1
EXHIBIT 10.29
ACQUISITION AGREEMENT
amongst
XXXXXX XXXXXX AND OTHERS
and
XXXXXX INTERNATIONAL INC.
--------------------------------
Re: acquisition of the entire share capital of
Integrated Drilling Services Limited
DUNDAS & XXXXXX XX
Solicitors
Saltire Court
00 Xxxxxx Xxxxxxx
XXXXXXXXX XX0 0XX
(Ref: DJC/CMF/D0638.012)
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INDEX
CLAUSE HEADING PAGE
1. Definitions and Interpretation
2. Sale and Purchase
3. Conditions Precedent to Completion
4. Consideration and Satisfaction of Consideration
5. Net Asset Value
6. Consideration Shares
7. Retention Deposits
8. Receipts and Interest
9. Completion
10. Representations, Warranties and Undertakings
11. Warrantors Protection Provisions
12. Tax Undertaking
13. Restrictive Covenants
14. Confidentiality
15. Declaration of Trust
16. Entire Agreement
17. Continuance of Agreement
18. Delay/Failure to proceed by Purchaser
19. Announcements etc.
20. XXXX
00. Assignation
22. Costs and Expenses
23. Notices
24. SEC Documents and Representations by Purchaser
25. Governing Law
SCHEDULE
Part 1 - The Vendors
Part 2 - The Company
Part 3 - The Properties
Part 4 - The Subsisting Securities
Part 5 - The Warranties
Part 6 - The Tax Undertaking
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ACQUISITION AGREEMENT
amongst
(1) THE SEVERAL PERSONS, whose names and addresses are set out in
Column 1 of Part 1 of the Schedule (hereinafter collectively called
"the Vendors" and severally a "Vendor"); and
(2) XXXXXX INTERNATIONAL INC. a corporation under the laws of the State of
Delaware having its principal place of business at 1 Xxxxxxxx Center
0000 Xxxxx Xxxxxxx, Xxxxxx, Xxxxx 00000 (hereinafter called "the
Purchaser")
WHEREAS:-
(A) Integrated Drilling Services Limited (hereinafter called "the Company")
is incorporated in Scotland (No. SC135886) as a private company limited
by shares.
(B) The Vendors are the beneficial owners and registered holders of the
whole of the issued share capital of the Company in the numbers shown
opposite their respective names in Columns 2 and 3 of Part 1 of the
Schedule and will at Completion be the beneficial owners and registered
holders of the whole of the issued share capital of the Company in the
numbers shown opposite their respective names in Columns 2 and 4 of
Part 1 of the Schedule.
(C) The Purchaser wishes to purchase and the Vendors wish to sell the whole
of the issued share capital of the Company on the terms and subject to
the conditions hereinafter set forth.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context shall otherwise require, the
expressions following shall have the meanings hereinafter mentioned:-
3I means 3i Group plc, one of the Vendors;
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IN THE AGREED FORM means in the terms agreed between the parties and
for the purpose of identification signed by the Purchaser's Solicitors
and the Vendors' Solicitors or Warrantors' Solicitors, as the case
may be;
THE ACCOUNTS means the audited balance sheet of the Company as at the
Accounts Date and the audited profit and loss account of the Company
for the year ended on the Accounts Date and the directors' and
auditor's reports and other documents annexed thereto (a copy of the
said Accounts being annexed hereto signed for identification by the
Purchaser's Solicitors and the Vendors' Solicitors and marked Exhibit
"A");
THE ACCOUNTS DATE means 31st December 1996;
ASSOCIATE means:-
(a) (in relation to an individual):-
(i) any issue, spouse, sibling or parent; and
(ii) any company which is, or may be, directly or
indirectly controlled (within the meaning of
Section 840 T.A. 1988) by the individual or by
any of the foregoing, orby any two
or more of them;
(b) (in relation to a company) any subsidiary or holding company
of that company and any subsidiary of any holding company of
that company;
BANKERS DRAFT means a bankers draft drawn upon a United Kingdom bank
which is an authorised institution under the Banking Xxx 0000;
BUSINESS DAY means a day on which banks are open for business in
Scotland;
COMPLETION means completion on the Completion Date pursuant to
Clause 9;
THE COMPLETION ACCOUNTS means the profit and loss account of the
Company from the Accounts Date to the Completion Date together with the
Balance Sheet of the Company as at the Completion Date prepared in
accordance with Clause 5;
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COMPLETION DATE means 28 February 1998 or such earlier date as the
Purchaser may determine by giving the Vendors 5 Business Days prior
notice;
COMPUTER SOFTWARE means all computer software, including all source
code, object code and data bases, used by the Company;
THE CONSIDERATION SHARES means the Class A Common Stock, $0.01 US par
value of the Purchaser to be allotted to the Vendors credited as fully
paid pursuant to Clause 4.1.2;
THE DISCLOSURE DOCUMENTS means all deeds and documents annexed to the
Disclosure Letter or incorporated by reference therein and exhibited to
the Purchaser's Solicitors;
DISCLOSURE LETTER means the letter in the Agreed Form dated of even
date herewith or as may be amended hereafter, but before Completion, by
agreement between the Purchaser's Solicitors and the Warrantors'
Solicitors signed by the Warrantors' Solicitors on behalf of the
Warrantors and addressed to and accepted by the Purchaser's Solicitors,
as agents for the Purchaser, and the Disclosure Documents;
THE EMPLOYEES means all or any employees of the Company ;
ENVIRONMENTAL LAW means all laws, regulations and codes of practice in
the United Kingdom concerning the protection of human health or the
environment or the conditions of the work place or the generation,
transportation, storage, treatment or disposal of Hazardous Substances;
ENVIRONMENTAL LICENCE means any permit, licence, authorisation, consent
or other approval required by any Environmental Law;
ENVIRONMENTAL WARRANTIES means the Warranties set out in paragraph
(47) in Part 5 of the Schedule;
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ESTIMATED N.A.V. means (British Pound) 1,900,000;
F.A. OR F.(NO. 2) A. followed by a stated year, means the Finance Act
or the Finance (No. 2) Act of that year;
THE FIRST RETENTION means 200,000 Consideration Shares held in the
joint names of the Purchaser's Solicitors and the Warrantors'
Solicitors as nominees for the Warrantors and/or the Purchaser or, as
the case may require, the balance of such shares remaining for the time
being so held;
FIRST RETENTION SUM means an amount equal to the aggregate amount of
all Intimated Claims for the time being remaining undischarged or
unresolved;
HAZARDOUS SUBSTANCES means any natural or artificial substance (whether
in a solid or liquid form or in the form of a gas or vapour and whether
alone or in combination with any other substance) capable of causing
harm to man or any other living organism supported by the environment,
or damaging the environment or public health or welfare including, but
not limited to, any controlled, hazardous, toxic or dangerous waste;
INTELLECTUAL PROPERTY means (i) all patent rights and applications
therefor; (ii) all trade and service marks or names (whether or not
applied for or registered); (iii) trade secrets and related legal
rights in all Know-how; (iv) all copyrights (whether or not applied for
or registered), but excluding any copyrights in Computer Software; (v)
all design rights (whether or not applied for or registered); and (vi)
Computer Software;
INTIMATED CLAIM means any bona fide claim by the Purchaser for breach
of any of the Warranties or pursuant to the Tax Undertaking in respect
of which claim the Purchaser shall, prior to the due date for making
transfer to the Warrantors' Solicitors in accordance with Clause 7.2.2
have commenced court proceedings against the Warrantors or any of them
or in respect of which the Warrantors' Solicitors shall have, prior to
the said date, agreed in writing on behalf of the Warrantors that
(without prejudice to the rights and pleas of the Warrantors) the
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Purchaser has a valid claim plus, in each case, a provision for the
reasonable expenses of the Purchaser in respect of such claim;
KNOW-HOW means any concept, idea, formula, process, procedure,
invention, know-how, device or compilation of data or information (but
excluding Computer Software) which is (i) used by or known to the
Company which gives the Company an opportunity to obtain an advantage
over competition who do not know or do not use it, (ii) competitively
sensitive information not generally known to the public, (iii)
developed by or supplied to the Company, including, but not limited to,
documentation, reports, data, flow charts, engineering notebooks,
drawings, diagrams, specifications, bills of materials, prototypes,
models or other tangible manifestations of the foregoing, or (iv) any
modification, adaptation, revision, update, enhancement or derivative
work of the foregoing;
THE LEASE means the lease between G. & J. Investments (Aberdeen)
Limited and the Company of the Leasehold Property dated 4th
and 11th April 1994 and registered in the Books of Council and
Session on 5th May 1994;
THE LEASEHOLD PROPERTY means that property, brief particulars whereof
are set out in Part 3 of the Schedule;
N.A.V. means the excess of total assets over liabilities and
provisions for liabilities and charges as disclosed in the
Completion Accounts;
THE NON-CONTINUING DIRECTORS means Xxxx Ace, Xxxx Xxxxxxxxx Xxxx Xxxx,
and Xxxx Xxxxxx;
THE ORDINARY SHARES means the aggregate of the `A' Ordinary Shares and
the Ordinary Shares set opposite the names of the Vendors in Column 4
of Part 1 of the Schedule;
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THE PENSIONS ARRANGEMENTS means:
(1) the Integrated Drilling Services Limited Group Life
Assurance Scheme ("the Group Life Assurance Scheme");
(2) the Integrated Drilling Services Widows Pension Benefits
Scheme ("the Widows Pension Benefits Scheme"); and
(3) any personal pension scheme to which the Company contributes
or to which it might be obliged to contribute in respect of
the Employees under their contracts of employment or
otherwise;
THE PREFERENCE SHARES means the aggregate of the `A' Preference Shares
and the `B' Preference Shares set opposite the names of the Vendors in
Column 3 of Part 1 of the Schedule;
THE PROPERTIES means the Leasehold Property;
THE PURCHASER'S ACCOUNTANTS means Ernst & Young of 00 Xxxxxx Xxxxxx,
Xxxxxxxx;
THE PURCHASER'S SOLICITORS means Messrs Dundas & Xxxxxx, X.X. of
Xxxxxxx Xxxxx, 00 Xxxxxx Xxxxxxx, Xxxxxxxxx XX0 0XX;
THE REGISTRATION RIGHTS AGREEMENT means the agreement in the Agreed
Form (or substantially in the Agreed Form) executed on the Completion
Date between the Purchaser and the Vendors to whom the Consideration
Shares are allotted in terms hereof;
THE RESTRICTED BUSINESSES means manufacturing, distributing or
providing services of any nature including consultancy services in
relation to telemetry for geosteering, directional drilling services,
logging while drilling services or monitoring while drilling services
in the oil and/or gas geothermal drilling industries;
THE RESTRICTED TERRITORY means means Europe, North America and
South America;
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THE SALE SHARES means the aggregate of the Ordinary Shares and of the
Preference Shares set opposite the names of the Vendors in Columns 3
and 4 of Part 1 of the Schedule;
THE SCHEDULE means the schedule annexed and executed as relative
hereto;
THE SECOND RETENTION DEPOSIT means the sum of $350,000 US lodged on
interest bearing deposit in accordance with Clause 9.4.1.2 by the
Purchaser on the Completion Date in the joint names of the Purchaser's
Solicitors and the Vendors' Solicitors;
SENIOR EMPLOYEE means an employee of the Company entitled to basic
salary at a rate in excess of (British Pound) 35,000 per annum;
SSAP means any Statement of Standard Accounting Practice or other
Financial Reporting Standard in force at the date hereof as issued by
the Accounting Standards Board (or any predecessor thereof);
THE SUBSISTING SECURITIES means the securities constituted in terms
of the documents referred to in
Part 4 of the Schedule;
T.A. 1970 means the Income and Corporation Taxes Xxx 0000;
T.A. 1988 means the Income and Corporation Taxes Xxx 0000;
TAX has the meaning given in Part 6 of the Schedule;
TAX AUTHORITY has the meaning given in Part 6 of the Schedule;
THE TAX UNDERTAKING means the tax undertaking referred to in Clause 12;
THE TAX WARRANTIES means the Warranties set out in paragraphs (72) to
(139) inclusive in Part 5 of the Schedule;
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T.C.G.A. 1992 means the Taxation of Chargeable Gains Xxx 0000;
TOTAL INDEBTEDNESS means (without double counting):-
(a) money borrowed or raised and includes capitalised interest;
(b) any liability under any bond, note, debenture, loan stock,
other instrument or security excluding redeemable shares in
the capital of the Company;
(c) any liability for acceptance or documentary credits or
discounted instruments;
(d) any liability for the acquisition cost of assets or services
payable on deferred payment terms where the period of
deferment is more than 120 days;
(e) any liability under debt purchase, factoring and similar
agreements and capital amounts owing under finance leases,
hire purchase or conditional sale agreements or arrangements;
and
(f) any liability under any guarantee or indemnity (except
product warranties)
of the Company as determined in the Completion Accounts produced in
accordance with Clause 5;
V.A.T.A. 1994 means the Value Added Tax Xxx 0000;
THE VENDORS' ACCOUNTANTS means KPMG of 00 Xxxxx Xxxxx, Xxxxxxxx;
THE VENDORS' SOLICITORS means Ledingham Chalmers of 0 Xxxxxx Xxxxxx,
Xxxxxxxx;
THE WARRANTIES means the representations, warranties and undertakings
on the part of the Warrantors set out in Clause 10 and in Part 5 of the
Schedule and "Warranty" means any of them;
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THE WARRANTORS means Xxxx Xxxx Remi Buytaert, Xxxx X XxXxxxx, Xxxx
Xxxxxxxxx, Xxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxx Xxxxxxx Xxxx;
THE WARRANTORS' SOLICITORS means The Commercial Law Practice, Xxxxxxx
Xxxxx, 00 Xxxxx'x Xxxx, Xxxxxxxx.
1.2 1.2.1 Words and expressions defined in the Companies Xxx 0000 shall
bear the same meanings in this Agreement.
1.2.2 Unless the context otherwise requires, the masculine gender
shall be deemed to include the feminine and neuter and vice
versa and the singular number shall be deemed to include the
plural and vice versa.
1.2.3 All representations, warranties, undertakings, indemnities,
agreements, obligations and others given, incumbent on or
entered into by more than one person in and/or pursuant to
this Agreement are, save as expressly otherwise herein
provided, given, incumbent on or entered into jointly and
severally and shall be binding on the respective executors,
personal representatives and successors of the Vendors.
1.2.4 The headings in this Agreement are for convenience of
reference only and shall not affect the construction or
interpretation hereof.
1.3 In this Agreement:-
1.3.1 references to any statute or statutory provision shall
include references to such statute or provision as from
time to time amended, extended, re-enacted or
consolidated, whether before, on or (in the case of
re-enactment or consolidation only) after the date hereof,
and shall be deemed to include provisions of earlier
legislation (as from time to time amended or extended)
which have been re-enacted or consolidated (with or without
modification) or replaced (directly or indirectly) by such
provision and shall further include all statutory
instruments or orders from time to time made pursuant thereto
except to the extent that any amendment or modification
enacted after the date hereof in respect of Warranties
granted today and after the Completion Date in respect of
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Warranties granted immediately prior to the Completion Date
would extend or increase the liability of the Warrantors
under the Warranties or the Tax Undertaking;
1.3.2 references to Clauses, Recitals or the Schedule and
sub-divisions thereof are to clauses of and recitals or the
schedule to this Agreement and sub-divisions thereof
respectively; and
1.3.3 references to any Scottish legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official or any legal concept or thing shall in respect
of any jurisdiction other than Scotland be deemed to include
what most nearly approximates in that jurisdiction to the
Scottish legal term.
1.4 The Schedule shall be deemed to form part of and be construed as one
with this Agreement and any reference to this Agreement shall include
the Schedule.
2. SALE AND PURCHASE
2.1 Upon and subject to the provisions of this Agreement, the Vendors shall
sell as legal and beneficial owners and the Purchaser, relying on the
representations, warranties, undertakings and indemnities herein
contained or referred to, shall purchase the Sale Shares with effect
from the Completion Date, free from all options, liens, charges and
encumbrances but together with all rights, privileges and advantages
attached or accruing thereto.
2.2 The Purchaser shall be under no obligation to purchase some only of
the Sale Shares.
2.3 Each of the Vendors hereby waives, and shall procure the waiver by his
nominee of, all rights of pre-emption, purchase, veto or otherwise
which he/it (or such nominee) may have relating to the Sale Shares by
reason of the existence or performance of the provisions of this
Agreement, whether conferred by the Articles of Association of the
Company or otherwise.
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3. CONDITIONS PRECEDENT TO COMPLETION
3.1.1 The obligation of the Purchaser to effect Completion on the Completion
Date shall be conditional upon:-
3.1.1.1 the financial and trading position of the Company and the
financial and legal due diligence carried out by or on behalf
of the Purchaser being satisfactory to the Purchaser;
3.1.1.2 the receipt of a Phase 1 environmental survey or its
equivalent on the Properties in terms satisfactory to the
Purchaser.
3.1.2 The obligation of 3i to effect Completion on the Completion Date shall
be conditional upon the financial and trading position of the Purchaser
and the financial and legal due diligence carried out by or on behalf
of 3i being satisfactory to 3i.
3.2 If the conditions precedent set out in Clause 3.1.1 shall not have been
satisfied (or waived by the Purchaser in its sole discretion) and if
the condition precedent set out in Clause 3.1.2 shall not have been
satisfied (or waived by 3i in its sole discretion) by 6 p.m. on the
Completion Date, the obligations of the parties under this Agreement
shall cease and none shall have any claim against any of the others
under this Agreement.
3.3.1 The Warrantors hereby jointly and severally undertake to the Purchaser
that prior to Completion and without prior notification to the
Purchaser:- 3.3.1.1 the Company shall not:-
3.3.1.1.1 borrow any money (except borrowings from its
bankers in the ordinary course of business
not exceeding (British Pound) 100,000 in
aggregate) or make any payments out of or
drawings on its bank account(s) other than
routine payments;
3.3.1.1.2 dispose of or agree to dispose of or grant
any option in respect of any part of or any
interest in its assets, except in the case
of stock-in-trade alone in the ordinary
course of trading;
3.3.1.1.3 enter into any unusual or abnormal contract
or commitment;
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3.3.1.1.4 incur any expenditure exceeding (British
Pound) 30,000 in aggregate on capital
account or enter into any commitment so
to do;
3.3.1.1.5 employ any employees on terms entitling them
to basic salary in excess of (British
Pound) 35,000 per annum;
3.3.1.1.6 fail to settle its creditors in accordance
with its normal practice;
3.3.1.1.7 permit any of its insurances to lapse or do
anything which would make any policy of
insurance void or voidable;
3.3.1.1.8 in any way, depart from its normal
accounting practices;
3.3.1.1.9 declare, pay or make any dividend or other
distribution of the Company;
3.3.1.1.10 do or permit anything to be done which will
give rise to any breach of the Warranties
when repeated immediately before Completion
or to a claim under the Tax Undertaking when
executed;
3.3.1.1.11 in any way, depart from the ordinary course
of its respective day-to-day business either
as regards the nature, scope or manner of
conducting the same.
3.3.2 Each of the Vendors other than the Warrantors hereby undertakes to the
Purchaser that prior to Completion it will so far as within its power
as a shareholder of the Company prevent the activities set out in
sub-Clauses 3.3.1.1 to 3.3.1.11 inclusive from taking place without
prior notification to the Purchaser.
3.4 Pending Completion, the Warrantors shall procure that the Purchaser,
its agents and representatives, are given subject to prior notice full
access to the Properties and to the books and records of the Company
and the Warrantors shall upon request furnish such information
regarding the business and affairs of the Company as the Purchaser may
reasonably require.
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3.5 If the Purchaser receives notice or becomes aware prior to Completion:-
3.5.1 of a material breach or an act or omission which would
constitute a material breach of any of the representations,
warranties and undertakings on the part of all or any of the
Vendors or Warrantors herein contained; or
3.5.2 that any such undertakings cannot be carried out or complied
with; or
3.5.3 that the Company has sustained loss or damage on account of
fire, flood, explosion, death, industrial dispute or other
calamity whatsoever which, in the opinion of the Purchaser
acting reasonably, materially and adversely affects the
business or prospects of the Company;
the Purchaser shall be entitled (in addition and without prejudice to
any other rights or remedies available to the Purchaser in respect
thereof) in its option:-
3.5.4 by notice in writing to the Vendors' Solicitors as agents for
the Vendors to resile from this Agreement without any claim by
the Vendors or any of them against the Purchaser;
or
3.5.5 by notice in writing to the Vendors' Solicitors as agents for
the Vendors to prescribe a new date for Completion (not being
more than fourteen days after the Completion Date).
4. CONSIDERATION AND SATISFACTION OF CONSIDERATION
4.1 The consideration for the sale of the Sale Shares shall be (subject to
adjustment as provided in Clause 7):-
4.1.1 $9,354,000 US (herein referred to as "the Cash
Consideration"); and
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4.1.2 $10,646,000 US to be satisfied by the allotment by the
Purchaser to the Vendors of the Consideration Shares in the
numbers set out opposite the names of the Vendors in Column 5
of Part 1 of the Schedule (herein referred to as "the
Consideration Shares Consideration");
in respect of the purchase of the Ordinary Shares, (the Cash
Consideration and the Consideration Shares Consideration being together
herein referred to as "the Ordinary Share Consideration"); and
4.1.3 (British Pound) 1,497,349 (herein referred to as "the
Preference Share Consideration") in respect of the
purchase of the Preference Shares provided that such
figure will be reduced by (British Pound) 458.75 for each
day prior to 28th February 1998 on which Completion takes
place.
4.2 The Cash Consideration and the Preference Share Consideration under
deduction of $350,000 US in contribution towards the Second Retention
Deposit shall be paid or satisfied at Completion by telegraphic
transfer to the Vendors' Solicitors who are hereby authorised to
receive the same on behalf of the Vendors and whose receipt shall be a
complete discharge to the Purchaser and binding upon and conclusive
against the Vendors.
4.3 The Consideration Shares in the numbers set out opposite the names of
the Vendors in column 7 of Part 1 of the Schedule shall be issued to
the Vendors at Completion and the Consideration Shares in the numbers
set out opposite the names of the Vendors in column 6 of Part 1 of the
Schedule shall be issued in the joint names of the Warrantors'
Solicitors and the Purchaser's Solicitors as nominees for the
Warrantors and/or the Purchaser in respect of the First Retention.
5. NET ASSET VALUE
5.1 The Vendors hereby undertake to and agree with the Purchaser to procure
that the Company and the Vendors' Accountants are instructed to prepare
the Completion Accounts with work to commence as soon as reasonably
practicable after the Completion Date.
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5.2 The Vendors' Accountants and the Company shall carry out such
procedures as they deem necessary in order to jointly prepare the
Completion Accounts.
5.3 The Vendors' Accountants shall be given access to the books, records
and accounts of the Company as is necessary to enable the Vendors'
Accountants to prepare the Completion Accounts. The Purchaser's
Accountants shall be given such access to the working papers of the
Vendors' Accountants as is reasonably necessary to enable the
Purchaser's Accountants to verify the preparation of the Completion
Accounts and may request such amendments to the Completion Accounts as
they see fit.
5.4 The Vendors and the Purchaser hereby undertake and agree to procure
that the Vendors' Accountants and the Purchaser's Accountants shall, as
soon as practicable, and in any event no later than 60 days after the
Completion Date, jointly report in writing to the Vendors and to the
Purchaser the N.A.V. and the Total Indebtedness.
5.5 The Completion Accounts shall be prepared so as to show a true
and fair view of the assets and liabilities and state of affairs of
the Company as at their date and subject to the sub-clauses below in
accordance with generally accepted U.K. accounting principles and
SSAPs applied in a manner which is consistent with the manner in which
the Accounts were prepared and adopting or applying consistently the
same accounting policies as were adopted for the purposes of the
preparation of the Accounts; provided always that in the preparation
of the Completion Accounts in accordance with this Clause 5:-
5.5.1 the value attributed to the stock of the Company shall not
exceed the lower of the cost or the net realisable value
thereof as at the Completion Date;
5.5.2 provision shall be made for deferred taxation in accordance
with SSAP 15;
5.5.3 the Vendors' Accountants and the Purchaser's Accountants shall
be entitled and authorised to rely upon the results of the
taking of the Company's stock jointly carried out on or before
the Completion Date by or on behalf of the Vendors and by or
on behalf of the Purchaser;
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5.5.4 no account shall be taken of any revaluation of the assets of
the Company made between 31st October 1997 and the Completion
Date;
5.5.5 for the avoidance of doubt, the Company's investment in 25% of
the ordinary share capital of Cryoton UK Limited shall be
carried at its original cost for the purposes of the
Completion Accounts of (British Pound) 50,022.
5.6 If there is any dispute between the Purchaser's Accountants and the
Vendors' Accountants on any matter relative to the preparation of the
Completion Accounts and/or the joint report in writing of the Vendors'
Accountants and the Purchaser's Accountants on the N.A.V. and Total
Indebtedness, such dispute shall be referred forthwith to the decision
of an independent chartered accountant (acting as an expert and not as
an arbiter) mutually nominated by the Vendors and the Purchaser or,
failing agreement as to nomination within 7 days, nominated by the
President for the time being of the Institute of Chartered Accountants
of Scotland on the application of either the Vendors or the Purchaser.
The costs of such independent chartered accountant shall be payable as
to one-half thereof by the Vendors and one-half thereof by the
Purchaser. The Vendors and the Purchaser shall instruct the Vendors'
Accountants and the Purchaser's Accountants respectively to accept and
act upon the determination of such independent chartered accountant in
connection with their joint report in accordance with this Clause and
to sign such amended report within 7 days of the final determination
of such independent chartered accountant.
5.7 The independent chartered accountant referred to in Clause 5.6 shall
be appointed on terms that he shall require one set of submissions in
writing to be made to him by each of the Vendors' Accountants and the
Purchaser's Accountants within such time (being not less than 7 days
and not more than 14 days) as the independent chartered accountant
shall determine. Such independent chartered accountant shall be
entitled at his discretion to accept counter-submissions from each of
the Vendors' Accountants and the Purchaser's Accountants. Such
independent chartered accountant shall further be appointed on terms
that he shall lay down and give a decision on the matter or matters in
dispute not later than 21 days after the date of appointment (which
decision shall be final and binding on the Vendors and the Purchaser)
and that he shall state what adjustments (if any) are to be made to
the Completion Accounts pursuant to his decision.
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5.8 The Purchaser shall be responsible for the fees and expenses of the
Purchaser's Accountants and the Vendors shall be responsible for the
fees and expenses of the Vendors' Accountants in connection with the
preparation of the Completion Accounts and the reporting on the N.A.V.
and the Total Indebtedness in accordance with this Clause.
6. CONSIDERATION SHARES
6.1 The Consideration Shares shall rank pari passu in all respects with the
Class A Common Stock, $0.01 U.S. par value in the capital of the
Purchaser in issue at the date of allotment thereof.
6.2 If the Purchaser consolidates or sub-divides its Class A Common Stock
or makes any issue by way of capitalisation or rights to holders of
this stock prior to the date of the issue of any of the Consideration
Shares to the Vendors the number thereof shall (if and to the extent
that the same shall have previously been determined) be adjusted in
such manner as the Purchaser's stockbrokers for the time being (acting
as experts and not as arbiters) shall certify to be fair and reasonable
to take account thereof.
7. THE RETENTION DEPOSITS
7.1 GENERAL
The Purchaser and the Vendors hereby agree and undertake to instruct
the Purchaser's Solicitors, the Vendors' Solicitors and the Warrantors'
Solicitors respectively to do all such acts and things as shall be
requisite and necessary to ensure that payment or transfer is duly made
from the First Retention or the Second Retention Deposit, as the case
may be, in accordance with the following provisions of this Agreement.
THE FIRST RETENTION
7.2.1 If any sum ("the determined sum", which expression shall include any
sum in respect of any expenses) shall be determined or agreed to be due
to the Purchaser on the conclusion or final settlement of any Intimated
Claim by the Purchaser under the Warranties or the Tax Undertaking,
20
then so many of the shares comprising the First Retention as equal the
determined or agreed sum (converted into $US on the date of
determination or agreement) (such shares being deemed to be valued at
$10 US each for the purposes of these clauses 7.2.1, 7.2.2, 7.2.3, and
7.2.4, notwithstanding their actual value) will be transferred to the
Purchaser or as it shall direct forthwith.
7.2.2 On the first Business Day which falls eighteen (18) months after the
Completion Date, there shall be transferred to the Warrantors'
Solicitors or as they may direct (who are hereby authorised to receive
the same on behalf of the Warrantors and whose receipt shall be a
complete discharge to the Purchaser and binding upon and conclusive
against the Warrantors) such number of shares comprising the First
Retention as have a value equal to the amount (if any) by which the
value of the shares comprising the First Retention as at that date
exceeds the First Retention Sum.
7.2.3 Any shares comprising the First Retention shall following a transfer
from the First Retention in accordance with clause 7.2.1 less such
number of shares as have a value equal to the then amount of the First
Retention Sum be transferred to the Warrantors' Solicitors or as they
may direct from the First Retention and so that the First Retention
shall be pro tanto exhausted.
7.2.4 The satisfaction pro tanto of any claim competent to the Purchaser by
transfer from the First Retention pursuant to this Clause shall in no
way prejudice or affect any other rights or remedies of the Purchaser
in respect of the recovery of any amount due to the Purchaser which is
not satisfied by such transfer.
THE SECOND RETENTION DEPOSIT
7.3.1 Upon final agreement or determination of the Completion Accounts the
Purchaser and the Vendors hereby agree and undertake to instruct the
Purchaser's Solicitors and the Vendors' Solicitors to release
forthwith to the Purchaser's Solicitors so much of the Second
Retention as is equal to the aggregate of the amount by which N.A.V.
is less than the Estimated N.A.V. and the amount by which Total
Indebtedness together with the Preference Share Consideration
(converted into $ US on the Completion Date) exceeds $10,000,000 US
together with any interest accrued thereon ("the Second Retention
21
Payment"), it being understood that if Total Indebtedness together
with the Preference Share Consideration is less than $10,000,000 US it
shall be deemed to be equal to $10,000,000 US for the purposes of this
clause and it further being understood that if a fact or circumstance
affects both N.A.V. and the Total Indebtedness it shall not be double
counted for the purposes of this clause.
7.3.2 If the Second Retention is less than the Second Retention Payment, the
balance of the Second Retention Payment not paid to the Purchaser's
Solicitors shall be paid forthwith by the Vendors in the percentages
set out in Column 9 of Part 1 of the Schedule to the Purchaser without
set off or deduction or otherwise.
7.3.3 If the Second Retention is greater than the Second Retention Payment,
the balance of the Second Retention shall be released to the Vendors'
Solicitors forthwith.
7.3.4 If N.A.V. is greater than Estimated N.A.V. then the amount of the
Second Retention Payment shall be reduced by such excess or if the
Second Retention Payment is nil such excess shall be paid forthwith by
the Purchaser to the Vendors' Solicitors.
8. RECEIPTS AND INTEREST
8.1 Any payment to be made by the Purchaser to the Vendors or the
Warrantors or by the Warrantors to the Purchaser pursuant to this
Agreement shall be made unless otherwise expressly provided by Bankers
Draft in favour of the Vendors' Solicitors or the Purchaser's
Solicitors, as the case may be, and delivered to the Vendors'
Solicitors (who are authorised to receive the same on behalf of the
Vendors) as the case may be, and whose receipt shall be an absolute
discharge of the Purchaser, who shall not be concerned with the
distribution of any monies so paid amongst the Vendors and binding
upon and conclusive against the Vendors or the Purchaser's Solicitors
(who are authorised to receive the same on behalf of the Purchaser and
whose receipt shall be an absolute discharge of the Vendors and
binding upon and conclusive against the Purchaser), as the case may
be.
8.2 Any payment to be made by the Purchaser to the Vendors' Solicitors or
by the Vendors or the Warrantors to the Purchaser's Solicitors in
accordance with this Agreement and not made on the due date for payment
thereof shall bear interest at the rate of two per cent per annum above
22
the base rate for the time being and from time to time of Bank of
Scotland from the due date for payment thereof to the date of actual
payment thereof to the Purchaser's Solicitors or the Vendors'
Solicitors, as the case may be, and that both before and after decree.
9. COMPLETION
9.1 The purchase and sale of the Sale Shares shall be completed at the
offices of the Purchaser's Solicitors on the Completion Date or at such
other place and on such other date as the parties may agree.
9.2 At Completion the Vendors shall:-
9.2.1 deliver to the Purchaser:-
9.2.1.1 duly completed and executed transfers in respect of
the Sale Shares (together with the relative share
certificates or indemnities for lost certificates in
the Agreed Form) by the registered holders in favour
of the Purchaser or as it may direct, capable of
immediate registration subject only to stamping,
together with any power of attorney or other
authority duly executed and in the Agreed Form under
which such documents have been executed;
9.2.1.2 any other documents including waivers of option
rights necessary to substantiate the Vendors' rights
to the Sale Shares sold by them to the Purchaser
pursuant to this Agreement and to transfer the Sale
Shares to the Purchaser.
9.3 At Completion the Warrantors shall:-
9.3.1 deliver or make available to the Purchaser:-
9.3.1.1 the statutory and minute books of the Company, all
duly made up to date, certificate of incorporation,
any certificates of incorporation on change of name
and Common Seal (if any) of the Company;
9.3.1.2 a letter from the auditors of the Company (in
duplicate) resigning their position as auditors of
that company, acknowledging that they have no claim
against that company in respect of compensation for
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loss of office or on any account whatsoever and
containing a statement that there are no such
circumstances as are referred to in Section 394(1) of
the Companies Xxx 0000;
9.3.1.3 such waivers and consents or other documents (if any)
as the Purchaser may require, inter alia, to enable
the Purchaser or its nominees to be registered as
holders of the Sale Shares;
9.3.1.4 duly executed releases, in the Agreed Form, releasing
the Company from all obligations, liabilities and the
like whatsoever (actual or contingent) undertaken by
the Company to the Vendors or any of them;
9.3.1.5 evidence in terms reasonably satisfactory to the
Purchaser that the Company has not created or granted
any security, charge, mortgage or the like other than
the Subsisting Securities;
9.3.1.6 all cheque books and bank mandates of the Company and
all charge, credit or cash cards issued in the name
of the Company;
9.3.1.7 service agreements in the Agreed Form (subject to any
minor amendments that may be agreed) between the
Company and the Warrantors duly executed by the
Warrantors;
9.3.1.8 certificates from each of the banks at which the
Company maintains an account of the amount standing
to the credit or debit of all such accounts at the
close of business two business days prior to the
Completion Date;
9.3.2 procure that a duly convened Board Meeting of the Company
shall be held at which:-
9.3.2.1 it shall be resolved that the transfers of the
Sale Shares be approved for registration subject
only to their being duly stamped;
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9.3.2.2 it shall be resolved that the said service agreements
between the Company and the Warrantors be approved
and executed by the Company;
9.3.2.3 such other business as the Purchaser may reasonably
require shall be conducted;
and that the person acting as chairman of such Meeting shall
sign the Minutes thereof in the Agreed Form;
9.3.3 cause such persons as the Purchaser may nominate to be validly
co-opted or appointed as Directors or Secretary or Secretaries
or Chairman of the Company;
9.3.4 procure that:-
9.3.4.1 each Non-Continuing Director of the Company shall
resign in writing his directorship and all other
offices or employment by the Company with effect
from the Completion Date and shall each sign an
acknowledgement in the Agreed Form to the effect
that each of them has no claim against the Company
for compensation for loss of office or otherwise
howsoever, except only for any accrued remuneration
and reimbursable expenses to such extent as may have
been disclosed in the Disclosure Letter, and that
there is outstanding no agreement or arrangement
under which the Company has or could have any
obligation to him;
9.3.4.2 the Secretary of the Company shall resign in writing
from such office with effect from the Completion Date
and shall sign an acknowledgement in the Agreed Form
to the effect that he has no claim against the
Company for loss of office or otherwise howsoever;
9.3.4.3 the Purchaser's Accountants shall be appointed
auditors of the Company;
25
9.3.4.4 resolutions shall be passed revoking and replacing or
amending all existing authorities to bankers of the
Company in such manner as the Purchaser may direct;
9.3.5 procure the release and discharge of the Company from any
letter of off-set granted by the Company and from any
guarantee, security, indemnity or other form of surety granted
by the Company in respect of the liabilities or obligations of
any other person, firm or company;
9.3.6 deliver or make available to the Purchaser:- 9.3.6.1 the Lease
in respect of the Leasehold Property;
9.3.6.2 unconditional receipts for rent and any additional
rent or service charge due in respect of the
Leasehold Property as at the last rent day prior to
Completion;
9.3.6.3 all books of account, documents of record, files and
the like which relate to the Company, and its assets
and businesses;
9.3.6.4 all subsisting contracts, agreement and the like
entered into by the Company;
9.3.6.5 reconciliations in respect of all of the bank
accounts of the Company brought down to a date within
seven days of the Completion Date;
9.3.6.6 a certificate of non-crystallisation in respect
of all floating charges (if any) granted by the
Company;
9.3.7 procure that on or before Completion all amounts owing to the
Company at Completion:-
9.3.7.1 by the directors of the Company;
9.3.7.2 by the Vendors; and
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9.3.7.3 by their respective Associates
shall be paid or repaid in full (whether due for payment or
not) and shall produce to the Purchaser a certificate, signed
by two directors of the Company, that such payments or
repayments have been effected.
9.4 At Completion, subject to the due implementation of Clauses 9.2.1 to
9.3.7, inclusive.
9.4.1 the Purchaser shall:-
9.4.1.1 pay the Cash Consideration and the Preference Share
Consideration under deduction of the sum of $350,000
US in contribution towards the Second Retention
Deposit to the Vendors by telegraphic transfer to the
Vendors' Solicitors; and
9.4.1.2 lodge the sum of $350,000 US on an interest bearing
deposit in the joint names of the Purchaser's
Solicitors and the Vendors' Solicitors;
9.4.1.3 allot the Consideration Shares in the numbers set
opposite the names of the Vendors in Column 7 of Part
1 of the Schedule to the Vendors on the basis
referred to in Clause 4.3;
9.4.1.4 allot 200,000 Consideration Shares jointly to the
Warrantors' Solicitors and the Purchaser's Solicitors
as nominees for the Warrantors and/or the Purchaser
on the basis referred to in Clause 4.3;
9.4.1.5 execute the Registration Rights Agreement in respect
of the Consideration Shares;
9.4.1.6 repay the loan outstanding to 3i Group plc.
9.5 The Purchaser may in its absolute discretion waive any requirements
contained in this Clause 9.
9.6 Following Completion, each of the Vendors shall so far as within
his/its power, execute and perform, or procure the execution and
performance of, all such other documents, acts and things as the
27
Purchaser shall reasonably require in order to perfect the right, title
and interest of the Purchaser in and to the Sale Shares sold by them,
to perfect the transactions intended to be effected under or pursuant
to this Agreement and to procure the registration of the Purchaser
and/or its nominee(s) as the registered holder(s) thereof.
10. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
10.1 Each of the Warrantors hereby jointly and severally represents,
warrants and undertakes to and with the Purchaser and its permitted
successors and assignees in the terms set out in Part 5 of the Schedule
subject to the limitations and qualifications set out in Clause 10.5
and Clause 11 below.
10.2 Each of the Vendors (other than the Warrantors) hereby individually and
separately represents, warrants and undertakes to and with the
Purchaser and its successors and assignees that:-
10.2.1 it has the requisite power and authority to enter into and
perform this Agreement and this Agreement constitutes and the
other ancillary agreements, as appropriate will, when
executed and delivered, constitute legal, valid and
binding obligations on that Vendor enforceable in
accordance with their terms; and
10.2.2 in respect of those of the Sale Shares which that Vendor is
selling to the Purchaser hereunder that as at Completion there
is no option, right to acquire, mortgage, charge, pledge, lien
or other form of security or encumbrance on, over or affecting
those shares and no agreement or commitment by that Vendor to
create any of the foregoing and no claim has been made by any
person to be entitled to any of the foregoing and that Vendor
is entitled to sell and transfer the full unencumbered legal
and beneficial ownership in the relevant shares to the
Purchaser on the terms set out in this Agreement.
10.3 The Warranties and the representation, warranty and undertaking
contained in Clause 10.2 above shall be deemed to be repeated
immediately before Completion with reference to the facts then
existing.
28
10.4 The Warranties given by each of the Warrantors under or pursuant to
this Clause shall not in any respect be extinguished or affected by
Completion, by any information of which the Purchaser may have
knowledge, whether actual, imputed or constructive (save for matters
disclosed in accordance with Clause 10.5), or by any other event or
matter whatsoever, except a specific and duly authorised written waiver
or release by the Purchaser.
10.5 The Warranties are subject to any exceptions fairly disclosed in the
Disclosure Letter and the Warrantors agree and acknowledge that the
Purchaser is entering into this Agreement in reliance, inter alia, on
the accuracy of the Warranties.
10.6 The Warranties shall be separate and independent and save as expressly
otherwise provided shall not be limited or restricted by reference to
any other paragraph of Part 6 of the Schedule or by anything in this
Agreement.
10.7 Each of the Warrantors hereby jointly and severally represents,
warrants and undertakes to and with the Purchaser that the information
contained in the Disclosure Letter is true and accurate in all material
respects and clearly and accurately presented and nothing so far as
they are aware has been omitted therefrom which renders any such
information incomplete, inaccurate or misleading.
10.8 Where any Warranty or any other statement in this Agreement is
qualified by a reference (howsoever expressed) to the awareness,
knowledge, information or belief of the person by whom such Warranty or
statement is given or made, such person shall be deemed (except where
otherwise expressly provided to the contrary) to have given to the
Purchaser an additional warranty that, or to the effect that, he has
made all reasonable enquiry regarding all material facts and
circumstances relevant to such Warranty or other statement.
10.9 Where the same circumstances could give rise to a claim both for breach
of Warranty and under the Tax Undertaking, then:
10.9.1 the Purchaser shall be entitled to claim in respect of either
or both; and
29
10.9.2 in calculating sums payable in respect of breach of Warranty
account shall be taken of sums paid by the Warrantors under
the Tax Undertaking and vice versa.
10.10 Without prejudice to any other remedy which may be available
to the Purchaser, each of the Warrantors hereby jointly and severally
further undertakes to the Purchaser to indemnify and keep indemnified
the Purchaser against all and any damages and reasonable and properly
incurred costs, or expenses suffered or incurred by the Purchaser as a
result of or in connection with any breach or non-fulfilment of any of
the representations, warranties and undertakings referred to or
contained in this Clause and all liabilities and reasonable and
properly incurred costs, and expenses arising in making or defending
a claim in relation to facts or circumstances which constitute or
would, if proved, constitute such a breach.
10.11 Without prejudice to any other remedy which may be available
to the Purchaser, each of the Warrantors hereby jointly and severally
undertakes to the Purchaser that if it be found that any matter the
subject of warranty under or pursuant to this Clause was not as
warranted and the effect thereof is that the amount or value of any
asset of the Company is or becomes less or the amount or value of any
liability of the Company is or becomes greater than it would have been
had the warranty been correct or that the Company has incurred or
incurs any loss or liability, then the Warrantors will make settlement
to the Company or, if the Purchaser shall so request by notice in
writing to the Warrantors, to the Purchaser of an amount equal to such
decrease in the amount or value of such asset or increase in the
amount or value of such liability or, as the case may be, the loss to
that Company occasioned by such loss or liability.
10.12 Any payment by the Vendors or the Warrantors (or any of them) in
respect of any claim under this Agreement (including, without
limitation, under the Tax Undertaking) shall be treated as reducing pro
tanto the Aggregate Consideration paid to such Vendor or Warrantor.
10.13 The Warrantors shall forthwith disclose in writing to the Purchaser any
matter or thing which may arise or become known to any of them after
the date hereof and before Completion which is inconsistent with any of
30
the Warranties and/or the matters stated in the Disclosure Letter or
which constitutes, or would constitute, a breach of any of the
Warranties or which might make any of them inaccurate or misleading in
any material respect if they were given at Completion.
10.14 In the event of any such matter or thing as is mentioned in Clause
10.13 becoming known to the Purchaser before Completion or in the event
of its becoming apparent on or before Completion that the Vendors or
the Warrantors or any of them are in any material respect in breach of
any of the Warranties or any other term of this Agreement, the
Purchaser may resile from this Agreement by notice in writing to the
Vendors and the Warrantors.
10.15 Each of the Vendors and the Warrantors hereby acknowledges to and
agrees with the Purchaser (as trustee for each of the Group Companies)
that in giving the Warranties and, where relevant, the Tax Undertaking
and preparing the Disclosure Letter he/it has not relied on any
information or advice supplied or given by any of the Group Companies
or their respective officers and employees and hereby waives any rights
which he/it may have in respect of any misrepresentation, inaccuracy or
omission in or from any such information or advice.
10.16 The Purchaser represents and warrants to the Warrantors that it and
Xxxxx Xxxx one of its officers is not aware of any fact, matter or
circumstance current at the date hereof that is not disclosed in the
Disclosure Letter which would permit or entitle the Purchaser to make a
claim for a breach of any of the Warranties. For the purposes of this
clause awareness shall be deemed to mean actual awareness at the date
hereof and not imputed or constructive awareness of the Purchaser
notwithstanding any rule or law to the contrary.
11. WARRANTORS PROTECTION PROVISIONS
The liability of the Warrantors under or in respect of the Warranties
and/or the Tax Undertaking shall, in the absence of fraud or wilful
concealment by any of the Warrantors, be limited as follows:-
11.1 the maximum liability of the Warrantors under or by virtue
of the Warranties and the Tax Undertaking shall not exceed
the aggregate of $5,500,000 US plus a sum equal to all
31
costs reasonably and properly incurred and liabilities
incurred by the Purchaser in pursuing, or making recovery
under, any claim for breach of any of the Warranties or
under the Tax Undertaking;
11.2 no liability shall attach to the Warrantors under or in
respect of any breach of any of the Warranties or under the
Tax Undertaking for any single claim where the liability in
respect of that claim does not exceed $1,000 US the
Warrantors shall have no liability under or by virtue of the
Warranties or under the Tax Undertaking unless and until the
amount of all valid claims in excess of $1,000 US by the
Purchaser under or by virtue of the Warranties and/or under
the Tax Undertaking shall exceed $75,000 US and, in such
event, the Warrantors shall be liable for the full amount of
such claims and not just for the excess over that amount;
11.3 without prejudice to clause 11.7 all liability of the
Warrantors under or by virtue of the Warranties shall cease
and any claim made thereunder or by virtue thereof against the
Warrantors shall be wholly barred and unenforceable:-
11.3.1 in the case of liability under or by virtue of any of
the Warranties other than the Tax Warranties with
effect from the date eighteen (18) calendar months
after the Completion Date; and
11.3.2 in the case of liability under or by virtue of any of
the Tax Warranties, within effect from the date seven
(7) years after the Completion Date,
unless notice of the relevant claim specifying as accurately
as possible the amount claimed and reasonably complete details
of the facts and circumstances, in so far as then available,
constituting the alleged liability shall have been given to
the Warrantors prior to the dates aforesaid; Provided that in
order to remain as a valid claim capable of being pursued by
the Purchaser proceedings in respect of any such claim will
require to be commenced within 12 months of its notification
to the Warrantors.
32
11.4 After Completion, the Purchaser shall have no right to rescind
or terminate this Agreement for breach of any of the
Warranties or for any other reason whatsoever and the sole
remedy of the Purchaser shall be in damages and shall be
subject to the limitations herein set out.
11.5 The Warranties and the Tax Undertaking are subject to any
matter or thing done or omitted to be done by the Warrantors
at the express written request of the Purchaser after the date
hereof.
11.6 No liability shall attach to the Warrantors in respect of a
breach of the Warranties and/or under the Tax Undertaking to
the extent that:-
(a) any increase in the rates of taxation or variation in
the method of applying or calculating rates of
taxation is made after the date hereof by virtue of a
direct or indirect action of the Purchaser;
(b) such claim arises in respect of any matters resulting
from a change of accounting policy or practice or
method of submission of tax returns by the Company or
of a change of the date to which the Accounts are
made up in each year by the Purchaser introduced on
or after Completion;
(c) any such claim relates to matters or amounts in
respect of Tax which are provided for in the Accounts
and/or specifically provided for in the Completion
Accounts.
11.7 (a) In addition to the duty of the Purchaser under the
general law to mitigate loss or damage the
Warrantors shall be entitled to require the
Purchaser and/or the Company at the Warrantors'
expense to take all reasonable steps or
proceedings having regard to the goodwill of the
Company's business as the Warrantors consider
necessary in order to mitigate any claim for
breach of any of the Warranties or under the Tax
Undertaking and the Purchaser and/or the Company
shall act in accordance with any such reasonable
requirements subject to being indemnified by the
Warrantors against all costs, liabilities and
expenses incurred in connection therewith.
33
(b) The Purchaser shall procure that at the request of
the Warrantors from time to time it shall provide
reasonably full and updated information in relation
to the nature, extent and status of any claim.
11.8 In the event that the Purchaser and/or the Company recovers
any sum from any third party (including any taxation
authority) which is not repayable in respect of any matter
for which a claim is made and whether before or after the
Warrantors have made a payment to the Purchaser and/or the
Company under such claim, the Purchaser and/or the Company
shall account or give credit (as the case may be) to the
Warrantors for the benefit thereof to the extent that such
accounting or crediting would not lead to repayment of such
sum being demanded by the third party.
11.9 In assessing the amount recoverable by the Purchaser or the
Company upon breach of any of the Warranties or under the Tax
Undertaking there shall be taken into account any financial
sum received by the Purchaser or the Company as a consequence
of such breach.
11.10 The Purchaser acknowledges that it has not entered into this
Agreement in reliance upon any representation or promise made
by the Warrantors other than those incorporated in this
Agreement and the Disclosure Letter.
11.11 The Purchaser hereby undertakes to indemnify the Warrantors
against any liability to Tax which the Warrantors shall have
paid or become liable to pay by virtue of an assessment in
terms of Section 767A of T.A. 1988 which arises by virtue of
the condition in sub-section (5) thereof being met, but only
if the arrangements referred to in sub-section (5) of
Section 767A of T.A. 1988 were made by the Purchaser and
then only to the extent that the Warrantors were not liable
to indemnify the Company or the Purchaser against such
liability in terms of the Tax Undertaking.
12. TAX UNDERTAKING
The Purchaser and each of the Warrantors shall comply with the
obligations pertaining to that party set out in Part 6 of the Schedule
(Tax Undertaking), the provisions of which are deemed to be set out in
this Clause of this Agreement.
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13. RESTRICTIVE COVENANTS
13.1 As a separate and independent stipulation and in consideration of the
purchase by the Purchaser of the Sale Shares hereunder, each of the
Warrantors hereby undertakes with and to the Purchaser that except with
the prior written consent of the Purchaser he will not (and will
procure that no Associate of his will) either alone or in conjunction
with or on behalf of any person, firm or company:-
13.1.1 during the period of two years following Completion, carry
on, or be engaged, concerned or interested directly or
indirectly in (save as the holder of 5% or less of the
voting share capital of any company listed on a stock
exchange or other recognised securities market) any of the
Restricted Businesses within the Restricted Territory;
13.1.2 during the period of two years following Completion, in
competition with the Restricted Businesses carried on by the
Company, canvass, solicit or entice, or endeavour to canvass,
solicit or entice, away from the Company the custom of any
person, firm or company who, to his knowledge, is at
Completion or has within a period of two years prior to the
Completion Date been a client, customer or supplier of the
Company or otherwise in the habit of dealing with the Company.
13.1.3 during the period of two years following Completion, induce or
seek to induce any of the Senior Employees of the Company to
leave the employment of the Company or to become employed or
provide services whether as an employee, consultant or
otherwise by or to any person, firm or company carrying on any
of the Restricted Businesses in competition with the business
of the Company;
13.1.4 assist any other person to do any of the foregoing things
whether by the provision of technical, marketing or consulting
services or through the use of its branch network or otherwise
howsoever.
13.2 Each of the Warrantors hereby undertakes to the Purchaser that he will
not at any time in relation to any business which competes with the
business carried on by the Company at the Completion Date directly or
35
indirectly use or allow to be used (other than by the Company any trade
or corporate name used by the Company at the Completion Date or any
name similar thereto or which is intended or likely to be confused
therewith.
13.3 Each of the Warrantors acknowledges and agrees that each of the
restrictions contained in Clauses 13.1, 13.2 and Clause 14
constitutes an entirely separate and independent restriction on
the Warrantors and is considered by the Warrantors to be
reasonable in all the circumstances but that if any of such
restrictions shall be adjudged (either when taken with others or
by itself or themselves) by any court or authority of competent
jurisdiction to go beyond what is reasonable and necessary in all
the circumstances for the protection of the interests of the
Purchaser but would be valid if any particular restriction or
restrictions were deleted or if any part or parts of the wording
and/or the period and/or the area thereof were restricted or
reduced in any particular manner then the said restriction or
restrictions shall apply with such deletions, restrictions or
reductions as the case may be.
14. CONFIDENTIALITY
14.1 Except so far as may be required by law, none of the Vendors
shall at any time disclose or communicate to any person (other
than his/its professional advisers) any confidential information
of a technical, trade, accounting, contractual, competitively
sensitive or any other character which he/it has acquired or may
acquire before Completion in the course of or as a result of his
employment by or directorship of the Company or his/its ownership
of shares in the share capital of the Company and each of the
Warrantors shall use his/its respective reasonable endeavours to
prevent the publication or disclosure of any confidential
information concerning such matters so acquired by him/it;
provided that the provisions of this Clause 14.1 shall not apply
to any confidential information
14.1.1 which has come into the public domain otherwise than in
breach of these provisions;
14.1.2 which the Vendor concerned is required to disclose by the
regulations of any recognised stock exchange or any other
government agency or other competent authority lawfully
requesting the same, or to any court of competent jurisdiction
acting within its powers.
36
14.2 None of the Vendors shall at any time use to the detriment of the
Company any confidential information of a technical, trade, accounting,
contractual, competitively sensitive or other character of the Company
which he/it has acquired or may acquire before Completion.
15. DECLARATION OF TRUST
15.1 Each of the Vendors hereby declares that so long as he remains the
registered holder of any of the Sale Shares he will stand and be
possessed of the Sale Shares and the dividends and other
distributions of profits or surplus or other assets in respect
thereof and all rights arising out of or in connection therewith
in trust for the Purchaser and will at all times hereafter deal
with and dispose of the Sale Shares, dividends, distributions and
rights as aforesaid as the Purchaser shall direct and further
will at the request of the Purchaser attend and vote at all
meetings which he shall be entitled to attend as the registered
holder of the Sale Shares in such manner as the Purchaser shall
have previously determined and if so requested by the Purchaser
will execute all instruments of proxy or other documents which
may be necessary or proper to enable the Purchaser or its
nominees to attend and vote at any such meeting.
15.2 The Purchaser undertakes to indemnify and hold indemnified the Vendors
in respect of all costs, losses, damages and expenses the Vendors may
suffer or incur as a result of the Vendors taking any actions or steps
at the request of the Purchaser in terms of Clause 15.1.
16. ENTIRE AGREEMENT
This Agreement, the Disclosure Letter, the Registration Rights
Agreement and the Service Agreements contain the entire agreement
between the parties or any of them with respect to the transactions
contemplated herein, supersedes all prior proposals, representations,
agreements and negotiations relating thereto, whether written, oral or
implied, between the parties or any of them or their respective
advisers or any of them save as otherwise provided herein, and no
modification or alteration of this Agreement shall be enforceable
except by an amendment in writing duly executed by all the parties
hereto.
37
17. CONTINUANCE OF AGREEMENT
Notwithstanding completion in terms of Clause 9, this Agreement shall,
except in so far as then implemented, remain in full force and effect
and all warranties, undertakings, indemnities and obligations contained
herein shall continue to be enforceable at the instance of the Vendors
and the Purchaser or its successors and permitted assignees.
18. DELAY/FAILURE TO PROCEED BY PURCHASER
18.1 No failure or delay by the Purchaser to exercise any right or power
hereunder shall operate as a waiver thereof nor shall any partial
exercise of such right or power preclude any other or further exercise
thereof or the exercise of any other right.
18.2 If the Vendors are liable to the Purchaser for a breach of this
Agreement, each of the Vendors shall be liable to the Purchaser
notwithstanding the failure by the Purchaser to proceed against any
other Vendor or Vendors and the Purchaser may compound with, relieve or
deal with any Vendor or Vendors without in any manner or way affecting
the liability of any other Vendor or Vendors Provided That any such
failure, compounding, relief or dealing shall not affect the rights of
the Vendors inter se.
18.3 The rights conferred upon the Purchaser by this Agreement are
additional to and without prejudice to any other rights of the
Purchaser under the general law (including any right to claim damages
or compensation and any statutory rights).
19. ANNOUNCEMENTS ETC.
Each of the Vendors shall, so far as within his/its power, procure that
there is not, either prior to or after Completion, any public
announcement of or concerning this Agreement to the Press, employees,
customers and suppliers of the Company or otherwise howsoever, unless
the consent of the Purchaser has been obtained to the making of such
announcement and the terms thereof have been agreed in advance by the
Purchaser. Provided that nothing herein shall restrict the making of
any public announcement required by law or called for by the
requirements of the London Stock Exchange or similar regulatory body.
38
20. RTPA
The parties agree that no provision of this Agreement by virtue of
which this Agreement is subject to registration under the Restrictive
Trade Practices Acts 1976 and 1977 ("RTPA") shall, in the event that
the Agreement is registrable but is not a non-notifiable agreement
under the RTPA, take effect until the day after the date on which
particulars of the Agreement have been furnished to the Director
General of Fair Trading pursuant to the RTPA. For the purposes of this
Clause, "Agreement" includes this Agreement and any other relevant
agreement or arrangement of which it forms a part.
21. ASSIGNATION
None of the rights or obligations of the parties under this Agreement
may be assigned or transferred except in the case of an assignation or
transfer by the Purchaser to an Associate of the Purchaser or from an
Associate of the Purchaser to the Purchaser or to any other Associate
of the Purchaser and notified to the Warrantors. If such Associate
ceases to be an Associate of the Purchaser, the Purchaser shall procure
that such rights or obligations are transferred to an Associate of the
Purchaser or the Purchaser within 28 days thereafter.
22. COSTS AND EXPENSES
Save as otherwise provided herein, the Purchaser and the Vendors shall
bear their own respective costs and expenses in relation to the
preparation, execution and implementation of this Agreement and the
sale of the Sale Shares. The Purchaser shall be responsible for payment
of any stamp duty on this Agreement and on the transfers of the Sale
Shares to be effected hereunder.
23. NOTICES
23.1 All notices, requests, demands or other communications to or upon the
respective parties under this Agreement shall be given or made to the
respective addresses set out below Provided Always that any party may,
by written notice to the others, substitute another address in the
United Kingdom for the service of notices hereunder:-
39
23.1.1 in the case of the Purchaser, to the Purchaser's Solicitors
marked "URGENT - For the Attention of Xx X. Xxxxxxxx";
23.1.2 in the case of the Vendors (other than 3i and the Warrantors)
, to the Vendors' solicitors marked "URGENT - For the
Attention of Xx Xxxxxxxxxx";
23.1.3 in the case of the Warrantors to the Warrantors' Solicitors
marked "URGENT - For the Attention of Xx Xxxxxx";
23.1.4 in the case of 3i to its registered office at 00 Xxxxxxxx
Xxxx, Xxxxxx, XX0 0XX.
23.2 Notices may be given by being delivered to the address for the service
of notices of the addressee (in which case the notice shall be deemed
to be served at the time of delivery) or by being sent by recorded
delivery mail (in which case the notice shall be deemed to be served 48
hours after the time of posting).
23.3 Any notice given to the Vendors' Solicitors or the Warrantors'
Solicitors shall be deemed to be notice to all of the Vendors or the
Warrantors as the case may be.
23.4 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was
properly addressed and posted recorded delivery, as the case may be.
24. SEC DOCUMENTS AND REPRESENTATIONS BY PURCHASER
24.1 SEC DOCUMENTS
The Purchaser has provided or will provide within 7 days hereof to the
Vendors its Annual Report on form 10-K for the year ended April 30,
1997, Quarterly Reports on form 10-Q for the quarters ended July 31,
1997 and October 31, 1997, its proxy statement with respect to its
Annual Meeting of Stockholders for 1997, its Current Reports of Form
8-K dated June 20, 1997 and July 7, 1997, as amended, and its
Confidential Offering Memorandum dated August 14, 1997 (the "Offering
Memorandum") (such documents collectively referred to herein as the
"SEC Documents"). As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as
40
amended (the "Exchange Act"), and the rules and regulations of the
Commission promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
consolidated financial statements of the Issuer included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the
Issuer and its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended. Since October 31, 1997, other than as discussed in
the SEC Documents and other than changes related to or arising from
economic and business conditions of the oil and gas industry as a whole
on the segments and markets in such industry as the Purchaser operates,
there has been material adverse change in the business of Purchaser and
its subsidiaries, taken as a whole on its financial condition or
results of operation. Each Stockholder acknowledges that an investment
in the Shares involves a high degree of risk, including the risks
identified in the SEC Documents.
24.2 REGULATION S: INVESTMENT PURPOSE
Each of the Vendors (other than Scottish Enterprise, Xxxx Buytaert and
Xxxxx Xxxxxxx Xxxxxxxxx) represents and warrants that at the time of
the investment decision to enter into and on the date hereof, such
Vendor is outside the United States and not a "U.S. Person" as such
term is defined in Regulation S under the Securities Act and that such
Vendor will not sell such Shares except pursuant to such a valid
registration statement under the Securities Act or exemption from
registration under the Securities Act. Each of Xxxx Buytaert and Xxxxx
Xxxxxxx Xxxxxxxxx represent and warrant that he will execute such
documents and provide such information that the Purchaser may
reasonably request to ensure that the issuance of shares to him under
this Agreement is exempt from registration under the Securities Act and
applicable state blue sky laws. Each Vendor acknowledges that the
issuance to such Vendor of the Shares has not been registered under the
Securities Act or the securities laws of any state and will contain the
following restrictive legend:
41
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the laws of any state
and may not be transferred in the absence of any effective registration
statement for the securities under the Securities Act of 1933 and
applicable state laws or an opinion of counsel reasonably satisfactory
to the Company that such registration is not required."
The Purchaser agrees that upon the written request of a Vendor and
receipt from such Vendor of reasonably and customary factual
representations as to such Vendor's ownership of the applicable shares
it will cause such restrictive legend to be removed and a new
certificate issued without such restrictive legend as soon as
reasonably practicable following receipt of an opinion of counsel whose
reasonable and customary fees shall be paid by the Purchaser in form
and substance reasonably acceptable to the Purchaser that based upon
such factual representations any transfer of the Shares represented by
such certificate by the registered holder thereof will not require
registration under the Securities Act or applicable state law in order
to comply with such act or applicable state law.
24.3 REPRESENTATIONS
The Purchaser represents and warrants to, and agrees with the Vendors
as of the date hereof and with respect to this Agreement, as follows:-
24.3.1 ORGANISATION STANDING AND POWER
The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction of its organisation and has all requisite power
and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted. The Purchaser
will within 7 days hereof, deliver to the Vendors complete and
correct copies of its certificate of incorporation and bylaws
as amended to the date hereof.
24.3.2 CAPITAL STRUCTURE
As of the date hereof the authorised capital stock of the
Issuer consists of 20,000,000 shares of Class A Common Stock,
10,000,000 shares of Class B Common Stock and 5,000,000 shares
of preferred stock. At the close of business on October 31,
1997, 4,483,598 shares of Class A Common Stock, 5,000,000
shares of Class B Common Stock and no shares of preferred
stock were outstanding. The Consideration Shares to be issued
in accordance with the documents to be executed and delivered
by the Purchaser in connection with this Agreement will be
duly authorised, validly issued, fully paid and
non-assessable.
42
24.3.3 AUTHORITY
The Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the
transactions contemplated thereby. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated thereby, have been duly authorised by all
necessary corporate action on the part of the Purchaser. The
execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not
conflict with or result in any violation of, or default under,
or give rise to a right of termination, cancellation or
acceleration of any obligations or to loss of a material
benefit under any provision of the certificate of
incorporation or bylaws of the Purchaser or any contract,
loan, agreement, instrument, permit, licence, statute, rule,
order, judgement or decree applicable to the Purchaser or its
subsidiaries or their properties or assets. No consent,
approval, order or authorisation of, or registration,
declaration or filing with any federal state, local or foreign
government or any agency or instrumentality thereof, is
required by or with respect to the Purchaser in connection
with the execution and delivery of this Agreement by the
Purchaser or the consummation by the Purchaser of the
transactions contemplated thereby;
24.3.4 INVESTMENT COMPANY
Neither the Purchaser nor any of its subsidiaries is (1) an
"investment company" or a company controlled by an investment
company within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC
thereunder or (2) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within
the meaning of the Public Utility Holding Company Act of 1935,
as amended;
25. GOVERNING LAW
This Agreement is governed by and shall be construed in all respects in
accordance with the Law of Scotland and the parties hereto hereby
irrevocably prorogate the
43
exclusive jurisdiction of the Court of Session in Scotland.
IN WITNESS WHEREOF
/s/ 31 Group PLC
/s/ Scottish Enterprise
/s/ Xxxxxx Xxxxxxx
/s/ Xxxx Bycert
/s/ Xxxx Xxxxx
/s/ Xxxx Xxxxxxxxx
/s/ Xxxx XxXxxxx
/s/ Xxxx Xxxx
/s/ Xxxxx Xxxxxxxxx
/s/ Hoda Mclek
/s/ Xxxxxxx Xxxxx
/s/ Cryoton Limited
/s/ Xxxx Xxxxx
/s/ Xxxxx Xxxxxxxx
/s/ Xxxxxx International Inc.
44
THIS IS THE SCHEDULE IN SIX PARTS REFERRED TO IN THE FOREGOING ACQUISITION
AGREEMENT BETWEEN XXXXXX XXXXXX AND OTHERS AND XXXXXX INTERNATIONAL INC. DATED
14TH JANUARY 1998.
45
THE SCHEDULE
PART 1
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6
VENDORS ORDINARY SHARES PREFERENCE ORDINARY CONSIDERATION RETAINED
SHARES SHARES SHARES CONSIDERATION
SHARES
3I GROUP PLC 445,000 638,000 438,358 605,287 -
00 XXXXXXXX XXXX
XXXXXX XX0 0XX
SCOTTISH ENTERPRISE 225,000 275,000 221,642 - -
000 XXXXXXXX XXXXXX
XXXXXXX X0 0XX
XXXXXX X. XXXXXX 75,665 - 75,665 122,056 59,824
00 XXXXXXXXX XXXXX
XXXXXXXXX
XXXXXXXX XX00 0XX
XXXX P. R. BUYAERT 40,665 - 40,665 70,417 34,514
00000 XXXXXX XXXX
XXXXXXX
XXXXX 00000
XXXX X. XXXXXX 56,000 - 56,000 93,042 45,603
00 XXXXXXX XXXXX
XXXXXXXXXX
XXXXXXXXXXXXXXX
XX00 0XX
XXXX X. XXXXXXXXX 30,000 - 30,000 54,682 26,802
00 XX. XXXXXXX XXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXX XX00 0XX
COLUMN 1 COLUMN 7 COLUMN 8 COLUMN 9
VENDORS ALLOTTED CASH PERCENTAGE
CONSIDERATION CONSIDERATION
SHARES ON ORDINARY
SHARES US$
3I GROUP PLC 605,287 2,010,959 43.12%
00 XXXXXXXX XXXX
XXXXXX XX0 0XX
SCOTTISH ENTERPRISE - 4,077,222 21.8%
000 XXXXXXXX XXXXXX
XXXXXXX X0 0XX
XXXXXX X. XXXXXX 62,232 406,853 7.44%
00 XXXXXXXXX XXXXX
XXXXXXXXX
XXXXXXXX XX00 0XX
XXXX P. R. BUYAERT 35,903 234,723 4.06%
00000 XXXXXX XXXX
XXXXXXX
XXXXX 00000
XXXX X. XXXXXX 47,439 310,141 5.51%
00 XXXXXXX XXXXX
XXXXXXXXXX
XXXXXXXXXXXXXXX
XX00 0XX
XXXX X. XXXXXXXXX 27,880 182,273 2.95%
00 XX. XXXXXXX XXXX
XXXXXXXXXX
XXXXXXXXXX
XXXXXXXX XX00 0XX
46
XXXX X. XXXXXXX 22,670 - 22,670 57,240 21,501
00 XXXXXXXXX XXXX
XXXXX
XXXXXXXX XX0 0XX
XXXX X. XXXX 12,500 - 12,500 26,980 11,756
0 XXXXXXX XXXX
XXXXXXXXXX
XXXXXXXX XX00 0XX
XXXXX X. XXXXXXXXX 15,723 - 15,723 28,740 -
106MOUNTAINSIDE DRIVE
XXXXXXXXX
XX 00000 XXX
HODA X. X. XXXXX 60,000 - 60,000 - -
29 XXXX 00
XXXXX
XXXXX XXXXX
XXXXXXX X. XXXXX 16,777 - 16,777 - -
802 XXXXXX XXXXX
XXXXXXXXX
XX 00000 XXX
CRYOTON (UK) LIMITED 16,674 - 16,674 - -
XXXXXXX XXXXX, XXXXXXX
XXX, XXXXXXXXXX XXXX,
XXXXXXX XX0 0XX
XXXX XXXXX - - 5,000 1,320 -
00 XXXXXXXX XXXXX
XXXXXXXX
XXXXXXXXXXXXX
XXXXX XXXXXXX - - 5,000 4,836 -
00 XXXXXXXX XXXXX
XXXXXXXXXXX XXXX -
XXXXXXXX
1,016,674 913,000 1,016,674 1,064,600 200,000
========= ======= ========= ========= =======
XXXX X. XXXXXXX 35,739 12,500 2.23%
00 XXXXXXXXX XXXX
XXXXX
XXXXXXXX XX0 0XX
XXXX X. XXXX 15,224 50,000 1.23%
0 XXXXXXX XXXX
XXXXXXXXXX
XXXXXXXX XX00 0XX
XXXXX X. XXXXXXXXX 28,740 95,801 1.55%
106MOUNTAINSIDE DRIVE
XXXXXXXXX
XX 00000 XXX
HODA X. X. XXXXX - 1,180,319 5.9%
29 XXXX 00
XXXXX
XXXXX XXXXX
XXXXXXX X. XXXXX - 330,037 1.64%
000 XXXXXX XXXXX
XXXXXXXXX
XX 00000 XXX
CRYOTON (UK) LIMITED - 328,010 1.64%
XXXXXXX XXXXX, XXXXXXX
XXX, XXXXXXXXXX XXXX,
XXXXXXX XX0 0XX
XXXX XXXXX 1,320 85,162 0.49%
00 XXXXXXXX XXXXX
XXXXXXXX
XXXXXXXXXXXXX
XXXXX XXXXXXX 4,836 50,000 0.49%
00 XXXXXXXX XXXXX
XXXXXXXXXXX XXXX
XXXXXXXX
864,600 9,354,000
======= =========
47
PART 2
FURTHER PARTICULARS OF THE COMPANY
SHARE CAPITAL
The authorised share capital of the Company is (British Pound) 1,632,674
divided into 613,000 `A' Preference Shares of (British Pound) 1 each,
300,000 `B' Preference Shares of 1p each, 670,000 `A' Ordinary Shares of
(British Pound) 1 each and 346,674 Ordinary Shares of (British Pound) 1
each, all of which have been issued and are fully paid or credited as
fully paid.
DIRECTORS
The following are all the present directors of the Company:
Xxxx Xxxxxx Ace, Xxxx Xxxx Remi Buytaert, Xxxx X XxXxxxx, Xxxx Xxxxxxxxx, Xxxx
Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxx Xxxx.
SECRETARY
The Secretary of the Company is:
The Commercial Law Practice, Xxxxxxx Xxxxx, 00 Xxxxx'x Xxxx, Xxxxxxxx XX00 0XX.
REGISTERED OFFICE
The Registered Office of the Company is at Xxxxxxx Xxxxx, 00 Xxxxx'x Xxxx,
Xxxxxxxx, XX00 0XX.
ACCOUNTING REFERENCE DATE
The accounting reference date of the Company, particulars of which have been
duly filed at the Companies Registration Office is:
31st December.
48
PART 3
THE PROPERTIES
the Leasehold Property
Description: Office and workshop premises
Landlord: G. & J. Investments (Aberdeen) Limited
Tenant: the Company
Lease Date: 4th and 11th April 1994
Term: 25 years
Rent: (British Pound) 60,000 p.a.
Rent Review: 28th May 1999 and five yearly thereafter
49
PART 4
SUBSISTING SECURITIES
DOCUMENT DATE PARTIES PROPERTY
CHARGED
Bond and Floating Charge 19th March 1992 the Company in whole assets and
favour of the undertaking from
Governor and time to time
Company of the
Bank of Scotland
Bond and Floating
Charge 8th December 1994 the Company in whole assets and
favour of 3i Group undertaking from
plc time to time
50
PART 5
THE WARRANTIES
SHARES
(1) (a) the Sale Shares will, at Completion, constitute the whole
of the issued and allotted share capital of the Company and
will then be fully paid up or credited as fully paid up;
(b) all dividends declared or otherwise due in respect of the
Sale Shares have been paid;
(2) (a) there is no option, right to acquire, mortgage, charge,
pledge, lien or other form of security or encumbrance
on, over or affecting the Sale Shares or any of them or the
unissued share capital or loan capital of the Company or
right to call for the allotment or issue of any share or
loan capital 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 and the Warrantors are entitled to sell and
transfer the full unencumbered beneficial ownership in the
Sale Shares to the Purchaser on the terms set out in this
Agreement.
(b) none of the Sale Shares has been the subject of a transfer
which is challengeable under Sections 242 or 343 of the
Insolvency Xxx 0000 within the period of five years prior to
the Completion Date;
CAPACITY
(3) each Warrantor individually has the requisite power and authority to
enter into and perform this Agreement (including, without limitation,
the Tax Undertaking) and this Agreement constitutes and the other
ancillary agreements, as appropriate will, when executed and delivered,
constitute legal, valid and binding obligations on each Warrantor
enforceable in accordance with its/their terms;
51
(4) the execution and delivery of, and the performance by the Warrantors of
their respective obligations under, this Agreement (including, without
limitation, the Tax Undertaking) will not:
(a) result in a breach of any provision of the memorandum
or articles of association of the Company; or
(b) result in a breach of, or constitute a default under, any
instrument to which any Warrantor or the Company is a party or
by which any Warrantor or the Company is bound;
(c) result in a breach of any order, judgement or decree of any
court or governmental agency to which any Warrantor or the
Company is a party or by which any Warrantor or the Company is
bound;
ACCOUNTS
(5) the Accounts are true, complete and accurate in all material respects
and, without prejudice to the generality of the foregoing, set out
correctly and accurately the assets and liabilities of the Company and
show a true and fair view of the state of affairs and financial
position of the Company at the Accounts Date;
(6) without limiting the generality of paragraph (5), the Accounts either
make full provision or reserve for, or as appropriate disclose by way
of note, all liabilities (actual, deferred, contingent or disputed and
including liabilities for Tax, financial lease commitments (if any) and
pension liabilities (if any) and all capital commitments, whether
actual or contingent, and reasonable provision for all bad or doubtful
debts if any of the Company as at the Accounts Date;
(7) the Accounts are not affected by any extraordinary or exceptional item
or by any other factor rendering the results for the year ended on the
Accounts Date unusually high or low, and the Accounts have been
properly audited and prepared in accordance with and comply with all
applicable laws, SSAPS and with United Kingdom accounting practice
current at the relevant time and have been prepared in all respects on
an accounting and valuation basis consistent in all respects with those
adopted in the three preceding audited accounts of the Company;
52
(8) to the best of the knowledge, information and belief of the Warrantors
all book debts included in the Accounts as payable to the Company and
all debts so payable incurred since the Accounts Date have been, or as
the case may be will be, paid in full within six months of their due
dates for payment and the Company has not factored or discounted its
debts or agreed to do so;
(9) (a) the Company has no work in progress is included in its books
and accounts including the Accounts;
(b) the value attributed to any stock included in the books and
accounts of the Company does not and did not exceed the lower
of cost and net realisable value;
(10) (a) since the date of its incorporation, proper and consistent
accounts, books and records of the business and activities of
the Company (including all accounts, books and records
required to be kept by law) have been kept and all such
accounts, books and records are up-to-date and in the
possession or control of the Company and contain true,
complete and accurate records of such business and activities
so far as the Warrantors are aware and the Company has
operated adequate systems of financial control in relation to
its book keeping;
(b) there has been no change during the three years prior to the
Accounts Date in any methods or bases of valuation, or any
accountancy treatment, relating to the keeping of such
accounts, books or records, or adopted, utilised or reflected
in the audited accounts relating to such period or any of it;
(11) none of the records, data or information relating to the business of
the Company are recorded, maintained or in any manner dependent in
whole or in part upon any electronic, mechanical or photographic
process (whether computerised or not) which is not under the exclusive
ownership and direct control of the Company;
53
EVENTS SINCE ACCOUNTS DATE
(12) since the Accounts Date:-
(a) the Company has carried on business in the ordinary course and
there has been no material adverse change in the financial
condition or trading position or to the best of the knowledge,
information or belief of the Warrantors the prospects of the
Company;
(b) the Company has not entered into or agreed to enter into any
contract, obligation or commitment except for routine
contracts in the normal course of trading and has not made any
payment other than payments of a routine nature in the normal
course of trading or dividends provided for in the Accounts;
(c) there has been no material change in the manner in which the
Company conducts its business or in the assets or liabilities
(including contingent liabilities if any) of the Company
except for changes in assets or liabilities arising in the
normal course of trading;
(d) there has been no resolution of the members of the Company not
included in the statutory books, no written agreements between
the Company and its members and no material consents given to
the Company by its members;
(e) no dividends or other distributions (within the meaning of
Sections 209, 210 or 418 of T.A. 1988) have been declared,
paid or made by the Company, other than as provided for in the
Accounts;
(f) there has been no purchase by the Company of fixed plant,
machinery, or any other asset at a cost in excess of the then
market value thereof nor any sale by the Company of fixed
plant, machinery, or any other asset at a price less than the
said market value thereof;
(g) no debtor has been released by the Company on terms that he
pays less than the book value of his debt and no debt owing to
54
the Company has been deferred, subordinated or written off or
has proved to any extent irrecoverable;
MANAGEMENT ACCOUNTS
(13) the management accounts of the Company for the period from and
including the Accounts Date to 31st October 1997 (copies whereof are
included in the Disclosure Documents) have been properly prepared on a
basis consistent with that previously adopted and show a reasonable
reflection of the Company's financial position at their dates;
ASSETS
(14) (a) all the assets which are included in the Accounts or have
been acquired since the Accounts Date (including book
debts owed to the Company) or which are used by the
Company (save for those subsequently disposed of or
realised in the normal course of trading) are in the
absolute ownership of the Company and the Company has a
good and marketable title thereto and none is the
subject of any hire or hire purchase, leasing,
factoring, conditional sale or credit sale agreement,
or agreement for payment on deferred terms or any
similar agreement or arrangement;
(b) all of the assets of the Company are in the possession or
under the control of the Company;
(c) the Company has not purchased any stock, goods or materials
from any of its suppliers on terms that property therein does
not pass until full payment is made or all indebtedness is
discharged;
(15) the assets used by the Company and the facilities and services to which
the Company has a contractual right comprise all of the assets,
facilities and services reasonably necessary for the carrying on of the
business of the Company in the manner in which it is presently carried
on;
(16) (a) all vehicles, plant, machinery, equipment, furniture,
fixtures and fittings owned or used by the Company are
suitable for their purpose, are so far as the
55
Warrantors are aware in good repair and condition (fair
wear and tear excepted) and (where relevant) in working
order and are not surplus to the Company's
requirements; none so far as the Warrantors are aware
is dangerous or inefficient and the Company has not
received any notification to the effect that it has
done or omitted to do any act or thing in contravention
or breach of any duty under the Employers' Liability
(Defective Equipment) Xxx 0000, the Xxxxxxxxx Xxx 0000
or the Health and Safety at Work etc., Xxx 0000;
(b) the Company has a complete and accurate record of all plant,
machinery, equipment and vehicles owned or possessed by it;
(17) all the stock-in-trade of the Company being the equipment used for the
purposes of the Company's business is in good condition and of
merchantable quality and, to the best of the knowledge, information and
belief of the Warrantors, free from any material defects (other than
any defects which arise solely out of designs and specifications
supplied by the purchasers thereof);
INSURANCE
(18) (a) all the assets and undertaking of the
Company of an insurable nature are and have at all material
times been insured with reputable insurers in amounts
representing their full replacement or reinstatement value
against fire and other risks normally insured against by
prudent persons carrying on the same or similar businesses
to those of the Company and so far as the Warrantors are
aware all risks of the Company normally insured by prudent
persons carrying on the same or similar businesses to those
of the Company are and have at all material times been
covered by insurance effected by the Company with reputable
insurers in adequate and prudent amounts and without
prejudice to the foregoing generality, the Company has
maintained all insurances required by statute;
(b) all the insurances of the Company are currently in full force
and effect and to the best of the knowledge, information and
56
belief of the Warrantors nothing has been done or omitted to
be done which would or might render any such insurances void
or voidable or result in an increase of premium;
(c) none of the said insurances is subject to any special or
unusual terms or restrictions or to the payment of any premium
in excess of the normal rate; there is no insurance claim
pending or outstanding and there are no circumstances
subsisting which would or might give rise to any claim under
any of the said insurances; and without prejudice to the
foregoing warranties full details of all insurances effected
by the Company are disclosed in the Disclosure Documents;
SUBSIDIARIES
(19) since the date of its incorporation the Company has had no
subsidiaries;
SECURITY INTERESTS
(20) (a) except for the Subsisting Securities disclosed in the
Disclosure Documents, there is no Security Interest of any
kind or encumbrance on, 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;
(b) for this purpose, Security Interest means any standard
security, mortgage, pledge, lien, hypothec (other than a
lien or hypothec arising in the ordinary course of trade in
respect of obligations which are not overdue) charge or
other encumbrance (in each case given, granted or allowed to
arise or subsist under any applicable law), the opening of
any account with bankers designated or earmarked for the use
of, or used for, making preferential payments pursuant to
Section 175 of the Insolvency Act 1986 (or similar provision
of any other applicable law) and any lease, assignation or
other agreement (in each case made or entered into under any
applicable law) the main purpose, or one of the main
purposes, of which is the giving or taking of security;
57
BANK ACCOUNTS, INDEBTEDNESS, ETC.
(21) statements of the bank accounts and the credit or debit balances
thereon of the Company as at a date not more than 2 Business Days prior
to the Completion Date are annexed to the Disclosure Letter and the
Company has no other current, deposit or term loan accounts (whether in
credit or overdrawn) not included in such statements and since the date
of each such statement there has been no payment out of any such
account except for routine payments in the normal course of business
and the present balances on such accounts are not substantially
different from the balances shown on such statements;
(22) in relation to all overdrafts, loans or other financial facilities
outstanding or available to the Company, the Disclosure Letter sets
out adequate details of them and there are disclosed in the Disclosure
Documents accurate copies of all documents relating to such
facilities; so far as the Warrantors are aware there has been no
contravention of, or non-compliance with, any provisions of any of
such facilities; no steps for the early repayment of any indebtedness
have been taken or threatened; and there have not been, nor are there,
any circumstances known to the Warrantors whereby the continuation of
any of such facilities might be prejudiced, or which would or might
give rise to any alteration in the terms and conditions of any of such
facilities;
(23) (a) the Company has no outstanding loan capital nor has it
borrowed any money or incurred any indebtedness which it has
not repaid or satisfied nor has it lent or advanced any money
which has not been repaid to it nor does it own the benefit of
any debt (whether present or future) other than debts due to
it in respect of trading in the normal course of business;
(b) there have been no loans or transactions intended to operate
as loans between the Company and any director;
(24) (a) the Company is not now, nor has it by reason of default by
it become, bound or liable to be called upon to repay
prematurely any borrowed monies;
58
(b) there is not now outstanding in respect of the Company any
guarantee or letter of offset or performance bond or agreement
for indemnity or for suretyship given by, or for the
accommodation of, the Company;
LITIGATION ETC.
(25) neither the Company nor so far as the Warrantors are aware any
person for whose acts and defaults the Company may be vicariously
liable is (in the case of any such person in respect of any such act
or default) involved or engaged in any litigation, proceedings or
arbitration (whether as pursuer or defender plaintiff or defendant or
otherwise) before any Court or tribunal nor, to the best of the
knowledge, information and belief of the Warrantors, is any such
litigation, proceedings or arbitration pending or threatened or
expected against the Company or any such person (in respect of any
such act or default) nor are there any facts known to the Warrantors
(no specific enquiry having been made) which would or might give rise
to any such litigation, proceedings or arbitration or to any dispute
and no claim for damages has been made against the Company;
(26) the Company is not being prosecuted for any criminal offence, nor is
any governmental or official investigation or inquiry concerning the
Company in progress or so far as the Warrantors are aware no specific
enquiry having been made, pending;
(27) so far as the Warrantors are aware there are no claims pending or
threatened against the Company by an employee or xxxxxxx or third party
in respect of any accident or injury which are not fully recoverable
under the insurances disclosed in the Disclosure Documents;
(28) to the best of the knowledge, information and belief of the Warrantors,
no officer of the Company has been convicted of any crime with the
exception of minor offences in relation to road traffic matters;
(29) no diligence, distress, poinding, arrestment or execution or other
similar process has been levied and is outstanding against any of the
59
property, rights and assets of the Company and to the best of the
knowledge, information and belief of the Warrantors, no circumstance
has arisen which could given rise to such;
CONTRACTS AND LIABILITIES
(30) (a) the Company is not a party to and has no liability
(present or future, contingent or otherwise) under or
beneficial interest in any deed, debenture, instrument,
guarantee, indemnity, letter of credit, suretyship, contract
for hire or rent, hire purchase, credit sale or conditional
sale agreement, agreement or commitment of any sort other
than:-
(i) contracts made in the ordinary course of business
and the usual contracts for the supply of
electricity, gas and telephones;
(ii) such contracts of service with its employees and
directors as are referred to in paragraph (59(g));
(iii) unpresented cheques drawn by it in the normal course
of business;
(b) full details of all material contracts and engagements
relating to the Company's business have been disclosed in the
Disclosure Letter;
(31) (a) to the best of the knowledge, information and belief of
the Warrantors the Company is not a party to any contract
which is of a loss making nature (that is to say, known to be
likely to result in a loss to the Company on completion of
performance) or which is of an onerous nature or cannot
readily be fulfilled or performed by it on time and without
undue or unusual expenditure of money or effort;
(b) full details of all contracts to which the Company is a party
having a term of twelve months or more or under which any
obligation may be required to be discharged more than twelve
months after the Completion Date have been disclosed in the
Disclosure Documents;
60
(c) in relation to the current order book of the Company, to the
best of the knowledge, information and belief of the
Warrantors (no specific enquiry having been made), there are
no circumstances relating to the relevant customers which
could adversely affect the ability of the latter to implement
their obligations in accordance with their terms;
(d) there is not outstanding any offer, tender or quotation made
or given by the Company capable of unilateral act of any other
person of giving rise to any such contract as is described in
sub-paragraphs (a) and (b) of this paragraph;
(32) (a) the Company is not in default under any agreement or
arrangement to which it is a party or by which it is bound
nor has the Company committed any breach of contract or to
the best of the knowledge of the Warrantors statutory duty
or subordinate legislation or any delictual or other
unlawful act which could lead to a claim for damages or a
fine or penalty or other liability on the part of the
Company or an interdict or a prosecution against it and, to
the best of the knowledge, information and belief of the
Warrantors, no event has occurred which would entitle any
contracting or third party to rescind/resile from, avoid,
repudiate or otherwise terminate any material contract or
any benefit enjoyed by the Company;
(b) so far as the Warrantors are aware compliance with the terms
of this Agreement does not and will not conflict with or
result in the breach of or constitute a default under any of
the terms, conditions or provisions of any agreement or
instrument to which the Company is now a party or relieve any
other party to a material contract with the Company of its
obligations thereunder or enable it to determine its
obligations thereunder;
(c) to the best of the knowledge, information and belief of the
Warrantors, no party to any material contract in which the
Company is interested (whether as contracting party or
otherwise) is in breach thereof and no breach by such party
has been waived;
61
(33) the Company is not a party to any contract or arrangement (other
than the Subsisting Securities) which (i) imposes any restriction on
its freedom to borrow or give security, dispose of assets or carry on
its business or (ii) includes any provisions imposing additional
obligations on it in the event of termination or accelerated
termination by it or (iii) so far as the Warrantors are aware, no
specific enquiry having been made, would entitle another party to
claim damages or compensation for breach thereof which would not be
calculated according to the normal principles of reparation or damages
under Scottish or English law for such breach;
(34) (a) except as required by Statute or implied by law the
Company has not given any guarantee or warranty or made any
representation in respect of any service rendered by it;
(b) no claim has been intimated to the Company in respect of any
guarantee, warranty or servicing obligation undertaken by it
in connection with the provision of any goods, products or
services;
(35) the Company has no capital commitments and it is not engaged in or
committed to any scheme requiring the expenditure of capital;
(36) the Company does not use on its business stationery, advertisements or
vehicles, or otherwise carry on business under, any name other than its
corporate name;
(37) all current selling, promotional and advertising material in respect of
any of the activities or business of the Company is not misleading;
(38) there is no agreement or arrangement which will result in the Company
becoming liable for any finder's fee, brokerage or other commission in
connection with the purchase of the Sale Shares;
CUSTOMERS, SUPPLIERS, AGENTS ETC.
(39) (a) no facts which are likely to make the loss of any
important customer or source or supply imminent are known to
the Warrantors having made no specific enquiry;
62
(b) to the best of the knowledge, information and belief of the
Warrantors no specific enquiry having been made, neither this
Agreement nor Completion nor any other circumstance is likely
to affect, to the prejudice of the Purchaser or the Company,
the attitude or actions of any of the employees of the Company
or of any customer, supplier or other person contracting or
dealing with the Company;
(40) the entire terms of every agency, distributorship, dealership,
marketing, purchasing, licensing or management agreement or arrangement
to which the Company is a party have been disclosed in the Disclosure
Documents and also the standard terms and conditions (which may vary
from contract to contract) subject to which the Company provides goods
and services to its customers;
(41) the Company has not given any power of attorney or other authority
(express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment
(including, without limitation, pledging the Company's credit) or do
anything on its behalf (other than any authority of employees to enter
into routine contracts in the normal course of their duties);
COMPETITION
(42) the Company is not and has not been party to any agreement, arrangement
or practice
(a) registered or requiring registration under the Restrictive
Trade Practices Acts; or
(b) which so far as the Warrantors are aware infringes the
Restrictive Trade Practices Acts, the Fair Trading Xxx 0000,
the Monopolies and Mergers Acts or the Competition Xxx 0000;
or
(c) which is or a provision of which is unlawful under the Resale
Prices Xxx 0000; or
63
(d) which contravenes or requires notification under Article 85
or 86 of the Treaty of Rome; or
(e) which infringes any other anti-trust or competition
legislation in any country in which the Company transacts
business;
(43) the Company has not received any process, notice or communication
(formal or informal) by or on behalf of the Office of Fair Trading, the
Monopolies and Mergers Commission, the Secretary of State for Trade and
Industry or the European Commission (or any other authority of any
country, or any political or administrative sub-division thereof,
having jurisdiction in anti-trust matters) in relation to any aspect of
any of its business or any agreement or arrangement to which it is, or
is alleged to be, a party;
LICENCES ETC.
(44) none of the activities or businesses of the Company requires any
licence, authorisation or consent which has not been obtained and all
licences, authorisations or consents which have been obtained are not
limited in duration or subject to onerous conditions and remain valid
and in full force and effect and copies of all such licences,
authorisations and consents material to the carrying on of the
business of the Company as it is now conducted are disclosed in the
Disclosure Documents and so far as the Warrantors are aware all
reports, returns and information required by law or as a condition of
any licence, authorisation or consent to be made or given to any
person or authority in connection with the business of the Company
have been made or given to the appropriate person or authority and
none of the Warrantors knows of any factor or circumstance which might
in any way prejudice the continuance or renewal of any of those
licences, authorisations or consents;
(45) the Company does not have and has never required a licence under the
Consumer Credit Act, 1974 or the Data Protection Xxx 0000;
TITLE TO AND MATTERS AFFECTING THE PROPERTIES
(46) (a) the brief particulars of the Lease set out in Part 3 of the
Schedule are true and correct and the Company is the tenant
of the Leasehold Property under the Lease and has and will
64
at the Completion Date and Completion have actual good and
marketable title to the Leasehold Property free of any lease
(other than and subject to the terms of, the Lease),
sub-lease, tenancy, franchise, concession or licence or
other third party rights of occupancy or possession actual
or future or any option, right of pre-emption, right of
redemption, security, charge, diligence or encumbrance
whatsoever; there are no over-leases or interposed leases
affecting the Leasehold Property or any of them;
(b) (i) the Company has and will at the Completion Date
and Completion have actual and vacant
possession of the whole of the Properties;
(ii) the Properties comprise all the land and buildings
owned, controlled, used or occupied by the Company in
connection with its business and use, actual or
proposed, and the Company has not contracted nor is
in the course of negotiating a contract for the sale,
lease, option, grant of security or other rights
whatsoever or any other disposal of any part or parts
thereof or for the acquisition of any interest in any
other land or buildings or rights thereto;
(iii) there are no other lands, premises or properties for
which the Company has continuing or outstanding
liability by virtue of privity of contract, joint
and/or several liability, surety, guarantee or
otherwise;
(c) (i) all outgoings in respect of the Properties which
are due and payable have been duly paid;
(d) (i) to the best of the Warrantors knowledge and
belief all (if any) land obligations, real burdens
and conditions affecting the Properties have been and
will at the Completion Date and Completion be duly
complied with and (except in so far as of a
continuing nature) fully and properly implemented;
65
(ii) so far as the Warrantors are aware there are no known
circumstances which would entitle or require any
person whatsoever to exercise powers of entry or take
possession or other enforcement action or which would
or could otherwise restrict or terminate the
continued peaceful possession and/or occupation of
the whole of any of the Properties or any parts
thereof;
(iii) during the Company's occupation of the Properties
there have been no disputes with adjoining
proprietors or third parties concerning items common
to the Properties and adjacent/neighbouring premises
or accesses affecting the Properties or such
premises;
(e) (i) so far as the Warrantors are aware all services
for (including, without limiting the generality of
the foregoing, water, gas (if any) and electricity
supplies and the drainage and sewerage facilities)
and fixed equipment in the Properties are and will at
the Completion Date and Completion be adequate (for
the purposes of the Company's business) and in good
working order and condition commensurate with their
age;
(f) (i) the Properties and the operations and proposed
operations of the Company and any development thereon
comply with all relevant statutory or other
requirements and in particular, but without prejudice
to the generality of the foregoing, the requirements
of the Town and Country Planning (Scotland) Acts, the
Factories Acts, the Public Health Xxx 0000, the Fire
Precautions Xxx 0000, the Health and Safety at Work,
etc. Xxx 0000, the Control of Pollution Xxx 0000 and
the Environmental Protection Xxx 0000;
(ii) the Company has received no Notices, Orders,
Proposals, Requisitions, Requirements, Compulsory
Purchase Proposals or Procedures or others affecting
the Property or any part thereof or the use thereof
by any Local or other Authority or Body or by any
third party issued under or in pursuance of any
66
statute, statutory instrument, regulation, by-law or
others which remain unimplemented;
(iii) there is no Agreement under Section 50 of the Town
and Country Xxxxxxxx (Xxxxxxxx) Xxx 0000 or Section
69 of the Local Government (Scotland) Xxx 0000
affecting the Properties or any interest of the
Company therein;
(g) none of the Properties are affected by any occupancy rights in
terms of the Matrimonial Homes (Family Protection) (Scotland)
Xxx 0000;
(h) there are no disputes or litigation or threatened litigation
in respect of the interest of the Company in the Properties
and the Warrantors have no knowledge of any matter likely to
give rise to dispute or litigation. Without prejudice to the
generality of the foregoing, there are no subsisting
interdicts affecting the Properties in any way;
(i) the Company does not have any existing or contingent
liabilities in respect of any properties previously occupied
by it or in which it owned or held any interest including,
without limitation, leasehold properties assigned or otherwise
disposed of;
(j) no variation of, or amendment to or deed in any way affecting
the Lease has been entered or will, prior to the Completion
Date and Completion, be entered into by the Company except for
(i) the deeds disclosed in the Disclosure Documents and (ii)
such other deeds as may be entered into with the prior written
consent of the Purchaser;
(k) at the date of grant of the Lease and at the date of grant of
any other deed supplemental or relevant thereto, the landlords
thereunder had a good marketable title and had secured all
necessary third party consents or approvals to the grant of
the same;
(l) throughout the period of the Lease and any continuation or
extension thereof, the tenants thereunder have had exclusive
physical possession of the Leasehold Property and the
67
Leasehold Property include all necessary and desirable rights
over adjoining land for the purposes of the Company's business
and use, actual and/or proposed;
(m) the tenants' obligations under the Lease have been and
will at the Completion Date and Completion have been duly
and timeously implemented, observed and performed and,
without limiting the generality of the foregoing, the whole
of any fitting out obligations have been complied with,
rents and other sums due and payable under the Lease have
been and will at the Completion Date and Completion have
been fully paid up to date (without lump sum commutation or
otherwise) and there are and will at the Completion Date and
Completion be no outstanding claims, schedules or notices of
any kind by or from the landlords and the landlords' right
of irritancy or forfeiture has not and will not at the
Completion Date or Completion have become exercisable and no
circumstances have arisen giving right to competent exercise
of such rights;
(n) no alterations or additions to the Leasehold Property have
been carried out by or on behalf of the Company except with
all such approvals and consents as are required in terms of
the Lease (and any documents or titles referred to therein);
(o) (i) so far as the Warrantors are aware (no specific
enquiry having been made) nothing has been or will at
the Completion Date and Completion have been done or
omitted to be done which would make the policies of
insurance of the Leasehold Property void or voidable
or which would otherwise prejudicially affect the
same and there are no outstanding claims or
liabilities in respect of such policies;
(ii) so far as the Warrantors are aware (no specific
enquiry having been made) nothing has been or will at
the Completion Date and Completion, have been done or
omitted to be done which does or which could entitle
the insurers to (a) withhold payment under the
policies or (b) subrogation rights;
68
(p) there is and will at the Completion Date and Completion be no
agreement or arrangement with the landlords under the Lease
for the payment or sharing of any regional development grants
or other like grants or allowances which could affect the
amount of rent payable under the Lease or impose a liability
on the Company to make any repayments in respect of monies
which it has not received;
(q) there are no outstanding applications to the landlords under
the Lease for consent or approval;
(r) there are no outstanding or incomplete rent reviews under the
Lease in respect of which the review date had passed or action
is required prior to that date to safeguard the position of
the Company;
(s) the landlords under the Lease have elected to charge Value
Added Tax on any rent or other sums due under the Lease;
ENVIRONMENTAL MATTERS
(47) (a) the Company has not carried on or been engaged in, nor
does it carry on or engage in, any business or other activity
which has required or does require the authorisation, consent,
licence or other approval of any regulatory body or authority,
or third party, pursuant to any Environmental Law;
(b) neither the Company nor the Warrantors, have received
any notice, intimation or other communication from any
regulatory body or authority nor from any other third party,
to the effect that the Company or any part of its business
or property are or might potentially be affected by any
claim, liability, obligation, proceeding, cost or other
adverse circumstance arising or having potential to arise
under or pursuant to any Environmental Law and to the best
of the Warrantors' knowledge, information and belief there
have not at any time been, nor are there currently, any
circumstances in existence whereby any such notice,
69
intimation or other communication might be served or any
such claim or other liability might arise affecting the
Company or its respective business or property;
(c) the Company has complied with its duty of care (under Section
34 of the Environmental Protection Act 1990) with respect to
its waste;
INTELLECTUAL PROPERTY
(48) the Disclosure Letter contains true, complete and accurate lists of all
registered Intellectual Property rights held or beneficially owned
solely by the Company or jointly or in common with others;
(49) (a) the granted patent rights listed in the Disclosure Letter
are valid, subsisting and not subject to any application for
cancellation or amendment and the other registered rights
listed in the Disclosure Letter are valid, subsisting and to
the best of the knowledge, information and belief of the
Warrantors not subject to any application for cancellation or
amendment;
(b) no act has been done or omitted to be done by the Company and
no event has occurred whereby any of the granted patent rights
listed in the Disclosure Letter are likely to be declared void
or invalidated and to the best of the Warrantors' knowledge,
information and belief no event has occurred whereby any of
the other registered rights listed in the Disclosure Letter
are likely to be declared void or invalidated or which is
likely to prevent the grant of a valid patent, trade xxxx,
service xxxx, design or other right pursuant to a pending
application;
(c) there is no litigation or similar proceeding (whether legal or
administrative) pending involving any of such registered
rights or to the best of the knowledge, information and belief
of the Warrantors any circumstance likely to give rise to any
such proceeding;
(50) (a) no person has been authorised to make any use whatsoever
of any Intellectual Property right owned by the Company; and,
save as disclosed in the Disclosure Letter the Company has not
70
been granted any licence or right under or in respect of any
Intellectual Property rights;
(b) the licences disclosed in the Disclosure Documents in respect
of the Intellectual Property which is used in the operations
of the Company are valid and subsisting;
(c) to the best of the knowledge, information and belief of the
Warrantors, the Company has not without having received
appropriate licences, manufactured, sold, supplied or
developed anything the subject of any Intellectual Property
rights or which could not be so made, sold, dealt in, used or
reproduced by the Company without infringing any Intellectual
Property right of any third party;
(d) there has been no actual or threatened infringement (including
misuse of Know-How) by any third party of any of the
Intellectual Property rights owned or used by the Company;
(e) all steps taken by the Company to obtain protection for any
Intellectual Property right or analogous right to which it may
be entitled are disclosed in the Disclosure Letter;
(f) the Company has not to the best of the knowledge, information
and belief of the Warrantors, disclosed to any person to whom
disclosure of the same would be improper any of the Company's
Know-How;
(51) the Computer Software used by the Company for carrying on its business
is fit for that purpose and, subject to proper use, care and
maintenance, will continue to permit the Company to fulfil its
obligations to its customers;
(52) the Company is not a party to any secrecy, confidentiality or other
agreement presently in force which may restrict the use or disclosure
by the Company of any confidential information;
71
COMPUTERS
(53) so far as the Warrantors are aware all the computers and computer
systems (including, without limitation, software, peripherals, storage
media and communication links) owned by or used by or on behalf of the
Company:-
(a) are (save for software licensed to the Company) owned by the
Company, are under its sole control and are not (save for its
joint venture partners) shared with or used by or on behalf of
or accessible by any other person;
(b) have adequate capacity for the Company's present and
reasonably foreseeable future needs;
(c) are in full operating order and are fulfilling the purposes
for which they were acquired or set up in an efficient manner
without material downtime or errors;
(d) have adequate security, back-ups, duplication, hardware and
software support and maintenance (including emergency cover)
and trained personnel to ensure:-
(i) that there are no breaches of security and that
errors and breakdown are kept to a minimum; and
(ii) that no material disruption will be caused to the
business of the Company or any material part thereof
in the event of a breach of security, error or
breakdown;
(54) with regard to all the software used on or stored or resident in the
said computers or computer systems:-
(a) in the case of software written or commissioned by the
Company, the copyright therein is owned exclusively by the
Company, no other person has rights in such software or rights
72
to use or make copies of the software or source codes and
complete written listings and written copies of the source
codes for the software are held by the Company;
(b) in the case of standard packaged software "purchased
outright", the use thereof is licensed to the Company on an
express or implied licence which does not require the Company
to make any further payments, is not terminable without the
consent of the Company and which imposes no material
restrictions (save as to copying) on the use or transfer of
the software;
(c) in the case of all other software the use thereof is licensed
to the Company;
(55) all the said software
(a) so far as the Warrantors are aware is lawfully held and used
and its use does not infringe the copyright or other
intellectual property rights of any person and all copies of
it have been lawfully made;
(56) so far as the Warrantors are aware the Company has sufficient employees
who are adequately trained to enable the said computer systems to be
used and operated at the capacity required by the Company to meet its
daily operational requirements;
(57) all records and data stored by the Company by electronic or magnetic
means are capable of ready access through the present computer systems
of the Company;
(58) neither the performance nor the functionality of the computer systems,
software controlled equipment used in the business as at the date of
this Agreement shall be affected by dates prior to or after 1 January
2000 or by the date 1 January 2000 itself;
EMPLOYEES
(59) (a) full details of the Company's employees and of their terms
of employment (including names, ages, gender, length of
service, wage or salary and basis of calculation and payment
thereof, bonuses, holiday entitlement and pension
arrangements) and of all current and pending negotiations
73
with the Senior Employees or any of them concerning such
terms of their employment (including their remuneration) are
set out in or annexed to the Disclosure Documents and there
are no outstanding arrears of salary, wages, holiday pay or
other remuneration;
(b) details of the changes made in terms of employment by the
Company since the Accounts Date (other than those required by
law) are set out in the Disclosure Documents;
(c) since the Accounts Date, no change has been made or agreed to
be made in the remuneration or other terms of engagement of
any director of the Company or Senior Employee;
(d) full details of any material benefit which the Company has
provided or is bound to provide to any employee otherwise than
in cash, and of any benefit received by any employee in cash
which is related to sales, profits or performance, or which is
otherwise variable (other than normal overtime), are set out
in the Disclosure Documents ;
(e) the Company has not registered (or applied to register) a
profit related pay scheme under Chapter III of Part IV T.A.
1988 and the Company is not named as an employer in relation
to a profit related pay scheme registered under that Act and
the Company is not named in an application to register a
profit related pay scheme under that Act;
(f) a copy of the Company's standard terms and conditions of
employment has been disclosed in the Disclosure Documents;
(g) there are no employees or directors of the Company employed or
engaged to render services under contracts (whether written or
unwritten) of service or for services which cannot be
terminated on six months' notice or less without payment of
damages or compensation, other than compensation payable in
accordance with the Employment Rights Xxx 0000;
74
(h) none of the Senior Employees has given notice to terminate, or
is under notice of termination of, his contract of employment;
(i) full details of all recognition, procedural or any other
agreements if any between any recognised independent trade
union and the Company existing at the date hereof are set out
in the Disclosure Letter;
(j) no dispute has arisen since the Accounts Date between the
Company and a material number or category of its employees and
to the best of the Warrantors' knowledge, information and
belief there are no present circumstances which are likely to
give rise to any such dispute;
(k) there are not now outstanding any contracts of service between
the Company and any director or employee in relation to which
any relevant requirements of Section 319 Companies Act 1985
have not been complied with;
(60) none of the Warrantors and, to the best of the knowledge, information
and belief of the Warrantors, none of the employees of the Company, has
any interest in any business competing with the business of the Company
other than by a holding of shares in a quoted company which does not
amount to more than 5% of the share capital of any such company
carrying the entitlement to vote at general meetings thereof;
PENSIONS
61. (a) other than under the Pensions Arrangements, or as
disclosed, the Company does not contribute to any arrangement
(nor as at Completion will it become liable to contribute to
any arrangement) for the payment of, nor is it under any
obligation to pay, provide, procure the provision of, or
contribute towards
(i) any relevant benefits within the meaning of Section
612 of the Income and Corporation Taxes Xxx 0000 for
or in respect of the Employees; or
(ii) benefits of any kind payable to or in respect of any
of the Employees on retirement, death, disability,
sickness or other similar circumstances;
75
(b) the Company is not making - and has not regularly made - any
ex gratia payments to any of the Employees of a sort which the
Purchaser or the Company would be required to make in future
in accordance with good industrial relations practice whether
or not there is any legal obligation to do so;
(c) no contributions which are payable to the Pensions
Arrangements by the Company are in arrears or have not been
paid;
(d) so far as the Warrantors are aware, the records of the
Pensions Arrangements have been properly and accurately
maintained;
(e) no undertaking or assurance has been given to any Employee as
to the continuance or introduction or increase or improvement
of any rights or entitlements in relation to the Pensions
Arrangements which the Purchaser or the Company would be
required to implement;
(f) no claim (including for this purpose an unresolved complaint
or reference to the Pensions Ombudsman or to any other
Ombudsman, Tribunal or conciliation service) has been made or
threatened against the Company or any other employer
participating in the Pensions Arrangements or any Trustees or
so far as the Warrantors are aware any providers of the
Pensions Arrangements (other than routine claims for
benefits);
(g) full details of the Pensions Arrangements have been given to
the Purchaser in the form of:-
(i) copies of all current trust deeds and rules governing
or relating to the Group Life Assurance Scheme and
the Widows Pension Benefits Scheme;
(ii) copies:
(1) of all explanatory literature issued to
Employees in connection with the Group Life
Assurance Scheme and the Widows Pension
Benefits Scheme; and
(2) of any explanatory literature issued to
Employees by or on behalf of the Company in
connection with any other Pensions
Arrangements;
76
(iii) copies of any announcements to Employees relating to
pensions matters in respect of benefit improvements
or other amendments not yet incorporated into the
governing documentation of the Pensions Arrangements;
(h) all benefits (other than refunds of contributions and
repayments of funds intended for the provision of retirement
benefits) payable under the Pensions Arrangements on the
death of a member and all benefits payable during periods of
sickness or disability of any of the Employees are to the
knowledge of the Warrantors (no specific enquiry having been
made) fully insured under a policy which will pay out the
necessary amounts in the contingency in question effected
with an insurance company of good repute and each such
Employee has as far as the Warrantors are aware (no specific
enquiry having been made) been covered for such insurance at
the insurance company's normal rates and on its normal terms
for persons in good health;
(i) (i) the Group Life Assurance Scheme is approved (or
is capable of approval and an application for
approval was submitted timeously after the Plan's
commencement) as an exempt approved scheme within the
meaning of Section 592 of the Income and Corporation
Taxes Act 1988 and has at all times been administered
in accordance with the requirements applicable to
such exempt schemes;
(ii) the Widows Pension Benefits Scheme is approved as an
exempt approved scheme within the meaning of Section
592 of the Income and Corporation Taxes Act 1988 and
has at all times been administered in accordance with
the requirements applicable to such exempt shares;
and
(iii) to the best of the Warrantors' knowledge and belief
any other Pensions Arrangements are approved or
provisionally approved as personal pension schemes
under Chapter IV of Part XIV of the Income and
Corporation Taxes Xxx 0000;
(j) all retirement benefits payable under the Pensions
Arrangements are of a "defined contribution" nature, that is
to say that the contributions paid to them are not dependent
upon the performance of investments held under the Pensions
Arrangements but rather are set either in accordance with the
77
Employees' contracts of employment or at the discretion of the
Company and the benefits which they secure are not guaranteed
in any way by means of a final salary promise or otherwise;
(k) no employments or categories of employment with the Company
are contracted out of the State Earnings Related Pension
Scheme and no promises or undertakings have been given which
could result in such employments or categories of employments
being so contracted-out;
(l) the information which has been supplied in relation to the
Employees and the contributions to and benefits under the
Pensions Arrangements is true and complete;
(m) the Pensions Arrangements do not and have not been operated
in such a way as to directly or indirectly discriminate
between male and female employees as regards eligibility,
the rates of contributions and the amounts of any benefits
provided or the dates on or from which the benefits are to
be or may be provided in any way which is contrary to
Article 119 of the Treaty of Rome or any corresponding
domestic legislation; for the avoidance of doubt it is
acknowledged by all parties and specifically excepted from
the foregoing provision that under money purchase
arrangements annuity rates which differ as between the sexes
may be available ;
(n) the Pensions Arrangements do not and have not been operated in
such a way as to directly or indirectly discriminate between
Employees in any other unlawful manner as regards eligibility,
the rates of contributions and the amounts of any benefits
provided or the dates on or from which the benefits are to be
or may be provided;
(o) the Pensions Arrangements comply with and have at all times
been administered in accordance with the Xxxxxxx Xxxxxxx Xxx
0000, the Pensions Xxx 0000 and all other applicable laws,
regulations and requirements including, where applicable,
those of trust law;
(p) the Company and / or the trustees of the aftermentioned
Schemes have in their possession and under their control the
originals of all the governing documents of the Group Life
Assurance Scheme and the Widows Pension Benefit Scheme, the
78
records and books of those Schemes are under the control of
those parties and they are complete and up to date and have
been maintained in accordance with best practice;
INSIDER CONTRACTS
(62) there is not subsisting and there has never been any contract or
arrangement to which the Company is or was a party and in which any of
its directors is or has been interested, directly or indirectly, and
neither the profits nor the financial position of any member has been
affected by any contract or arrangement of the Company which is or was
not on an entirely arm's length basis;
(63) the Company has not made any loans to any director of the Company
and/or any person connected with any of them as described in Section
839 T.A. 1988; there is no agreement or arrangement under which any
amounts are owing by the Company to any present or former director or
secretary of the Company (other than in respect of remuneration accrued
due or reimbursement of business expenses);
COMPLIANCE
(64) the Company has conducted its business and corporate affairs in
accordance with its Memorandum and Articles of Association and to the
best of the Warrantors' knowledge, information and belief with all
applicable laws and regulations of the United Kingdom or any foreign
country;
(65) neither the Company nor, to the best of the knowledge, information and
belief of the Warrantors, any of its officers has committed any
criminal, illegal or unlawful act or defaulted with respect to any
statute, regulation, order, decree or judgement of any court or any
governmental agency of the United Kingdom or any foreign country which
could have a material adverse effect on the assets or business of the
Company;
(66) the Company is not subject to any order, decree or judgement given by
any court or governmental agency which has not been satisfied or party
to any undertaking or assurance given to any court or governmental
agency which is still in force;
GRANTS OR ALLOWANCES
(67) particulars of all grants or allowances paid or made to the Company
during the last six years by, and of all outstanding claims by the
79
Company for any grant or allowance from, any supranational, national or
local authority or governmental agency in the United Kingdom or the
Republic of Ireland or the European Community are set out in the
Disclosure Documents ;
(68) no act or transaction has been effected in consequence whereof the
Company is or may be held liable to refund or forfeit in whole or in
part any investment grant, regional development grant, interest relief
grant or any other grant received by virtue of any statute or in
consequence whereof any such grant will or may be reduced and
Completion will not necessitate such refund, forfeit or reduction;
DOCUMENTS
(69) so far as the Warrantors are aware all documents (including documents
of title) in the enforcement of which the Company is interested are
valid and have been properly stamped and where necessary have been duly
registered and are in the control or possession of the Company;
INFORMATION
(70) (a) the information contained in Recitals (A) and (B) and
Parts 2, 3 and 4 of the Schedule is true, complete
and accurate in all material respects;
(b) the copy of the Memorandum and Articles of Association of the
Company disclosed to the Purchaser's Solicitors is accurate
and complete in all respects and has annexed or incorporated
copies of all resolutions or agreements required by the
Companies Xxx 0000 to be so annexed or incorporated and
fully sets out all rights attaching to each class of the
share capital of the Company and the register of members and
other statutory books of the Company have been properly kept
and contain a true, complete and accurate record of the
matters which should be dealt with therein and no notice or
allegation that any of the same is incorrect or should be
rectified has been received;
(c) all returns, resolutions and other documents required to be
filed with or delivered to the Registrar of Companies or the
80
Department of Trade and Industry by the Company have been
correctly and properly prepared and so filed or delivered;
INSOLVENCY
(71) no order has been made and no petition has been presented or resolution
proposed or passed for the winding up or administration of the Company,
no receiver (or administrative receiver) or administrator or judicial
factor has been appointed by any person of the undertaking or assets of
the Company or any part thereof and there is no unfulfilled or
unsatisfied decree or court or tribunal order outstanding against it,
nor is the Company unable to pay its debts within the meaning of
Section 123 of the Insolvency Xxx 0000 nor has it stopped paying its
debts as they fall due;
TAXATION
(72) (a) the Company has duly and correctly, within the statutory time
limits, made all returns and given or delivered all notices,
accounts and information which ought to have been made or
given or delivered to the appropriate Tax Authority,
including (without prejudice to the generality of the
foregoing) the Inland Revenue and H.M. Customs and Excise
and so far as the Warrantors are aware none of such returns,
notices, accounts or information is or is likely to become
disputed or questioned by the Tax Authority concerned nor is
any such dispute or question contemplated at the date hereof
with regard to liability (actual or contingent) assessable
on the Company at the date hereof;
(b) valid claims and letters of consent have been submitted within
the statutory time limits for all available reliefs from tax
and valid notices of appeal have been submitted in accordance
with statutory time limits against all assessments to tax the
amount of which is estimated or otherwise not correct and any
tax charged under any assessment which has not been finally
determined has either been paid or properly and validly
postponed;
(c) no appeals by the Company against assessments or
determinations of losses by any Tax Authority are undetermined
or are the subject of appeal;
81
(73) all National Insurance contributions, income tax, corporation tax and
other sums including interest and/or penalties payable to the Inland
Revenue, whether under the PAYE system or otherwise, which have become
due and payable by the Company up to the date hereof have been duly
paid and proper records have been maintained in respect of all the
matters in this paragraph contained and such records are true, complete
and accurate in all respects;
(74) the Company has properly operated the PAYE system and has accounted to
the Inland Revenue for all tax so deducted and for all tax chargeable
on benefits provided to its employees or former employees;
(75) (a) all liabilities, whether actual, deferred, contingent or
disputed, of the Company for income tax or corporation tax
measured by reference to actual or deemed taxable profits
(including both income and chargeable gains) made or deemed
to have been made on or before the Accounts Date, and for
any other taxes, duties or other fiscal impositions of any
kind whatsoever (including any interest on any such amounts
and any penalties or charges imposed in relation to such
amounts) whether arising under any law of the United Kingdom
or any part thereof or any law of any other jurisdiction and
whether incurred as principal, agent or trustee, are fully
provided for or (as appropriate) disclosed in the Accounts;
(b) full disclosure has been made in the Disclosure Letter
of the differences between the accounting and tax
treatment of items in the Accounts;
(76) since the Accounts Date;
(a) no transaction has been entered into or engaged in by the
Company which has given or may give rise to a liability to Tax
on the Company (or would have given or might give rise to such
a liability but for the availability of any relief, allowance,
deduction or credit) other than corporation tax on normal
trading income (and not chargeable gains or deemed income)
arising from transactions entered into in the ordinary course
of business as currently carried on by the Company;
(b) a further tax accounting period (as defined by Section 12
T.A. 1988) of the Company has not ended;
82
(c) no bonuses (or other payments) other than normal salaries have
been paid to directors or employees of the Company;
(d) there have been no pension scheme refunds or transfers of
assets out of the Pension Scheme to the Company in terms of
Section 601 and Schedule 22 T.A. 1988;
(e) the Company has not been released within the terms of Section
94 T.A. 1988 from the whole or any part of any debt for which
a deduction has previously been allowed in computing the
taxable profits of its trade;
(77) (a) the Company has complied with all statutory provisions and
regulations relating to Value Added Tax and to goods, services
and/or sales taxes and/or custom duties or their equivalent in
any jurisdiction and has duly paid or provided for all amounts
of Value Added Tax and for goods, services and/or sales taxes
and/or customs duties or their equivalent in any jurisdiction
for which the Company is liable;
(b) the Company has not committed any offence contrary to Section
72 or Section 60 V.A.T.A. 1994 nor has it received any penalty
liability notice pursuant to Sections 64(2) and (3) of
V.A.T.A. 1994, surcharge liability notice pursuant to Section
59 V.A.T.A. 1994, written warning issued pursuant to Section
76(2) or incurred a penalty under Section 63 F.A. 1985;
(c) the Company is not and has not been a member or registered as
a member of a group of companies for the purposes of V.A.T.A.
1994 and no act or transaction has been effected in
consequence whereof the Company is or may be held liable for
any Value Added Tax chargeable against some other company;
(d) no supplies have been received or will be received by the
Company prior to Completion to which the provisions of Section
8 V.A.T.A 1994 might apply;
(e) all input tax for which the Company has claimed credit has
been paid by the Company in respect of supplies made to it
relating to goods or services used or to be used for the
purpose of the Company's business;
83
(f) all supplies made by the Company are taxable supplies and the
Company is not and will not be denied credit for any input tax
by reason of the operation of Section 26 V.A.T.A. 1994 and
regulations made thereunder;
(g) the Company is not and has not at any time been required to
give security for payment of Value Added Tax under V.A.T.A.
1994, Schedule 11, paragraph 4;
(h) the Company is not and will not become liable for Value
Added Tax by virtue of Section 47 V.A.T.A. 1994;
(i) neither the Company nor any of its relevant associates
(as defined in Schedule 10 paragraph 3(7) V.A.T.A. 1994) has
made nor will make prior to Completion any elections under
Schedule 10 paragraph 2 V.A.T.A. 1994;
(j) the Company does not own any capital items to which part XV of
the Value Added Tax (General) Regulations 1995 apply;
(k) all claims for bad debt relief that could have been made have
been made and full details of all such claims are set out in
the Disclosure Letter;
(78) (a) any overseas VAT suffered shown as recoverable in the
Accounts has been recovered;
(b) the Company does not have an interest in any property which
could give rise to a charge to Value Added Tax under paragraph
5 of Schedule 10 V.A.T.A. 1994;
(79) all clearances obtained by the Company have been properly obtained and
all information supplied to the Inland Revenue or other appropriate
authority in connection with such clearances was complete and accurate
in all respects when given and at the time of the transaction and any
transaction for which such clearance was obtained has been carried out
only in accordance with the terms of the clearance given therefor and
the application on which the clearance was based;
(80) the Company has made all applicable tax deductions which it is obliged
or entitled to make from any payments made by it including (without
84
prejudice to the generality of the foregoing) deductions under Sections
349 and 43 T.A. 1988 and has accounted in full to the appropriate Tax
Authority for all amounts deducted as aforesaid;
(81) (a) the Company has not paid or agreed to pay any compensation
for loss of office or any gratuitous payments not wholly
deductible in computing the profits of the Company for the
purposes of corporation tax;
(b) all sums payable under any obligation incurred by the
Company prior to Completion and which will continue to bind
the Company after Completion will continue to be deductible
for corporation tax purposes, either in computing the
profits of the Company or in computing the corporation tax
chargeable on the Company and such sums payable by the
Company shall include, without limitation, all remuneration
and other sums (including any payments made directly or
indirectly in consideration or in consequence of, or
otherwise in connection with, the termination of the holding
of any office or employment) paid or payable and all
benefits provided or agreed to be provided to employees or
officers of the Company and all interest, rent, royalties,
annuities and other annual payments paid or payable by the
Company under any loan agreement, lease, contract, covenant
or other commitment or arrangement;
(82) (a) except as disclosed by the Accounts or save in so far as
full provision is made therein in respect of any chargeable
gains, realised development values or balancing charges
which would arise or accrue in respect of any such asset or
machinery and plant on a disposal thereof at the values at
which they are included therein, no asset is included in the
Accounts at a value such that if that value were obtained on
the disposal or deemed disposal of the asset a chargeable
gain or realised development value or balancing charge would
or might arise or accrue;
(b) the Company has and all other necessary persons have made all
necessary elections and claims required to be made on their
respective parts in respect of the grant to the Company of all
capital allowances for which the Company is eligible;
(c) the Company has not elected to have any assets treated as
short life assets under Section 00 Xxxxxxx Xxxxxxxxxx Xxx
0000;
85
(d) full details have been supplied in the Disclosure Letter of
disclaimers of first year allowances and writing down
allowances on plant and machinery under Sections 22(7-9), 24
and 25 Capital Allowances Act 1990 and of any reduction of
initial allowance on industrial buildings under Section 1(5)
Capital Allowances Xxx 0000;
(e) the Company is not, nor could be, in dispute with any person
as to the entitlement to capital allowances under Section 00
Xxxxxxx Xxxxxxxxxx Xxx 0000;
(f) the Company has sufficient records to enable it to calculate
the liability to Tax which would arise on any disposal or
realisation of any asset owned by the Company at the Accounts
Date or acquired since that date but before Completion;
(g) the Company has not incurred any expenditure on the
provision of machinery or plant for leasing;
(83) the Company has not made any disposal which has required or may require
any computation under Section 42 T.C.G.A. 1992 (part disposals);
(84) no claims have been made under Section 24 T.C.G.A. 1992 (negligible
value claims);
(85) no asset owned, or agreed to be acquired, by the Company (other than
plant and machinery in respect of which it is entitled to capital
allowances) is a wasting asset within Section 44 T.C.G.A. 1992 (wasting
assets);
(86) the Company has not incurred a capital loss on a transaction with a
connected person under Section 18(3) T.C.G.A. 1992 (disposal to
connected person);
(87) the Company has not acquired any debt such that a loss on a disposal of
the debt will not be an allowable loss under Section 251(4) T.C.G.A.
1992 (debts acquired from connected person);
(88) no chargeable gains will accrue to the Company on the disposal of
debts, other than debts on a security, under Section 251 T.C.G.A. 1992;
86
(89) the Company has not claimed any relief for a loss under Section 253
T.C.G.A. 1992 (loans to traders);
(90) no claims have been made under Section 23 T.C.G.A. which would affect
the amount of the chargeable gain or allowable loss which would, but
for such claim, have arisen on a disposal of any of the Company's
assets (capital sums: compensation and insurance);
(91) there have been no reorganisations, conversions or reconstructions
whereby Section 116(1) T.C.G.A. 1992 might apply to a corporate bond
held by the Company;
(92) no part of the consideration given by the Company for a new holding of
shares will be disregarded by virtue of the provisions of or exceptions
to Section 128(2) T.C.G.A. 1992;
(93) (a) no election under Section 35(5) T.C.G.A. 1992 has been
made (whether by the Company, the Vendors, or any other
person) which will apply to disposals made by the Company
(rebasing to 1982);
(b) no period has expired, being a period in which an election
under Section 35(5) T.C.G.A. 1992 in respect of the Company
could have been made, without the election being made;
(c) where an election under Section 35(5) T.C.G.A. 1992 in respect
of the Company could be made and has not yet been made, the
Disclosure Letter gives details of the "first relevant
disposal" and the date when the period for making such an
election expires;
(94) the Company has not at any time:-
(a) repaid, redeemed or purchased or agreed to repay or redeem or
purchase 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 or
debentures or other securities or in paying up any amounts
unpaid on 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;
87
as provided in Sections 209 to 211 T.A. 1988;
(95) the Company has not been engaged in, or been a party to, any of the
transactions in Sections 213 to 218 T.A. 1988 (demergers) and has not
made or received a chargeable payment as defined in Section 214 T.A.
1988 (chargeable payments connected with exempt distributions);
(96) the Company is not and has not been a "contractor" for the purposes
of Section 559(1)(b) T.A. 1988 by virtue of Section 560(2)(f) T.A.
1988 (expenditure on construction operations exceeding an
average of (British Pound) 250,000 per annum for previous three years);
(97) the Disclosure Letter contains full details of any unapproved share
schemes and the Company has complied with all statutory requirements in
respect of any such scheme or arrangement under Sections 136(6) and
139(5) T.A. 1988;
(98) the Disclosure Letter contains full details of any profit sharing
scheme and the Company has complied with all statutory requirements in
respect of any such scheme under Section 186, Schedule 9 and Schedule
10 T.A. 1988;
(99) the Disclosure Letter contains full details of any approved share
option scheme and the Company has complied with all statutory
requirements in respect of any such scheme under Section 185 and
Schedule 9 T.A. 1988;
(100) the Disclosure Letter contains full details of any Save as You Earn
Share Option Scheme and the Company has complied with all statutory
requirements in respect of any such scheme under Section 185 and
Schedule 9 T.A. 1988;
(101) the Disclosure Letter contains full details of any Employee Share
Ownership Trust, the Company has complied with all statutory
requirements in respect of any such scheme, and the Company is not
aware of any potential tax liability that might be recovered from the
Company under Section 68 F.A. 1989;
(102) the Company does not operate any profit related pay scheme;
88
(103) there has been no claim by the Company to pay corporation tax or any
other fiscal imposition by instalments or to defer payment of such
taxes or impositions;
(104) the Company is not, and never has been, a close company as defined
by Section 414 T.A. 1988 or a close investment holding company
within Section 13A T.A. 1988;
(105) no payments of the type referred to in Section 418 T.A. 1988 which are
required to be treated as "distributions" have been made (or will be
made pending Completion);
(106) no loan has been made or transaction effected by the Company falling
within Sections 419, 421 or 422 T.A. 1988;
(107) the Company has no outstanding liability to stamp duty reserve tax;
(108) since the date of its incorporation the Company has not made any claim
for relief or exemption under Section 55 F.A. 1927 or Section 42 F.A.
1930 or Part III of Schedule 19 F.A. 1973 or Section 78 F.A. 1985 or
Sections 75 to 77 F.A. 1986 and no relief from stamp duty has been
obtained;
(109) (a) the Company has not made any claims under Sections 152 to
160 T.C.G.A. 1992;
(b) the potential tax liabilities of the Company on timing
differences have been fully provided for in the Accounts or
disclosed by way of note in the Accounts;
(c) the Company has not made any elections under Section
161(3) T.C.G.A. 1992 that Section 161(1) T.C.G.A 1992
shall not apply;
(110) (a) no circumstances have arisen in relation to the Company
which could give rise to any liability under Section 776 T.A.
1988;
(b) no sale of land has taken place with a right to repurchase
falling within Section 36 T.A. 1988;
(c) no circumstances have arisen in relation to the Company which
could render it liable to Capital Transfer Tax or Inheritance
Tax;
89
(d) no asset owned or acquired by the Company is subject to a
charge for unpaid Capital Transfer Tax or Inheritance Tax
under Sections 237 and 238 Inheritance Tax Xxx 0000;
(111) no transaction has taken place in relation to the Company which could
constitute a depreciatory transaction for the purpose of Section 176
T.C.G.A. 1992 or dividend stripping for the purpose of Section 177
T.C.G.A. 1992 or value shifting for the purposes of Sections 29 to 32
T.C.G.A. 1992 or otherwise nor is any expenditure on any share or
security liable to be reduced under Section 125 T.C.G.A. 1992;
(112) the Company has not acquired or disposed of any asset otherwise
except by way of bargain at arm's length;
(113) nothing has been done, and no event or series of events has occurred,
which might cause the disallowance of the carry forward of ACT by the
Company under Section 245A T.A. 1988;
(114) the Company has acquired no assets in the circumstances described in
Section 44 V.A.T.A. 1994;
(115) (a) no security has been issued by the Company the interest on
which might fall to be treated as a distribution under Section
209 T.A. 1988;
(b) the Company has not made and is not committed to make any
payments of interest which have been or could be treated as
a distribution by reason of Section 209 T.A. 1988;
(116) (a) no act or transaction has been effected in consequence of
which the Company is or may be held liable for any taxation
primarily chargeable on some other company;
(b) the Company has not at any time entered into, engaged in or
been a party to or otherwise been involved in any transaction,
scheme or arrangement of which the main intention or purpose,
or one of the main intentions or purposes, is or was the
avoidance of, or reduction in liability to, taxation; and
without prejudice to the generality of the foregoing, the
Company has not at any time entered into, engaged in, been a
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party to or otherwise been involved in any transaction, scheme
or arrangement to which any of the following provisions could
apply:-
Sections 703 to 709 T.A. 1988;
Sections 770 to 787 T.A. 1988;
(c) the Company has not been a party to any transaction to which
any of the following provisions have been, or could be,
applied, other than transactions for which all necessary
consents and clearances have been obtained: Section 139
T.C.G.A. 1992 and Sections 135 to 138 T.C.G.A. 1992. Full
disclosure has been made in the Disclosure Letter of all such
consents and clearances received by the Company;
(117) (a) the Company is resident in the United Kingdom and nowhere
else for tax purposes and does not have any branch or
permanent establishment (as defined in the relevant double
taxation treaty or agreement) outside the United Kingdom;
(b) a direction has been received from the Inspector of Foreign
Dividends in respect of all payments of interest and royalties
made without deducting basic rate income tax to residents of
other countries and copies of all such notices are included in
the Disclosure Documents;
(118) (a) nothing has been done, and no event or series of events
has occurred, which might cause the disallowance of the carry
forward of advance corporation tax under Section 245 T.A.
1988;
(b) nothing has been done, and no event or series of events has
occurred which might cause the disallowance of the carry
forward of losses under Sections 393 or 768 TA 1988;
(119) (a) the Company has not ceased to carry on a trade or begun to
carry on a trade in circumstances to which the provisions of
Section 343 T.A. 1988 apply;
(b) there are no circumstances in which the provisions of
Section 343(4) T.A. 1988 could apply to deny the carry
forward of losses transferred to the Company;
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(120) no claim has been made by the Company under Section 242 T.A. 1988;
(121) except as set out in the Disclosure Letter, neither the Inland Revenue
nor Customs & Excise have agreed to operate any special arrangement
(being an arrangement which is not based on a strict and detailed
application of the relevant legislation) in relation to the Company's
affairs, whether in respect of benefits provided by the Company to its
officers or employees, or in relation to the valuation of stocks or
depreciation of assets or in respect of any administrative or other
matter whatsoever;
(122) no event has occurred which could give rise to a claim under the Tax
Undertaking;
ADDITIONAL TAX ADMINISTRATION AND RETURNS WARRANTIES
(123) all notification liabilities which have arisen up to the Completion
Date have been observed;
(124) the Company has not taken any action which has had, or so far as the
Warrantors are aware, might have the result of altering, prejudicing or
in any way disturbing any arrangement or agreement previously
negotiated with any Tax Authority;
(125) the Disclosure Letter contains full particulars of all outstanding
entitlements to make claims, elections, appeals and postponement
applications at the Completion Date;
(126) every notice, clearance application or election made by the Vendors in
respect of the sale has been disclosed to the Purchaser;
(127) the Company has not received any payment from any Tax Authority to
which it is not entitled nor any assessment which understates its
liability to tax;
(128) the Company has not paid, or become liable to pay, any penalty or
interest charged by virtue of the provisions of the Taxes Management
Xxx 0000 or any other taxation statute in the United Kingdom or in any
other countries;
(129) the Company has never been the subject of an investigation or discovery
by or involving any of the special investigations units of the Inland
Revenue (e.g., special office or enquiry branch) or Customs & Excise
and so far as the Warrantors are aware there are no circumstances
existing which make it likely that an investigation or discovery will
be made;
92
(130) full disclosure has been made in the Disclosure Letter of any Target
Group company which may be a controlled foreign company for the
purposes of T.A. 1988 Chapter IV Part XVII, and of any elections,
claims or Inland Revenue exercises of power to tax under that Chapter;
(131) there is no potential liability to tax arising from postponement
relief given under Section 140 T.C.G.A. 1992;
(132) the Company has in all respects complied with the requirements of H.M.
Commissioners of Customs & Excise, the Department of Trade and
Industry, and any other customs authority, and the Company neither has,
nor has reason to expect to have, a dispute with any of the above
authorities;
(133) those responsible for signing customs documentation are in possession
of all the relevant information and have an adequate knowledge of the
relevant customs regulations;
(134) all customs and other duties due and payable have been settled in full;
(135) neither H.M. Commissioners of Customs & Excise nor any other customs
authority are investigating any valuation declared by the Company and
so far as the Warrantors are aware there are no circumstances existing
which may make it likely that an investigation will be made;
(136) all guarantees given to H.M. Commissioners of Customs & Excise, or any
other customs authority, on behalf of the Company in respect of goods
subject to customs control have been disclosed in the Disclosure Letter
and there is no confirmed or potential call on such guarantees as a
result of infraction of any regulation;
(137) the Company has discharged any expressed or implied undertakings to
H.M. Commissioners of Customs & Excise, or any other customs authority,
in respect of goods on which duty has not been paid;
(138) Treasury consent has been obtained for all transactions requiring
consent under Section 765 T.A. 1988 and full disclosure has been made
in the Disclosure Letter of all such consents;
93
(139) all notices required under Section 765A T.A. 1988 have been given to
the Board of the Inland Revenue within the prescribed time limit, and
full disclosure has been made in the Disclosure Letter of all such
notices;
94
PART 6
THE TAX UNDERTAKING
1. DEFINITIONS AND INTERPRETATION In the construction of this Part of the
Schedule:
1.1 DEMAND shall mean any assessment, notice, demand or other document
issued or any claim made or action taken by or on behalf of any person,
authority (whether governmental, state, provincial, local or municipal)
or body whatsoever (whether of the United Kingdom or elsewhere in the
world) from which it appears that a Tax liability is or is sought to be
imposed on the Company;
EVENT shall include, without limitation, any transaction, act, event or
omission of whatever nature and includes a failure to make sufficient
distributions to avoid an apportionment or deemed distribution of
income and completion of the sale of the Sale Shares to the Purchaser;
and reference to any event on or before a date shall be deemed to
include any combination of two or more events, the first of which has
taken place on or before that date;
RELIEF shall mean any relief from Tax, allowance, exemption, set-off or
deduction in computing or against income, profits or gains, or credit
against Tax granted by or pursuant to any legislation or otherwise for
Tax purposes;
TAX shall mean all forms of taxation, whether of the United Kingdom or
other parts of the world, including (without prejudice to the foregoing
generality):
(i) within the United Kingdom, income tax (including
income tax required to be deducted or withheld
from or accounted for in respect of any payment),
corporation tax, advance corporation tax, capital gains tax,
development land tax, value added tax, customs and other
import or export duties and other excise duties, car tax,
capital transfer tax, inheritance tax, insurance premium tax,
stamp duty, capital duty, stamp duty reserve tax, national
insurance and social security contributions, and local
authority rates and charges, the Uniform Business Rate, and
any other taxes, levies, duties, charges, imposts or
withholdings corresponding to, similar to, replaced by or
replacing any of them, and all costs, fines, penalties,
expenses, charges and interest incidental or relating to the
same or to any late or incorrect return in respect of such
taxes;
95
(ii) outside the United Kingdom, all taxes, levies, duties,
imposts, charges and withholdings including (without
limitation) taxes on gross or net income, profits or gains and
taxes on receipts, sales, use, occupation, franchise, value
added or personal property, and all costs, fines, penalties,
expenses, charges and interest incidental or relating to the
same or to any late or incorrect return in respect of such
taxes;
regardless (in either case) of whether any such taxes, levies, duties,
imposts, charges, withholdings, penalties, and interest are chargeable
directly or primarily against or attributable directly or primarily to
the Company or any other person and of whether any amount in respect of
any of them is recoverable from any other person as mentioned in
paragraph 8 of this Tax Undertaking;
TAX AUTHORITY shall mean any taxing or other authority (whether within
or outside the United Kingdom) competent to impose any Tax liability.
1.2 References to any Tax liability of the Company shall include
liabilities of the Company to make actual payments of or in respect of
Tax and also:-
1.2.1 the loss of a right to repayment of tax (and any repayment
supplement and/or repayment interest) which has been treated
as an asset of the Company in preparing the Completion
Accounts or the setting off of any such right to repayment
of tax against any actual Tax liability in respect of which
the Purchaser would, but for that setting off, have been
able to make a claim against the Warrantors under this Tax
Undertaking; and
1.2.2 the setting off against any income, profits or gains which
were earned, accrued or received on or before Completion or
in respect of a period ended on or before Completion of any
Relief which arises as a consequence of or by reference to
an event occurring (or deemed to occur) after Completion or
in respect of a period commencing after Completion and not
as a consequence of or by reference to any event occurring
(or deemed to occur) on or before Completion or in respect
of a period on or before Completion in circumstances where,
but for such setting off, the Company would have had an
actual tax liability in respect of which the Purchaser would
have been able to make a claim against the Warrantors under
this Tax Undertaking; and
96
1.2.3 the loss, or setting off against income, profits or gains
earned, accrued or received on or before Completion, of any
Relief arising in respect of an event occurring on or before
Completion which Relief would (were it not for the said loss
or setting off) have been available to the Company and which
has been taken into account in computing (and so reducing) any
deferred tax liability which appears in the Completion
Accounts (or which would have appeared in the Completion
Accounts but for the presumed availability of such Relief).
1.3 The amount that is to be treated for the purposes of this Tax
Undertaking as a Tax liability of the Company (the "Notional Tax
Liability") in any case falling within paragraphs 1.2.1, 1.2.2 or 1.2.3
of this Tax Undertaking shall be determined as follows:
1.3.1 in a case which falls within paragraph 1.2.1 of this Tax
Undertaking, the Notional Tax Liability shall be the amount
of the repayment that would have been obtained but for the
loss or setting off mentioned in that paragraph;
1.3.2 in a case which falls within paragraphs 1.2.2 or 1.2.3 of this
Tax Undertaking and where the Relief that was the subject of
the loss or setting off mentioned in those paragraphs was a
deduction from or offset against Tax, the Notional Tax
Liability shall be the amount of that Relief;
1.3.3 in a case which falls within paragraphs 1.2.2 or 1.2.3 of this
Tax Undertaking and where the Relief that was the subject of
the loss or setting off mentioned in those paragraphs was a
deduction from or offset against income, profits or gains, the
Notional Tax Liability shall be:
1.3.3.1 if the Relief was the subject of such a setting off,
the amount of Tax which has been saved in
consequence of the setting off; or
1.3.3.2 if the Relief was the subject of such a loss, the
amount of Tax which, but for such loss, would have
been saved by virtue of the Relief, on the basis of
the rates of tax current at the first occasion on
which but for such loss the Relief could have been
used.
97
1.4 References to:
1.4.1 income, profits or gains earned, accrued or received on or
before a particular date or in respect of a particular period
shall include income, profits or gains which have been deemed
to have been earned, accrued or received on or before that
date or in respect of that period for the purposes of any
Demand and any development value and any other standard or
measure for the assessment of any Tax;
1.4.2 any payment or distribution as being made on or before a
particular date shall include:-
1.4.2.1 any payment or distribution which has fallen due
to be made on or before that date; and
1.4.2.2 any event which has occurred on or before that date
and is, or is deemed to be, a payment or distribution
for (in either case) the purposes of any Tax; and
1.4.3 any dividend shall include anything which is deemed to be a
dividend or distribution for the purposes of any Tax; and
1.4.4 "a majority of the Warrantors" means a majority in number of
the Warrantors.
1.5 The definitions and rules of interpretation contained in Clause 1 of
this Agreement shall, subject to the context otherwise requiring, apply
as if the same had been set out in this Tax Undertaking.
2. WARRANTORS' UNDERTAKING
2.1 Subject as hereinafter expressly provided, the Warrantors hereby
jointly and severally undertake with and to the Purchaser (for itself
and as trustee for its successors and permitted assignees in title to
the Sale Shares) to pay to the Purchaser (so far as possible by way of
repayment of the consideration payable under this Agreement for the
Sale Shares) an amount equal to the following:-
2.1.1 any Tax liabilityof the Company arising:
2.1.1.1 as a consequence of or by reference to any event
which occurred on or before Completion or was deemed
to occur on or before Completion for the purposes of
any Tax;
or
98
2.1.1.2 in respect of or by reference to any income, profits
or gains earned, accrued or received on or before or
in respect of a period ended on or before Completion;
and
2.1.2 any liability to repay the whole or any part of any payment
received for group relief pursuant to any agreement or
arrangement entered into by the Company on or before
Completion; and
2.1.3 any costs and expenses properly and reasonably incurred by the
Purchaser, the Company in connection with any such Tax
liability as is referred to in paragraphs 2.1.1 or 2.1.2 above
or with any Demand therefor or in taking or defending any
action under this Tax Undertaking.
2.2 In computing the amount to be paid by the Warrantors under this Tax
Undertaking in respect of any Tax liability of the Company, no account
shall be taken of any Tax for which the Company would have been liable
in respect of such amount had it in fact been paid to the Company.
3. LIMITATIONS AND EXCLUSIONS
3.1 The Warrantors shall not be liable under the undertaking contained in
paragraph 2 of this Tax Undertaking in respect of any Tax liability of
the Company:-
3.1.1 with effect from the date seven (7) years after the
Completion Date unless notice of the relevant Tax liability
specifying as accurately as possible the amount claimed and
with reasonable details of the facts and circumstances, (in
so far as then available) constituting the alleged
liability, shall have been given to the Warrantors prior to
the said date; or
3.1.2 to the extent that provision or reserve in respect thereof was
made or specifically noted in the Accounts or to the extent
that payment or discharge of such Tax liability was taken into
account or specifically noted therein; or
3.1.3 to the extent that such Tax liability arises or is increased
or such provision or reserve in respect thereof as is
mentioned in paragraph 3.1.2 of this Tax Undertaking is
insufficient by reason only of the imposition of new forms
99
of Tax or increase in the rates of Tax or as a consequence
of any change in law or in Inland Revenue or Customs &
Excise or other Tax Authority's practice or procedure
occurring, made or first published after Completion with
retrospective effect but excluding (a) any change occurring
after Completion which enacts, in substantially the same
form, the terms of the Finance Xxxx last published before
Completion and (b) any change which is taken into account in
the preparation of the Completion Accounts; or
3.1.4 to the extent that any amount otherwise subject to the
undertaking contained in paragraph 2 of this Tax Undertaking
has been recovered under the Tax Warranties and/or any of the
Warranties relating to the accounts of the Company; or
3.1.5 arising in respect of or by reference to any income, profits
or gains earned, accrued or received in the ordinary course of
business by the Company or any of the Subsidiaries after the
Accounts Date but on or before Completion;
3.1.6 if the Warrantors are liable to the Purchaser under this
Tax Undertaking by reason of an obligation of the Company to
pay advance corporation tax or any sum recoverable from the
Company as if it were advance corporation tax, the liability
of the Warrantors shall be reduced, and any amount paid to
the Purchaser in respect of such liability shall be
refunded, when and to the extent that the Company or the
Purchaser obtains the benefit of a reduction in liability to
mainstream corporation tax by reason of such payment, and
the Purchaser shall or shall procure that the Company makes
all such claims and elections as will result in such benefit
being obtained as soon as reasonably possible;
3.1.7 if the Warrantors are liable to the Purchaser under this
Tax Undertaking by reason of an obligation of the Company to
pay tax to an overseas Tax Authority, and a deduction can be
claimed under Section 811 T.A. 1988, the liability of the
Warrantors shall be reduced, and any amount paid to the
Purchaser in respect of such liability shall be refunded,
when and to the extent that the Company or the Purchaser
obtains the benefit of a reduction in liability to
mainstream corporation tax as a result of the increased
trading losses available. The Purchaser shall make or shall
procure that the Company makes all such claims and elections
as will result in such benefit being obtained as soon as
reasonably practicable.
100
4. NOTIFICATION OF CLAIMS
4.1 Without prejudice to the other provisions of this Tax Undertaking, if
the Purchaser shall become aware of any Demand which may or will result
in any claim against the Warrantors under this Tax Undertaking, the
Purchaser shall forthwith give or procure the giving of written notice
thereof to the Warrantors setting out reasonable details of the Demand
which written notice shall be accompanied by copies of all relevant
documents and correspondence relating to such Demand. The Purchaser
shall give such written notice within 14 days of becoming aware of any
Demand.
4.2.1 Subject to the Warrantors indemnifying and securing the Purchaser or
the Company to the Purchaser's reasonable satisfaction against any
costs, claims, liabilities and expenses (including interest on overdue
tax) which may be incurred thereby, the Purchaser shall procure at the
request in writing of or on behalf of the Warrantors (or a majority of
them) that the Company shall give the Warrantors such reasonable
co-operation and assistance for the purposes of disputing, resisting,
appealing, compromising or defending such Demand or any further Demand
arising therefrom as aforesaid as the Warrantors (or a majority of
them) may reasonably and promptly by written notice request PROVIDED
THAT if, having given the Warrantors written notice of the receipt of
that demand, the Warrantors (or a majority of them) have not within 10
days thereafter either given instructions in writing in accordance
with the preceding provisions of this paragraph or if the Warrantors
shall fail to indemnify and secure the Purchaser or the Company, the
Purchaser or the Company shall be free to satisfy or settle the
relevant Tax liability on such terms as it may in its absolute
discretion think fit and the Company shall not be obliged to appeal
against any Tax assessment raised on it if, having given the
Warrantors (or a majority of them) written notice of the receipt of
that assessment, it has not within 20 days thereafter received
instructions in writing from the Warrantors, in accordance with the
preceding provisions of this paragraph, to make that appeal;
4.2.2 The actions which the Warrantors (or a majority of them) may reasonably
request under paragraph 4.2.1 of this Tax Undertaking shall include
(without limitation) the Company applying to postpone (so far as
legally possible) the payment of any tax and/or the instruction of such
solicitors or other professional advisers as the Warrantors (or a
majority of them) may nominate to act on behalf of the Company to the
intent that the conduct and costs and expenses of the dispute shall be
delegated entirely to and be borne solely by the Warrantors (or a
majority of them);
101
4.2.3 In connection with the conduct of any dispute relating to a Tax
liability to which this Tax Undertaking applies:-
4.2.3.1 the Warrantors shall keep the Purchaser fully informed
of any relevant matters and shall promptly forward,
or procure to be forwarded, to the Purchaser copies
of all material correspondence and other material written
communications pertaining to it; and
4.2.3.2 no settlement or compromise shall be made of the matter which
is the subject of the dispute nor any agreement reached in
respect of any matter in its conduct which is likely to affect
the amount of the resulting Tax liability without the prior
written approval of the Purchaser (which shall not be
unreasonably withheld or delayed).
4.3 Neither the Purchaser nor the Company shall be subject to any claim by,
or liability to, any of the Warrantors on the ground that it has not
complied with the foregoing provisions if it has bona fide acted in
accordance with the instructions or with the approval of a majority of
the Warrantors.
5. TAX RETURNS
5.1 The Warrantors or their duly authorised agents shall prepare the tax
returns of the Company for all accounting periods ended on or prior to
Completion, to the extent that the same shall not have been prepared
before Completion.
5.2 The Purchaser shall cause the returns mentioned in paragraph
5.1 of this Tax Undertaking to be authorised, signed and submitted to
the appropriate authority without amendment or with such amendments as
the Warrantors shall agree, and shall give the Warrantors or their
agents all such assistance as may be required to agree those returns
with the appropriate authorities Provided that the Purchaser shall be
entitled to refuse to sign any such returns if it considers the return
to be incorrect and in the case of any dispute as to the correctness
of the return between the Warrantors and the Purchaser the matter
shall be referred to a leading Tax Counsel agreed between the parties
or, failing agreement, nominated on the application of either the
Warrantors or the Purchaser by the Xxxx of the Faculty of Advocates
for resolution (acting as an expert and not as an arbiter and whose
costs shall be borne as between the Warrantors and the Purchaser in
such manner as he shall direct) and the decision of such Tax Counsel
102
shall be final and binding on the parties and the Purchaser shall sign
the return in the form which is so resolved to be correct.
5.3 The Warrantors or their duly authorised agents shall prepare all
documentation and deal with all matters (including correspondence)
relating to the tax returns of the Company for all accounting periods
ended on or prior to Completion and the Purchaser shall procure that
the Company shall afford such access to its books, accounts and records
as is necessary and reasonable to enable the Warrantors or their duly
authorised agents to prepare those returns and conduct matters relating
thereto in accordance with the Warrantors rights under this Tax
Undertaking.
5.4 If the Warrantors fail to submit a draft of each of the returns
mentioned in paragraph 5.1 of this Tax Undertaking by the date which is
not later than three months prior to the filing date for the return in
question, the Purchaser shall be entitled, notwithstanding the
foregoing provisions of this paragraph 5, to prepare and submit to the
appropriate authority that return.
5.5 Nothing done by the Company pursuant to this paragraph of this Tax
Undertaking shall in any respect restrict or reduce any rights the
Purchaser may have to make a claim against the Warrantors under this
Tax Undertaking in respect of any such Tax liability as is mentioned in
paragraph 2 of this Tax Undertaking.
6. PAYMENT OF CLAIMS
6.1 Payments by the Warrantors pursuant to the undertaking in paragraph 2
of this Tax Undertaking shall be made on the day or date specified in
paragraph 6.2 below.
6.2 The days and dates referred to in paragraph 6.1 above are as follows:-
6.2.1 if the Tax liability giving rise to a claim under this Tax
Undertaking involves an actual payment of Tax by the Company
the date which is the last day on which that Tax may be paid
by the Company to the relevant Tax Authority in accordance
with the relevant Tax legislation without incurring a
liability to interest or a charge or penalty in respect of the
non-payment of that Tax liability;
6.2.2 if the Tax liability giving rise to a claim under this Tax
Undertaking does not involve an actual payment of Tax:-
103
6.2.2.1 if involving the denial or loss or setting off in
whole or in part of a right to repayment of
Tax, the date on which such Tax would otherwise
have been repaid in accordance with the relevant
Tax legislation or (where the repayment was
dependent upon the making of an application or the
satisfaction of some other condition) the earliest
date upon which the application could have been made
or the condition satisfied; or
6.2.2.2 if involving the denial or loss or setting off in
whole or in part of any Relief, the date on which the
Tax saved thereby would otherwise have become fully
due and payable to the relevant Tax authorities in
accordance with the relevant Tax legislation; or
6.2.2.3 in any case other than as referred to in paragraphs
6.2.2.1 and 6.2.2.2 the date falling seven days after
the date when the Warrantors have been notified by
the Company, or the Purchaser that the auditors for
the time being of the Company have certified, at the
request of the Purchaser or the Company that the
Warrantors have a liability for a determinable amount
under paragraph 2 of this Tax Undertaking;
6.2.3 in the case of the costs and expenses referred to in paragraph
2 of this Tax Undertaking, 14 Business Days after the date on
which the Purchaser or the Company produces receipted invoices
or other proof of payment in respect thereof to the
Warrantors.
6.3 If the Warrantors shall fail to pay any sum due from them under this
Tax Undertaking on the due date for payment in accordance herewith then
the Warrantors shall pay interest thereon from such date until the date
when payment is actually made in full (as well after as before any
decree) at the rate of two per cent per annum above the base rate from
time to time of Bank of Scotland.
7. NO WITHHOLDINGS ETC.
7.1 All sums payable by the Warrantors under this Tax Undertaking shall be
paid free and clear of all deductions or withholding or set off unless
the deduction or withholding or set off is required by law.
104
7.2 If any deduction or withholding or set off is required by law to be
made from any sums, the Warrantors shall be obliged to pay to the
Purchaser such amount as will, after the deduction or withholding or
set off has been made, leave the Purchaser with the same amount as it
would have been entitled to receive in the absence of such requirement
to make a deduction or withholding or set off.
7.3 If any Tax Authority brings into charge to Tax any sum paid to the
Purchaser under this Tax Undertaking, the amount so payable shall be
increased so that, after deduction of the Tax so chargeable, there
shall be left a sum equal to the amount that would otherwise be
payable.
8. RECOVERY FROM THIRD PARTY
8.1 If the Company recovers any sum (whether by payment, discount, credit
or otherwise) from any third party (not being the Company or the
Purchaser but including any Tax Authority) or receives any repayment of
Tax (including any repayment supplement) in respect of any Tax
liability for which a claim could be made or has been made under this
Tax Undertaking the amount so recovered, less the reasonable costs
incurred by the Company in recovering or obtaining repayment of the
same, shall:-
8.1.1 if the Warrantors (or any of them) have at the time of the
recovery or repayment made payment under this Tax
Undertaking in respect of that Tax liability, be paid
forthwith to the Warrantors to the extent not exceeding the
amount so paid by each of the Warrantors (but without
prejudice to the right of the Purchaser to recover from the
Warrantors under this Tax Undertaking if a further Tax
liability is imposed upon the Company, whether in respect of
matters to which the recovery or repayment relates or
otherwise);
8.1.2 if a claim has been made pursuant to this Tax Undertaking in
respect of that Tax liability but the Warrantors have not at
the time of recovery or repayment made payment in respect
thereof, be set against and reduce the claim against the
Warrantors in respect of such Tax liability;
8.1.3 if no claim has been made pursuant to this Tax Undertaking in
respect of that Tax liability at the time of recovery or
repayment, be set against and reduce any claim that
subsequently may be made against the Warrantors in respect of
such Tax liability.
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ACQUISITION AGREEMENT
amongst
XXXXXX XXXXXX AND OTHERS
and
XXXXXX INTERNATIONAL INC.
--------------------------------
DUNDAS & XXXXXX XX
Solicitors
Saltire Court
00 Xxxxxx Xxxxxxx
XXXXXXXXX XX0 0XX
(Ref: DJC/CMF/D0638.012)
