Exhibit 10.1
DATED 10 MAY 2002
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(1) AEA TECHNOLOGY PLC
(2) ASPEN TECHNOLOGY, INC.
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A G R E E M E N T
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For the sale and purchase
of the Hyprotech Companies
EVERSHEDS
Cloth Xxxx Xxxxx
Xxxxxxxxx Xxxxxx
Xxxxx XX0 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
CONTENTS
CLAUSE PAGE
1 OPERATIVE CLAUSES....................................................... 1
2 SALE AND PURCHASE...................................................... 11
3 CONDITIONS............................................................. 12
4 CONSIDERATION.......................................................... 13
5 GUARANTEES............................................................. 14
6 REPRESENTATIONS AND WARRANTIES......................................... 14
7 INDEMNITIES AND LIMITATION ON CLAIMS................................... 17
8 COVENANTS.............................................................. 23
9 COMPLETION............................................................. 28
10 PENSIONS AND EMPLOYMENT................................................ 30
11 INFORMATION AND ACCESS AND BUSINESS INTELLECTUAL PROPERTY RIGHTS....... 31
12 GENERAL................................................................ 31
13 ANNOUNCEMENTS.......................................................... 32
14 COSTS.................................................................. 32
15 NOTICES................................................................ 32
16 GOVERNING LAW AND JURISDICTION......................................... 33
SCHEDULES
1 Details of each Hyprotech Company...................................... 36
2 The Property........................................................... 37
3 Business Intellectual Property Rights.................................. 38
4 Non-Taxation Warranties................................................ 50
5 Completion Arrangements................................................ 73
6 Limitation of Liability................................................ 76
7 The Permitted Activities............................................... 80
8 Conduct of the Business Pending Completion............................. 81
9 Hyprotech Organisation Chart........................................... 83
10 Taxation Warranties for Hyprotech UK Limited and Advanced Systems
Consultants Limited.................................................. 84
11 Tax Representations and Warranties for Hyprotech Malaysia SDN BHD...... 87
12 Tax Representations and Warranties for Hyprotech Japan Limited......... 89
13 Tax Representations and Warranties for AEA Technology Canada Limited
and Hyprotech Ltd.................................................... 90
14 Tax Representations and Warranties for Hyprotech Inc., EA Systems
Inc., EA Systems (California) Inc. and EA Systems (Europe) Inc.,
save for warranty 2.5 which shall be in respect of all Hyprotech
Companies............................................................ 94
15 Tax Representations and Warranties for Hyprotech Europe SL............. 96
16 Tax Representations and Warranties for Hyprotech India Private
Limited.............................................................. 99
17 Tax Deed...............................................................101
18 UKAEA Records Agreement................................................124
19 Draft Accounts.........................................................125
THIS AGREEMENT is made on 10 May 2002
BETWEEN
(1) AEA TECHNOLOGY PLC (registered number 3095862) whose registered office is
at 000 Xxxxxxx, Xxxxxx, Xxxxxxxxxxx XX00 0XX (the "Vendor"); and
(2) ASPEN TECHNOLOGY, INC. whose principal place of business is at Xxx Xxxxx
Xxxx, Xxxxxxxxx Xxxxxxxxxxxxx 00000 (the "Purchaser").
1. OPERATIVE CLAUSES
In this Agreement:
1.1 the following expressions have the following meanings unless inconsistent
with the context:
"AEAT CANADA" AEA Technology Canada Limited, a corporation
incorporated under the laws of Alberta, Canada
"AEAT UK" Hyprotech UK Limited, a corporation incorporated
under the laws of England
"AEAT US" AEA Technology Inc, a corporation incorporated
under the laws of Delaware
"ASSOCIATED COMPANY" any company, not being a Hyprotech Company, which
at the relevant time is:
(a) a holding company of the Vendor; or
(b) a subsidiary or subsidiary undertaking of the
Vendor; or
(c) a subsidiary or subsidiary undertaking (other
than the Vendor itself) of any such holding
company;
and the expressions "HOLDING COMPANY",
"SUBSIDIARY" and "SUBSIDIARY UNDERTAKING" having
the meanings given to them by CA 1985
"AUDITED ACCOUNTS" collectively, the audited consolidated financial
statements including the balance sheet, income
statement and statement of cash flows of the
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Hyprotech Group for the financial year ended 31
March 2002 under United States generally accepted
accounting principles
"BUSINESS DAY" any day (other than a Saturday or Sunday) on which
banks are open in London except in relation to
CLAUSE 8.2 where the reference to "London" above
is replaced by "Toronto"
"THE BUSINESS all Intellectual Property Rights owned by,
INTELLECTUAL PROPERTY licensed to or otherwise utilized by any of the
RIGHTS" Hyprotech Companies in or for the benefit of the
Hyprotech Business, subject to any right, title or
interest of UKAEA in the UKAEA CS and IP
Agreements, particulars of such rights being set
out in SCHEDULE 3
"CA 1985" the Companies Xxx 0000 as amended
"CANADA SHARES" all of the issued and outstanding shares of AEAT
Canada
"COMPLETION" consummation of the sale and purchase contemplated
herein in accordance with the provisions hereof
"THE COMPLETION PAYMENT" the sum of (pounds)67,500,000 payable at
Completion pursuant to CLAUSE 9 and Completion
Date shall be construed accordingly
"THE CONDITIONS" shall have the meaning given in CLAUSE 3
"CONFIDENTIAL all information of a confidential or proprietary
INFORMATION" nature (whether or not specifically labelled or
identified as "confidential"), in any form or
medium, that relates to the business, products,
services, historical or projected financial
results, financial condition or research or
development of any Hyprotech Company or its
employees, customers, suppliers, contractors,
agents or other business relations, including
without limitation all technical documentation,
design documents, error and service reports,
source code, and diagnostic
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information associated with the Software
"THE CONSIDERATION" the aggregate consideration payable for the Shares
as stated in CLAUSE 4
"CONTRACTS" all agreements, contracts, instruments,
guarantees, obligations or undertakings to which
any of the Hyprotech Companies is a party or by
which or to which any of their properties are
bound or subject and which have an aggregate value
or cost in excess of US$200,000
"CONTRACTS REPORT" the report sent to the Purchaser on 30
April 2002 contained in the Data Room
"DATA ROOM" the documentation made available to the
Purchaser as part of the Purchaser's due diligence
exercise, the index of which is attached to the
Disclosure Letter and initialled by the parties
for the purposes of identification only
"DISCLOSURE LETTER" the letter having the same date as this
Agreement from the Vendor to the Purchaser
qualifying the Warranties
"DRAFT ACCOUNTS the unaudited draft revenue and profit
statements for the Hyprotech Group for the
financial year ended 31 March 2002 and balance
sheet as at 31 March 2002 under United States
generally accepted accounting principles appended
as SCHEDULE 19
"EA SYSTEMS" EA Systems Inc., a corporation
incorporated under the laws of California
"EC TREATY" The Treaty of Rome 1957, as amended
"THE EMPLOYEES" the employees employed in each Hyprotech Company
as listed at Reference 5.4.1.3 in the Data Room
"ENCUMBRANCE" any mortgage, hypothec, charge, pledge, lien,
assignment by way of security, option,
restriction, claim, right of pre-emption, right of
first refusal,
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third party right or interest, other encumbrance
or security interest of any kind, or other
preferential arrangement having similar effect
"EUROPEAN DIRECTIVE" any directive issued by or on behalf of the
European Commission
"THE FIELD" the development, support, marketing and sale of:
1. Software for:
(a) conceptual design, dynamic and steady state
process simulation and optimization as
exemplified by, amongst other things, the
HYSYS suite of programs;
(b) the fitting, estimation and storage of
physical properties and reaction kinetics of
products of the process industries;
(c) heat exchanger, air coolers and fired
heaters, process and their mechanical design,
rating, simulation optimisation, and
performance monitoring and real time
optimisation;
(d) flare and pressure relief systems design,
operation and safety studies;
(e) steady-state and dynamic, single and
multi-phase hydraulics, heat exchange,
thermal insulation and fouling for the design
and operation of well, pipes, pipelines,
plant piping, pipe networks and process
equipment;
(f) the creation of advanced process control
applications, including real time process
optimisation, data-reconciliation and
performance monitoring applications;
(g) the selection, sizing, capital costing of
process equipment and related bulks,
operational costing and optimisation for
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process plants and associated plant site
installations and operating costs such as
utility systems, control rooms, storage tanks
and areas;
(h) solid processing and handling,
crystallization and drying;
(i) the component based delivery of fundamental
science for thermodynamics, hydraulics, heat
transfer, reaction chemistry, math's solvers,
separation processes, solids handling,
bio-processing and separation and open
graphical interfaces;
(j) process design work management, engineering
data bases, automated Process Flow Diagram
(PFD) construction, automated Process &
Instrumentation Diagram (P&ID) construction,
automated selection and sizing, automated
transfer to CADCENTRE and Intergraph
products, all as exemplified by, amongst
other things, the Axsys suite of programs;
(k) fundamental discovery of chemicals and
pharmaceutical products including route
selection and design as well as process
design and optimisation down to the
documentation of recipes and usage of the
documentation in operating plans. Software
for the encapsulation, management and
dissemination of best practice, data and
knowledge for the batch based process
industries including pharmaceutical, fine
chemical, fragrances, catalyst manufacture;
(l) software encapsulating process engineering
expertise specific to ammonia, amines, crude
oil assays, sulfur
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plants and urea processes
(m) Risk Based Inspection (RBI) planning system
need to calculate likelihood of failure and
consequences of failure and thereby
determining the overall risk for Chemical and
Petrochemical facilities
2. specialised solvers for the various software,
including for example, equation oriented
solvers
3. steady state and dynamic process performance
monitoring, data reconciliation, and real
time process optimisation software and
application development and delivery for
process plants utilising first principle and
empirical engineering models
4. first principle plant and control system
models for training, start-up and shut-down
assessments and process improvement systems
with associated software and services for
process plants
5. end user telephone, web based, consulting and
training services to support the software
identified above
6. services to integrate, configure, deploy
update and operate the software identified
above
all the above services and products to be sold to
the upstream and/or downstream oil and gas, oil
refining, pharmaceutical, chemical, fine chemical,
specialty chemical, power, metals, polymers,
utilities, pulp and paper, consumer goods and
petrochemical markets including without
limitation, owner operators, contractors, process
licensors, engineering contractors and equipment
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procurement entities
"THE GEMINI PROPERTY" the premises described as plot 10.2, Harwell
Business Park, Harwell, Oxfordshire in SCHEDULE 2
"THE HYPROTECH BUSINESS" the operations of the Hyprotech Companies
"HYPROTECH COMPANY" each of the Vendor companies engaged in Field as
listed in SCHEDULE 1
"HYPROTECH GROUP" together the Hyprotech Companies
"HYPROTECH INC" Hyprotech Inc., a corporation incorporated under
the laws of Delaware
"HYPROTECH INTELLECTUAL all Business Intellectual Property Rights that are
PROPERTY RIGHTS" not Licensed Intellectual Property Rights
"HYPROTECH LIMITED" Hyprotech Limited, a corporation incorporated
under the laws of Alberta
"INDIA SHARES" all of the issued and outstanding shares in the
capital of Hyprotech India Private Ltd, a
corporation incorporated under the laws of India
"INTELLECTUAL PROPERTY all of the following throughout the world:
RIGHTS"
(a) software and software tools (including where
relevant source code, object code, data and
related documentation);
(b) technology, inventions, discoveries, designs
and all improvements thereto (whether
patentable or not) and all patents, patent
applications and patent disclosures and
utility models, together with all
re-issuances, continuations,
continuations-in-part, revisions, extensions
and re-examinations thereof;
(c) trademarks, service marks, famous names,
trade names, logos, Internet domain names and
corporate names and
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applications, registrations and renewals
related thereto (or portions thereof)
including moral rights;
(d) copyrightable works, copyrights, and
applications, registrations, and renewals
related thereto;
(e) Know-how; and
(f) other intellectual property rights of a
proprietary nature including, but not limited
to derivative rights, industrial property,
data, databases, models, integrated circuit
topographies and registered and unregistered
mask works
"INTRA GROUP DEBT" the aggregate amount including trading and other
inter-company balances owing at Completion by the
Hyprotech Companies to the Vendor on inter-company
loan and trading accounts, net of inter-company
receivables
"JAPAN SHARES" all of the issued and outstanding shares in the
capital of Hyprotech Japan Limited, a corporation
incorporated under the laws of Japan
"KNOW-HOW" all trade secrets, know-how, improvements,
designs, techniques and processes
"LICENSED INTELLECTUAL those Business Intellectual Property Rights
PROPERTY RIGHTS" licensed to a Hyprotech Company by any Person who
is not a Hyprotech Company or the Vendor,
including but not limited to those set out in PART
2A and 2C of SCHEDULE 3
"MASTER AGREEMENT" The master agreement dated 31 March 1999 between
KBC and the Vendor as amended to date
"THE PENSION SCHEME" the AEA Technology Pension Scheme
"THE PERMITTED those activities described in SCHEDULE 7
ACTIVITIES"
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"THE PROPERTY" the premises described in SCHEDULE 2
"PURCHASER'S SOLICITORS" Xxxx and Xxxx LLP of 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000
"RELEVANT CLAIM" any claim for breach of any of the Warranties
"REQUISITE CONSENTS" any consent required in order to grant the
Underlease
"SENIOR EMPLOYEE" any employee of a Hyprotech Company who receives
an annual gross salary in excess of (pounds)45,000
or the equivalent in local currency
"SHARES" the Canada Shares, the India Shares, the Japan
Shares, the US Shares and the UK Shares
"SOFTWARE" any form of computer program, including
applications software, operating systems,
databases, software libraries, web pages and other
code, whether in source, object or machine code
form
"SOFTWARE REPORT" the Vendor's report dated 23 April 2002 detailing
all problems known to the Vendor relating to the
Hyprotech Intellectual Property Rights and
Licensed Intellectual Property Rights
"THE SUPPLEMENTARY the letter to be given as at the date of
DISCLOSURE LETTER" Completion from the Vendor to the Purchaser
qualifying the Warranties to be repeated
immediately before Completion
"TAX" OR "TAXATION" has the same meaning as in the Tax Deed
"TAX DEED" the tax deed to be entered into at Completion
between the Vendor and the Purchaser in the form
attached to SCHEDULE 17
"TAX WARRANTIES" has the same meaning as in the Tax Deed
"TAXES ACT" the Income and Corporation Taxes Act
"UKAEA" United Kingdom Atomic Energy Xxxxxxxxx
0
"XXX XXXXX CS AND IP the computer software agreement and the
AGREEMENTS" intellectual property agreement each dated 31
March 1996 and made between UKAEA and the Vendor
"THE UKAEA RECORDS the agreement to be entered at Completion between
AGREEMENT" UKAEA, the Vendor and the Purchaser in the form
attached to SCHEDULE 18
"UK SHARES" all the issued and outstanding shares in the
capital of AEAT UK
"UKLA" United Kingdom Listing Authority
"UNDERLEASE" an underlease in a form to be agreed between the
parties hereto
"US SHARES" all of the issued and outstanding shares in the
capital of Hyprotech Inc and of EA Systems Inc,
both of which are corporations incorporated under
the laws of Delaware
"VATA" the Value Added Tax Xxx 0000
"VENDOR'S SOLICITORS" Eversheds of Cloth Xxxx Xxxxx, Xxxxxxxxx Xxxxxx,
Xxxxx XX0 0XX
"WARRANTIES" the representations and warranties set out or
referred to in CLAUSE 6, SCHEDULE 4, SCHEDULES
10-16 (inclusive).
1.2 references to any statute or statutory provision include, unless the
context otherwise requires, a reference to the statute or statutory
provision as modified or re-enacted and in force from time to time prior to
Completion and any subordinate legislation made under the relevant statute
or statutory provision in force prior to Completion;
1.3 references to persons will include bodies corporate, unincorporated
associations and partnerships;
1.4 references to a document being "in the agreed terms" are to that document
in the form agreed and for the purposes of identification initialled by or
on behalf of the Vendor and the Purchaser;
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1.5 references to clauses and Schedules are to clauses of and Schedules to this
Agreement, and references to paragraphs are to paragraphs in the Schedule
in which such references appear;
1.6 the Schedules form part of this Agreement and will have the same force and
effect as if expressly set out in the body of this Agreement;
1.7 the headings in this Agreement will not affect its interpretation;
1.8 any phrase introduced by the term "include", "including", "in particular"
or any similar expression will be construed as illustrative and will not
limit the sense of the words preceding that term; and
1.9 reference to any English legal term or statute or statutory provision is
deemed to include that term or statute or statutory provision which most
nearly approximates it in another jurisdiction in which a Hyprotech Company
is incorporated or has a branch or otherwise operates in.
2. SALE AND PURCHASE
2.1 The Vendor will sell or procure the sale with full title guarantee, and the
Purchaser, relying upon the Warranties, representations and undertakings,
will buy, the Shares and will underlet the Gemini Property. The Shares will
be sold free of any Encumbrance and with all rights attached or accruing to
them at or after the date of this Agreement and the Gemini Property will be
underlet in accordance with the provisions of PART 2 of SCHEDULE 2.
2.2 The Purchaser may by notice in writing prior to Completion request that the
Canadian Shares, the Indian Shares, the Japan Shares, the US Shares or the
UK Shares (or any of them) be transferred to and acquired by one or more
transferee companies on Completion as the Purchaser may reasonably request
("a Transferee Company") in satisfaction of the Vendor's obligation to
transfer such Shares to the Purchaser pursuant to this Agreement. The
Vendor may require such Transferor Company to agree to be bound to the same
terms of this Agreement as the Purchaser in relation to the Shares
transferred to such Transferor Company.
2.3 The Purchaser may by notice in writing to the Vendor require the Vendor to
undertake or to procure that a Hyprotech company undertakes any transaction
or action prior to Completion which the Purchaser may reasonably request.
The Vendor shall undertake or procure that the relevant Hyprotech company
shall undertake such action or transaction provided that:
2.3.1 the Vendor shall not procure the relevant Hyprotech company takes
any action which it reasonably considers prejudicial to the Vendor
or any
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company within the same group of companies as the Vendor or to which
it objects on any other reasonable ground; and
2.3.2 notwithstanding any other provision of the Agreement or the Tax Deed
the Vendor shall not be liable under this Agreement or the Tax Deed
whether for breach of Warranty or otherwise in respect of such
transaction or action.
3. CONDITIONS
3.1 This Agreement is conditional on the following:
3.1.1 the shareholders of the Vendor in general meeting passing a
resolution in the agreed terms to approve the terms of this
Agreement;
3.1.2 the Purchaser shall have received the Audited Accounts;
3.1.3 the total revenue figure in the Audited Accounts shall be not less
than 95% (excluding any adjustments made in relation to the revenues
associated with the contract with Conoco ref: (HYPUK447/02)) of the
equivalent figure in the Draft Accounts.
3.2 The Parties will use their reasonable endeavours to procure that the
Conditions are fulfilled on or before 12.00pm on 14 June, 2002. The
obligation of the Vendor in relation to CLAUSE 3.1.1 will be satisfied by
it sending a circular to its shareholders containing a recommendation to
vote in favour of the appropriate resolution.
3.3 If the Conditions have not been satisfied by 12.00pm on 14 June 2002, or
there has been a material breach of the Warranties in accordance with
CLAUSE 6.6 the Purchaser or the Vendor (as appropriate) may on that date or
at the date of such material breach by notice to the Vendor or the
Purchaser (as appropriate) terminate this Agreement. The Purchaser shall
not be entitled to terminate or rescind this Agreement in any circumstances
other than for a material breach in accordance with CLAUSE 6.6 or as a
result of the Conditions not having been satisfied by 12.00pm on 14 June
2002 and the provisions of this clause shall not affect the Purchaser's
remedies for breach of Warranties in accordance with the remaining terms of
this Agreement.
3.4 If the Purchaser or the Vendor terminates this Agreement in accordance with
this clause, none of the parties will have any rights against any other
party under this Agreement (other than in respect of any accrued rights).
3.5 Between the time of execution of this Agreement and Completion, the Vendor
shall comply with the provisions of Schedule 8. Notwithstanding any
provisions in Schedule 8 the Purchaser hereby agrees that:
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3.5.1 AEAT Canada transfer the entire issued share capital of AEA
Engineering Software Limited ("the AEAS Shares") to the Vendor (or
such other company as the Vendor may direct); and
3.5.2 AEAT Canada uses the proceeds of such sale to return capital to the
Vendor providing however that AEAT Canada shall retain out of such
proceeds an amount of cash equal to:
3.5.2.1 the product obtained by multiplying the gain arising on the
disposition of the AEAT Shares by the combined Canadian
Federal and Provincial statutory tax rate applicable to
AEAT Canada as reduced by;
3.5.2.2 the amount of tax that may be saved by the utilisation of
any Covenantor's Reliefs (as defined in the Tax Deed).
Provided always that the Purchaser is satisfied the transfer referred to in
clause 3.5.1 takes place at fair market value (as agreed by the Purchaser
and the Vendor, acting reasonably, and the Vendor shall give the Purchaser
reasonable access to its books and records for the purpose of agreeing to
fair market value. To the extent that the parties are unable to agree fair
market value at least 7 days prior to Completion, the parties shall appoint
an independent professional to determine the fair market value which
determination shall be final and binding on the parties) and that any legal
requirements in Canada as to maintenance of capital of AEAT Canada are
satisfied.
3.6 Between the time of execution of this Agreement and Completion, the Vendor
shall comply with the provisions set forth in SCHEDULE 8.
3.7 The parties shall observe and perform the requirements set out in SCHEDULE
2 (Property Provisions).
3.8 In the event that this Agreement is terminated in accordance with CLAUSE
3.3 or otherwise, the provisions that the Vendor and the Purchaser have
agreed to be bound by as set out in CLAUSE 7 of this Agreement shall
continue notwithstanding any such termination.
4. CONSIDERATION
The consideration for the sale of the Shares will be (pound)67,500,000 and
will be allocated as follows:
4.1 the UK Shares; (pound)13,000,000
4.2 the Canada Shares; (pound)47,728,830
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4.3 the US Shares; (pound)1,721,170
4.4 the India Shares; (pound)49,999
4.5 the Japan Shares; (pound)5,000,000
4.6 the Property; (pound)1
5. GUARANTEES
5.1 The Vendor will procure that on Completion each Hyprotech Company is
released from any guarantee, indemnity, counter-indemnity, letter of
comfort or other obligation given by such Hyprotech Company to any third
party in respect of a liability of any person other than a Hyprotech
Company.
5.2 Save in respect of KBC, the Purchaser undertakes to the Vendor that as soon
as reasonably practicable following Completion the Purchaser will use all
reasonable endeavours to obtain the release of the Vendor or any Associated
Company from any guarantee, indemnity, counter-indemnity, letter of comfort
or other obligation given by the Vendor or any Associated Company to any
third party in respect of a liability of any Hyprotech Company particulars
of which are contained in the Disclosure Letter. Pending such release, the
Purchaser undertakes, save in respect of KBC, to indemnify the Vendor or
any Associated Company against all amounts paid by the Vendor or any
Associated Company to any third party pursuant to any such obligation (and
all costs incurred in connection with such obligation) arising after
Completion.
6. REPRESENTATIONS AND WARRANTIES
6.1 The Vendor represents, undertakes and warrants to the Purchaser in the
terms of the Warranties.
6.2 In this Agreement, unless otherwise specified, where any Warranty refers to
the knowledge, information, belief or awareness of the Vendor (or similar
qualification) the Vendor is deemed to have such knowledge, information,
belief or awareness as the Vendor would have obtained had the Vendor made
enquiries of Xxxxx Sim, Xxxxx Xxxxxxxx, Xxxxxx Xxxxx and Xxxxxxxxx Xxxxx at
the date hereof, without implication of any further enquiry or
investigation into the subject matter of such Warranty.
6.3 The Purchaser acknowledges that:
6.3.1 the Agreement, together with any other agreements contemplated
hereby, sets forth the entire agreement between the parties with
respect to the
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subject matter covered by them and supersedes and replaces all prior
communications, drafts, representations, warranties, stipulations,
undertakings and agreements of whatsoever nature, whether oral or
written, between the parties relating thereto;
6.3.2 it does not enter into this Agreement in reliance on any warranty,
representation, undertaking, stipulation or agreement other than
those contained in this Agreement;
6.3.3 except with respect to claims based on fraud, after Completion, the
contractual rights of the parties under this Agreement shall be the
exclusive remedy of the parties with respect to claims for monetary
damages resulting from or relating to any misrepresentation, breach
of Warranties or failure to perform any covenant or agreement
contained in this Agreement; and
6.3.4 save as expressly provided in this Agreement, it has no right to
rescind this Agreement either for breach of contract or for
negligent or innocent misrepresentation,
provided that the provisions of this CLAUSE 6.3 will not exclude any
liability which the Vendor would otherwise have to the Purchaser or any
right which the Purchaser may have to rescind this Agreement in respect of
any statements made fraudulently by the Vendor prior to the execution of
this Agreement.
6.4 The Warranties will be deemed to be repeated immediately before Completion
by reference to the facts and circumstances existing at Completion and for
this purpose only, where in a Warranty there is an express or implied
reference to the "date of this Agreement" or an equivalent term, that
reference is to be construed as a reference to the "date of Completion"
provided however that the Purchaser will not be entitled to claim that any
fact or combination of facts constitutes a breach of any of the Warranties
repeated immediately before Completion if and to the extent that such fact
or combination of facts has been clearly and fairly disclosed in the
Supplementary Disclosure Letter.
6.5 For the avoidance of doubt, any new facts or matters which occur after the
execution of this Agreement and which are disclosed pursuant to the
Supplementary Disclosure Letter shall not be deemed to qualify the
Warranties given as at the date of this Agreement.
6.6 The Purchaser may by notice in writing to the Vendor at any time prior to
Completion elect to terminate this Agreement without liability on the part
of the Purchaser if any fact, matter or event (whether existing or
occurring on or before the
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date of this Agreement or arising or occurring afterwards) comes to the
notice of the Purchaser at any time prior to Completion which:
6.6.1 constitutes a breach or breaches which are material of any Warranty
as given at the date of this Agreement; or
6.6.2 would, disregarding the operation of the Supplementary Disclosure
Letter, constitute a breach or breaches which are material of any
Warranty if the Warranties were repeated immediately before
Completion on the basis referred in CLAUSE 6.4 by reference to the
facts and circumstances then existing,
(for the purposes of this CLAUSE 6.6 breaches shall be deemed to be a
material breach if the breaches are such that the Purchaser would be
entitled to bring a Claim (as defined in SCHEDULE 6) against the Vendor for
in excess of (pound)5,000,000 in aggregate in respect of such breaches) and
provided that the Purchaser shall have no right to rescind this Agreement,
and shall have no other claim against the Vendor whether for breach of
Warranty or otherwise, where the relevant fact, matter or event arises as a
result of the Purchaser failing to give consent to any of the matters which
intention is to cure or prevent a breach referred to in SCHEDULE 8 or
otherwise as a result of the acts or omissions of the Purchaser.
6.7 In the event of a breach of the Warranties or any of them proving to be
untrue or misleading in any respect, then the Vendor agrees, subject to the
limitations set forth in SCHEDULE 6, to pay on demand in cash to the
Purchaser the aggregate of:
6.7.1 a sum by way of damages as agreed between the Vendor and the
Purchaser or (in default of such agreement) as determined by order
of a court of competent jurisdiction which is the higher of:
6.7.1.1 an amount sufficient to put the Hyprotech Business into the
position that would have existed if the Warranties had been
true or not misleading when given or repeated; and
6.7.1.2 an amount equal to the diminution thereby caused in the
value of the assets of the Hyprotech Companies at
Completion; and
6.7.2 all costs and expenses incurred by the Purchaser or any of the
Hyprotech Companies directly or indirectly as a result of such
breach.
6.8 All sums payable by the Vendor to the Purchaser for breach of any of the
Warranties shall be paid free and clear of all deductions or withholdings
whatsoever, save only as may be required by law. If any deduction or
withholding in respect of Tax or otherwise is required by law to be made
from any of the sums payable as mentioned
16
in CLAUSE 6.7, the Vendor shall be obliged to pay to the Purchaser such
greater sum as will, after such deduction or withholding as is required to
be made has been made, leave the Purchaser with the same amount as it would
have been entitled to receive in the absence of any such requirement to
make a deduction or withholding. If any sum (the "first sum") payable by
the Vendor to the Purchaser as stated in CLAUSE 6.7 shall be subject to any
Tax in the hands of the Purchaser then the Vendor shall pay to the
Purchaser (as often as shall be necessary) such additional sum or sums as
will after such Tax (and any Tax on such additional sum or sums) leave the
Purchaser with an amount equal to the first sum.
6.9 The Warranties are qualified by all facts and matters that are clearly and
fairly disclosed in the Disclosure Letter.
6.10 Prior to Completion the Vendor undertakes to disclose immediately to the
Purchaser anything which comes to the notice of the Vendor which is a
breach of any of the Warranties.
6.11 Each Warranty is to be construed independently and is not limited or
restricted by any other Warranty or any other term of this Agreement.
6.12 For the avoidance of doubt if there is a prima facie breach of a Warranty
the subject matter of which is not clearly and fairly disclosed in the
Disclosure Letter or inaccurately disclosed in the Disclosure Letter then
the Purchaser shall be entitled to make a claim in accordance with the
terms of this Agreement.
7. INDEMNITIES AND LIMITATION ON CLAIMS
7.1 "KBC Claim" means a claim under which either party seeks to recover from
the other under CLAUSE 7.
7.1.1 Notwithstanding the other provisions of this Agreement, the
Purchaser shall fully indemnify the Vendor against any costs
(excluding VAT unless irrecoverable by the Vendor), damages or
expenses (included without limitation the Vendor's own legal costs
and exposure to any other parties' legal costs) ("Costs") in respect
of any claim which might be brought by KBC against the Vendor (i)
where it is alleged by KBC that the Vendor has failed to comply with
or perform any of the Hyprotech Services (as defined in the letter
from Hyprotech Limited to the Vendor dated 30 April 2002 a copy of
which is contained at Tab 8A in the Data Room) save where the
circumstances giving rise to the breach primarily occurred before
and were known to the Vendor at the date hereof (ii) where it is
alleged by KBC that the Vendor is in breach of the non-competition
clauses at clause 17 of the Master Agreement by reason of the
activities of Hyprotech and/or the
17
Purchaser after the date hereof, (iii) where it is alleged by KBC
that the Vendor is in breach of Clauses 11 or 28 of the Master
Agreement by reason of the Purchaser's acquisition of Hyprotech or
the letter of the 30 April referred to above between the Vendor and
Hyprotech, or (iv) in relation to the execution, or the announcement
of the execution, of this Agreement.
7.1.2 The Vendor shall indemnify the Purchaser against any Costs in
respect of any claim which might be brought by KBC against Hyprotech
or the Purchaser or the Group Members in respect of Hyprotech's or
the Vendor's acts pursuant to the Master Agreement up to the date
hereof, or which AEA performs or is obligated to perform (itself and
not through Hyprotech) following the date hereof.
7.1.3 Upon either party seeking to rely on the indemnity set out above
becoming aware that matters have arisen or are likely to give rise
to a KBC Claim, that party (the "Indemnified Party") will
7.1.3.1 As soon as reasonably practical (but no later than twenty
(20) days following its own receipt of notice of the KBC
Claim), notify the other (the "Indemnifying Party") in
writing of the potential KBC Claim and of matters which may
give rise to such KBC Claim, such notice to describe in
reasonable detail (to the extent known by the Indemnified
Party) the facts constituting the basis for such KBC Claim
and the amount of the claimed damages;
7.1.3.2 Not make and procure that no member of its Group makes any
admission of liability, agreement or compromise with any
person, body or authority in relation to the potential KBC
Claim without the prior consent (not to be unreasonably
withheld or delayed) of the other;
7.1.3.3 Subject to any confidentiality restrictions imposed in law
at all times clearly and fairly disclose in writing to the
Indemnifying Party all information and documents relating
to the potential KBC Claim or the matters that will or are
likely to give rise to such KBC Claim and if requested by
the Indemnifying Party, give the Indemnifying Party and its
professional advisors reasonable access to the personnel of
the Indemnified Party and any member of its Group and to
any relevant premises, chattels, accounts, documents and
records within the power, possession or control of the
Indemnified Party and any member of its group
18
to enable the Indemnifying Party and its professional
advisors to interview such personnel, and to examine such
KBC Claim, premises, chattels, accounts, documents and
records and take copies or photographs of them at its own
expense, and will fully co-operate with the Indemnifying
Party in relation to providing such assistance; and
7.1.3.4 take such action including remedying any material breach in
accordance with the Master Agreement that the Indemnifying
Party may reasonably require (including appointment of
solicitors nominated by the Indemnifying Party) to avoid,
resist, contest or compromise the potential KBC Claim or
the matters which will or are likely to give rise to such
KBC Claim save where the Indemnifying Party also has an
interest in the same proceedings (see CLAUSE 7.1.6 below);
7.1.4 In the event of any claim by KBC against the Vendor, Purchaser or
Hyprotech, the parties shall co-operate and provide assistance to
the other in relation to such claim (including making available
documentation and employees where requested by the other party),
share information to assist in the defence of such claim and keep
each other informed as to material developments in such claims
subject to any confidentiality restrictions imposed in law. The
Vendor and Purchaser for itself and on behalf of Hyprotech agree
that neither shall knowingly take any steps which prejudices the
other's rights in relation to such claims.
7.1.5 Without prejudice to the generality of CLAUSE 7.1.4 above, the
Purchaser for itself and on behalf of Hyprotech (as soon as
practicable following a request) agree to allow access and/or to
make available to the Vendor and its legal advisers all necessary
documents (whether on paper, in e-mail or in other forms stored on
computer) and employees (including without limitation Xxxxx Sim,
Salve Clave, Xxxxx Xxxxxx, Xxx Xxxxxx) as may be requested on behalf
of the Vendor in connection with the arbitration proceedings
commenced by KBC, including making available potential witnesses for
meetings and any hearings in the arbitration proceedings.
7.1.6 In the event that proceedings are brought by KBC against one or more
of the Vendor, Hyprotech and the Purchaser which include claims
which are subject to an indemnity and claims which are not subject
to an indemnity, all parties who have, or many have, a financial
interest in the proceedings shall co-operate and agree (having
regard to the respective financial interests of the parties) on how
the proceedings should be managed (including
19
without limitation the appointment of solicitors and the settlement
of such proceedings on claims within those proceedings), who should
bear the legal costs (and in what proportions) and who should meet
any liability in those proceedings. In the event of any dispute in
relation to the conduct of such proceedings which cannot be resolved
by negotiation, the provision of CLAUSE 7.1.11 below shall apply.
7.1.7 The Indemnifying Party shall assume control of the defense of any
KBC Claim that it is obliged to defend hereunder with counsel
reasonably satisfactory to the Indemnified Party. The Indemnified
Party may participate in such defense at its own expense. Subject to
any confidentiality restrictions imposed in law the Indemnified
Party shall furnish the Indemnifying Party with such information as
it may have with respect to such KBC Claim (including copies of any
summons, complaint or other pleadings which may have been served on
such party and any written claim, demand, invoice, billing or other
document evidencing or asserting the same) and shall otherwise
cooperate with and assist the Indemnifying Party in the Defense of
such KBC Claim. The Indemnifying Party shall not agree to any
settlement of, or the entry of any judgment arising from, any Third
Party Action without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld, conditioned or
delayed; provided that the consent of the Indemnified Party shall
not be required if the Indemnifying Party agrees in writing to pay
any amounts payable pursuant to such settlement or judgment and such
settlement or judgment includes a complete release of the
Indemnified Party from further liability and has no other adverse
effect on the Indemnified Party. The Indemnified Party shall not
agree to any settlement of, or the entry of any judgment arising
from, any such KBC Claim without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld,
conditioned or delayed. Where a claim is brought by KBC which gives
rise to a right to indemnification or in other claims where a party
other than the named party to the proceedings is responsible for the
payment of part or all of the costs of the proceedings, the party
responsible for payment shall pay such costs within 30 days of the
receipt of an invoice and all reasonably requested supporting
documentation sent on behalf of the named party to the proceedings.
7.1.8 The Vendor represents to Purchaser that a true and complete copy of
the Master Agreement, including all amendments and modifications
thereto is at Tab 3.4.1 of the Data Room. The Vendor shall not agree
to the amendments, waiver, clause modification or termination of the
Master
20
Agreement which prejudices the position of the Purchaser or
Hyprotech without the written consent of the Purchaser (such consent
not to be unreasonably withheld). The Vendor shall keep the
Purchaser updated so far as practicable on any material
developments, discussions or communications with KBC in relation to
the Master Agreement.
7.1.9 At the request of the Purchaser, Vendor shall take any measures
necessary to enforce its rights against KBC with respect to the
Master Agreement (including the payment of royalties), which
measures may include, without limitation, the initiation of
arbitration or legal action against KBC and/or the termination of
the Master Agreement in accordance with its terms, in each case only
as and when instructed by Purchaser and where the Vendor reasonably
considers its interests are not prejudiced by doing so.
7.1.10 In relation to a dispute pursuant to CLAUSE 7.1.6 the parties shall
seek to agree on the appointment of an expert who shall be a Queens
Counsel of at least 10 years standing and in the event that the
parties cannot agree on the appointment the parties shall ask the
President of the Bar Council to make such appointment. In the
absence of manifest error the decision of the appointed expert shall
be final and binding on both parties.
7.2 The Vendor shall fully indemnify the Purchaser against any Costs (i) in
respect of any claim which may be or has been brought by Process Research
Corporation against Hyprotech and/or the Purchaser and/or the Group Members
(collectively, the "Indemnified Parties") in respect of the Software
Licence Development and Distribution Agreement dated 29 March 1994, as it
is or may have been amended prior to the date hereof, and the Court Order
dated 27 July 2001 and any modifications or subsequent orders thereto made
prior to the date hereof; and (ii) in respect of any claims made by Saudi
Consolidated Electric Company against Hyprotech in relation to the
performance of the contracts dated 14 January 1998 and 21 August 2000 as
each may have been amended (each, a `Section 7.2 claim').
7.3 In relation to the indemnities given pursuant to clause 7.2 the aggregate
liability of the Vendor in respect of any section 7.2 claims shall be
limited to (pounds)1 million in respect of each indemnity contained in
paragraph 7.2. Further, the Vendor will be under no liability in respect of
such indemnities unless written particulars of any Section 7.2 claim have
been (giving full details of the specific matter in respect of which such
claim is made) given to the Vendor within three years from Completion.
7.4 The Purchaser shall use and procure the Indemnified Party shall use
reasonable efforts to mitigate its loss in respect of any Section 7.2
claim; provided, however, that the Indemnified Party shall not be required
to expend any sums in pursuit of
21
such mitigation unless Vendor agrees that such sums are subject to Vendor's
indemnification and reimbursement in accordance with this Section 7.2.
7.5 Upon the Purchaser becoming aware of any Section 7.2 claim, the Purchaser
shall (i) as soon as reasonably practicable notify the Vendor in writing,
(ii) not make and shall procure no Indemnified Party shall make any
admission of liability, agreement or compromise regarding such Section 7.2
claim without the prior written consent (not to be unreasonably withheld or
delayed) of the Vendor, (iii) at all times clearly and fairly disclose in
writing to the Vendor all information and documents relating to the Section
7.2 claim and/or to the matters which or are likely to give rise to such
Section 7.2 claim and if requested by the Vendor give the Vendor and its
professional advisors reasonable access to the personnel of each
Indemnified Party and to any relevant premises, chattels, accounts,
documents and records within the power, possession and control of each
Indemnified Party to enable the Vendor and their professional advisors to
interview such personnel and to examine such claim, premises, chattels,
accounts, documents and records and to take copies or photographs of them
at its own expense and (iv) take such action as the Vendor may reasonably
require (including the appointment of solicitors nominated by the Vendor)
to avoid, resist, contest or compromise the potential Section 7.2 claim or
the matters which are or are likely to give rise to such Section 7.2 claim,
all at the Vendor's sole expense.
7.6 The Vendor shall assume control of the defense of any Section 7.2 claim
with counsel reasonably satisfactory to the Purchaser. The Vendor shall not
agree to any settlement of, or the entry of any judgment arising from, any
Section 7.2 claim without the prior written consent of the Purchaser, which
shall not be unreasonably withheld, conditioned or delayed; provided that
the consent of the Purchaser shall not be required if the Vendor agrees in
writing to pay any amounts payable pursuant to such settlement or judgment
and such settlement or judgment includes a complete release of the
Purchaser from further liability and has no other adverse effect on the
Vendor. The Purchaser shall not and shall procure no Indemnified Party
shall agree to any settlement of, or the entry of any judgment arising
from, any Section 7.2 claim without the prior written consent of the
Vendor, which shall not be unreasonably withheld, conditioned or delayed.
The Vendor shall pay all Costs incurred by the Indemnified Parties within
30 days of the receipt of an invoice and all reasonably requested
supporting documentation sent on behalf of the Indemnified Party.
7.7 The Vendor agrees to indemnify and hold harmless the Purchaser in respect
of any amount that the Purchaser is required to deduct and withhold from
the consideration payable to the Vendor pursuant to this Agreement under
any provision of federal, state, local or foreign tax law, to the extent
that the Purchaser does not deduct and withhold such amount on Completion.
22
8. COVENANTS
8.1 If so elected by the Purchaser in its sole discretion, the Vendor and the
Purchaser shall cooperate fully with each other in the making of an
election under Section 338 H"10" of the U.S. Internal Revenue Code of 1986,
as amended (the "Code"), with respect to the purchase of the Shares (the
"Section 338 Election") for one or more the Hyprotech Companies. In
particular, and not by way of limitation, in order to effect the Section
338 Election, the parties shall execute Internal Revenue Service Form 8023
and all attachments required to be filed with respect to such election.
Vendor and Purchaser agree to report the transaction for United States
federal and state income tax purposes, and to file all tax returns, in a
manner consistent with the making of such elections. The allocation of the
Consideration, and other relevant items, among the assets of the Hyprotech
Group shall be determined in accordance with Section 338 of the Code and
the regulations promulgated thereunder.
8.2 The Vendor covenants and agrees with the Purchaser as follows:
8.2.1 If a certificate issued by the Minister of National Revenue pursuant
to subsection 116(2) of the Income Tax Act (Canada) (the "ITA") is
delivered by the Vendor to the Purchaser at or prior to Completion
with respect to the Sale of the Canada Shares and such certificate
fixes a certificate limit (as defined in subsection 116(2) of the
ITA) which is no less than the amount of the consideration paid by
the Purchaser for the Canada Shares (the "PROCEEDS OF DISPOSITION")
the Purchaser shall pay forthwith to the Vendor the full amount of
the Proceeds of Disposition;
8.2.2 If a certificate issued by the Minister of National Revenue pursuant
to subsection 116(2) of the ITA is delivered by the Vendor to the
Purchaser at or prior to Completion with respect to the sale of the
Canada Shares and such certificate fixes a certificate limit (as
defined in subsection 116(2) of the ITA) which is less than the
Proceeds of Disposition, the Purchaser shall be entitled to withhold
from the Proceeds of Disposition payable 25% of the amount, if any,
by which the Proceeds of Disposition exceed the certificate limit;
8.2.3 If a certificate is not so delivered at or prior to Completion, the
Purchaser shall be entitled to withhold 25% of the Proceeds of
Disposition;
8.2.4 Where the Purchaser has withheld any amount pursuant to CLAUSE 8.2.2
or 8.2.3 hereinabove and the Vendor has not complied with the
conditions of CLAUSE 8.2.5 or 8.2.6 by the Business Day which is
before the date on which the Purchaser is required to remit the
amount withheld to the Receiver General of Canada (referred to
herein as the "REMITTANCE DATE"),
23
the amount withheld shall be paid by the Purchaser to the Receiver
General of Canada on account of the Vendor's liability for tax
pursuant to subsection 116(5) of the ITA and shall also be credited
to the Purchaser as a payment to the Vendor on account of the
purchase price for the Canada Shares;
8.2.5 If the Vendor delivers to the Purchaser after Completion, but prior
to the Remittance Date, a certificate issued by the Minister of
National Revenue under either subsection 116(2) or 116(4) of the ITA
with a certificate limit (which in the case of a certificate issued
under subsection 116(4) means the amount recorded thereon as
proceeds of disposition) which is no less than the Proceeds of
Disposition, the Purchaser shall pay forthwith to the Vendor upon
delivery to the Purchaser of such certificate any amount that the
Purchaser has withheld pursuant to PARAGRAPH 8.2.2 or 8.2.3 hereof;
8.2.6 If the Vendor delivers to the Purchaser after Completion, but prior
to the Remittance Date, a certificate issued by the Minister of
National Revenue under either subsection 116(2) or 116(4) of the ITA
and such certificate fixes a certificate limit (which in the case of
a certificate issued under subsection 116(4) means the amount
recorded thereon as proceeds of disposition) which is less than the
Proceeds of Disposition, the Purchaser shall pay forthwith to the
Vendor upon delivery to the Purchaser of such certificate the
portion of the Proceeds of Disposition withheld equal to the amount
of the excess, if any, of:
8.2.6.1 the amount of the Proceeds of Disposition that the
Purchaser has withheld pursuant to PARAGRAPH 8.2.2 or 8.2.3
hereof; and
8.2.6.2 the amount equal to 25% of (A-B), where A is the Proceeds
of Disposition and B is the amount of such certificate
limit.
8.3 For the purpose of assuring to the Purchaser the full benefit of and in
consideration for the Purchaser agreeing to buy the Shares on the terms of
this Agreement, the Vendor undertakes to the Purchaser that the Vendor and
any Associated Company will not, without the prior written consent of the
Purchaser (such consent not to be unreasonably withheld or delayed):
8.3.1 for a period of three years immediately following Completion,
interfere, or seek to interfere, with the continuance of supplies to
any Hyprotech Company from any supplier who was supplying goods
and/or services to that Hyprotech Company if such interference
causes or would cause that supplier to cease supplying or materially
to reduce its supply of those goods and/or services to that
Hyprotech Company;
24
8.3.2 for a period of three years immediately following Completion,
solicit or entice, or endeavour to solicit or entice, away from any
Hyprotech Company any person employed in a managerial, executive,
supervisory, technical or sales capacity at Completion; and
8.3.3 for a period of three years immediately following Completion, be
engaged in any business which develops, designs, licenses, sells,
promotes, markets, finances or supplies goods and/or services which
are competitive with any Hyprotech Company or the Hyprotech Business
as conducted at Completion.
8.4 Nothing in CLAUSE 8.3 shall operate to prohibit the Vendor or any
Associated Company of the Vendor:
8.4.1 from carrying on or being engaged, concerned or interested in the
Permitted Activities (including for the avoidance of doubt
activities carried out by the Vendor and its Associated Companies at
the date hereof other than the Hyprotech Business); or
8.4.2 from passively holding or being beneficially interested in up to 5%
of the securities of any company which is engaged in a business
which is in competition with any part of the Hyprotech Business
(which business shall be called a "RELEVANT BUSINESS" for the
purpose of CLAUSE 8.4) and the shares of which are listed or dealt
in on any recognised stock exchange as defined in the Financial
Services Xxx 0000 (including the Alternative Investment Market); or
8.4.3 from acquiring or becoming interested in (whether by means of share
purchase, asset purchase, merger or otherwise) a Relevant Business
as part of an acquisition of a larger enterprise ("THE LARGER
ENTERPRISE") provided that:
8.4.3.1 the relevant acquisition is not made principally with a
view to acquiring the Relevant Business;
8.4.3.2 if the turnover derived from the Relevant Business is (by
reference to the latest available audited accounts relating
to it) in excess of (pounds)5.0 million per annum, then
such turnover is not more than 10% of the aggregate
consolidated turnover of the Larger Enterprise (including
its subsidiaries and associated companies insofar as such
subsidiary and associated companies are comprised in the
acquisition or merger) such that, for the avoidance of
doubt, if the turnover derived from the Relevant
25
Business as referred to above is not in excess of
(pounds)5.0 million per annum then this CLAUSE 8.4.3.2
shall not be relevant; and
8.4.3.3 upon the Vendor or Associated Company so acquiring or
becoming so interested in a Relevant Business it shall as
soon as reasonably practicable thereafter notify the
Purchaser and will, if requested, and if contractually
possible, enter into discussions in good faith with a view
to selling the Relevant Business to the Purchaser if a
price can be agreed upon between the Vendor and the
Purchaser and if the Vendor is not prevented from doing so
by law or regulatory requirements.
8.5 The Vendor and its Associated Companies acknowledge that they have
confidential information in respect of the conduct, financing, dealings,
transactions and affairs of and plans and proposals for the Hyprotech
Business. In this CLAUSE 8 such information is called "CONFIDENTIAL
INFORMATION" and includes confidential or secret information relating to
the trade secrets, Know-how, ideas, business methods, finances, prices,
business plans, marketing plans, development plans, manpower plans, sales
targets, sales statistics and customer lists of each Hyprotech Company. The
Vendor accordingly agrees to enter into the restrictions contained in
CLAUSES 8.3 and 8.6.
8.6 The Vendor undertakes that it will not and will procure any Associated
Company will not at any time after Completion disclose to any person except
to those authorised by the Purchaser in writing to know, any Confidential
Information save:
8.6.1 as may be required by law or the regulations of the UKLA;
8.6.2 to the extent that such information is known (or becomes known) to
the public otherwise than as a result of a breach of the provisions
of this CLAUSE 8.6; or
8.6.3 to the extent that such information has been received by the Vendor
from a third party other than as a result of a breach of a duty of
confidence owed by such third party to the Purchaser.
8.7 Following Completion the Purchaser shall not, and shall procure that no
Associated Company of the Purchaser shall, in any way use, or carry on
business under, the name "AEA Technology" or any colourable imitation
thereof or any related logo, xxxx or name of the Vendor or any Associated
Company of the Vendor. Notwithstanding the foregoing, the Purchaser will
use reasonable efforts to procure that as soon as reasonably practicable
following Completion all references to "AEA Technology" and any such logo,
xxxx or name are removed from all letterheads,
26
purchase orders, invoices and other stationery of each Hyprotech Company.
The Purchaser shall indemnify the Vendor and any Associated Company of the
Vendor against all actions, proceedings, claims, loss, damages, liabilities
and expenses suffered or incurred as a result of any breach by the
Purchaser of this CLAUSE 8.7.
8.8 Following Completion the Vendor shall not, and shall procure that no
Associated Company of the Vendor shall, in any way use, or carry on
business under, the name "Hyprotech" or any colourable imitation thereof or
any related logo, or xxxx and in particular (without limitation) the Vendor
will procure that with effect from Completion all references to "Hyprotech"
and any such logo, xxxx or name are removed from all letterheads, purchase
orders, invoices and other stationery. The Vendor shall indemnify the
Purchaser and any Hyprotech Company against all actions, proceedings,
claims, loss, damages, liabilities and expenses suffered or incurred as a
result of any breach by the Vendor of this CLAUSE 8.8.
8.9 Aspen will procure that Hyprotech will on or after Completion in accordance
with the terms of the relevant bonuses pay to such relevant individuals all
outstanding amounts due in respect of the thank you bonus, the variable
compensation bonus and the change of control bonus. Details of the change
of control bonus are contained at Tabs 5.4.20.2, 5.4.19.1, 5.4.18.2,
5.4.17.2, 5.4.14.1, 5.4.15.2, 5.4.16.2 and 5.4.29, details of the thank you
bonus are contained at Tab 5.5.3 and 5.5.4 and details of the variable
compensation bonus are contained at Tab 5.5.1 in the Data Room. Aspen shall
also procure that Hyprotech will, within 90 days of Completion pay the
Vendor in full and final settlement all Intra Group Debt. The Intra Group
Debt shall be determined by the Audited Accounts and in any event shall not
exceed (pounds)2,491,000 and any excess Intra Group Debt shall be waived by
the Vendor without liability to Hyprotech or the Purchaser.
8.10 The Vendor covenants that the differential of:
8.10.1 cash and cash equivalents; and
8.10.2 accounts receivable;
less
8.10.3 accounts payable;
8.10.4 capital leases; and
8.10.5 accrued expenses
set out in the Audited Accounts will not be materially different from that
set out in the Draft Accounts.
27
For the purpose of this covenant, material is defined as US$0.25 million.
In the event that the differential of these amounts set out in the Audited
Accounts is greater than US$0.25 million of the differential set out in the
Draft Accounts, to the extent that liabilities classified as accounts
payable as accrued expenses in the Draft Accounts are not included
elsewhere in the balance sheet within the Audited Accounts, the Purchaser
will pay to the Vendor a sum equal to the full difference and not merely
the amount in excess of US$0.25 million. In the event that the differential
of these amounts set out in the Draft Accounts is greater than US$0.25
million than the differential that is set out in the Audited Accounts, to
the extent that assets classified as cash and cash equivalents and accounts
receivable in the Draft Accounts are not included elsewhere in the balance
sheet within the Audited Accounts, the Vendor will pay to the Purchaser a
sum equal to the full difference and not merely the amount in excess of
US$0.25 million.
For the avoidance of doubt, the accounts receivables balance included in
the Draft Accounts is inclusive of the receivables from Conoco of
approximately US$4,000,000 and the accounts payable and accrued expenses
balance in the Draft Accounts are inclusive of the amounts payable relating
to Conoco of approximately US$1,200,000.
8.11 Vendor shall use reasonable endeavours to procure the following
waivers/consents referenced at Tab 4 (Software Report) of the Data Room:
8.11.1 from Cranfield University for Cranfield Adaptive Gridding/Implicit
Solver;
8.11.2 from DTI for Two Phase Transient;
8.11.3 from Lindo Systems for LINGO.
8.12 The parties agree that each of the undertakings set out in this CLAUSE 8
are separate and severable and enforceable accordingly and if any one or
more of such undertakings or part of an undertaking is held to be against
the public interest or unlawful or in any way an unreasonable restraint of
trade, the remaining undertakings or remaining part of the undertakings
will continue in full force and effect.
9. COMPLETION
9.1 Completion of the sale and purchase of the Shares will take place on the
date which is the Business Day after the date (not being later than 12.00pm
on 31 May 2002) on which the Conditions are satisfied when and in relation
to the Gemini Property on the date on which the Underlease for the Gemini
Property is completed in accordance with the provisions of PART 2 of
SCHEDULE 2 when:
28
9.1.1 the Vendor will deliver to the Purchaser on Completion:
9.1.1.1 subject to the provisions of SCHEDULE 2 vacant possession
of the Gemini Property together with documentation relating
to the Property in accordance with the provisions of
SCHEDULE 2;
9.1.1.2 title documentation in respect of UK Properties (save as
provided for in 9.1.1.1) in the possession of the Vendor;
9.1.1.3 an undertaking from the Seller's solicitors to use their
reasonable endeavours to procure the registration of
Hyprotech Limited as the registered proprietor of Title
Number CB4557 and on completion of the registration to
deliver up the said Land Certificate to the Purchaser or as
it may direct;
9.1.2 the Vendor will deliver or procure delivery to the Purchaser:
9.1.2.1 the Supplementary Disclosure Letter duly executed on behalf
of the Vendor, a preliminary copy of which shall have been
delivered to the Purchaser at least 48 hours before
Completion;
9.1.2.2 those documents referred to in SCHEDULE 5 in relation to
the Shares;
9.1.2.3 the Tax Deed duly executed by the Vendor;
9.1.3 the Purchaser will deliver to the Vendor:
9.1.3.1 the Supplementary Disclosure Letter duly executed on behalf
of the Purchaser;
9.1.3.2 the counterpart Tax Deed duly executed by the Purchaser.
9.2 Upon completion of all matters referred to in CLAUSE 9.1 but subject to
CLAUSE 8.2, the Purchaser will pay the Completion Payment in cash by way of
a CHAPS transfer from a Clearing Bank to the Vendor's bank account (details
of which to be provided prior to Completion) or by such other method as may
be agreed between the parties.
9.3 With effect from the Completion (save as otherwise agreed or provided in
this Agreement) all arrangements involving the Vendor relating to the
provision of management, administration, computer, insurance, personnel,
accounting, legal or similar services in relation to any Hyprotech Company
(insofar as they have been provided to that date) shall cease without
further liability on the part of any party.
29
9.4 Notwithstanding the provisions of CLAUSE 9.3 the Vendor shall continue to
provide or procure provision to the Hyprotech Companies at cost plus VAT,
if appropriate for a period of up to 6 months payroll services and other
services as the Purchaser shall request to the extent able in the manner
that it has provided or procured provision of such services prior to
Completion.
9.5 The provisions of PART 2 of SCHEDULE 2 shall apply in respect of the Gemini
Property.
10. PENSIONS AND EMPLOYMENT
10.1 The Vendor hereby agrees to indemnify and hold harmless the Purchaser, AEAT
UK and any Hyprotech Company against all and any liabilities, costs or
expenses which the Purchaser or any Hyprotech Company may incur or be
responsible for in relation to the Pension Scheme under or pursuant to or
in connection with section 60 Pensions Act 1995 and/or section 75 Xxxxxxxx
Xxx 0000, as amended.
10.2 The Vendor shall indemnify and hold harmless the Purchaser and the
Hyprotech Companies against any reasonable costs, claims, liabilities or
expenses (including reasonable legal expenses), losses, fines, penalties
and awards in connection with or as a result of any claim made by any of
the past or present employees or consultants of the Hyprotech Companies
arising out of the acts or omissions of any of the Hyprotech Companies or
the Vendor Parties prior to Completion including, in particular, any claims
from employees arising out of or in connection with the transfer of the
Business from the Vendor to AEAT UK on 29 December 2001, the transfer of
the contract of the German Employee Xxxxx Cos, the assignment and novation
of contracts described in paragraph 7.1 of the Disclosure Letter and the
two TUPE transfers referred to at paragraph 15.11 of the Disclosure Letter
and the termination of employment of Xxxxxxx Xxxxxxxxx from AEAT GmbH. The
provisions of paragraphs 2.1, 2.4, 2.5, 2.6, 3, 4, 5, 6 and 10 of SCHEDULE
6 shall apply to a claim pursuant to this CLAUSE 10.2.
10.3 The Vendor hereby undertakes that it will, to the fullest extent permitted
by law, account to the Inland Revenue within the prescribed time scales all
appropriate income tax (including, without limitation, operating the Pay As
You Earn regime) and national insurance contributions (including, without
limitation, both primary and secondary Class 1 national insurance
contributions) in relation to the grant, holding or exercise of any options
or other share based incentives granted to those employees and former
employees of any Hyprotech Company employed or formerly employed in the UK
prior to Completion.
10.4 The Vendor shall indemnify and hold harmless the Purchaser and any
Hyprotech Company against all and any costs, liabilities, taxes or social
security contributions
30
(including, without limitation, both primary and secondary Class 1 national
insurance contributions) which the Purchaser or any Hyprotech Company may
incur or be responsible for in relation to the grant, holding or exercise
of any option or other share based incentives granted or provided to
employees or former employees of any Hyprotech Company employed or formerly
employed in the UK prior to Completion.
10.5 The Purchaser agrees to carry out salary reviews within 90 days of
Completion for those employees employed by UKAEAT, such reviews to address
alignment of salaries of UKAEAT employees with the Purchaser's UK
counterpart employees; provided, however, that such alignment or any change
to the current salary of UKAEAT employees shall be in the sole discretion
of the Purchaser.
11. INFORMATION AND ACCESS AND BUSINESS INTELLECTUAL PROPERTY RIGHTS
11.1 The Vendor shall allow each Hyprotech Company to permit the Purchaser
between the date of this Agreement and the Completion, without interference
to such Hyprotech Company's ordinary conduct of its business, to have
reasonable access during normal business hours to the premises and to all
the books and records of each Hyprotech Company.
11.2 The provisions of this CLAUSE 11 shall be subject and without prejudice to
the provisions of the UKAEA Records Agreement and the UKAEA Intellectual
Property Agreement, in particular, CLAUSE 10 thereof.
12. GENERAL
12.1 Neither the Vendor nor the Purchaser will be entitled to assign the benefit
or delegate the burden of this Agreement (including all or any benefit,
interest or right which arises under or out of this Agreement including any
present, future or contingent interest or right to any sums or damages
payable by either party under or in connection with this Agreement) without
the prior written consent of the other save for any assignment to an
Associated Company on the basis that prior to any assignee ceasing to be an
Associated Company of the Vendor or the Purchaser (as the case may be) it
will assign the benefit and burden of this Agreement back to the Vendor or
the Purchaser (as the case may be). For the avoidance of doubt, the
acquisition by a third party of the entire issued share capital of the
Purchaser shall not be deemed to be an assignment of the Purchaser's rights
under this Agreement.
12.2 Except insofar as the same have been fully performed at Completion, each of
the agreements, covenants, obligations, warranties, representations,
indemnities and undertakings contained in this Agreement will continue in
full force and effect notwithstanding Completion.
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12.3 Any waiver of any breach of, or any default under, any of the terms of this
Agreement will not be deemed a waiver of any subsequent breach or default
and will in no way affect the other terms of this Agreement.
12.4 The rights and remedies expressly provided for by this Agreement will not
exclude any rights or remedies provided by law and equity.
12.5 This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, each of which so executed and delivered
will be an original, but all the counterparts will together constitute one
and the same agreement.
12.6 The parties to this Agreement do not intend that any of its terms will be
enforceable by virtue of the Contracts (Rights of Third Parties) Xxx 0000
by any person not a party to it.
13. ANNOUNCEMENTS
13.1 No announcement or circular concerning the transactions contemplated by
this Agreement or any matter ancillary to it and no disclosure of the terms
of this Agreement will be made by the Vendor except with the prior written
approval of the Purchaser or by the Purchaser except with the prior written
approval of the Vendor.
13.2 This clause does not apply to any announcement, circular or disclosure
required by law or, to the extent relevant, the regulations of any stock
exchange or listing authority or the Panel on Takeovers and Mergers or any
other governmental or regulatory organisation, provided, if practicable,
that the party required to make it has first consulted and taken into
account the reasonable requirements of the other party.
14. COSTS
Except where expressly stated otherwise, each party to this Agreement will
bear such party's own costs and expenses relating to the negotiation,
preparation and implementation of this Agreement. No Hyprotech Company will
bear any part of such costs and expenses of the Vendor.
15. NOTICES
15.1 Any notice or other communication given in connection with this Agreement
will be in writing and will be delivered personally or sent by pre-paid
first class post (or air mail if overseas) or by fax to the recipient's
address set out in this Agreement or to any other address which the
recipient has notified in writing to the sender received not less than
seven Business Days before the notice was despatched.
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15.2 A notice or other communication is deemed given:
15.2.1 if delivered personally, upon delivery at the address provided for
in this clause; or
15.2.2 if sent by prepaid first class post, on the second Business Day
after posting it; or
15.2.3 if sent by air mail, on the sixth Business Day after posting it; or
15.2.4 if sent by fax, on completion of its transmission
provided that, if it is delivered personally or sent by fax on a day which
is not a Business Day or after 4.00 pm on a Business Day, it will instead
be deemed to have been given or made on the next Business Day.
15.3 Any notice or other communication given to the Vendor's or Purchaser's
Solicitors, will be treated as validly given to the Vendor or the Purchaser
as the case may be.
15.4 The provisions of this clause will not apply, in the case of service of
court documents, to the extent that such provisions are inconsistent with
the Civil Procedure Rules.
16. GOVERNING LAW AND JURISDICTION
16.1 This Agreement will be governed by and constructed in accordance with
English law.
16.2 FORM OF ARBITRATION CLAUSE
16.2.1 SCOPE. Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or invalidity thereof
(a "DISPUTE"), shall be definitively settled by arbitration in
accordance with the provisions of the Rules of Civil Procedure
(Alberta) ("CCP") in Calgary except with respect to Disputes for
which other resolution mechanisms have been specifically provided
for herein.
16.2.2 NOTICE OF DISPUTE. The party wishing to initiate the arbitration
mechanism provided in this Section 16 shall send a notice to the
other party setting forth the object of the Dispute and nominating
an arbitrator to hear the Dispute. The other party shall have (10)
days to notify the initiating party whether the suggested arbitrator
is acceptable, failing which, the suggested arbitrator shall be
deemed to be acceptable to the parties. If the suggested arbitrator
is not acceptable, the parties shall refer the matter forthwith to
the Superior Court (Alberta) who shall appoint a single arbitrator.
The decision of the
33
Superior Court (Alberta) shall be final and binding. The
arbitration proceedings shall commence forthwith upon the
appointment of the arbitrator.
16.2.3 QUALIFICATIONS OF ARBITRATOR. The arbitrator shall have at least
ten (10) years of experience in corporate law or commercial
transactions but shall not be a lawyer representing any of the
Vendor or the Purchaser at the time of Completion or at the time of
arbitration.
16.2.4 PLACE OF ARBITRATION. The seat of arbitration shall be Calgary. The
arbitrator may, without changing the seat of arbitration, hold
hearings or meet elsewhere for reasons of convenience or speed with
the agreement of the parties.
16.2.5 AWARDS ON PRELIMINARY ISSUES. The arbitrator may hold a hearing and
render an award in relation to any preliminary issue.
16.2.6 TIMING OF FINAL AWARD. The arbitrator shall render any final award
within thirty (30) days following the completion of evidence and
arguments on the substantive issue(s) in dispute between the
parties.
16.2.7 BINDING AND FINAL AWARD. Any award rendered by the arbitrator shall
be final and binding on the parties. Any arbitration award made may
be enforced against assets of the relevant party wherever they are
located or may be found. Judgment on any arbitral award may be
entered in any court having jurisdiction over the parties or any of
their assets, and the parties hereby consent to the jurisdiction of
any court in a proceeding to enforce such award.
16.2.8 WAIVER OF APPEAL. Any procedural decision or interim or final award
rendered by the arbitrator shall be binding on the parties who
hereby expressly and irrevocably waive all rights of appeal or
recourse to any court, except such rights as cannot be waived by
the Law of the place of arbitration and the Law of the place of
enforcement.
16.2.9 COSTS. The apportionment of the costs of any arbitration pursuant
to this Agreement shall be left to the discretion of the
arbitrator.
16.2.10 CONFIDENTIALITY. Each party and any arbitrator appointed hereunder
shall, subject to securities Laws, rules of applicable stock
exchanges and obligations under credit instruments, keep
confidential the terms of any Dispute, including testimony and
evidence produced during any Dispute. Notwithstanding the
foregoing, each party may provide its counsel,
34
consultants and witnesses, on a confidential basis, any information
required to allow such persons to assist such party or any mediator
or arbitrator to resolve such Dispute. Any arbitrator may only
inform his governing body of the existence and resolution of the
Dispute.
16.2.11 EXTRAORDINARY REMEDIES. Nothing in this CLAUSE 16 shall limit the
right of a party to seek extraordinary recourses in courts of
competent jurisdiction, including specific performance, seizures
before judgement and injunctions, unless the recourse sought is in
conflict with any Dispute finally resolved in accordance with this
CLAUSE 16.
35
SCHEDULE 1
[Intentionally Omitted]
36
SCHEDULE 2
[Intentionally Omitted]
37
SCHEDULE 3
[Intentionally Omitted]
38
SCHEDULE 4
NON-TAXATION WARRANTIES
For purposes of this SCHEDULE 4, the term "Vendor Parties" shall mean the Vendor
and each Hyprotech Company, including, where applicable, their respective
subsidiaries.
1. SCHEDULE 1; CAPITAL
1.1 The information contained in SCHEDULE 1 is true, complete and accurate
in all respects and the relevant information is set out for each
Hyprotech Company.
1.2 The Shares and the other issued shares of each Hyprotech Company are
fully paid and are beneficially owned and registered as set out in
SCHEDULE 1 free from any Encumbrance or any claim to, or contract to
grant, any Encumbrance.
1.3 No Hyprotech Company has allotted or issued any share capital other
than the shares shown in SCHEDULE 1 as being issued and no Hyprotech
Company has granted any options to allot or issue any share capital.
1.4 No contract has been entered into which requires or may require any
Hyprotech Company to allot, issue or transfer any share or loan capital
and no Hyprotech Company has allotted or issued any securities which
are convertible into share or loan capital.
1.5 No Hyprotech Company has any interest in the share capital of any body
corporate save as specified in SCHEDULE 1.
1.6 Other than as specified in SCHEDULE 1, no Hyprotech Company has, or
ever has had, any subsidiary undertakings (as defined in sections 258
to 260 CA 1985).
VENDOR
2. CAPACITY
The Vendor has full power to enter into and perform this Agreement and
this Agreement constitutes obligations binding on the Vendor in
accordance with its terms.
ACCOUNTS AND RECORDS
3. THE ACCOUNTS
3.1 The Audited Accounts:
39
3.1.1 present fairly, in all material respects, the financial
position of the Hyprotech Group as of 31 March 2002, and the
results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally
accepted in the United States of America.
4. RECORDS
Each Hyprotech Company's accounting records are up to date and contain
complete and accurate details of all transactions of that Hyprotech
Company and comply with the provisions of sections 221 and 222 CA 1985.
Each Hyprotech Company's records and information are exclusively owned
by it and under its direct control. The copies of the company records,
including minutes, of each of the Hyprotech Companies included in the
Data Room are complete and accurate in all material respects, and the
originals of such company records are in the control of the Hyprotech
Companies.
CHANGES
5. GENERAL
5.1 Since 31 March 2001, the business of each Hyprotech Company has been
carried on in the ordinary and usual course in all material respects;
and
5.2 Since 31 March 2002, there has been no adverse change in the financial
or trading position of any Hyprotech Company.
6. SPECIFIC
Since 31 March 2002:
6.1 no Hyprotech Company has other than in the ordinary course of business
acquired, or agreed to acquire, any single asset having a value in
excess of (pound)100,000 or assets having an aggregate value in excess
of (pound)100,000;
6.2 no Hyprotech Company has disposed of, or agreed to dispose of, any
asset having a value reflected in the Draft Accounts in excess of
(pound)100,000 or acquired since 31 March 2002;
6.3 no dividend or other payment which is, or could be treated as, a
distribution for the purposes of Part VI ICTA or section 418 ICTA has
been declared, paid or made by any Hyprotech Company;
6.4 no resolution of the shareholders of any Hyprotech Company has been
passed;
6.5 no Hyprotech Company has changed its accounting reference date;
40
6.6 no management or similar charge has become payable or been paid by any
Hyprotech Company;
6.7 no share or loan capital has been allotted, issued, repaid or redeemed
or agreed to be allotted, issued, repaid or redeemed by any Hyprotech
Company; and
6.8 no Hyprotech Company has borrowed any money from any party.
ASSETS
7. GENERAL
7.1 The assets of each Hyprotech Company comprise all the assets reasonably
necessary to effectively operate the relevant Hyprotech Company in the
manner conducted immediately prior to Completion.
7.2 The Business Intellectual Property Rights and the Licensed Intellectual
Property Rights comprise all the Intellectual Property Rights necessary
to effectively operate the relevant Hyprotech Company in the manner
conducted prior to Completion.
7.3 All the business of the Vendor included in the Audited Accounts will be
transferred to the Purchaser with the transfer of the Shares.
7.4 The Asset Registers at Tabs 15.2-15.5, 15.6.1 and 15.7 in the Data Room
in all material respects comprises a true and accurate record of all
the plant and equipment as at the date hereof.
8. UNENCUMBERED TITLE
Each asset owned by a Hyprotech Company is in the legal and beneficial
ownership of the Vendor or the relevant Hyprotech Company and is free
from any Encumbrances.
9. DEBTORS
9.1 No Hyprotech Company has made, or entered into any contract to make,
any loan to, or other arrangement with, any person as a result of which
it is or may be owed any money, other than trade debts incurred in the
ordinary course of business and cash at bank.
9.2 No Hyprotech Company owes any money to the Vendor or any Associated
Company, and neither the Vendor nor any Associated Company owes any
money to any Hyprotech Company.
41
9.3 No Hyprotech Company is entitled to the benefit of any debt otherwise
than as the original creditor and no Hyprotech Company nor the Vendor
has factored, deferred or discounted any debt or agreed to do so.
10. PLANT, ETC.
The plant and machinery, vehicles, fixtures and fittings, furniture,
tools and other equipment used in connection with the business of each
Hyprotech Company have been maintained to a good standard.
11. INTELLECTUAL PROPERTY RIGHTS
11.1 All Hyprotech Intellectual Property Rights are legally and beneficially
owned by a Hyprotech Company free from any Encumbrance. A detailed
breakdown of the ownership of the Hyprotech Intellectual Property
Rights is set forth in SCHEDULE 3.
11.2 All Hyprotech Intellectual Property Rights which are registered or the
subject of applications for registration and any unregistered
trademarks are listed and described in SCHEDULE 3 of this Agreement or
in the Disclosure Letter.
11.3 The Hyprotech Intellectual Property Rights are valid, subsisting and
enforceable. In respect of registered Hyprotech Intellectual Property
Rights, all renewal fees have been duly paid, all steps required for
their maintenance and protection have been taken and there are, so far
as the Vendor is aware, no grounds on which any person is or will be
able to seek cancellation, rectification or any other modification of
any registration.
11.4 There are, and have been, no proceedings, actions or claims either (and
neither the Vendor nor any Hyprotech Company has received written
notice) impugning the title, validity or enforceability of the
Hyprotech Intellectual Property Rights or claiming any right or
interest in such Hyprotech Intellectual Property Rights.
11.5 So far as the Vendor is aware, there is, and has been, no infringement
of the Hyprotech Intellectual Property Rights and none is pending or
threatened.
11.6 Save for licences granted in the ordinary course of the Hyprotech
Business, no contract or consent in respect of any of the Hyprotech
Intellectual Property Rights has been entered into or given by a
Hyprotech Company or the Vendor in favour of any third party and
neither the Vendor nor any Hyprotech Company, save for licences of
Software granted in the ordinary course of the Hyprotech Business, is
obliged to enter into or grant any such contract or consent.
42
11.7 The past and present activities of each Hyprotech Company (including
the processes, methods, Software, goods and services used or dealt in
by it, and the products or services manufactured or supplied by it) so
far as the Vendor is aware:
11.7.1 do not infringe or misappropriate and have not infringed or
misappropriated any Intellectual Property Rights of any third
party; and
11.7.2 have not resulted in a claim to any compensation under
sections 40 and 41 of the Patents Xxx 0000 or any foreign
patent statute.
11.8 So far as the Vendor is aware: (1) no Hyprotech Company has disclosed,
nor is obliged to disclose, nor has permitted access to any
Confidential Information or Know-How to any third party, other than
those of its officers or employees or contractors who are bound by
obligations of confidence or in the normal course of business and (2)
no Hyprotech Company is restricted in its ability to use, or to
disclose to any third party, any of its own Confidential Information or
Know-How.
11.9 The Vendor is not aware of any circumstances which would render any
current application for registration of the Hyprotech Intellectual
Property Rights unacceptable to the relevant registry or other
authority or which would prevent any such application from proceeding
to grant and registration.
11.10 Complete and accurate copies of all material (and for the purposes of
this paragraph 11.10 material shall mean (i) having an aggregate value
in excess of US$200,000 or (ii) all licences granted to each Hyprotech
Company or (iii) all licences which include a licence of source code
granted by any Hyprotech Company or (iv) any development commitments or
obligations of any Hyprotech Company), licences, sub-licences and other
agreements whereby a Hyprotech Company is licensed or otherwise
authorised to use the Intellectual Property Rights of a third party
(including the Vendor and its other Associated Companies) or whereby a
Hyprotech Company licenses or otherwise authorises a third party to use
Licensed Intellectual Property Rights or Hyprotech Intellectual
Property Rights are included in the Data Room (save that where rights
are granted by a Hyprotech Company on standard form contracts, in which
case, such standard forms are included in the Data Room). Save where it
is clear from the face of any such document that it has expired or
otherwise terminated, all of them are in full force and effect, no
notice having been given to terminate them, and, so far as the Vendor
is aware, the obligations of all parties in respect of them have been
fully complied with in all material respects, there are no current
disputes in respect of them and so far as the Vendor is aware none of
them will be terminated or materially affected as a result of the
Completion.
43
11.11 The Hyprotech Business does not license the software subject to the
Cadcentre option agreement in any of its current products or current
Hyprotech Business activities are in no way affected by Cadcentre
exercising its option.
12. COMPUTER SYSTEMS
12.1 For the purposes of this PARAGRAPH 12:
"COMPUTER SYSTEMS" means all computer hardware, Software,
microprocessors and firmware and any other
items that connect with any of them which in
each case are used in the Hyprotech Business
or are in the possession of a Hyprotech
Company.
12.2 Full details of all Software used or held by a Hyprotech Company in
which the Intellectual Property Rights are owned by a third party are
set out in the Disclosure Letter. Any payments due and owing under the
licenses of such Software have been timely made by the Vendor or a
Hyprotech Company. The licences of such Software are complied with in
all material respects in the operation of the Hyprotech Business and
any restrictions in those licences do not materially adversely affect
the present conduct of any business of any Hyprotech Company.
12.3 Each Hyprotech Company has a prudent disaster recovery plan in respect
of the Computer Systems.
12.4 Each Hyprotech Company has prudent procedures in place which are
designed to give reasonable security of the Computer Systems and data
stored on them.
12.5 Each Hyprotech Company has a sufficient number of employees who are
technically competent and appropriately trained to ensure the proper
operation and use of the Computer Systems.
PROPERTY
13. PROPERTY
13.1 The particulars of the Property shown in SCHEDULE 2 are true, complete
and correct.
13.2 The Vendor and each Hyprotech Company has good and marketable title to
the Gemini Property and title to the other Property for the relevant
estate or interest as shown in SCHEDULE 2.
13.3 The replies given by the Vendor's Solicitors contained at reference
8.2.10 in the Data Room concerning the UK Property were true and
accurate in all material respects on 2 April 2002.
44
13.4 To the extent any of the Property shown in SCHEDULE 2 is the subject of
a lease to which the Vendor or a Hyprotech Company is a party, neither
the Vendor nor such Hyprotech Company is in breach or violation of, or
default under, any such lease, and no event has occurred, is pending
or, to the knowledge of the Vendor, is threatened, which, after the
giving of notice thereof, with lapse of time, or otherwise, would
constitute a breach or default by the Vendor or such Hyprotech Company.
13.5 The Vendor is not aware of any matters likely to be revealed by
searches required to have been undertaken by the Purchaser in respect
of matters which would be materially prejudicial to the matters as
listed in CLAUSES 9.1 and 9.2 hereof.
ENVIRONMENTAL/HEALTH AND SAFETY (EHS) MATTERS
14. ENVIRONMENTAL/HEALTH AND SAFETY (EHS) MATTERS
14.1 For the purposes of this warranty the following expressions have the
following meanings:
"EHS LAWS" all or any applicable laws and regulations
of the United Kingdom and any relevant
foreign country which relate to EHS Matters
"EHS MATTERS" all or any matters relating to the pollution
or protection of the Environment or harm to
or the protection of human health and safety
or the health of animals and plants
"EHS PERMITS" all or any permits, consents, licences,
approvals, certificates and other
authorisations required by EHS Laws for the
operation of the Hyprotech Business
"ENVIRONMENT" any air, (including air within natural or
man-made structures above or below ground);
water (including territorial, coastal and
inland waters and groundwater and water in
drains and sewers); and land (including the
seabed or river bed under any water),
surface land and sub-surface land.
14.2 So far as the Vendor is aware:
14.2.1 any EHS Permits have been obtained and are in full force and
effect and have been complied with in all material respects;
45
14.2.2 there are no circumstances which may result in any EHS permit
being varied, modified, revoked or suspended;
14.2.3 in relation to the carrying on of the Hyprotech Business the
Vendor and each Hyprotech Company complies in all material
respects with EHS Laws;
14.2.4 neither the Vendor nor any Hyprotech Company is involved in
any action, litigation, arbitration or dispute resolution
proceedings or subject to any investigation under EHS Laws and
the Vendor is not aware of any facts likely to give rise to
such matters.
EMPLOYEES
15. EMPLOYEES
15.1 The Transfer of Undertakings (Protection of Employment Regulations
1981), as amended, shall have no application to the sale of Shares
contemplated by this Agreement.
15.2 Section 5 of the Data Room correctly sets forth the name, remuneration
and notice period or fixed term (as appropriate) of all key consultants
and key independent contractors (for the purposes of this paragraph
15.2 a key consultant or contractor shall be one who is paid in excess
of (pound)45,000 per annum) of the Hyprotech Companies and the name,
dates of commencement of employment and continuous service, ages,
notice periods, remuneration and benefits whether contractual or
discretionary and whether provided for orally or in writing or
otherwise of each Employee of the Hyprotech Companies and whether any
such Employees are absent from active employment (whether on maternity,
secondment, sick leave or garden leave). In addition, the Data Room
includes details of the name of any person who has accepted an offer of
employment or consultancy made by any Hyprotech Company but whose
employment or consultancy has not yet started and of any outstanding
offer of employment or consultancy made to any person by any Hyprotech
Company. So far as the Vendor is aware, no Senior Employee employed in
the Hyprotech Companies has any plans to terminate or has already
terminated or given notice of termination of employment from any
Hyprotech Company and the Vendor has not threatened to terminate or has
terminated or given notice of the termination of employment to any such
Senior Employee. So far as the Vendor is aware, in connection with the
Hyprotech Business, it and all Hyprotech Companies are in compliance
with all laws relating to the employment of labour (including, but not
limited to any provisions or regulations, codes of conduct, codes of
practice, terms and conditions of employment, orders of any court,
tribunal or regulatory authority agreements with third parties, awards
relevant to their conditions of service or to relations between it and
any recognised trade union or other body representing
46
the Employees) and it has complied with its obligations concerning
health and safety at work, wages, hours, equal opportunity, vacation
entitlements, overtime, termination, notice and severance pay, human
rights, workers compensation, collective bargaining and the payment of
social security, national insurance and other Taxes), and no Hyprotech
Company has or over the past 12 months had any threatened or actual
strikes, lock-outs or work stoppages. Section 5.5 of the Data Room sets
forth the bonuses paid to all employees employed in any Hyprotech
Company during the financial year ended on 31 March 2002.
15.3 The Data Room at section 5 contains copies of all standard form current
employment and key consulting agreements.
15.4 There are no amounts owing other than in the normal course of
salary/bonus payments to or from any present or former officers,
employees or key consultants of any Hyprotech Company.
15.5 Each Hyprotech Company has maintained adequate and up-to-date records
regarding the service of each of the Employees.
15.6 No Hyprotech Company has entered into any binding arrangement or
proposal regarding any future variation in any contract of employment
or working conditions in respect of any of the Employees or any
agreement imposing an obligation on the Hyprotech Company to increase
the basis and/or rates of remuneration and/or the provision of other
benefits in kind (including any share incentive, share option, profit
related pay, change of control, profit sharing bonus or other incentive
scheme) to or on behalf of any of the Employees or any officers or key
consultants, at any future date of which copies/details are not
contained in the Data Room.
15.7 All contracts of employment (written or unwritten) with any UK Employee
can be terminated by three (3) months' notice or less without giving
rise to a claim for damages, severance pay or compensation (other than
statutory termination payments).
15.8 There are no amounts of deferred remuneration outstanding (including
but not limited to bonuses or holiday pay) and which are for the
account of a Hyprotech Company to any Employee (other than amounts
representing remuneration accrued due for the current pay period, or
for reimbursement of reasonable business expenses).
15.9 No payment has been made or promised to be made or benefit given or
promised to be given by Hyprotech Company in connection with the actual
or proposed termination or suspension of employment or variation of any
contract of employment of any of the Employees.
47
15.10 No Hyprotech Company has made or agreed to make any payment to, or
provided or agreed to provide any benefit for, any Employee or any
spouse or dependent of any Employee on termination of their employment.
15.11 The employers of the UK Employees have not within the period of three
years preceding the date of this Agreement been a party to any
"relevant transfer" (as defined in the Transfer of Undertakings
(Protection of Employment Regulations) 1981, as amended) or agreement
for a relevant transfer nor been a party to or been obliged to be a
party to any consultation in relation to any collective redundancies
made pursuant to section 188 of the Trade Union and Labour Relations
(Consolidation) Xxx 0000.
15.12 No Hyprotech Company recognises to any extent any trade union or other
body representing the UK Employees or any of them for the purpose of
collective bargaining or other negotiating purposes.
15.13 All personnel whose services are wholly or mainly utilised in the UK
are employed by AEAT UK.
15.14 There is no term of employment for any Employee which provides that a
change of control of any Hyprotech Company shall entitle the Employee
to treat the change of control as amounting to a breach of the contract
or entitling him to any payment entitling him to treat himself as
redundant or otherwise dismissed or released from their employment.
15.15 No Hyprotech Company has an obligation to make any payment or
redundancy in excess of the statutory redundancy payment.
15.16 So far as the Vendor is aware, no enquiry or investigation affecting
AEAT UK has been made or threatened by the Commission for Racial
Equality, the Equal Opportunities Commission, Human rights Commission,
the Health & Safety Executive, the Disability Rights Commission, the
Occupational Pensions Advisory Service, the Pensions Ombudsman or the
Occupational Pensions Regulatory Authority in respect of:
15.16.1 any application for employment by any person;
15.16.2 the employment (including terms of employment, working
conditions, benefits and practices) or termination of
employment of any person;
and the Vendor is not aware of any circumstance which is likely to give
rise to any such claim or investigation.
48
15.17 The AEA Technology Plc Company Share Option Plan (Part A) and the AEA
Technology Plc Savings-Related Share Option Scheme are both approved in
full by the Inland Revenue under Schedule 9 to the Income and
Corporation Taxes Act 1988 and there is no reason why such approval may
be withdrawn.
16. PENSIONS
16.1 NON UK EMPLOYEE BENEFIT PLANS
16.1.1 In this PARAGRAPH 17.1 the following terms shall have the
following meanings as described in the laws of the United
States:
"ERISA" the Employee Retirement Income Security Act
of 1974 (as amended)
"CODE" the Internal Revenue Code 1986 (as amended)
"COBRA" Section 4980B of the Code.
16.1.2 Sections 5.8.4 and 6.2 in the Data Room set forth an accurate
and complete list of each "employee benefit plan" (as such
term is defined in Section 3(3) of ERISA and each other plan,
program or arrangement providing benefits to current or former
employees (including any bonus plan, plan for deferred
compensation, retirement, severance, sick leave, employee
health or other welfare benefit plan or other arrangement)
currently maintained, sponsored, or contributed to by the
Vendor or any Hyprotech Company on behalf of employees or
former employees of the Hyprotech Business employed in the
United States, or with respect to which the Vendor or any
Hyprotech Company has any current or potential liability on
behalf of employees or former employees of the Hyprotech
Business employed in the United States. Each such item listed
in Sections 5.8.4 and 6.2 in the Data Room is referred to
herein as a "Plan" and collectively as the "Plans".
16.1.3 Sections 5.8.3 and 6.1 lists all material bonus, deferred
compensation, incentive compensation, stock purchase, stock
option, hospitalisation or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing,
pension, or retirement plan, program, agreement or arrangement
(whether qualified under applicable local law or not), which
is either (i) currently sponsored, maintained or contributed
to by the Vendor or any Hyprotech Company on behalf of
employees or former employees of the Hyprotech Business
employed outside the United States and the United Kingdom, or
(ii) with respect to which the Vendor or any Hyprotech Company
has any current liability or potential liability on behalf of
any
49
employees or former employees of the Hyprotech Business
employed outside the United States and the United Kingdom.
Each such item listed in Sections 5.8.3 and 6.1 in the Data
Room is referred to herein as a "Non U.S. Plan", and
collectively as "Non U.S. Plans". So far as the Vendor is
aware each Non U.S. Plan complies in form and operation with
the applicable laws and regulations of the governing
jurisdiction.
16.1.4 Except where a Plan is expressly identified as a defined
benefit plan in Section 6.2 in the Data Room, none of the
Plans are either a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or a "multi employer plan" as defined
in Section 3(37) of ERISA; and no Non U.S. Plan provides a
defined benefit pension.
16.1.5 So far as the Vendor is aware there is no obligation under any
Plan or Non U.S. Plan to provide medical, health or life
insurance benefits to current or future retired or terminated
employees of the Hyprotech Business (except for limited
continued medical benefit coverage required to be provided
under COBRA or under applicable state or local law). The
Purchaser hereby agrees that, effective on the Transfer Date,
it shall assume all rights duties and responsibilities to
provide continuation coverage under its health plans in
accordance with COBRA to all employees or former employees of
the Hyprotech Business employed in the United States
including, without limitation, any such persons who had
elected such continuation coverage prior to the Transfer Date
and any such person who is terminated on such Transfer Date;
and it will provide a level of coverage under its health
plan(s) which will make it unnecessary for the Vendor or any
Hyprotech Company to offer continuation coverage to any such
person under any health plan of the Vendor or any Hyprotech
Company, and finally that it shall indemnify the Vendor with
respect to any costs incurred by the Vendor or any Hyprotech
Company which would not have been incurred if the Purchaser
had satisfied the requirements of this Paragraph 17.15. 16.1.6
Except where a Plan or Non U.S. Plan is expressly identified
as a "defined contribution plan" in Sections 6.1 and 6.2 in
the Data Room, no such Plan or Non U.S. Plan is a "defined
contribution plan" (as defined in Section 3(34) of ERISA or
applicable local laws of all jurisdictions), whether or not
terminated.
16.1.7 With respect to the Plans and Non U.S. Plans, all required or
recommended (in accordance with historical practices)
payments, premiums, contributions, reimbursements or accruals
for all periods ending 31 March 2002 shall have been made or
properly accrued in the Draft Accounts.
50
16.1.8 The Plans, the Non U.S. Plans and all related trusts,
insurance contracts and funds have been maintained, funded,
and, so far as the Vendor is aware, are administered in
compliance in all material respects with their terms and with
the applicable provisions of ERISA, the Code and other
applicable local laws of all jurisdictions. So far as the
Vendor is aware neither the Vendor nor any Hyprotech Company
nor any trustee or administrator of any Plan or Non U.S. Plan
has engaged in any transaction with respect to the Plans or
Non U.S. Plans which would subject the Vendor or any Hyprotech
Company or any trustee or administrator of the Plans or Non
U.S. Plans, or any party dealing with any such Plan or Non
U.S. Plan, nor do the transactions contemplated by this
Agreement constitute transactions which would subject any such
party, to either a civil penalty assessed pursuant to Section
502(i) of ERISA or the tax or penalty on prohibited
transactions imposed by Section 4975 of the Code or any tax or
penalty under applicable local law of all jurisdictions. So
far as the Vendor is aware there are no actions, suits or
claims with respect to the assets of the Plans or Non U.S.
Plans (other than routine claims for benefits) pending or,
threatened which could result in or subject the Vendor or any
Hyprotech Company to any material liability, nor any
circumstances which would give rise to or be expected to give
rise to any such actions, suits or claims.
16.1.9 Each of the Plans which is intended to be qualified under
Section 401(a) of the Code has received a favourable
determination from the Internal Revenue Service that such plan
is qualified under Section 401(a) of the Code and so far as
the Vendor is aware there are no circumstances which would
adversely affect the qualified status of any such Plan. Each
Non U.S. Plan has been properly qualified under the applicable
local laws of its jurisdiction.
16.1.10 The Vendor has provided Purchaser with true and complete
copies of all material documents pursuant to which the Plans
and Non U.S. Plans are maintained, funded and administered,
including (where appropriate) the most recent actuarial,
accounting, and annual reports (Form 5500 and attachments), if
any, for the Plans, and similar reports, if any, for the Non
US Plans.
16.1.11 None of the Non U.S. Plans provide for benefit increases or
the acceleration of, or an increase in, funding obligations
that are contingent upon or will be triggered by the entering
into of this Agreement or the completion of the transactions
contemplated herein.
51
16.1.12 None of the Non U.S. Plans is a benefit plan required to be
established and maintained pursuant to a Collective Agreement
(commonly known as a "union plan") and which is maintained or
administered by the Vendor or its relevant Associated Company
or a "multi-employer" pension plan or benefit plan as defined
under Laws.
16.1.13 All Employee data necessary to administer each Non U.S. Plans
is in the possession of the Vendor or the relevant Associated
Company and is complete, correct and in a form which is
sufficient for the proper administration of the Non U.S. Plans
in accordance with its terms and all Laws.
16.1.14 None of the Non U.S. Plans (i) require or permit a retroactive
increase in premiums or payments, or (ii) require additional
premiums or payments, or (iii) termination of such Non U.S.
Plan or any insurance contract relating thereto.
16.2 UK EMPLOYEE BENEFIT PLANS
In respect of employees or former employees of the Hyprotech Business
employed or formerly employed in the UK ("UK Employees"):
16.2.1 With the exception of the Pension Scheme and save as set out
in section 5 of the Data Room none of the Vendor Parties is
under any liability or obligation (whether legally enforceable
or not and whether actual or contingent, present or future) in
terms or in respect of any ex gratia arrangement,
understanding, undertaking or promise (whether contractual or
otherwise) to pay, make provision for or provide any relevant
benefits (as defined in section 612(1) of ICTA but as if the
exception contained in that section were omitted) in respect
of the UK Employees or any of their dependants, relatives,
spouses, former spouses or any other person otherwise
connected with any UK Employee.
16.2.2 No proposal has been announced by the Vendor to alter the
Pension Scheme which proposal remains outstanding and has not
been fully implemented. The benefits referred to in all
booklets published and announcements made to employees
concerning the Pension Scheme have been incorporated in the
terms of the deeds or documents governing the Pension Scheme.
There is nothing in any booklet or announcement issued or made
available generally which is inconsistent with, or
constitutes, envisages or requires an augmentation under the
terms of, the deeds governing the Pension Scheme.
52
16.2.3 Complete and accurate copies of all of the documents in
Section 6.3 are contained in the Data Room, which include:
16.2.3.1 all material documents containing the provisions
currently governing the Pension Scheme;
16.2.3.2 all material announcements that have not been
incorporated into the documents mentioned in
16.2.3.1;
16.2.3.3 the latest actuarial valuation and updates (if
any) of the Pension Scheme;
16.2.3.4 the latest audited accounts of the Pension Scheme;
and
16.2.3.5 lists, at Section 6.3.19 in the Data Room, the UK
Employees who are members of the Pension Scheme.
16.2.4 No agreements, undertakings or assurances have been given to
or in respect of all or any of the UK Employees or any other
person as to the continuance, introduction, increase or
improvement of any retirement, death or disability benefits
(whether or not there is any legal obligation to do so).
16.2.5 No discretion or power has been exercised under the Pension
Scheme in respect of any UK Employees (or any beneficiaries
claiming under them) to:
16.2.5.1 augment benefits;
16.2.5.2 provide or offer to provide any benefit which
would not otherwise be provided in respect of any
potential member or former member; or
16.2.5.3 pay any additional contribution on the part of the
Vendor Parties which would not otherwise have been
paid.
16.2.6 The Pension Scheme is an exempt approved scheme within the
meaning of section 592(1) of ICTA and so far as the Vendor is
aware there is no reason why such approval could be withdrawn.
There is a contracting-out certificate (within the meaning of
section 7 of the Pension Schemes Act 1993) in force in respect
of the Pension Scheme naming the relevant Vendor Parties and
no reason exists why the certificate should be cancelled,
surrendered or varied.
16.2.7 The Vendor Parties comply (and have at all times complied) in
all material respects with all of their obligations to and in
respect of the UK Employees in connection with the Pension
Scheme.
53
16.2.8 No UK Employee has been excluded or prevented from
participating (or been granted restricted participation) in
the Pension Scheme on the grounds of part-time employment,
marital status, sexual orientation, age or otherwise where
such exclusion, prevention or restriction constitutes (or
could reasonably be expected to constitute) discrimination in
breach of the EC Treaty or any European Directive.
16.2.9 The Pension Scheme has been operated at all times from and
including 17 May 1990 in accordance with the provisions of the
EC Treaty relating to equal treatment and all Acts of
Parliament, European Directives and other relevant legislation
including (save in respect of Guaranteed Minimum Pensions) the
provision of sex equal benefits accruing after 16th May 1990.
16.2.10 All amounts due from the Vendor Parties to the trustees of the
Pension Scheme in respect of the UK Employees have been paid.
16.2.11 There have been no material actions, suits, claims (other than
routine claims for benefits) or other disputes made, brought
or instituted by any Employee against any Vendor Party in
relation to the Pension Scheme which remains unresolved and no
such actions, suits, claims or disputes are pending or
threatened and the Vendor Parties have no reason to believe
that any such action, suits, claims, or disputes are likely.
16.2.12 No Vendor Party has any obligation or liability (actual or
contingent, present or future) to contribute to any personal
pension scheme (as defined in section 630 of ICTA) or any
stakeholder pension arrangement for or in respect of any of
the UK Employees.
16.2.13 All UK Employees are eligible to become members of the Pension
Scheme so that no Hyprotech Company is or has been under any
obligation to nominate a stakeholder pension arrangement.
16.2.14 The Pension Scheme has not commenced winding-up in whole or in
part at any time prior to Completion.
CONTRACTS
17. INSURANCE
17.1 All the assets of each Hyprotech Company of an insurable nature are,
and have at all material times been, insured adequately against
employer's liability, public liability, product liability and (where
appropriate) professional indemnity liability.
54
17.2 All premiums due in relation to insurance in respect of the Hyprotech
Business have been paid, and so far as the Vendor is aware nothing has
been done or omitted to be done which would make any policy of
insurance of the Hyprotech Business void or voidable.
17.3 Particulars of each Hyprotech Company insurances are given in the
Disclosure Letter, no claim is outstanding under any such insurances
and neither the Vendor nor any Hyprotech Company has any intention of
making a claim under any such insurances.
17.4 For a period of one year after Completion, the Vendor shall maintain in
effect a directors' and officers' liability insurance policy covering
those persons currently covered by directors' and officers' liability
insurance policies maintained by the Vendor for benefit of the
directors and officers of any Hyprotech Company and a professional
indemnity insurance policy covering each Hyprotech Company on
reasonable policy conditions and financial terms as are generally
available in the UK insurance market and provided that such coverages
continue to be available on reasonable, meaning substantially similar,
terms as currently; and further provided, that in no event shall the
Vendor be required to expend in excess of 150% of the annual premium
currently paid by the Vendor for such coverages.
18. CONTRACTS
18.1 Copies of all customer Contracts which are reviewed in the Contracts
Report prepared by Eversheds are in the Data Room.
18.2 So far as the Vendor is aware, the information provided to Eversheds
for Eversheds preparation of the Contracts Report prepared by Eversheds
was true and accurate in all material respects.
18.3 A complete and accurate copy of each of the following Contracts has
been provided to the Purchaser in the Data Room:
18.3.1 any written Contract for the lease of personal property from
or to third parties;
18.3.2 any customer Contract in which any of the Hyprotech Companies
has granted manufacturing rights, "most favoured nation"
pricing provisions or marketing or distribution rights
relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed
to purchase goods or services exclusively from a certain
party;
18.3.3 any Contract establishing a partnership, a joint venture or a
joint development arrangement;
55
18.3.4 any contract under which it has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee)
indebtedness (including capitalized lease obligations)
involving more than US$200,000 or under which it has imposed
(or may impose) an Encumbrance on any of its assets, tangible
or intangible;
18.3.5 so far as the Vendor is aware any other Contract currently in
effect involving any officer, director or stockholder of any
of the Hyprotech Companies;
18.3.6 any Contract that contains any provisions requiring the
Hyprotech Companies to indemnify any other party thereto
(excluding indemnities contained in Contracts for the
purchase, sale or license of products entered into in the
ordinary course of business);
18.3.7 any Contract that was entered into outside the ordinary course
of business; and
18.3.8 any Contract that is expected to result in a material loss.
18.4 So far as the Vendor is aware, no threat or claim of default under any
Contract has been made and is outstanding and so far as the Vendor is
aware there is nothing whereby any Contract may be terminated or
rescinded by any other party as a result of anything done or omitted to
be done by the Vendor.
18.5 Save where it is clear from the face of any such document that it has
expired or otherwise terminated, so far as the Vendor is aware all the
Contracts are in full force and effect and have been duly complied with
in all material respects and nothing has occurred which could result in
the invalidity of, or a ground for termination, avoidance or
repudiation of such a Contract. No party to such a Contract has given
notice of its intention to terminate, or so far as the Vendor is aware
has sought to repudiate or disclaim, that Contract.
19. GENERAL
Save as clearly and fairly disclosed in the Disclosure Letter or where
it is clear from the face of any document in the Data Room no Contract:
19.1 was entered into other than in the usual course of the Hyprotech
Business and by way of a bargain at arm's length;
19.2 restricts the Vendor's nor any Hyprotech Company's freedom to operate
as it decides;
56
19.3 constitutes a sale or purchase option or similar agreement, arrangement
or obligation affecting the Hyprotech Business;
19.4 is one which is prohibited by competition law in any relevant
jurisdiction.
20. TERMS OF TRADE AND BUSINESS
20.1 Creditors
No Hyprotech Company is involved in any material disputes in relation
to creditors.
20.2 Suppliers and customers
20.2.1 During the 12 months ending on the date of this Agreement no
substantial customer or supplier of any Hyprotech Company has:
20.2.1.1 substantially reduced its trading with or supplies
to any Hyprotech Company; or
20.2.1.2 substantially changed any material terms on which
it is prepared to trade with or supply any
Hyprotech Company (other than normal price and
quota changes).
20.2.2 No person (either individually or jointly with another person)
has bought from or sold to any Hyprotech Company, either in
the financial year ended on 31 March 2002 or since 31 March
2002, more than 10% of the total amount of all purchases or
sales made by any Hyprotech Company in that financial year or
since 31 March 2002.
20.3 Computer records
None of the records, systems, data or information of the Hyprotech Business is
recorded, stored, maintained, operated or otherwise wholly or partially
dependent on or held or accessible by any means (including, without limitation,
an electronic, mechanical or photographic process, computerised or not) which
are not included among the assets of a Hyprotech Company.
20.4 Data protection
20.4.1 The Vendor has obtained and maintained in force each
registration under the Data Protection Acts 1984 and 1998 and
all foreign statutes and regulations relating to data privacy
and protection necessary or appropriate including, without
limitation, each registration relating to the obtaining,
holding, processing, transfer and disclosure of personal data
effected by the Vendor.
57
20.4.2 The Vendor has in respect of personal data relating to the
Hyprotech Business at all times complied in all material
respects with any Data Protection Principles contained in the
Data Protection Acts 1984 and 1998 and all foreign statutes
and regulations relating to data privacy and protection to
which the Vendor is subject.
COMPLIANCE, DISPUTES
21. COMPANY LAW MATTERS
21.1 Compliance has been made with all legal requirements in connection with
the formation of each Hyprotech Company and all issues and grants of
shares, debentures, notes, mortgages or other securities of each
Hyprotech Company.
21.2 The copy of the memorandum and articles of association of each
Hyprotech Company attached to the Disclosure Letter is true and
complete. Each Hyprotech Company has at all times carried on its
business and affairs in all respects in accordance with its memorandum
and articles of association and all such resolutions and agreements.
21.3 All returns, particulars, resolutions and other documents required to
be filed with or delivered to the Registrar of Companies by each
Hyprotech Company or any of its officers have been correctly and
properly prepared and so filed and delivered, and no such returns,
particulars, resolutions or other documents have been so filed or
delivered during the period of 14 days ending on the date of this
Agreement.
21.4 The statutory books (including all registers and minute books) of each
Hyprotech Company have been properly kept and contain an accurate and
complete record of the matters which should be dealt with in those
books and no notice or allegation that any of them is incorrect or
should be rectified has been received.
22. GENERAL LEGAL COMPLIANCE
22.1 So far as the Vendor is aware, the Hyprotech Business has been
conducted in all material respects in accordance with all applicable
laws and regulations of the United Kingdom and any foreign country in
which the Hyprotech Business has been operated.
22.2 So far as the Vendor is aware, there is not pending, or in existence,
any investigation or enquiry by, or on behalf of, any governmental or
other body in respect of the affairs of the Hyprotech Business other
than in the ordinary course of the business.
22.3 So far as the Vendor is aware all necessary licences, consents, permits
and authorities (public and private) have been obtained by the Vendor
and each Hyprotech Company
58
to enable the Hyprotech Business to be carried on and in the manner in
which the business is now carried on. So far as the Vendor is aware all
such licences, permits and authorities are valid and subsisting and
have been complied with in all material respects and so far as the
Vendor is aware there is no reason why any of them should be suspended,
cancelled or revoked.
23. LITIGATION
23.1 Save for debt collection in the ordinary course of business, neither
the Vendor nor any Hyprotech Company is involved (whether as plaintiff
or claimant, defendant, respondant or any other party) in any civil,
criminal, tribunal or arbitration proceedings which relate to the
Hyprotech Business and so far as the Vendor is aware there are no facts
likely to give rise to any such proceedings.
23.2 There is no unsatisfied judgment, award or unfulfilled order
outstanding against the Vendor or any Hyprotech Company in respect of
the Hyprotech Business and neither the Vendor nor any Hyprotech Company
is 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.
23.3 There is no proceeding, claim or other litigation pending or threatened
wherein an unfavourable judgment, order, decree, stipulation or
injunction would (i) prevent consummation of the transactions
contemplated by this Agreement, (ii) cause the transactions
contemplated by this Agreement to be rescinded following consummation
or (iii) materially and adversely affect the Hyprotech Business.
24. INSOLVENCY
24.1 No meeting has been convened at which a resolution will be proposed, no
petition has been presented, no order has been made and no resolution
has been passed for the winding-up of any Hyprotech Company or for the
appointment of any provisional liquidator. No Hyprotech Company has
called any formal or informal meeting of all or any of its creditors.
24.2 No administrative receiver, receiver or manager has been appointed of
the whole or any part of the property, assets or undertaking of any
Hyprotech Company.
24.3 No administration order has been made appointing an administrator in
respect of any Hyprotech Company and no petition has been presented for
an administration order in respect of any Hyprotech Company.
24.4 No voluntary arrangement has been proposed or approved under Part I
Insolvency Act 1986 and no compromise or arrangement has been proposed,
agreed to or
59
sanctioned under section 425 Insolvency Act 1986 in respect of any
Hyprotech Company.
24.5 No distress, execution or other process has been levied on or applied
for in respect of any asset of any Hyprotech Company.
24.6 No Hyprotech Company has stopped or suspended the payment of its debts
or received a written demand pursuant to section 123(1)(a) Insolvency
Xxx 0000 and no Hyprotech Company is insolvent or unable to pay its
debts within the meaning of section 123 Insolvency Xxx 0000.
24.7 No disqualification order has at any time been made pursuant to the
provisions of the Company Directors Disqualification Xxx 0000 against
any former or current officer of any Hyprotech Company.
24.8 There are no facts in existence which are likely to lead to any of the
events or circumstances referred to in this paragraph.
24.9 No Hyprotech Company and none of the directors of any Hyprotech Company
has consulted a person qualified to act as an insolvency practitioner
under Part XIII of the Insolvency Xxx 0000 with a view to minimising
the potential loss to the relevant Hyprotech Company's creditors or
otherwise in relation to any financial difficulty of such Hyprotech
Company.
24.10 No Hyprotech Company has been a party to any transaction at an
undervalue as defined in section 238 of the Insolvency Xxx 0000 nor has
any Hyprotech Company given or received any preference as defined in
section 239 of the Insolvency Xxx 0000, in either case within the
period of two years ending on the date of this Agreement.
25. NONCONTRAVENTION
So far as the Vendor is aware, neither the execution and delivery by
the Vendor of this Agreement or any of the other agreements
contemplated hereby, nor the consummation by the Vendor of the
transactions contemplated hereby or thereby, will (a) conflict with or
violate any provision of the Memorandum and Articles of Association of
the Vendor or the charter, articles, by-laws or other organizational
document of any Hyprotech Company, (b) require on the part of the
Vendor or any Hyprotech Company any notice to or filing with, or any
permit, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency, (c) conflict with, result in a breach
of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of obligations under, create
in any
60
party the right to terminate, modify or cancel, or require any notice,
consent or waiver under, any contract or instrument to which the Vendor
or any Hyprotech Company is a party or by which the Vendor or any
Hyprotech Company is bound or to which any of their respective assets
is subject, (d) result in the imposition of any Encumbrance upon any
assets of the Vendor or any Hyprotech Company or (e) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Vendor, any Hyprotech Company or any of their respective properties or
assets.
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SCHEDULE 5
COMPLETION ARRANGEMENTS
At Completion the following will take place:
1. ITEMS FOR DELIVERY
1.1 The following items will be produced and delivered by the Vendor:
SHARE TRANSFERS
1.1.1 Executed transfers of the Shares (save where such shares are
held by a Hyprotech Company whose shares are also being
transferred) in favour of the Purchaser (or its nominee(s))
together with the share certificates for the Shares (or in the
case of any lost certificate an indemnity satisfactory to the
Purchaser in relation to it).
1.1.2 Any waiver, consent or other document necessary to give the
Purchaser (or its nominee(s)) full legal and beneficial
ownership of the Shares.
1.1.3 Transfers of all shares in any Hyprotech Company not held in
the name of the Vendor or another Hyprotech Company duly
executed in favour of the Purchaser (or its nominee(s))
together with share certificates in respect of all the issued
shares of each Hyprotech Company (or in the case of any lost
certificate an indemnity satisfactory to the Purchaser in
relation to it).
AUTHORISATIONS
1.1.4 A copy of a resolution of the board of directors (certified by
a duly appointed officer as true and correct) of the Vendor
and each Hyprotech Company authorising the execution of and
the performance by the relevant company of its obligations
under each of the documents to be executed by it.
1.1.5 If the Purchaser requests, a power of attorney (or proxy) in
the agreed terms by each registered holder of the Shares which
enables the Purchaser or its nominee to attend and vote at
general meetings of each Hyprotech Company.
RESIGNATIONS AND APPOINTMENTS
1.1.6 A letter of resignation in the agreed terms from each director
of each Hyprotech Company.
62
1.1.7 A letter of resignation in the agreed terms from each officer
of each Hyprotech Company.
1.1.8 A copy of a letter to each Hyprotech Company from its auditors
resigning from office with effect from Completion (other than
in respect of Hyprotech Malaysia Sdn Bhd whose auditors shall
resign at a general meeting after Completion except where the
Purchaser has requested the auditors remain in place) and
containing the statement required by section 394 CA 1985, the
original of the letter having been deposited at the registered
office of the relevant company.
COMPANY DOCUMENTATION
1.1.9 The certificate of incorporation, any certificate(s) of
incorporation on change of name, the common seal and the
statutory books and registers (which will be written up to but
not including Completion) or the equivalent for jurisdictions
other than the United Kingdom of each Hyprotech Company.
1.1.10 All deeds and documents relating to the title or leasehold
estate of any Hyprotech Company to the Property.
1.1.11 All cheque books in current use of each Hyprotech Company.
1.1.12 All papers, books, records, keys, credit cards and other
property (if any) of each Hyprotech Company which are in the
possession or under the control of the Vendor or any other
person who resigns as an officer of any Hyprotech Company in
accordance with this Schedule.
FINANCIAL
1.1.13 A copy of the bank mandate of each Hyprotech Company and
copies of bank statements in respect of each account of each
Hyprotech Company as at the close of business on the last
Business Day prior to Completion, together in each case with a
reconciliation statement prepared by the Vendor to show the
position at Completion (listing unpresented cheques drawn or
received by the relevant Hyprotech Company and standing orders
payable since the date of such bank statements).
1.1.14 Deeds of release for charges and guarantees.
1.1.15 Letters of non-crystalisation.
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MISCELLANEOUS
1.1.16 All licences, certificates or other documents previously specified by
the Purchaser.
1.1.17 A deed in the agreed terms from the Vendor acknowledging that neither
the Vendor nor any Associated Company has any claim against any
Hyprotech Company and that there is no agreement or arrangement under
which any Hyprotech Company has any actual, contingent or prospective
obligation to any such person.
2. CONVENING OF MEETINGS
2.1 The Vendor will procure that duly convened board meetings of each
relevant Hyprotech Company are held at which:
2.1.1 the transfers referred to in paragraphs 1.1.1 and 1.1.3
(subject to stamping if not previously effected) are approved
for registration in the books of the relevant Hyprotech
Companies;
2.1.2 the accounting reference date of each Hyprotech Company is
changed to 30 June;
2.1.3 subject to compliance with relevant foreign statutory
requirements relating to those resignations, the resignations
of directors, secretaries and auditors referred to in each of
paragraphs 1.1.7, 1.1.8 and 1.1.9 are accepted with effect
from the end of the relevant board meeting;
2.1.4 subject to compliance with relevant foreign statutory
requirements relating to those appointments, such persons as
are nominated by the Purchaser as directors, secretary and
auditors of each Hyprotech Company are appointed with effect
from the end of the relevant board meeting;
2.1.5 all existing instructions to the bankers of each Hyprotech
Company are revoked and new instructions given to such bankers
as the Purchaser may nominate, in such form as the Purchaser
directs.
64
SCHEDULE 6
LIMITATION OF LIABILITY
1. In this SCHEDULE 6 "CLAIM" means any claim which is or would (but for
the provisions of this SCHEDULE 6) be capable of being made against the
Vendor in respect of any liability for breach of the Warranties.
For the purpose of paragraph 2.1 below "Claim" shall include any claim
made pursuant to the Tax Deed.
2. Notwithstanding the provisions of this Agreement:
2.1 the aggregate liability of the Vendor in respect of all Claims (other
than a Claim arising under SECTION 2 of the Agreement or under SECTION
1 of SCHEDULE 4 to this Agreement) will be limited to the
Consideration;
2.2 the Vendor will be under no liability in respect of any Claim unless
the amount of its liability in respect of such Claim is in excess
of(pound)50,000;
2.3 the Vendor will be under no liability in respect of any Claim (other
than a Claim arising under SECTION 2 of the Agreement or under SCHEDULE
13 to this Agreement) unless the amount of its liability in respect of
such Claim is (when aggregated with its liability in respect of any
other such Claim or Claims made by the Purchaser but, for the avoidance
of doubt, excluding any Claims for which the Vendor shall have no
liability pursuant to PARAGRAPH 2.2) in excess of (pound)5,000,000, in
which event the Vendor will (subject to the other provisions of this
SCHEDULE 6) be liable for the whole amount of such liability and not
merely for the excess;
2.4 the Vendor will be under no liability in respect of any Claim
concerning a breach of the Warranties (other than the Tax Warranties)
unless written particulars of such Claim (giving full details of the
specific matter in respect of which such Claim is made) have been given
to the Vendor within 18 months from Completion and unless legal
proceedings in respect of such Claim are commenced and served upon the
Vendor within three months after such written particulars have been
given to the Vendor;
2.5 the Vendor will have no liability in respect of any Claim (other than a
Claim for breach of the Tax Warranties in which case clause 4.1 of the
Tax Deed shall apply):
2.5.1 to the extent that it arises or is increased as a result of
the passing of any legislation (or making of any subordinate
legislation) with retrospective effect or an increase in rates
of Taxation after 31 March 2002, or any
65
provision or reserve in the Audited Accounts being
insufficient by reason of any increase in rates of Taxation
after 31 March 2002;
2.5.2 if it would not have arisen but for anything voluntarily done
or omitted to be done after Completion by the Purchaser, any
Hyprotech Company or any of its respective agents or
successors in title but not including anything voluntarily
done or omitted to be done, which is carried out or effected
pursuant to a legally binding commitment created on or before
Completion; or
2.5.3 to the extent that such Claim arises, or has otherwise arisen
and is increased, as a result of any reorganisation or change
made in the ownership of a Hyprotech Company after Completion
or any change in any accounting or taxation policies or
practice or accounting reference date of the Purchaser or any
other company in the same group of companies as a Hyprotech
Company or the Purchaser made after Completion which is
carried out or effected or which occurs in the ordinary course
of business; or
2.5.4 to the extent that it relates to any loss for which the
Purchaser or any Hyprotech Company is indemnified by
insurance, or for which it would have been so indemnified if
at the relevant time there had been maintained valid and
adequate insurance cover of a type in force in relation to the
Vendor or any Hyprotech Company at the date of this Agreement;
2.5.5 to the extent that it relates to any matter provided for, or
included as a liability or otherwise fully and fairly
disclosed, in the Audited Accounts and the Draft Accounts; or
2.5.6 where the Purchaser or a Hyprotech Company is entitled to
recover from some other person any sum in respect of any
matter or event which could give rise to a Claim, it shall
assign the rights in relation to the Claim to the Vendor
(other than a claim for breach of the Tax Warranties in which
case CLAUSE 10.6 of the Tax Deed shall apply);
2.6 payment of any Claim will to the extent of such payment satisfy and
preclude any other Claim which is capable of being made in respect of
the same subject matter;
2.7 the Vendor will have no liability in respect of any Claim to the extent
it is clearly and fairly disclosed in the Data Room.
3. Upon the Purchaser becoming aware that matters have arisen which will
or are likely to give rise to a Claim (other than a claim for breach of
the Tax Warranties in which case CLAUSE 6 of the Tax Deed shall apply)
the Purchaser will:
66
3.1 as soon as reasonably practicable notify the Vendor in writing of the
potential Claim and of the matters which may give rise to such Claim;
3.2 not make and procure no Hyprotech Company makes any admission of
liability, agreement or compromise with any person, body or authority
in relation to the potential Claim without the prior written consent
(not to be unreasonably withheld or delayed) of the Vendor;
3.3 at all times clearly and fairly disclose in writing to the Vendor all
information and documents relating to the potential Claim or the
matters which will or are likely to give rise to such Claim and, if
requested by the Vendor, give the Vendor and its professional advisers
reasonable access to the personnel of the Purchaser and any relevant
Hyprotech Company and to any relevant premises, chattels, accounts,
documents and records within the power, possession or control of the
Purchaser and any relevant Hyprotech Company to enable the Vendor and
its professional advisers to interview such personnel, and to examine
such Claim, premises, chattels, accounts, documents and records and to
take copies or photographs of them at its own expense; and
3.4 upon the Vendor first indemnifying the Purchaser to the reasonable
satisfaction of the Purchaser against all losses, costs, liabilities,
damages and expenses (including interest on overdue Taxation which may
be incurred thereby) take such action as the Vendor may reasonably
require (including the appointment of solicitors nominated by the
Vendor) to avoid, resist, contest or compromise the potential Claim or
the matters which will or are likely to give rise to such Claim.
4. Nothing in this Agreement will in any way diminish the Purchaser's
common law duty to mitigate its loss.
5. The Purchaser is not entitled to recover damages or otherwise obtain
payment, reimbursement or restitution more than once in respect of the
same loss or liability.
6. If any potential claim arises by reason of a liability of the Vendor
which is contingent only, then the Vendor will not be under any
obligation to make any payment in respect of such claim until such time
as the contingent liability ceases to be contingent and becomes actual.
7. The Purchaser confirms to the Vendor that at the date of this Agreement
it is not actually aware of a fact or circumstance which has not been
disclosed by the Vendor to the Purchaser which gives rise to a Claim.
8. The Vendor shall be under no liability in respect of any claim under
any of the Warranties relating to EHS Matters, the Environment, EHS
Permits or EHS Laws
67
unless it is brought under PARAGRAPH 14 of SCHEDULE 4, and each of the
other Warranties shall be deemed not to be given in relation to EHS
Matters, the Environment, EHS Permits or EHS Laws.
9. Notwithstanding the other provisions of SCHEDULE 4, the parties agree
that the only warranties that shall apply to business intellectual
property rights are those set out in PARAGRAPH 11; no other warranty
shall apply in respect of any Business Intellectual Property Rights or
issue related to the Business Intellectual Property Rights.
10. The provisions of this Schedule apply notwithstanding any other
provision of this Agreement or its Schedules to the contrary and will
not cease to have effect in consequence of any rescission or
termination by the Purchaser of any other provisions of this Agreement.
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SCHEDULE 7
THE PERMITTED ACTIVITIES
The research, development, support, marketing, sale and licensing of the
following activities together with associated products, services, software and
consulting:
a) CFD software.
b) Enterprise Accessible Software Applications (EASA).
c) Software and hardware primarily intended for predictive condition
monitoring and preventative maintenance applications with or without
the ability to be utilised for process control improvement purposes.
d) Integrated Durability and Reliability Management software.
e) Risk-based assessment, plant integrity, plant maintenance and plant
degradation software and services and associated process engineering
consultancy.
f) Integrated work management software.
g) Management of government programmes for technology transfer in the
biotechnology and bioprocessing fields.
h) Software applications for environmental data management and
environmental performance improvement.
i) Development of original process methods, process designs and hardware
including fluidic, vortex, plasma, catalysis, electrochemical, power
ultrasound, laser ultrasonics, magnetic inspection, process
intensification and bio-processing and electronic materials
processing technologies.
j) Products, services and software for the transport industry.
k) Heat radiation studies of flare flames.
l) Risk Based Inspection.
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SCHEDULE 8
CONDUCT OF THE BUSINESS PENDING COMPLETION
The Vendor will procure that between the time of execution of this Agreement and
Completion the business of each Hyprotech Company will be carried on in all
material respects in the ordinary and usual course and that nothing which is not
of a routine nature will be done, and nothing which is of a routine nature will
be omitted to be done, without the prior written consent of the Purchaser (such
consent not to be unreasonably withheld or delayed). The following acts, or any
agreement to do any of the following acts, will without limitation, be deemed
not to be of a routine nature:
1. incurring any expenditure exceeding(pound)100,000 on capital account or
entering into any commitment to do so;
2. transferring any cash to the Vendor or any member of its Group;
3. disposing of any part of the Hyprotech Business;
4. entering into any unusual or abnormal contract or commitment which is
material to the Hyprotech Business or taking any material alteration to
the terms of its material agreements with any of its existing customers
or suppliers;
5. granting or creating or agreeing to grant or create any security,
mortgage, charge, lien or encumbrance over the Hyprotech Business;
6. taking on new Senior Employees or terminating the employment of any
Senior Employees or making any material change in the terms or
conditions of employment or pension benefits of any Senior Employees;
7. permitting any material insurance of the Hyprotech Business to lapse or
doing anything which would make any policy of insurance void or
voidable;
8. making any material change in the business structure or organisation of
the Hyprotech Business;
9. not borrow any money, except under its existing overdraft facilities
from its bankers where the borrowing does not exceed the amount
available to be drawn under those facilities, or amend or agree to
amend the terms of its borrowings under its existing overdraft
facilities;
10. not enter into any guarantee or indemnity or other agreement to secure,
or incur financial or other obligations with respect to, another
person's obligations;
70
11. not enter into any long term, unusual or onerous contract or
commitment; and
12. not declare, make or pay any dividend or other distribution; not
create, allot, issue, grant or agree to grant any option over, acquire,
repay or redeem any class of share or loan capital and not vary or
agree to vary the rights of, any class of share or loan capital.
71
SCHEDULE 9
[Intentionally Omitted]
72
SCHEDULE 10
TAXATION WARRANTIES FOR HYPROTECH UK LIMITED AND ADVANCED SYSTEMS CONSULTANTS
LIMITED
1. INTERPRETATION
1.1. For the purposes of this Schedule 10 all definitions shall have the
same meaning as set out in the Tax Deed unless otherwise specified.
1.2. All references to "the Company" in this Schedule 10 mean Hyprotech UK
Limited and Advanced Systems Consultants Limited, and either of them.
2. TAX WARRANTIES
2.1. Tax returns. All necessary information, notices, accounts, statements,
reports, computations and returns which ought to have been made or
given have been properly and duly submitted by the Company to the
Inland Revenue, HM Customs & Excise and any other relevant taxation or
excise authorities whether of the United Kingdom or elsewhere and all
information, notices, computations and returns submitted to the Inland
Revenue, HM Customs & Excise and such other authorities are true and
accurate and are not the subject of any material dispute nor so far as
the Vendor is aware are likely to become the subject of any material
dispute with such authorities.
2.2. Taxation liabilities. All Taxation of any nature whatsoever whether of
the United Kingdom or elsewhere for which the Company is liable or for
which the Company is liable to account has been duly paid (insofar as
such Taxation ought to have been paid) and without prejudice to the
generality of the foregoing the Company has made all such deductions
and retentions as it was obliged or entitled to make and all such
payments as should have been made. Where such liability has not arisen
at the date of this Agreement (or such liability is not due to be paid
at the date of this Agreement), and such liability relates to a period
ending on or before the Accounting Date, it has been provided in the
Accounts in accordance with generally accepted accounting principles,
and appropriate provision has been made in the Accounts for deferred
Taxation in accordance with generally accepted accounting practice.
2.3. Penalties and interest. The Company has not paid or become liable to
pay, nor are there any circumstances so far as the Vendor is aware by
reason of which the Company is likely to become liable to pay, any
penalty, fine, surcharge or interest whether charged by virtue of the
provisions of the Taxes Management Xxx 0000, VATA 1994 or otherwise.
2.4. Investigations. The Company has not within the past twelve months
suffered any investigation audit or visit by the Inland Revenue, HM
Customs & Excise, Department of Social Security, or any other Taxation
or excise authority, and neither the Vendor nor the Company is aware of
any such investigation audit or visit planned for the next twelve
months.
2.5. The Company has not with the last 6 years 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.
73
2.6. The Company has not within the last 6 years capitalised or agreed to
capitalise in the form of shares or debentures any profits or reserves
of any class or description or otherwise issued or agreed to issue any
share capital other than for the receipt of new consideration (within
the meaning of Part VI of the Taxes Act) or passed or agreed to pass
any resolution to do so.
2.7. No securities (within the meaning of Part VI of the Taxes Act) issued
by the Company in the last 6 years and remaining in issue at the date
of this agreement were issued in such circumstances that any interest
or other distribution out of assets in respect thereof falls to be
treated as a distribution under s.209(2)(d), (da) or (e) Taxes Act, nor
has the Company agreed to issue securities (within that meaning) in
such circumstances.
2.8. Loan relationships. All interest, discounts and premiums payable by the
Company in respect of its loan relationships within the meaning of
Chapter II of Part IV of the Finance Xxx 0000 are capable of being
brought into account by the Company as a debit for the purposes of that
Chapter as and to the extent that they are from time to time recognised
in the Company's accounts (assuming that the accounting policies and
methods adopted for the purpose of the Accounts continue to be so
adopted).
2.9. Transactions not at arm's length. So far as the Vendor is aware, the
Company has not disposed of or acquired any asset in the last 6 years
in circumstances such that the provisions of s.17 TCGA could apply to
such disposal or acquisition nor given or agreed to give any
consideration to which s.128(2)(b) TCGA could apply.
2.10. Close companies. The Company is not and has not within the last 6 years
been a close company.
2.11. Group relief. The Disclosure Letter gives details of every written
agreement that the Company has entered into for the claim or surrender
of group relief under the provisions of s.402 to s.413 (inclusive)
Taxes Act or of Advance Corporation Tax under the provisions of s.240
Taxes Act.
2.12. Except as provided in the Accounts the Company is not or so far as the
Vendor is aware under any obligation to make or has any entitlement to
receive in respect of any period ending on or before the Accounting
Date any payment for group relief as defined in s.402(6) Taxes Act or
any payment for the surrender of the benefit of an amount of Advance
Corporation Tax or repayment of such a payment.
2.13. Acquisitions from group members. No asset of the Company shall be
deemed under s.179 TCGA to have been disposed of and reacquired by
virtue of or in consequence of the entering into or performance of this
agreement or any other event since the Accounting Date.
2.14. Intra-group transactions. No Taxation has been or may be assessed on
the Company in the last 6 years pursuant to s.190 TCGA in respect of
any chargeable gain accrued prior to the date of this agreement and the
Company has not in the last 6 years transferred any asset other than
trading stock (including without limitation any transfer by way of
share exchange within s.135 TCGA to any company which at the time of
disposal was a member of the same group (as defined in s.170 TCGA).
74
2.15. The Company has not been a member of a group of companies for any
Taxation purposes whatsoever other than the group of companies existing
immediately prior to Completion.
2.16. Residence. The Company is and has in the last 6 years been resident for
Taxation purposes in the UK, and is not and has not been treated as
resident in any other jurisdiction for any Taxation purpose.
2.17. Controlled foreign companies and offshore funds. The Company has not or
has not had in the last 6 years any interest in a controlled foreign
company as defined in Chapter IV Part XVII Taxes Act 1988 nor any
material interest in an offshore fund as defined in s.759 Xxxxx Xxx
0000.
2.18. Foreign Tax and Double Tax Treaties. Where the Company has been subject
to any Taxation on its income, receipts, profits, gains or Events in
any state, country or jurisdiction other than the United Kingdom, it is
entitled to claim the benefit of any double taxation agreement or
convention entered into between the United Kingdom and any other
relevant country, state or jurisdiction such that no material amount of
overseas Taxation has not been recovered, or is not recoverable,
pursuant to such double taxation agreement or convention.
2.19. Foreign exchange and financial instruments. The Company has no
qualifying assets, qualifying liabilities or currency contracts to
which the provisions of Chapter II, Part II Finance Xxx 0000 apply; nor
any interest rate or currency contracts or options to which the
provisions of Chapter II, Part IV Finance Xxx 0000 apply.
2.20. Stamp duty. All documents in the enforcement of which the Company may
be interested and which are liable to stamp duty (or any corresponding
Taxation in any foreign jurisdiction) have been duly stamped.
2.21. Stamp duty reserve tax. The Company has not since the Accounting Date
incurred any liability to Stamp duty reserve tax.
2.22. Value Added Tax Exemption. The Company is not and was not partially
exempt in its current or preceding value added tax year.
2.23. Since the Accounting Date, the Company has not been involved in any
transaction (i) which has given or may give rise to a liability to
Taxation on it other than Taxation in respect of normal trading income
or receipts of the Company arising from transactions entered into by it
in the ordinary course of business, or (ii) otherwise than on arm's
length terms.
2.24. Transfer pricing. No transactions or arrangements involving the Company
have taken place in the last 6 years or are in existence which are such
that any of the provisions of Schedule 28 AA Taxes Act have been or
could be applied to them.
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SCHEDULE 11
TAX REPRESENTATIONS AND WARRANTIES FOR HYPROTECH MALAYSIA SDN BHD
1. INTERPRETATION
1.1 For the purpose of this Schedule 11 all definitions shall have the same
meaning as set out in the Agreement and the Tax Deed unless otherwise
specified.
1.2 All references to "the Company" in this Schedule 11 mean Hyprotech
Malaysia SDN BHD.
2. TAX REPRESENTATIONS AND WARRANTIES
2.1 All income tax, service tax, sales tax, withholding taxes, real
property gains tax and other taxes, duties or levies which were due and
payable in respect of the profits, gains, invoices, sales, revenues,
dividends, interests and royalties of or relating to the Company for
all periods up to the date of this Agreement have been fully and
punctually paid.
2.2 The amounts provided in the Draft Balance Sheets of the Company as set
out in Tab 12.25 of the Data Room ("Draft Balance Sheets") for taxation
have been properly computed after taking into account all taxation
(including but not limited to income tax, amounts assessed as if they
were amounts of income tax, service tax, withholding taxes or real
property gains tax) for which the Company is at the date of this
Agreement (or which the Company is reasonably expected to become)
liable to be assessed or to pay on or in respect of or by reference to
its businesses, income or profits on or before the date to which the
Draft Balance Sheets were made out ("Accounts Date") or in respect of
dividends or distributions made prior to the Accounts Date.
2.3 The tax returns of the Company have at all times been correct and on a
proper basis and are not the subject of any back duty claim or other
dispute with the revenue authorities, and the tax returns of the
Company are not so far as the Vendor is aware subject to any
investigations by any taxation authority of Malaysia in respect of any
tax liability. The Company has supplied all relevant information and
made all necessary payments to the Inland Revenue and Customs and
Excise authorities and to the appropriate authorities under the Income
Tax Xxx 0000 (Act 53) - Revised 1971, Real Property Gains Tax Act 1976
(Act 169), Customs Xxx 0000 (Act 235) - Revised 1980, Service Tax Xxx
0000 (Act 151), Sales Tax Xxx 0000 (Act 64), Employees Provident Fund
Act 1991 (Act 452), Employees Social Security Xxx 0000 (Act 4) and
76
other similar laws and there is no dispute or contemplated dispute at
the date of this Agreement with any of such authorities or breach of
any such legislation.
77
SCHEDULE 12
TAX REPRESENTATIONS AND WARRANTIES FOR HYPROTECH JAPAN LIMITED
1. INTERPRETATION
1.1 For the purpose of this Schedule 12 all definitions shall have the same
meaning as those set out in the Agreement and the Tax Deed unless
otherwise specified.
1.2 All references to "the Company" in this Schedule 12 mean Hyprotech
Japan Limited.
2. TAX REPRESENTATIONS AND WARRANTIES
2.1 There have been properly completed and filed on a timely basis and in
correct form all tax returns required to be filed by the Company on or
prior to the date hereof. As of the time of filing, the foregoing tax
returns correctly reflected the facts regarding the income, business,
assets, operations, activities, status or other matters of the Company
or any other information required to be shown thereon in all material
respects.
2.2 With respect to all amounts in respect of taxes imposed upon the
Company, or for which the Company could be liable, with respect to all
taxable periods or portions of periods ending on or before Completion,
all applicable tax laws have been fully complied with, and all amounts
required to be paid by the Company to the Taxation Authority have been
paid.
78
SCHEDULE 13
TAX REPRESENTATIONS AND WARRANTIES FOR AEA TECHNOLOGY CANADA LIMITED AND
HYPROTECH LTD
1. INTERPRETATION
1.1 For the purpose of this Schedule 13 all definitions shall have the same
meaning as those set out in the Agreement and the Tax Deed unless
otherwise specified.
1.2 The following words shall have the following meanings for the purpose
of this Schedule 13:
"COMPANY" means AEA Technology Canada Limited and
Hyprotech Ltd
"GOVERNMENTAL AUTHORITY" means any government, regulatory authority,
governmental department, agency, commission,
bureau, official, minister, Crown
corporation, court, board, tribunal, dispute
settlement panel or body or other law, rule
or regulation-making entity:
a) having or purporting to have
jurisdiction on behalf of any
nation, province, state or other
geographic or political subdivision
thereof;
b) exercising, or entitled or
purporting to exercise any
administrative, executive,
judicial, legislative, policy,
regulatory or taxing authority or
power
"LAWS" means applicable statutes, by-laws, rules,
regulations, orders, ordinances or
judgements and administrative policy of any
Governmental Authority having the force of
law
"TAX RETURNS" means all returns, reports, declarations,
elections, notices, filings, forms,
statements and other documents (whether in
tangible,
79
electronic or other form) and including any
amendments, schedules, attachments,
supplements, appendices and exhibits
thereto, made, prepared, filed or required
to be made, prepared or filed by Law in
respect of Taxes
"TAXES" means any taxes, duties, fees, premiums,
assessments, imposts, levies and other
similar charges imposed by any Governmental
Authority under applicable Law, including
all interest, penalties, fines, additions to
tax or other additional amounts imposed by
any Governmental Authority in respect
thereof, and including those levied on, or
measured by, or referred to as, income,
gross receipts, profits, capital, transfer,
land transfer, sales, goods and services,
harmonized sales, use, value-added, excise,
stamp, withholding, business, franchising,
property, development, occupancy, employer
health, payroll, employment, health, social
services, education and social security
taxes, all surtaxes, all customs duties and
import and export taxes, countervail and
anti-dumping, all license, franchise and
registration fees and all employment
insurance, health insurance and Canada,
Quebec and other government pension plan
premiums or contributions.
2. TAX WARRANTIES
2.1 RESIDENCE OF THE VENDOR
The Vendor is a corporation duly incorporated and validly existing under the
laws of England and is a non-resident of Canada for the purposes of the Income
Tax Act (Canada).
2.2 TAX MATTERS
Except as specifically disclosed in the Disclosure Letter:
(a) the Company has duly and timely made or prepared all Tax Returns
required to be made or prepared by it, has duly and timely filed all
Tax Returns required to be filed by it with the appropriate
Governmental Authority and has duly, completely and
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correctly reported all income and all other amounts and information
required to be reported thereon;
(b) the Company has duly and timely paid all Taxes, including all
instalments on account of Taxes for the current year, that are due and
payable by it. Provision has been made on the Draft Accounts for
amounts at least equal to the amount of all Taxes owing by it that are
not yet due and payable and that relate to periods ending on or prior
to Completion;
(c) the Company has not requested, offered to enter into or entered into
any agreement or other arrangement, or executed any waiver, providing
for any extension of time within which (i) to file any Tax Return
covering any Taxes for which the Company is or may be liable; (ii) to
file any elections, designations or similar filings relating to Taxes
for which the Company is or may be liable; (iii) the Company is
required to pay or remit any Taxes or amounts on account of Taxes; or
(iv) any Governmental Authority may assess or collect Taxes for which
the Company is or may be liable;
(d) other than those agreements and arrangements described in subsection
(c), the Company has not made, prepared and/or filed any elections,
designations or similar filings relating to Taxes or entered into any
agreement or other arrangement in respect of Taxes or Tax Returns that
is not disclosed in the Company's Tax Returns;
(e) there are no proceedings, investigations, audits or Claims now pending
or threatened against the Company in respect of any Taxes and there are
no matters under discussion, audit or appeal with any Governmental
Authority relating to Taxes;
(f) the Company has duly and timely withheld all Taxes and other amounts
required by Law to be withheld by it (including Taxes and other amounts
required to be withheld by it in respect of any amount paid or credited
or deemed to be paid or credited by it to or for the account or benefit
of any Person, including any Employees, officers or directors and any
non-resident Person), and has duly and timely remitted to the
appropriate Governmental Authority such Taxes and other amounts
required by Law to be remitted by it;
(g) the Company has duly and timely collected all amounts on account of any
sales or transfer taxes, including goods and services, harmonized sales
and provincial sales taxes, required by Law to be collected by it and
has duly and timely remitted to the appropriate Governmental Authority
any such amounts required by Law to be remitted by it;
(h) the Company is duly registered under subdivision (d) of Division V of
Part IX of the Excise Tax Act (Canada) with respect to the goods and
services tax and harmonized sales tax;
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(i) None of Sections 78, 79, 80, 80.01, 80.02, 80.03 or 80.04 of the Income
Tax Act (Canada), or any equivalent provision of the Tax legislation of
any province or other jurisdiction, have applied or will apply to the
Company at any time prior to and including Completion;
(j) The Canada Shares are not "taxable Quebec Property" within the meaning
of the Taxation Act, Quebec.
(k) The Canada Shares and the Japan Shares are recorded in share registers
that are (and have been for at least one month from the date of this
Agreement) kept outside of the United Kingdom.
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SCHEDULE 14
TAX REPRESENTATIONS AND WARRANTIES FOR HYPROTECH INC., EA SYSTEMS INC.,
EA SYSTEMS (CALIFORNIA) INC. AND EA SYSTEMS (EUROPE) INC.,
SAVE FOR WARRANTY 2.5 WHICH SHALL BE IN RESPECT OF ALL HYPROTECH COMPANIES
1. INTERPRETATION
1.1 For the purpose of this Schedule 14 all definitions shall have the same
meaning as those set out in the Agreement and the Tax Deed unless
otherwise specified.
1.2 The following words shall have the following meanings:
"TAX OR TAXES" mean any United States federal, state,
local, or non-United States income, gross
receipts, license, payroll, employment,
excise, severance, stamp, occupation,
premium, windfall profits, environmental
(including taxes under Section 59A of the
Internal Revenue Code), customs duties,
capital stock, franchise, profits,
withholding, social security (or similar),
unemployment, disability, real property,
personal property, sales, use, transfer,
registration, value added, alternative or
add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest,
penalty, or addition thereto, whether
disputed or not
"TAX RETURN" means any return, declaration, report, claim
for refund, or information return or
statement relating to Taxes, including any
schedule or attachment thereto, and
including any amendment thereof
"US COMPANIES" Hyprotech Inc. and EA Systems, a corporation
incorporated under the laws of Delaware
"US PARENT" AEA Technology Inc., a corporation
incorporated under the laws of Delaware
83
"US TREASURY REGULATIONS" United States Treasury Income Tax
Regulations issued by the United States
Treasury Department
2. TAX WARRANTIES
2.1 Tax returns. US Parent and each of the US Companies has filed all Tax
Returns (As defined herein) that it was required to file. All such Tax
Returns were correct and complete in all material respects.
2.2 All Taxes (as defined herein) due and payable by or with respect to the
US Companies, whether or not shown on any Tax Return, have been timely
paid. Neither US Company currently is the beneficiary of any extension
of time within which to file any Tax Return.
2.3 There is no material dispute or claim concerning any Tax liability of
either of the US Companies that either (A) has been claimed or raised
by any authority in writing or (B) as to which the Vendor and the
directors and officers of the US Companies has knowledge based upon
personal contact with any agent of such authority.
2.4 Neither of the US Companies have waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
tax assessment or deficiency.
2.5 All Hyprotech Companies are not obligated to make, and as a result of
any event connected with the transactions contemplated by this
Agreement, will not become obligated to make, any "excess parachute
payment" within the meaning of Section 280G of the Code (without regard
to Section 280G(b)(4) of the Code) in connection with the "change of
control" resulting from the transactions contemplated by this
Agreement.
2.6 No transaction contemplated by this Agreement is subject to withholding
under Section 1445 of the Code.
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SCHEDULE 15
TAX REPRESENTATIONS AND WARRANTIES FOR HYPROTECH EUROPE SL
1. INTERPRETATION
1.1 For the purpose of this Schedule 15 all definitions shall have the same
meaning as those set out in the Agreement and the Tax Deed unless
otherwise specified.
1.2 The following words shall have the following meanings:
"COMPANY" means Hyprotech Europe, S.L.
"TAXES" refers in general to the taxes currently in
force in Spain, whether imposed by the
State, an Autonomous Community, a
municipality or any other authority and
equivalent taxes in Belgium and Norway,
particularly including:
Corporate Income Tax
Non-Residents' Income Tax
Withholdings of Personal Income Tax
/Corporate
Income Tax
Value Added Tax
Customs and Excise Duties
Transfer Tax and Stamp Duty
Tax on Economic Activities
Real estate tax
Other minor local taxes
and equivalent taxes in Belgium and Norway.
"FINANCIAL STATEMENTS" means the Company's Balance Sheet and Profit
and Loss Account as of March 31, 2002
2. TAX WARRANTIES
2.1 The Company does not have nor has received any indication that it will
have or be claimed any liability for Taxes (whether accrued, definite,
contingent or otherwise and regardless of whether such liability is to
be borne by the Company in its condition as taxpayer or otherwise)
arising out of any transaction entered into or any state of facts
existing on or prior to the Date of the Agreement, in excess of the
amounts
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adequately and specifically reserved therefor in the Financial
Statements and in addition to Taxes in respect of the day-to-day
business operations of the Company since such date. The Company has
correctly filled out and filed on a timely basis all returns, reports,
notifications and other documents it is required to do either by the
appropriate Tax authorities or in accordance with applicable Tax laws,
whether in compliance of its obligations or to benefit from a given
relief, and no such returns, reports, notifications or documents have
been contested or are under dispute vis-a-vis the authorities
concerned.
2.2 The Company has always paid the Taxes on a timely basis, or in the case
of default, any penalty, interest surcharge or fine in connection with
any Tax Liability due up to and including the Date of the Agreement.
2.3 The Company has effected the relevant tax prepayments for all
applicable Taxes and has duly withheld or collected all Taxes which are
required to be withheld or collected and, to the extent required, has
paid the amount so withheld or collected to the proper Tax authority,
or has properly set aside or deposited such amount as required by the
applicable laws or regulations.
2.4 The Company has complied with all its reporting and other obligations
to the authorities in connection with any benefits provided to its
employees and directors.
2.5 The Company has not been submitted to any inspection with respect to
any of the Taxes, including corporate income tax ("Impuesto de
Sociedades"), VAT ("I.V.A"), transfer tax, customs and excise duties
and social security obligations, nor is aware of any inspection
affecting a person or party, for which outcome it may become affected.
There exist no default payments or claims in respect of Taxes
concerning the last four years, nor with respect to earlier years in
which regard the Statute of Limitations shall have been interrupted,
nor for the current year.
2.6 The Company is not and does not expect to be involved in any dispute in
relation to Taxes, and the competent authorities have not indicated
that they intend to investigate the Tax affairs of the Company. The
relevant VAT bookkeeping and invoicing requirements have been properly
met, and all of the commercial documentation of at least the past six
years is being kept, including all documents of an earlier date to the
extent affecting the Company's liability with respect to the Taxes,
including documentation concerning deductions, credits, exemptions,
carryovers, precedents, approved plans (deferral / reinvestment /
amortisation) and the like.
2.7 The Company has not made and is not under any obligation to make, at
any time, any payments of interest or other payments for which no
relief will be received by way of a
86
deduction or charge on income, other than as reflected in the Tax
returns of the Company.
2.8 No liability for Taxes of the Company (including a loss of relief on
account of Tax losses) will arise in respect of nor as a result of
entering into this Agreement.
2.9 The Company has not entered into nor has otherwise been involved in any
transactions which may be submitted to a Transfer Pricing adjustment,
nor has it held shares in a company from which passive income should
have been imputed for tax purposes, nor has it had nor has any direct
or indirect debt with a related party that may allow application of the
thin capitalisation rule.
2.10 The Company has not taken any tax relief or deduction which application
depends wholly or partly on the fulfilment of a specific condition
which has not occurred or must continue to occur or which still needs
to occur.
2.11 All of the above applies equally with respect to tax duties,
liabilities, obligations, deductions, credits and / or exemptions
arising our of or in connection with the Company's foreign presence or
trade, particularly through its branches in Belgium and Norway, whether
such tax duties, liabilities, obligations, deductions, credits and / or
exemptions refer to taxes payable in Spain or elsewhere, adequately
adjusted with regard to the Statute of Limitations.
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SCHEDULE 16
TAX REPRESENTATIONS AND WARRANTIES FOR HYPROTECH INDIA PRIVATE LIMITED
1. INTERPRETATION
1.1 For the purposes of this Schedule 16 all definitions shall have the
same meaning as set out in the Agreement and the Tax Deed unless
otherwise specified.
1.2 All references to "the Company" in this Schedule 16 mean Hyprotech
India Private Limited.
1.3 All reference to "Returns" in this Schedule 16 mean any return, report,
declaration, filing or request for the extension of due date thereof in
respect of Taxes.
2. TAX WARRANTIES
2.1 The Company has filed all Returns with respect to Taxes required to be
filed by it in a timely manner. All such Returns were at the time filed
and are as of the date hereof complete and correct in all material
respects.
2.2 All Taxes due, or shown to be due on each filed Return have been paid,
except for Taxes being diligently contested in good faith by the
Company and which are described in Disclosure Letter. All Taxes which
the Company is required to withhold or collect have been withheld or
collected and have been paid over to or will be paid over to the proper
government authorities as required (including as to the due time of
payment). The Company has duly responded to or furnished requisite
particulars or clarifications or complied with all notices, inquiries,
assessment notices received from taxing authorities. Neither the
Income-tax authorities nor any other taxing authority is now asserting
or, to the knowledge of the Company or the vendor, threatening to
assert against the Company any deficiency or claim for additional
Taxes.
2.3 The Company has no liabilities for Taxes which have not been recognised
in its books whether assessed, contingent or otherwise.
2.4 The Company has discharged their liabilities for Taxes or made adequate
provisions in the Accounts for discharging their liabilities for Taxes.
The Company has not been a party to any exercise or scheme which has or
will have the effect of evasion or deferring Taxes. The Company has
discharged or have taken all reasonable steps for discharging their
obligations under the taxation laws and regulations applicable to them
including (i) obtaining various registrations, certificates, approvals,
permissions from taxation or regulatory authorities, or (ii) depositing
Taxes deducted or withheld
88
at source, issuing certificates for Taxes deducted at source and filing
requisite statements and returns with concerned taxation or regulatory
authorities.
89
SCHEDULE 17
TAX DEED
DATE 2002
AEA TECHNOLOGY PLC (1)
AND
ASPEN TECHNOLOGY INC. (2)
--------------------------------
TAX DEED
RELATING TO THE SALE AND PURCHASE
OF THE HELIUM COMPANIES
--------------------------------
SUBJECT TO CONTRACT
90
TABLE OF CONTENTS
1. DEFINITIONS
2. INTERPRETATION
3. COVENANTS BY COVENANTOR
4. EXCLUSIONS
5. OBLIGATIONS AND RELEASE OF COVENANTOR
6. CONDUCT OF NEGOTIATION AND PROCEEDINGS
7. DATE FOR PAYMENT
8. DEGROUPING CHARGE
9. MITIGATION OF LIABILITY
10. SAVINGS, REPAYMENTS AND OVERPROVISIONS
11. PURCHASER'S COVENANT
12. VAT GROUP
13. TAX RETURNS FOR PERIODS BEFORE AND INCLUDING COMPLETION
14. TIME LIMITATION
15. SALE OF STOCK OF UNITED STATES COMPANIES
16. WITHHOLDING TAX
17. GENERAL
91
DATE OF DEED 2002
PARTIES
(1) AEA TECHNOLOGY PLC (registered number 3095862) whose registered office
is at 329 Harwell, Didcot, Oxfordshire, OX11 OQJ ("the Vendor")
(2) ASPEN TECHNOLOGY, INC. whose registered office is at Xxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("the Purchaser")
INTRODUCTION
(A) The Covenantor has agreed to sell each of the companies engaged in the
Helium Business (a complete and accurate list of which is set out in
Schedule 1 of the Agreement) to the Purchaser (or a subsidiary or
subsidiaries of the Purchaser, as the case may be). The terms of the
sale are set out in the Agreement.
(B) The Agreement provides for the Covenantor to enter into this deed which
contains certain covenants on its part in favour of the Purchaser
relating to taxation matters.
THIS DEED WITNESSES THAT:
1. DEFINITIONS
1. In this deed the following words have the meanings set out below.
1.1.1 "Accounts" means the Draft Accounts as defined in the
Agreement.
1.1.2 "Accounting Date" means 31 March 2002.
1.1.3 "Actual Liability to Taxation" means any liability to make an
actual payment of Taxation.
1.1.4 "Agreement" means an agreement dated made between the Vendor
(1) and the Purchaser (2).
1.1.5 "Auditors" means the auditors of the Company for the time
being.
1.1.6 "Claim" means:
1.1.6.1 any letter, assessment, reassessment, notice, demand
or other document issued or action taken by any
Taxation Authority; or
1.1.6.2 any action that the Company has to take as a result
of any Taxation legislation or requirement of the
relevant Taxation Authority, from which it appears
that the Company is or may be or may become liable to
any Liability to Taxation.
1.1.7 "Company" means each and any of the companies engaged in the
Helium Business (a complete and accurate list of which is set
out in Schedule 1 of the Agreement).
1.1.8 "Covenantor" means the Vendor.
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1.1.9 "Covenantor's Relief" means any Relief which is or
subsequently becomes available to the Company other than a
Relevant Relief or a Post-Accounting Date Relief.
1.1.10 "Effective Liability to Taxation" shall have the meaning given
in clause 2.4.
1.1.11 "Event" includes any event, act, transaction or omission or
deemed event, act, transaction or omission or combination or
series of actual or deemed events, acts, transactions or
omissions whether or not the Company is a party to it,
including (without limitation), the declaration, payment or
making of any dividend or other distribution, and completion
of the sale of the shares of the Company to the Purchaser
pursuant to the Agreement.
1.1.12 "Group Relief" means (in relation to United Kingdom Taxation
only) any relief surrendered pursuant to Chapter IV of Part X
of the Taxes Act or advance corporation tax surrendered or
claimed pursuant to section 240 of the Taxes Act or any
taxation refund surrendered or claimed pursuant to section 102
of the Finance Xxx 0000.
1.1.13 "Internal Revenue Code" means the U.S. Internal Revenue Code
of 1986, as amended.
1.1.14 "Liability to Taxation" means any Actual Liability to Taxation
and/or Effective Liability to Taxation and/or other payment
and/or liability referred to in clause 3.
1.1.15 "non-availability" includes in relation to a Relief the
reduction, loss, claw-back, disallowance or cancellation of
that Relief or right to repayment of Taxation or a failure to
obtain a Relief or to receive the benefit of a right to
repayment of Taxation to which the Company was or assumed it
was entitled.
1.1.16 "Overprovision" means (i) the amount by which any provision
for Taxation in the Accounts proves to be an overprovision,
and (ii) the amount by which any repayment of Taxation which
is treated as an asset in the Accounts proves to be
understated, in either case except to the extent that such
overprovision results from the utilisation of a Relevant
Relief or a Post-Accounting Date Relief.
1.1.17 "Post-Accounting Date Relief" means (i) any Relief which
arises as a result of any Event occurring after Completion or
(ii) any Relief which arises as a result of any Event
occurring after the Accounting Date and before Completion
which is in the ordinary course of business of the Company.
1.1.18 "Relevant Relief" means:
1.1.18.1 any Relief which was treated as an asset of the
Company in the Accounts; or
1.1.18.2 any Relief which was taken into account in
computing (and so reducing or eliminating)
any provision for deferred Taxation which
appears in the Accounts or which would have
appeared in the Accounts but for the
presumed availability of such Relief,
and for this purpose "Relief" shall include any Relief, which
the Company has assumed is available to it and has been
utilised in the manner described in
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clauses 1.1.18.1 or 1.1.18.2, whether or not at the time of
such utilisation the Company was actually entitled to any such
Relief.
1.1.19 "Relief" means any loss, relief, allowance, exemption, credit,
set-off, charge or deduction or right to repayment of Taxation
in respect of any Taxation or for the purposes of computing
income profits or gains for Taxation, including (without
limitation) losses which the meaning of section 393 of the
Taxes Act.
1.1.20 "Repayment" means the obtaining by the Company of a repayment
of Taxation after the Covenantor has made a payment under this
deed or under the Agreement for breach of any of the Taxation
Warranties, in either case in respect of the same Taxation
which is the subject of the repayment.
1.1.21 "Respective Time Limit" means:
1.1.21.1 seven (7) years after the date of this deed for
any Claim which arises as a result of a Liability
to Taxation of Advanced Systems Consultants
Limited and Hyprotech UK Limited;
1.1.21.2 ninety (90) days after the expiration of the
statute of limitations of the relevant tax for any
Claim which arises as a result of a Liability to
Taxation of any of the US Companies;
1.1.21.3 ninety (90) days after the relevant authorities
shall no longer be entitled to assess a
Liability for Taxation against AEA
Technology Canada Limited or Hyprotech Ltd
for any Claim which arises as a result of a
Liability to Taxation of Hyprotech Limited
or AEA Technology Canada Limited (provided
that the Respective Time Limit shall not be
extended by virtue only of any waiver given
by any of AEA Technology Canada Limited or
Hyprotech Limited after Completion without
the consent of the Covenantor, such consent
not to be unreasonably withheld);
1.1.21.4 ninety (90) days after the expiration of the
statute of limitations of the relevant tax for any
Claim which arises as a result of a Liability to
Taxation of Hyprotech India Private Limited;
1.1.21.5 nine (9) years after the date of this deed for any
Claim which arises as a result of a Liability to
Taxation of Hyprotech Malaysia SDN BHD;
1.1.21.6 ninety (90) days after the expiration of the
statute of limitations of the relevant tax for any
Claim which arises as a result of a Liability to
Taxation of Hyprotech Japan Limited; and
1.1.21.7 five (5) years after the date of this deed for any
Claim which arises as a result of a Liability to
Taxation of Hyprotech Europe SL.
1.1.22 "Saving" means the amount of any reduction in a liability of
the Company or the Purchaser (or any member of the same group
of companies as the Purchaser) to make an actual payment of
Taxation in respect of which the Covenantor would not have
been liable under this deed or under
94
the Agreement for breach of any of the Taxation Warranties,
where such reduction occurs as a result of the utilisation of
a Relief, and where such Relief has arisen as a result of any
payment made by the Covenantor under this deed or under the
Agreement for breach of any of the Taxation Warranties and
which would not otherwise have arisen.
1.1.23 "Taxation" means all forms of taxation, and statutory,
governmental, federal, state, provincial, local governmental
or municipal impositions, duties, imposts, contributions,
fees, premiums, assessments, rates and levies in the nature of
taxation, in each case whether of the United Kingdom or
elsewhere in the world whenever imposed, and any payment
whatsoever which the Company may be or become bound to make to
any person (as a result of any enactment or law relating to
Taxation) as a result of the discharge by that person of any
Taxation which the Company has failed to discharge, including
(without limitation):
1.1.23.1 any income tax required to be deducted or withheld
from or accounted for in respect of any payment
under section 203 of the Taxes Act or otherwise
and any sums paid or owing to the representative
member of a VAT group (as defined in section 43 of
the VATA (or any corresponding legislation in any
foreign jurisdiction));
1.1.23.2 any United States federal, state, local, or
non-United States income, gross receipts, license,
payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits,
environmental (including taxes under Section 59A
of the Internal Revenue Code), customs duties,
capital stock, franchise, profits, withholding,
social security (or similar), unemployment,
disability, real property, personal property,
sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether
disputed or not; and
1.1.23.3 any taxes, duties, fees, premiums, assessments,
imposts, levies and other similar charges imposed
by any Taxation Authority under applicable law,
including all interest, penalties, fines,
additions to tax or other additional amounts
imposed by any Taxation Authority in respect
thereof, and including those levied on, or
measured by, or referred to as, income, gross
receipts, profits, capital, transfer, land
transfer, sales, goods and services, harmonized
sales, use, value-added, excise, stamp,
withholding, business, franchising, property,
development, occupancy, employer health, payroll,
employment, health, social services, education and
social security taxes, all surtaxes, all customs
duties and import and export taxes, countervail
and anti-dumping, all license, franchise and
registration fees and all employment insurance,
health insurance and Canada, Quebec and other
employee provident fund or government pension plan
premiums or contributions,
and all penalties, fines, charges, costs and interest relating
thereto or relating to any late filings of any returns which
the Company may be or become liable to pay to any Taxation
Authority (or any other person as a result of any enactment or
law relating to Taxation).
1.1.24 "Taxation Authority" means the Inland Revenue, the
Commissioners for
95
Customs and Excise or any other statutory, governmental,
federal, state, provincial, local or municipal authority or
body (whether in the United Kingdom or otherwise) involved in
the collection or administration of Taxation.
1.1.25 "Taxation Benefit" means any Relief or other Taxation benefit
available in the computation of any Liability to Taxation.
1.1.26 "Taxation Warranties" means the warranties, representation and
undertakings in Schedules 10-16 (inclusive) of the Agreement
or any other Warranty which relates to Taxation.
1.1.27 "Taxes Act" means the Income and Corporation Xxxxx Xxx 0000.
1.1.28 "TCGA" means the Taxation of Chargeable Gains Xxx 0000.
1.1.29 "US Companies" means Hyprotech Inc. and EA Systems Inc.
1.1.30 "US Parent" means AEA Technology Inc.
1.1.31 "US Seller" means AEA Technology Inc. as to the sale of the
stock of Hyprotech Inc. and EA Systems Inc.
1.1.32 "VATA" means the Value Added Tax Xxx 0000.
2. INTERPRETATION
2.1 Reference to income or profits or gains, earned, accrued or received
includes income or profits or gains deemed to have been, treated as or
regarded as earned, accrued, received or otherwise arising for the
purposes of any Taxation legislation.
2.2 Reference to a Claim for Taxation shall include any Claim whether made
before or after Completion.
2.3 Reference to the result of an Event or Events on or before Completion
includes the combined result or results of two or more Events, each of
which shall have taken place on or before Completion.
2.4 Any reference to an "Effective Liability to Taxation" shall be
construed as a reference to:
2.4.1 the set-off of any Post-Accounting Date Relief or Relevant
Relief against any Actual Liability to Taxation or against any
income, profit or gains in respect of which the Covenantor
would, but for such set-off, have been liable under clause 3.1
and, for the purposes of clause 3.1, the amount of such an
Effective Liability to Taxation arising as a result of such
set-off will be an amount equal to the amount of Taxation
saved as a result of the set-off; or
2.4.2 the non-availability (in whole or in part) of any Relevant
Relief and, for the purposes of clause 3.1, the amount of such
Effective Liability to Taxation shall be:
2.4.2.1 if the Relevant Relief was a deduction from or
set-off against Taxation or a right to repayment of
Taxation, the amount of that Relevant Relief; or
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2.4.2.2 in any other case, the amount of Taxation that would
have been saved but for such non-availability
(subject to clause 7.1.5) on the assumption that the
Relevant Relief was available and was capable of
being fully utilised and was so utilised immediately
prior to it becoming non-available.
2.4.3 subject to clause 16, any liability of the Company pursuant to
any agreement or arrangement entered into before Completion to
make a payment for, or to repay the whole or part of any
payment received for, Group Relief or any Taxation Benefit
(other than to another Company), and, for the purposes of
clause 3.1 the amount of such Effective Liability to Taxation
shall be the amount of such liability (disregarding any
set-off);
2.4.4 the loss of a right to a payment or other consideration (taken
into account as an asset in the Accounts) for the surrender of
Group Relief or any Taxation Benefit (other than from another
Company), and, for the purposes of clause 3.1 the amount of
such Effective Liability to Taxation shall be equal to the
amount taken into account in the Accounts.
2.5 Words and expressions defined or used in the Agreement shall (unless
the context requires otherwise) have the same meanings in this deed.
2.6 Any reference to a statutory provision includes a reference to all
prior and subsequent modifications, re-enactments and amendments of
that provision and any regulation made under it.
2.7 Reference to clauses shall be a reference to the clauses of this deed
unless otherwise stated.
2.8 Reference to the singular number shall include the plural and vice
versa.
2.9 For the avoidance of doubt, reference to any Actual Liability to
Taxation of the Company which results from any gains earned or received
or any Event which occurs or is deemed to occur on or before Completion
for the purposes of Taxation shall include a reference to any Liability
to Taxation arising under Section 179 TCGA (or any corresponding
legislation in any foreign jurisdiction) which results from the sale of
the Shares pursuant to the Agreement.
2.10 There shall be excluded (without limitation) from the meaning of
"ordinary course of business" any Event which results in or involves
any of the following:
2.10.1 any Taxation arising in respect of any distribution or deemed
distribution;
2.10.2 any Taxation arising in respect of the acquisition, disposal
or supply or deemed acquisition, disposal or supply of any
assets, goods, service or business facility of any kind
(including a loan of money or the letting, hiring or licensing
of any tangible or intangible property) to the extent that the
consideration deemed for Taxation purposes is in excess of
that (if any) actually received or to the extent that the
consideration deemed for Taxation purposes is less than that
actually given;
2.10.3 any Taxation arising in respect of a transaction which results
in the Company becoming liable to pay or bear Taxation
chargeable directly or primarily against or attributable
directly or primarily to another person, firm or company
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other than any Taxation which the Company has deducted
pursuant to the provisions of section 203 of the Taxes Act (or
its overseas equivalent);
2.10.4 any Taxation to the extent that it arises as a result of any
failure by the Company to properly file any tax returns,
account for any Taxation or otherwise act in accordance with
all applicable laws (including, without limitation, any
Taxation arising as a result of the operation of any penalty
provisions, any interest and any penalty payments);
2.10.5 any Taxation which arises to the extent that the Company
failed to deduct or which arises as a result of a failure by
the Company to deduct or duly account for Taxation; and
2.10.6 any Taxation arising from the disposal or acquisition or
deemed disposal or acquisition of any asset other than trading
stock for a consideration in each case in excess of
(pound)100,000.
3. COVENANTS BY COVENANTOR
3.1 Subject as hereinafter provided the Covenantor hereby covenants to pay
to the Purchaser an amount equal to:
3.1.1.1 any Actual Liability to Taxation of the Company in respect of
any period up to and including Completion, including for
greater certainty, any Actual Liability to Taxation of the
Company resulting from or by reference to:
3.1.1.1 any income, profits or gains earned, accrued or
received on or before Completion; or
3.1.1.2 any Event which occurred on or before Completion or
was deemed to occur on or before Completion for the
purposes of Taxation whether alone or in conjunction
with other Events (each occurring on or before
Completion); or
3.1.1.3 the provisions of section 767A and 767AA of the
Taxes Act or sections 179, 190 and 191 of the TCGA
(or any corresponding legislation in any foreign
jurisdiction) in relation to corporation tax (or any
corresponding Taxation in any foreign jurisdiction)
assessed on any company (other than a Company)
remaining unpaid where the company in question is or
was under the control of the Covenantor on or before
Completion; or
3.1.1.4 any Event occurring after Completion in pursuance of
a legally binding obligation or arrangement, in
either case whether or not conditional, incurred or
entered into on or before Completion outside the
ordinary course of business of the Company;
3.1.2 any Effective Liability to Taxation;
3.1.3 any liability of the Company to pay or repay an amount in
respect of Taxation under any agreement, indemnity, guarantee,
covenant, mortgage or charge or other contractual obligation
entered into on or before Completion which is outside the
ordinary course of business of the Company;
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3.1.4 any Liability to Taxation of the Company which is also a
Liability to Taxation of another person (other than a Company)
and which is payable by the Company by virtue of (i) the other
person failing to discharge such Liability to Taxation and
(ii) the Company being at any time before Completion a member
of the same group as such other person or otherwise connected
with or related to such other person for Taxation purposes,
including, without limitation, any Liability to Taxation
pursuant to United States Treasury Income Tax Regulation
1.1502-6 or similar provision of state or local law; and
3.1.5 any reasonable costs and expenses properly incurred by the
Purchaser and/or the Company in connection with any such
Liability to Taxation (or claim therefor) or in successfully
taking or defending any action under this deed.
3.2 The Covenantor hereby covenants to pay to the Purchaser an amount equal
to any Liability to Taxation of Hyprotech UK Limited resulting from, in
connection with or by reference to the transfer of the Helium trade and
assets from the Covenantor to Hyprotech UK Limited on or about 29
December 2001 ("the Transfer"), including (for the avoidance of doubt
and without limitation):
3.2.1 any liability to corporation tax pursuant to section 179 TCGA,
3.2.2 any liability to value added tax, and
3.2.3 the amount of any stamp duty payable on any document of
transfer in relation to the Transfer or in relation to the
Helium trade and assets.
3.3 The Covenantor hereby covenants to pay to the Purchaser an amount equal
to any Liability to Taxation of the Company which is assessed by any
Taxation Authority in connection with or by reference to:
3.3.1 the activities and the employees of any representative office,
branch, agency or other permanent establishment of the Company
in any jurisdiction other than the jurisdiction in which the
Company is incorporated (or, if different, resident for
Taxation purposes),
3.3.2 the non-declaration and/or underdeclaration of any income,
profits or gains of the Company to any Taxation Authority in
any jurisdiction other than the jurisdiction in which the
Company is incorporated (or, if different, resident for
Taxation purposes) (a "Foreign Tax Authority"), whether
attributable to a permanent establishment or otherwise; or
3.3.3 the late filing of Taxation returns with any Foreign Tax
Authority,
in each case on or prior to Completion, but excluding any Liability to
Taxation to the extent that;
a) provision or reserve in respect of the relevant Liability to
Taxation has been made in the Accounts; or
b) such Liability to Taxation would not have arisen but for any Event
which occurred in the ordinary course of business of the Company after
the Accounting Date and before Completion.
3.4 The Covenantor hereby covenants to pay to the Purchaser an amount equal
to any
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Liability to Taxation of AEAT Canada which is assessed by any
Taxation Authority in connection with or by reference to the sale,
transfer, or other disposition of AEA Software Engineering Limited to
the Covenantor on or prior to Completion, in accordance with clause 3.5
of the Agreement, to the extent that AEAT Canada has not been left with
sufficient cash to pay any such Liability to Taxation by the Covenantor
in accordance with subclause 3.5.2 (such cash sum taking into account
any Covenantor's Relief available to AEAT Canada to reduce or eliminate
the Liability to Taxation in question).
3.5 In respect of payments made pursuant to the covenants contained within
this deed:
3.5.1 all sums payable by the Covenantor to the Purchaser shall be
paid free and clear of all deductions, withholdings, set-offs
or counterclaims whatsoever save only as may be required by
law; and
3.5.2 if any deductions or withholdings are required by law to be
made from any sums, the Covenantor shall be obliged to pay the
Purchaser such further amount as will, after the deduction or
withholding has been made (taking into account any Relief
available to the Purchaser by reason of such deduction or
withholding), leave the Purchaser with the same amount as it
would have been entitled to receive in the absence of such
requirement to make a deduction or withholding; and
3.5.3 if any sum payable by the Covenantor to the Purchaser under
clause 3 (including clause 3.5.2 and this clause 3.5.3) shall
be subject to an Actual Liability to Taxation in the hands of
the Purchaser or would have been so subject but for the
availability of a Relief, the Covenantor shall pay to the
Purchaser such further sum equal to such Actual Liability to
Taxation, but
3.5.4 in the event that the benefit of this deed is assigned by the
Purchaser, clause 3.5.3 shall not apply to the extent that an
Actual Liability to Taxation in the hands of the assignee is
greater than an equivalent Actual Liability to Taxation in the
hands of the Purchaser.
4. EXCLUSIONS
4.1 Subject to clause 4.2, the covenants by the Covenantor in clause 3.1
shall not apply to any Liability to Taxation, nor shall the Covenantor
be liable for any breach of any Taxation Warranty, to the extent that:
4.1.1 provision or reserve in respect of the relevant Actual
Liability to Taxation has been made in the Accounts; or
4.1.2 such Liability to Taxation was discharged on or before
Completion; or
4.1.3 the Covenantor has already made a payment to the Purchaser in
respect of the same Liability to Taxation under this deed or
the Agreement; or
4.1.4 such Liability to Taxation would not have arisen but for a
change in legislation (including but not limited to an
increase in rates of Taxation) first announced and coming into
effect after Completion; or
4.1.5 such Liability to Taxation would not have arisen but for the
Company changing any of its accounting policies, bases or
practices (including, but not
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limited to, the date to which the Company prepares its
accounts, the treatment of timing differences, the bases on
which the Company values its assets and its taxation reporting
practice) after Completion, but not including any such change
in order to comply with any generally accepted accounting
principles, any financial reporting standard, any statement of
standard accounting practice or any rule of law, in each case
existing at the date hereof; or
4.1.6 such Liability to Taxation would not have arisen but for a
voluntary act or omission of the Purchaser of the Company
after Completion, but not including any act or omission:
4.1.6.1 carried out or effected under a legally binding
commitment created on or before Completion, or
4.1.6.2 carried out or effected in the ordinary course of
business of the Company or the Purchaser, or
4.1.6.3 which the Purchaser or the Company was not aware, and
could not reasonably have been expected to be aware,
would give rise to such Liability to Taxation; or
4.1.7 such Liability to Taxation would not have arisen but for (i)
the Company ceasing to carry on any trade or business after
Completion, or (ii) the Company effecting a major change after
Completion in the nature or conduct of any trade or business
carried on by it, or (iii) any reorganisation or change in the
ownership of a Company after Completion, but not including any
cessation, reorganisation or change:
4.1.7.1 carried out or effected under a legally binding
commitment created on or before Completion, or
4.1.7.2 carried out or effected in the ordinary course of
business of the Company or the Purchaser, or
4.1.7.3 which the Purchaser or the Company was not aware, and
could not reasonably have been expected to be aware,
would give rise to such Liability to Taxation; or
4.1.8 such Liability to Taxation would not have arisen but for the
failure by the Company after Completion to make any claim,
election, surrender or disclaimer, the making of which was
permitted by law and which was taken into account in computing
and so reducing any provision for Taxation which appears in
the Accounts (or eliminating any provision for Taxation which,
but for such Relief, would have appeared in the Accounts) or
in computing any right to a repayment of Taxation which
appears in the Accounts, and which is disclosed to the
Purchaser in the Disclosure Letter (or is notified to the
Purchaser after Completion in sufficient time for the Company
or Purchaser to make such claim, election, surrender or
disclaimer), but not including any failure carried out or
effected under a legally binding commitment created on or
before Completion.
4.1.9 such Liability to Taxation would not have arisen but for any
failure or delay by the Purchaser or the Company in paying
over to any Taxation Authority any payment previously made by
the Covenantor under this deed; or
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4.1.10 a Covenantor's Relief is available to the Company to reduce or
eliminate the Liability to Taxation in question; or
4.1.11 such Liability to Taxation would not have arisen but for any
Event which occurred in the ordinary course of business of the
Company after the Accounting Date and before Completion; or
4.1.12 such Liability to Taxation is in respect of the actual (as
opposed to the deemed) earning or receipt for any Taxation
purposes of any actual (as opposed to deemed) income, profit
or gain which is not (but should have been) recognised in the
Accounts and which, at Completion, is represented by an asset
(being cash or an asset readily realisable into cash) of the
Company which has a value equal to or greater than such
Liability to Taxation; or
4.1.13 such Liability to Taxation arises as a result of any action
taken by the Covenantor or any Hyprotech company which the
Purchaser has specifically requested in writing pursuant to
clause 2.3 of the Agreement.
4.2 The exclusions in clause 4.1 above shall not apply to any Liability to
Taxation of Hyprotech Inc or EA Systems Inc for which the Covenantor is
liable to make a payment to the Purchaser under this deed by virtue of
clause 3.1.4.
5. OBLIGATIONS AND RELEASE OF COVENANTOR
5.1 No delay or omission of the Purchaser or the Covenantor in exercising
any right, power or privilege under this deed shall impair such right,
power or privilege or be construed as a waiver thereof and any single
or partial exercise of any such right, power or privilege shall not
preclude the further exercise of any right, power or privilege.
6. CONDUCT OF NEGOTIATION AND PROCEEDINGS
6.1 If the Purchaser becomes aware of a Claim relevant for the purposes of
this deed or for breach of the Taxation Warranties it shall as soon as
reasonably practicable give written notice of it to the Covenantor but
such notice shall not be a condition precedent to the liability of the
Covenantor under this deed. The notice of the Claim will, in reasonable
detail, explain the Claim and the Liability to Taxation to which the
Claim relates and give a reasonable estimate of the amount thereof.
6.2 If the Covenantor first indemnifies and secures the Purchaser and the
Company to the reasonable satisfaction of the Purchaser against all
losses, costs, liabilities, damages and expenses (including interest on
overdue Taxation which may be incurred thereby) the Purchaser will take
(and procure that the Company takes) such action as the Covenantor may
reasonably and promptly by written notice request to avoid, resist,
appeal, compromise or defend the Claim provided that:
6.2.1 the Purchaser shall not be obliged to procure that the Company
appeal against the Claim, if having given the Covenantor
written notice of the receipt of the Claim the Purchaser has
not within 30 working days thereafter (or if earlier 5 working
days prior to the expiry of any time limit by which action
must be taken) received instructions from the Covenantor, in
accordance with the preceding provisions of this clause 6.2,
to make that appeal and in such circumstances the Purchaser
may choose to treat the Liability to Taxation in respect of
that Claim as determined at the value specified in the Claim
and/or
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the Purchaser and/or the Company shall (without prejudice to
their rights under this deed) be free to pay or settle the
Claim on such terms as they may in their absolute discretion
consider fit and the Covenantor acknowledges that if the
Purchaser pays or otherwise settles the amount specified in
the Claim then a sum equal to that amount is a liability of
the Covenantor under the covenant in clause 3.1;
6.2.2 the Purchaser shall not be obliged to procure that the Company
pursue any appeal beyond the General Commissioners of Inland
Revenue, the Special Commissioners of Inland Revenue or Value
Added Tax Tribunal or any equivalent forum in the United
Kingdom or any other jurisdiction unless the Covenantor
furnishes the Purchaser with the written opinion of leading
Tax Counsel to the effect that an appeal against the Liability
to Taxation will, on the balance of probabilities, be won; and
6.2.3 the Purchaser shall not in any event be obliged to comply with
any unreasonable instruction of the Covenantor to make a
settlement or compromise of the Claim or agree to any matter
in the course of disputing the Claim which is likely to
adversely affect the amount thereof or materially increase the
future liability of the Company in respect of Taxation or
materially and adversely affect the relationship of the
Company with the relevant Taxation Authority.
6.3 The action which the Covenantor may request under clause 6.2 shall
include (without limitation) allowing the Covenantor to take on or take
over at its own cost and expense the conduct of the Claim, unless any
action or other step is taken to put the Covenantor into liquidation,
receivership or administration (and if the Covenantor has taken over
any Claim when such action or step occurs, the conduct of the Claim
shall automatically revert to the Purchaser).
6.4 If the Covenantor takes on or takes over the conduct of the Claim
pursuant to clause 6.3:
6.4.1 the Covenantor shall keep the Company fully informed of all
matters relating to the Claim and shall promptly send all
correspondence in connection therewith to the Company;
6.4.2 all written communications which are to be transmitted to the
Taxation Authorities in connection with the Claim shall first
be submitted to the Purchaser (or its advisers) for written
approval and shall not be submitted without such prior written
approval (such written approval not to be unreasonably
withheld or delayed).
6.5 If the Covenantor or the Company shall have committed acts or omissions
which any Taxation Authority alleges constitute fraudulent conduct
(pursuant to section 36 of the Taxes Management Act 1970) (or any
corresponding legislation in any foreign jurisdiction) neither clause
6.2 nor clause 6.3 shall not apply.
7. DATE FOR PAYMENT
7.1 The Covenantor shall make payments to the Purchaser under this deed
within 5 Business Days after the date on which a notice containing a
written demand for the amount of the payment required to be made is
delivered to the Covenantor or, if later, on the following dates:
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7.1.1 in so far as a Claim represents Taxation to be borne by the
Company but which has not yet become due, the Covenantor shall
make the payment in respect of that Claim (or so much thereof
as represents that Taxation) 5 Business Days before that
Taxation becomes due;
7.1.2 in so far as a Claim consists of the loss of a right to
repayment of Taxation, the Covenantor shall make the payment
in respect of that Claim (or so much thereof as represents
that loss) on the date on which that repayment would otherwise
have become due; and
7.1.3 in a case which falls within paragraph 2.4.4 (loss of payment
rights relating to the surrender of Group Relief or any other
Taxation Benefit), not later than the day on which the right
to a payment or other consideration is lost;
7.1.4 in a case which falls within paragraph 2.4.3 (liability for
Group Relief or any other Taxation Benefit payments), not
later than 5 Business Days before the day on which the Company
is due to make the payment or repayment;
7.1.5 in a case which falls within paragraph 2.4.2.2
(non-availability of a Relevant Relief where the Relevant
Relief was not a deduction from or set-off against Taxation or
a right to repayment of Taxation), not later than the later of
5 Business Days after Taxation is paid which otherwise would
not have been paid and the date on which a notice containing a
written demand for the amount of the payment required to be
made is delivered to the Covenantor (such notice not to be
delivered unless the Relevant Relief could actually have been
used to reduce or eliminate any Liability to Taxation of the
Company);
7.1.6 in any other case, within 5 Business Days after the date on
which a notice containing a written demand for the amount of
the payment required to be made is delivered to the
Covenantor;
and for this purpose references to a date on which Taxation becomes due
include a reference to the date on which it would have become due were
it not for the availability of some Relief or right to repayment of
Taxation. Any payment which becomes due on a day which is not a
Business Day shall be paid on the next following Business Day, and any
payment which is made after noon on any day shall, for the purposes of
calculating interest, be deemed to have been paid on the next following
Business Day. No payment shall be treated as made until cleared funds
in respect thereof are available to the Purchaser.
7.2 If any payment required to be made by the Covenantor or the Purchaser
under this deed is not made by the due date for payment thereof, then
that payment shall carry interest from the due date of payment until
actual payment at the rate of 2 per cent above the base rate from time
to time of Barclays Bank plc compounded on the usual quarter days.
8. DEGROUPING CHARGE
8.1 Where a Liability to Taxation has arisen in relation to Hyprotech UK
Limited or Advanced Systems Consultants Limited for which the
Covenantor is liable to make a payment to the Purchaser under this
deed, and such Liability to Taxation is a liability to corporation tax
pursuant to section 179 TCGA, the Purchaser and the Covenantor agree to
act in accordance with clause 8.2.
8.2 To the extent that it is lawfully permitted to do so, the Covenantor
(or such other
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member of the Covenantor's Group as the Covenantor may specify) may
require the Purchaser to procure that a joint election with Hyprotech
UK Limited or Advanced Systems Consultants Limited (as the case may be)
be entered into pursuant to the proposed section 179A TCGA (or such
other legislation as may be enacted hereafter to similar effect),
whereby the whole or part of the chargeable gain that would be deemed
to accrue to Hyprotech UK Limited or Advanced Systems Consultants
Limited (as the case may be) on the deemed sale under section 179 TCGA
as a result of the Covenantor entering the Agreement is deemed to
accrue to the Covenantor (or such other member of the Covenantor's
Group as the Covenantor may specify).
9. MITIGATION OF LIABILITY
9.1 The Covenantor may by notice in writing to the Purchaser reduce or
eliminate any liability which the Covenantor would, apart from this
clause 9.1, have under this deed or under the Agreement for breach of
any of the Taxation Warranties by surrendering or procuring the
surrender to the Company of Group Relief or a Taxation Benefit, or an
overpayment of corporation tax (or its overseas equivalent) (without
the Purchaser or the Company being liable to make any payment in
consideration for such surrender) and the Covenantor's liability under
this deed or for breach of any of the Taxation Warranties will be
reduced or eliminated to the extent of the amount of Taxation reduced
or eliminated by such surrender. To the extent that it is lawfully
permitted to do so, the Purchaser will procure that the Company takes
all such steps, including (without limitation) making and giving all
such claims and consents, as the Covenantor may reasonably request to
effect any such surrender and delivers to the Covenantor a certificate
from the Auditors confirming that such Group Relief, or overpayment of
corporation tax has been so surrendered and such surrenders and
consents so made.
10. SAVINGS, REPAYMENTS AND OVERPROVISIONS
10.1 If, at the Covenantor's request and expense, the Auditors certify that
the Company has obtained a Saving or a Repayment or that an
Overprovision has been made, the Saving, Repayment or Overprovision (as
the case may be) will be applied as follows:
10.1.1 first, the amount of the Saving, Repayment or Overprovision
will be set off against any payment then due from the
Covenantor under this deed or for breach of any of the
Taxation Warranties;
10.1.2 to the extent that there is an excess, a refund shall be made
to the Covenantor of any previous payment made by the
Covenantor under this deed or for breach of any of the
Taxation Warranties (to the extent not previously refunded
under this clause 10) up to the amount of such excess; and
10.1.3 to the extent that the excess referred to in clause 10.1.2
above is not exhausted under that paragraph, the remainder of
the excess shall be carried forward and set off against any
future payment which becomes due from the Covenantor under
this deed or for breach of any of the Taxation Warranties.
10.2 In determining whether or not the Company has obtained a Saving or a
Repayment or whether or not an Overprovision has been made and, if so,
the amount, the Auditors will act as experts and not as arbitrators and
their determination will (in the absence of manifest error) be
conclusive and binding on the parties.
10.3 The Purchaser will inform the Covenantor as soon as reasonably
practicable after it
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or the Company becomes aware that the Company may obtain a Saving or a
Repayment or that there may be an Overprovision.
10.4 Where any such certification as is mentioned in paragraph 10.1 above
has been made, the Covenantor or the Purchaser may (at their own
expense) request the Auditors to review such certification in the light
of all relevant circumstances, including any facts which have become
known only since such certification, and to certify whether such
certification remains correct or whether, in the light of those
circumstances, the amount that was the subject of such certification
should be amended.
10.5 If the Auditors certify under paragraph 10.4 that an amount previously
certified should be amended, that amended amount shall be substituted
for the purposes of paragraph 10.1 as the amount in respect of the
certification in question in place of the amount originally certified,
and such adjusting payment (if any) as may be required by virtue of the
above mentioned substitution shall be made as soon as practicable by
the Covenantor or the Purchaser, as the case may be.
10.6 Where the Purchaser has informed the Covenantor pursuant to clause 10.3
that the Company may obtain a Repayment, provided that the Covenantor
indemnifies the Company, the Purchaser and all other members of the
same group of companies as the Purchaser to the reasonable satisfaction
of the Purchaser against all losses, costs, damages and expenses which
may be incurred thereby, the Purchaser will procure that the Company,
at the Covenantor's cost and expense, takes such action as the
Covenantor may reasonably and promptly request to recover such
Repayment.
10.7 The action which the Covenantor may request the Company to take under
clause 10.6 does not include:
10.7.1 any action which the Purchaser considers to be materially
prejudicial to the business or Taxation affairs of the
Company, the Purchaser or any other members of the same group
of companies as the Purchaser or to which the Purchaser
objects on any other reasonable ground; or
10.7.2 allowing the Covenantor to undertake the conduct of any action
necessary to effect recovery of the amount in question.
11. PURCHASER'S COVENANT
11.1 The Purchaser covenants with the Covenantor to pay to the Covenantor an
amount equal to any liability of the Covenantor to Taxation under
section 767A or 767AA Taxes Act in connection with an Event occurring
in the accounting period of Hyprotech UK Limited or Advanced Systems
Consultants Limited (as the case may be) current at Completion or in
any earlier accounting period and arising as a result of Hyprotech UK
Limited or Advanced Systems Consultants Limited (as the case may be)
failing to discharge such liability together with any losses, costs,
fees or expenses incurred by the Covenantor in connection with such
liability.
11.2 Clause 11.1 shall not apply to any Liability to Taxation in respect of
which the Purchaser is entitled to bring a claim against the Covenantor
under this deed or the Taxation Warranties.
11.3 The Covenantor covenants with the Purchaser that it shall make no claim
under clause 11.1 above to the extent that it has recovered the
Taxation in question under section 767B(2) Taxes Act and to the extent
that it recovers any amount under clause 11.1
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above it shall not seek to recover payment under section 767B(2) Taxes
Act.
11.4 The Purchaser shall subject to clauses 11.2 and 11.3 make payment to
the Purchaser under clause 11.1 within 15 Business Days after the date
on which a notice containing a written demand for the amount of the
payment required to be made is delivered to the Purchaser.
12. VAT GROUP
12.1 Advanced Systems Consultants Limited and Hyprotech UK Limited are
members of a VAT group ("The VAT Group") of which the Covenantor is the
representative member.
12.2 Forthwith after Completion the Covenantor, shall, if it has not already
done so, make an application to H M Customs & Excise for the exclusion
of Advanced Systems Consultants Limited and Hyprotech UK Limited from
The VAT Group, and the Covenantor shall use its reasonable endeavours
to ensure that such application takes effect from Completion or, if
later, the earliest date which H M Customs & Excise will allow ("The
Leaving Date").
12.3 The Purchaser will procure that Advanced Systems Consultants Limited
and Hyprotech UK Limited provide the Covenantor with all information
relating to Advanced Systems Consultants Limited and Hyprotech UK
Limited required for the purposes of the preparation of the VAT return
of The VAT Group in respect of any period that Advanced Systems
Consultants Limited and Hyprotech UK Limited are or have been members
of that VAT Group.
12.4 The Purchaser will procure that Advanced Systems Consultants Limited
and Hyprotech UK Limited pay to the Covenantor an amount equal to:
12.4.1 the amount of VAT for which the Covenantor is obliged to
account to HM Customs and Excise in respect of supplies,
acquisitions or importations made or deemed to be made by
Advanced Systems Consultants Limited and Hyprotech UK Limited
during any period that Advanced Systems Consultants Limited
and Hyprotech UK Limited remain in The VAT Group; after
deducting
12.4.2 an amount equal to all credit allowable in respect of supplies
made to Advanced Systems Consultants Limited and Hyprotech UK
Limited during the same period by reference to input tax
incurred or deemed to be incurred by Advanced Systems
Consultants Limited and Hyprotech UK Limited;
provided that if the amount determined under clause 12.4.2 exceeds the
amount determined under clause 12.4.1 the Covenantor will pay to
Advanced Systems Consultants Limited and Hyprotech UK Limited an amount
equal to that excess. Any amount payable under this clause 12.4 shall
be paid by no later than the due date for payment of VAT in respect of
the relevant period.
12.5 The Covenantor will, in respect of any period up to The Leaving Date,
correctly account for VAT in respect of Advanced Systems Consultants
Limited's and Hyprotech UK Limited's supplies and their entitlement to
input tax and submit the VAT return of The VAT Group, within the
requisite time period for so doing together with payment for the
appropriate amount as represented on the VAT return (subject, in
respect of any payment due from Advanced Systems Consultants Limited
and
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Hyprotech UK Limited in accordance with the above provisions, to the
receipt of the same from Advanced Systems Consultants Limited and
Hyprotech UK Limited).
12.6 The Covenantor will afford the Purchaser, Advanced Systems Consultants
Limited and Hyprotech UK Limited and their representatives, agents and
employees access on reasonable notice to all material information and
documents relating to The VAT Group and relating to a period during
which Advanced Systems Consultants Limited and Hyprotech UK Limited
have been or remain members of The VAT Group and keep all relevant
records for such period as may be required by law.
13. TAX RETURNS FOR PERIODS BEFORE AND INCLUDING COMPLETION
13.1 The Covenantor shall procure that the Purchaser is promptly sent a copy
of any communication from any Taxation Authority insofar as it relates
to or impacts upon the Taxation affairs of the Company for the
accounting period beginning before and ending on or after Completion.
13.2 Subject to the provisions of clause 12, the Covenantor shall afford or
procure that there is afforded to the Company or its duly authorised
agents such information and assistance as the Purchaser or the Company
or its duly authorised agents may reasonably request for the purpose of
preparing, submitting and agreeing the Taxation returns of the Company
for the accounting period beginning before and ending on or after
Completion.
13.3 The Covenantor or its duly authorised agents will (subject to clause
13.11 below, at the Company's cost and expense) prepare the corporation
tax returns and computations of the Company for all accounting periods
ended before Completion, to the extent that they have not been prepared
before Completion.
13.4 At least 20 Business Days before any such returns or computations are
due to be submitted to the relevant Taxation Authority, the Covenantor
will submit them to the Purchaser (or its duly authorised agents) for
review, and the Purchaser will procure that the Company causes the
returns and computations mentioned in clause 13.3 to be authorised,
signed and submitted to the Company's Inspector of Taxes without
amendment or with such amendments as the Purchaser may reasonably
require.
13.5 The Covenantor or its duly authorised agents will (subject to clause
13.11 below, at the Company's cost and expense) prepare all
documentation and deal with all matters (including correspondence)
relating to the corporation tax returns and computations of the Company
for all accounting periods ended before Completion. The Covenantor will
inform the Purchaser of all material matters relating to the agreement
of such corporation tax returns with the Company's Inspector of Taxes
and will provide the Purchaser with copies of all material
correspondence and other documents relating thereto. Furthermore, no
such material matters will be agreed with the Company's Inspector of
Taxes without the Purchaser's written agreement (such agreement not to
be unreasonably withheld or delayed).
13.6 The Purchaser will procure that the Company affords the Covenantor or
its duly authorised agents such access to the Company's books, accounts
and records as is reasonable to enable the Covenantor or its duly
authorised agents to prepare the corporation tax returns and
computations of the Company for all accounting periods ended before
Completion and conduct matters relating to them in accordance with this
clause 13.
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13.7 The Purchaser will procure that the Company keeps the Covenantor fully
informed of its Taxation affairs in respect of the accounting period
beginning before and ending on or after Completion to the extent that
the Covenantor may be liable under this Deed or for breach of any of
the Taxation Warranties in relation thereto, and will not submit or
agree any return or computation to any Taxation Authority for such
period to the extent that the Covenantor may be liable under this Deed
or for breach of any of the Taxation Warranties in relation thereto
without taking account of the Covenantor's reasonable comments (such
comments not to be unreasonably withheld or delayed).
13.8 The Purchaser will procure that the Company promptly makes or gives
such claims, elections, surrenders and consents in relation to Taxation
for all accounting periods of the Company ended before Completion as
the Covenantor reasonably requests in writing, including (without
limitation) the carry forward, carry back, acceptance or surrender of
or any claim or election in relation to any Covenantor's Relief, and
generally does all such things as may reasonably be necessary to give
effect to such claims, elections, surrenders or consents.
13.9 Neither the Company nor the Purchaser shall be required to take any
action under this clause 13 which has or is likely to have any
materially adverse effect on the future liability to Taxation of the
Company or the Purchaser unless the submission, agreement or settlement
thereof has been taken into account in preparing the Accounts.
13.10 Neither the Company nor the Purchaser shall be required to take any
action under this clause 13 which in the Purchaser's reasonable opinion
is false, incomplete, inaccurate or misleading in any respect but
neither the Purchaser nor the Company shall be under any obligation to
the Covenantor to make any enquiry as to the completeness or accuracy
thereof and they shall be entitled to rely entirely on the Covenantor
and/or its agents.
13.11 In the event that the sum of the costs and expenses incurred by each of
the Hyprotech Companies in accordance with clauses 13.3 and 13.5
exceeds, in total, (pound)30,000, the Covenantor hereby covenants to
pay the excess to the Purchaser.
14. TIME LIMITATION
14.1 The Covenantor will not be liable under this deed in respect of a
Liability to Taxation of the Company or under the Agreement for breach
of any Taxation Warranty unless within the Respective Time Limit the
Purchaser has given notice, containing the information specified in
clause 6.1, to the Covenantor of any Claim relating to such Liability
to Taxation and unless legal proceedings are commenced and served on
the Covenantor within 6 months of such notice PROVIDED THAT this clause
14.1 shall not apply in respect of any Liability to Taxation that
involves fraud, wilful default or negligence alleged by any Taxation
Authority.
14.2 The liability of the Covenantor under this deed shall be limited in
accordance with paragraph 2.1 of Schedule 6 of the Agreement (and for
the avoidance of doubt, no other paragraph or clause of the Agreement
(or of any Schedule to the Agreement) shall apply to limit the
liability of the Covenantor under this deed).
15. SALE OF STOCK OF UNITED STATES COMPANIES
15.1 The Purchaser and Covenantor agree that with regards to the sale of the
US Shares by the US Sellers to Purchaser, the following provisions of
Clause 15 will apply
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notwithstanding anything else in this Tax Deed to the contrary.
15.2 Purchaser and Covenantor agree as follows:
15.2.1 The US Parent will include the income, gain and loss of the US
Companies on US Parent's consolidated federal income tax
return for all tax periods through and including the date of
Completion and pay any federal income taxes attributable to
such income, gain or loss. The income, gain and loss of the US
Companies will be included in the Purchaser's consolidated
federal income tax return for all tax periods after the date
of Completion. The income, gain and loss of the US Companies
will be apportioned to the period up to and including the date
of Completion and the period after the date of Completion by
closing the books of the US Companies as of the date of
Completion. US Parent and Purchaser will not exercise any
option or election (including any election to ratably allocate
a tax year's items under United States Treasury
Regulation ss.1.1502-76(b)(2)(ii)) to allocate tax items in a
manner inconsistent with a closing of the books method.
15.2.2 The US Parent shall have the right to reattribute such net
operating loss carryovers and net capital loss carryovers of
the US Companies (to the extent that they exist) that do not
exceed any loss recognized by US Sellers on the sale of the US
Companies that are otherwise disallowed under United States
Treasury Regulation ss.1.1502-20(g). At Covenantor's or US
Parent's request, Purchaser will cause any of the US Companies
and their subsidiaries to join with US Parent or US Seller in
filing any necessary elections under United States Treasury
Regulation ss.1.1502-20(g).
15.2.3 The Purchaser agrees to make an election under Code Section
1.1502-21(b)(3) to waive the carryback period and to only
carryforward any net operating losses incurred by the US
Companies for any tax period after the date of Completion.
15.2.4 The Purchaser shall be liable for and pay any and all transfer
taxes arising in connection with the transfer of the US Shares
and shall indemnify, defend and hold Covenantor and US Seller
harmless against any and all such transfer taxes.
16. WITHHOLDING TAX
16.1 For the purposes of clauses 16.3 and 16.4, "Amount X" shall be
C$581,067, being an amount of withholding tax that Hyprotech Limited
has paid to the Canadian tax authorities prior to Completion as a
result of payments made by Hyprotech Limited to the Covenantor on or
prior to Completion where such withholding was not made by Hyprotech
Limited in respect of and at the time of such payments (more
particularly described in paragraph 22.1 of the Disclosure Letter).
16.2 For the purposes of clauses 16.3 and 16.4, "Amount Y" shall be the
amount equal to the amount of any withholding tax that is paid by the
Covenantor to the UK Inland Revenue in respect of any payment made by
the Covenantor to Hyprotech Limited on or prior to Completion where
such withholding was not made by the Covenantor in respect of and at
the time of such payment.
16.3 In the event that Amount X exceeds Amount Y, the excess of Amount X
over Amount Y shall be paid from the Covenantor to Hyprotech Limited
within 5 Business days of the determination of Amount Y.
110
16.5 In the event that Amount Y exceeds Amount X, the excess of Amount Y
over Amount X shall be paid from Hyprotech Limited to the Covenantor
PROVIDED THAT Hyprotech Limited shall only make payment under this
clause as and when, and to the extent that, either:
16.5.1 it receives a repayment of withholding tax from the UK Inland
Revenue which has been paid to the UK Inland Revenue by the
Covenantor in respect of any payment that falls within clause
16.2, or
16.5.2 an Actual Liability to Taxation of Hyprotech Limited is
reduced or eliminated (or would have been reduced or
eliminated but for any cessation of the business of Hyprotech
Limited) by virtue of the withholding tax paid by the
Covenantor to the UK Inland Revenue being allowed by the
Canadian tax authorities as a deduction or credit against such
Actual Liability to Taxation (assuming for this purpose that,
to the extent that Hyprotech Limited is entitled at its own
discretion to use such deduction or credit (on the one hand)
or another Relief (on the other hand), such deduction or
credit is used in priority to such other Relief),
and PROVIDED FURTHER THAT no payment shall be made from Hyprotech
Limited to the Covenantor to the extent that the excess of Amount Y
over Amount X exceeds (pound)350,000.
16.5 For the purposes of clause 16.4 above, the Purchaser will procure that
Hyprotech Limited will make all reasonable efforts to ensure that
credit or repayment is received from the Canadian Tax Authorities or
the UK Inland Revenue (as the case may be).
16.6 For the avoidance of doubt, this clause 16 shall be with out prejudice
to any right of the Purchaser to recover any amount in respect of
withholding tax payable by Hyprotech Limited (or interest or penalties
in relation thereto) pursuant to clause 3 of this Deed.
17. GENERAL
17.1 Clauses 12 (General), 15 (Notices) and 16 (Governing Law) to the
Agreement shall apply to this deed as if set out herein.
17.2 All payments by the Covenantor under this deed shall be regarded as
repayments by the Covenantor of the consideration paid by the Purchaser
for the acquisition of the Shares.
IN WITNESS of which the parties have executed this deed on the date set out
above
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SIGNED and delivered as a deed by
AEA TECHNOLOGY PLC acting by
two Directors or a Director and the
Company Secretary:
DIRECTOR
Signature :
Name :
DIRECTOR/COMPANY
SECRETARY
Signature :
Name :
SIGNED and delivered as a deed by
ASPEN TECHNOLOGY, INC. acting
by:
TITLE
Signature :
Name :
112
SCHEDULE 18
[Intentionally Omitted]
113
SCHEDULE 19
[Intentionally Omitted]
114
SIGNED by )
duly authorised for and on behalf of )
AEA TECHNOLOGY PLC in the presence )
of: )
Witness signature:
Name:
Address:
Occupation:
SIGNED by /s/ Xxxx X. Xxxxxxx )
---------------------------------
duly authorised for and on behalf of )
ASPEN TECHNOLOGY, INC. )
in the presence of: )
Witness signature: /s/ Xxxxxxx Xxxxxx
------------------------
Name: Xxxxxxx Xxxxxx
Address: Xxx Xxxxx Xxxx, Xxxxxxxxx, XX 00000
Occupation: Executive Assistant
115
