DATED MARCH 15, 2000
THE WEB FACTORY LIMITED (1)
and
CASTLEGATE 133 LIMITED (2)
and
TELTRAN INTERNATIONAL GROUP LIMITED (3)
and
DATATEC LIMITED (4)
AGREEMENT FOR THE SALE AND PURCHASE
OF PART OF THE BUSINESS OF THE WEB FACTORY LIMITED
Xxxxxx Xxxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxxx
XX0 0XX
Telephone: (0000) 0000000
Fax: (0000) 000 0000
DX: 718130, Nottingham 27
Email : xxxx@xxxxxxx.xx.xx
Index
Clauses
1. Interpretation
2. Sale and purchase
3. Consideration
4. Completion
5. Further assurances
6. Name
7. Warranties
8. Restrictive covenants
9. Book debts
10. Contracts and other obligations
11. Assignment and novation of contracts
12. Apportionments
13. Employees
14. Future trading
15. Value added tax
16. Guarantee
17. Costs
18. Announcements
19. Notices
20. General
21. Governing law
22. Entire Agreement
Schedules
1 Allocation of consideration
2 Warranties
3 Escrow Account
4 Software Specification
Documents in Agreed Form
Assignments of:
Trademarks
Goodwill and Software
Release of Encumbrances
Licence
Debenture
Disclosure Letter
Notice of Assumption of Contracts
Opinion Letter
Date: March 15, 2000
Parties:
(1) THE WEB FACTORY LIMITED (company number 03096331) whose registered
office is at APV Building Speedwell Road,
Parkhouse Industrial Estate East Newcastle, Staffordshire ST6 5RG (the
"Vendor")
(2) CASTLEGATE 133 LIMITED (company number 3897137) whose registered office
is at 00 Xxxxxx Xxxx, Xxxxxxxxxx XX0 0XX (the "Purchaser")
(3) TELTRAN INTERNATIONAL GROUP LIMITED incorporated in Delaware, whose
registered office is at Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000 (the
"Guarantor")
(4) DATATEC LIMITED a company incorporated in South Africa of Building 8,
Harrowdene Office Park, Western Services Road, Woodmead, Gauteng, South
Africa ("Datatec")
IT IS AGREED as follows:
1 Interpretation
In this Agreement:
1.1 the following words and expressions shall have the following
meanings:
Expression Meaning
---------- -------
"Accounts Date" 31 March 1999
"Assets" the assets bought and sold pursuant to
clause 2.1
"Assumed Employees" those employees employed in the
Business as at the Transfer Date whose
names are set out in section 11 of the
Disclosure Bundle
"Book-Debts" all book and other debts owed to the
Vendor in respect of the Business as
1
at the Transfer Date, details of which
are included in Section 3 of the
Disclosure Bundle
"Business" the business of supplying Internet
network and related services including
supply of connectivity, hosted
services, managed network services,
messaging (comprising the internet
connection equipment and related
software and the contracts and other
assets used in relation thereto) and
the provision of associated financial
software (including the Financial
Software) carried on under the name
"The Web Factory", "PDM", "PDM 2000",
"ShareTracker", and "Key Financial" by
the Vendor (other than to the extent
relating to the Retained Business save
as otherwise specified in this
definition) but excluding for the
avoidance of doubt internet protocol
software application development and
web site integration and design other
than in respect of the Financial
2
Software
"Business Accounts Date" 31 December 1999
"Business Accounts" the unaudited management accounts of
the Business for the period from 1st
April 1999 to the Business Accounts
Date in the form set out in Section 10
of the Disclosure Bundle
"Business Day" a day (other than a Saturday) on
which banks are open for the
transaction of all normal sterling
banking business in the City of London
"Claims" all rights of the Vendor at the
Transfer Date in relation to any of
the Plant and any liabilities assumed
or incurred by the Purchaser as a
result of this Agreement (including,
without limitation, such rights under
any warranties, guarantees,
indemnities (in each case whether
express or implied) or insurance
policies)
"Clearing Bank" a bank which is a member of CHAPS and
Town Clearing Company Limited
3
"Companies Act" the Companies Xxx 0000
"Completion" completion of the sale and purchase of
the Business and Assets in accordance
with clause 4
"Computer System" all computer hardware, software (to
the extent used in the operation of
the hardware (excluding for the
avoidance of doubt the Financial
Software and any software relating to
the black website) and networks
comprised in the Business including
all arrangements relating to the
provision of maintenance and support,
security, disaster recovery,
facilities management bureau and
on-line services to the Business as
are included in the Business
"Consideration" the aggregate consideration specified
in clause 3 for the Assets
"Contracts" those orders or contracts entered into
on or prior to the Transfer Date by or
on behalf of the Vendor in connection
with the Business which remain as at
the Transfer Date (in whole or in
part) to be
4
performed by the Vendor to the extent
the terms of such Contracts have been
fairly disclosed in the Disclosure
Letter or the Purchaser has given
notice to the Vendor that such
Contracts are to be assumed for the
purposes of this Agreement
"Disclosure Letter" the letter (together with any
schedules, appendices and annexures
specified in it (the "Disclosure
Bundle")) in the Agreed Form and
expressed to be the Disclosure Letter
"Domain Names" the domain names listed in section 22
of the Disclosure Bundle
"Encumbrance" any claim, charge, lien, pledge,
encumbrance, equity or third party
right affecting property
"Escrow Account" as defined in Schedule 3
"Excluded Assets" any and all assets or rights and the
benefit of any claims consisting of or
comprised in:
(a) the Vendor's cash in hand and
at bank;
(b) the Statutory Books of the
Vendor;
5
(c) without prejudice to the
obligation of the Vendor to
account for prepayment
pursuant to clause 12.1, all
debts owing to the Vendor
including the Book Debts;
(d) all freehold and leasehold
property;
(e) the styles and designations
"TWF" and "TWF Corporate
Solutions" and associated
goodwill;
(f) all insurance policies;
(g) the three servers detailed at
section 7(1.1.3) of the
Disclosure Letter
(h) the telephone number 01782
858585 and the facsimile
number 01782 858586
(i) the agreements referred to at
Section 1 of the Disclosure
Bundle
(j) for the avoidance of doubt and
without
6
limitation any software (other
than Financial Software and
any software used to operate
the Computer System or
relating to the black website)
developed by the Vendor
including, but not limited to,
"PIMS", "Wombat",
"e-commerceshop" and "image
library"
(k) any and all other assets of
the Vendor not exclusively
used in the Business
"Financial Software" the software known as "ShareTracker"
and "PDM" the specification for each
of which is set out in Schedule 4
"Goodwill" the goodwill relating to the Business
as at the Transfer Date together with
the exclusive right for the Purchaser
or its assignee to represent itself as
carrying on the Business as a going
concern in succession to the Vendor
together with the trade names "The Web
Factory" and "Key Financial" and the
7
product names "ShareTracker" and "PDM"
and "PDM2000" and all other trade
names associated with the Business
excluding "TWF" and "TWF Corporate
Solutions" and the benefit of all
outstanding enquiries and negotiations
to the extent they relate to the
Business
"holding company" the meaning given in section 736 of
the Companies Act
"ICTA" Income and Corporation Taxes Act 1988
"Intellectual those of the following which are used
Property Rights" exclusively in the Business as at the
Transfer Date:
(a) all and any rights in patents,
xxxxx patents, utility models,
trade or service marks
(whether registered or
unregistered), trade names,
copyrights (including
copyright in computer
software), registered designs,
unregistered design rights,
applications for any
8
of the foregoing and the right
to apply for any of the
foregoing in any part of the
world and all or any other
intellectual property whether
or not registered or capable
of registration.
(b) in whatsoever medium held:
know-how, information,
designs, formulae, source
codes, specifications,
drawings, data, instruction
manuals, service records and
components lists relating to
the Business including the
Software and the Domain Names
and all web sites relating to
the Business including the
"Black Web Site", "PDM 2000",
"ShareTracker" and "Key
Financial" (excluding the TWF
web site)
"Interest Rate" 4% above the base rate from time to
time of National Westminster Bank
9
plc
"Liabilities" all liabilities and obligations (past
present and future) of the Vendor
which are not expressly assumed by the
Purchaser hereunder including any
guarantees warranties or obligations
in respect of services provided prior
to the Transfer Date
"Licence" the licence to occupy the Premises in
the Agreed Form
"Plant" all the fixed and moveable plant,
tooling, machinery, equipment and
tooling, computer and communication
hardware used or intended for use
exclusively in the Business as at the
Transfer Date included in the list set
out in section 5 of the Disclosure
Bundle
"Premises" the premises detailed in the Licence
"Purchaser's Group" any company other than the Purchaser
which at the relevant time is or was:
(a) a holding company of the
Purchaser;
(b) a subsidiary of any
10
such holding company; or
(c) a subsidiary of the Purchaser
"Purchaser's Solicitors" Xxxxxx Xxxxxxxx, 00 Xxxxxx Xxxx,
Xxxxxxxxxx XX0 0XX
"Records" in whatsoever medium held:
(a) all documents, papers and
records (excluding VAT
records) relating exclusively
to the Business, the Assets
and the Assumed Employees;
(b) information exclusively
relating to the management,
administration and running of
the Business;
(c) all marketing information
exclusively relating to the
Business and Assets including,
without limitation, copies of
lists of customers, suppliers,
potential customers, contacts,
and catalogues, advertising
and
11
promotional material
"Regulations" Transfer of Undertakings (Protection
of Employment) Regulations 1981
"Retained Business" the business of electronic business
application consultancy and software
design and applications and computer
hardware sales (other than to the
extent relating to the Business)
carried on by the Vendor
"Retained Employees" any persons other than the Assumed
Employees who are or have been engaged
in the Business
"Software" all software owned or used by the
Vendor exclusively in the Business
including the Financial Software
"Subsidiary" the meaning given in section 736 of
the Companies Act
"Transfer Date" the date upon which Completion takes
place
"Vendor Accounts" the audited accounts of the Vendor
comprising the balance sheet as at,
and the profit and loss account for
the two financial years ended on, the
Accounts Date together
12
with the directors' report, the
auditors' report, cash flow statements
and notes together with the management
accounts of the Vendor for the period
from the Accounts Date and ending on
31 December 1999 in each case in the
form as attached as section 25 of the
Disclosure Bundle
"Vendor's Group" any company other than the Vendor
which at the relevant time is or was:
(a) a holding company of the
Vendor;
(b) a subsidiary of any such
holding company; or
(c) a subsidiary of the Vendor
"Vendor's Solicitors" Xxxx Xxxxx and Done of Xxxxxxxxx
Xxxxx, Xxxxxx Xxxx, Xxxxx-xx-Xxxxx XX0
0XX
"Warranties" the warranties, representations and
undertakings set out in clause 7 and
Schedule 2
1.2 section 839 ICTA applies as it applies in that Act to determine
whether one person is connected with another;
13
1.3 any reference to a person shall be construed to include a
reference to a body corporate, unincorporated association or a
partnership;
1.4 headings used in this Agreement are for convenience only and
shall not affect its construction;
1.5 whenever a document is referred to in this Agreement as being
"in the Agreed Form" it shall be in the form agreed between the
parties and initialled by the Purchaser's Solicitors and the
Vendor's Solicitors by way of identification;
1.6 references to statutory provisions shall be construed as
including:
1.6.1 references to the provisions of any earlier statute
which are directly or indirectly amended, consolidated
or re-enacted by such provisions; and
1.6.2 references to those provisions as amended or re-enacted
or modified from time to time;
1.7 in construing this Agreement the interpretation of general words
shall not be restricted by being followed by words indicating a
particular class of acts, matters or things or being followed by
particular examples.
2 Sale and Purchase
2.1 The Vendor shall sell and the Purchaser shall purchase as a
going concern with effect from the close of business on the
Transfer Date:
2.1.1 the Claims;
2.1.2 the Computer System;
14
2.1.3 the benefit (subject to the burden as provided in clause
10) of the Contracts;
2.1.4 the Plant;
2.1.5 the Goodwill;
2.1.6 the Intellectual Property Rights (other than the
Financial Software);
2.1.7 the Records;
2.1.8 the Financial Software; and
2.1.9 all other assets of whatever nature which are owned by
the Vendor and which are used exclusively in or are
connected with the Business
but excluding for the avoidance of doubt and without limitation
the Excluded Assets.
2.2 The Assets shall be sold with full title guarantee and free from
any Encumbrance and with all accrued benefits and rights
attaching to them.
3 Consideration
3.1 Subject to clause 3.4, the Consideration shall be
(pound)3,000,000 which shall be apportioned among the Assets as
set out in Schedule 1.
3.2 Subject to clause 3.4, the Consideration shall be paid in cash
as follows:
3.2.1 (pound)750,000 on Completion;
3.2.2 as to the balance by three instalments of (pound)750,000
on each of 30 April 2000, 31 August 2000 and 31 December
2000 (the "Deferred Consideration").
15
by way of a CHAPS transfer from a clearing bank to the client
account of the Vendor's Solicitors with National Westminster
Bank plc Sort Code 01-03-69, account number 00000000, or by such
other method as may be agreed by the parties.
3.3 The Vendor's Solicitors are authorised to receive the
consideration on behalf of the Vendor and payment to the
Vendor's Solicitors will be a good and sufficient discharge to
the Purchaser who need not be concerned to enquire as to the
application of any monies so paid.
3.4 If the Purchaser serves notice on the Vendor of a claim under
this Agreement whilst monies are still outstanding under clause
3.2.2 (for the avoidance of doubt, after account being taken of
the limitations in clause 7), the Purchaser shall be entitled to
pay a part of such sum not exceeding the amount specified in
such notice being a bona fide estimate of the amount of the
claim into a retention account in accordance with the terms of
Schedule 3.
3.5 If any part of the Deferred Consideration or any other monies
payable by any party to any other party under this Agreement are
not paid on the due date for payment (and in respect of a
successful claim for an unliquidated sum by either party then
the due date for payment shall be deemed to be 30 days after
written notice of the claim is served on the other party), the
defaulting party or parties shall pay interest on the amount
outstanding calculated on a daily basis at the Interest Rate
(after as well as before judgment) from the due date of payment
until the actual date of payment provided that any monies in the
Escrow Account shall only accrue interest at the rate payable on
such account
16
3.6 If any part of the Deferred Consideration is not paid (whether
to the Vendor or into the Escrow Account) within 30 days of the
due date for payment then the covenants set out in clauses 8.1
and 8.3 and the restriction on use of confidential information
(as opposed to disclosure thereof) in clause 8.2 of this
Agreement shall cease to apply
4 Completion
The sale and purchase of the Assets and the Business shall be completed
at the offices of the Vendor's Solicitors immediately after both
the signing and exchanging of this Agreement, when:
4.1 the Vendor shall deliver or procure delivery to the Purchaser
of:
4.1.1 all of the Assets which can be transferred by delivery
and shall permit the Purchaser to take possession of
such Assets;
4.1.2 duly executed assignments of such of the Intellectual
Property Rights in the Agreed Form as the Purchaser
shall direct and all documents of title, licences,
agreements and other documents relating to the
Intellectual Property Rights;
4.1.3 a duly executed assignment of the Goodwill in the Agreed
Form;
4.1.4 the Licence;
4.1.5 the Records and all media in which they are stored
(subject to clause 4.3);
4.1.6 certified copies of duly executed releases in respect of
the Assets in the Agreed Form by National Westminster
Bank of its fixed and floating charge dated 15th
December 1998 and a
17
fixed and floating charge in favour of Datatec dated
17th February 1998
4.1.7 a duly passed resolution of the members of the Vendor
making the name change referred to in clause 6; and
a duly passed board minute (or certified copy) of the Vendor and
Datatec in the Agreed Form
4.2 the Purchaser shall pay that part of the Consideration due under
clause 3.2.1 and deliver to the Vendor
4.2.1 a duly passed board minute (or certified copy) of the
board of directors of each of the Purchaser and the
Guarantor in the Agreed Form and
4.2.2 a duly executed counterpart of the Licence
4.2.3 a duly executed debenture in the Agreed Form
4.2.4 an opinion letter of the Guarantor's Counsel in the
Agreed Form and certified copies of any authorities
pursuant to which this Agreement is executed on behalf
of the Guarantor
4.2.5 a notice given by the Purchaser to the Vendor in the
Agreed Form for the purpose of clause 10.1.
4.3 If and to the extent the Vendor is unable to deliver any part of
the Records relating to title in the Assets at Completion the
Vendor shall deliver such records as it has relating thereto as
soon as practicable after Completion.
18
5 Further assurances
The Vendor shall at the request of the Purchaser at any time after Completion
execute or procure the execution of such documents or procure the doing
of such acts and things as the Purchaser may be necessary for the
vesting of the Assets in the Purchaser or otherwise giving the Purchaser
the benefit of all the provisions of this Agreement and without
limitation the Vendor shall make available on request to the Purchaser
such of the Excluded Assets as may be necessary to deliver the Financial
Software.
6 Names
6.1 The name of the Vendor shall be changed to Logical e business
Solutions Limited and the Vendor and Datatec undertake to the
Purchaser that it shall not and shall procure that no member of
the Vendor's Group shall in connection with the business carried
on by it (other than as agent for or pursuant to any agreement
or arrangement with the Purchaser), use the name(s) "The Web
Factory" "Key Financial" "ShareTracker" or "PDM" or "PDM2000" or
any trade names used in the Business or any colourable imitation
of or any names or words similar to or likely to be confused
with such names after Completion provided always that the
Purchaser acknowledges and agrees that following Completion the
Vendor shall be entitled to trade under and use the names and
style "TWF" and "TWF Corporate Solutions".
6.2 Notwithstanding the sale of the Goodwill pursuant to this
Agreement the Purchaser undertakes that it shall not and the
Guarantor undertakes to procure that no member of the
Purchaser's Group registered in the UK shall at any time within
1 year of the date of this Agreement, use the name "The Web
Factory" or "Web Factory" (the "restricted name") as its
corporate
19
name provided that for the avoidance of doubt the Purchaser and
any member of the Purchaser's Group may (a) trade using the
restricted name or (b) have the restricted name as part of its
corporate name when used with another word distinguishing the
corporate name from the restricted name and (c) the Purchaser's
Group may have a dormant subsidiary registered in the UK as "The
Web Factory Limited".
6.3 Notwithstanding any other provision of this Agreement the
Purchaser undertakes to the Vendor that that it shall not use or
distribute any catalogues advertising and promotional materials
included in the Records which carry any logo (including without
limitation "DataTec" "Logical" "IT IQ" and "Westcon") or name
indicating any connection with the Vendor's Group or otherwise
use any such logo following the Transfer Date.
7 Warranties
7.1 Subject to clause 7.2, the Vendor warrants and represents to the
Purchaser in the terms of the Warranties.
7.2 The Purchaser shall not be entitled to claim that any fact or
combination of facts contrary to any of the Warranties
constitutes a breach of any of the Warranties if and to the
extent that such fact or combination of facts has been fairly
disclosed in the Disclosure Letter.
7.3 Without restricting the rights of the Purchaser or the ability
of the Purchaser to claim damages on any basis available to it,
the Vendor undertakes to the Purchaser that if any of the
Warranties set out in paragraphs 1.1.3 and 1.1.4 of Schedule 2
is proved to be untrue or misleading and the amount of all such
claims of the Purchaser exceeds (pound)15,000 the
20
Vendor will pay to the Purchaser an amount necessary to put the
Business into the position which would have existed if the
Warranties had been true or not misleading but if the amount of
such liability (aggregated with liability in respect of any
other relevant claim or claims) exceeds such sum the Vendor
shall be liable for the whole amount of such liability and not
merely for the excess.
7.4 The Vendor agrees that the amount of the Purchaser's claim shall
not be limited by reference to the way the Consideration is
apportioned amongst the Assets in Schedule 1.
7.5 Each of the Warranties shall be construed as a separate and
independent Warranty and (save where expressly provided to the
contrary in this Agreement) shall not be limited or restricted
by reference to, or inference from, the terms of any other
Warranty or any other term of this Agreement.
7.6 In this Agreement, unless otherwise specified, where any
Warranty refers to the knowledge, information and belief (or
similar expression) of the Vendor, the Vendor is deemed to have
such knowledge, information and belief which the Vendor would
have had if it had made all due and careful enquiries of the
directors of the Vendor (other than Xxxxxxxx Xxxxxx, Xxxx Xxxxxx
and Xxxxx Xxxxxxxxx) and Xxxxxx Xxxxxxx into the subject matter
of that Warranty.
7.7 Notwithstanding the other provisions of clause 7,(other than
clause 7.3 in respect of which this clause shall not apply) the
Vendor shall be under no liability to make any payment in
satisfaction of any relevant claim unless the amount of such
liability (when aggregated with the Vendor's liability in
respect of any other relevant claim or claims or which could
have been made but for this clause 7.7)
21
is in excess of (pound)75,000 but if the amount of such
liability (aggregated with liability in respect of any other
relevant claim or claims) exceeds such sum the Vendor shall be
liable for the whole amount of such liability and not merely for
the excess.
7.8 Notwithstanding the other provisions of this clause 7 the Vendor
shall not be under any liability to make any payment in
satisfaction of any relevant claim unless:
7.8.1 written particulars (giving details of the specific
matter in respect of which such claim is made and
including a bona fide pre-estimate of the amount claimed
in respect of the relevant claim) shall have been given
to the Vendor; and
7.8.2 such particulars are given on or before the 30 June 2001
;and
7.8.3 proceedings in respect of any breach so notified are
commenced (by the issue and service of proceedings)
within six months of such notification unless such claim
has been settled within such six month period.
7.9 The total liability of the Vendor in respect of relevant claims
shall not exceed (pound)3,000,000 (including any monies in
respect of which setoff is exercised)
7.10 Any liability of the Vendor in respect of a relevant claim which
is agreed by the Vendor or otherwise determined shall be paid or
settled on a pound for pound basis:-
7.10.1 first by deduction from any part of the Deferred
Consideration which has not at the time of such
agreement or determination been paid to the Vendor or
into the Escrow Account (which
22
shall be applied against the amount of the Deferred
Consideration first falling due);
7.10.2 second by payment from any funds standing to the credit
of the Escrow Account; and
7.10.3 thirdly, by payment of the balance by the Vendor.
7.11 No right of recision shall be available to the Purchaser by
reason of any breach of the Warranties.
7.12 The Vendor shall not be liable for any breach of the Warranties:
7.12.1 to the extent that the amount of the relevant claim is
provided for or reserved for on the face of the Business
Accounts (and for this purpose any general provisions
may be utilised against all claims of that type) or is
included in calculating the balance to be paid pursuant
to clause 12 (apportionments);
7.12.2 to the extent that a relevant claim arises wholly or
partly as a result of the passing of an enactment or
other governmental regulation following Completion;
7.12.3 to the extent that the amount of the relevant claim has
been or is made good or is otherwise compensated for by
a third party without cost to the Purchaser;
7.12.4 to the extent that the amount of the relevant claim is
recovered by the Purchaser by insurance (except to the
extent of any losses or liabilities arising by the
making of such relevant claim);
7.12.5 in respect of the Warranties at paragraphs 1.1.5, 5.3 -
5.7 (inclusive), 5.9, 5.10, 11.1 -
23
11.5 (inclusive), 11.7, 16.1 ,16.2 and 19 of Schedule 2
in respect of any fact or circumstance known to either
Xxxx Xxxxxx or Xxxxxxxx Xxxxxx unless such fact or
circumstance is within the knowledge, information or
belief of the Vendor as defined in clause 7.6.
7.13 The Purchaser shall not be entitled to claim more than once in
respect of the same loss or damage.
7.14 The Purchaser shall take all such reasonable actions as the
Vendor may reasonably request to avoid dispute, resist,
compromise, defend or appeal any claims against the Purchaser
giving rise to the relevant claim but subject to being
indemnified and secured by the Vendor (in respect of the
relevant claim and all liabilities, costs and expenses arising
in connection therewith) to the reasonable satisfaction of the
Purchaser and (whether or not such action is requested) the
Purchaser shall not make any admission of liability, agreement
or compromise in respect of such claim or otherwise settle such
claims without giving notice to and (so far as reasonably
practicable) consulting with the Vendor.
7.15 Where the Purchaser is entitled to recover any sum from some
other person, firm or company in respect of any matter giving
rise to a relevant claim under this Agreement, the Purchaser
shall take all reasonable steps to enforce such recovery subject
to being indemnified and secured by the Vendor in respect of the
relevant claim and all liabilities, costs and expenses arising
in connection therewith to the reasonable satisfaction of the
Purchaser and shall account to the Vendor for any amount by
which the relevant claim is reduced by the amount so recovered
(not exceeding any amount paid by the Vendor in respect of the
relevant claim) after deducting all
24
costs and expenses incurred by the Purchaser in connection
therewith.
7.16 The Purchaser shall reimburse to the Vendor an amount equal to
any sum paid in respect of any relevant claim which is
subsequently recovered by or paid to the Purchaser by any third
party less any costs and expenses incurred by the Purchaser in
connection therewith.
7.17 Any amount paid or otherwise satisfying a relevant claim by the
Vendor under this Agreement shall be treated as a reduction in
the Consideration
7.18 Nothing in this clause 7 shall be deemed to relieve the
Purchaser from any common law duty to mitigate any loss or
damage incurred by it in respect of a relevant claim.
7.19 The Purchaser shall give to the Vendors 7 days notice in writing
of any action which it intends to take in relation to the
Business which is outside the ordinary course of the Business
after the Transfer Date and where the Purchaser knows that a
relevant claim will arise as a result of such action provided
that any failure to do so shall not limit the relevant claim
except to the extent the liability of the Vendor is increased by
the Purchaser's failure to give notice.
7.20 None of the Warranties are given in relation to the "Black Web
Site".
7.21 In this Agreement "relevant claim" means any claim which is made
against the Vendor in respect of any liability under the
Warranties.
7.22 The provisions of clause 7.8 to 7.20 shall not apply to limit or
exclude the liability of the Vendor to the extent that any claim
arises by reason of any
25
fraud, dishonesty or wilful misstatement or omission by or on
behalf of the Vendor.
8 Restrictive covenants
8.1 For the purpose of assuring to the Purchaser the full benefit of
this Agreement and in consideration of the agreement of the
Purchaser to buy the Assets on the terms of this Agreement, the
Vendor undertakes to the Purchaser that without the written
consent of the Purchaser the Vendor shall not whether directly
or indirectly and whether alone or in conjunction with, or on
behalf of any other person and whether as partner, shareholder,
director, manager, consultant, agent or employee or in any other
capacity whatsoever:
8.1.1 for a period of 2 years immediately following the
Transfer Date, canvass or solicit orders or facilitate
the canvassing of or the soliciting of orders from any
person who at any time during the 6 months immediately
preceding the Transfer Date was:
8.1.1.1 a customer or client of the Business; or
8.1.1.2 negotiating for the supply by the Business of
goods or services,
where the orders are for goods or services which are competitive
with those supplied by the Business at any time during
the 6 months immediately preceding the Transfer Date;
8.1.2 for a period of 2 years immediately following the
Transfer Date, accept the custom of any person who at
any time during the 6 months immediately preceding the
Transfer Date was:
8.1.2.1 a customer or client of the Business; or
26
8.1.2.2 negotiating with the Business for the supply by
the Business of goods or services,
where the custom involves the supply of goods or services which
are competitive with those supplied by the Business at any
time during the 6 months immediately preceding the
Transfer Date;
8.1.3 for a period of 2 years immediately following the
Transfer Date, canvass, solicit or entice away from the
Business any supplier to the Business who had supplied
goods and/or services to the Business at any time during
the 6 months immediately preceding the Transfer Date if
such solicitation or enticement causes or would cause
such supplier to cease supplying, or materially to
reduce its supply of, those goods and/or services to the
Business;
8.1.4 for a period of 2 years immediately following the
Transfer Date (save as the holder of shares or other
securities in any company which are quoted, listed or
otherwise dealt in on a recognised stock exchange or
other securities market and which confer not more than 5
per cent of the votes which could be cast at a general
meeting of the company concerned) carry on any trade or
business which provides internet access or any product
competitive with the Financial Software within the
United Kingdom (provided that nothing in this clause
8.1.4 shall preclude or prevent any member of the
Vendor's Group (other than the Vendor) providing
internet access).
8.1.5 for a period of 2 years immediately following the
Transfer Date, canvass, solicit or entice
27
away from the Business any Assumed Employee who was
employed in a managerial, supervisory, technical, sales
or administrative post or any person who was a
consultant to, the Business at the Transfer Date or at
any time during the period of one month immediately
preceding the Transfer Date;
8.1.6 attempt, or knowingly assist or procure any other
person, to do any of the foregoing things.
8.2 The Vendor undertakes to the Purchaser that (save as required by
law or to the extent necessary to comply with the regulations of
any stock exchange or regulated market on which the shares of
any of the Vendor's Group are or are to be quoted or listed but,
in each case, only after reasonable notification of such
proposed disclosure has been given to the Purchaser) the Vendor
shall not divulge or communicate to any other person (other than
to any employee of the Vendor or any Assumed Employee who needs
that knowledge in the discharge of duties) such information in
relation to the Business or as is contained in the Records which
is confidential, shall not use or attempt to use any such
information for the Vendor's or their own benefit or for the
benefit of any other person and shall use all reasonable
endeavours to prevent the publication or disclosure of any such
information provided that the Vendor shall be entitled to use
for its own benefit any information which relates to the
Retained Business.
8.3 In consideration of the Purchaser entering in to this Agreement,
Datatec undertakes to the Purchaser that without the written
consent of the Purchaser, Datatec shall not and shall procure
that no member of the Vendor's Group shall, whether directly or
indirectly and whether alone or in conjunction with or on behalf
of any other person and whether as partner,
28
shareholder, director, manager, consultant, agent or employee or
in any other capacity whatsoever act contrary to the provisions
of clause 8.2 (on the basis that such sub-clause was set out in
this clause).
8.4 The Vendor and Datatec acknowledge that each of the undertakings
contained in clauses 8.1, 8.2 and 8.3 is reasonable and for the
proper protection of the Business and further acknowledges that
damages may not be an adequate remedy to the Purchaser for
breach of those undertakings.
8.5 The restrictions on the Vendor contained in clause 8.2 above
shall not apply to any information which is or becomes generally
available to the public on a non-confidential basis through no
act or default on the part of the Vendor.
8.6 Each undertaking contained in clauses 8.1, 8.2 and 8.3 shall be
construed as a separate undertaking and if any one or more of
such undertakings or any part of an undertaking is held to be
against the public interest or unlawful or in any way as an
unreasonable restraint of trade, the remaining undertaking or
undertakings or the remaining part of such undertaking or
undertakings shall continue in full force and effect and shall
bind the Vendor or Datatec as the case may be.
8.7 For the purposes of protecting the Retained Business and in
consideration of the agreement of the Vendor to sell the Assets
on the terms of this Agreement, the Purchaser undertakes to the
Vendor that without the written consent of the Vendor the
Purchaser shall not whether directly or indirectly and whether
alone or in conjunction with, or on behalf of any other person
and whether as a partner, shareholder,
29
director, manager, consultant, agent or employee or in any other
capacity whatsoever:
8.7.1 for a period of 1 year immediately following the
Transfer Date, canvass or solicit orders or facilitate
the canvassing of or the soliciting of orders from any
person who at any time during the 6 months immediately
preceding the Transfer Date was:
8.7.1.1 a customer or client of the Retained Business;
or
8.7.1.2 negotiating for the supply by the Retained
Business of goods or services,
where orders are for goods or services which are competitive
with those supplied by the Retained Business at any time
during the 6 months immediately preceding the Transfer
Date and for the avoidance of doubt not goods or services
supplied by the Business during such period.
8.7.2 For a period of 1 year immediately following the
Transfer Date, accept the custom of any person who at
any time during the 6 months immediately preceding the
Transfer Date was:
8.7.2.1 a customer or client of the Retained Business;
or
8.7.2.2 negotiating with the Retained Business for the
supply by the Business of goods or services,
where the custom involves the supply of goods or services which
are competitive with those supplied by the Retained
Business at any time during the 6 months immediately
preceding the Transfer Date and for the avoidance of doubt
not
30
goods or services supplied by the Business during such
period
8.7.3 For a period of 1 year immediately following the
Transfer Date, canvass, solicit or entice away from the
Business any employee of the Vendor at the Transfer Date
(other than an Assumed Employee) who was employed in a
managerial, supervisory, technical, sales or
administrative post or any person who was a consultant
to, the Retained Business at the Transfer Date or at any
time during the Period of one month immediately
preceding the transfer date;
8.7.4 attempt or knowingly assist or procure any other person,
to do any of the foregoing things.
8.8 In consideration of the Vendor entering into this Agreement at
the request of the Guarantor, the Guarantor undertakes to the
Vendor that without the written consent of the Vendor, the
Guarantor shall not and shall procure that no member of the
Purchaser's Group shall, whether directly or indirectly, and
whether alone or in conjunction with or on behalf of any other
person and whether as partner, shareholder, director, manager,
consultant, agent or employee or in any other capacity
whatsoever act contrary to the provisions of clause 8.7 (on the
basis that such clauses are set out in this clause).
8.9 The Purchaser and the Guarantor acknowledge that each of the
undertakings contained in clauses 8.7 and 8.8 is reasonable and
for the proper protection of the Retained Business and further
acknowledges that damages may not be an adequate remedy to the
Vendor for breach of those undertakings.
8.10 Each undertaking contained in clauses 8.7 and 8.8 shall be
construed as a separate undertaking and if
31
any one or more of such undertakings or any part of an
undertaking is held to be against the public interest or
unlawful in any way as an unreasonable restraint of trade, the
remaining undertaking or undertakings or the remaining part of
such undertaking or undertakings shall continue in full force
and effect and shall bind the Purchaser and the Guarantor.
8.11 The restrictions in clauses 8.7 and 8.8 shall cease to apply if
the Vendor fails to satisfy a claim under this Agreement within
30 days of the agreement or determination of such claim by any
order of a court of competent jurisdiction.
8.12 The restrictions in clauses 8.1, 8.3, 8.7 and 8.8 shall only
apply to the United Kingdom.
9 Book Debts
9.1 Each party shall account to the other promptly for the payment
of any debtor which is received by it and which is properly
payable to the other.
9.2 It is agreed that monies received in respect of debtors relating
to the provision of access to the internet shall be applied
firstly against invoices rendered by the Vendor in respect
thereof unless the relevant debtor has raised a bona fide
dispute in relation to the sums owing to the Vendor and provided
also that where any debtor is a pre -payment of services to be
provided after the Transfer Date, the relevant proportion of the
debtor may be retained by the Purchaser pursuant to clause 12.1.
10 Contracts and other obligations
10.1 Subject to clause 10.2, the Purchaser undertakes to the Vendor
to carry out and complete, to the
32
extent they remain unperformed at the Transfer Date, the
Contracts after Completion and the Purchaser shall (subject to
clause 10.2) indemnify and keep the Vendor indemnified against
all losses, liabilities, costs, claims and demands arising in
respect of the Contracts after the Transfer Date whether or not
any agreement, consent or novation as mentioned in clause 11.1
has been obtained
10.2 The Purchaser will have no liability for, or be required to
perform any obligation arising out of any breach of any of the
Contracts prior to the Transfer Date whether a breach by the
Vendor or some other person provided that the Purchaser agrees
to fulfil the obligations of the Vendor in respect of those
breaches of the Contracts referred to in the disclosure against
Warranty 11.3 in the Disclosure Letter (without any obligation
to make any payment).
10.3 Save where these are specifically assumed by the Purchaser under
this Agreement the Vendor shall pay, satisfy and discharge all
the Liabilities and (subject to clause 10.2) shall indemnify and
keep indemnified the Purchaser in respect of the same.
10.4 Nothing in this Agreement shall make the Purchaser liable in
respect of anything done or omitted to be done prior to the
Transfer Date other than as specifically stated in this
Agreement.
10.5 The Vendor will settle any sum outstanding in respect of the
Tigris Router so as to give title to such asset to the Purchaser
11 Assignment and novation of contracts
11.1 If the benefit of any of the Contracts cannot be assigned to the
Purchaser except with the agreement or consent of a third party
or that third party entering into a novation agreement then the
Vendor
33
and the Purchaser will each use their reasonable endeavours to
procure such agreement, consent or novation (without any
obligation to make a payment in respect thereof) .
11.2 Unless and until the benefit of any Contract is assigned or
novated, or where any of the Contracts is incapable of transfer
by assignment to the Purchaser:
11.2.1 the Vendor shall continue its corporate existence and
shall hold the benefit of such Contract upon trust for
the Purchaser absolutely and shall account to the
Purchaser without any deduction for all sums and other
benefits derived from such Contract and the Purchaser
shall perform at its cost and risk the outstanding
obligations (subject to clause 10.2) of the Vendor under
any such Contract in accordance with its terms;
11.2.2 the Vendor shall give all reasonable assistance to the
Purchaser to enable it to enforce the rights of the
Vendor under such Contract and shall at all times act
with regard to the Contract in accordance with the
Purchaser's reasonable instructions from time to time;
and
11.2.3 the Vendor shall not take any action in respect of such
Contract without the prior written approval of the
Purchaser such approval not to be unreasonably withheld
or delayed.
12 Apportionments
12.1 Subject to clause 12.2, the Vendor shall account to the
Purchaser for all pre-payments made or to be made (but only as
and when and to the extent received) by third parties to the
Vendor in respect of the Business and the Assets save for such
amounts which are attributable to obligations of the Vendor
which
34
have been wholly completed or discharged as at the Transfer Date
and the Purchaser shall account to the Vendor for any sums
received by the Purchaser for network services provided in
respect of the Business prior to the Transfer Date.
12.2 The Vendor shall account to the Purchaser in the amount of
(pound)720 in respect of the Stable Express Services (as defined
in the Disclosure Letter) and the Purchaser hereby acknowledges
assumption by it of the obligation to perform such services.
12.3 All periodic outgoings relating to, or payable, or accruing in
respect of the Business down to and including the Transfer Date
shall be borne by the Vendor and as from the Transfer Date shall
be borne by the Purchaser. Such outgoings shall if necessary be
apportioned accordingly provided that outgoings specifically
referable to the extent of the user of any property or rights
shall be apportioned accordingly to the extent of such user.
12.4 Within 30 days from the Transfer Date an account shall be drawn
up by the Purchaser and presented to the Vendor showing the
calculations of what the Vendor or the Purchaser owes to the
other under clauses 12.1, 12.2, 12.3 and 13.3.
12.5 If the account is not agreed by the Vendor and the Purchaser
within 10 business days of such presentation, either party may
apply for an independent accountant nominated by the president
for the time being of the Institute of Chartered Accountants in
England and Wales to be appointed who shall give a decision
based on representations of the Vendor and the Purchaser as to
the amount which is owed in respect of the matters which ought
to have been included within the account and such person shall
act and expert and not as arbitrator and his or
35
her decision shall be binding on the Vendor and the Purchaser
save in the event of manifest error.
12.6 Any payment required pursuant to the account prepared under
clause 12.3 above shall be made within two business days of the
agreement or determination of the amount due.
13 Employees
13.1 The contracts of employment of the Assumed Employees shall be
transferred to the Purchaser under the Regulations.
13.2 The Vendor shall discharge and indemnify the Purchaser against:
13.2.1 all liabilities, obligations, costs, claims and demands
arising from or in respect of any of the Retained
Employees;
13.2.2 all liabilities, obligations, costs, claims and demands
arising from or in respect of any of the Assumed
Employees, caused by any act or omission by the Vendor
prior to the Transfer Date.
13.3 Responsibility for all salaries, wages, bonuses and other
emoluments, all statutory contributions and all income tax
deductible under PAYE for which the Vendor is accountable, all
employer's contributions to the pension scheme(s) and all other
employment costs and holiday pay in respect of the Assumed
Employees and the Retained Employees in respect of or referable
to the period ending on to the Transfer Date shall be the
Vendor's if relating to any period prior to or including the
Transfer Date whether or not due for payment at that date and
shall be the Purchaser's after the Transfer Date and such
responsibility shall be apportioned on a time basis.
36
14 Future trading
14.1 The Vendor shall promptly refer to the Purchaser (on a non
exclusive basis) all enquiries to the extent they relate to the
Business including, without limitation, enquiries or orders for
any stock, spares, parts, accessories and other equipment
manufactured or sold, or any services provided in connection
with the Business, which the Vendor may receive after the
Transfer Date:
14.1.1 to the extent they are received from any person who is
at the Transfer Date or was within 12 months prior to
that date a customer of the Business whenever such
enquiry is received; and
14.1.2 in respect of enquiries relating to the Business
received from any other person only if received within 3
months from the date of this Agreement.
14.2 The Vendor shall promptly give notice to the Purchaser of any
claims made by third parties against the Vendor in respect of
any matter relating to the Business prior to the Transfer Date
and the Vendor shall not take any steps in relation to any such
matters which might reasonably be expected to damage the
commercial interests of the Purchaser without prior notification
to the Purchaser.
14.3 For a period of 6 years after the Transfer Date each party shall
preserve and make available to the other free of charge, all
information and records (including the Records) generated prior
to the date hereof which the other may reasonably require
relating to the Business, and the Assets.
14.4 For the period of ninety days following the Transfer Date (the
"Access Period"):-
37
14.4.1 the Purchaser grants to the Vendor the right to use the
Computer System at the Premises free of charge for its
own internal business purposes and, subject to clause
8.2 which shall apply to all information stored on the
Computer System which is confidential, the Purchaser
shall permit the Vendor full and unrestricted access
during the Purchaser's normal business hours to use the
Computer System for such purpose;
14.4.2 the Vendor agrees to provide telephone and fax
facilities in the form currently used by the Business to
the Purchaser free of charge during the Vendor's normal
business hours; and
14.4.3 the Vendor will whilst the same are in its employ,
provide the services of Xxxxx Xxxxxxx and Xxxxxx
Xxxxxxxx in connection with the operation of the
"Financial Software" on an as and when needed basis
subject to the Purchaser giving notice of not less than
5 working days and sickness and holiday in respect of
each of Xxxxx Xxxxxxx and Xxxxxx Xxxxxxxx at a cost of
(pound)1,250 (plus VAT) per day per person.
14.4.4 the Purchaser will control the domain name
"xxxxxxxxxx.xx.xx" and shall promptly redirect all
e-mail addressed to the addresses listed as retained
addresses in section 22 of the Disclosure Bundle to such
e-mail address as the Vendor may from time to time
notify.
14.5 Neither the Purchaser nor the Vendor shall copy (save for the
purposes of backups), process, transfer, corrupt or otherwise
modify in any way or use for any purpose the other party's
programs and data held on the Computer System from time to time
and the Purchaser agrees that, upon expiry of the Access Period
or at the Vendor's written request at any
38
time, to cause any programs or data of the Vendor to be deleted
from the Computer System.
14.6 Save in respect of death or personal injury caused by the
negligence of the Vendor or the Purchaser (as the case may be)
neither the Vendor nor the Purchaser shall be liable to the
other for any loss, damage, costs or expense arising from the
relevant facility being interrupted, prevented, postponed,
delayed, limited, inadequate or curtailed due to:
14.6.1 such failure being outside the reasonable control of the
relevant party or due to other unforeseen event,
emergency or circumstance;
14.6.2 good cause or routine or general maintenance,
inspection, servicing, repair, renewal or replacement;
14.6.3 emergency maintenance, inspection, servicing, repair,
renewal or replacement
and, save in respect of death or personal injury caused by negligence or
damage caused by wilful default or gross negligence, the maximum
liability of the Vendor and the Purchaser to the other in the
provision of such facilities shall be (pound)100,000.
14.7 The Vendor acknowledges and agrees that:
14.7.1 the Vendor Accounts (or accurate and not misleading
extracts from them) may be used by the Purchaser or the
Purchaser's Group in connection with its returns filings
and announcements in respect of securities law of the
United States ("SEC Requirement") and the Vendor shall
reasonably endeavour to procure the consent of the
auditors of the Vendor for such purpose; and
39
14.7.2 the Purchaser in particular (without limiting 14.3) may
have access to any records of the Vendor which relate to
the Business or the Retained Business for the purposes
of preparing management accounts of the Business for the
period of the Vendor Accounts and of preparing audited
accounts of the Business in connection with any SEC
Requirement for the period up to the date of this
Agreement in both cases if and to the extent necessary
to comply with any SEC Requirement and the Vendor shall
reasonably promptly co-operate in the preparation of
such accounts at its own cost (subject to payment of
expenses properly incurred).
14.8 Without prejudice to the other provisions of clause 14, the
Vendor agrees and undertakes to provide (at its own cost) such
assistance as is reasonably required by the Purchaser to enable
the Purchaser to produce management accounts for the period from
1 April 1999 to the date of this Agreement.
15 Value added tax
15.1 All amounts expressed in this Agreement as being payable by or
to the Purchaser are expressed exclusive of any value added tax
which may be chargeable thereon and the amount of any such value
added tax shall be payable in addition thereto subject as
hereinafter provided.
15.2 The Vendor and the Purchaser shall use all reasonable endeavours
to ensure that the provisions of article 5 of the Value Added
Tax (Special Provisions) Order 1995 apply to the sale and
purchase of the Business and the Assets.
15.3 The Vendor and the Purchaser shall as soon as reasonably
practicable after the Transfer Date each
40
give notice of the sale and purchase to H M Customs and Excise
andthe Vendor shall be entitled to request that all records
referred to in section 49(1) of the Value Added Tax Xxx 0000 be
retained by the Vendor and the Vendor hereby undertakes to
preserve such records for such period as may be required by law
and shall during that period afford reasonable access to them
free of charge at the request of the Purchaser.
15.4 If H M Customs and Excise determine that value added tax is
chargeable on the sale of the Business and Assets hereunder or
any of them then the Vendor shall promptly notify the Purchaser
of such determination and the Purchaser agrees that such value
added tax shall be in addition to the Consideration and the
Purchaser shall (against production by the Vendor of tax
invoices in respect thereof) pay the amount of any such value
added tax forthwith to the Vendor but such payment shall be
without prejudice to the right of the Purchaser under this
Agreement to call upon the Vendor to make or join an appeal
against the aforesaid determination subject to the provisions of
clause 15.5.
15.5 The Purchaser at its sole discretion (but after consultation
with the Vendor) may within twenty Business Days of notification
by the Vendor of a determination having been made by H M Customs
and Excise dispute that determination or request the Vendor to
dispute or join with the Purchaser or any other person in
disputing that determination, including the making of a formal
appeal to the Value Added Tax Tribunals and such higher court of
law as may subsequently be required to reach a decision on the
dispute and the Vendor shall promptly comply with any reasonable
request but shall not be obliged to take any action under this
clause unless the
41
Purchaser shall indemnify it against all reasonable costs and
expenses so incurred.
15.6 The Purchaser shall indemnify the Vendor against any penalty,
surcharge, fine or interest incurred by the Vendor in respect of
any late payment of VAT payable in respect of the Consideration
which arises up to the period of 4 business days after the VAT
is paid to the Vendor in cleared funds.
15.7 All value added tax payable in respect of goods and services
supplied or deemed to be supplied by the Vendor in connection
with the Business prior to the Transfer Date, and all interest
and penalties attributable to it, shall be paid to H M Customs
and Excise by the Vendor and the Vendor shall be entitled to
receive and to retain for its own benefit all reimbursement or
credit from H M Customs and Excise for value added tax borne by
the Vendor on goods and services supplied to the Vendor prior to
the Transfer Date and any payments received in respect of value
added tax overpaid to H M Customs and Excise prior thereto.
16 Licence Indemnity
[Not used.]
17 Guarantee
17.1 All obligations contained in or relating from the execution of
this Agreement on the part of the Guarantor and the Purchaser
shall be construed and take effect as joint and several
obligations and any benefits contained in this Agreement in
favour of them shall be construed and take effect as conferred
on each of them collectively and individually.
17.2 The Guarantor unconditionally and irrevocably:
42
17.2.1 guarantees to the Vendor as principal obligor and not
merely as surety the due and punctual performance by the
Purchaser of all obligations of the Purchaser arising
under this Agreement for which the Guarantor is not
primarily liable or jointly liable with the Purchaser;
and
17.2.2 acknowledges and agrees that the Vendor may enforce its
rights under this Agreement without first having
recourse to any rights it may have or taking any steps
or proceedings against the Purchaser.
17.3 The obligations of the Guarantor under clause 17.2 of this
Agreement are continuing obligations and shall not be affected
discharged or diminished by and the Guarantor shall perform such
obligations notwithstanding that:
17.3.1 any obligation of the Purchaser may be void, voidable or
unenforceable;
17.3.2 any intermediate payment or settlement of account by or
the insolvency of or analogous proceedings relating to
the Purchaser;
17.3.3 the granting of any time or indulgence or any extension
to the Purchaser or by any failure by the Vendor to
pursue any remedies or rights against the Purchaser or
any modification or variation agreed by the Vendor with
the Purchaser from time to time (unless in writing);
17.3.4 the Vendor giving up dealing with varying or abstaining
from perfecting or enforcing any security held by the
Vendor; or
17.3.5 any arrangement, matter or fact or circumstances which
might otherwise operate to discharge or diminish the
liability of or
43
otherwise provide a defence to a surety (other than any
arrangement, matter or fact or circumstance which is
available to the Purchaser).
18 Costs
Each party hereto shall pay its own costs and expenses of and incidental to the
negotiation preparation and execution of this Agreement and all
documents ancillary to this Agreement, except where otherwise expressly
stated in this Agreement.
19 Announcements
Save for the announcement in the Agreed Form or an announcement (including to
customers clients or suppliers of the Business by the Purchaser or of
the Retained Business by the Vendor) merely of the fact that the
Purchaser has acquired the Business, no announcements concerning the
transactions contemplated by this Agreement or any matter ancillary to
it and no disclosure of the terms of this Agreement shall (save as
required by law) be made by the Vendor except with the prior written
consent of the Purchaser or by the Purchaser except with the prior
written consent of the Vendor (such consent not to be unreasonably
withheld or delayed)
20 Notices
20.1 In order to be effective, any notice, demand or other
communication to be served under or pursuant to this Agreement
shall be in writing and shall be served upon any party to this
Agreement by:
20.1.1 posting by first class post (for inland mail); or
20.1.2 posting by airmail (for overseas mail); or
44
20.1.3 delivery by hand; or
20.1.4 facsimile transmission
to the party to be served at its address or facsimile number given below or at
such other address or number in the United Kingdom as it may from time
to time notify in writing to the other parties to this Agreement as
being the recipient's address or number for service provided that it may
(at the option of the sender) in any event be addressed to the
recipient's registered office:
Vendor: The Web Factory Limited
Address: APV Building, Speedwell Road, Xxxxxxxxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxxxxxxxx
XX0 0XX
Facsimile number: 01782 858586
Marked for the attention of: Xxxxxx Xxxxxxx with a copy to Vendors
Solicitors, fax number 00000 000000, marked for
the attention of Xxxxx Xxxxx
Purchaser: Castlegate 133 Limited
Address: Xxx Xxxx Xxxxx
Xxx Xxxx
Xxx Xxxx 00000
Facsimile Number: 000 (000) 000 0000
Marked for the attention of: Xxxxx Xxxxxx
Guarantor: Teltran International Group Limited
Address: Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: 000 (000) 000 0000
45
Marked for the attention of: Xxxxx Xxxxxx
With a copy to: Xxxxxx Xxxxxx Xxxxxx & Xxxx
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: 000 (000) 000 0000
Marked for the attention of: Xxxxxxx XxXxxxxxxx
but so that any notice served by facsimile transmission shall be confirmed by
the sender in writing served not later than the second Business Day
after the date of the facsimile transmission.
20.2 A notice or demand given in accordance with this clause shall be
deemed to have been given or made on the following days:
20.2.1 if served by hand shall be deemed duly served when left
at the address for service unless such delivery occurs
on a day which is not a Business Day or after 5pm on a
Business Day, in which case it shall be deemed duly
served on the next following Business Day;
20.2.2 if served by inland mail it shall be deemed duly served
on the second Business Day or if by overseas mail the
fifth Business Day after posting; or
20.2.3 if sent by facsimile transmission it shall be deemed to
have been served at the time of transmission (unless
such transmission occurs on a day which is not a
Business Day or after 5 pm on a Business Day in which
case service will be deemed to occur on the next
following Business Day),
and in proving service of the same it shall be sufficient to prove, in
the case of a letter, that such letter
46
was properly stamped or franked first class or airmail (as
relevant) addressed and placed in the post and, in the case of a
facsimile transmission, that such facsimile was transmitted to
the facsimile number of the addressee referred to above.
21 General
21.1 This Agreement shall be binding on and shall continue for the
benefit of each party's successors. . Save as aforesaid this
Agreement shall not be assignable.
21.2 Notwithstanding Completion each of the agreements, covenants,
obligations, warranties, indemnities and undertakings contained
in this Agreement shall, except in so far as fully performed at
Completion, continue in full force and effect.
21.3 None of the rights of any party arising out of this Agreement
shall be varied or restricted by the giving of any time or other
indulgence to any person but shall only be affected by a
specific waiver or release by the relevant party and any such
waiver or release shall be specific to the matters to which it
relates, shall not be deemed to be a waiver of any subsequent
breach or default and shall in no way affect the other terms of
this Agreement.
21.4 All the rights and remedies expressly provided for by this
Agreement shall not exclude any rights or remedies provided by
law.
21.5 This Agreement may be executed in any number of counterparts by
the different parties hereto or on separate counterparts, each
of which when executed and delivered shall constitute an
original, but all of which shall constitute one and the same
instrument.
47
21.6 Any variation of this Agreement shall be binding only if it is
recorded in a written document signed by or on behalf of all the
parties.
22 Governing Law
This Agreement shall be governed by and construed in all respects in
accordance with English law and the parties submit to the exclusive
jurisdiction of the English Courts.
23 Entire Agreement
This Agreement (and the documents entered into pursuant to this Agreement)
embodies the entire understanding of the parties hereto and the Purchaser
declares (and the Vendor acknowledges) that the Purchaser is relying on no
other warranties, representations, covenants, undertaking, indemnities or
other statements whatsoever, other than those expressly set out in this
Agreement or any documents entered into pursuant to this Agreement.
IN WITNESS of these matters this document has been executed as a deed and
delivered on the date set out at the beginning of this Agreement.
48
SCHEDULE 1
Allocation of Consideration
The Consideration shall be apportioned among the Assets as follows:-
(pound)
1. Plant (pound)299,994
2. Claims 1.00
3. The benefit of the Contracts 1.00
4. Goodwill (pound)1.00
5. Intellectual Property Rights 1.00
(other than the Financial Software
and Registered Trade Marks)
6. The Computer System 1.00
7. Records 1.00
8. Registered Trade Marks 5,000
9. The Financial Software
(pound)2,695,000.00
-------------------
Total (pound)3,000,000.00
49
SCHEDULE 2
Warranties
1 Assets: General
1.1 The Assets:
1.1.1 are situate at the Premises;
1.1.2 not the subject of any dispute;
1.1.3 in the case of the Plant and the Computer System comprise
all the assets of that nature used in the Business in the
12 months prior to the Transfer Date;
1.1.4 in the case of the Intellectual Property Rights, comprise
all the intellectual property rights used in the Business
as carried on at the Transfer Date
1.1.5 are not surplus to requirements of the Business and are
owned absolutely by the Vendor free from any Encumbrance.
1.2 All deeds and documents which show or affect in any way the
right, title or interest of the Vendor in or to any of the Assets
which are in its possession or direct control are included in the
Records
2 Book Debts
2.1 An accurate schedule of the Book Debts as at the Transfer Date
is included in the Schedule and the Book Debts are all the
outstanding debtors of the Business.
50
2.2 None of the Book Debts have been outstanding for more than 90
days from its due date of payment.
2.3 None of the Book Debts are the subject of any dispute.
3 Plant
3.1 The Plant is in a good and safe state of repair and condition
and satisfactory working order .
3.2 An accurate Schedule of the Plant is included in the Disclosure
Letter.
4 Computer System
4.1 Full details of all elements of the Computer System, including
all licences and service agreements are set out in the
Disclosure Letter.
4.2 The Computer System:
4.2.1 is so far as the Vendor is aware free from any material
defect and is fulfilling the present requirements of the
Business as carried on at the Transfer Date;
4.2.2 has such security, back-ups, duplication, hardware and
software support and maintenance (including emergency
cover) and trained personnel as the Vendor considers
necessary in place to ensure:
4.2.2.1 that breaches of security, errors and breakdowns
are kept to a minimum; and
4.2.2.2 that the Computer System is year 2000 compliant.
4.3 The acquisition of the Business by the Purchaser shall not
affect the rights of the Purchaser to have
51
full and unrestricted access to use each element of the Computer
System in the manner in which such element has been used prior
to Completion. Such rights of access shall not be subject to the
grant of any additional rights and/or the use of any element of
the Computer System on a shared basis with the Vendor or an
other member of the Vendor's Group and/or any third party.
4.4 The Vendor is not in breach of any arrangements pursuant to
which any element of the Computer System has been made available
by any third party. In addition, the Vendor has not received
notice of and is not aware of any circumstances which would
enable any third party to terminate such arrangements.
4.5 In paragraph 4.2.2 "year 2000 compliant" means the ability for
the continued normal use of the Computer System such that
neither the performance nor the functionality of the Computer
System will be affected by any changes to the date format caused
by the advent of the year 2000. In particular:
4.5.1 year 2000 compliant shall mean that no value for current
date will cause any interruption of the Computer System;
4.5.2 all manipulations of time-related data will produce the
desired results for all valid date values within the
application domain and in combination with other
products, prior to, through and beyond the Year 2000 and
no part of the Computer System shall use date values for
special meanings;
4.5.3 date elements in interfaces and data storage will permit
specifying the century to eliminate date ambiguity
without human intervention, including leap year
calculations;
52
4.5.4 where any date element is represented without a century,
the correct century shall be unambiguous for all
manipulations involving that element;
4.5.5 year 2000 shall be identified as a leap year.
5 Intellectual Property
5.1 All Intellectual Property Rights are in full force and effect
and are vested in and beneficially owned by the Vendor free from
any Encumbrance and, without limitation, free from all claims or
rights of employees, agents, consultants, customers, licencees
or other parties involved in the development creation
documentation marketing maintenance enhancement or licencing of
such Intellectual Property Rights.
5.2 Details of all registered Intellectual Property Rights, all
Software, and all other Intellectual Property Rights considered
by the Vendors to be material to the Business and any
applications to register Intellectual Property Rights are
contained in Schedule 4 or in the Disclosure Letter.
5.3 No person has been authorised by the Vendor to use any
Intellectual Property Rights owned or used by the Vendor.
5.4 The Disclosure Letter has copies annexed to it or contains full
details of all licences and other agreements relating to
Intellectual Property Rights to which the Vendor is a party.
Such agreements are valid, subsisting and enforceable in
accordance with their terms and the Vendor is not in breach of
any of their provisions.
5.5 The Business is not carried on in such a way as to infringe any
intellectual property rights or moral rights of any person.
53
5.6 To the knowledge information or belief of the Vendor there has
not been any infringement by another party of the Intellectual
Property Rights.
5.7 So far as the Vendor is aware none of the Intellectual Property
Rights are being (or are threatened to be) used, claimed,
opposed or attacked by any person or are subject to any claim or
potential claim for compensation pursuant to sections 40 and 41
of the Patents Xxx 0000 or otherwise.
5.8 Where an Intellectual Property Right has been registered, the
Vendor is registered as sole proprietor.
5.9 To the information, knowledge or belief of the Vendor there is
no breach of the terms of the authorisations or agreements
referred to in paragraphs 5.3 and 5.4 by any of the other
parties thereto and the Vendor is not in breach of the terms of
the authorisations or agreements.
5.10 The Vendor has not (except in the ordinary and normal course of
business) disclosed or permitted to be disclosed or undertaken
or arranged to disclose to any person other than the Purchaser
the source code in the software or any of the information
contained in the Records.
5.11 The Software owned by the Vendor is not dependant on any
Software licence to the Vendor in order to operate effectively
5.12 The source code for all Software is documentated to an extent to
allow the Purchaser (with reasonably experienced and trained
personnel) to utilise the Software without the knowledge
information or assistance of the Vendor, the Assumed Employees
or any other person.
54
6 Premises
[Not used]
7 Records
The Records:
7.1 have been, properly maintained on a consistent basis and are up
to date and contain true and accurate records of all aspects of
the Business and the Assets to which they relate and of all
matters required by law to be entered in them;
7.2 give a true and fair view of the contractual and trading
position of the Business and of its fixed and current assets and
liabilities (actual and contingent) and debtors and creditors .
8 Business Accounts
The Business Accounts accurately show (within 5% in aggregate) invoices in
respect of sales issued during and expenditure incurred during the period to
which the Business Accounts relate
9 Employees
9.1 The Disclosure Letter contains details of:
9.1.1 the identities, dates of commencement of employment (or
appointment to office) dates of birth, remuneration and
job title of each of the Assumed Employees;
9.1.2 the written terms of all existing contracts with each of
the Assumed Employees;
55
9.1.3 the terms of all consultancy agreements relating to the
Business.
9.2 The Vendor has no outstanding liability to any Assumed Employees
except for salary which has accrued in respect of the calendar
month in which this Agreement is executed or for business
expenses incurred during the same month.
9.3 There are no agreements or other arrangements (whether or not
legally binding) between the Vendor and any trade union or other
body representing the Assumed Employees.
9.4 There is no agreement or understanding (contractual or
otherwise) between the Vendor and any Assumed Employee with
respect to:
9.4.1 his or her employment;
9.4.2 ceasing to be employed; or
9.4.3 retirement
which is not included in the written terms of that employee's employment
or previous employment (as the case may be).
9.5 Since 31st December 1999, no change has been made in the terms
of employment of any Assumed Employee.
9.6 No negotiations for any increase in the emoluments or benefits
of any Assumed Employee are current or are expected to take
place within the next three months.
9.7 The subsisting contracts of each of the Assumed Employees is
terminable by the Vendor without compensation (other than under
the Employment Rights Act 1996) by giving the minimum period of
notice specified in section 86 of that Act.
56
9.8 There is not and has not within the twelve months preceding the
date of this Agreement been, any industrial dispute involving
persons engaged in the Business and there are no facts which
suggest that there may be an industrial dispute involving the
Assumed Employees.
9.9 The Disclosure Letter contains details of any claims made by any
person employed in the Business in the 3 years prior to the date
of this Agreement for compensation for alleged injury or illness
caused in the course of employment in the Business whether with
the Vendor or a previous owner of the Business.
9.10 The Vendor has not established, nor has expressed an intention
to establish, any share or share option scheme or arrangement,
or profit sharing bonus, commission, or other incentive scheme
for all or any of the Assumed Employees.
9.11 There is no early retirement scheme applicable to any Assumed
Employee.
9.12 None of the products or services supplied by the Business are
produced or provided by outworkers.
9.13 The Vendor has not acquired any undertaking or part of one such
that the Transfer of Undertakings (Protection of Employment)
Regulations 1981 apply, or may apply, thereto which is being
sold pursuant to this Agreement as part of the Business.
9.14 The Disclosure Letter contains a list of all the Retained
Employees and all other individuals who have worked in the
Business in the period of 6 months immediately prior to the
Transfer Date.
9.15 The Disclosure Letter contains full details of all redundancies
and dismissals made by the Vendor in the six months period prior
to Completion.
57
10 Pensions
There are no agreements, arrangements, customs or practices (whether legally
enforceable or not) in operation at the date of this Agreement for the
payment of or contribution towards any pensions, allowances, lump sums or
other like benefits on retirement or on death or during periods of
sickness or disablement for the benefit of any of the Assumed Employees or
for the benefit of the dependants of any such persons, nor has any
proposal been announced to establish any such agreement or arrangement.
11 Contracts and Customers
11.1 The Contracts are the only contracts outstanding in respect of
the Business and the terms of all the Contracts are set out in
the Disclosure Letter.
11.2 The Vendor is not party to any Contract where notice of
termination has been given or received by the Vendor or which
the Vendor has reason to believe may be terminated (or not
renewed on any renewal date or the expiry of a fixed term) by
any other party to it.
11.3 The Vendor is not in breach of any Contract, and so far as the
Vendor is aware no other party is in breach of any Contract, and
to the knowledge, information and belief of the Vendor there are
no grounds existing at the Transfer Date for the termination,
rescission, avoidance or repudiation of any Contract by the
Vendor or any other party to any Contract.
11.4 No offer, quote or tender given or made by the Vendor in
relation to the Business on or before the date of this Agreement
is capable of giving rise to a contract by the unilateral act of
a third party.
11.5 The Vendor has not waived nor has any other party waived its
rights under the Contracts.
58
11.6 In the period of twelve months prior to the date of this
Agreement, no substantial customer or supplier (in each case
attributing more than 5% of revenue or expenditure in the last
financial year (as the case may be) of the Business:
11.6.1 has ceased to trade with the Business;
11.6.2 has materially reduced the amount of business which it
carries on with the Business; or
11.6.3 has materially changed the terms on which it carries on
trade with the Business,
and no indication has been received by the Vendor that there will or may
be any such cessation, reduction or change.
11.7 In the 12 month period prior to the Transfer date there have
been no arrangements and understandings (whether legally
enforceable or not) between the Vendor and any person connected
with the Vendor relating to the management or operation of the
Business or the letting of any of the Assets or the provision of
finance, goods, services or other facilities to or by the Vendor
or otherwise in any way relating to the Business or the Assets.
12 Insolvency
12.1 No order has been made or petition presented or resolution
passed for the winding up of the Vendor or for an administration
order in respect of the Vendor and neither has the Vendor made,
nor is it in the process of negotiating, any composition with
its creditors.
12.2 No administrative receiver supervisor, receiver and/or manager
has been appointed to the Business or the Assets or any part
thereof.
59
12.3 No distress, execution or other process which remains
undischarged has been levied on the Business or the Assets.
12.4 The Vendor is not aware of any facts which could give rise to a
material possibility that any of the events or circumstances
referred to in paragraphs 12.1 to 12.3 will take place.
13 Legal Compliance
13.1 So far as the Vendor is aware neither the Vendor, nor any of its
officers, agents or employees (during the course of their duties
in relation to the Business) have committed, or omitted to do,
any act or thing the commission or omission of which is, or
could be, in contravention of any act, order, regulation or the
like in the United Kingdom or elsewhere which is punishable by
fine or other penalty or could give rise to proceedings or other
liability in relation to the Business or any of the Assets.
13.2 So far as the Vendor is awarethere has not been within the six
years prior to the date of this Agreement and there is not
pending or in existence any investigation or enquiry by, or on
behalf of, any governmental or other body into the affairs of
the Business.
14 Licences
The Vendor has the licences and consents set out in the Disclosure Letter
required from any governmental or local or similar body for carrying on the
Business and is not in breach of the terms or conditions of such licences
and consents and, so far as the Vendors are aware, there are no pending or
threatened proceedings which might in any way affect such licences and
consents. To the knowledge, information and belief of the Vendor the Vendor
has all
60
licences and consents required for carrying on the Business and there is
no reason why any of the licences or consents it does have should be
suspended, threatened or revoked or be invalid and there is no
requirement for special arrangement or expense in transferring any of
them. The Disclosure Letter contains copies of all such licences and
consents held by the Vendor.
15 Default
In carrying on the Business the Vendor has not , sold or supplied any services
which were in any respect defective or which did not comply with any
warranties or representations, expressly or impliedly made by it, or with
customers' specifications or with all applicable statutes, regulations,
orders or standards.
16 Litigation
16.1 Apart from normal debt collection for amounts not exceeding an
aggregate of(pound)5,000, neither the Vendor, nor any person for
whose acts or defaults in the matter the Vendor may be
contractually or vicariously liable, is involved in any civil or
criminal litigation or arbitration proceedings or reference of
any dispute or disagreement to an expert which affects the
Business and to the knowledge, information and belief of the
Vendor no such proceedings or reference are pending or
threatened and there are no facts likely to give rise to such
proceedings arbitration or reference.
16.2 In relation to the Business there is no unsatisfied judgment or
unfulfilled order outstanding against the Vendor and the Vendor
is not party to any undertaking or assurance given to a court,
tribunal or any other person in connection with the
determination or settlement of any claim or proceedings.
61
17 Events since 31st March 1999
Since the 31st March 1999:
17.1 the Business has been carried on in the ordinary and usual
course and in the same manner, including nature and scope, as in
the financial year ended on the Accounts Date;
17.2 there has been no material adverse change in the trading
position (or the prospects of the Business) and there has been
no decrease in turnover or (in the opinion of the Vendor in the
gross or net profits margins), or in liabilities (actual or
contingent) or expenses (direct or indirect) of the Business as
compared with the corresponding months in the financial year
ended on 31st March 1999
17.3 the Business has not been adversely affected by the loss of any
contract or customer or source or supply or by any other factor
not affecting similar businesses to a like extent;
17.4 no capital expenditure has been incurred in respect of the
Business and in particular, without limitation, no capital asset
having a value in excess of (pound)10,000 or capital assets
having an aggregate value in excess of (pound)10,000 have been
acquired or been agreed to be acquired;
17.5 the Vendor has not disposed of or agreed to dispose of, any
capital asset which has been used in the Business either
included in the Accounts at a value in excess of (pound)10,000
or acquired since the Accounts Date;
18 Taxation
18.1 No assets to be transferred to the Purchaser pursuant to this
Agreement are capital items for the purposes
62
of Part XV of the Value Added Tax Regulations 1995 (S.I. 2518)
in respect of which the period of adjustment (as there defined)
has not expired and that all adjustments required to be made
pursuant to the said Part on or before the date hereof have been
made and declared to H M Customs and Excise in the appropriate
manner.
18.2 The Vendor has not made any election pursuant to the provisions
of paragraph 2 Schedule 10 Value Added Tax Xxx 0000 in respect
of any land or buildings transferred hereunder.
18.3 All documents which are required to be stamped and which relate
to the Assets have been duly stamped.
19 Effects of this Agreement
The Vendor has received no indication that following the acquisition of the
Business any of its suppliers and customers will cease to deal, or
materially change its terms of dealing, with the Purchaser.
20 Liabilities
Full and accurate details of all the trade creditors of the Business as at
the Transfer Date is included in the Disclosure Letter.
21 Capacity
The Vendor has the necessary power and authority to enter into and perform this
Agreement and sell and transfer the Assets or procure the transfer of the
Assets and this Agreement constitutes valid and binding obligations of the
Vendor in accordance with its terms.
63
SCHEDULE 3
Provisions regarding Deferred Consideration
In the event of any part of the Deferred Consideration being paid into a
retention account (the "Escrow Account") pursuant to clause 3.4, then that part
of the Deferred Consideration shall be paid by the Purchaser to the Purchaser's
Solicitors and the Vendor's Solicitors (the "Escrow Account Holders") who shall
be irrevocably instructed by the Vendor and the Purchaser:-
1. to place the Deferred Consideration in a deposit account in the name of
the Escrow Account Holders with National Westminster Bank plc and,
subject to paragraphs 2 and 5, to retain the same in such account;
2. If at any time or from time to time the Escrow Account Holders shall
receive notice from the Purchaser stating that any claim for
compensation, indemnity or abatement has been made by the Purchaser
under this Agreement to pay to the Purchaser any amount admitted by the
Vendors or awarded by a final order of any court or competent authority
(including costs which may be admitted or awarded in favour of the
Purchaser) and/or (as the case may be) retain the amount in dispute
pending the determination or award in respect of the claim and, subject
thereto, to pay the balance of the Deferred Consideration to the
Vendor's Solicitors or as the Vendor or the Purchaser may jointly
instruct in writing;
3. to pay any interest received by the Escrow Account Holders on the
Deferred Consideration (less any tax thereon for which the Escrow
Account Holders may be accountable and any charges and expenses incurred
by the Escrow Account Holders) to the Vendor's and/or to the Purchaser
in
64
proportion to the amounts paid to them under this Schedule.
4. a final order for the purposes of this Schedule 3 is an order from which
there is no right of appeal or in respect of which any right of appeal
has expired
5. In respect of any relevant claim which ceases to be a claim because of
the operation of clause 7.8.3 of this Agreement, the Escrow Account
Holders shall pay the amount claimed in respect of such claim (subject
to retention of amounts in respect of all other claims) to the Vendor
65
SCHEDULE 4
Software
"PDM 2000"
"PDM 2000" is an internet based bespoke business application developed to
deliver the most comprehensive information available for both the private
investor and the independent financial advisor.
"PDM 2000" is modular in design and receives data feeds from information vendors
(under contract) to create and deliver financial information via the internet.
For a more detailed specification see document 29 of the Disclosure Bundle
"ShareTracker"
"ShareTracker" is an internet based financial report service and e-commerce
transaction service based upon the same database as "PDM 2000". "ShareTracker"
delivers reports to users on a pay and receive basis. For a more detailed
specification see document 30of the Disclosure Bundle.
66
EXECUTED AS A DEED by )
)
THE WEB FACTORY LIMITED )
)
acting by
Director /s/
------------------------------
Secretary/Director /s/
------------------------------
EXECUTED AS A DEED by )
)
CASTLEGATE 133 LIMITED )
)
acting by
Director /s/
------------------------------
Secretary/Director /s/
-------------------------------
EXECUTED by )
)
TELTRAN INTERNATIONAL )
)
GROUP LIMITED )
)
acting by its duly authorised)
)
representative )
EXECUTED by )
)
DATATEC LIMITED )
)
acting by
Director /s/
------------------------------
Secretary/Director /s/
------------------------------
67