OCTOBER 3, 2001
Xxxxxxx Xxxxxx,
Xxxx Xxxxxx
Mentor Capital Ltd.,
Xxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxxx
(collectively, Seller)
-and-
Xxxxxxx Ventures, Inc.
(the "Purchaser")
-and-
Xxxxxxx Communications Corporation
("Xxxxxxx")
SHARE PURCHASE AGREEMENT
relating to
IVRON SYSTEMS, LTD.
("Company")
1
AGREEMENT made the 3rd day of October 3, 2001
BETWEEN
1. Xxxxxxx Xxxxxx, Mentor Capital Ltd., Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxx,
Xxx Xxxxxxxx (collectively, the "Seller");
and
2. Xxxxxxx Ventures, Inc. ("Purchaser"), a company organized under the laws of
the State of Utah, United States, having its executive office at 0000
Xxxxxxxx Xxx, Xxxx Xxxx Xxxx, XX 00000,
and
3. Xxxxxxx Communications Corporation, a company organized under the laws of
the State of Utah, United States, having its executive office at 0000
Xxxxxxxx Xxx, Xxxx Xxxx Xxxx, XX 00000, ("Xxxxxxx")
BACKGROUND
A. The Seller is the beneficial owner of the entire issued share capital of
Ivron Systems, Ltd.("the Company"), particulars of which are set out in
Part 1 of Schedule 1 and the Company is the beneficial owner (directly or
indirectly) of the whole of the issued share capital of Ivron Systems Inc.,
a Delaware corporation (the "Subsidiaries"), particulars of which are set
out in Part 2 of Schedule 1.
B. The Seller as beneficial owner has agreed to sell and Purchaser agreed to
purchase the entire issued share capital of the Company from the Seller on
the terms and subject to the conditions of this Agreement.
NOW IT IS HEREBY AGREED that in consideration of the mutual covenants,
conditions, agreements, warranties and payments hereinafter set forth or
provided for the parties hereto respectively covenant with each other as
follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
In this Agreement and in the Schedules unless the context otherwise
requires or unless otherwise specified:-
"Adverse Consequences"
means all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
2
"the Authorisations"
has the meaning ascribed to it in and for the purposes of paragraph 59 of
Schedule 4;
"Borrowings"
means the aggregate principal amount for the time being outstanding of
moneys borrowed by the Group Companies including (but not limited to):
(a) the aggregate amount of all liabilities whatsoever of any body whether
corporate or unincorporated (including the Group Companies) which are
not otherwise taken into account in this definition but the payment or
repayment of which is for the time being guaranteed or wholly or
partly secured by or is the subject of an indemnity given by a Group
Company;
(b) the principal amount raised by the Company by accommodation bills or
acceptances under any acceptance credit or letter of credit opened on
behalf of the Group Companies or by any bank or acceptance house or
for which a Group Company is or may be liable in respect of any xxxx
of exchange, promissory note or similar instrument;
(c) the principal amount (together with any premium payable on redemption
or repayment) of any debentures (whether secured or unsecured) of each
Group Company;
(d) the full amount of the installments from time to time outstanding
under any hire purchase, leasing, factoring, credit or deferred
payment agreement entered into by each Group Company requiring to be
paid prior to the date on which the relevant agreement may be
terminated without further liability to such company;
PROVIDED HOWEVER that there shall be excluded from the computation of the
foregoing all moneys due to trade creditors in the ordinary and usual of
business];
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks are open for
business in Dublin and New York;
"Completion"
means completion of the matters relating to the sale and purchase of the
Shares hereunder pursuant to clause 5, contemplated to occur on October 4,
2001_, or such other date as mutually agreed by parties, at which time the
closing of the transaction contemplated by this Agreement shall occur;
"Connected Person"
means a person connected with a director of any Group Company for the
purposes of Section 26 of the Companies Act, 1990;
3
"Consideration"
means the consideration for the sale of the shares as stated in clause 2.3;
"Directors"
means the following persons, whose names and addresses are set forth on the
Disclosure Letter
"Disclosure Letter"
means the letter of today's date and its annexures from the Seller's
Solicitors to the Purchaser's Solicitors expressed to be a disclosure
letter for the purposes of this Agreement;
"Deed of Indemnity"
means the deed of indemnity in the form set out in Schedule 2 to be entered
into on Completion by the parties hereto in accordance with the terms of
this Agreement.
"Encumbrance"
means:
(a) any adverse claim or right or third party right;
(b) any equity;
(c) any mortgage, charge (whether fixed or floating), lease, assignment,
hypothecation, pledge, lien, option, right of pre-emption or right to
acquire or right to restrict or any other form of security interest or
right or interest or encumbrance of whatsoever nature or any
obligation (including any conditional obligation) to create any of the
same;
"Environment"
means:-
(a) any and all buildings, structures, fixtures, fittings, appurtenances,
pipes, conduits, valves, drains, servers, tanks, vessels and
containers whether above or below ground level; and
(b) all or any of the following media namely the air (including without
limitation the air within buildings and the air within other natural or
non-made structures above or below ground), water and land and any living
organisms or systems supported by those media;
"Examiner"
means an Examiner appointed under Section 2 of the Companies (Amendment)
Act, 1990;
4
"the Group"
means the Company and the Subsidiaries;
"Group Company" or "Member of the Group"
means any of the Company or the Subsidiaries;
"Insider"
has the meaning ascribed to it in and for the purposes of paragraph 70 of
Schedule 4;
"the Last Accounts Date"
means December 31, 2000;
"Optionees"
means those former optionees of the Company as set forth on the Shareholder
Matrix;
"Pension Schemes"
means all existing pension schemes of or operated by or in relation to the
Company, full particulars of which are set out in the Disclosure Letter;
"Principal Accounts"
means the audited balance sheet as at the Last Accounts Date and the
audited profit and loss account for the financial period ended on the Last
Accounts Date of each Group Company, including in the case of the Company
the audited consolidated balance sheet as at that date and the audited
consolidated profit and loss account for that year and all notes thereto
and the Directors' report and Auditors' report and all other documents and
statements annexed thereto, copies of which are attached to the Disclosure
Letter;
"Properties"
means the properties of the Group particulars of which are set out in
Schedule 3;
"Purchaser's Solicitors"
means XXXXX XXXXX & XXXXXX, SOLICITORS
"Relevant Business"
means the research, development and sale of videoconferencing software and
hardware;
"Relevant Territory"
means the Republic of Ireland;
"SDCA"
means the Stamp Duties Consolidation Xxx 0000, as amended;
5
"the Shares"
the 5,366,637 fully paid ordinary shares of US$1 each in the capital of the
Company, constituting the entire issued share capital of the Company;
"Taxation"
means all forms of taxation, duties, imposts, levies, withholding, rates
and charges of whatsoever nature whether of Ireland or elsewhere in any
part of the world, wherever or whenever created or imposed including,
without prejudice to the generality of the foregoing, income tax,
corporation tax, advance corporation tax, capital gains tax, capital
acquisitions tax, inheritance tax, deposit interest retention tax, valued
added tax, sales tax, customs and other import and export duties, excise
duties, stamp duty, capital duty, wealth tax, property tax, rates, pay
related social insurance, health levies, youth employment levies or other
similar contributions and generally all taxes, duties, imposts,
withholdings, levies, rates and charges whatsoever on or in relation to
income, profits, gains, sales, receipts, use or occupation and any taxes,
duties, imposts, withholdings, levies, rates and charges supplementing or
replacing any of the foregoing and any interest, charges, surcharges,
fines, penalties, costs and expenses in connection with any of the
foregoing;
"Taxation Warranties"
means the warranties contained in Part II of Schedule 4 hereto;
"TCA"
means the Taxes Consolidation Xxx 0000, as amended;
"Warranties"
means the representations, warranties and undertakings as referred to in
clause 7.1 through 7.10 and set out in Schedule 4;
"Working Hours"
means 9 a.m. to 5.30 p.m. (local time) on a Business Day.
1.2 Interpretation
(a) Any reference to a document being "in the approved terms" means in
relation to that document, the copy of that document which has been initialed by
each Seller and the Purchaser for the purposes of identification only.
(b) The contents of the Schedules form an integral part of this Agreement
and shall have as full effect as if they were incorporated in the body of this
Agreement and the expressions "this Agreement" and "the Agreement" as used in
any of the Schedules shall mean this Agreement and any reference to "this
Agreement" shall be deemed to include the Schedules.
(c) Headings are for convenience only and shall not affect the construction
or interpretation of this Agreement.
(d) Any reference to a clause, sub-clause, paragraph, subparagraph or
schedule shall be a reference to a clause, sub-clause, paragraph, subparagraph
6
or schedule (as the case may be) of this Agreement and any reference in a clause
to a sub-clause, paragraph, or subparagraph shall be a reference to a
sub-clause, paragraph or subparagraph of the clause, sub-clause or paragraph in
which the reference is contained unless it appears from the context that a
reference to some other provision is intended.
(e) Words such as hereunder hereto hereof and herein and other words
commencing with "here" shall, unless the context clearly indicates to the
contrary, refer to the whole of this Agreement and not to any particular section
or clause hereof.
(f) Words denoting any gender include all genders and words denoting the
singular include the plural and vice versa.
(g) Any reference to a person shall be construed so as to include any
individual, firm, company, corporation, government, state or agency of a state
or any joint venture, association, partnership, works council or employee
representative body (whether or not having separate legal personality).
(h) Any reference to a person includes successors, personal representatives
and assigns.
(i) Any reference to any statutory provision or to any order or regulation
shall be construed as a reference to that provision, order or regulation as
extended, modified, replaced or re-enacted from time to time (whether before or
after the date of this Agreement) and all statutory instruments made thereunder
or deriving validity therefrom (whether before or after the date of this
Agreement) save that any changes after the date hereof to any such statutory
provision, order, regulation or statutory instrument shall not be applicable to
the extent that such charge imposes an obligation or increases an obligation on
the Purchaser.
(j) Any reference to any provision of any legislation shall, unless the
context clearly indicates to the contrary, be a reference to legislation of
Ireland.
(k) Any statement, representation, warranty or undertaking in this
Agreement or the Disclosure Letter which is qualified by the expression "to the
best of the knowledge, information and belief of the Seller" or "so far as the
Seller is aware" or any similar expression shall be deemed to include a warranty
that such statement, representation, warranty or undertaking has been made after
reasonable and careful enquiry.
(l) "Writing" or any similar expression includes transmission by facsimile
or comparable means of communication.
(m) If any action or duty to be taken or performed under any of the
provisions of this Agreement would fall to be taken or performed on a day which
is not a Business Day, such action or duty shall be taken or performed on the
Business Day next following such date.
(n) All references to time are references to Irish time.
(o) Time shall be of the essence in this Agreement, both as regards the
dates and periods specifically mentioned or any date or period as may be
substituted therefor in accordance with this Agreement.
7
(p) Any reference to Ireland does not include Northern Ireland.
2. SALE AND PURCHASE OF SHARES
2.1 Agreement to sell
On the terms and subject to the conditions of this Agreement, the Seller,
as beneficial owner, shall sell or procure the sale of and Purchaser shall
purchase or procure the purchase of the Shares free from all Encumbrances and
together with all rights attached or accruing thereto including, without
limitation, all dividends and distributions declared made or paid in respect
thereof on or after the date of this Agreement. The Purchaser shall not be
obliged to complete the purchase of any of the Shares unless the purchase of all
the Shares is completed simultaneously in accordance with the provisions of this
Agreement.
2.2 Pre-emption Rights
Each Seller waives all rights of pre-emption over any of the Shares
conferred upon it in any way and shall procure that no later than Completion all
rights of pre-emption and other similar or comparable rights over and in respect
of the Shares conferred upon or held by any other person are waived so as to
permit the sale and purchase of such shares hereunder.
2.3 Consideration
The Consideration payable by the Purchaser for the Shares shall be as
follows:
(a) the sum of Six Million U.S. Dollars (US$6,000,000) (the "Cash
Proceeds") to be paid by electronic fund transfer.
(b) If and when the conditions set forth in the succeeding paragraphs of
this clause 2.3(b) have been met, then promptly thereafter the Purchaser will
deliver to the Seller an aggregate of 445,848 shares of Xxxxxxx'x common stock
(as may be adjusted for any split, combination, subdivision, or any other
similar adjustment after the date hereof; "July Shares") which shares will be
issued to the Sellers as fully paid up shares, as more specifically set forth in
the "Shareholder Matrix" delivered by the Sellers to Xxxxxxx and the Purchaser
as of the Completion.
(c) As soon as practicable following their issuance, the July Shares will
be registered for resale at the expense of Xxxxxxx on an applicable registration
form, under the Securities Act of 1933 (currently contemplated to be Form S-3).
These registration rights are set forth in a Declaration of Registration Rights
executed by Xxxxxxx for the benefit of the Sellers.
(d) The July Shares will be issued to the Sellers provided that the
following two contingencies have been met:
(i) Completion of the installed video codec product currently under
development by Ivron in accordance with the specification as in existence
on the date of Completion (the "Codec"); and
(ii) Shipments to customers of:
8
(1) two hundred (200) units of the commercial Codec and/or the
commercial Set-Top video conferencing product (the "Set Top") currently
under development in FY 2002 (as opposed to beta versions of such
products). The two hundred (200) units can be comprised of any combination
of the Installed Codec and the Set Top; and
(2) twenty five (25) units of any combination of the Installed Codec
and Set Top product in FY2003.
(e) An earn-out of up to maximum of US$18 Million (the "Earn-Out") may be
paid in up to two (2) tranches as described in this section 2.3(e).
(i) The Earn-Out will be paid based on Xxxxxxx'x fully diluted earnings per
share ("EPS") in Xxxxxxx'x fiscal year 2003 and/or fiscal year 2004, in the
"products (audio and video) and conferencing services segments" of
Xxxxxxx'x business. This segment includes all products and services that
may be sold to affiliated entities or divisions that are in a separate
segment of Xxxxxxx. These segments shall be based on SEC reporting
practices that are based on business practices of Xxxxxxx. The calculation
of EPS will not include any shares issued for purposes of acquisition of
businesses in other segments of Xxxxxxx'x business. In addition, it will be
assumed that 500,000 shares are issued as part of the July Shares and will
be added to the EPS calculation for FY 2003 and FY 2004. Any Earn-Out
Shares issued for meeting EPS targets in a particular fiscal year will not
be added into a re-calculation of that year's EPS; however, any such shares
will be considered issued and outstanding for purposes of the following
year's EPS calculation. The Earn-Out if payable will be paid at the earlier
of (i) thirty (30) days from the conclusion of the fiscal year annual audit
for each relevant fiscal year, or (ii) ninety (90) days from the conclusion
of the applicable fiscal year, based on unaudited financial results (due
date). The Earn-Out will be paid in cash ("Earn-Out Cash"), or in shares of
common stock of Xxxxxxx (the "Earn-Out Shares"). The number of Earn-Out
Shares to be issued will be calculated using a trading average determined
as of the date of issuance, based on the average closing price for the ten
trading days prior to two days before the issuance of the shares, and
subject to the limitation described in 3.2(f), below. The Earn-Out will be
allocated among the Sellers as set forth in the Shareholder Matrix.
(ii) The Earn-Out Shares will be not be issued with any registration
rights.
(iii) Earn-Out Cash that remains unpaid on the due date, will be subject to
interest of one and one-half percent per month until paid. In addition,
Earn-Out payable to Seller Xxxx Xxxxxx will be paid 1/2 as shares and 1/2
as cash unless, in the discretion of Purchaser, Purchaser desires to pay
Earn-Out in a ratio of up to 60% - 40% mix of cash and shares, or shares
and cash. Such an election can be made by Purchaser at any time prior to a
payment or issuance being made. In the event that Xx. Xxxxxx transfers any
right to Earn-Out Cash or Earn-Out Shares, as provided elsewhere in this
Agreement, the restrictions regarding the ratio of cash and shares shall be
assigned with such transfer.
(iv) The Earn-Out will be paid as set forth below provided that the
following conditions must be satisfied:
9
(1) If Xxxxxxx'x EPS for the relevant business segments for fiscal
year 2003 is US$1.70 or more, then the full US$18 Million Earn-Out is
payable. An additional condition to the payment of earn out is the sale by
Xxxxxxx in fiscal year 2003 of a minimum of twenty five (25) units of any
combination of the Installed Codec and the Set Top product.
(2) If Xxxxxxx'x EPS for the relevant business segments for fiscal
year 2003 is between US$1.45 and US$1.69 then up to US$9 Million of the
Earn-Out will be paid as set forth in the Table I below. An additional
condition to the payment of earn out is the sale by Xxxxxxx in fiscal year
2003 of a minimum of twenty five (25) units of any combination of the
Installed Codec and the Set Top product.
(3) If Xxxxxxx'x EPS for the relevant business segments for fiscal
year 2003 is US$1.44 or less then no Earn-Out is payable for fiscal year
2003.
(4) Earn-Out may be payable for fiscal year 2004 as set forth in Table
II, below, even if no Earn-Out is payable for fiscal year 2003, provided
that Xxxxxxx meets the EPS targets described in Table II and sells in both
fiscal years 2003 and 2004 of a minimum of twenty five (25) units of any
combination of the Installed Codec and the Set Top product.
Table I
--------------------------------------- ----------------------------------------
EPS for FY 2003 % of US$9,000,000
--------------------------------------- ----------------------------------------
< US$1.45 0%
--------------------------------------- ----------------------------------------
US$1.45-US$1.48 50%
--------------------------------------- ----------------------------------------
US$1.49-US$1.52 60%
--------------------------------------- ----------------------------------------
US$1.53-US$1.56 70%
--------------------------------------- ----------------------------------------
US$1.57-US$1.60 80%
--------------------------------------- ----------------------------------------
US$1.61-US$1.64 90%
--------------------------------------- ----------------------------------------
US$1.65-US$1.69 100%
--------------------------------------- ----------------------------------------
Table II
--------------------------------------- ----------------------------------------
EPS for FY 2004 % of US$9,000,000
--------------------------------------- ----------------------------------------
< US$1.75 0%
--------------------------------------- ----------------------------------------
US$1.75-US$1.78 50%
--------------------------------------- ----------------------------------------
US$1.79-US$1.82 60%
--------------------------------------- ----------------------------------------
US$1.83-US$1.86 70%
--------------------------------------- ----------------------------------------
US$1.87-US$1.90 80%
--------------------------------------- ----------------------------------------
US$1.91-US$1.94 90%
--------------------------------------- ----------------------------------------
US$1.95-US$1.99 100%
--------------------------------------- ----------------------------------------
(f) If Xxxxxxx is acquired or there is otherwise a change in the
control of the organisation, the obligation to pay Earn-Out as described in
Section 2.3(e) above, including the methodology described therein, shall
continue.
10
(g) Notwithstanding any other provision of this Agreement to the
contrary, the maximum number of shares that will be issued by Xxxxxxx in
the transactions contemplated by this Agreement, including the "July
Shares" and the "Earn-Out Shares", will not exceed 1,600,000 shares. In the
event that the Sellers desire Earn-Out to be paid in shares of Xxxxxxx
which would exceed 1,600,000 shares, then such amounts will be paid in cash
rather than shares and will not be subject to interest as described in
2.3(e)(ii), above, provided that the cash is paid at the same time that the
shares are issued.
(h) An equivalent amount of cash using the formulas described in
section 2.3(e)(i) for purposes of share conversion will be withheld from
the July Shares and the Earn-Out for the payment of any taxes which may be
assessed by any taxing authorities against the Company, the Purchaser, or
other affiliated company, in connection with the payment of the Earn-Out,
the July Shares, or any Optionee Payment (as defined below) or bonus
pursuant to the Waivers.
2.4 Waivers.
In connection with the transactions contemplated by this Agreement, the Company
and the Purchaser have entered into a waiver instrument (the "Waivers") with
each of the Optionees, in consideration for a payment to be made by the Company
from funds delivered by the Purchaser (the "Optionee Payment"), and, in
consideration for participation in the Earn-Out, pursuant to which each Optionee
has waived any rights it may have under any existing option or similar plans of
the Company. Funds for purposes of the Optionee Payment will be transferred by
the Purchaser to the Company in trust for the Optionees prior to the payment
date. Xxxxxxx will cause the Purchaser to honor the obligations of the Company
set forth in the Waivers.
3. and 4. [Intentionally Omitted]
5. COMPLETION OF SALE AND PURCHASE
5.1 Time and Place
Completion of the sale and purchase referred to in clause 2 shall take
place at the executive offices of the Purchaser in Salt Lake city, UT, on or
about October 3, 2001, at 3:00 P.M..
5.2 Documents and other items to be delivered by the Seller
At Completion the Seller shall deliver to the Purchaser (or make available
to the Purchaser at the Company):
(a) any consents of applicable governmental, regulatory, or other third
parties, which the Purchaser deems reasonably necessary and appropriate, and of
which Sellers shall have been advised;
11
(b) evidence of the authority of any person or persons executing or
attesting the execution of this Agreement and any other document on its behalf
to do so;
(c) duly executed Stock Transfer Forms in respect of the Shares and the
Nominee Shares in favour of the Purchaser or such person as it may nominate,
together with Share Certificates relative thereto or, in the case of share
certificates found to be missing, an indemnity in a form satisfactory to the
Purchaser;
(d) minutes of meetings of the Boards of Directors of the Company which
reflect the following:-
(i) the share transfers referred to at (c) are approved (subject only to
stamping);
(ii) such persons as the Purchaser may nominate are appointed as directors,
secretary, auditors and solicitors of each Group Company with immediate
effect;
(iii) the resignations referred to in the succeeding paragraphs of this
sub-clause 5.2 are accepted;
(iv) the execution of the Deed of Indemnity by the Shareholders is approved
and authorised;
(v) a letter of resignation by Messrs KPMG as Auditors of the Company
confirming that such Auditors have no claim of any kind against the
Company; and
(vi) a notice in the form required by section 185 of the Companies Xxx 0000
stating that there are no circumstances connected with such resignation
that the said Auditors consider should be brought to the notice of the
members or creditors of such Group Company.
(vii) the written resignations under seal of those Directors agreed to
resign effective as of Completion of each Group Company in a form
satisfactory to the Purchaser;;
(viii) a waiver instrument ("Waiver") in a form mutually acceptable to the
parties pursuant to which each existing optionee under any existing stock
option plan of Company agrees to waive its rights thereunder;
(f) In addition to the foregoing, the following items are to be delivered
or retained in the records of each Group Company, as requested by the Purchaser:
(i) confirmation from KPMG that a CG50A Clearance Certificate is not
required:
(ii) a copy of the Memorandum and Articles of Association of each Group
Company certified by the Secretary of each Group Company as a true,
complete and accurate copy as at Completion;
(iii) the Deed of Indemnity duly executed by the Seller;
(iv) the Disclosure Letter duly executed by the Sellers
12
(v) the statutory books, records and registers (complete and duly written
up to date), common seal, certificate of incorporation, certificates of
incorporation on change of name, if any, and all documents, contracts,
licences, agreements, insurance policies, records, papers, correspondence
files and books of trading and accounts of each Group Company;
(vi) [Intentionally Omitted]
(vii) evidence satisfactory to the Purchaser of the fulfillment by the
Seller of its obligations referred to in clause 5.3 below; and
(viii) any other documents or property of the Group Companies as may be
specified by the Purchaser.
5.3 Release/Discharge of Existing Debts and Obligations
On Completion the Seller shall procure:-
(a) the discharge of all monies owing to each Group Company (whether then
due for payment or not) by the Sellers, or the Directors or by any of
them or by any Connected Person;
(b) pay off of the current loan from Mentor Capital in the amount of
US$725,000 together with accrued interest, and the release of the
charge (which may be done post-Completion);
(c) termination of any existing stock option plan or other similar plans
of any Group Company such that Purchaser will have no liability for
such plans upon completion; and
(d) filing of any tax filings previously due or due in the normal course
of business prior to or at the date of Completion, provided that in
the event the Sellers have failed to do so then they shall promptly
reimburse the Purchaser for any costs, penalties, or expenses arising
from the failure to make such filings.
5.4 Issuances of July Shares and Earn-Out Shares.
(a) The July Shares and Earn-Out Shares will be issued in a private
placement pursuant to Section 4(2) of the Securities Act of 1933 to the Sellers.
As soon as practicable following the issuance of the July Shares, such shares
will be registered for resale on an applicable registration form, under the
Securities Act of 1933, currently contemplated to be Form S-3, as set forth in
that certain Declaration of Registration Rights of even date herewith executed
by Xxxxxxx in favor of the Sellers.
(b) The Earn-Out Shares will not be registered for re-sale.
5.5 Documents and other items to be delivered in connection with the
Transaction.
(a) certified board minutes of Xxxxxxx and the Purchaser.
13
6. POST COMPLETION
6.1 Stamping
The Purchaser shall, as soon as practicable following Completion, deliver
to the Revenue Commissioners the share transfer forms referred to in Section 5
for assessment of stamp duty and shall pay the duty thus assessed. Prior to
registration of such duly stamped share transfer forms in the register of
members of the Company, the Seller shall co-operate in any manner required by
the Purchaser for the convening, holding at short notice and conduct of general
meetings of the Company and/or of each of the Subsidiaries, shall execute
promptly on request all proxy forms, appointments of a representative, documents
of consent to short notice and such like that the Purchaser may require and
generally shall act in all respects as the nominee and at the direction of the
Purchaser in relation to the Shares and the Nominee Shares and all rights and
interests attaching thereto.
6.2 Companies Act Notices
The Seller and the Purchaser shall, within five days of Completion, give to
each Group Company such notice as is required by Section 53 of the Companies Xxx
0000.
7. WARRANTIES
7.1 General Warranty
Each Seller:-
(a) warrants, represents and undertakes to the Purchaser and its successors
in title in relation to the Group in the terms of the Warranties, provided
however that the Purchaser will not be entitled to claim that any fact
constitutes a breach of any of the Warranties if and to the extent that such
fact has been fairly disclosed in the Disclosure Letter;
(b) undertakes to disclose immediately to the Purchaser anything which
comes to its notice which is or may be a breach of any of the Warranties.
7.2 Accounts of Company
At the time of the Completion, the Accounts of the Company will contain an
equivalent of US$300,000
7.3 Effect of Completion
The Warranties shall not in any respect by extinguished or affection by
Completion, and the benefits thereof may be assigned in whole or in part by the
Purchaser and Xxxxxxx, only in the case of the following events with respect to
the Purchaser and/or Xxxxxxx: (i) a sale of all of the share capital, or (ii) a
merger, or acquisition of either of them.
14
7.4 Claims against the Group
(a) Any information supplied by or on behalf of any Group Company, its
professional advisers or employees prior to Completion to the Seller or their
respective agents representatives or advisers in connection with the Warranties
and the Disclosure Letter and otherwise in relation to the business or affairs
of the Group or any Group Company shall not be regarded as a representation,
warranty or guarantee of its accuracy by any Group Company to the Seller and
shall not constitute a defence or the basis of any claim for indemnity or
contribution to any claim by the Purchaser hereunder;
(b) for the avoidance of doubt, the Seller will not make any claim against:
(i) any director or employee of a Group Company on whom the Seller may have
relied before agreeing to any term of this Agreement or any of the
documents to be executed or delivered pursuant to and in compliance with
its terms or before making any statement in the Disclosure Letter;
(ii) any Group Company in respect of the information supplied or not
supplied or opinions or advice given or not given by any such director or
employee as aforesaid; or
(iii) the Seller agrees that any Group Company, director, employee or
professional adviser may rely on the provisions of this sub-clause although
not a party to this Agreement.
7.5 Notification to Purchaser
The Seller shall forthwith disclose to the Purchaser in writing any matter
or thing which may become known to it which is or could be a breach of or is
inconsistent with or may render inaccurate or misleading any of the Warranties.
7.6 Separate Warranties
Each of the Warranties will be construed as a separate Warranty and will
not be limited or restricted by reference to, or inference from, the terms of
any other Warranty or other term of this Agreement.
7.7 Waivers etc
The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion, by any investigation made by it
or on its behalf into the affairs of any Group Company, by its failing to
exercise or by its delaying to exercise any right or remedy or by any other
event or matter whatsoever, except a specific and duly authorised written waiver
or release, and no single or partial exercise of any right or remedy shall
preclude any further or other exercise.
7.8 No other warranties
The Purchaser acknowledges and agrees that it has not entered into this
Agreement in reliance upon any representation, warranty, covenant, promise,
15
undertaking or statement not contained in this Agreement or the Deed of
Indemnity or any document scheduled or annexed to either such document or
referred to in either of them.
7.9 Limitations
The liability of the Seller (if any) under the Warranties shall be limited
to the total amount that may be paid hereunder as the Purchase Price, including
any Earn-Out Shares (whether paid or unpaid) and the value of the July Shares.
For purposes of this limitation, the value of such shares at the time of
issuance shall be used to determine their extent of the limitation on liability.
7.10 Right of Set-Off
(a) For purposes of satisfying the indemnification obligations of the
Sellers set forth in Clause 13.1, Purchaser shall have the right to set-off
against amounts or shares owing pursuant to the July Shares or the Earn-Out,
allocated against each Shareholder in accordance with his/her/its pro-rata
interest in the July Shares and Earn-Out Shares.
(b) The Purchaser shall have the option of recouping all or any part of any
Adverse Consequences it may suffer by notifying the Sellers in writing of such
Adverse Consequences (the "Set-Off Claim") stating (i) the amount of such
Adverse Consequences, and (ii) the basis for such claim of Adverse Consequences
in sufficient details for Sellers to evaluate the Set-Off Claim; Sellers shall
have ten (10) days to evaluate and respond to Buyer's Set-Off Claim in writing.
If the Sellers do not dispute Purchaser's Set-Off Claim, Purchaser shall be
entitled to set off such claim against the July Shares, and, if no July Shares
remain unissued, then the Earn-Out. In the event of a dispute regarding a
Set-Off Claim, the parties will agree on an a mutually acceptable independent
firm of chartered accountants who shall act as an expert and not an arbitrator
and whose decision shall be final and binding (save in the case of manifest
error). The number of July Shares and Earn-Out Shares shall be determined using
a quotient, the numerator of which is the amount of the Set-Off Claim, and the
denominator of which is the average closing price for the ten trading days prior
to the date of the Set-Off Claim.
7.11 Warranties of Xxxxxxx And the Purchaser
The representations and warranties of Xxxxxxx and the Purchaser are as set
forth on Schedules 5.1 and 5.2.
(a) Xxxxxxx:
(i) Warrants, represents and undertakes to each Seller and their
successors in title in relation the warranties set out in
Schedule 5.1;
(ii) Will indemnify each Seller against costs or expenses (including
reasonable legal costs) which it may incur, either before or
after the commencement of any action, directly, or indirectly as
a result of any intentional breach of any of the warranties
referred to in paragraph (i), above; and
16
(iii)Undertakes to disclose immediately to each Seller anything which
comes to the notice of its officers or directors which is or may
be a breach of any of the warranties referred to in paragraph
(i), above.
(b) Purchaser
(i) Warrants, represents and undertakes to each Seller and their
successors in title in relation the warranties set out in
Schedule 5.2;
(ii) Will indemnify each Seller against costs or expenses (including
reasonable legal costs) which it may incur, either before or
after the commencement of any action, directly, or indirectly as
a result of any intentional breach of any of the warranties
referred to in paragraph (i), above; and
(iii)Undertakes to disclose immediately to each Seller anything which
comes to the notice of its officers or directors which is or may
be a breach of any of the warranties referred to in paragraph
(i), above.
7.12 Survival of Warranties
The representations and warranties of the parties made in this Agreement
shall survive the Completion for a period of three (3) years from the date of
Completion, except that those representations and warranties in connection with
taxes shall survive for seven (7) years. In addition, the indemnities set forth
in section 13 (b) shall survive for a period of seven years from the date of the
Completion.
7.13 Xxxxxxx Covenant
In consideration of each Seller entering into this Agreement, Xxxxxxx
guarantees the full and punctual performance of all the obligations of the
Purchaser under this Agreement.
8. COVENANTS BY SELLER
8.1 Restrictive Covenant
For the purpose of assuring to the Purchaser the full benefit of the Group
and in consideration of the Purchaser agreeing to buy the Shares on the terms of
this Agreement, each Seller covenants and undertakes with the Purchaser that it
will not, without the prior written consent of the Purchaser, whether directly
or indirectly and whether alone or in conjunction with or on behalf of any other
person and whether as principal, agent, director, officer, shareholder,
debenture holder, partner, joint venturer, consultant or otherwise:
(a) for a period of two years immediately following the date hereof solicit
or entice away from any Group Company any employee of any Group Company employed
at the date of Completion whether as employee or as consultant;
17
(b) save as permitted by law, use or reveal to any person any secret or
confidential information concerning any Group Company until such time as the
same falls into the public domain otherwise than by reason of a breach of this
covenant and undertaking;
(c) use any one or more of the following names or any colourable imitation
of any of them in the course of a business being carried on by the Company at
Completion (or any name which is capable of being confused with such names):
"Ivron", "Ivron Systems", or any other trademark owned by or previously used by
the Company
(d) for a period of two years immediately after Completion solely or
jointly, directly or indirectly engage in the Relevant Business in the Territory
or become involved or connected with or carry on, participate, assist, be
engaged or concerned or interested (except as the holder or beneficial holder
for investment purposes of not more than 5% nominal value of any class of
securities listed or dealt in on a recognised stock exchange) in the Territory
during this said period in any company or firm carrying on any such business
whether as employee, director, partner, consultant, agent, shareholder or sole
proprietor or otherwise howsoever; and
(e) interfere either directly or indirectly or take any such steps as may
interfere with the continuance of supplies to any Group Company (or the terms
relating to such supplies) from any suppliers who are at the Completion or who
have been at any time during [one] year immediately preceding Completion supply
materials, components, products, goods or services to any Group Company.
8.2 Separate restrictions
Each covenant and undertaking contained in clause 8.1 shall be construed as
a separate covenant and undertaking and:
(a) if any one or more of such covenants and undertakings or any part of
such covenant and undertaking is held to be against the public interest or
unlawful or in any way unreasonable (for example, by reason of the area,
duration or type or scope of the covenant and undertaking) the remaining
covenants and undertakings, or, as the case may be, the remaining part of the
covenants and undertakings shall continue in full force and effect and shall
bind the Seller; and
(b) the parties consent to a court giving effect to such covenant and
undertaking in such reduced form as may be decided by any Court of competent
jurisdiction in order that it be held thereby to be reasonable.
9. ANNOUNCEMENTS
9.1 Subject to clause 9.2, no announcement concerning the sale or purchase of
the Shares or any ancillary matter shall be made by any party without the prior
written approval of the other of the content and timing of such announcement.
9.2 Any party may make an announcement concerning the sale or purchase of the
Shares or any ancillary matter if required by:-
18
(a) the law of any relevant jurisdiction; and/or
(b) any securities exchange or regulatory or Governmental body to which any
party is subject or submits, wherever situated, whether or not the requirement
has the force of law;
(c) in which case the party concerned shall take all steps as may be
reasonable and practicable in the circumstances to agree the contents of such
announcement with the other party before making such announcement and provided
that any such announcement shall be made only after notice to the other party.
9.3 The restrictions contained in this clause shall continue to apply after
termination of this Agreement without limit in time.
10. NOTICES
10.1 Mode of service
Notices and other communications to any party to this Agreement required or
permitted hereunder or any proceedings relating hereto shall be in writing and
will be sufficiently served:
(a) if delivered by hand, or
(b) if sent by fax (where a fax number has been set out below), or
(c) if sent by prepaid registered post,
to the address specified below in this clause or to such other address as
is from time to time notified to the other party in accordance with the
provisions of this clause:
The Seller:
As each Seller may direct from time to time
The Purchaser:
Xxxxxxx Ventures Inc.
0000 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
Xxxxxxx:
Xxxxxxx Communications Corporation
0000 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
Fax: (000) 000-0000
19
10.2 Time of service. Any such notice or communication shall be deemed to have
been served:
(a) if delivered by hand, on delivery;
(b) if sent by fax, when the sender's facsimile machine issues confirmation
that the relevant pages have been transmitted to the recipient's facsimile
machine; and
(c) if sent by pre-paid registered post, on the third Business Day after
the date of posting;
provided that, if in accordance with the above provisions, any such notice
or communication is delivered by hand or received by facsimile outside Working
Hours on any day, such notice or communication shall be deemed to have been
served at the start of Working Hours on the next Business Day thereafter.
10.3 Fax notices
Each person giving a notice or making a communication hereunder by
facsimile shall promptly confirm such notice or communication by post to the
person to whom such notice or communication was addressed but the absence of any
such confirmation shall not affect the validity of any such notice or
communication or the time upon which it is deemed to have been served.
11. GENERAL
11.1 Further assurance
At the request of the Purchaser from time to time, each Seller shall, (and
shall procure that any other necessary party shall) at Purchaser's cost and
expense (other than for legal counsel) execute and do all such documents, acts
and things as may be reasonably required subsequent to Completion for assuring
to or vesting in the Purchaser (including its nominee or nominees) the
beneficial ownership of the Shares free from Encumbrances or otherwise in order
to perfect the right, title and interest of the Purchaser to the Shares or of
any Group Company to any asset or as otherwise may be reasonably necessary or
desirable in order to grant to the Purchaser the full benefit and effect of this
Agreement.
11.2 Successors and assigns
(a) The Purchaser may assign its rights and/or obligations hereunder
without the consent of the other parties hereto, provided that the Purchaser
shall after such assignment notify the other parties hereto of such assignment.
Each Seller must obtain the prior consent of the Purchaser to assign its rights
and/or obligations under this Agreement, which consent will not be unreasonably
withheld.
20
(b) This Agreement shall enure to the benefit of and be binding upon the
respective parties hereto and their respective successors, personal
representatives and permitted assigns.
11.3 Costs and Expenses
Each party shall bear any costs, fees or expenses incurred by it in
connection with the drafting, negotiation and entering into of this Agreement
and the documents referred to in it.
11.4 Termination or Rescission
If the Purchaser terminates or rescinds this Agreement under any of its
provisions or under general law then, in addition to any right or remedy which
it may have against the Seller for breach of this Agreement or the Warranties,
the Seller shall indemnify the Purchaser on demand for all costs, charges and
expenses incurred by it in connection with the negotiation, preparation and
determination or rescission of this Agreement and all matters which it
contemplates.
11.5 Waiver
(a) A waiver by the Purchaser of any breach by any party hereto of any of
the terms, provisions or conditions of this Agreement or the acquiescence of the
Purchaser in any act (whether commission or omission) which, but for such
acquiescence, would be a breach as aforesaid, shall not constitute a general
waiver of such term, provision or condition or an acquiescence to any subsequent
act contrary thereto.
(b) Any remedy or right conferred upon the Purchaser for breach of this
agreement shall be in addition to and without prejudice to all other rights and
remedies available to it whether pursuant to this Agreement or provided for by
law.
(c) No failure or delay by the Purchaser in exercising any claim, remedy,
right, power or privilege under this Agreement shall operate as a waiver nor
shall a single or partial exercise of any claim, remedy, right, power or
privilege preclude any further exercise thereof or exercise of any other claim,
right, power or privilege.
(d) Should any provision of this Agreement transpire not to be enforceable
against any of the parties hereto, such non-enforceability shall not render such
provision unenforceable against any other party hereto.
11.6 Counterparts
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterpart, each of which when executed
and delivered shall constitute an original, all such counterparts together
constituting but one and the same instrument.
11.7 Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the
laws of Ireland and each of the parties hereto submits to the non-exclusive
jurisdiction of the Courts of Ireland for any of the purposes of this Agreement.
21
11.8 Survival of Obligations
The provisions of this Agreement which shall not have been performed on
Completion shall remain in full force and effect notwithstanding Completion.
11.9 Post-Completion Information
The Seller shall provide or procure the provision to the Purchaser of all
information in its possession or under its control which the Purchaser shall
from time to time reasonably require subsequent to Completion relating to the
business and affairs of any Group Company and will give, or procure to be given
to the Purchaser, its advisors and agents, such access to (including the right
to take copies of) any documents in its possession or under its control
containing such information as the Purchaser may from time to time reasonably
require.
11.10 Whole Agreement
This Agreement, the documents to be executed pursuant to the provisions
hereof, and the Disclosure Letter constitute the whole agreement between the
parties hereto in relation to the transactions provided for in this Agreement
and supersede all previous agreements (if any) between such parties in respect
of such matters and each of the parties to this Agreement acknowledges that in
agreeing to enter into this Agreement it has not relied on any representations
or warranties except for those contained in this Agreement.
11.11 Severability
Each of the provisions of this Agreement is separate and severable and
enforceable accordingly and if at any time any provision is adjudged by any
Court of competent jurisdiction to be void or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof or of that
provision in any other jurisdiction shall not in any way be affected or impaired
thereby.
11.12 Variation
No variation of this Agreement shall be valid unless it is in writing and
signed by or on behalf of each of the parties hereto.
11.13 Confidentiality
The existence and terms and conditions of this Agreement are strictly
confidential and may not be disclosed to anyone other than to the directors,
officers, critical employees, and advisers of Purchaser, Seller, and Company
Group, who have fiduciary or legal responsibilities to the Company to keep such
information confidential. The parties acknowledge and agree that they are
parties to a mutual non-disclosure agreement, and continue to be bound by the
terms thereof.
12. [Intentionally Omitted]
13. SPECIFIC INDEMNITIES
Each of the Sellers hereby covenants with and to the Purchaser (the
Purchaser receiving and taking the indemnity for itself and for the owners for
the time being of the Shares) to indemnify the Purchaser (as aforesaid) from and
against all and any:
22
(a) Adverse Consequences arising from the breach of any Warranty;
(b) actions, proceedings, costs, damages, expenses, claims and demands;
arising by reason of or on account of:
(i) any loss, claim, or damage, including reasonable attorneys' fees and
costs, in connection with any claim or assertion by Viseon, Inc. (formerly, RSI
Systems, Inc.) that any product or intellectual property of the Group Companies
infringes any intellectual property right or claim of Viseon, Inc.; and
(ii) any loss, claim, or damage, including reasonable attorneys' fees and
costs, in connection with any claim or assertion by "MSL, a supplier of goods to
the Company.
Notwithstanding the other provisions of this Agreement or the Disclosure Letter,
the indemnities set forth in (b), above, shall not be reduced or limited by any
disclosures or limitations made herein or in the Disclosure Letter.
IN WITNESS of which the parties have caused this Agreement to be executed under
seal on the date specified herein.
23
SCHEDULE 1
PARTICULARS OF THE COMPANY AND THE SUBSIDIARIES
Part 1 - the Company
Name of Company: Ivron systems Ltd.
Registered Number: 276380
Registered Office: 00 Xxxxxxx Xxxxxx, Xxxxxx 0
Date of Incorporation: 01 December 1997
Place of Incorporation: Dublin, Ireland
Status: Private Company Limited by Shares
Authorised Share Capital: US$20,000,000 divided into 19,850,000 ordinary and
150,000 "A" Ordinary
Issued Share Capital: US$5,350,181
Registered Shareholders and number of shares held by each: see Shareholder
Matrix
Directors' Full Names: See Disclosure Letter
Secretary's Full Name: Xxxxx Xxxxx
Last Accounts Date: 31 December 2000
Auditors: KPMG (prior to Completion)
Description of Business: Development, design, manufacturing and sale of
videoconferencing equipment and services
24
Part 2 - the Subsidiaries
Name of Company: Ivron Systems, Inc.
Registered Number: Delaware file number: 2794479
Registered Office: Corporation Service Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
XX
Date of Incorporation: September 11, 1997
Place of Incorporation: The state of Delaware
Status: Active, and current
Authorised Share Capital: $1,000.00
Issued Share Capital: $1,000.00
Beneficially Owned By: Ivron Systems, Ltd.
Registered Shareholders: Ivron systems, Ltd.
Directors' Full Names: Xxxxxxx Xxxxxx, Xxx Xxxxxxxx, and Xxxxx Xxxxx
Secretary's Full Name: Xxxxx Xxxxx
Last Accounts Date: December 31, 2000
Auditors: United States tax preparation done by Xxxxxxx & Xxxxx, P.C.
Description of Business: Sales and service of computer software and related
products
25
SCHEDULE 2
DEED OF INDEMNITY
26
SCHEUDULE 3
[INTENTIONALLY OMITED]
27
SCHEDULE 4
WARRANTIES REPRESENTATIONS AND UNDERTAKINGS
In this Schedule the expression "Company" shall
be deemed to mean any Member of the Group.
Part 1: General
ACCURACY OF INFORMATION
1. Information Furnished.
All information given by or on behalf of the Seller or the Company to the
Purchaser or any shareholder, accountant, lawyer or agent thereof the due
diligence process leading to this Agreement was, when given, and is at the
date hereof, to our knowledge, true, accurate and complete in all material
respects.
2. Other Information.
There is no fact or matter which, to the knowledge of each Seller, has not
been disclosed in writing to the Purchaser which renders the information
referred to in paragraph 1 untrue or misleading at the date of this
Agreement or which, on the basis of good faith, ought to be disclosed to
any intending purchaser of the Shares or the disclosure of which might
reasonably affect the willingness of a purchaser to purchase the Shares on
the terms (including the consideration) contained herein.
3. Representations and Warranties
None of the representations or warranties made by the Seller in this
Agreement or in any document to be delivered by it pursuant hereto contains
or will contain any untrue statement of a fact, or omits or will omit to
state a fact necessary to make any statement or fact contained herein or
therein not misleading.
4. Disclosure Letter.
The information contained in or attached to the Disclosure Letter is true,
complete and accurate in all respects.
5. Recitals and Schedules.
The information set out in the recitals and Schedules hereto is true,
complete and accurate in all respects.
CAPACITY
6. Ownership of Shares.
(1) Each Seller is the sole beneficial owner of the number of Shares listed
opposite his name in Part 1 Schedule 1 free and clear of all liens,
encumbrances, restrictions and claims of every kind.
(2) The Seller will transfer to the Purchaser on Completion good and marketable
title to the Shares, free and clear of all liens, encumbrances,
restrictions, trusts and claims of every kind.
28
(3) The Seller acquired and holds the Shares in compliance with law.
(4) The shares constitute the whole of the allotted and issued share capital of
the Company and are fully paid.
(5) The Group Companies listed in Schedule 1 Part 2 are all the present
subsidiaries (within the meaning of Section 155 Companies Act 1963) of the
Company.
(6) The Company is the sole beneficial owner of the shares in each Group
Company listed in Part 2 Schedule 1 free from any lien, encumbrance,
restriction, trust or claim of any kind.
7. Authorisation.
(1) The Seller has the full legal right, power and authority to enter into and
perform this Agreement and the Deed of Indemnity and all transactions
referred to herein and therein.
(2) The Seller has the absolute right to sell, assign, transfer and convey the
Shares pursuant to this Agreement without obtaining the consent or approval
of any other person, governmental authority or other third party.
(3) This Agreement has been, and all other instruments and agreements of the
Seller provided for herein will be on Completion, duly executed and
delivered by the Seller and this Agreement constitutes, and all such other
instruments and agreements will constitute on Completion, the valid and
binding obligations of the Seller, enforceable against it in accordance
with their respective terms.
8. Conflicts with Other Agreements. The execution and delivery by the Seller
of this Agreement and the performance by the Seller of its obligations
hereunder will not, or with the giving of notice or the lapse of time or
both, would not:-
(a) conflict with or result in a breach of or constitute a default under
any provision of the memorandum and articles of association of the
Company or of any contract, license, indenture, lease, sublease, loan
agreement, restriction, lien, encumbrance or other obligation or
liability to which the Company, or the Seller are a party or by which
the Company, or the Seller are affected or bound or result in or
create in any party the right to accelerate, terminate, modify or
cancel any such contract, license, indenture, lease, sublease or loan
agreement;
(b) violate any order, writ, injunction, decree, law, statute, rule or
regulation; or
(c) result in the creation or imposition of any lien, claim, restriction,
charge or encumbrance upon the assets or property of the Company or
the Shares.
9. Corporate Organization.
(1) The Company is a corporation validly existing and in good standing under
the laws of its jurisdiction of incorporation, with all requisite corporate
power and authority to own, lease and operate its Properties and assets
29
used in connection therewith, to carry on its business as presently
conducted by it, and to consummate the transactions contemplated hereby.
(2) The Company is not required to be licensed or qualified to conduct its
business or own its property in any jurisdiction.
(3) The Company has not outside Ireland any branch, agency or place of
business, or any permanent establishment (as that expression is defined in
the relevant double taxation relief orders current at the date of this
Agreement), other than as set forth on Schedule 12, part 2.
10. Capitalization.
(1) Schedule 1, Part 1 contains a true and complete list of the authorised,
issued and outstanding shares of the Company including the respective
number of Shares owned nominally and beneficially by the Seller.
(2) The Shares constitute all of the issued and outstanding shares of the
Company.
(3) All of the Shares have been duly authorised and validly issued and are
fully paid and not subject to any actual or contingent call and are not
subject to any lien or encumbrance.
(4) There is no outstanding right, subscription, warrant, call, pre-emptive
right, option or other agreement or commitment of any kind to purchase or
otherwise to receive from the Company any of the authorised but unissued
capital stock or treasury shares of the Company and there is no outstanding
security of any kind convertible into such shares.
11. Memorandum and Articles
A copy of the memorandum and articles of association of each Group Company
has been furnished to the Purchaser by or on behalf of the Seller and each
said copy which has been certified as a true copy is true and complete as
of the date of this Agreement and has embodied therein or annexed thereto a
copy of every resolution or agreement amending or modifying the same and
fully sets out all rights to each class of the share capital of the
Company.
12. No Other Shares or Businesses
With the exception of shares in the subsidiaries, the Company is not and
never has been the holder or beneficial owner of any class of shares in, or
other capital of, any company or corporation where ever incorporated, is
not a member of any joint venture, partnership, consortium, joint
development or other incorporated association, does not have any branch,
place of business or any assets outside Ireland and is not and has not
agreed to be a party to any profit sharing arrangement or shareholders or
similar agreement.
13. No Share Options or Similar Arrangements
There are no options or other agreements (including conversion rights) in
force which call or may call for the present or future issue of or accord
to any person the right to call for the issue of any share or loan capital
30
of the Company and there has been no exercise or purported exercise, or
claim of any charge, lien, encumbrance or equity over any of the issued or
unissued shares or loan capital of the Company.
14. Repayment Redemption Capitalization. The Company has not at any time:
(a) repaid or redeemed or agreed to repay or redeem any shares of any
class of its share capital or otherwise reduced or agreed to reduce
its issued share capital or any class thereof; or
(b) capitalised or agreed to capitalise in the form of shares,
debentures, other securities or otherwise any profits or reserves
of any class or description or passed or agreed to pass any
resolution to do so; or
(c) provided capital to any company on terms whereby the company so
capitalized has in consideration thereof issued shares, loan
stock or other securities where the terms of any such
capitalization were otherwise than by way of a bargain made at
arms length or where the shares, loan stock or other securities
acquired are shown in the Principal Accounts at a value in excess
of their market value at the time of acquisition.
BANKING
15. Bank Accounts
The Company has no bank account or deposit account other than those
disclosed in a list supplied to the Purchaser as at the day prior to the
execution of this Agreement with the credit and debit balances thereon and
since such statement there have been no payments out of any such accounts
save for routine payments in the ordinary and usual of business and the
present balances on such accounts are not substantially different from the
balances shown on such statements.
16. Borrowings
(a) Except for the bank accounts mentioned in the Disclosure Letter, the
Company does not have any outstanding loan capital and has not
borrowed any money which it has not repaid and has not lent any money
which has not been repaid to it and does not own the benefit of any
debt (whether present or future) other than debts due to it in the
ordinary and usual of business.
(b) The total amount borrowed by the Company from its bankers does not
exceed its approved facilities and the total amount borrowed by the
Company from whatever source does not exceed any limitation on its
borrowing contained in its Memorandum and Articles of Association or
in any debenture or loan stock deed or other deed or document executed
by it.
(c) Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company at Completion are
contained in the Disclosure Letter and true and correct copies of all
documents relating thereto are annexed to the Disclosure Letter and
31
the Company has not done anything whereby the continuance of any such
overdrafts, loans or other financial facilities might be affected or
prejudiced and the Company is not in default under any instrument
constituting any indebtedness or under any guarantee of, or security
or indemnity for, any indebtedness and there is no reason why such
indebtedness, guarantee, security or indemnity should be called or the
liabilities thereunder accelerated or why any such overdrafts, loans
or other financial facilities should be terminated and no person who
provides any such facility has given any indication that it may be
withdrawn or its terms altered.
17. Guarantees by Third Parties
No person other than the Company has given any guarantee of or security for
any overdraft, loan or other financial facility granted to the Company.
18. Banks Generally.
The Disclosure Letter sets forth a true, correct and complete list of all
bank accounts and safe deposit boxes of the Company and all persons who are
signatories thereunder or who have access thereto.
19. No Security Enforceable
No indebtedness of the Company is due and payable and no security over any
of the assets of the Company is now enforceable, whether by virtue of the
stated maturity date at the indebtedness having been reached or otherwise,
and the Company has not received any formal or informal notice from any
creditor of the Company, requiring any payment to be made and/or intimating
the enforcement of any security which it may hold over any of the assets of
the Company.
20. Sufficient Working Capital
Upon Closure, the Company will have the equivalent of US$300,000.
ASSETS
21. Ownership of Assets
All of the assets (including all the assets, fixtures, fittings, equipment
and vehicles) included in the Principal Accounts and all the assets used in
connection with the business of the Company
(a) are the absolute property of the Company save such as are subject to
leasing agreements in respect of which the primary leasing periods
have now expired;
(b) are in the possession and under the control of the Company;
(c) comprise all the assets reasonably necessary to enable the Company to
currently carry on its business fully and effectively in the ordinary
and usual; and
(d) are not, to any extent, surplus to requirements.
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22. Condition of Assets
All the fixtures, fittings, vehicles and computer equipment of the Company
are in good condition and working order, normal wear and tear excepted.
23. Agreements and Documentation relating to Assets
There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security, encumbrance or equity on or over or affecting the
whole or any part of the undertaking or assets of the Company and there is
no agreement or commitment to give or create any of the foregoing and no
claim has been made by any person to be entitled to any of the foregoing.
The Company has not agreed to acquire any asset on terms that the property
in it does not pass until full payment is made
24. [intentionally blank]
25. Stock.
The stock now held by the Company and not written off in the Principal
Accounts of the Company:-
(a) is not obsolete, slow moving, out of date or likely to realise less
than its book value and does not include goods returned by customers
of the Company;
(b) in the case of stock comprising finished goods, is capable of being
sold by the Company in the ordinary and usual of its business;
(c) is fit for its intended purpose and has satisfactory quality and
accords with any other representation, condition, warranty or
contractual term, express or implied, which has been given, or which
would in the normal course of its business be given, by the Company in
respect of it;
(d) complies fully and will on sale by the Company in the ordinary and
usual of its business comply fully with all applicable laws,
regulations, standards (including, without limitation Irish and/or
European standards), customer specifications and specifications laid
down by the Company;
(e) is not and will not when put to its intended use be faulty, defective
or dangerous; and
the Company has, and on the date of Completion will have, the proper amount
of stock necessary to conduct its business consistent with past practice.
26. Plant and Machinery.
The plant and machinery, apparatus, implements, computers, vehicles and
other chattels and equipment used in connection with the business of the
Company:
(a) are in a good and proper state of repair and condition and in
satisfactory working order as of the Closure and have been regularly
and properly maintained;
33
(b) are all capable and (subject to normal wear and tear) will remain
capable throughout the respective periods of time during which they
are each written down to a nil value in the accounts of the Company
(in accordance with generally accepted accountancy principles
consistently applied prior to the date hereof) of doing the works for
which they were designed or acquired; and
(c) are not reasonably expected to require replacements or additions
outside the ordinary and usual of business within a period of twelve
months immediately after Completion.
27. Charges.
No charge in favour of the Company is void or voidable.
CORPORATE RECORDS
28. Filing of Documents
All documents and resolutions relating to the Company required to be filed
by any applicable legislation or regulation with the Registrar of Companies
have been duly filed, all statutory records required to be kept by the
Company have been properly kept and will be so kept until Completion and
the Company has complied with all provisions of the Companies Acts 1963 to
2001.
29. Register of Members
The Register of Members of the Company accurately and sufficiently records
the Members from time to time of the Company and the Company has received
no notice of any intended application or proceedings to rectify the said
Register.
30. Books and Records
On the date hereof the books and records of the Company accurately present
and reflect in accordance with generally accepted accounting principles and
standards in relation to businesses similar to that of the Company all of
the transactions entered into by the Company or to which it has been a
party together with the assets of the Company and such books and records
will be maintained in the same manner until Completion.
31. Minute Books and Registers.
The minute books and registers of the Company are accurate and up to date,
with all necessary signatures, and set forth all meetings and actions taken
by the shareholders, directors and any committees thereof, and properly
record all corporate action required by law to be reflected therein and no
notice or allegation that anything contained in the said minute books and
registers is incorrect or should be rectified has been received.
32. Possession of Books and Records
On Completion the Company will be in possession of all its books, records,
papers and deeds (including agreements to which it is a party) and
documents of title.
34
33. Accounts, Books, and Records
All the accounts, books, ledgers, financial and other records, of
whatsoever kind of the Company:-
(a) have been fully, properly and accurately kept and completed;
(b) do not contain any material inaccuracies or discrepancies of any kind;
(c) give and reflect a true and fair view of its trading transactions and
its financial, contractual and trading position.
34. Reports
There have been no reports commissioned by or on behalf of the Company
concerning the Company by financial or management consultants within the
period of [two] years prior to this Agreement.
INSOLVENCY
35. No Winding-Up or Execution or Similar Process
No order has been made or petition presented or resolution passed for the
winding-up of the Company, or to have an Examiner appointed thereto, no
distress, execution, sequestration, attachment or other process has been
levied on any of its assets, it has not stopped payment and is not
insolvent, or unable to pay its debts for the purposes of Section 214 of
the Companies Act, 1963 or Section 2 of the Companies (Amendment) Xxx 0000,
no encumbrancer has taken possession or attempted to take possession or
exercised or attempted to exercise any power of sale in respect of the
whole or any part of the undertaking, property, assets or revenue of the
Company, no receiver has been appointed or could be appointed by any person
over its business or assets or any part thereof, there is no unfulfilled or
unsatisfied judgment or court order outstanding against it and there has
been no delay by it in the payment of any obligation due for payment.
INSURANCES
36. Insurances
(1) All the fixtures, fittings, equipment, vehicles, stock in trade and assets
of the Company of an insurable nature are and have at all times been
insured against at least such risks and in at least such amounts normally
insured against by persons carrying on business similar to that of the
Company and in particular, but without limitation, the Company has in place
policies of insurance which adequately insure it against employer's
liability and third party public liability (including, without limitation,
product liability and professional indemnity liability) and insure the
assets of the Company against fire and other usual risks in their full
replacement value (including professional fees) and all such insurances are
currently in force and effect and full details thereof are enclosed in or
attached to the Disclosure Letter.
(2) The Company maintains at the date hereof and has at all times maintained
liability insurances in respect of such amounts and against such risks as
are normal and prudent in relation to the Company's business.
35
(3) All premiums due in relation to the Company's insurances have been paid and
nothing has been done or omitted to be done which would make any policy of
insurance void or voidable or which is likely to result in an increase in
premiums or which would release any insurer from any of its obligations
under any policy of insurance of the Company and there is no claim
outstanding pending or threatened against the Company by any person in
respect of death or injury or loss or damage to property which is not
covered by the insurance disclosed.
(4) There is no insurance claim by or on behalf of the Company pending or
outstanding and, as far as the Seller is aware, there are no circumstances
likely to give rise to any such claim.
DIRECTORS AND EMPLOYEES
37. Directors, Officers and Employees. Contained in or attached to the
Disclosure Letter:
(a) is a true and complete list as of the date of this Agreement of the
names of all directors and officers of the Company;
(b) is a true and complete list as of the date of this Agreement of the
names, job descriptions, dates of hiring and particulars of
remuneration (including participation in any bonus or commission
scheme) of all employees;
(c) are details of the terms of employment of each employee stated to
include all details to satisfy the Minimum Notice and Terms of
Employment Xxx 0000, the Terms of Employment (Information) Xxx 0000
and such other legislation as may be applicable thereto together with
copies of all written service agreements and/or contracts of
employment to which the Company is, at the date hereof, a party or
pursuant to which any obligations are outstanding;
(d) is a true and complete list as of the date of this Agreement of any
debts owed to the Company by any officer, director, employee or member
of the Company; and
(e) are copies of any contracts or other arrangements between the Company
and any corporation, partnership or other entity in which any officer,
director, employee or shareholder of the Company has an interest,
directly or indirectly, or serves as an officer or director.
38. No Governing Directors There are no permanent or Governing Directors of the
Company and the Company is not under any liability to pay any sum
whatsoever to any former Director or Governing Director.
39. Employment Terms
(1) The Company is not a party to, and does not operate, any bonus, pension,
profit sharing, share option, deferred compensation, retirement,
hospitalization insurance, medical insurance or similar plan or practice,
formal or informal, with respect to any directors, officers, or employees
36
or others and, is not bound by any agreement whether written or oral with
any director, officer or employee providing for a specified period of
notice of termination or providing for any fixed term of employment, and
the employment of each employee of the Company can be terminated by the
Company without notice and without liability for any severance or
termination pay or other similar payment.
(2) There are not in existence any service agreements with Directors or
employees of the Company which cannot be terminated by three months notice
or less or (where not recorded in writing) by reasonable notice without
giving rise to any claim for damages or compensation (other than the
statutory redundancy payment or statutory compensation for unfair
dismissals).
(3) The Company has maintained adequate and suitable records regarding the
service of each of its employees and officers.
40. Collective Agreements and Labour Relations.
The Disclosure Letter gives full particulars of all collective agreements.
41. Disputes with Employees.
(1) The Disclosure Letter sets out complete particulars of negotiations and of
present and former disputes between the Company and its employees and of
negotiations and of present and former disputes between such employees and
the Seller.
(2) The Company is not, and has not within the past three years been, involved
in any labour, industrial or trade dispute or any dispute or negotiation
with any trade union or association of trade unions or organisations or
body of employees.
(3) The Company has complied with all collective agreements, customs and
practices for the time being dealing with relations between it and its
employees and/or any trade union.
(4) The Company has complied in all respects with the conditions of service of
each of its employees.
42. No Commissions
There are no schemes in operation by or in relation to the Company
whereunder any officer or employee of the Company is entitled to a
commission or remuneration of any sort calculated by reference to the whole
or part of the turnover of profits or sales of the Company.
43. No Sums due
There are no amounts owing to any present or former officers or employees
of the Company, other than remuneration accrued (but not yet due for
payment) in respect of the calendar month in which this agreement is
executed or for reimbursement of business expenses incurred during such
month, and none of them is entitled to accrued holiday pay other than in
respect of the Company's current holiday year.
37
44. Benefit in Kind
(1) No moneys other than in respect of remuneration or emoluments of employment
are payable by the Company to or for the benefit of any officer or
executive of the Company.
(2) The Company has not made or agreed to make any payment to or provided or
agreed to provide any benefit for any present or former officer or employee
or any dependent of any of them which was not allowable as a deduction for
the purposes of Taxation.
45. No Breach of Employment Terms
No liability has been incurred by the Company for breach of any contract of
service or for services or for compensation for wrongful or unfair
dismissal or discrimination or for failure to comply with an order for the
reinstatement or re-engagement of any employee or for failure to comply
with a tribunal or court order relating to an employee or former employee.
46. No Gratuitous Payments
No gratuitous payments have been made or promised by the Company in
connection with the actual or proposed termination or suspension of
employment or variation of any contract of employment of any present or
former director or employee.
47. Labour Court
No Employment Regulation Order affecting the terms of employment of any
employees of the Company has been made by the Labour Court under the
Industrial Relations Acts, 1946 to 1990 or otherwise.
48. Redundancies
Within a period of one year preceding the date of this Agreement, the
Company has not given notice of any redundancies to the Minister for
Enterprise and Employment, or started consultations with any trade union
under Part II of the Protection of Employment Xxx 0000 or Regulation 7 of
the European Communities (Safeguarding of Employees' Rights on Transfer of
Undertakings) Regulations 1980.
49. Compliance
The Company has complied in all material respects, with all:
(a) legal obligations;
(b) codes of conduct or practice; and
(c) collective agreements, customs and practices,
relevant to its employees, and has maintained current, adequate and
suitable records regarding service.
50. Recommendations and Claims
(1) The Company has complied with all recommendations made by Industrial
Relations Officers of the Labour Relations Commission, by Equality
Officers or by the Labour Court.
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(2) The Company is not involved in any material industrial or trade dispute, or
negotiation regarding a claim, with any trade union or other group or
organisation representing employees, and there are no facts known, or which
would, on reasonable enquiry be known to the Seller which might indicate
that such a dispute or claim may exist.
51. Right of return There is no person previously employed by the Company who
now has or may have a right to return to work or a right to be re-instated
or be re-engaged by the Company.
52. Flexible arrangements There are no job share arrangements, flexi-time
arrangements or early retirement schemes applicable to any employees of the
Company. There are no schemes or programmes for the employment or training
of people by the Company other than such schemes or progammes as are under
the Company's full control.
53. Special schemes The Company neither has introduced nor intends to introduce
any short time working scheme or any redundancy scheme or any similar
scheme.
54. Outsourcing None of the products or services supplied by the Company are
produced or provided by out-workers, agency or other self-employed persons,
contracted labour or agents.
PENSIONS
55. Pension Schemes
The Company does not and has never had any Pension Scheme (to include any
retirement, death or disability benefit schemes) for officers or employees
or their dependents nor are there any obligations to or in respect of
present or former officers or employees or any dependent of any of them
with regard to retirement, death or disability pursuant to which the
Company is or may become liable to make payments and no pension or
retirement or sickness gratuity is currently being paid or has been passed
by the Company to or in respect of any former director, former employee or
any dependent of any of them.
LITIGATION AND OFFENCES
56. No Litigation or Similar Process
(a) Neither the Company nor any person for whose acts or defaults the
Company may be contractually or vicariously liable is engaged in any
litigation as plaintiff or defendant or in any criminal or arbitration
proceedings or any proceedings before any tribunal and there are no
proceedings of any of the aforesaid kinds pending or threatened either
by or against the Company and there are no facts which are likely to
give rise thereto nor is there any dispute with any revenue authority
in relation to the affairs of the Company.
(b) There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and the Company is not party to any undertaking or
39
assistance given to a court, tribunal or any other person in
connection with the determination or settlement of any claim or
proceedings.
57. Compliance with Law
The Company has conducted its business in compliance with all applicable
laws and regulations of Ireland and of any other relevant foreign country.
There is no order, decree or judgement of any court or governmental agency
of Ireland or of any other country which is outstanding against the Company
or which may have an adverse effect upon the assets or business of the
Company.
58. Contravention
Neither the Company nor any of its officers agents or employees has
committed or omitted to do any act or thing the commission or omission of
which is or could be in contravention of any national or local statutes or
enactments or of any legally binding instruments, rules, orders,
regulations, ordinances, codes or directions made thereunder or of any
European Union Directives or of any legally binding instruments, rules,
orders, regulations, ordinances, codes or directions made thereunder.
59. No Breaches
Neither the Company nor any of its officers or employees has committed any
offence likely to affect prejudicially the business of the Company and none
of the activities or contracts or rights of the Company are ultra xxxxx,
unauthorised, invalid or unenforceable or in breach of any contract or
covenant and none of the activities or business of the Company requires any
licence authorisation or consent which has not been obtained on a basis
which enables the Company properly to carry on its business and the Company
has not committed any breach of contract or statutory duty or any law, or
any tortious or other unlawful act which could lead to a successful claim
or an injunction being made or granted against it and no event has occurred
as regards the Company which would entitle any third party to terminate any
contract or call in any money before the normal due date thereof.
60. No Conflicts
The Company is entitled to carry on the business now carried on by it
without conflict with any valid rights of any other person and the Company
is not a party to any joint venture, consortium or other joint partnership
arrangement or agreement, and there are no claims against the Company for
breach of any such agreement.
61. Default in Product/Service
The Company has not sold, supplied or provided any product or service which
did not, does not, or will not comply fully with all applicable laws,
regulations standards (including Irish and/or European Union standards) and
customer specifications or which was, is or will be faulty, defective or
dangerous or not in accordance with any representation, condition, warranty
or contractual term, express or implied given in respect of or relating to
it.
40
BUSINESS / AGREEMENTS
62. Conduct of Business.
The Company's business has been conducted solely by the Company and not
through any subsidiary (other than Ivron Systems, Inc.), affiliate, joint
venture, partnership or other entity or person.
63. Authorisations
No consent, approval or agreement of any person, party, court, government
or entity is required to be obtained by the Seller or the Company in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
64. Agreements
(1) The Company is neither a party to nor has any liability (present or future,
actual or contingent) under any deed, debenture, instrument, guarantee,
warranty, indemnity, contract or agreement or commitment of any sort other
than (in the ordinary and usual course of business) as specified in the
Disclosure Letter (full details of which are therein disclosed to the
Purchaser).
(2) The Company is not in default under or in respect of any such deed,
debenture, instrument, guarantee, warranty, indemnity, contract, agreement
or commitment.
65. Restriction on Freedom
No agreements or arrangements are in force which in any way restrict the
freedom of the Company to conduct its day to day business in a normal and
businesslike manner or which provide for the furnishing, receipt or
exchange of information or assistance in relation to the conduct of the
Company's business or which contain or create any abnormal onerous or
long-term contractual obligations or commitments to be complied with or met
by the Company.
66. Brokers.
No agent, broker, person or firm acting on behalf of the Company or the
Seller or under their authority is or will be entitled to a financial
advisory fee, brokerage commission, finder's fee or like payment in
connection with any of the transactions contemplated hereby
67. Effect of Share Sale
(1) No contracts, agreements or arrangements to which the Company is a party
will be terminated or affected by reason of the change in the shareholding
in, or in the ownership or control of, the Company or in the business or
undertaking of the Company or which will result or may result from the
implementation of the provisions of this Agreement.
(2) No party to any such contract agreement or arrangement will be entitled to
terminate its obligations thereunder by reason of the execution delivery or
performance of this Agreement or any of the transactions contemplated
thereby.
(3) Neither this Agreement nor the Completion thereof will or is likely to
cause :
41
(a) the Company to lose the benefit of any licence, exemption, right or
privilege which it currently enjoys, or;
(b) any person who normally does business with the Company not to continue
to do so on the same basis, or;
(c) any officer or senior employee to leave,
and so as far as the Seller is aware the attitude or actions of customers,
employees and other persons with regard to the Company will not be
prejudicially affected thereby.
(4) No person with whom the Company has entered into any agreement or
arrangement is in default thereunder being a default which would have an
adverse effect on the financial or trading position or prospects of the
Company and there are no circumstances likely to give rise to such default.
(5) The execution of this Agreement and the observance and performance of its
provisions will not and will not be likely to:
(a) result in a breach of any contract, law, regulation, order, judgement,
injunction, undertaking, decree or other like imposition to or by
which the Company and/or the Seller is a party or is bound;
(b) result in the creation, imposition, crystallisation, or enforcement of
any encumbrance whatsoever on any of the assets of the Company;
(c) result in any present or future indebtedness of the Company becoming
due and payable or capable of been declared due and payable prior to
its stated maturity date or in any financial facility of the Company
being withdrawn; or
(d) result in the loss or impairment of or any default under any licence,
authorisation or consent required by the Company for the purposes of
its business.
68. Commission
No person is entitled to receive from the Company any finder's fee,
brokerage or other commission in connection with the sale and purchase of
the Shares under this Agreement.
69. Customer Connection
There is no contract to which the Company is a party which depends on the
continuation of the connection (whether as an officer of the Company or
otherwise) of any person with the Company.
70. Customers and Suppliers Generally.
(1) No present customers or suppliers of the Company's business intend to cease
doing business with the Company, or to diminish the amount of the business
that they are now doing with the Company.
42
(2) No supplier or customer of the Company's business has been informed of
the sale of the Shares. There is no agreement with any customer or
supplier containing a provision against the change of control of the
Company.
71. Know-how
The Company does not employ or require to employ in relation to its
businesses any know-how which either infringes or is likely to infringe the
rights of third parties or which has been disclosed to it by third parties
under licence or similar arrangements.
72. Licences, etc
(a) All necessary licences, consents, permits and authorities (public and
private) have at all times been obtained by the Company to enable the
Company to carry on its business effectively in the places and in the
manner in which such business is and has been from time to time
carried on and all such licences consents permits and authorities are
valid and subsisting and the Company is not in breach of any of the
terms and conditions thereof and there is no reason why any of them
should be suspended cancelled or revoked.
(b) All vehicles owned, leased or hired by the company have such licenses,
authorities, and other consents as are necessary or desirable to
enable such vehicles to be used by the Company in connection with its
business.
73. Intellectual Property Rights
(1) Particulars of all licences patents trade marks copyright and
registered designs (if any) owned or used by the Company in connection
with its business together with any user, know-how, information,
assistance or development agreements to which the Company is a party
(none of which will lapse on or after Completion) ("Intellectual
Properties") are contained in the Disclosure Letter and all the said
Intellectual Properties are registered in the name of the Company
and/are otherwise beneficially owned by it and no licence or other
right in respect thereof has been granted or agreed to be granted and
the Company is not under any liability to pay royalties or other
payments in respect thereof.
(2) There has been no infringement by any third party of such intellectual
properties and the Company has not taken or omitted to take any action
that would have the effect of waiving any rights relating to such
intellectual properties.
(3) There has been no infringement by Company of any intellectual property
right of any third party, and other than as disclosed in the
Disclosure Letter, Company has not been advised of any such potential
claim of infringement.
(4) The Company has not granted any licences to others nor has it been
granted any licences by others relative to the Company's business.
(5) The business of the Company as now carried on does not involve the
licensed use of confidential information, know-how or technical data
and does not and is not likely to infringe any intellectual property
rights of any other person.
43
(6) The Company is not passing off any part of its business as and for the
business of any other person and no person is passing off its business
as and for any part of the Company's business.
(7) The Company does not carry on business under or use on its letterhead,
sales material, invoices or vehicles or otherwise any name other than
its own corporate name or any names specified in the Disclosure Letter
as being a name under which it does business and there are no
circumstances which might prevent the Company from continuing to carry
on business under any such name.
74. Disclosure of Information The Company has not disclosed or permitted to
disclose, or undertaken or arranged to disclose, confidential information
or lists of customers or clients.
75. Powers of Attorney
The Company has not delegated any powers or functions under a power of
attorney or agency agreement.
76. Computer Programme Copyright
The Company is absolutely and solely entitled to the benefits of all
copyright in any computer programme used by the Company in the course of
its business.
77. Unusual or LongTerm Contracts
The Company is not a party to any contract entered into otherwise than in
the ordinary and usual course of business or any contract which may be
performed over a period in excess of one year or any contract pursuant to
the terms of which any person may be or may become entitled to receive
amounts based on the revenues or profits of the Company.
78. Insiders' interests.
(1) In this paragraph the expression "Insider" means a shareholder of the
Company, a Connected Person or any past or present director of the Company,
or any person who is or was at the relevant time related to or otherwise
associated with any such shareholder or who was at the relevant time, a
Connected Person.
(2) There is not outstanding and there has not at any time during the period of
six years ended on the date of this Agreement been outstanding:-
(a) any loan, guarantee or indemnity given by the Company in favour of any
Insider or in favour of any other person in respect of any liability
of any Insider;
(b) any loan, guarantee or indemnity given by any Insider in favour of the
Company or in favour of any other person in respect of any liability
of the Company, other than the Mentor Loan; or
(c) any other contract to which the Company is or was a party and in which
any Insider is or was interested in any way whatsoever (excluding any
contract of employment between the Company and any of its directors,
full details of which are set out in the Disclosure Letter).
44
(3) No Insider has any interest, direct or indirect, in any trade or
business which competes or is likely to compete with the Company's
business.
79. Customers.
The Company has not within two years prior to the date hereof been, and is
not in prospect of being, affected by the loss of any important
client/customer or supplier or by any abnormal factor relating to a
customer or supplier or by any dispute or matter which would affect the
relationship of the Company with any of its customers or suppliers or any
trade association to which it belongs or any member thereof.
80. Agreements
The Company has not since the Last Accounts Date, entered into any contract
other than in the ordinary and usual course of business, including the
following:
(a) involves or is likely to involve an aggregate consideration payable by
or to the Company in excess of IR(pound)100,000; and
(b) restricts the freedom of the Company to provide or take goods or
services by such means and to and from such persons as it may from
time to time think fit;
(c) is not on arms length terms or is in anyway otherwise than in the
ordinary and usual course of the Company's business.
81. Government grants
The Company has not applied for or received any grant, subsidy, payment or
allowance from any Government, authority, body or agency (whether
supra-national, national, regional or local) which may at any time be or
become repaid or repayable.
POSITION SINCE THE LAST ACCOUNTS DATE
82. Position since the Last Accounts Date.
(1) Since the Last Accounts Date:
(a) the business of the Company has been continued in the ordinary and
usual course with a view to profit and so as to maintain the same as a
going concern;
(b) save for disposals in the ordinary and proper course of business at
not less than market value the assets of the Company have been in the
possession or under the control of the Company;
(c) the Company has not by reason of any default by it in its obligations
become bound or liable to be called upon to repay prematurely any loan
capital or borrowed moneys;
(d) there has not been any damage, destruction or loss (whether or not
covered by insurance) affecting the assets of the Company or of its
business;
(e) there has been no abnormal increase or reduction of stocks;
45
(f) none of the stock reflected in the Principal Accounts has been
realised for an amount less than that reflected in the Principal
Accounts in respect of such stock, other than in the ordinary and
usual course of business;
(g) the Company has not offered price reductions or discounts or
allowances on sales of stock, or sold stock at less than cost.
(h) no loan or advance or payment has been made or consideration given or
transaction effected to or with any director, shareholder or person
Connected with any of them;
(i) the Company has not undergone any capital reorganisation nor has it
made any changes in its capital structure;
(j) there has not been and there is not threatened any labour trouble,
strike or other occurrence event or condition of a similar character
which adversely affects or may hereafter adversely affect the assets,
Properties, business or prospects of the Company;
(k) the Company has not disposed of or acquired any asset other than in
the ordinary and usual course of business;
(l) the Company has not entered into any transaction or a series of
transactions wholly or partially designed to avoid tax;
(m) the Company has not suffered any termination or amendment of, or
changes to contractual or other relationships with any suppliers or
customers of the Company, affecting the business of the Company;
(n) the Company has not permitted any disposition of, lapse or other
failure to preserve any trade-xxxx, trade name, logo, copyright or
application or registration therefor or any trade secret of the
Company which would have material or adverse consequences;
(o) the Company has not agreed any increase in the compensation payable or
to become payable by the Company to any of its officers, employees,
agents, or to any Connected Person or to any person related to or
otherwise associated with any of its present or former officers or
employees, nor has the company agreed to any increase in any bonus
payment or arrangement made to or with any such person, or to the
adoption or amendment of a bonus, profit-sharing, compensation, stock
option, pension, retirement, deferred compensation or other plan for
the benefit of employees (whether or not gratuitous);
(p) the Company has not implemented any change with respect to the
management or supervisory personnel of the Company;
(q) the Company has not implemented any change in the accounting methods
or practices followed by the Company;
46
(r) the Company has not made any commitment or taken any action, including
without limitation incurring of indebtedness, mortgage or pledge of
property, forgiveness or cancellation or payment or discharge of debts
or claims or waiver of any rights by the Company, other than in the
ordinary and usual course of business; and
(s) the Company has paid its creditors in accordance with their respective
credit terms.
(2) Since the Last Accounts Date there has been no change in the financial
position or trading or prospects of the Company and without prejudice to
the generality of the foregoing, there has been no material adverse change
in the assets or liabilities of the Company and no further liability
(actual or contingent and whether disputed or not) for Taxation (including
deferred Taxation) has arisen or is likely or will arise otherwise than as
a result of transactions entered into by the Company in the ordinary and
usual of its business since the Last Accounts Date.
(3) Since the Last Accounts Date the Company has not:
(a) paid or declared any dividends or otherwise made any distribution to
shareholders;
(b) entered into any capital commitments (other than in the ordinary and
proper course of business and of an aggregate value of not more than
(pound)500) or any long term or abnormal contract;
(c) disposed of any part of its fixed assets or, except in the ordinary
and proper course of its business, its current assets;
(d) made any borrowings or loans other than in the ordinary and proper
course of business or given security over its assets, or allowed any
liens to be created thereover, or entered into any guarantees or
indemnities or other surety agreements;
(e) issued or agreed to issue or give options over any share or loan
capital;
(f) altered its memorandum or articles of association;
(g) permitted any of its insurances to lapse or done anything to make any
policy of insurance void or voidable;
(h) entered into any service agreement or otherwise employed any person;
(i) paid or agreed to pay or provide to its officers or employees any
increase in fees, remuneration or benefits or otherwise agreed to any
change in the terms of employment (as the case may be) of any employee
employed by it at the date of this agreement or any officer holding
office at the date hereof;
(j) released any debtor on terms that he pays less than the book value of
his debt (except for settlement discounts on the usual terms which
47
have been disclosed to the Purchaser) and no debt owing to the Company
has been deferred, subordinated or written off or has proved to any
extent irrevocable;
(k) repaid any loan or loan capital in whole or in part or become liable
to repay such loan or loan capital.
PRINCIPAL ACCOUNTS
83. Accuracy of Principal Accounts The Principal Accounts are true, complete
and accurate in all respects and have been prepared in accordance with the
Companies Acts, 1963 to 2001 and other applicable statutes and regulations
and in accordance with good and current accounting principles, practices
and standards generally accepted in Ireland at the date of this Agreement
including (without limitation) the statements of standard accounting
practice of the Institute of Chartered Accountants in Ireland and on a
basis consistent with the basis on which the accounts of the Company have
been prepared for the six immediately preceding accounting periods, and
(a) set out fairly the assets and liabilities (including without prejudice
to the generality of the foregoing all contingent and unquantified and
disputed liabilities) of the Company and the amounts thereof and show
a true and fair view of the financial position of the Company as at
the Last Accounts Date and of the results of the Company for its
financial years ended on the Last Accounts Date and of the profit or
losses for the periods concerned;
(b) make adequate provision for depreciation and amortisation of the fixed
assets of the Company having regard to their original costs and
estimated life and include no fixed assets at a greater value than
their originating cost;
(c) include no intangible assets;
(d) make full provision for all actual liabilities (whether actual or
contingent and whether or not qualified or disputed) and fully
disclose all contingent or potential liabilities which are not
expected to crystallise and all capital commitments of the Company as
at the Last Accounts Date;
(e) contain in accordance with the generally accepted accounting standards
either, provisions therein adequate to cover, or essential particulars
in notes thereto of, all liabilities of the Company (whether
qualified, contingent, unascertained or otherwise);
(f) are not affected by any unusual or nonrecurring items;
(g) make full provision or reserve for all Taxation for which the Company
was on the Last Accounts Date, or at any time thereafter may have
become, liable to be assessed or to pay on or in respect of or by
reference to the profits, gains, incomes and earnings of the Company
for any period ending on or before the Last Accounts Date and in
respect of all distributions, dividends, loans, advances and payments
paid, due, payable or made prior to the Last Accounts Date by
reference to taxation legislation in force prior to the Last Accounts
Date;
48
(h) do not overstate the value of the current or fixed assets;
(i) do not understate any liabilities (whether actual or contingent);
(j) make proper and adequate provision or reserve for all bad and doubtful
debts;
(k) include all of the stock in trade and work in progress of the Company
at the lower of the cost and the net realisable value and write off
all redundant, obsolete and slow moving stock in trade in value, stock
in trade in work in progress on a basis in all material respects
consistent with that adopted for the purpose of preparing the audited
accounts of the Company in respect of the last preceding accounting
period.
(l) make reasonable provision or reserve for deferred Taxation in
accordance with generally accepted accounting principles and
standards;
(m) do not include any accruals which the Seller regards as relating to
Taxation; and
(n) do not attribute to the Company's fixed assets a value in excess of
their market value.
84. Liabilities Disclosed The Principal Accounts disclose all loans,
guarantees, indemnities, mortgages, charges, debentures or unusual
liabilities (including contingent liabilities) which have been given or
made or incurred by or assigned to or vested in or were outstanding on
behalf of the Company on the Last Accounts Date and since the Last Accounts
Date none of the foregoing have been created.
85. Accounts Receivable.
(a) The Company has not made or entered into any contract or other
agreement 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 and usual of business and cash at bank.
(b) The Company is not entitled to the benefit of any debt otherwise than
as the original creditor and has not factored or discounted or
otherwise assigned any debt or agreed to do so.
(c) All of the debts which are reflected in the Principal Accounts as
owing to the Company (apart from bad and doubtful debts to the extent
to which they have been provided for in the Principal Accounts) or
which have subsequently been recorded in the books of the Company have
realised or will realise in the normal course of collection and within
three months of Completion their full value as included in the
Principal Accounts or in the books of the Company, and no such debt
nor any part of it has been outstanding for more than two months from
its due date for payment.
49
86. Capital Commitments
There were no commitments on capital account outstanding at the Last
Accounts Date and since the Last Accounts Date none have been created and
none will be created prior to Completion.
87. No Liabilities
The Company had at the Last Accounts Date no liabilities (absolute,
accrued, contingent or otherwise), other than those included in the
Principal Accounts and since the Last Accounts Date no such liabilities
have been incurred other than in the ordinary and usual of business.
88. Book Value of Assets
The book value in or adopted for the purposes of the Principal Accounts as
the value of each of the assets of the Company on the disposal of which a
chargeable gain or allowable loss could arise does not exceed the amount
deductible under the Capital Gains Tax Acts plus an indexation allowance
computed as though each asset were disposed of on the Completion Date.
89. Valuation of Stock and Work in Progress
The method of valuing stock and work-in-progress and the basis of
depreciation and amortisation adopted in the Principal Accounts were the
same as those adopted in the audited balance sheet for the two previous
financial years.
90. No Extraordinary Items
The profits shown by the audited profit and loss accounts of the Company
for each of the three financial years ended on the Last Accounts Date have
not (except as therein disclosed) been affected by an extraordinary or
exceptional item or by inconsistencies of accounting practice or by the
inclusion of nonrecurring items of income or expenditure or by transactions
entered into otherwise than on normal commercial terms or by any other
factor rendering such profits for all or any of such years unusually high
or low.
91. Accounts and Records
All accounts books ledgers financial and other records of whatsoever kind
of the Company:
(a) have been properly maintained and contain proper records of all
matters required to be entered therein by the Companies Acts, 1963 to
2001;
(b) do not contain or reflect any inaccuracies or discrepancies; and
(c) give and reflect a true and fair view of the trading transactions and
of the financial and contractual position of the Company and of the
assets and liabilities in accordance with normal business practice.
92. Control of Records
The Company's records, systems and information, and the means of access to
them, are exclusively owned by it and under its direct control.
50
93. Accounts Payable.
All accounts payable of the Company to third parties have arisen in the
ordinary and usual of business, and, as of the date hereof there is no such
account payable past due or delinquent in its payment.
94. Filing of Accounts.
True copies of the Principal Accounts and of the audited accounts for each
financial year of the Company preceding that which ended on the Last
Accounts Date have been laid before the Company in general meeting and
delivered to the Registrar of Companies in compliance with the Companies
Acts 1963 to 2001.
PROPERTY
95. Fee Interests
The Company owns no freehold property.
96. Properties held under a Lease
(1) In the case of Properties held by the Company under a lease:
(a) there are no unusual or onerous provisions in the lease affecting the
cureent and intended use of the property;
(b) except for normal forfeiture provisions, the lease does not include
express provision whereby either the landlord or the tenant may
terminate the lease prematurely;
(c) there are no rent reviews currently under negotiation or the subject
of reference to either an expert, an arbitrator or the Courts.
(d) the Company is not in breach nor has it breached any of the covenants,
restrictions or conditions contained or referred to in the lease.
(2) The use and mode of construction of the Property is and always has been in
compliance with law.
(3) The Properties under lease comprise all the lands and buildings owned,
occupied or used by the Company or in which the Company has any interest.
(4) The Company is the legal and beneficial owner of the leasehold interest in
the Properties.
51
COMPANIES XXX 0000
97. Investigations
(1) No application has been made pursuant to Section 7 or Section 8 of the
Companies Xxx 0000 (the "1990 Act") for the appointment of an Inspector to
investigate the affairs of the Company and no such application is
threatened or anticipated.
(2) The Company is not the subject of or adversely affected by any court order
made pursuant to Section 12 of the 1990 Act or otherwise the subject of or
adversely affected by any proceedings instituted by or against any person
as a result of any investigation of any Companies' affairs under the 0000
Xxx.
(3) The Company is not identified or referred to in any inspector's report made
pursuant to Section 11 of the 1990 Act.
(4) No inspector has been appointed by the Minister for Enterprise and
Employment (the "Minister") under Section 14 of the 1990 Act to investigate
the ownership of the Company and no person has been required pursuant to
Section 15 of the Act to give the Minister any information as to the
ownership of the Company.
(5) No shares in or debentures of the Company are subject to or have been
issued in contravention of any restriction under Section 16 of the 1990 Act
and the Company is not legally or beneficially interested in any shares in
or debentures of the Company which are the subject of any restriction under
Section 16 of the 0000 Xxx.
(6) No directions have been given to the Company under or pursuant to Section
19 of the 1990 Act in relation to the production of documents.
98. Disclosure of Interest in Shares Each shareholder of the Company who is, or
has at any time been required to notify the Company of its interests in any
share in or debenture of the Company pursuant to Section 53 of the 1990 Act
has duly complied with its obligations under Part IV Chapter 1 of the 1990
Act.
99. Compliance with Companies Xxx 0000
The Company has not:-
(a) entered into any arrangement in breach of Section 28 or Section 29 of
the 1990 Act;
(b) made any loans or quasi loans (within the meaning of Section 25 of the
1990 Act), entered into any credit transaction as creditor or entered
into any guarantee or indemnity or provided any security in connection
with a loan, quasi loan or credit transaction in breach of Section 31
of the 1990 Act;
(c) been and is not related to any other company for the purpose of
Section 140 of the 1990 Act and is not and will not at any time be
liable to be subject to an order made under that section by virtue of
any Act (whether of commission or of omission) that occurred prior to
Completion;
52
(d) had a notice served on it by its auditors pursuant to Section 185 or
194 of the 1990 Act;
(e) been struck off and subsequently restored to the Register pursuant to
the provisions of Section 311(A) of the Companies Xxx 0000;
(f) entered into any transaction or arrangement particulars whereof would,
pursuant to Section 41 of the 1990 Act, require to be contained in the
accounts prepared by such company;
(g) purchased or redeemed its own shares or those of its holding company
or created treasury shares pursuant to the provisions of Part XI of
the 1990 Act.
100. Interested Parties
(1) No indebtedness or liability (whether actual or contingent and whether or
not quantified or disputed) and no contract, commitment or arrangement is
outstanding between the Company and any Seller or any Connected Person.
(2) Neither of the Seller nor any Connected Person has any right or interest
directly or indirectly in any business which is or is likely to be or
become competitive with the business of the Company.
(3) Neither the Seller nor any Connected Person is entitled to any claim of
whatsoever nature against the Company and neither the Seller nor any
Connected Person has assigned to any person the benefit of any such claim
to which he would otherwise have been entitled.
101. Safety in Industry
(1) The Company has duly discharged its duties and performed its obligations
under and in compliance with the Safety in Industry Acts 1955 and 1980,
(the "SAIS") and under the Safety Health and Welfare at Work Xxx 0000 (the
"SHW Act") and all regulations, directions, notices and orders made or
served thereunder and has complied with any relevant code of practice
issued by the National Authority for Occupational Safety and Health
established pursuant to the SHW Act.
(2) Neither the Company nor any of its Properties are subject to any
investigation or enquiry pursuant to the SAIS or the SHW Act and no
direction, notice or order has been served on the Company or any of the
Properties pursuant to the SAIS or the SHW Act and no application has been
made to court under the SAIS or the SHW Act for an order restricting or
prohibiting the use of any of the Properties or any part thereof, nor is
any prosecution threatened or pending in respect of any possible breach of
the SAIS or the SHW Act or related regulations.
COMPETITION LAW
102. Competition
(1) The Company is not a party to or concerned in any agreement, practice or
arrangement which is registered or notifiable under or contravenes or is
53
invalidated (in whole or in part) by the provisions of the Competition Acts
1991 to 1996 or the Consumer Information Xxx 0000 and no order has been
made thereunder against the Company.
(2) The Company is not nor has it ever been, a party to or concerned in any
agreement, decision or practice prohibited by Articles 85 and/or 86 of the
Treaty of Rome, or which contravenes any anti-trust, anti-monopoly or anti
cartel legislation or regulation of Ireland or of the European Union or of
any relevant jurisdiction nor has the Company made any application to the
Commission of the European Union for a declaration of inapplicability or
for negative clearance in respect of any agreement, decision or practice
nor is the Company abusing, nor has it abused, a dominant position.
(3) In relation to every merger or take-over in which the Company was involved
prior to the date of this agreement and to which the Mergers Act applied,
the Minister has issued a statement in writing prior to completion of the
merger or take-over concerned stating that he decided not to make an order
under section 9 of the Mergers Act.
(4) The Company is not now nor has it been, a party to any agreement or
arrangement or been involved in any business practice in respect of which
any request for information, statement of objections, request or similar
matter has been received by the Seller or the Company from any court,
tribunal, governmental, national or supranational authority.
(5) The Company has not made or threatened to make any complaint against any
other person or any relevant authority under any law or legislation
referred to in this paragraph.
(6) The Company has not given any assurance or undertaking to the Irish
Competition Authority, the Commission or Court of First Instance or Court
of Justice of the European Union or to any other court, person or body, and
is not subject to any act, decision, regulation or order or other
instrument (statutory or otherwise) made by any of them in relation to any
matter referred to in this paragraph.
(7) The Company is not in default or in contravention of any article, act,
decision, regulation, order or other instrument or of any assurance or
undertaking relating to any matter referred to in this paragraph.
(8) None of the Companies has given any consents limiting or excluding its
rights to do business and/or compete in any area or field with any other
person.
CONDUCT OF BUSINESS
103. Code of Practice/Orders
(1) No code of practice has been issued by any government department,
association or similar body which relates to the Company's business.
(2) (Apart from statutory instruments) no order or notice been made, given or
published affecting the prices which may be charged for any goods as
services supplied by the Company and no notification has been received or
published of any intention to make such an order or to give such a notice.
54
104. Investigations
There is not pending, or in existence any investigation or inquiry or
tribunal of inquiry by, or on behalf of, any governmental or other body in
respect of the affairs of the Company or which is likely to involve the
Company or any of its personnel.
105. Attachment of Defaulters Funds
No notice of attachment has been served on the Company nor in relation to
any funds of the Company of the Company under Section 72(2) of the Finance
Xxx, 0000.
106. July Shares and Earn-Out Shares [compare against term sheet]
Each Seller (i) understands that issuance of the July Shares and the
Earn-Out Shares have not been, and will not be, registered under the
Securities Act of 1933 (the "Securities Act"), or under any state
securities laws, and that they are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public
offering, (ii) is acquiring the July Shares and the Earn-Out Shares solely
for its own account for investment purposes, and not with a view to the
distribution thereof, (iii) is an "Accredited Investor" as defined in the
rules promulgated pursuant to the Securities Act, or is a sophisticated
investor with knowledge and experience in business and financial matters,
(iv) has received certain information concerning Xxxxxxx and has had the
opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding the July Shares and
the Earn-Out Shares, (v) is able to bear the economic risk and lack of
liquidity inherent in holding the July Shares and the Earn-Out Shares, (vi)
has had an opportunity to discuss the investment contemplated herein with
legal and other advisors, and (vii) has accurately completed and delivered
to the Company an investor questionnaire ("Investor Questionnaire") in the
form previously delivered to the Seller.
55
PART II: TAX
References to `the Companies' in the warranties shall
include the Group Companies or any of them.
1. General
(a) When making payments subject to the deduction of Tax, all appropriate
deductions have been made and paid to the appropriate authorities
including, without limitation, all deductions required to be made
pursuant to the TCA.
(b) All Taxation of any nature whatsoever or other sums imposed charged
assessed levied or payable under the provisions of applicable
legislation relating to Taxation for which the Company is liable as a
result of any act or omission by the Company prior to or on Completion
will if, and insofar as such Taxation or other sums ought to be paid
prior to or on Completion, have been paid at or before Completion. In
particular, but without prejudice to the generality of the foregoing,
at Completion, all amounts due for payment to the Revenue
Commissioners in respect of excise duty and of Value Added Tax in
respect of goods or services supplied prior to Completion or goods
imported prior to Completion, and of income tax deductible prior to
Completion under Schedule E by virtue of the PAYE regulations from
time to time in force will have been paid so that the Company will
have no liability in respect thereof and at Completion all Social
Welfare and Pay Related Social Insurance contributions (both
employer's and employees') and any other levies and impositions due in
respect of the employees of the Company will have been duly paid.
(c) The Company is not liable nor has at any time since the date of
incorporation been liable to pay interest on overdue Taxation.
(d) The Company has not acquired or disposed of any asset or entered into
any transaction otherwise than by way of bargain at arm's length.
(e) The Company has not entered into any financing or leasing agreement in
which or in connection with which the Company has indemnified any
other party against any claim, loss or other liability arising from
any change in tax legislation or in the interpretation of Tax
legislation.
(f) There are set out in the Disclosure Letter full particulars of all
material differences between the accounting and Taxation treatments of
all items in the Accounts.
(g) There is no appeal by the Company pending against any assessment to
Tax and the Company is not in default in payment of any Tax within the
period prescribed for payment thereof.
(h) The Company has not been at any time, for Taxation purposes, resident
in any jurisdiction other than the Republic of Ireland nor has it been
at any time managed or controlled in or from any country other than
56
Ireland or carried on a trade or profession or had a branch agency or
permanent establishment or other taxable presence in any country other
than Ireland.
(i) The Company has since the date of incorporation:-
(i) furnished the relevant Inspector of Taxes with full and
materially accurate particulars relating to the affairs of the
Company where required;
(ii) properly and within the prescribed periods of time made all
returns and given or delivered all notices, accounts and
information required for the purpose of Taxation; and
(iii)complied fully with the requirements of Part 41 of the TCA
regarding the payment of preliminary tax, corporation tax and
capital gains tax.
All such particulars, returns, notices, accounts, information and
payments have been correct in all material respects and on a proper
basis and none are disputed by the Revenue Commissioners or other
authority concerned. In addition there are no grounds or circumstances
which might cause any such dispute and the Company has made all claims
which would be of benefit to it within the time limits laid down in
the relevant legislation.
(j) No act or transaction has been effected in consequence of which the
Company is liable for any Taxation primarily chargeable against any
other person, including any other company.
(k) The Company does not and never has had any interest in the share or
loan capital of any other body corporate or unincorporate.
(l) The Company is not now member of a partnership, joint venture,
consortium, group or other association.
(m) (i) No change of ownership of the Company has taken place nor will
take place in the period up to and including Completion in
circumstances such that Section 401 TCA (change in ownership of
the company: disallowance of trading losses) has or may be
applied to deny relief for a loss or losses acquired from the
Seller or incurred by the Company.
(ii) Tax Warranty 1(m)(i)(A) would not apply to the extent that any
act, transaction or omission by or on behalf of the Purchaser or
the Company after Completion would result in the application of
the said Section 401 TCA.
(n) The Disclosure Letter contains full and accurate particulars of all
transactions effected otherwise than in the ordinary and usual of
business in respect of which the Company is required to make a
specific return to the Revenue Commissioners or other relevant
authorities.
57
(o) The Company has not been the subject of any audit, inspection or
discovery by the Revenue Commissioners and there are no facts to the
best of the knowledge, information and belief of the Sellers which are
likely to cause such an audit, inspection or discovery to be made.
(p) Any revaluation of immovable property of the Company will have been a
bona fide revaluation in accordance with Part IV of the Companies
(Amendment) Act, 1983 and the Schedule to the Companies (Amendment)
Act, 1986 and otherwise in compliance with law.
(q) There have been no bonus issues, repayments and reorganisations of
capital.
(r) There are no arrangements or agreements between the Company and the
Revenue Commissioners or any other Taxation Authority pursuant to
which the Company is authorised to deviate from its statutory
obligations with respect to Taxation.
(s) In respect of all transactions entered into by the Company which
required a consent or clearance from the Revenue Commissioners or any
other Taxation Authority, all such consents or clearances were validly
obtained prior to the transaction having been effected and the
conditions of any such consents or clearances were strictly adhered to
within the appropriate time periods and to the best of the Sellers'
knowledge, information and belief, there are no circumstances that
have arisen since any application for consent or clearances made which
might cause such consent or clearance to be withdrawn or invalidated.
(t) All payments made by the Company requiring the deduction of Tax have
been properly made and such Tax which ought to have been deducted has
been properly accounted for.
(u) No relief from against or in respect of Tax has been claimed or given
to the Company which could or might be effectively postponed
restricted withdrawn or otherwise diminished as a result of any act or
omission or circumstance occurring before Completion.
(v) The Company has made all claims which would be of benefit to it within
the time limits laid down and in accordance with any other conditions
laid down in respect thereof in the relevant legislation.
(w) No asset has been disposed of by the Company to any Connected Person
or otherwise in a manner not at arm's length.
(x) The Company has never claimed relief under Part 14, Chapters 1 and 2
of the TCA. The existing operations of the Company will not qualify
for the relief and there is no dispute with the Inspector of Taxes or
with any Taxation Authority with regard to this relief.
58
(y) The Company has not repaid share capital or any part thereof and the
Company has not issued as paid up otherwise than by receipt of new
consideration any new shares.
(z) The Company has not made any payment to or provided any benefit to any
officer or employee of the Company which is not allowable as a
deduction in calculating the profits of the Company for Taxation
purposes.
(aa) The book value of each of the capital assets of the Company in or
adopted for the purpose of the Accounts does not exceed the base cost
thereof for the purposes of calculating liability to capital gains tax
or corporation tax on chargeable gains on a disposal thereof by the
Company.
(bb) Section 138 of the TCA does not apply as the Company does not have
preference shares.
(cc) If fixed assets which have been stated in the Net Asset Statement in
excess of their cost were disposed of for a consideration equal to the
book value of that asset shown in the Accounts, then no liability to
Corporation Tax on chargeable gains or balancing charge under Part 20
of the TCA or under the TCA generally, would arise and for the purpose
of determining the liability to Corporation Tax on chargeable gains,
any relief or allowances available to the Company other than amounts
falling to be deducted under Part 19 and Section 828 of the TCA shall
be disregarded.
(dd) The provisions of Part 13 of the TC, do not apply to the Company.
(ee) Goods produced by the Company do not fall within the definition of
goods regarded as manufactured within the meaning, and for the
purposes of section 443 of the TCA and the Company has at all material
times been eligible to claim the reduction of corporation tax provided
for in section 448 of that Act.
(ff) The Company is not, and has at no time been, member of any group of
companies within the meaning of section 616 of the TCA or associated
with any other company within the meaning of section 19 of the Finance
Act, 1952.
(gg) The Company has not entered into or been a party to any schemes or
arrangements which were not effected for bona fide commercial purposes
and which were designed partly or wholly for the purpose of avoiding
Taxation nor has the Company received any notice under Section 811 of
the TCA nor has the Company been engaged in or been a party to a tax
avoidance transaction within the meaning of the said Section.
(hh) No notice of attachment has since the date of incorporation been
served on the Company or in relation to any funds of the Company under
Section 1002 of the TCA.
(ii) The Company has not been and is not assessable to Tax under Section
1034 or 1035 of the TCA.
59
(jj) The Company has not committed any act, made any omission, made any
understatement of liability or overstatement of entitlement or failed
to draw an understatement in an assessment to the attention of the
Revenue Commissioners which might constitute an offence and/or give
rise to any liability to a penalty under Section 1078 of the TCA.
(kk) No surcharge for late submission of returns under Section 1084 of the
TCA has or will become payable by the Company.
(ll) No penalty under Section 1084 of the TCA has or will become payable in
respect of the Company.
(mm) At Completion the Company will have paid all amounts due by virtue of
Section 523 of the TCA.
2. Corporation Tax
(a) The Company has not since the date of incorporation paid remuneration
to its directors in excess of such amount as will be deductible in
computing the taxable profits of the Company; and
(b) The Company has not at any time:-
(i) repaid or redeemed or agreed to repay or redeem any shares of any
class of its share capital or otherwise reduced or agreed to
reduce its issued share capital or any class thereof; or
(ii) capitalised or agreed to capitalise in the form of shares,
debentures or other securities or in paying up any amounts unpaid
or any shares debentures or other securities any profits or
reserves of any class or description or passed or agreed to pass
any resolution to do so; or
(iii)provided capital to any company on terms whereby the company so
capitalised has in consideration thereof issued shares loan stock
or other securities where the terms of any such capitalisation
were otherwise than by way of a bargain made at arm's length or
where the shares loan stock or other securities acquired are
shown in the Accounts at a value in excess of their market value
at the time of acquisition.
(c) The Company has not paid nor will pay prior to Completion remuneration
or compensation for loss of office or make any gratuitous payment or
any other payment in respect of management or other services rendered
or to be rendered to the Company to any of its present or former
directors or employees which will not be deductible in computing the
taxable profits of the Company.
(d) No capital gain chargeable to corporation tax would accrue to the
Company on the disposal of a debt owed to the Company where the
proceeds equal the value of the debt (net of provisions) in the Net
Asset Statement.
60
(e) All plant and machinery and industrial buildings in respect of which
the Company has claimed capital allowances satisfied the requirements
of the relevant legislation entitling the Company to claim capital
allowances thereon and the Company satisfied all relevant requirements
of the said legislation and no circumstances have arisen which could
result in any such allowances previously made being withdrawn.
(f) The Company has not effected or entered into any act, transaction or
arrangement of any nature whereby it has incurred or may hereafter
incur any liability under or by virtue of any of Sections 98, 99, 100
or 103,of the TCA in connection with any act or event occurring or
commencing before Completion.
(g) The Company is not tenant under any lease or leases which was or were
granted at an undervalue such that a charge might arise by virtue of
Section 99 of the TCA on any assignment thereof. The Company has not
entered into any transaction or transactions which falls or fall
within the provisions of Sections 99, 100 and 102 of the TCA.
(h) The provisions of Sections 133 and 134 of the TCA do not apply to the
Company.
(i) No allowable loss which has arisen or which may hereafter arise on the
disposal by the Company of shares in or securities of any company is
liable to be disallowed in whole or in part by virtue of the
application of Section 621 or Section 139 of the TCA in connection
with any act or event occurring or commencing before Completion.
(j) The Company has duly complied in all material respects with the
requirements of Part 18 of the TCA and with the requirements of all
other provisions relating to the deduction and withholding of tax at
source up to the date hereof and all such Tax which has become due to
the Revenue Commissioners has been paid to the Revenue Commissioners.
(k) No allowance in respect of capital expenditure incurred or deemed
incurred before Completion of the Company is or may be restricted by
virtue of Part 9 of the TCA
(l) Any machinery or plant provided for use for the purposes of the trade
of the Company after 1 April 1990 is used wholly and exclusively for
the purposes of the trade of the Company, both generally and within
the meaning and for the purposes of Part 9 of the TCA.
(m) The provisions of Section 317 of the TCA do not apply to any
expenditure incurred by the Company.
(n) No change of ownership of the Company has since the date of
incorporation taken place in circumstances such that Section 401 of
the TCA has nor may be applied to deny relief for a loss or losses
incurred by the Company.
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(o) The Company is not lessor in respect of any plant or machinery to
which the provisions of Section 403 of the TCA apply.
(p) The Company is not liable to make a subvention payment or any other
payment for an amount surrendered by any other company under or in
connection with the provisions of Section 411 of the TCA with any act
or event occurring or commencing before Completion.
(q) The Company has not surrendered or claimed any amount by way of group
relief under the provisions of Part 12, Chapter 5, of the TCA and will
not make any such surrender or claim prior to Completion.
(r) The Company has not, nor ever has had, an approved share option
scheme/ profit sharing scheme under Part 17, Chapter 1, of the TCA.
(s) The utilisation of losses incurred by the Company is not restricted by
section 456 of the TCA.
(t) No event has occurred and the Company has not entered into any
transaction which could give rise to a liability to Tax under Part 20,
Chapter 1, of the TCA.
(u) No tax liabilities will arise in the Company under Section 623 of the
TCA as a result of the Company ceasing to be owned by the Seller.
(v) The Company has not entered into any of the transactions to which Part
21 of the TCA applies and it does not hold nor has it disposed of `new
assets' for the purposes of Section 631 of the TCA.
(w) The Company has not entered into any transaction as a result of which
it could be assessed to Tax under Part 22, Chapter 1, of the TCA or
Section 35 of the Finance Act, 1965
(x) The Company has not entered into a transaction by virtue of which it
will be chargeable under Case IV of Schedule D in accordance with
Section 815 of the TCA.
(y) The Company has not entered into or taken any steps the object of
which is a transaction which comes, or might come, within Section 817
of the TCA.
(z) The Company has not paid or become liable to pay any interest charged
by virtue of Sections 1080, 1081, 1082 and 1083, Part 47, Chapter 5,
of the TCA and the Company has not and will not prior to Completion be
in default in payment of any Tax within the period prescribed for
payment thereof.
(aa) The Company has never been a party to a loan arrangement in respect of
which interest or any other amount payable thereunder is capable of
being treated as a distribution pursuant to the provisions of Part 6,
Chapter 2 of the TCA.
(bb) The Net Asset Statement does not take or purport to take into account
any relief or allowance for tax purposes (by way of deduction in
62
computing profits or gains or deduction or set off against income or
total profits) which could be disallowed under the TCA.
(cc) No rents, interest, annual payments or other sums of an income nature
or any other nature paid or payable by the Company or which the
Company is under an obligation to pay in the future are wholly or
partially disallowable as deductions or charges in computing profits
or gains for the purposes of Tax by reason of the provisions of the
TCA or otherwise.
(dd) The Company has not since the date of incorporation received payment
in respect of professional services from an accountable person within
the meaning of Part 18, Chapter I of the TCA.
(ee) The Company has not since the date of incorporation acquired any
assets other than trading stock from any company which at the time of
acquisition was a member of the same group of companies as referred to
in Section 617 of the TCA.
3. Advance Corporation Tax ("ACT")
(a) The Company has no liability to ACT under Chapter 8 of Part 6 of the
TCA.
(b) The Company has not made an election under Section 165 and no
surrender has been made under Section 166 of the TCA.
(c) The Company is not affected by the provisions of Section 167 or
Section 170 of the TCA.
4. Capital Gains Tax
(a) There have been no claims under Section 538 of the TCA by the Company.
(b) No Tax liability has been deferred under any provision of the TCA
including, without limiting the foregoing, Section 981 of the TCA.
(c) There have been no transactions falling within the terms of Section
547 of the TCA to which the Company has been a party. (d) The Company
has not entered into any transactions to which Section 590 and
Sections 615 to 617 inclusive of the TCA or Part 21 of the TCA apply.
(e) The Company does not own any shares or securities acquired as a `new
holding' within the meaning and for the purposes of Sections 584 to
587 inclusive and Section 733 of the TCA.
(f) No claim has been made by the Company under Section 1005 of the TCA.
(g) The Company has not made any disposal within the meaning of Chapter 2
of Part 22 of the TCA.
63
(h) The value of each asset in the Net Asset Statement does not exceed and
will not up to Completion exceed the sum which would be allowable as a
deduction in the computation (under Chapter 2, Part 19 of the TCA) of
the gain which would accrue on the disposal of such asset.
(i) The Company has not made any claim for roll-over relief under Section
597 of the TCA.
(j) The Company has not made any such transfer as is referred to in
Section 589 of the TCA or received any asset by way of gift as
mentioned in Section 978 of the TCA.
(k) The Company has not been a party to or involved in any share for share
exchange or any scheme of reconstruction or amalgamation such as are
mentioned in Part 19 and Section 733 or Section 615 of the TCA under
which shares or debentures have been issued or any transfer of assets
effected.
(l) The Company has not entered into any transaction which has, will or
may give rise to a charge to Tax under the provisions of the TCA
relating to companies' capital gains or under the provisions of the
Capital Acquisitions Tax Act, 1976.
(m) The Company has not entered into or taken any steps the object of
which is a transaction which comes within or might come within Section
549 of the TCA.
(n) No obligation has arisen or will arise prior to Completion for the
Company to deduct an amount under Section 980 TCA.
(o) The Company has not had to apply for a certificate under Section
980(8) of the TCA.
5. Stamp Duty
(a) The Company has duly complied with and has no liability under the
SDCA.
(b) All documents in the possession or under the control of the Company
relating to transfers of shares in the Company or the Properties which
attract stamp duty have been properly and adequately stamped.
(c) No relief, exemption or reduction has been obtained from companies
capital duty or stamp duty and without prejudice to the generality of
the foregoing no relief, exemption or reduction has been obtained from
companies capital duty or stamp duty under Section 119 of the SDCA ,
or from stamp duty under Section 79 of the SDCA, or Section 80 of the
SDCA, which:
(i) has become liable to forfeiture; or
(ii) may be forfeited in the future.
(d) All capital duty and/or stamp duty payable by the Company in respect
of any of the transactions referred to in the SDCA has been duly and
64
promptly paid by the Company so that there is no liability in respect
thereof or any interest and/or penalty thereon.
(e) All other capital and/or stamp duty relating to transfers of shares in
the Company or the Properties howsoever arising or payable has been
paid by the Company and there is no outstanding liability therefor or
interest and/or penalty thereon.
6. Value Added Tax
(a) The Company has registered and is a taxable person for the purposes of
the Value Added Tax Act, 1972 and has complied in all respects with
such legislation and all regulations made or notices issued thereunder
and has maintained full complete and correct and up to date records,
invoices and other documents (as the case may be) appropriate or
requisite for the purposes thereof.
(b) The Company has duly made Value Added Tax (`VAT') returns accurately
and in time and has accounted for and paid on time all VAT due and
payable by it and has provided Tax invoices in the required form and
within the required time to all persons to whom the Company has made a
taxable supply of goods or services. The Company has never issued any
invoice containing an amount of Tax which is not due.
(c) The Company is not in arrears with its payments or returns or
notifications under the Value Added Tax Acts regulations or notices or
liable to any abnormal or non-routine payment or any forfeiture or
penalty or to the operation of the penal provisions contained therein.
(d) The Company has not been required by the Revenue Commissioners or
other appropriate fiscal authorities to give security under the Value
Added Tax Acts.
(e) No arrangement exists or has existed whereby pursuant to Section 8 (8)
of the Value Added Tax Act, 1972, and Regulation 5 of the Value Added
Tax Regulations, 1979, (as amended) the business activities of the
Company is or were deemed to be carried on by any other person or the
business activities of any other person are or were deemed to be
carried on by the Company.
(f) The Company has not prior to the date hereof availed of the procedure
in Section 58 of the Finance Act, 1989, whereby a trader may account
and make returns for VAT purposes other than after each two monthly
taxable period.
(g) The Company has never acted as agent, manager or factor of any person
not resident in the State so as to be accountable for that person's
Tax under Section 37 of the Value Added Tax Act, 1972.
(h) The only deductions of input Tax (i.e., Tax paid in respect of
supplies to the Company) from output Tax (i.e., Tax payable by the
Company in respect of supplies made by it) which the Company has
claimed are credits or deductions allowable under Section 12 of the
Value Added Tax Act, 1972. The Company has never claimed deduction of
any input Tax in circumstances which would give rise to any repayment
of Tax under the Value Added Tax Acts.
65
(i) Any payments of excess credit for input Tax or refunds of Tax to the
Company have been made on the correct basis.
(j) The Company has never been required to make adjustments to the
deduction of input Tax on capital items in accordance with the
provisions of Section 12 of the Value Added Tax Act, 1972.
(k) No value is attributable in the Accounts to credit for input Tax paid
which is not available in full by reason of the Company having made
exempt supplies for VAT purposes or otherwise nor for refunds not made
on the correct basis.
(l) The Company has never been and will not up to Completion be liable to
any penalty and no goods of the Company have been or will up to
Completion be liable to forfeiture under Section 27 of the Value Added
Tax Act, 1972.
(m) Set out in the Disclosure Letter are copies of all written
notifications of elections to waive exemptions from Tax under section
7(1) of the Value Added Tax Act, 1972, which affect the Company in any
way.
(n) The Company does not make exempt supplies for VAT purposes nor is it
unable to obtain a credit or deduction for any input tax paid or
suffered by it.
(o) The transfer of the Seller's business to the Company will be treated
as a transfer of a business within Sections 3(5)(b)(iii) and 5(8) of
the Value Added Tax Xxx 0000.
7. Capital Acquisitions Tax
(a) There is no unsatisfied liability to capital acquisitions tax attached
or attributable to the Shares and the Shares are not subject to a
charge in favour of the Revenue Commissioners.
(b) No person is liable to capital acquisitions tax attributable to the
value of any of the Shares and in consequence no person has the power
to raise the amount of such tax by sale or mortgage or by a terminable
charge on any of the Shares.
(c) The Company has not prior to the date hereof entered into any
arrangement or taken any steps which come within Section 90 of the
Finance Act, 1989.
(d) There is no unsatisfied liability to capital acquisitions tax attached
or attributable to any shares in the capital of the Company and no
shares in the capital of the Company are subject to a charge in favour
of the Revenue Commissioners, whether under section 47 of the Capital
Acquisitions Tax Act, 1976 or otherwise.
8. PAYE/Social Welfare
(a) The Company is registered for the purposes of regulations made under
Section 986 of the TCA (PAYE regulations) and has complied at all
66
times in all respects with such regulations and has maintained full,
complete, correct and up to date records appropriate or requisite for
the purposes thereof.
(b) The Company is not in arrears with its payments or returns required
under regulations made under Section 986 of the TCA (PAYE regulations)
or liable to any abnormal or non-routine payment or any forfeiture or
penalty or to the operation of any penal provisions due to
non-compliance with the said regulations.
(c) The Company has complied in all respects with Part II, Chapter I,
Social Welfare Consolidation Xxx, 0000, Health Contributions Xxx,
0000, Youth Employment Agency Act, 1981, and any regulations made
under those Acts and has maintained full, complete, correct and up to
date records appropriate or requisite for the purposes thereof and has
not committed any offence under Section 115, Social Welfare
Consolidation Act, 1981, and is not liable to any abnormal or
non-routine payment or any forfeiture or penalty or to the operation
of any penal provisions due to non-compliance with the said Acts
and/or regulations.
(d) The Company has not availed of the Income Tax (Employments)
Regulations, 1989, (SI No 58 of 1989) whereby an employer may make
remittances of PAYE deducted from his employees at longer intervals
than the normal monthly remittance basis.
67
SCHEDULE 5.1
Warranties of Xxxxxxx
Xxxxxxx warrants, represents, and undertakes to each Seller and their successors
in title in relation to Xxxxxxx, as follows:
1. Information Furnished.
All information given by or on behalf of Xxxxxxx to the Seller or any
shareholder, accountant, lawyer or agent thereof in the course of the
negotiations leading to this Agreement was, when given, and is at the date
hereof true, accurate and complete in all material respects.
2. Other Information.
There is no fact or matter which to the knowledge of Xxxxxxx, has not been
disclosed in writing to the Seller which renders the information referred
to in paragraph 1 untrue or misleading at the date of this Agreement or
which, on the basis of good faith, ought to be disclosed to any intending
Seller of the Shares or the disclosure of which might reasonably affect the
willingness of a Seller to sell the Shares on the terms (including the
consideration) contained herein. Xxxxxxx undertakes to disclose immediately
to each Seller anything which come to its notice which is or may be a
breach of any of the warranties set forth in this Schedule 5.1.
3. Representations and Warranties
None of the representations or warranties made by Xxxxxxx in this Agreement
or in any document to be delivered by it pursuant hereto or in connection
with the transactions contemplated hereby contains or will contain any
untrue statement of a fact, or omits or will omit to state a fact necessary
to make any statement or fact contained herein or therein not misleading.
5. Recitals and Schedules.
The information set out in the recitals and Schedules hereto is true,
complete and accurate in all respects.
6. Organization of Xxxxxxx.
Xxxxxxx is a corporation duly organized, validly existing, and in good
standing under the laws of Utah.
7. Capitalization.
The authorized capital stock of Xxxxxxx consists of 50,000,000 shares of
common stock, par value $.001 per share. As of September 28, 2001,
8,640,778 shares of common stock were issued and outstanding, all of which
were validly issued, fully paid and nonassessable, and no shares of common
stock were held in treasury. As of June 30, 2001, Xxxxxxx had 1,750,798
options to purchase common stock of the company outstanding under two
employee stock option plans. The Company's 1998 Stock Option Plan (the
"Plan") provides for grants of up to 1,700,000 shares. In addition,
Xxxxxxx'x board of directors has recommended to the shareholders an
amendment to the Plan providing for increasing the number of shares
thereunder to 2,500,000 shares. Except as set forth herein, and other than
Xxxxxxx'x 1997 Employee Stock Purchase Plan in which all employees may
participate, no third party has any right to purchase shares in Xxxxxxx.
68
8. Authorization of Transaction.
Xxxxxxx has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Xxxxxxx, enforceable in accordance with its terms and
conditions.
9. Noncontravention.
The execution and the delivery of this Agreement, and the consummation of
the transactions contemplated hereby will not or with the giving of notice
or the lapse of time, or both, would not (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which Xxxxxxx is currently subject or any current provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which Xxxxxxx is a party or by which it is bound or to which
any of its assets is subject. Xxxxxxx does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, which will not
be obtained prior to the Completion.
10. Brokers' Fees.
Xxxxxxx has no liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated
by this Agreement for which the Seller could become liable or obligated.
11. Calculation of EPS
In relation to the calculation of Earn-Out in clause 2.3, Xxxxxxx will act
in good faith in accordance with its customary practices and U.S.
Securities and Exchange Commission practice in making the EPS calculation.
12. Payment of Consideration
In relation to the payment of consideration, Xxxxxxx will act on a
commercially reasonable basis in connection with the shipment of product
and the payment of consideration.
13. Earn-Out
If and to the extent that the Earn-Out consideration would be adversely
affected by:
- a corporate reorganisation which would relocate all or a part of the
business of the company to another body corporate
- the imposition of an Encumbrance on the company or its business other
than in the ordinary and usual of business
- an unforeseen circumstance
69
then such reorganisation, imposition, or unforeseen circumstance (as the
case may be) shall be disregarded in the calculation of the earn-out
Consideration.
70
SCHEDULE 5.2
Warranties of the Purchaser.
Purchaser warrants, represents, and undertakes to each Seller and their
successors in title in relation to Purchaser, as follows
1. Information Furnished.
All information given by or on behalf of the Purchaser to the Seller or any
shareholder, accountant, lawyer or agent thereof in the course of the
negotiations leading to this Agreement was, when given, and is at the date
hereof true, accurate and complete in all material respects.
2. Other Information.
There is no fact or matter which to knowledge of Purchaser has not been
disclosed in writing to the Seller which renders the information referred
to in paragraph 1 untrue or misleading at the date of this Agreement or
which, on the basis of good faith, ought to be disclosed to any intending
Seller of the Shares or the disclosure of which might reasonably affect the
willingness of a Seller to sell the Shares on the terms (including the
consideration) contained herein. Purchaser undertakes to disclose
immediately to each Seller anything which come to its notice which is or
may be a breach of any of the warranties set forth in this Schedule 5.2.
3. Representations and Warranties
None of the representations or warranties made by the Purchaser in this
Agreement or in any document to be delivered by it pursuant hereto or in
connection with the transactions contemplated hereby contains or will
contain any untrue statement of a fact, or omits or will omit to state a
fact necessary to make any statement or fact contained herein or therein
not misleading.
4. Recitals and Schedules.
The information set out in the recitals and Schedules hereto is true,
complete and accurate in all respects.
5. Organization of the Purchaser.
The Purchaser is a corporation duly organized, validly existing, and in
good standing under the laws of Utah.
6. Capitalization.
The authorized capital stock of the Purchaser consists of 100 shares of
common stock, no par value. As of September 28, 2001, ten (10) shares of
common stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable, and no shares of common stock were held in
treasury. As of September 28, 2001, no options or other rights to subscribe
for common stock had been issued.
7. Authorization of Transaction.
The Purchaser has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Purchaser, enforceable in accordance with its
terms and conditions.
71
8. Noncontravention.
The execution and the delivery of this Agreement, and the consummation of
the transactions contemplated hereby will not, or with the giving of notice
or the lapse of time, or both, would not (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which the Purchaser is currently subject or any current provision
of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Purchaser is a party or by which it is bound or to
which any of its assets is subject. The Purchaser does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties
to consummate the transactions contemplated by this Agreement, which will
not be obtained prior to the Completion.
9. Brokers' Fees.
The Purchaser has no liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become liable or
obligated.
10. Calculation of EPS
In relation to the calculation of Earn-Out in clause 2.3, the Purchaser
will act in good faith in accordance with its customary practices and U.S.
Securities and Exchange Commission practice in making the EPS calculation.
11. Payment of Consideration
In relation to the payment of consideration, the Purchaser will act on a
commercially reasonable basis in connection with the shipment of product
and the payment of consideration.
12. Earn-Out
If and to the extent that the Earn-Out consideration would be adversely
affected by:
- a corporate reorganisation which would relocate all or a part of the
business of the company to another body corporate
- the imposition of an Encumbrance on the company or its business other
than in the ordinary and usual of business
- an unforeseen circumstance
then such reorganisation, imposition, or unforeseen circumstance (as the
case may be) shall be disregarded in the calculation of the earn-out
Consideration.
72
================================================================================
SIGNED SEALED AND DELIVERED by the
said Xxxx Xxxxxx in the presence of:
--------------------------------------
Witness Signature:
/s/Xxxxx X. Valeo /s/Xxxxxxx Xxxxxx
SEAL
-------------------------------------- -----------------------------------------
Address:1825 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------------------
Description: Attorney
================================================================================
================================================================================
SIGNED SEALED AND DELIVERED by the
said Xxx Xxxxxxxx in the presence of:
--------------------------------------
Witness Signature:
/s/Xxxxx X. Valeo
SEAL
-------------------------------------- -----------------------------------------
Address:1825 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------------------
Description: Attorney
================================================================================
================================================================================
SIGNED SEALED AND DELIVERED by the
said Xxxxx Xxxxx in the presence of:
--------------------------------------
Witness Signature:
/s/Xxxxx X. Valeo
SEAL
-------------------------------------- -----------------------------------------
Address:1825 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------------------
Description: Attorney
================================================================================
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================================================================================
SIGNED SEALED AND DELIVERED by Xxxx
Xxxxxx as lawful attorney for the
said Xxxx Xxxxxx in the presence of:
--------------------------------------
Witness Signature:
/s/Xxxxx X. Valeo
SEAL
-------------------------------------- -----------------------------------------
Address:1825 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------------------
Description: Attorney
================================================================================
================================================================================
SIGNED SEALED AND DELIVERED by Xxxx
Xxxxxx as lawful attorney for the
said Xxxx Xxxxxx in the presence of:
--------------------------------------
Witness Signature:
/s/ Xxxxx X. Valeo
SEAL
-------------------------------------- -----------------------------------------
Address:1825 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------------------
Description: Attorney
================================================================================
================================================================================
PRESENT when the common seal of Mentor
Capital, Ltd. was affixed hereto:
--------------------------------------
Witness Signature:
/s/Xxxxx X. Valeo SEAL
-------------------------------------- -----------------------------------------
Address:
0000 Xxxxxxxx Xxx
Xxxx Xxxx Xxxx, XX 00000 /s/Xxxxxxx Xxxxxx, Director
-----------------------------------------
Description: Attorney
================================================================================
74
================================================================================
Executed as a Deed By Xxxxxxx Communications Corporation
By: /s/Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx Xxxxx, President
/s/Xxxxx X. Valeo
-----------------------------
Witness
================================================================================
================================================================================
Executed as a Deed By Xxxxxxx Ventures, Inc.
By: /s/Xxxxxxx Xxxxx
-------------------------------
Xxxxxxx Xxxxx, President
/s/Xxxxx X. Valeo
-------------------------------
Witness
================================================================================
75
