
include the items identified in, Schedule 5 and such accounts shall be
prepared by adopting the provisions contained in Schedule 5, applying
the principles contained in Schedule 5 and otherwise in a manner
consistent with the application of the accounting policies in preparing
the Accounts.
(3) If the Seller and the Purchaser do not reach agreement on the Draft
Completion Accounts within 10 business days of delivery of the Draft
Completion Accounts either party may refer the matter(s) in dispute to
the Independent Accountant for resolution in accordance with clause 16.
(4) The Draft Completion Accounts, as approved and agreed in accordance
with subclause (1) above or, if subclause (3) above applies, as
determined by the Independent Accountant shall comprise the "Completion
Accounts".
(5) Each party shall (if applicable):
(a) disclose to the other and (if applicable) to the Independent
Accountant (if so requested) all relevant facts and
information in its possession; and
(b) promptly give to the other and (if applicable) to the
Independent Accountant, all information, assistance and access
to books of account, documents, files and papers which either
of them may reasonably require,
for the purposes of agreeing or determining the matter(s) contemplated
by the foregoing provisions of this clause.
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(6) The Independent Accountant shall be entitled (to the extent it
considers it appropriate) to rely on information provided or made
available by either of the parties.
5. Condition Precedent
(1) The sale and purchase of the Shares is conditional on a resolution to
approve the sale of the Shares being duly passed by the members of
InterX in general meeting.
(2) InterX shall use reasonable endeavours to procure that the condition in
subclause (1) above is fulfilled on or before 31st August, 2000.
(3) If the condition in subclause (1) above is not fulfilled on or before
31st August, 2000 neither party (provided it shall have used reasonable
endeavours as described above) shall have any rights or obligations
under this agreement except under clauses 19 (Announcements), 20
(Notices) and 22 (Governing Law and Jurisdiction) which shall continue
to apply and the parties accrued rights and obligations shall not be
affected.
6. Warranties
(1) The Seller warrants to the Purchaser that each of the statements set
out in Part A and Part B of Schedule 3 is true and accurate in all
respects and not misleading, and agrees and acknowledges that the
Purchaser is entering into this agreement in reliance on such
warranties.
(2) On Completion Warranties 10, 12, 13, 25(2), 27, 28, 36 and 37 in Part A
of Schedule 3 and Warranties 2(a), 6(a) and 22(h) in Part B of Schedule
3 shall be repeated by the Seller in each case so far as the Seller is
aware (without having made any enquiry) with reference to the facts and
matters then existing and (except in relation to any transaction,
matter or thing which arises outside the ordinary course of business
after the Completion Accounts Date but prior to Completion) subject to
any matter fairly disclosed in the Final Disclosure Letter.
(3) The Seller shall be entitled to submit a Final Disclosure Letter to the
Purchaser substantially in the form to be submitted on Completion not
less than 48 hours before Completion and the Purchaser shall not be
entitled to make any Warranty Claim in relation to the Warranties
referred to in subclause (2) above in respect of anything arising
directly or indirectly from any transaction, matter or thing fairly
disclosed in the Final Disclosure Letter or the documents specifically
referred to in and attached to the Final Disclosure Letter.
(4) The Seller agrees with the Purchaser (as trustee for the Group
Companies), to waive any rights or claims which it may have and (as
trustee for the employees of each Group Company) in the absence of
fraud, dishonesty or wilful concealment by or on behalf of the relevant
employee to waive any rights or claims which it may have in each case
against the Group Companies or any of their employees in respect of any
misrepresentation, inaccuracy or omission in or from any information or
advice supplied or given by the Group Companies or any of their
employees in connection with the giving of the Warranties and the
preparation of the Disclosure Letter or the Final Disclosure Letter.
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(5) The Purchaser warrants to the Seller that:
(a) it is a corporation validly existing under the laws of
California with the requisite power and authority to enter
into and perform, and has taken all necessary corporate action
to authorise, the execution and performance of, its
obligations under this agreement and the Tax Deed; and
(b) this agreement and the Tax Deed constitute valid and binding
obligations of the Purchaser.
(6) The Seller undertakes to the Purchaser that upon it becoming aware of
the occurrence or the impending or threatened occurrence or
non-occurrence of any matter, event or circumstance (including any
omission to act) which would or might reasonably be expected to cause
or constitute a breach (or which would have caused or constituted a
breach had such matter, event or circumstance occurred or been known to
the Seller prior to the date of this agreement) of any of the
Warranties or which would or might reasonably be expected to give rise
to a claim under the Tax Deed (whether or not then executed) it will as
soon as reasonably practicable give written notice (with such
particulars as are reasonably available to it) of such matter, event or
circumstance to the Purchaser prior to Completion and, if so requested
by the Purchaser, use reasonable endeavours to prevent or to remedy the
same.
(7) The Seller acknowledges that the Purchaser and its directors, officers,
employees and its advisers have not made any representations or
warranties (other than as set out in this agreement or the documents
referred to in this agreement as being in the Agreed Form) upon which
the Seller has relied or which have caused (wholly or in part) the
Seller or any other person to sell the Shares and/or enter into this
agreement.
(8) Only transactions, matters or things fairly disclosed in the Disclosure
Letter or the Final Disclosure Letter (as the case may be) or in the
documents specifically referred to in paragraphs 1 to 47 of Part A of
the Disclosure Letter and paragraphs 1 to 24 of Part B of the
Disclosure Letter, or in the Final Disclosure Letter (as the case may
be) operate to reduce or affect any claim under, any of the Warranties
or operate to reduce any amount claimable or recoverable.
(9) Subject to the provisions of clause 7(14), each of the Warranties shall
be construed as a separate and independent warranty and representation
and agreement to the intent that the Purchaser shall have a separate
claim and right of action in respect of every event giving rise to a
breach of any of the Warranties and (except as expressly provided in
this agreement) shall not be limited by reference to any other
paragraph or anything in this agreement or other documents referred to
herein.
7. Limitations on Warranty Claims
(1) The Purchaser acknowledges to and agrees with the Seller that:
(a) the Warranties are the only representations, warranties or
other assurances of any kind given by or on behalf of the
Seller or any other member of the Seller's Group and on which
the Purchaser may rely in entering into and performing this
agreement;
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(b) no other statement, promise or forecast made by or on behalf
of the Seller or any other member of the Seller's Group may be
relied on or form the basis of, or be pleaded in connection
with, any claim by the Purchaser under or in connection with
this agreement;
(c) any claim by the Purchaser in connection with the Warranties
(a "Warranty Claim") shall be subject to the following
provisions of this clause; and
(d) at the time of entering into this agreement it will not take
action in respect of any matter of which it is actually aware
which would give rise to a Warranty Claim immediately after
Completion.
(2) The liability of the Seller under or in respect of the Warranties shall
be limited as follows:
(a) the Seller shall not be liable in respect of any breach of the
Warranties if and to the extent that the matter giving rise to
the breach is the subject of a successful claim under the Tax
Deed;
(b) there shall be disregarded for all purposes any breach, or any
number of connected breaches, of the Warranties in respect of
which the aggregate amount of the damages to which the
Purchaser would otherwise be entitled is less than
(pound)10,000;
(c) the Purchaser shall not be entitled to recover any damages in
respect of any breach or breaches of the Warranties unless the
amount of damages in respect of such breach or breaches
exceeds in aggregate the sum of (pound)100,000; and
(d) the maximum aggregate liability of the Seller in respect of
all and any Warranty Claims (and any claims under the Tax
Deed) shall not exceed the Consideration.
(3) The Purchaser shall not be entitled to make any Warranty Claim:
(a) to the extent that specific provision or allowance for the
matter or liability which would otherwise give rise to the
claim in question has been made or falls to be made in the
Accounts, the Completion Accounts or the calculation of the
Deferred Payment or it is otherwise specifically taken account
of in the Accounts, the Completion Accounts or the calculation
of the Deferred Payment;
(b) in respect of anything arising directly or indirectly from any
transaction, matter or thing fairly disclosed in the
Disclosure Letter or in the documents specifically referred to
in paragraphs 1 to 47 of Part A of the Disclosure Letter and
paragraphs 1 to 24 of Part B of the Disclosure Letter, or in
the Final Disclosure Letter;
(c) if the claim would not have arisen but for a change in
legislation announced or enacted on or after the date of this
agreement (whether relating to Taxation, rates of Taxation or
otherwise) or the withdrawal after the date of this agreement
of any practice or extra-statutory concession previously
published by the Inland Revenue or other taxing authority
(whether or not the change purports to be effective
retrospectively in whole or in part);
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(d) to the extent that the claim arises as a result of any changes
in the accounting policies or practices upon which any Group
Company values its assets made after Completion;
(e) to the extent occasioned by any voluntary act or omission of
any member of the Purchaser's Group or the Group Companies
after Completion done or suffered outside the ordinary course
of business and other than pursuant to a legally binding
obligation entered into by any Group Company before
Completion; or
(f) to the extent that any loss or liability is caused or
increased by the failure of any member of the Purchaser's
Group to mitigate any loss suffered by it,
and to the extent that any Warranty Claim is increased as a result of
any of the matters set out in this subclause, the Seller shall not be
liable in respect of the amount by which any claim is so increased.
(4) If the Purchaser or any of the Group Companies becomes aware of a
matter which is likely to give rise to a Warranty Claim:
(a) the Purchaser shall give written notice of the relevant facts
to the Seller as soon as reasonably practicable; and
(b) the Purchaser shall claim under any applicable policy of
insurance before making a Warranty Claim against the Seller
but without prejudicing its ability to notify a claim within
the relevant period.
(5) Subject to the provisions of the Tax Deed in relation to any matter
which may form the subject of a claim under it, if the Warranty Claim
in question is as a result of or in connection with a liability or
alleged liability to a third party:
(a) the Purchaser shall procure the relevant Group Company to take
such action to avoid, dispute, resist, appeal, compromise or
contest the liability as may be reasonably requested by the
Seller which shall be entitled to have the conduct of any
appeal, dispute, compromise or defence of the dispute and of
any incidental negotiations and the Seller shall, to the
extent reasonably practicable, keep the Purchaser fully
informed of such matters; and
(b) the Purchaser shall procure the relevant Group Company to make
available to the Seller such persons and all such information
as the Seller may reasonably require for avoiding, disputing,
resisting, appealing, compromising or contesting any such
liability;
in each case provided that the Purchaser and the relevant Group Company
is indemnified to its reasonable satisfaction against the costs and
expenses of taking such action including all reasonable legal and
professional expenses.
(6) The Seller shall, in the absence of fraud or wilful concealment, cease
to have any liability under or in respect of the Warranties:
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(a) on the seventh anniversary of the date of this agreement in
respect of Warranties in Part B of Schedule 3;
(b) on 31st October, 2001 in respect of any other Warranties,
except in respect of a Warranty Claim of which the Purchaser gives
written notice to the Seller before the relevant date and in accordance
with subclause (3) but the liability of the Seller in respect of any
Warranty Claim shall terminate if proceedings in respect of it have not
been commenced within six months of the termination of the relevant
period in subclause (6) above.
(7) The Seller shall, in the absence of fraud or wilful concealment, cease
to have any liability under or in respect of the Tax Deed on the
seventh anniversary of Completion.
(8) Without prejudice to the Purchaser's duty to mitigate any loss in
respect of any breach of the Warranties, if, in respect of any matter
which would otherwise give rise to a breach of the Warranties, a Group
Company is entitled to claim under any policy of insurance (or would
have been so entitled had it maintained in force its insurance cover
current at Completion) the amount of insurance monies to which that
Group Company actually receives shall reduce pro tanto or extinguish
the claim for breach of the Warranties.
(9) If the Seller makes any payment by way of damages for breach of the
Warranties (the "Damages Payment") and a Group Company or any member of
the Purchaser's Group receives any benefit otherwise than from the
Seller which would not have been received but for the circumstance
giving rise to the claim in respect of which the Damages Payment was
made the Purchaser shall, once it or a Group Company or the member of
the Purchaser's Group has received such benefit, immediately repay to
the Seller an amount equal to the lesser of the amount of such benefit
and the Damages Payment less the Purchaser's reasonable costs and
expenses (if any) incurred in paying such benefit to the Seller.
(10) The Purchaser shall not intentionally do, and shall procure that each
Group Company shall not intentionally do, any act or thing which is
reasonably likely to give rise to a Warranty Claim which would not
otherwise arise other than pursuant to a legally binding obligation
entered into by any Group Company before Completion or in the proper
course of the relevant Group Company's business or activities.
(11) Where the Seller has made a payment to the Purchaser in respect of, or
relating to, any claim under the Warranties and a Group Company or the
Purchaser has a right of reimbursement against any other person in
respect of or relating to that claim the Purchaser shall notify the
Seller within a reasonable period of that fact and shall (if
indemnified to its reasonable satisfaction against the costs and
expenses of taking such action) take all reasonable steps or
proceedings to enforce such right.
(12) If any amount in respect of any breach of the Warranties is paid by the
Seller to the Purchaser and any subsequent event or circumstances
happens or arises by virtue of which the loss attributable to such
breach is reduced or removed altogether, then the Purchaser shall
forthwith repay to the Seller that amount or the appropriate proportion
thereof less the Purchaser's reasonable costs and expenses (if any)
incurred in recovering any relevant amount.
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(13) The Purchaser shall not be entitled to recover more than once in
respect of any claim under the Warranties, the Tax Deed or to the
extent that any claim has been taken into account in accordance with
Schedule 5 arising from the same subject matter or set of
circumstances.
(14) Nothing in this agreement shall in any way restrict or limit the common
law obligation of the Purchaser to mitigate any loss or damage which it
may suffer in relation to the matters contained in this agreement.
(15) The Purchaser shall not be entitled to rescind this agreement after
Completion in any circumstances and the Purchaser shall be entitled to
rescind this agreement before Completion only in accordance with clause
9.
(16) Any payment made by the Seller under this agreement or the Tax Deed
shall be deemed to be a pro tanto reduction in the Consideration.
8. Covenants up to Completion
(1) The Seller shall procure that without the prior written consent of the
Purchaser the Group Companies shall not before Completion:
(a) incur any expenditure or make any commitment exceeding
(pound)100,000 in aggregate on capital account; or
(b) dispose of or grant any option or right of pre-emption in
respect of any part of its assets except in the ordinary
course of trading; or
(c) borrow or lend any money (except borrowings from its bankers
not exceeding (pound)24,000,000) or make any payments out of
or drawings on its bank account(s) (except for routine or
committed payments); or
(d) enter into, terminate or amend or vary in any material respect
any unusual or abnormal contract or commitment which is
material to the business or outside the ordinary course of
business of the relevant Group Company; or
(e) do or allow to be done anything which renders its financial
position less favourable than at the date of this agreement;
or
(f) grant, issue or redeem any mortgage, charge, debenture or
other security or give any guarantee or indemnity; or
(g) make any material change in the terms and conditions of
employment of any of its directors or employees or employ or
terminate (except for good cause) the employment of any person
or pay any abnormal bonus or other sum; or
(h) create, issue, purchase or redeem any class of share or loan
capital; or
(i) modify any of the rights attached to any of its shares or
create allot or issue any shares or grant of any option over
any shares or uncalled capital or issue any obligations
convertible into shares; or
12
(j) capitalise or repay any amount standing to the credit of any
reserve or redeem or purchase any shares or otherwise
reorganise its share capital; or
(k) declare or pay or recommend any dividend or other
distribution; or
(l) alter its Memorandum of Association or Articles of Association
or adopt new Articles of Association; or
(m) acquire (including by subscription) or dispose of any shares
in or other securities of any other company or participate in
any partnership or joint venture save in respect of the
Logical Online joint venture; or
(n) propose or pass any resolution (other than pursuant to this
agreement); or
(o) institute, settle or agree to settle any proceedings save for
the institution of debt collection proceedings in the ordinary
course of business; or
(p) pay any management or similar charge to the Seller or the
Seller's Group other than in the ordinary course of business
and on an arms' length basis; or
(q) establish any superannuation or retirement benefit scheme,
personal pension scheme or other pension or life assurance
arrangement; or
(r) release any debt; or
(s) assign, grant, dispose or license any Intellectual Property
relating to the Business or any right or interest, thereunder
or be responsible for any act or omission which would or could
prejudice any such right or interest or any registration or
pending application of the same; or
(s) agree, conditionally or otherwise, to do any of the foregoing.
(2) The Seller shall not (and shall procure that no Group Company shall)
before Completion without the prior written consent of the Purchaser
dispose of any interest in the Shares or grant any option or right of
pre-emption over, or mortgage, charge or otherwise encumber the Shares.
(3) The Seller undertakes to the Purchaser and each Group Company that it
shall procure that between the date of this agreement and Completion,
the business of each Group Company is carried on in the ordinary course
in consultation with the Purchaser.
(4) The Seller undertakes to the Purchaser that from the date of this
agreement until Completion:
(a) each Group Company will use reasonable endeavours to maintain
its trade and trade connections;
(b) all debts which each Group Company has incurred or incurs will
be settled within the applicable period of credit;
13
(c) each Group Company, or the Seller as applicable, shall
promptly give to the Purchaser details of any material changes
in its business, financial position or prospects;
(d) each Group Company, or the Seller if applicable, shall
maintain in force policies of insurance within limits of
indemnity at least equal to and otherwise on terms no less
favourable than those policies of insurance currently
maintained in respect of each Group Company, shall not
knowingly do anything or omit to do anything which makes or is
likely to make any such policy void or voidable and shall at
the Purchaser's cost effect such additional insurances as the
Purchaser may reasonably request.
(5) From the date of this agreement and until Completion the Seller agrees
to provide the Purchaser and the Purchaser's advisers upon reasonable
notice and during normal business hours with reasonable access to the
Properties and all the books, title deeds and records of each Group
Company as the Purchaser may reasonably request and the Seller shall
instruct the directors and employees of each Group Company to give
promptly all such information and explanations to the Purchaser or any
such authorised persons, as the Purchaser or its advisers may
reasonably request.
(6) The Seller and the Purchaser will both use all best endeavours
(including the agreement and signing of all relevant documentation)
from the date of this agreement to obtain court orders excluding the
Leases from the provisions of the Landlord and Tenant Xxx 0000.
9. Rescission
(1) If before Completion there shall occur a Rescission Event the Purchaser
shall be entitled (but not obliged) to elect not to complete the
purchase of the Shares by giving notice in writing to InterX. Such
election shall be without any liability to the Seller or the Purchaser.
(2) "Rescission Event" means for the purposes of this clause one or more of
the following:
(a) the destruction of the building on the property known as
Fountain Court, Xxx Xxxx, Chessington or it being damaged to
the extent that it cannot reasonably be expected to be used
for the conduct of the Business (in all material respects in
the same way as the Business is conducted as at the date of
this agreement) for a period of not less than three months; or
(b) a breach of one or more of the Warranties specified in clause
6(2) in respect of a matter or event which shall not be
capable of remedy before Completion and in relation to which
the aggregate Damages that the Purchaser or the Company would
suffer as a result of any such breach or breaches are greater
than (pound)5,000,000.
10. Completion
(1) Completion shall take place at the offices of the Seller's Solicitors
immediately following the satisfaction of the condition set out in
clause 5(1).
(2) At Completion the Seller shall procure:
14
(a) the delivery to the Purchaser of:
(i) signed transfers into the name of the Purchaser or
its nominee in respect of the Shares;
(ii) share certificates in respect of the Shares (or an
express indemnity in the Agreed Form in the case of
any found to be missing);
(iii) the certificate of incorporation, the common seal, all
minute books, the share register and the share
certificate books and other statutory books of the
Group Companies;
(iv) the Tax Deed duly executed by the Seller and InterX;
(v) the resignation of the auditors of each of the Group
Companies in each case confirming, in accordance with
section 394 of the Companies Xxx 0000, that there are
no circumstances connected with their resignation
which should be brought to the notice of the members
or creditors of the Company or the Property Companies
respectively;
(vi) a copy of the minute of the meeting of the members of
InterX approving the transaction;
(vii) the Leases and the Options each duly executed by the
relevant member of the Seller's Group; and
(ix) the resignation of Xxxxx Xxxxxxxxx as a director of
the Company.
(b) that a meeting of the directors of each Group Company is held
at Completion at which the following business is transacted:
(i) the directors of each Group Company (as appropriate)
shall approve for registration (subject to their
being duly stamped) the transfers referred to in
subclause (2)(a) above;
(ii) the situation of the registered office of each Group
Company shall be changed as the Purchaser may direct;
(iii) such persons as the Purchaser shall nominate shall be
appointed as directors of that Company;
(iv) Xxxxxx Xxxxxxxx resign as auditors of each Group
Company and PricewaterhouseCoopers are appointed as
auditors of each Group Company; and
(v) its bank mandates are revised in such manner as the
Purchaser requires.
(3) Upon completion of all the matters referred to in subclause (2) above
the Purchaser shall:
(a) deliver to the Seller a counterpart of the Tax Deed duly
executed by the Purchaser;
15
(b) deliver to the Seller a counterpart of the Leases and the
Options duly executed by the Purchaser; and
(c) pay to the Seller the sum of (pound)13,182,178 in cash.
(4) The parties acknowledge that prior to Completion the Group Companies
have had the benefit of insurances effected and maintained by the
Seller in relation to the Seller's Group and the Group Companies and
that such insurances (other than the Directors and Officers liability
insurance in respect of the period prior to Completion) will cease with
effect from Completion in respect of the Group Companies. Accordingly,
insurance in relation to the Group Companies on and from Completion
shall be the responsibility of the Purchaser. Forthwith following
signature of this agreement and prior to Completion InterX shall
procure that the interest of the Purchaser arising from this agreement
is noted on the relevant insurance policies.
11. Exit Charge
(1) The Purchaser covenants to procure that the Company pays any liability
of the Company under section 179 of the Taxation of Chargeable Gains
Xxx 0000 which arises as a result of the Company ceasing to be a member
of the same group of companies as the Seller (the "Exit Charge").
(2) If the Exit Charge is greater or less than(pound)3,000,000, the
difference shall be dealt with in accordance with Schedule 5.
(3) The Seller will have no liability under Schedule 5 or any other
provision of this agreement or the Tax Deed in respect of any interest
or penalties which arise as a result of the Company failing to pay the
Exit Charge, or any part of the Exit Charge on the last date on which
such amount can be paid in order to avoid interest and penalties except
to the extent such date fell prior to Completion or such interest and
penalties relate solely to a failure to pay any amount of the Exit
Charge in excess of (pound)3,000,000 and the Seller has not paid the
excess to the Purchaser on the due date for payment under Schedule 5.
(4) Following Completion the Purchaser (or its advisers) will prepare a
calculation of the Exit Charge for the purposes of agreeing the amount
of the Exit Charge with the Inland Revenue. The Purchaser shall provide
a copy of the calculation to the Seller. The Purchaser shall procure
that the Company shall submit such calculation to the Inland Revenue
without any amendments or with such amendments as the Seller shall
reasonably request and the Purchaser shall agree, such agreement not to
be unreasonably withheld or delayed.
(5) The Purchaser (or its advisers) shall have responsibility for agreeing
the amount of the Exit Charge with the Inland Revenue and shall prepare
all correspondence relating to such matter for submission by the
Company. The Purchaser shall provide the Seller with copies of any
correspondence prior to submission to the Inland Revenue. The Purchaser
shall procure that the Company will send all such correspondence to the
Inland Revenue without amendment or with such amendments as the Seller
shall reasonably request and the Purchaser shall agree, such agreement
not to be unreasonably withheld or delayed. If the Company receives any
16
correspondence from the Inland Revenue relating to the Exit Charge, the
Purchaser shall procure that the Company shall, as soon as reasonably
practicable, send a copy of the relevant correspondence to the Seller.
(6) If the Exit Charge is not agreed with the Inland Revenue prior to the
preparation of the Company's tax return for the accounting period
current at Completion the Purchaser shall procure that the Company
shall provide the Seller with a copy of the Company's tax return to the
extent it relates to the Exit Charge in sufficient time prior to the
due date for submission of such tax return to allow the Seller an
opportunity to comment thereon. The Company shall take account of any
reasonable comments of the Seller in relation to such matters.
12. Employees
(1) Save in respect of the directors of Newco as set out in Schedule 1, the
Purchaser agrees to honour the existing terms and conditions of
employment of the employees of the Group Companies and not to make any
material changes to them for a period of twelve months following
Completion.
(2) The Seller and InterX, in consideration of the Purchaser entering into
this agreement at the request of InterX, hereby, jointly and severally,
indemnify and shall keep indemnified the Purchaser and each Group
Company against all claims, counter-claims, actions, proceedings,
liabilities, losses, damages, penalties, payments, costs, expenses and
legal and other professional fees suffered or incurred by any of them
in connection with any claims brought by the employees and/or former
employees of the Seller relating to any act or omission of any member
of the Seller's Group prior to completion of the Hivedown Agreement (to
the extent that any such claims, counter-claims, actions, proceedings,
liabilities, losses, damages, penalties, payments, costs, expenses and
legal or other professional fees have not been taken into account in
the Completion Accounts or the calculation of the Deferred Payment)
arising out of or in connection with:
(a) any provision of the Hivedown Agreement including the change
of employer occurring by virtue of the Regulations and/or the
Hivedown Agreement;
(b) a change to any term of employment or working condition
(including any term or condition relating to an occupational
pension scheme) or any proposal to make such a change;
(c) the termination of employment of an employee or any other act
or omission or any other event, matter or circumstance
occurring whether pursuant to the Employment Acts or
otherwise;
(d) the failure of a Group Company to employ an employee by virtue
of the Regulations.
13. Loans
The Seller shall procure that immediately prior to Completion all the
Loans are repaid or otherwise discharged in full.
14. Guarantees
(1) The Purchaser undertakes with the Seller:
17
(a) to procure the release at Completion of the Seller and any
member of the Seller's Group from all guarantees, indemnities,
bonds, letters of comfort, undertakings, licences and other
arrangements to which they or any of them are a party in
respect of any of the Group Companies or their business or
properties occupied by them details of which are specified in
the Disclosure Letter and to indemnify and to keep indemnified
on a continuing basis the Seller and any member of the
Seller's Group from all claims, liabilities, costs and
expenses (including without limitation, legal and other
professional advisers' fees) arising in respect or by reason
thereof; and
(b) to use all reasonable endeavours to procure the release of the
Seller and any member of the Seller's Group from any other
guarantees, indemnities, bonds, letters of comfort,
undertakings, licences and other arrangements to which any of
them are a party in respect of any of the Group Companies or
their business or properties occupied by them, if any, copies
of which are not specified in the Disclosure Letter and
details of which are subsequently notified to the Purchaser.
(2) Without limiting the generality of subclause (1), the Purchaser agrees,
in discharging its obligations under that subclause, to:
(a) offer any guarantees, indemnities or other undertakings (as
the case may be) in place of the guarantees and indemnities
and other arrangements referred to in subclause (1)(a); or
(b) offer to discharge the liabilities in relation to which a
guarantee or indemnity or other arrangements referred to in
subclause (1)(a) was given.
(3) The obligations of the Purchaser under subclauses (1) and (2) will
continue after Completion until all such releases are obtained.
(4) InterX and the Seller shall procure that prior to or on Completion each
Group Company shall be released from all charges, guarantees and
indemnities given by it in respect of the obligations of any member of
the Seller's Group or any third parties.
15. Protective Covenants
(1) Each of InterX and the Seller undertakes that it shall not, and it
shall procure that no member of the Seller's Group for so long as it
shall remain a subsidiary of InterX shall, whether directly or
indirectly, either alone or in conjunction with or on behalf of any
other person, do any of the following:
(a) within two years after Completion, be engaged or (save as the
holder of the shares or debentures in a listed company which
confer not more than five per cent. of the votes which could
normally be cast at a general meeting of the company) directly
or indirectly interested in carrying on any business in the
United Kingdom which competes with any core business carried
on by the Company at Completion; or
(b) within six years after Completion disclose to any other person
any Confidential Information, Proprietary Information,
Technical Information or any other information of a secret or
confidential nature to the extent such information relates
exclusively to the business of the Company except:
18
(i) to the extent that the information has entered the
public domain otherwise than by reason of the
unauthorised act or default of the Seller or of any
other member of the Seller's Group; and
(ii) insofar as may be required by law or by any
regulatory authority; or
(c) within two years after Completion do or fail to do anything
which directly results in any person who at any time during
the period of twelve months before Completion was a
consultant, contractor, adviser, supplier or agent to or of
the Company in respect of goods and/or services:
(i) ceasing to supply or substantially reducing such
goods and/or services; or
(ii) changing substantially the bases or terms on which he
is prepared to enter into contracts, do business or
supply such goods and/or services; or
(d) within two years after Completion canvas, solicit for orders
from or entice or endeavour to entice away from any Group
Company the custom of any person who at any time within the
period of twelve months prior to Completion has been a
customer of any Group Company in respect of goods and/or
services similar to those provided by any Group Company to
such person at any time during the said period of six months
prior to Completion; or
(e) within two years after Completion solicit or entice away from
the employment of any Group Company any person who at the date
of this agreement or at Completion is one of the senior or key
employees of any Group Company (irrespective of whether such
person would by reason of leaving service commit a breach of
his contract of employment) provided that this subclause shall
not prevent InterX or the Seller from employing any such
person who responds to a general advertisement offering
employment; or
(f) within two years after Completion employ or engage the
services of any of Xxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxx Xxxxxx, Xxxx Xxxxxx or Xxxxxx Xxxxxx.
(2) Each of InterX and the Seller acknowledges that the undertakings
contained in this clause are considered reasonable in the context of
the proposed sale of the Shares but in the event that any of the said
undertakings shall be found or held to be void in circumstances when
such undertaking would be valid if some part were deleted, or the
geographical, temporal or other limits were reduced, the parties agree
that such undertaking shall apply with such modification as may be
necessary to make it valid and effective.
(3) Subject to clause 15(1)(a) the Purchaser acknowledges that nothing in
this clause shall prevent any member of the Seller's Group from selling
technology owned as at the date of Completion or developed by any such
member.
(4) The restrictions in subclause (1) shall not apply (or as the case may
be shall cease to apply) insofar and to the extent that any member of
the Seller's Group after Completion acquires any company or business
19
and, as a result of that acquisition, acquires a company or business
which falls within the terms of that subclause (the "Relevant
Interest"), provided that the Relevant Interest accounts for less than
20 per cent of the turnover of the company or business acquired.
(5) Each undertaking contained in this clause shall be construed as a
separate undertaking and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an
unreasonable restraint of trade, the remaining undertakings shall
continue to bind the Seller or the Purchaser (as the case may be).
16. Independent Accountant
(1) If the Seller and the Purchaser do not agree any matter referred to in
clause 4 or Part 7 of Schedule 5 within the period(s) stated the matter
in dispute shall be referred at the request of either the Seller or the
Purchaser for decision to an independent chartered accountant (the
"Independent Accountant") to be appointed by agreement between the
Seller and the Purchaser, or, in default of agreement within 14 days of
a request by either the Seller or the Purchaser, by the President for
the time being of the Institute of Chartered Accountants in England and
Wales on the application of either the Seller or the Purchaser.
(2) If the Independent Accountant dies, delays or becomes unwilling or
incapable of acting or if for any other reason the President for the
time being of the Institute of Chartered Accountants in England and
Wales thinks fit he may discharge the Independent Accountant and
appoint another in his place.
(3) The Independent Accountant shall act as an expert and not as an
arbitrator and his decision shall be final and binding on the parties.
The Independent Accountant shall afford the Seller and the Purchaser
the opportunity of making written representations to him.
(4) The fees and expenses of the Independent Accountant shall be borne by
the Seller and the Purchaser in equal shares unless the Independent
Accountant otherwise determines.
(5) Any amount payable as a result of the Independent Accountant's decision
shall be paid within seven days of his decision being notified in
writing to the Seller and the Purchaser.
17. Agreed Claims
(1) If the Purchaser makes a Claim the validity of which is accepted by the
Seller but the quantum of which is not accepted by the Seller, the
parties shall negotiate in good faith to reach agreement as to quantum.
If they do not reach such agreement within 21 days of the Purchaser
submitting the Claim to the Seller, the matter shall be referred
immediately to a Queen's Counsel (the "Queen's Counsel"), acting as an
expert, to be appointed by agreement between the Purchaser and the
Seller or, in the absence of such agreement within 14 days appointed by
the President of the Law Society of England and Wales. The Queen's
Counsel shall be instructed to determine within 14 days the amount
which he or she considers to be a reasonable estimate of the quantum of
the Claim. The amount agreed between the parties or determined by the
Queen's Counsel in accordance with this clause shall be the "Agreed
Claim".
(2) If the Purchaser makes a Claim the validity of which is not accepted by
the Seller within 21 days of submission, the matter shall be referred
immediately to a Queen's Counsel appointed in accordance with subclause
20
(1) above. The Queen's Counsel shall be instructed to determine
whether, on a balance of probabilities, the Claim will succeed and to
notify the parties of his or her determination as soon as possible and
in any event within 14 days after his or her appointment. Where the
Queen's Counsel determines a Claim will, on a balance of probabilities,
succeed the quantum of such a Claim shall be determined in accordance
with subclause (1).
(3) The parties agree to procure that there is made available to the
Queen's Counsel all such information and evidence as he or she may
reasonably require for the purpose of making a fair determination of
the validity or quantum of the Claim. All costs arising out of or in
connection with instructing the Queen's Counsel under this clause shall
be borne by the Seller on the one hand and the Purchaser on the other
in equal shares or in such other proportions as the Queen's Counsel may
determine to be fair and reasonable. The Queen's Counsel may instruct
any expert (including a chartered accountant) to assist him or her in
arriving at his or her decision and the fees and expenses of any such
expert shall be payable by the parties in the same proportions as the
fees of the Queen's Counsel. All findings of the Queen's Counsel shall
be final and binding on the parties.
18. Whole agreement
(1) This agreement, the Hivedown Agreement and the documents referred to in
either of them contain the whole agreement between the parties relating
to the transactions contemplated by this agreement and supersede all
previous agreements between the parties relating to those transactions
(with the exception of all pre-existing confidentiality undertakings
between the parties).
(2) Each of the parties acknowledges that, in agreeing to enter into this
agreement, it has not relied on any representation, warranty,
undertaking or other assurance except those set out in this agreement.
Without prejudice to the foregoing, the Purchaser acknowledges that it
has not relied on any representations or warranties or other
information contained in the Confidential Information Memorandum on the
Company prepared by Broadview International Limited or in any other
written or oral information supplied by or on behalf of the Seller or
its advisers or made or supplied in connection with the negotiations of
the sale and purchase under this agreement.
(3) In entering into this agreement no party may rely on any
representation, warranty, collateral contract or other assurance (
except those set out in this agreement and the documents referred to in
it) made by or on behalf of any other party before the signature of
this agreement and each of the parties waives all rights and remedies
which, but for this subclause, might otherwise be available to it in
respect of any such representation, warranty, collateral contract or
other assurance; providing that nothing in this subclause shall limit
or exclude any liability for fraud or wilful concealment.
19. Announcements
No announcement concerning this sale and purchase or any ancillary
matter will be made before, on or after Completion by any member of the
Seller's Group or of the Purchaser's Group without prior consultation
with and (unless the announcement is required by law, the London Stock
Exchange, Nasdaq or any other relevant regulatory authority) without
the prior written approval of the Seller and the Purchaser (such
approval not to be unreasonably withheld or delayed).
21
20. Notices
(1) Any notice or other document to be served under this agreement must be
in the English language and may be delivered or sent by first class
recorded delivery post (using air courier (such as FedEx or DHL) if
required to be served on a party in a different jurisdiction) or
facsimile process to the party to be served at its address appearing in
this agreement or at such other address as it may have notified to the
other parties in accordance with this clause.
(2) Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 a.m. on the third business day after it
was put into the post; or
(c) if sent by facsimile process, at the expiration of two hours
after the time of despatch, if despatched before 3.00 p.m. on
any business day, and in any other case at 10.00 a.m. on the
business day following the date of despatch.
(3) In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the notice
or document was properly addressed and posted as a prepaid first class
recorded delivery letter or, if sent by air courier, was delivered to
the correct address and signed for upon receipt or that the telex or
facsimile message was properly addressed and despatched and the correct
answerback or identity code is received as the case may be.
(4) The addresses of the parties for the purpose of this clause are as
follows:
InterX and the Seller
Xxxxxx Xxxxx
00 Xxxxxxxx Xxxxx
Xxxxxx X0X 0XX
For the attention of: the Finance Director and the Commercial Director
Facsimile: 020 7769 9201
The Purchaser
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx
Xxxxxxxxxx
00000-0000
XXX
For the attention of: Xxxx Xxxxxxx
Facsimile: 001 408 451 1694
with a copy to:
22
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx
XX 00000
XXX
For the attention of: Xxx Xxxxxx
Facsimile: 001 612 347 7000
21. General
(1) Each of the obligations and undertakings set out in this agreement
which is not fully performed at Completion will continue in force after
Completion.
(2) No party shall be entitled to assign or transfer its rights or
obligations under this agreement or any of them without the prior
written consent of the other parties.
(3) Each party shall pay the costs and expenses incurred by it in
connection with the entering into and completion of this agreement.
(4) The Purchaser will bear all stamp duty and registration fees payable or
assessed in relation to this agreement and the transfer of the Shares.
(5) The Purchaser agrees to provide the Seller and its advisers upon
reasonable notice and during normal business hours with reasonable
access (including the right to take copies) to the books of accounts
and other financial records of the Group Companies which relate to the
period up to Completion as the Seller may reasonably request for the
purposes of preparing its annual consolidated accounts for the year in
which Completion takes place and preparing its tax returns. The Seller
agrees to provide to the Purchaser and its advisors upon reasonable
notice and during normal business hours with reasonable access
(including the right to take copies) to the books and records which
relate to the businesses of the Group Companies for the period up to
midnight on 2nd June, 2000 but which were not transferred pursuant to
the Hivedown Agreement as the Purchaser may reasonably request so far
as, in the reasonable opinion of the Seller, they relate to the
business of the Group Companies for the period up to midnight on 2nd
June, 2000.
(6) This agreement may be entered into in the form of two or more
counterparts each executed by one or more of the parties but, taken
together, executed by all and, provided that all the parties so enter
into the agreement, each of the executed counterparts, when duly
exchanged or delivered, shall be deemed to be an original but, taken
together, they shall constitute one document.
(7) Save as otherwise provided, time is not of the essence in relation to
the obligations under this agreement.
(8) The terms of this agreement may be enforced only by a party to it or a
party's successors and permitted assigns.
23
(9) Except as otherwise provided in this agreement, all payments to be made
by any of the parties to this agreement, the Tax Deed or any of the
other documents referred to in this agreement shall be made in cleared
funds in full without any set-off or counterclaim and free from any
deduction or withholding except as may be required by law.
(10) If all of the Shares are sold or transferred after Completion the
benefit of each of the obligations, warranties, indemnities and
undertakings given by the Seller in this agreement or the Tax Deed may
be assigned to a wholly-owned subsidiary of the Purchaser or a holding
company of which the Purchaser is a wholly-owned subsidiary provided
that the liability of the Seller in this agreement or the Tax Deed
shall not be increased by such assignment and provided that if such
assignee shall cease to be so wholly owned by the Purchaser or, as the
case may be, the Purchaser shall cease to be wholly owned by the
assignee, the benefit of the obligations, warranties, indemnities and
undertakings shall be reassigned to another wholly-owned subsidiary of
the Purchaser or to a holding company of which the Purchaser is a
wholly-owned subsidiary or to the Purchaser itself, who may enforce
them as if it had been named in this agreement as the Purchaser. If
such assignee does not so reassign the benefit of the obligations,
warranties, indemnities and undertakings, the Seller shall be released
from any further liability in respect thereof from the date on which
such assignee ceases to be wholly owned by the Purchaser or, as the
case may be, the Purchaser ceases to be wholly owned by the assignee
until such time as a reassignment as envisaged by this clause takes
place.
(11) Unless otherwise expressly stated all payments to be made under this
agreement shall be made in sterling to the party to be paid as follows:
(a) to the Seller in immediately available funds to the account of
InterX at:
bank: National Westminster Bank plc
Berkeley Square Branch
PO Box 2153
0-0 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xxxxxx X0X 00X
sort code: 60-02-20
account number: 00000000
or such other account as the Seller may specify; and
(b) to the Purchaser in immediately available funds to the account
of the Purchaser at:
bank: California Bank & Trust
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx
XX 00000
XXX
sort code: 12100 2042
24
account number: 01700039970
or such other account as the Purchaser may specify.
(12) It is agreed that the Purchaser shall be entitled but not obliged at
any time or times to set-off an Agreed Claim against any liability of
the Purchaser to the Seller (in either case howsoever arising and
whether any such liabilities is present or future liquidated or
unliquidated and irrespective of the currency of its denomination). Any
exercise by the Purchaser of its rights under this clause shall be
without prejudice to any other rights or remedies available to the
Purchaser under this agreement or otherwise.
(13) If the whole of the undertaking (but not part only) of the Company is
assigned by the Company after Completion to the Purchaser or any
wholly-owned subsidiary of the Purchaser either:-
(a) the benefit of each of the obligations, warranties,
indemnities and undertakings given by the Seller in this
agreement or the Tax Deed may be assigned to such a transferee
of the undertaking who may enforce them as if it had been
named in this agreement as the Purchaser provided that if such
assignee shall cease to be a wholly owned subsidiary of the
Purchaser, the benefit of the obligations, warranties,
indemnities and undertakings shall be reassigned to another
wholly owned subsidiary of the Purchaser or the Purchaser
itself. If such assignee does not so reassign the benefit of
the obligations, warranties, indemnities and undertakings, the
Seller shall be released from any further liability in respect
thereof from the date on which such assignee ceases to be
wholly owned by the Purchaser until such time as a
reassignment as envisaged by this clause takes place; or
(b) (at the option of the Purchaser) any cost, expense or loss of
such assignee which results from a breach by the Seller of any
of the obligations, warranties, indemnities or undertakings
given by the Seller in this agreement or the Tax Deed and
which would have entitled the Purchaser to bring a claim
against the Seller either for breach of contract or under an
indemnity (so long as it remains a wholly-owned subsidiary of
the Purchaser) shall for the purpose of this agreement be
deemed to be a cost, expense or loss of the Company or the
Purchaser and the Seller shall, on the terms of this
agreement, be liable accordingly.
(14) Each of the parties hereto hereby undertake they (and any nominee for
them) will execute such deeds, sign such documents, attend such
meetings, exercise such votes, pass such resolutions, waive such rights
(under the Memorandum or Articles of Association of any company or
otherwise and including rights of pre-emption), give and/or obtain such
consents and generally do and procure all things as may be necessary or
convenient for the implementation and completion of this agreement
according to its terms and conditions.
(15) The Seller shall from time to time after Completion give to the Company
and/or the Purchaser on written request all information in their
possession which relates exclusively to the business, dealings,
transactions or affairs of the Company.
(16) InterX agrees with the Purchaser and undertakes that any subsequent
liquidation of the Seller will be carried out such that the provisions
of section 216 of the Insolvency Xxx 0000 do not apply.
25
(17) InterX and the Seller, to the extent that they have any equitable
interest in the Properties, hereby confirm and consent to the grant of
the Leases and the Options to the Purchaser and to the sale of the
Properties to the Purchaser or the Purchaser's successor in title and
undertake that they will release such equitable interests in the event
that the Options are exercised and InterX and the Seller further agree
and undertake to the Purchaser and any successor in title to the
Purchaser that they will enter into such further consents, releases or
assignments in respect of any such equitable interests as the Purchaser
or the Purchaser's successors in title may reasonably require. For the
purposes of the Contracts (Rights of Third Parties) Xxx 0000 it is
expressly agreed that the provisions of this clause are for the benefit
of and enforceable by the successor in title of the Purchaser and for
the avoidance of doubt the provisions of this clause shall remain in
full force and effect notwithstanding completion of this agreement,
completion of the Leases and completion of the sales of the Properties
pursuant to the Options.
22. Governing Law and Jurisdiction
(1) This agreement is governed by, and shall be construed in accordance
with the laws of England.
(2) The Purchaser submits to the exclusive jurisdiction of the English
courts for all purposes relating to this agreement and irrevocably
appoints the Purchaser's Solicitors as its agent for service of
process.
23. Rights of Third Parties
(1) Each Group Company may enforce the terms of clauses 6, 8, 15 and 21(17)
of this agreement subject to the provision of the Contracts (Rights of
Third Parties) Xxx 0000.
(2) Except as provided in subclause (1) above a person who is not a party
to this agreement has no right under the Contracts (Rights of Third
Parties) Xxx 0000 to enforce any term of this agreement but this does
not affect any right or remedy of a third party which exists or is
available apart from the Contracts (Rights of Third Parties) Xxx 0000.
24. Guarantee
(1) In consideration of the Purchaser entering into this agreement at the
request of InterX (as InterX hereby acknowledges) InterX irrevocably
and unconditionally:
(a) guarantees to the Purchaser prompt performance by the Seller
of all its obligations under or in connection with the
Hivedown Agreement, this agreement and any documents referred
to in it as being in the Agreed Form and of payment on the due
date of all sums payable now or in the future to the Purchaser
by the Seller under or in connection with the Hivedown
Agreement, this agreement or any documents referred to in it
as being in the Agreed Form as and when the same shall become
due;
(b) undertakes with the Purchaser that, if and whenever the Seller
shall be in default in the payment of any sum whatsoever under
or in connection with the Hivedown Agreement, this agreement
or any documents referred to in it InterX will pay such sum on
demand;
26
(c) undertakes with the Purchaser that, if and whenever the Seller
shall be in default in the performance of any of its
obligations whatsoever under or in connection with the
Hivedown Agreement, this agreement or any documents referred
to in it, InterX will, so far as it is able to, perform such
obligation on demand;
(d) agrees that if any sums hereby secured are not recoverable on
the basis of a guarantee, then InterX will, as a separate and
independent stipulation and as a primary obligor, pay to the
Purchaser on demand an amount or amounts equal to the amount
or amounts which InterX would have been liable to pay but for
such irrevocability and will on demand indemnify the Purchaser
against any loss or liability suffered or incurred by the
Purchaser as a result of such irrevocability.
(2) All payments to be made by InterX hereunder will be made by not later
than noon (London time) on the date 5 business days following the due
date in pounds sterling in same day cleared funds into the account of
the Purchaser specified in clause 19 or such other account as the
Purchaser may from time to time notify to InterX.
(3) (a) Payments will be made free and clear of and without
deduction for or on account of any present or future tax
unless InterX is required by law to make any such payment
subject to any tax.
(b) In the event that InterX is required by any law to make any
deduction or withholding on account of any tax from any
payment due hereunder, then such payment will be increased by
such amount as may be necessary to ensure that the Purchaser
received a net amount, free and clear of all taxes equal to
the full amount which the Purchaser would have received had
such payment not been subject to such taxes and InterX will
indemnify the Purchaser against any liability of the Purchaser
in respect of such taxes and will remit promptly the amount of
such taxes to the appropriate taxation authority and in any
event prior to the date on which penalties attach.
(4) The security constituted by this Guarantee will be in addition to and
not in substitution for any other rights which the Purchaser may now or
hereafter have under or by virtue of any guarantee or security or
agreement or any lien or operation of law or under any collateral or
other security now or hereafter held by the Purchaser or to which the
Purchaser may be entitled and this Guarantee will be held by the
Purchaser as a continuing security, will not be satisfied by any
intermediate payment or satisfaction of any part of the obligations
hereby guaranteed and will remain in force until all obligations of the
Seller hereunder have been unconditionally and irrevocably paid and
satisfied in full.
(5) The Purchaser will not be bound to enforce any other security before
enforcing its rights under this Guarantee and no delay or omission on
the part of the Purchaser in exercising any right under this Guarantee
will impair such right or be construed as a waiver thereof nor will any
single or partial exercise of any such right preclude any further
exercise thereof.
(6) The rights provided in this Guarantee are cumulative and not exclusive
of any rights provided by law and may be exercised from time to time as
often as the Purchaser may deem expedient.
(7) Any settlement or discharge under this Guarantee between the Purchaser
and InterX will be conditional upon no security or payment to the
27
Purchaser by InterX or any other person being avoided or satisfied or
ordered to be refunded or reduced by any provision or enactment
relating to bankruptcy, insolvency, administration or liquidation for
the time being in force, and if such condition is not satisfied, the
Purchaser will be entitled to recover from InterX on demand the value
of such security or the amount of any such payment as if such
settlement or discharge had not occurred.
(8) The rights of the Purchaser under this Guarantee and security hereby
constituted will not be affected by any omission, matter or thing which
apart from this provision might operate to impair affect or discharge
such rights and security, in whole or in part and whether or not known
to or discoverable by InterX, the Purchaser or any other person.
(9) Until all obligations of the Seller have been unconditionally and
irrevocably paid in full to the reasonable satisfaction of the
Purchaser, the Purchaser may at any time keep in a separate account for
as long as it may think fit any monies received, recovered or realised
under this Guarantee without being under any intermediate obligation to
apply the same or any part thereof towards discharge of such amount
provided that any payment by InterX to the Purchaser under the terms of
this Guarantee shall discharge the liability of the Seller to make such
payment.
25. Access to Books and Records; Cooperation with Purchaser
After Completion, InterX and the Seller shall, upon the reasonable
request of the Purchaser and at the Purchaser's cost provide, and
procure that its auditors provide, to the Purchaser, during normal
business hours upon reasonable notice, reasonable access to and the
right to make copies of all files, books, work papers, records,
documents and other information, including financial accounting
information (to the extent such items are in InterX or the Seller's
possession or accessible to them) relating to the Seller as necessary
for the Purchaser to comply with financial reporting and/or securities
regulation requirements relating to the historical operations and
finances of the Seller and/or in connection with the calculation of the
Exit Charge or the preparation of the Draft Completion Accounts. InterX
and the Seller shall retain files, books, work papers, records and
documents relating to the Seller (to the extent not transferred to the
Purchaser at Completion) for at least seven years after Completion.
AS WITNESS this agreement has been executed as a deed by each of InterX and the
Seller and by the hands of the duly authorised representatives of the Purchaser
the day and year first before written.
28
SCHEDULE 1
(Particulars of Newco)
Registered number: 3969946
Registered office: Xxxxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxxx, Xxxxxx, XX0 0XX
Date and place of 11th April, 2000, England
Incorporation:
Directors: Ian Xxxxxxx Xxxxxx
Xxxxxxx Xxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxxx
*Xxxxx Xxxxx Xxxxxx Xxxxxxxxx
Secretary: Xxxxxxxx Xxxxx Xxx
Accounting reference 30th April
date:
Authorised capital: 1,000,000 ordinary shares of(pound)1 each
Issued capital: 1,000,000 ordinary shares
Shareholders: The Seller: 1,000,000 ordinary shares
29
SCHEDULE 2
Particulars of the Subsidiaries
Subsidiary's name: Ideal Hardware (Europe) Limited (previously
called BrandIT Limited)
Registered number: 3711148
Registered office: Xxxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxxx, Xxxxxx, XX0 0XX
Date and place of 10th February, 1999, England
Incorporation:
Directors: Ian Xxxxxxx Xxxxxx
Xxxxxxx Xxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Secretary: Xxxxxxxx Xxx
Accounting reference 31st July
date:
Auditors: Xxxxxx Xxxxxxxx
Authorised capital: 100 ordinary shares of(pound)1 each
Issued capital: 2 ordinary shares
Shareholders: Ideal Hardware Limited
30
Subsidiary's name: Logical Online Limited
Registered number: 3803158
Registered office: Xxxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxxx, Xxxxxx XX0 0XX
Date and place of 0xx Xxxx, 0000, Xxxxxx Xxxxxxx
Incorporation:
Directors: Xxxxxxxx Xxxxx Xxx
Xxxx Xxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxx Xxx Xxxxx
Secretary: Xxxxxxxx Xxxxx Xxx
Accounting reference 31st July
date:
Auditors: Xxxxxx Xxxxxxxx
Authorised capital: (pound)10,000 ordinary shares of(pound)1 each
Issued capital: 1 share
Shareholder: Ideal Hardware Limited
31
Subsidiary's name: Ideal Financial Services Limited
Registered number: 3942210
Registered office: Xxx Xxxx, Xxxxxxxxxxx
Xxxxxx, XX0, 0XX
Date and place of 0xx Xxxxx, 0000, Xxxxxx Xxxxxxx
Incorporation:
Directors: Ian Xxxxxxx Xxxxxx
Xxxxxxx Xxx Xxxxx
Xxxxxxxxx Xxxxxxx Xxxxxxxxx Xxxxxx
Secretary: Xxxxxxxx Xxxxx Xxx
Accounting reference 31st March
date:
Auditors: Xxxxxx Xxxxxxxx
Authorised capital: 100 ordinary shares of(pound)1 each
Issued capital: 1 share
Shareholder: Ideal Hardware Limited
32
SCHEDULE 3
(Warranties)
A. GENERAL
1. Recitals and Schedules
The particulars relating to the Group Companies set out in the recitals
and Schedules 1 and 2 to this agreement are accurate.
2. Due Incorporation and Capacity
Each of InterX and the Seller is a corporation validly existing under
the laws of England with the requisite power and authority to enter
into and perform, and has taken all necessary corporate action to
authorise the execution and performance of, its obligations under this
agreement and the Tax Deed.
3. Valid Obligations
This agreement and the Tax Deed constitute valid and binding
obligations of InterX and the Seller.
4. Filings and Consents
Other than as required by this agreement, no notices, reports or
filings are required to be made by InterX or the Seller in connection
with the transactions contemplated by this agreement nor are any
consents, approvals, registrations, authorisations or permits required
to be obtained by InterX or the Seller in connection with the execution
and performance of this agreement the failure to make or obtain any of
which:
(a) would prevent or delay completion of this agreement; or
(b) would subject the Purchaser or the Group Companies to any
material liability.
5. Incorporation
The Group Companies are corporations validly existing under the laws of
England with the requisite power and authority to conduct their
businesses as presently conducted.
6. InterX's other interests
Neither InterX nor any member of the Seller's Group has any material
interest in any business which is competitive or likely to be
competitive with the business of any of the Group Companies as
conducted at the date hereof.
7. Ownership of the Shares
(1) The shares described in Schedule 1 constitute the whole of the issued
and allotted share capital of the Company.
33
(2) The shares described in Schedule 2 constitute the whole of the issued
and allotted share capital of the Subsidiaries.
(3) There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance on, over or affecting any of the
Shares and there is no agreement or commitment to give or create any of
the foregoing.
(4) The Seller is entitled to transfer or procure the transfer of the full
legal and beneficial ownership in the Shares to the Purchaser on the
terms set out in this agreement.
8. Subsidiaries and associates
No Group Company is the holder or beneficial owner of or has agreed to
acquire any shares of any other corporation other than the
Subsidiaries.
9. Assets
(1) Particulars of each fixed asset with a value in excess of (pound)20,000
acquired or agreed to be acquired by each of the Group Companies since
the Accounts Date are set out in the Disclosure Letter.
(2) Except for assets offered for sale or sold in the ordinary course of
business, no Group Company has since the Accounts Date disposed or
agreed to dispose of any of the assets included in the Accounts or any
asset acquired or agreed to be acquired since the Accounts Date, in
each case with a book value in excess of (pound)20,000.
(3) Save for the bare licence in favour of the Company in relation to the
Properties no Group Company has on the date of this agreement any
interest in any real property (freehold or leasehold) whatsoever or
wheresoever situate and has no liability (contingent or otherwise) in
respect of any premises formerly owned or occupied by any Group
Company.
10. Licences
(1) Each Group Company has obtained all material licences, permissions,
authorisations and consents required for the carrying on of the
businesses now carried on by it in the place and in the manner in which
such business is now carried on and there are no factors which might in
any way prejudice the continuance or renewal of any of those licences,
permissions, authorisations or consents.
(2) Neither the Seller nor any Group Company has received notice that any
Group Company is in default under any material licence, permission,
authorisation or consent.
11. Insider Contracts
There are no subsisting material contracts to which a Group Company is
a party and in which any member of the Seller's Group has a material
interest (other than, in the case of the Seller, its interest in the
Shares).
34
12. Litigation
Except as claimant in the collection of debts arising in the ordinary
course of business, no Group Company is a plaintiff or defendant in or
otherwise a party to any litigation, arbitration or administrative
proceedings which are in progress nor, so far as the Seller is aware,
have such proceedings been expressly threatened by or against any Group
Company or any of their assets in each case where those proceedings
would have a material adverse effect on the Group Companies' financial
position.
13. Liquidation
(1) No administrator, receiver or administrative receiver has been
appointed in respect of the whole or any part of the assets or
undertaking of a Group Company.
(2) So far as the Seller is aware, no petition has been presented, no order
has been made for the winding-up of a Group Company.
(3) No resolution has been passed for the winding-up of a Group Company.
14. Consequences of sale
The sale of the Shares to the Purchaser will not:
(a) result in the breach of or constitute a default under any of
the terms or provisions of the memorandum or articles of
association of any of the Group Companies; or
(b) result in the creation or imposition of any lien, charge or
encumbrance of any nature on any of the property or assets of
the Group Companies.
15. Accounts and Management Accounts
(1) The Accounts were prepared in accordance with applicable law and
generally accepted accounting principles and give a true and fair view
of the state of affairs of the Company and the Property Companies (as
appropriate) as at the Accounts Date and of the results of the Company
and the Property Companies (as appropriate) for the financial period
ended on the Accounts Date.
(2) The unaudited management accounts of the Business for the month ended
2nd June, 2000 (a copy of which is attached to the Disclosure Letter)
fairly present the income and expenditure of the Business for that
period.
16. Records
Save in the ordinary course of business all material records and
information belonging to the Group Companies (whether or not held in
written form) are in their exclusive possession, under their control
and all such records and information are in all material respects
up-to-date and accessible by them.
35
17. Borrowings
(1) The total amount borrowed by each Group Company from its bankers does
not exceed(pound)24,000,000 (or if lower its overdraft and other
financial facilities).
(2) No Group Company has outstanding loan capital or money borrowed or
raised (other than under its bank and overdraft facilities or normal
trade credit).
18. Loans
No Group Company has lent any money which is due to be repaid and, as
at the date of this agreement, has not been repaid to it and it does
not own the benefit of any debt other than debts accrued to it in the
ordinary course of its business.
19. Indebtedness
No Group Company has received any notice to repay under any agreement
relating to any borrowing (or indebtedness in the nature of borrowing)
which is repayable on demand; and no Group Company has received notice
that there has occurred any event of default under any agreement
relating to any other borrowing or indebtedness in the nature of
borrowing or other credit facility of that Group Company.
20. Bank accounts
No Group Company has bank or deposit accounts other than those listed
in the Disclosure Letter.
21. Existing suppliers and customers
Since the Accounts Date:
(a) no material supplier of any Group Company has ceased or has
notified that it will cease supplying, or materially reduce
supplies to, any Group Company; and
(b) no material customer of any Group Company has terminated or
has notified that it will terminate or materially reduce its
business with any Group Company.
22. Material commitments and liabilities
(1) No Group Company is a party to any material contract (other than the
Hivedown Agreement) which:
(a) was entered into otherwise than in the ordinary course of
trading; or
(b) is of a long-term nature (that is to say, incapable of
performance in accordance with its terms within twelve months
after the date on which it was entered into or undertaken); or
(c) is of a loss-making nature (that is to say, known to be likely
to result in a loss on completion or performance); or
36
(d) involves the supply of goods the aggregate sales value of
which will represent in excess of five per cent. of the
turnover of the Group Companies for the current financial
year.
(2) No Group Company has outstanding (save as disclosed in the Accounts):
(a) any material agreement or arrangement with any members of the
Seller's Group otherwise than by way of bargain at arm's
length;
(b) any mortgage, charge, lien or pledge or any obligation to
create a mortgage, charge, lien or pledge to secure any
material obligation of, or the performance of, a material
obligation by any member of the Seller's Group or any other
company, firm or undertaking.
(3) Neither the Seller nor any Group Company has received notice that they
are in default under any agreement, mortgage, charge, lien or pledge
which is material to the financial condition of the Group Companies.
23. Joint ventures, agencies, etc.
(1) Other than as set out in the Disclosure Letter, no Group Company is or
has agreed to become a member of any partnership or other
unincorporated association, joint venture or consortium (other than
recognised trade associations).
(2) No Group Company is a party to any agreement which is material in
relation to its business and which in any way restricts its freedom to
carry on the whole or any material part of its business as it does at
present.
24. Secret or confidential information
So far as the Seller is aware, no Group Company has (except in the
ordinary course of business, or to its professional advisers, or to the
Seller, or as required by law or any regulatory authority or subject to
a confidentiality undertaking) disclosed to any person other than the
Purchaser (and its professional advisers) any Confidential Information,
Technical Information, Proprietary Information or any other secret or
confidential information relating to its business.
25. Intellectual Property and Style and Places of Business
(1) No Group Company currently uses on its letterheads, circulars,
advertisements or vehicles any name other than its corporate name.
(2) All material licences, rights or similar arrangements granted to each
Group Company at the date of this agreement in respect of any
Intellectual Property are valid and subsisting and no Group Company is
in material breach of any of the provisions thereof and no Group
Company has received notice of any material dispute in relation thereto
and no material dispute is reasonably foreseeable with respect to them.
37
(3) (a) The Group Companies are, between them, the sole legal and
beneficial owners of the registered Intellectual Property
identified in Schedule 4 (the "Scheduled Intellectual
Property"). No person has been authorised to use any Scheduled
Intellectual Property owned by any Group Company. No Group
Company has disclosed (except in the normal, usual and
ordinary course of its business or subject to a duty of
confidentiality) any of its Confidential Information,
Technical Information, Proprietary Information or any other
know how, trade secrets or lists of customers to any other
person.
(b) So far as the Sellers are aware all of the Intellectual
Property used by a Group Company at the date of this agreement
is owned by it or licensed to it .
(c) So far as the Sellers are aware none of the processes,
products or services or activities of any Group Company
infringes any material right of any other person relating to
Intellectual Property or involves the unlicensed use of
confidential information disclosed to any Group Company by any
person in circumstances which would entitle that person to
claim against any Group Company and so far as the Seller is
aware none of the Intellectual Property used or required to be
used by any Group Company in carrying its business is being
used, claimed, opposed or attacked by any person.
(d) The Seller is not aware of any infringement by any third party
of any Scheduled Intellectual Property owned by any Group
Company.
(e) There are no outstanding written claims against any Group
Company for infringement of any Scheduled Intellectual
Property used (or which has been used) by any Group Company
and no such claims have been settled by the giving of any
undertakings which remain in force.
(f) Confidential Information and know how used by any Group
Company are kept confidential and each Group Company operates
and complies with procedures which maintain such
confidentiality. Such confidentiality has not been breached in
any material respect.
(g) All application and renewal fees, costs and charges relating
to the Scheduled Intellectual Property in carrying on its
business have been duly paid on time.
(h) Copies of all material agreements relating to Scheduled
Intellectual Property to which the Company is a party have
been supplied to the Purchaser and each of them is in force.
(4) The Intellectual Property owned by each Group Company is not subject to
any Security Interest.
(5) So far as the Sellers are aware none of the material Intellectual
Property owned by any Group Company is subject to any claims from
employees, consultants, agents or others.
(6) There have been no actions, claims, counterclaims or allegations
impugning the validity or enforceability of any Scheduled Intellectual
Property owned (for whether interest) by any Group Company or any Group
Company's ownership thereof and so far as the Seller is aware there are
38
no facts, matters or circumstances which are reasonably likely to give
rise to any such action, claim, counterclaim or allegation.
(7) No Group Company has in the past 12 months received a written claim
alleging that the Scheduled Intellectual Property is invalid.
(8) No Group Company has at any time (save in the normal, usual and
ordinary course of its business or to its professional advisers or
subject to a duty of confidentiality) disclosed (or undertaken or
arranged to disclose or permitted to be disclosed) to any person other
than the Purchaser any Confidential Information or any of its secret
information or property (including, without limitation, secrets,
processes, know-how financial and technical information, designs,
drawings, plans, models, prototypes, statistics, lists of customers or
suppliers documents, files, records and papers) or any other
information relating to its business or affairs the disclosure of which
would cause loss or damage to or adversely affect any Group Company or
any other information relating to its manufacturers, suppliers,
customers, clients and agents or to any other person who has or has had
any dealings with it.
26. Memorandum & Articles of Association
(1) The copy of the Memorandum and Articles of Association of each of the
Company and the Subsidiaries which has been produced to the Purchaser's
Solicitors (together with all material required to be embodied in or
annexed thereto by section 380 of the Companies Act) is accurate and
complete in all material respects as at the date of this agreement and
fully sets out all rights attaching to each class of the share capital
of the Company and the Subsidiaries.
(2) No dividends or other distributions or profits have been declared, made
or paid since the Accounts Date.
27. Compliance with Laws
(1) No Group Company has committed any criminal, illegal or unlawful act or
default or any breach of any rules or regulations of any professional
body relevant to its business or affairs or the activities of its
employees and no officer or employee of any Group Company has committed
any criminal, illegal or unlawful act or default (other than minor
traffic offences) or breach of trust in connection with the business or
affairs of any Group Company or any breach of any rules or regulations
of any professional body relevant to any Group Company's business or
affairs or the activities of its employees.
(2) None of the activities or contracts or rights of any Group Company is
ultra xxxxx, unauthorised, invalid or unenforceable or in breach of any
contract or covenant.
(3) So far as the Seller is aware no event has occurred which would entitle
any third party to terminate any contract or any benefit enjoyed by any
Group Company or call in any money before the normal due date therefor
and there are no circumstances likely to give rise to such an act or
event.
(4) The Company does not carry on, nor does it purport to carry on, nor has
it at any time since 28th April, 1988 carried on, or purported to carry
on, investment business in the United Kingdom within the meaning of
section 3 of the Financial Services Xxx 0000 nor has it contravened any
provision of the said Act.
39
28. Insolvency
(1) No Group Company has stopped payment or is unable to pay its debts
within the meaning of s.123 of the Insolvency Xxx 0000.
(2) No Group Company is insolvent either on the basis that it is unable to
pay its debts as and when they fall due or upon the basis of a
deficiency of assets over liabilities taking into account any
contingent or prospective liabilities.
(3) No receiver or manager (whether an administrative receiver or
otherwise) has been appointed by any person or court over the business
or assets of any Group Company or any part thereof.
(4) No petition has been presented to the court for the appointment of an
administrator to any Group Company and no Group Company nor its
directors have any intention to present such a petition nor has any
order been made for the appointment of such an administrator.
(5) No Group Company has made nor does it intend to make any proposal to
its creditors for a composition in satisfaction of its debts or a
scheme of arrangement.
(6) There is no unfulfilled or unsatisfied judgment or court order
outstanding against any Group Company and there has been no delay by
any Group Company in the payment or discharge of any obligation or
liability when due.
(7) No distress, execution or other analogous process has been levied on
any of the assets of any Group Company.
29. Business Since Incorporation
(1) Since its incorporation the Company has carried on only the Business
and has not at any time during such period ceased to carry on such
business or changed its business or carried on any new or other
business and save for liabilities incurred in the ordinary course of
business and which are reflected in the 2nd June, 2000 management
accounts has no obligations or liabilities whatsoever other than those
acquired by it pursuant to the Hivedown Agreement or this agreement.
(2) The assets acquired by the Company pursuant to the Hivedown Agreement
are (other than the fixed assets and stock) adequate and suitable for
the Company to conduct the Business as at the date of this agreement.
30. Effects of this agreement
Neither the exchange of nor the performance of nor compliance with this
agreement or any of the documents referred to in it or Completion will:
(a) conflict with or result in the breach of or constitute a
default under any of the terms, conditions or provisions any
arrangement, contracts, transactions to which any Group
Company is a party;
(b) relieve any other party to a contract, agreement, arrangement
or instrument with any Group Company of its obligations
40
thereunder or enable it to terminate its obligations under
such contract, agreement, arrangement or instrument or to
exercise any option or right against any Group Company or any
asset of any Group Company; or
(c) result in the creation or imposition of any Security Interest
on any of the assets of any Group Company other than any
Security Interest required by the Purchaser's lender.
31. Government and Other Grants
As a result of Completion no Group Company is subject to any
arrangement for receipt or repayment of any allowance, redundancy
payment contribution, grant, subsidy or financial assistance from any
government department, local authority, agency, board or other body
whatsoever or is under any obligation, contingent or otherwise, to
return, repay, allow to be forfeited, withheld or set-off the whole or
any part of the same.
32. Insurance
(1) All the assets and liabilities of each Group Company of an insurable
nature (including but not limited to the stock-in-trade, the real
property, product liability and consequential loss of profits covering
a period of not less than six months) are and have at all material
times been insured against all risks as would in the circumstances be
prudent in amounts representing the full replacement or reinstatement
value thereof or the full amount of any liability and all such
insurance is currently in full force and effect.
(2) So far as the Seller is aware nothing has been done or omitted to be
done which has made or could make any policy of insurance void or
voidable and all conditions attached thereto have been and are being
complied with and so far as the Seller is aware there are no insurance
claims outstanding, pending or threatened and no circumstances which
are likely to give rise to any claim under any of such insurance.
33. Terms of Business and Trade
(1) No party with whom any Group Company has entered into any contract,
arrangement or understanding is in material default thereunder and so
far as the Seller is aware there are no circumstances likely to give
rise to such a default.
(2) Each Group Company has observed and performed in all material respects
so far as the Seller is aware the terms and conditions on its part to
be observed and performed under any trading contracts.
34. Warranties of Goods and/or Services
There are no outstanding claims (other than claims for payment under
outstanding invoices or warranties) against any Group Company on the
part of customers or suppliers which exceed (pound)5,000 nor have any
such claims been settled or paid since the Accounts Date in respect of
defects in quality of or delays in delivery or completion of contracts
or deficiencies of design or performance of equipment or otherwise
relating to liability for goods or services supplied by any Group
Company so far as the Seller is aware and no such claims are threatened
or anticipated and so far as the Seller is aware there is no matter or
fact in existence in relation to goods or services supplied before the
date of this agreement which is likely to give rise to the same.
41
35. Ownership of Assets
As at the Accounts Date all the assets included in the Accounts were
owned by the Seller or Subsidiaries and particulars of all fixed assets
acquired or agreed to be acquired by the Seller or any Group Company
since the Accounts Date are set out in the Disclosure Letter.
36. Sureties
(1) No person has given or promised any guarantee or indemnity of or
security for any overdraft, loan or loan facility granted or to be
granted to any Group Company or of any obligation owed or to be owed by
any Group Company.
(2) Other than in the ordinary course of business, no Group Company has
given or promised any guarantee or indemnity of any of the obligations
of any third party except to members of the Seller's Group.
37. Powers of Attorney, Authorisation, Agencies
(1) Other than in the ordinary course of business, no Group Company has
given any power of attorney or any other authority (express, implied or
ostensible) which is still outstanding or effective to any person to
enter into any contract or commitment or do anything on its behalf
(other than any authority of employees to enter into routine trading
contracts in the ordinary course of their duties) except to members of
the Seller's Group.
(2) Other than in the ordinary course of business, no Group Company has
appointed any agents or distributors or managers in respect of any of
its assets, liabilities, products or services whether within or outside
the United Kingdom except to members of the Seller's Group.
38. Employment
(1) The Disclosure Letter contains:
(a) details of all employees of the Group Companies and their
material terms of employment, including (without limitation)
their names, dates of birth, date of commencement of
employment, job title, current salary, profit sharing,
commission, discretionary bonus arrangements and all other
financial benefits;
(b) particulars of any person who has accepted an offer of
employment made by any Group Company but whose employment has
not yet started and of any outstanding offer of employment
made to any person by any Group Company; and
(c) particulars of any agreement for the provision of consultancy
services or the services of personnel to any Group Company and
of the terms applicable to the secondment to any Group Company
of any person.
(2) Since the Accounts Date there has been no promise, or agreement for any
change in the terms of employment or any increase in the emoluments
payable to any director or employee of any Group Company and no
director or employee has given notice, or is under notice of dismissal,
and no amounts are due to or in respect of any former director or
42
employee and no amounts which should have been paid to any director, or
employee of any Group Company are in arrears or unpaid.
(3) No amount is owing by any of the directors of any Group Company to any
Group Company.
(4) No Group Company has any current but unsatisfied liability to pay
compensation for loss of office or employment or a redundancy payment
to any present or former employee or to make any compensation payment
under any provision of the Employment Acts and no such sums have been
paid (whether pursuant to a legal obligation or ex gratia) since the
date of incorporation of the relevant Group Company and so far as the
Seller is aware there are no existing circumstances which will give
rise to any such liability.
(5) No Group Company has any outstanding loan or advance to any employee.
(6) Each of the Group Companies have in relation to each of its employees
(and so far as it is relevant, to each of its former employees)
complied in all material respects with all relevant obligations imposed
by the Employment Acts.
(7) None of the Employees is involved in any industrial action and the
Seller is not aware of any circumstances which may result in any
industrial action involving any Employees.
(8) No Group Company has entered into any recognition agreement with a
trade union nor has it received any request for recognition.
39. Pension Schemes
(1) Other than the Ideal Hardware Limited No 2 Executive Pension Scheme and
the group personal pension plan (the "Pension Schemes"), all material
details of which are contained in the Disclosure Letter, no Group
Company is a party to or has any liability under any retirement
benefit, pension or life assurance scheme or arrangement or fund
relating to any of its directors or ex-directors, officers or
ex-officers, employees or ex-employees nor is it under any legal
obligation to provide any retirement benefit, pension or life assurance
scheme or arrangement or fund for any person nor has it regularly
conferred any benefit or made any payment to any ex-director,
ex-officer or ex-employee or person connected therewith. No ex gratia
payments have been or are proposed or intended to be made by any Group
Company to any employees, former employees, director or former director
or to any person connected therewith.
(2) In relation to the Pension Schemes:
(a) there is disclosed the basis on which Newco makes, or is
liable to make, contributions to it;
(b) all contributions which are payable by Newco in respect of it
and all contributions due from employees have been duly made
and Newco has fulfilled all its obligations under it;
(c) no discretion has been exercised to provide in respect of a
member a benefit which would not otherwise be provided;
43
(d) it provides only money purchase benefits (as defined in
section 181 Pension Schemes Act 1993);
(e) it is an exempt approved scheme and/or group personal pension
scheme approved, or capable of being approved, under the Taxes
Act; and
(f) all consultancy, legal and other expenses have been paid to date.
(3) No death, disability or retirement gratuity is currently being paid or
has been promised by Newco.
(4) In relation to the Ideal Hardware Limited No 2 Executive Pension
Scheme, the Seller shall (at the Seller's expense) execute such deeds
as the Company reasonably requires in order to be substituted as
Principal Employer and Trustee in place of the Seller subject to the
agreement of the Inland Revenue (for tax approval purposes).
40. Security Interests
There is no Security Interest on, over or affecting all or any part of
the undertaking or assets of any Group Company and there is no
agreement, commitment or obligation to create any Security Interest and
no claim has been made by any person to be entitled to any Security
Interest other than any lien operating in favour of bankers arising in
the ordinary course of operating bank accounts and other bank
facilities.
41. Material Contracts
No Group Company is a party to or has either any liability or any right
or purported right under the Contracts (Rights of Third Parties) Xxx
0000 under any deed, mortgage, debenture, instrument, charge,
guarantee, bond, indemnity, undertaking, lease (whether assigned or
not), contract (including any agency, distributorship, franchise or
commission agreement) arrangement, obligation or commitment of any sort
other than:-
(a) contracts for the sale or purchase of trading stock or supply
or services in the normal, usual and ordinary course of such
Group Company's business (being contracts on terms which are
in no way unusual or unreasonably onerous on any Group
Company, which will not be likely to result in a loss to any
Group Company and which do not give or purport to give any
person a right under the Contracts (Rights of Third Parties)
Act 1999); and
(b) contracts of service with its employees which can be
terminated by the relevant Group Company by not more than four
weeks' prior notice without compensation (other than
compensation payable under any statute).
42. Restrictive Practices
(1) No Group Company is or has been concerned directly or indirectly in any
agreement, arrangement, understanding or practice (whether or not
legally binding) or any conduct which infringes or has infringed or
which has or should have been registered or notified under any
anti-monopoly or anti-trust legislation including the Restrictive Trade
Practices Xxx 0000 and 1977, the Resale Prices Xxx 0000, the Fair
44
Trading Act 1973, the Competition Xxx 0000, Articles 34, Article 81
(ex-Article 85) or Article 82 (ex-Article 86) of the EC Treaty, or the
Competition Xxx 0000.
(2) The Company in relation to anti-trust or similar matters relating to
the Business:
(a) has not given any undertaking to, nor is subject to, any order
of or investigation by, nor has received any request for
information from;
(b) has not received or is likely to receive any process, notice
or communication, formal or informal by or on behalf of;
(c) has not been or is a party to, nor is or has been concerned
in, any agreement, arrangement, understanding or practice in
respect of which an application for negative clearance and/or
exemption has been made to
the Office of Fair Trading, the Competition Commission, the Secretary
of State for Trade and Industry, 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.
(3) Save as required by law or pursuant to the terms of any distribution
agreement no Group Company is subject to any contracts, obligations,
practices, agreements or arrangements which restrict any Group
Company's freedom to carry on the whole or any part of its business in
any part of the world in such manner as it sees fit.
43. Computer Systems
(1) No Group Company has any of its records, Computer Systems or other
systems, controls, data or information recorded, stored, maintained,
operated or otherwise dependent upon or held by any means (including
any electronic, mechanical or photographic process whether computerised
or not) which (including all means of access thereto and therefrom) are
not under the exclusive ownership and direct control of a Group
Company.
(2) The Computer Systems have been satisfactorily maintained and supported
and have the benefit of an appropriate maintenance and support
agreement terminable by the contractor by not less than twelve months'
notice.
(3) The Computer Systems have had adequate capability and capacity for the
requirements of the Company for the processing and other functions
required to be performed for the purposes of the business of each Group
Company.
(4) Disaster recovery plans are in effect and are adequate to ensure that
the Computer Systems can be replaced or substituted without material
disruption to the business of any Group Company.
(5) In the event that any person providing maintenance or support services
for the Computer Systems ceases or is unable to do so, the Group
Companies have all necessary rights to obtain the relevant source codes
and all related technical and other information free of charge and to
procure the carrying out of such services by employees or by a third
party.
45
(6) The Group Companies have adequate procedures to ensure internal and
external security of the Computer Systems, including procedures for
taking and storing on-site and off-site back-up copies of computer
programs and data.
(7) None of the Computer Systems will be affected and the performance and
function of any Computer System and/or related hardware, software or
communication facilities or other automated process used by the Company
in connection with its activities or business will not be affected by
dates prior to, during or after the year 2000 and in particular:
(a) none of the Computer Systems is unable to accept without
interruption all date inputs, provide without interruption
correct date outputs and correctly perform without
interruption calculations on dates or portions of dates and
otherwise accurately without interruption handle date
information before, during and after 1st January, 2000;
(b) no value for any date element in any data used as input by the
software will cause any interruption in the operation of the
software, which will either correctly interpret the date
element (where it is a valid date) or else affect and report
it as an invalid date and continue processing accordingly; and
(c) date-based functionality shall behave consistently for dates
prior to, during and after year 2000 and produce correct
results in accordance with the software's specifications.
44. Environmental Liability
No Group Company has cause any and the Sellers is not aware of any
events, conditions, circumstances, activities, practices, incidents or
actions which have given or might give rise to any liability (whether
in common law or under statute) on the part of any Group Company
related to Environmental Matters or otherwise form the basis of any
expenditure, claim, action, suit, hearing, proceedings or investigation
related to Environmental Matters against or involving any Group
Company.
45. Ownership of Fixed Assets
The Group Companies together own absolutely both legally and
beneficially free from any Security Interest all the fixed assets
listed in the Disclosure Letter.
46. Ownership of Stock
The Group Companies together own absolutely both legally and
beneficially free from any Security Interest all the stock listed in
the Disclosure Letter.
47. Data Protection Xxx 0000
(1) The Company has registered or applied to register itself under the Data
Protection Xxx 0000 in respect of all registrable personal data held by
it, and all due and requisite fees in respect of such registrations
have been paid.
46
(2) The details contained in such registrations or applications are
correct, proper and suitable for the purpose(s) for which the Company
holds or uses the personal data which are the subject of them, and the
contents of all such registrations or applications have been made
available to the Purchaser.
(3) All personal data held by the Company has been held in accordance with
the data protection principles and there has been no unauthorised
disclosure of such personal data.
(4) There are no outstanding enforcement, deregistration or transfer
prohibition notices or any other nature or notice under the Data
Protection Xxx 0000 currently outstanding against the Company, nor is
there any outstanding appeal against such notices. The Sellers are not
aware of any circumstances which may give rise to the giving of any
such notices to the Company.
(5) There are no unsatisfied requests to the Company made by data subjects
in respect of personal data held by the Company, nor any outstanding
applications for rectification or erasure of personal data.
(6) There are no outstanding claims for compensation for inaccuracy, loss
or unauthorised disclosure of personal data nor is any personal data
held by the Company inaccurate, nor has the Company lost or made any
unauthorised disclosure of any such data.
(7) Without prejudice to the specific provisions above, the Company and its
employees have complied in all respects with the requirements of the
Data Protection Xxx 0000.
48. Properties
(1) The Properties are the only freehold and leasehold properties owned,
controlled or occupied by any Group Company and no Group Company has
entered into any agreement to acquire or dispose of any land or
premises or any interest therein which has not been completed.
(2) There is no Security Interest, option, agreement for sale, right to
acquire or any overriding interest or rent charge on over or affecting
all or any part of the Properties and there is no agreement or
commitment to give or create any of he foregoing and no claim has been
made by any person to be entitled to any of the foregoing.
(3) A Group Company is in actual and exclusive occupation of the whole of
the Properties no lease, tenancy, licence or other right of occupancy
has been granted or agreed to be granted to any third party in respect
of the Properties or any part thereof.
(4) So far as the Seller is aware, there are no legal proceedings issued,
pending or threatened against any Group Company in any way relating to
the Properties.
(5) No Group Company has at any time assigned or otherwise disposed of any
freehold or leasehold property in such a way that it retains any
residual liability in respect of any such freehold or leasehold
property.
(6) No Group Company holds or owns any real property or interest therein
situate outside England and Wales.
47
(7) The replies to enquiries given by the Seller to the Purchaser in
respect of Cox House and in respect of Fountain Court are true and
accurate in all material respects.
(8) No Group Company has received any notice or complaint issued by the
local, county or other competent authority or from any third party in
respect of the Properties or any part of them and have no knowledge of
any such notice or complaint.
(9) There are no overriding interests, covenants restrictions or easements
affecting the Properties which might adversely affect the relevant
Group Company's ability to continue to carry out its existing business
from any Property in the same manner as at present and at the same
cost.
B. TAXATION
1. Entering Into/Performance of the Agreement
So far as the Seller is aware neither the exchange of or performance of
this agreement nor Completion will render any Group Company liable to
any, or any additional, Taxation.
2. Returns and Clearances
(a) Any return, notification, computation, accounts, information, statement
or payment which should have been made, submitted or given by any Group
Company for the purposes of Taxation has been made, submitted or given
properly, correctly and fully within the requisite period and is not
the subject of any material dispute nor, so far as the Seller, is aware
likely to become the subject of any material dispute with any Taxation
authority.
(b) Each Group Company has complied in all respect with all statutory
provisions, rules, regulations, orders and directions relating to Value
Added Tax and has made timely and accurate returns and maintained full,
complete, correct and up-to-date records, obtained and, where
appropriate, retained invoices and other documents requisite for the
purposes of such legislation and is not in arrears with any payments or
returns thereunder and has not been required by the Commissioners of
Customs and Excise to give security.
(c) All particulars furnished to any Taxation authorities, in connection
with any application for consent or clearance on behalf of any and each
Group Company, fully and accurately disclosed all facts and
circumstances material to the decision of the authorities: any consent
or clearance was and remains valid and effective; and any transaction,
for which consent or clearance was obtained, has been carried out (if
at all) only in accordance with the terms of the relevant application
and consent or clearance.
(d) No Taxation authority has operated or agreed to operate any special
arrangement (being an arrangement which is not based on relevant
legislation or any published practice) in relation to the affairs of
any Group Company.
(e) No Group Company is involved in any arrangement for the payment of
Corporate tax by instalments.
3. Penalties
(a) No Group Company is under a liability to pay any penalty, fine,
surcharge or interest to any Taxation authority.
48
(b) No Group Company has within the last six years been the subject of an
investigation, audit, non-routine investigation or discovery by or
involving any Taxation authority and there are no circumstances, so far
as the Seller is aware, which make it likely that an investigation,
audit or discovery will take place.
(c) No Group Company has, within the last two years, been given a penalty
liability notice within Section 64 VATA 1994 nor a surcharge liability
notice within Section 59 VATA 1994 nor received a written warning
within Section 76(2) VATA 1994.
4. Claims, Elections, Liabilities and Reliefs
(a) No Group Company has made a claim under any of the following provisions
of TCGA:
(i) Section 24 (disposals where assets are lost or destroyed or
become of negligible value);
(ii) Section 48 and 280 (consideration due after time of disposal).
(b) No Group Company is or will become liable to pay, or to reimburse or
indemnify in respect of, any Taxation in consequence of the failure by
any other person to discharge that Taxation, where the Taxation relates
to profit, income or gains earned or arising or deemed to have arisen
or an Event occurring or deemed to have occurred (whether wholly or
partly) on or before Completion.
(c) All Taxation which any Group Company is liable to pay or for which any
Group Company is liable to account has been duly paid or accounted for
insofar as such Taxation ought properly to have been paid or accounted
for.
5. PAYE National Insurance and Payments under Deduction of Tax
(a) Each Group Company has properly operated the PAYE system by duly
deducting from all payments made or treated as made to its employees or
former employees, including anyone treated as an employee of such Group
Company by a Taxation authority, Taxation under the PAYE system and has
duly accounted to the Inland Revenue for all Taxation deducted by it
and for all Taxation chargeable on salaries, wages and bonuses paid,
and where applicable, benefits provided by such Group Company and
notional payments within the meaning of Section 203 Taxes Act, and
proper records have been maintained in respect thereof.
(b) All payments due in respect of national insurance contributions have
been deducted from salaries, wages and bonuses paid by and where
applicable, benefits provided by any Group Company (including for the
avoidance of doubt the granting of options over any Group Company's
shares), and each Group Company has accounted to the Inland Revenue for
such deductions made by it and for all national insurance contributions
chargeable on or in respect of salaries, wages and bonuses paid or
benefits provided and proper records have been maintained in respect
thereof.
(c) Each Group Company has made such deductions withholdings and retentions
as it was required by the Taxation Statutes to make from payments made
or treated as made and has accounted to the Taxation authorities for
such deductions, withholdings or retentions and proper records in
respect thereof have been maintained and retained by the Company.
49
(d) Each Group Company has complied in all respects with sections 559 to
567 of Taxes Act (deduction of tax from payments to sub-contractors in
the construction industry).
(e) Each Group Company has correctly operated:
(i) a statutory sick pay scheme in accordance with the provisions
of the Social Security and Housing Benefits Xxx 0000;
(ii) a statutory maternity pay scheme in accordance with the
provisions of the Social Security Xxx 0000.
(f) Each Group Company has complied with the provisions of section 85 FA
1988 (duty to furnish returns where a person acquires shares in a
company in certain (circumstances).
(g) No Group Company is or has been a party to any arrangement which has
been, is being, or may be challenged as being an abnormal pay practice
under Regulation 21 of the Social Security (Contributions) Regulations
(SI 1979/591).
6. Disallowance of Deductions
All rents, interest, annual payments and other sums of an income nature
paid or payable by any Group Company or which any Group Company is
under an obligation to pay in the future are wholly allowable as
deductions or charges in computing income for the purposes of
corporation tax and, in particular, are not disallowable by reason of
any of the following provisions of Taxes Act:
(a) section 74 (general rules as to deductions which are not
allowable);
(b) section 125 (annual payment for non-taxable consideration);
(c) section 338 (allowance of charges on income);
(d) section 770 (sales etc. at an undervalue or an overvalue);
(e) section 779 (sale and lease-back; limitation on tax reliefs);
or
(f) section 787 (restriction of relief for payments of interest),
provided that this sub-paragraph shall relate only to such payments or
transfers by the Company as in aggregate exceed (pound)25,000.
7. Tax Avoidance etc.
(a) No Group Company has been party to or otherwise involved in any
transaction, scheme or arrangement of which the main purpose or one of
the main purposes was avoiding, reducing or delaying a liability to
Taxation or which or any part of which could for the purposes of
Taxation be disregarded or reconstructed by reason of any motive to
avoid, reduce, mitigate or delay payment of Taxation.
(b) No Group Company has been party to or otherwise involved in any
transaction or agreement to which any of the following provisions of
Taxes Act could apply:
50
(i) section 75 CAA (further restrictions on allowances);
(ii) sections 159(4)-(6) CAA
(iii) section 399 (dealings in commodity futures etc.: withdrawal of
loss relief);
(iv) section 410 (arrangements for transfer of a company to another
group or consortium), section 395 (leasing contracts and
company reconstructions) and section 116 (arrangements for
transferring relief);
(v) section 729 (sale and purchase of securities) and section 730
(transfers of income arising from securities);
(vi) sections 731-735 (purchase and sale of securities);
(vii) section 736 (company dealing in securities: distribution
materially reducing the value of the holding);
(viii) section 774 (transactions between dealing company and
associated company);
(ix) section 779 (sale and leaseback: limitation on tax relief):
(x) Section 781 (assets leased to traders and others);
(xi) Section 786 (transactions associated with loans or credit).
(c) No Group Company has been party to or otherwise involved in any
transaction to which any of the following provisions of the TCGA could
apply:
(i) section 29 (value-shifting);
(ii) section 106 (disposals of shares and securities by company
within prescribed period of acquisition).
(d) No Group Company has since the Accounts Date been a party to or
otherwise involved in any transaction to which any of the following
provisions have been, or could be, applied, other than transactions in
respect of which all necessary consents or clearances have been
obtained:
(i) Sections 703-709 Taxes Act (cancellations of tax advantages
from certain transactions in securities);
(ii) section 765 Taxes Act (migration etc. of companies);
(iii) section 776 Taxes Act (transactions in land taxation of
capital gains);
(iv) sections 135-136 TCGA (reconstruction and amalgamations); and
(v) section 139 TCGA (reconstruction or amalgamation involving
transfer of business).
51
8. Transactions relating to Land
No Group Company has carried out or entered into any transaction or
arrangement whereby it is or may become liable to Taxation under or by
virtue of any of the following provisions of the Taxes Act:
(a) section 34 (treatment of premiums etc as rent of Schedule D
profits);
(b) section 35 (Schedule D charge on assignment of lease granted
at an undervalue);
(c) section 36 (Schedule D charge on sale of land with a right to
a reconveyance);
(d) section 37 (premiums paid etc; deductions from premiums and
rent received);
(e) section 43 (payments to non-residents);
(f) sections 776-778 (transactions in land: taxation of capital
gains);
(g) section 780 (sale and lease-back: taxation of consideration
received).
9. Depreciatory Transactions and Value-shifting
(a) No loss which was accrued or might accrue on the disposal by any Group
Company of any asset is liable to be reduced or disallowed by reason of
the provisions of section 176 TCGA (depreciatory transactions) or
section 177 TCGA (dividend stripping).
(b) No chargeable gain or allowable loss arising on a disposal by any Group
Company of any asset is liable to be adjusted under section 30 TCGA
(tax free benefits).
10. Transactions not at Arm's length
(a) No Group Company has disposed of or acquired any assets in
circumstances to which the provisions of section 17 TCGA (disposals and
acquisitions treated as made at market value) or section 125 TCGA
(close company transferring assets at an under value) apply.
(b) No Group Company has been a party to any transaction to which the
provisions of section 770 Taxes Act (sales at undervalue/overvalue
between associated persons) apply or in respect of which a direction
under paragraph 1 of Schedule 6 or paragraph 1 of Schedule 7 VATA could
be made.
(c) No Group Company is entitled to any capital loss to which the
provisions of section 18(3) TCGA (disposals between connected persons:
restriction of loss relief) apply.
(d) No Group Company has received any assets by way of gilt as mentioned
section 282 TCGA (recovery of tax from donee).
11. Distributions and Payments
(a) No Group Company has repaid or agreed to repay or redeemed or agreed to
redeem or purchased or agreed to purchase or granted an option under
which it may become liable to purchase any shares of any class of its
issued share capital.
52
(b) No Group Company has issued any share capital which is of a relevant
class as defined in section 249(2) Taxes Act (stock dividends treated
as income) or to which section 141(1) TCGA (stock dividends:
consideration for new holding) applies or could apply nor does the
Company own any such share capital.
(c) No Group Company has been engaged in, or been a party to, any of the
transactions set out in sections 213-218 Taxes Act (demergers) and
Section 192 TCGA (tax exempt distributions) or has made or received a
chargeable payment as defined in Section 214 Taxes Act (chargeable
payments connected with exempt distributions).
(d) No Group Company has capitalised or agreed to capitalise in the form of
shares or debentures any profits or reserves of any class or
description or otherwise issued or agreed to issue any share capital
otherwise than for the receipt of "new consideration" (within the
meaning of Part VI Taxes Act) or passed or agreed to pass any
resolution to do so.
(e) No distribution within the meaning of sections 209, 210, 211 or 254 of
Taxes Act has been made by any Group Company since 1st January, 1987
except dividends shown in the Accounts nor is any Group Company bound
to make any such distribution.
(f) No Group Company has received a capital distribution to which the
provisions of section 189 TCGA (capital distribution or chargeable
gain: recovery of tax from shareholder) applies or could apply.
12. Close Companies
(a) No Group Company is or has ever been within the last six years a close
company within the meaning of section 414 Taxes Act.
(b) No Group Company is or has ever been a close investment holding company
as defined in section 13A Taxes Act.
(c) No distribution within section 418 Taxes Act has been made by any Group
Company within the last seven years.
(d) No loan or advance made by or debt incurred to or assigned to any Group
Company falling within the provisions of section 419 Taxes Act as
extended by section 422 is outstanding or has been waived since the
Accounts Date.
13. Employees
(a) No Group Company is under any obligation to pay nor has any Group
Company since the Accounts Date paid or agreed to make any payment to
or provided or agreed to provide any benefit for any person who is or
has been an officer or employee of any Group Company or a dependant of
any such person which is not allowable as a deduction in calculating
the profits of such Group Company for the purposes of Taxation.
(b) No Group Company participates in a scheme under section 202 Taxes Act
(donations to charity: payroll deduction scheme).
53
(c) No scheme registered under Chapter III of Part V Taxes Act
(profit-related pay) applies to any Group Company or any of its
employees and no application for registration of such a scheme has been
made.
(d) No Group Company has made any payment since the Accounts Date which may
be wholly or partly disallowed as an expense or expense of management
under Section 112 FA 1993 (employers' pension contributions) nor do any
circumstances exist at the Accounts Date which could result in an any
payment made after that date being wholly or partly so disallowed.
14. Group Relief, Surrenders of ACT and Group Income
(a) The Purchaser has been given in writing full particulars of all
arrangements and agreements relating to the claim or surrender of group
relief (as defined by section 402 Taxes Act) to which any Group Company
is or had been a party and under which it has an outstanding obligation
to surrender any group relief or make any payment and:
(i) all claims by such Group Company for group relief were when
made and are now valid and have been or will be allowed by way
of relief from corporation tax; and
(ii) each Group Company has received all payments due to it under
any such arrangement or agreement for surrender of group
relief made by it.
(b) There are no arrangements in existence within the meaning of section
410 Taxes Act which would preclude any Group Company from being
registered as a member of the Seller's Group.
(c) The Purchaser has been given in writing full particulars of all
arrangements and agreements to which any Group Company is or has been a
party relating to the surrender of advance corporation tax made or
received by such Group Company under section 240 Taxes Act and under
which the Group Company has an outstanding obligation to surrender any
advance corporation tax or make any payment and:
(i) no Group Company has paid nor is liable to make a payment
under any such arrangement or agreement which exceeds the
amount of the advance corporation tax surrendered to it under
section 240 Taxes Act;
(ii) no Group Company has paid nor is liable to make a payment
under any such arrangement or agreement for the surrender of
any advance corporation tax which is or may become incapable
of set-off against the Company's liability to corporation tax;
and
(iii) each Group Company has received all payments due to it under
any such arrangement or agreement for all surrenders of
advance corporation tax made by it.
(d) No Group Company has paid any payment without deductions of income tax
in the circumstances specified by section 247(6) Taxes Act.
(e) No Group Company has made or is subject to any claim under section 242
Taxes Act (surplus franked investment income).
54
(f) No Group Company owns any asset which was acquired from another company
within the last six years which was a Group Company which owned the
asset other than as trading stock within the meaning of section 173
TCGA.
(g) No Group Company has ceased or will cease to be a member of a group of
companies in circumstances in which a charge under section 179 TCGA has
arisen or may arise.
15. Capital Allowances
(a) On the assumption that a disposal is made of the pool of assets or of
any asset not in such a pool for a consideration equal to the book
value shown in or adopted for the purposes of the Accounts for the
assets in the pool or, as the case may be, the asset, no balancing
charge under CAA or any other Tax Statute relating to capital
allowances would be made on any Group Company (and for the purpose of
this paragraph 15 "asset" shall be taken to include each and every part
of such asset).
(b) No event has occurred since the Accounts Date by reason of which any
balancing charges may fall to be made against or any disposal value
brought into account by any Group Company under CAA or any other
Taxation Statute relating to capital allowances, or a withdrawal of
first year allowances or recovery of excess relief be made under
sections 46 and 47 CAA.
(c) No claim for capital allowances has been made by any Group Company in
respect of any asset which is leased to or from or hired to or from any
Group Company and no election affecting any Group Company has been made
under section 53 CAA (expenditure incurred by an equipment lessor) or
section 55 CAA (expenditure incurred by an incoming lessee) in respect
of any such asset.
(d) No Group Company has made an election under section 37 CAA (short-life
assets) nor is it taken to have made such an election under subsection
(8)(c) of that section.
(e) None of the assets of any Group Company expenditure on which has
qualified for a capital allowance under Part I CAA (industrial
buildings and structures), has at any time since that expenditure was
incurred been used otherwise than as an industrial building or
structure.
16. Acquisition Costs and Re-basing
(a) If each of the assets (except trading stock and work-in-progress) of
each Group Company were disposed of at the date of this Agreement for a
consideration equal to the book value of that asset in or adopted for
the purpose of the Accounts to a person not connected with it and by
way of a bargain at arm's length, no liability to corporation tax on
chargeable gains would arise and for this purpose there shall be
disregarded any relief and allowances available to such Group Company
other than amounts falling to be deducted from the consideration
receivable under section 38 TCGA (acquisition and disposal costs, etc).
(b) No election under section 35(5) TCGA (assets held on 31st March, 1982
re-election for re-basing) has been made by any Group Company and the
Accounts are prepared on the basis that no such election will be made.
55
(c) No loss which might accrue on the disposal by any Group Company of any
asset is liable to be reduced or eliminated by the application of
section 35(3) or (4) of TCGA (exclusion of rebasing).
(d) No asset owned by any Group Company is subject to a deemed disposal and
reacquisition under paragraphs 16, 17, 19 or 21 Schedule 2 TCGA and
there are no circumstances which could give rise to any Group Company
being denied time apportionment in computing chargeable gains.
17. Replacement or Restoration of Business Assets
The Purchaser has been given in writing full particulars of all claims
and elections which have been made or assumed in the Accounts to be
made by any Group Company under:
(a) section 23 TCGA (receipt of compensation and insurance
proceeds applied to replace or restore asset);
(b) sections 152 to 158 TCGA (replacement of business assets;
roll-over relief):
(c) section 165 TCGA (relief for gifts of business assets);
(d) sections 175 TCGA (replacement of business assets by members
of a group); or
(e) section 247-248 TCGA 1992 (roll-over relief on compulsory
acquisition),
which would affect the amount of the chargeable gain or allowable loss
which would, but for the claim, have arisen on a disposal of any of the
Company's assets and no such claim or election has been made by any
other person which affects or could affect the amount or value of the
consideration for the acquisition of any asset by the Company taken
into account in calculating liability to corporation tax on chargeable
gains on a subsequent disposal of that asset.
18. Chargeable Debts
No gain chargeable to corporation tax will accrue to any Group Company
on the disposal of any debt owing to any Group Company.
19. Chargeable Policies
No Group Company has acquired benefits under any policy of assurance
otherwise than as original beneficial owner.
20. Gifts and Inheritance Tax
(a) No transfer of value (as defined in section 3 IHTA) or disposal by way
of gift (within the meaning of section 102 FA 1986) has at any time
been made by or to any Group Company and there are no other
circumstances by reason of which any liability in respect of
inheritance tax has arisen or could arise on any Group Company or on
any of its participators.
56
(b) No Inland Revenue charge (as defined in section 237 IHTA) is
outstanding over any asset of any Group Company or in relation to any
of the shares in any Group Company and no circumstances exist which
could lead to any such charge arising in the future.
(c) There are not in existence any circumstances whereby any such power as
is mentioned in section 212 IHTA could be exercised in relation to any
shares in or securities or assets of any Group Company.
(d) No Group Company has disposed of or acquired any asset in circumstances
to which the provisions of section 282 TCGA (recovery of tax from the
donee) could apply.
21. Overseas Matters
(a) Each Group Company is and always has been resident in the United
Kingdom for United Kingdom tax purposes.
(b) No Group Company is registered or has ever fallen to be treated for the
purposes of any double taxation relief arrangements as resident in a
territory outside the United Kingdom or is liable to tax on gains
arising on disposals of assets of descriptions specified in any such
arrangements nor is the Seller aware of any circumstances as to why
this would be the case.
(c) No Group Company is or has ever been a dual resident company within the
meaning of section 404(2) Taxes Act.
(d) There has been no transfer by any Group Company of a trade or part of a
trade which it carried on outside the United Kingdom through a branch
or agency, to a company not resident in the United Kingdom in
circumstances such that a chargeable gain might be deemed to arise at a
later date pursuant to the provisions of section 140 TCGA (postponement
of charge to tax on transfer of assets to a non-resident company).
(e) No notice of the making of a direction under section 747 Taxes Act
(imputation of chargeable profits and creditable tax of controlled
foreign companies) has been received by any Group Company and the
circumstances are not such and have never been such as would permit the
Inland Revenue to make such a direction as to apportion the profits of
a controlled foreign company in whole or in part to any Group Company
pursuant to section 752 Taxes Act (apportionment of chargeable profits
and creditable tax).
(f) No Group Company owns or has at any time owned a material interest in
an offshore fund which is or has at any time been a non-qualifying
offshore fund as defined by section 760 Taxes Act.
(g) No Group Company has received or become entitled to any income which is
"unremittable income" within the meaning of section 584 Taxes Act which
has not been remitted to the United Kingdom nor has it received or
become entitled to any gain to which section 279 TCGA could apply or
has been applied and which has not been transferred to the United
Kingdom.
(h) No gain has accrued in respect of which any Group Company may be liable
to corporation tax on chargeable gains by virtue of the provisions of
section 13 TCGA 1992 (attribution of gains to members of non-resident
company) or section 87 TCGA 1992 (attribution of gains to
beneficiaries).
57
(i) No Group Company is a person to whom section 132(2) FA 1988 or section
191(2) TCGA applies (liability of other persons for unpaid tax of
migrating companies non payment of tax by non-resident companies).
(j) No Group Company has been or is assessable to Tax under section 78
Taxes Management Act 1970 (method of charging non-residents) including
that section as modified and extended for stamp duty reserve tax.
(k) No Group Company has received foreign loan interest on which double
taxation relief will, or may be, restricted under section 798 Taxes Act
(interest on certain overseas loans).
(l) No Group Company is deemed to have made a disposal of any assets under
section 186 TCGA (assets ceasing to be within the charge to UK tax).
(m) No claim or election affecting any Group Company has been made or has
been assumed in the Accounts to have been made under any of the
following sections of TCGA:
(i) section 140 (postponement of charge on transfer or assets to a
non-resident company);
(ii) section 140C (transfer of a non-United Kingdom trade);
(iii) section 187 (postponement of charge on deemed disposal on a
company ceasing to be resident in the United Kingdom).
22. Value Added Tax
(a) Each Group Company is duly registered for the purposes of Value Added
Tax with quarterly prescribed accounting periods and its registration
is not subject to any conditions imposed by or agreed with Customs and
Excise and no Group Company is under a duty to make monthly payments on
account.
(b) No Group Company has ever been required by the Commissioners of H.M.
Customs and Excise to give security.
(c) No Group Company is authorised to account for Value Added Tax annually
in accordance with Part VII Value Added Tax Regulations 1995.
(d) No Group Company is accounting for Value Added Tax in accordance with
Part VIII Value Added Tax Regulations 1995.
(e) No Group Company is or has at any time been treated for the purposes of
Value Added Tax as a member of a group of companies and there has been
no transfer of a business as a going concern in respect of which any
Group Company could become or at any time since the Accounts Date has
become liable under section 44 VATA (supplies to groups).
(f) No act or transaction has been effected in consequence of which any
Group Company is or may be held responsible for any Value Added Tax
under section 29 (self-billing), section 47 (agents), section 48 (VAT
representatives) VATA and no direction affecting any Group Company has
been given under paragraph 2 Schedule 6 VATA (sales by retail).
58
(g) No Group Company is partially exempt for VAT purposes and there are no
circumstances by reason of which any Group Company might not be
entitled to credit for all Value Added Tax chargeable on supplies
received and imports and acquisitions made by it.
(h) The Purchaser has been given in writing full particulars of all
elections to waive exemption made or agreed to be made under Schedule
10 VATA (interests in buildings and land) by any Group Company and any
person in relation to which any Group Company is a relevant associate
as defined in paragraph 3(7) of that Schedule in respect of the
Properties and in respect of each election made, all things necessary
for the election to have effect have been done and in particular any
necessary notification and information has been duly given and any
necessary permission has been duly given and any necessary permission
has been properly obtained, and in no case has any Group Company
charged Value Added Tax which is not properly any Group chargeable
because a Group Company has not made an election to waive exemption
having effect in relation to the relevant supply.
(i) There are no present circumstances by reason of which any Group Company
is or could become liable to Value Added Tax under paragraph 1
(residential or charitable buildings: change of use etc) or paragraph 5
(developers of certain non-residential buildings etc) of Schedule 10
VATA or under the Value Added Tax (Self-Supply of Construction
Services) Order 1989.
(j) In relation to each capital item (if any) within Part XV of the VAT
Regulations in relation to which a liability under Part XV has arisen
or could in future arise on any Group Company the Group Company has
sufficient records to calculate the amount of any such liability.
23. Stamp Duty and Stamp Duty Reserve Tax
(a) All documents in the possession or under the control of any Group
Company or to the production of which any Group Company is entitled
which are necessary to establish the title of any Group Company to any
asset and which, in the United Kingdom or elsewhere, attract either
stamp duty or require to be stamped with a particular stamp denoting
that no duty is chargeable or that the document has been produced to
the appropriate authority, have been properly stamped and there is no
liability for any penalty in respect of such duty; and no such
documents which are outside the United Kingdom would attract stamp duty
if they were brought into the United Kingdom.
(b) No Group Company has since the Accounts Date incurred any liability to
or been accountable for stamp duty reserve tax and there has been no
agreement within section 87 (1) FA 1986 which could lead to any Group
Company incurring any such liability or becoming so accountable.
(c) No Group Company has had transferred to it any chargeable securities
(as defined in section 99 FA 1986) in circumstances which have given
rise to or may give rise to a liability for stamp duty reserve tax nor
are there any other circumstances in which any Group Company may have a
liability for stamp duty reserve tax.
24. The Subsidiaries
Each of Ideal Financial Services Limited and Logical Online Limited is
dormant and has no outstanding tax liabilities whatsoever.
SCHEDULE 4
SCHEDULED INTELLECTUAL PROPERTY
1. TRADEMARKS
------------------------ ---------------------- --------------------- ---------------------- ---------------------
Territory Xxxx Number Class Status
------------------------ ---------------------- --------------------- ---------------------- ---------------------
UK UNISOLVE 2180376 9, 16, 35, 38, 41, 42 Registered
Unisolve
------------------------ ---------------------- --------------------- ---------------------- ---------------------
CTM IDEAL UNISOLVE 982694 9, 16, 35, 38, 41, 42 Pending
------------------------ ---------------------- --------------------- ---------------------- ---------------------
[Chart with graphics omitted]
2. DOMAIN NAMES TO BE TRANSFERRED TO THE COMPANY
Contained in the Disclosure Letter
SCHEDULE 5
COMPLETION ACCOUNTS
PART A - PRO FORMA COMPLETION ACCOUNTS
Part A - Pro Forma Completion Accounts
(pound) (pound)
Estimated "Fixed Assets" Tangible Assets 3,160,954
Intangible Assets -
----------------
3,160,954
Estimated "Completion Assets" Stock 27,104,571
Trade Debtors 65,600,869
Debit Notes 6,472,370
Prepayments & Other Debtors 202,622
Amounts owing from InterX Group companies 159,730
----------------
99,540,162
Estimated"Completion Liabilities" Bank -24,116,188
Trade Creditors -54,626,872
Other Creditors, Accruals & Taxes -10,706,463
----------------
-89,449,523
"InterX Debtor" 1,234,562
Estimated July 2000 Profit (net of tax) - to be reallocated throughout assets/liabilities 345,000
---------------
Gross Assets Less Liabilities 14,831,155
"Completion Provision" Stock Value - 'POT' -148,271
Stock Specific -434,612
Bad Debts -1,197,467
Credit Notes for Customers -122,216
Unallocated Credit Notes from Suppliers -681,785
Debit Notes -318,701
Annual Bonuses -355,909
----------------
-3,258,961
---------------
Estimated Net Assets per July 2000 Management Accounts 11,572,194
"Super Provision" -1,678,333
---------------
Estimated "Completion Net Assets" 9,893,861
===============
61
PART B - COMPLETION PROVISION, SUPER PROVISION AND CATASTROPHE PROVISION
1. INTERPRETATION
In this Schedule:
"Completion Assets" means the assets of the Company as set forth in the
Completion Accounts;
"Completion Liabilities" means the liabilities of the Company as set
forth in the Completion Accounts;
"Completion Net Assets" means the value of net assets of the Company as
set forth in the Completion Accounts;
"Completion Provision" means the "completion provision" as set forth in
the Completion Accounts;
"Catastrophe Provision" means (pound)1,977,326 as adjusted in
accordance with Part 7 below;
"Super Provision" means the additional provision of at least
(pound)1,318,218 as set forth in the Completion Accounts, as adjusted
in accordance with Part 8.5 below;
"InterX Debtor" means the inter-company loan of (pound)1,234,562 from
the Company to InterX Media plc which is outstanding at the date of
this agreement and which shall be settled in accordance with Part 7
below;
"Pre-Completion Assets" means assets of the Company in existence at
Completion but which were not reflected in the Completion Accounts; and
"Pre-Completion Liabilities" means liabilities of the Company in
existence at Completion but which were not reflected in the Completion
Accounts.
2. POST-COMPLETION CLAIMS AND POST-COMPLETION GAINS
2.1 Within 15 business days of the end of the months of August 2000,
September 2000, October 2000, November 2000, December 2000, January
2001 and February 2001, the Purchaser shall cause the Company to
deliver to the Seller management accounts (the "Review Accounts") for
the relevant preceding month, such management accounts to be prepared
in accordance with the procedures and accounting policies applied by
the Seller in preparing the Accounts and to the same standard as the
management accounts prepared by the Seller for the Purchaser for the
months of May and June 2000. For the avoidance of doubt, any tax losses
or other tax assets (other than VAT or other taxes paid on account)
shall not be recognised in the Review Accounts.
2.2 Included in the Review Accounts shall be analyses of:
62
2.2.1 any Completion Assets outstanding as at the end of the month
in question;
2.2.2 any Completion Liabilities outstanding as at the end of the
month in question;
2.2.3 any potential Pre-Completion Assets that have been accounted
for in the month in question; and
2.2.4 any potential Pre-Completion Liabilities that have been
accounted for in the month in question.
2.3 Within 5 business days after delivery of the Review Accounts to the
Seller under Part 2.1, and on the reasonable request of the Seller,
authorised representatives of the Purchaser and the Seller shall review
the Review Accounts (the "Provisions Review"). In undertaking the
Provisions Review, both parties shall apply UK generally accepted
accounting principles and the accounting practices of the Company at
Completion, which, for the avoidance of doubt, shall preclude the
recognition of any tax losses or other assets (other than VAT and other
taxes paid on account), to ascertain and agree within such 5 business
day period:
2.3.1 which Completion Assets are unlikely to be realised, either in
full or in part;
2.3.2 which Completion Liabilities are unlikely to be realised,
either in full or in part;
2.3.3 whether there are any Pre-Completion Assets that should have
been accounted for in the Review Accounts; and
2.3.4 whether there are any Pre-Completion Liabilities that should
have been accounted for in the Review Accounts,
and accordingly to agree the actions, if any, to be taken by the
Company to either mitigate any such potential loss (including using
set-off or insurance policies) or maximise any such potential gain to
the Company.
2.4 Subject to the Company carrying out the actions under Part 2.3, if both
parties agree that:
2.4.1 there is a Completion Asset that will not be realised, either
in full or in part; or
2.4.2 there is a Pre-Completion Liability which should have been
accounted for in the Review Accounts,
then the amount of the loss shall be agreed and termed a
"Post-Completion Claim".
2.5 Subject to the Company carrying out the actions under Part 2.3, if both
parties agree that:
2.5.1 there is a Completion Liability that will not be realised,
either in full or in part; or
2.5.2 there is a Pre-Completion Asset which should have been
accounted for in the Review Accounts,
then the amount of the gain shall be agreed and termed a
"Post-Completion Gain".
63
3. COMPLETION PROVISION MANAGEMENT
3.1 At each Provisions Review:
3.1.1 any agreed Post-Completion Claims shall be deducted from the
Completion Provision; and
3.1.2 any agreed Post-Completion Gains shall be added to the
Completion Provision.
3.2 If the Completion Provision has been exhausted, and the balance agreed
as zero, then all unapplied or future Post-Completion Claims and
Post-Completion Gains shall be applied to the Super Provision in
accordance with Part 4 below.
3.3 The balance on the Completion Provision at the end of the month in
question shall be agreed during each Provisions Review.
4. SUPER PROVISION MANAGEMENT
4.1 Subject to the Completion Provision being agreed as zero in accordance
with Part 3.2 above, then at each Provisions Review:
4.1.1 any unapplied agreed Post-Completion Claims shall be deducted
from the Super Provision; and
4.1.2 any unapplied agreed Post-Completion Gains shall be added to
the Super Provision.
4.2 If the Super Provision has been exhausted, and the balance agreed as
zero, then all unapplied future Post-Completion Claims and
Post-Completion Gains shall be applied to the Catastrophe Provision in
accordance with Part 7 below.
4.3 The balance on the Super Provision at the end of the month in question
shall be agreed during each Provisions Review.
5. EXIT CHARGE
5.1 To the extent that the estimated Exit Charge of (pound)3,000,000 is
greater than the Actual Exit Charge paid as contemplated under Article
11 of the agreement, then the excess (the "Exit Charge Excess") shall
be added to the Catastrophe Provision in accordance with Part 7 below.
5.2. To the extent that the estimated Exit Charge of (pound)3,000,000 is
less than the actual Exit Charge paid as contemplated under Article 11
of the agreement, then the shortfall (the "Exit Charge Shortfall")
shall be deducted from the Catastrophe Provision in accordance with
Part 7 below.
5.3 To the extent that the creation of an Exit Charge Excess creates an
additional charge to tax for the Company or the Purchaser, then the
Exit Charge Excess shall be decreased on a (pound)1 for (pound)1 basis.
6. PROPERTY ADJUSTMENT
64
6.1 Should the Purchaser exercise the Options, the "Property Adjustment"
shall be(pound)550,000.
6.2 Should the Purchaser fail to exercise the Options, the "Property
Adjustment" shall be(pound)0 (zero).
7. CATASTROPHE PROVISION MANAGEMENT
7.1 At the Provisions Review to be held in March, 2001, both parties,
having
7.1.1 completed their review of the Review Accounts for February
2001;
7.1.2 agreed the balance of the Completion Provision under Part 3
("CP");
7.1.3 agreed the balance of the Super Provision under Part 4 ("SP");
7.1.4 agreed the value of any unapplied Post-Completion Claims under
Part 4.2 ("PCC");
7.1.5 agreed the value of any unapplied Post-Completion Gains under
Part 4.2 ("PCG");
7.1.6 agreed the value of the Exit Charge Excess, if any, under Part
5.1 and 5.3 ("ECE");
7.1.7 agreed the value of the Exit Charge Shortfall, if any, under
Part 5.2 ("ECS"), and
7.1.8 agreed the value of the Property Adjustment under Part 6
("PA")
shall then conduct the Catastrophe Provision Calculation under Part
7.2.
7.2 Catastrophe Provision Calculation and the InterX Debtor:
Where the value at Completion of the InterX Debtor ((pound)1,234,562)
is "ID", then:
7.2.1 if CP + SP - ID is greater than or equal to(pound)0 (zero),
then the Catastrophe Provision is calculated as:
(pound)1,977,326 + ECE - ECS - PA, and the value of ID will
then be deemed by the Seller, the Purchaser and the Company to
be (pound)0 (zero), and all claims by the Purchaser or the
Company for repayment of the InterX Debtor shall be waived
forthwith.
7.2.2 if CP + SP - ID is less than(pound)0 (zero), then the
Catastrophe Provision is calculated as:
CP + SP - ID + (pound)1,977,326 - PCC + PCG + ECE - ECS - PA
and the value of ID will then be deemed by the Seller, the
Purchaser and the Company to be (pound)0 (zero), and all
claims by the Purchaser or the Company for repayment of the
InterX Debtor shall be waived forthwith.
7.3 Should the balance of the Catastrophe Provision, as calculated under
Part 7.2 above, be greater than zero, then the amount shall be paid by
the Purchaser to the Seller on 31st March 2001 provided that, in the
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absence of fraud, dishonesty or wilful concealment, the amount payable
by the Purchaser under this Part 7.3 shall not exceed (pound)4,977,326,
being the pre-adjusted Catastrophe Provision of (pound)1,977,326
aggregated with the estimated Exit Charge of (pound)3,000,000.
7.4 Should the balance of the Catastrophe Provision, as calculated under
Part 7.2 above, be less than zero, then the amount shall be paid by the
Seller to the Purchaser on 31st March 2001 provided that, in the
absence of fraud, dishonesty or wilful concealment, the amount payable
by the Seller under this Part 7.4 shall not exceed the Initial
Consideration.
8. General
8.1 The Completion Provision shall be determined in accordance with the
procedures and accounting policies applied by the Seller in preparing
the Accounts and to the same standard as the management accounts
prepared by the Seller for the Purchaser for the months of May and June
2000. For the avoidance of doubt, any tax losses or other tax assets
(other than VAT or other taxes paid on account) shall not be recognised
in the Review Accounts.
8.2 If the Exit Charge has not been agreed with the Tax Authorities by 31st
March 2001 then the Catastrophe Provision shall be calculated without
reference to ECE or ECS. Upon subsequent agreement of the Exit Charge
with the Tax Authorities the ECE or ECS is then to be settled by the
respective party within 10 business days.
8.3 For the purposes of paragraph 8.2 the Exit Charge shall be agreed on
the earlier of:
8.3.1 the date on which it is agreed in writing with the Inland
Revenue;
8.3.2 the date the Seller and the Purchaser agree the value of the
Exit Charge in writing;
8.3.3 if the Company has submitted an assessment to the Inland
Revenue in respect of the accounting period in which the Exit
Charge arises the last date on which the Inland Revenue can
amend that assessment in the absence of fraudulent or
negligent conduct or a failure by the Company to supply the
Inland Revenue with all relevant information.
8.4 The Completion Accounts will include:
8.4.1 a charge of (pound)25,000 for the professional costs of the
preparation of Form 8-K.
8.4.2 a charge of (pound)25,000 for the professional costs of the
submission to, and the agreement with, the Tax Authorities of
the Exit Charge.
8.4.3 the creation of an "Other Debtor" of (pound)100,000, relating
to the possible recovery of the costs of the abortive Logical
Online Limited joint venture, with a corresponding provision
of the same amount.
8.5 To the extent that the value of the net assets of the Company
immediately prior to Completion exceeds (pound)9,893,861, then the
Super Provision will be increased on a (pound)1 for (pound)1 basis so
that the amount of the "Completion Net Assets" equals (pound)9,893,861.
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8.6 The Exit Charge shall not be a Pre-Completion Liability nor a
Post-Completion Claim. Any Exit Charge Excess shall not be treated as a
Pre-Completion Asset giving rise to a Post-Completion Gain, and any
Exit Charge Shortfall shall not be treated as a Pre-Completion
Liability giving rise to a Post-Completion Claim.
8.7 Any payment made pursuant to Part 7.3 or 7.4, as the case may be, shall
be deemed to be a pro tanto increase or decrease to the Consideration.
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SIGNED as a deed by )
INTERX PLC acting by )
its attorney )
in the presence of: )
Witness's signature: ...........................
Name: ...........................
Address: ...........................
SIGNED as a deed by )
INTERX MEDIA PLC acting by )
its attorney )
in the presence of: )
Witness's signature: ...........................
Name: ...........................
Address: ...........................
SIGNED by )
for and on behalf of )
XXXX MICROPRODUCTS INC. )
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