DATED 28 FEBRUARY 1999
DMD GMBH
AND
XXXX XXXXXX
AND
DMDS LIMITED
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AGREEMENT FOR THE SALE OF
THE SELLER'S BUSINESS AND ASSETS
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DRAFT: 24/2/99
XXXXXXXXX & XXXXX
XXXXXXX HOUSE
00 XXXXXXX XXXXXX
XXXXXX X0X 0XX
h85/249321/17277_1
INDEX
1. Definitions............................................................1
2. Agreement For Sale and Purchase........................................6
3. Consideration..........................................................6
4. Completion.............................................................7
5. Value Added Tax........................................................8
6. Liabilities............................................................9
7. Employees..............................................................9
8. Insurance.............................................................10
9. Contracts and Third Party Consents....................................10
10. Apportionments........................................................11
11. Post Completion.......................................................11
12. Warranties by Seller..................................................12
13. Warranties by Purchaser...............................................12
14. Purchaser's Remedies..................................................13
15. Conduct of Warranty Claims............................................14
16. Notices...............................................................14
17. Successors and Assignability..........................................15
18. Certificate of Value..................................................15
19. Announcements.........................................................15
20. Survival of Certain Provisions........................................15
21. Entire Agreement......................................................15
22. Governing Law.........................................................15
SCHEDULE 1 Contracts........................................16
SCHEDULE 2 Employees........................................17
SCHEDULE 3 Excluded Assets..................................18
SCHEDULE 4 The Warranties...................................19
SCHEDULE 5 Apportionment of Consideration...................20
THIS AGREEMENT is made on 28 February 1999
BETWEEN:
(1) DMD GMBH (registered number [ ]) which has its registered office at
Xxxxxx Xxxxxx Xxxxxxx Xx 0, 00000 Xxxxxxx, Xxxxxxx,0 ("THE SELLER");
(2) XXXX XXXXXX of [address] ("XX XXXXXX"); and
(3) DMDS LIMITED (registered number 3505875) whose registered office is
at Xxxxxxxx Xxxxx, Xxxxxx, XX0X 0XX ("THE PURCHASER").
WHEREAS:
(A) The Seller carries on the Business.
(B) Xx Xxxxxx and DMD N.V. hold all of the issued shares in the Seller.
(C) The Purchaser has agreed with the Seller with effect from the
Completion Date to purchase as a going concern the Business including
(without limitation) the undertaking and the assets referred to below,
upon the following terms.
IT IS AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement unless the context otherwise requires the following
expressions shall have the following respective meanings:-
"ACCOUNTS"
the balance sheet as at the Accounts Date and the profit and loss account for
the year ended on the Accounts Date of the Seller, including all documents
required by law to be annexed to them;
"ACCOUNTS DATE"
28 February 1999;
"ACCRUALS"
all amounts received by the Seller prior to the Completion Date but in respect
of a period after the Completion Date or in respect of goods and services to be
supplied by the Seller after the Completion Date and excluding any such amounts
relating to the Excluded Assets;
"BOOK DEBTS"
the debts and other amounts owing to the Seller at the Completion Date in
respect of the Business;
"BUSINESS"
the business carried on by the Seller at the
Completion Date more particularly described as the distribution of
dental/medical products and all income derived from the distribution of the
products;
"BUSINESS INFORMATION"
all information, know-how and records (whether or not confidential and in
whatever form held) including (without limitation) all formulae, designs,
specifications, drawings, data, manuals and instructions and all customer lists,
supplier lists, sales information and all technical or other expertise and all
computer software and all accounting and VAT Records, correspondence, orders and
inquiries of the Business;
"BUSINESS RECORDS"
shall include, without limitation, all notes, correspondence, orders, inquiries,
drawings, plans, books of account and other documents and all computer disks or
tapes or other machine legible programmes or other records relating to the
Business;
"CASH FLOAT"
all cash of the Business held as xxxxx cash and cash at the bank held in the
Seller's bank accounts as at the Completion Date relating to the Business;
"COMPLETION"
completion of the sale and purchase of the Business and Sale Assets in
accordance with the terms of this Agreement;
"COMPLETION DATE"
the date of this Agreement;
"CONSIDERATION"
the consideration described in Clause 3;
"CONSIDERATION SHARES"
3500 shares of common stock of DMD-USA;
"CONTRACTS"
the contracts and other legally enforceable engagements or arrangements of the
Seller in relation to the Business in existence on the Completion Date,
including those contracts brief details of which are set out in Schedule One
(Contracts);
"DEBENTURE"
A debenture made by the Seller in favour of the Purchaser dated the date of this
Agreement;
"DMD"
Dental/Medical Diagnostic Systems, Inc.;
"EMPLOYEES"
the persons employed at the Completion Date in connection with the Business as
listed in Schedule Two (Employees);
"ENVIRONMENTAL LAWS"
all applicable laws, regulations, codes of practice, circulars, guidance notes
and the like whether of the United Kingdom or otherwise concerning protection of
the environment;
"EXCLUDED ASSETS"
Those assets and rights of the Seller which are to be retained by the Seller
after Completion and listed in Schedule Three (Excluded Assets);
"GOODWILL"
all the goodwill of the Seller in relation to the Business including all rights
of the Seller in and to the Intellectual Property Rights used in or for the
Business and the exclusive right for the Purchaser and its permitted assignees
to represent itself as carrying on the Business in succession to the Seller and
all trade names associated with the Business;
"GUARANTEE"
a guarantee made by Xx Xxxxxx and DMD N.V. in favour of the Purchaser dated the
date of this Agreement;
"INTELLECTUAL PROPERTY RIGHTS"
patents, trade marks, service marks, trade names, registered designs,
unregistered designs, copyrights (including copyright in any computer
programs) and other forms of intellectual or industrial property (whether or
not registered or registerable and for the full period thereof and all
extensions and renewals thereof and applications for registration of or
otherwise in connection with the foregoing), know-how, inventions, formulae,
confidential or secret processes and information (in each case in any part of
the world), and any other similar rights which may subsist anywhere in the
world;
"LIABILITIES"
the claims, obligations, liabilities and debts of the Seller on the Completion
Date or arising prior to Completion or attributable to a period prior to
Completion which relate to the Business;
"LICENCE"
the licence of the property at Xxxxxx Xxxxxx Xxxxxxx Xx.0, 00000, Xxxxxxx,
Xxxxxxx made between the Seller and SEG Stadt Entwecklungs Gesellschaft Marburg
MHB dated 1 March
1997;
"LOSSES"
losses, claims, charges, interest, fines, penalties, liabilities, costs,
expenses (including legal expenses on a solicitor and own-client basis) or
damages of any nature whatsoever and whether or not reasonably or otherwise
foreseeable or avoidable;
"MOVEABLE PLANT AND MACHINERY"
all moveable fittings, furniture, furnishings, plant, machinery, equipment and
vehicles, computer and communication hardware, loose tools, books, stationary,
and other goods (other than the Excluded Assets) owned by the Seller and used by
or in the Business at the Completion Date;
"PROMISSORY NOTE"
a promissory note made by the Seller in favour of the Purchaser dated the date
of this Agreement;
"PURCHASER'S SOLICITORS"
Xxxxxxxxx & Xxxxx of Hanover House, 00 Xxxxxxx Xxxxxx, Xxxxxx X0X 0XX;
"SALE ASSETS"
the property, assets and rights of the Business to be purchased by the Purchaser
listed in subclauses 2.1.1 to 2.1.8;
"SELLER'S PREPAYMENTS"
all prepayments as at the Completion Date made by or on behalf of the Seller in
connection with the Business or the Sale Assets;
"SERVICE AGREEMENT"
a service agreement between the Purchaser and Xx Xxxxxx dated the date of this
Agreement;
"STOCK"
whether or not held for the purpose of resale all stocks of goods and other
stocks in trade whether or not relating exclusively to the Business wherever
located and by whomsoever held including items which although subject to
reservation of title by the suppliers of those items are under the control of
the Seller;
"TAXATION"
all forms of taxation and statutory, governmental, supra-governmental, state,
provincial, local governmental or municipal impositions, duties, contributions
and levies (including withholdings and deductions), whether domestic or foreign,
whenever imposed
and all penalties, fines, charges, costs and interest relating to any such
matters and "TAX" shall be construed accordingly;
"THIRD PARTY RIGHTS"
all of the Seller's rights in connection with warranties and representations
made and obligations and liabilities undertaken by third parties in connection
with the Business or the Sale Assets;
"WARRANTIES"
the warranties and representations set out in Clause 12 and Schedule 4 and
"WARRANTY" means any one of them;
"WARRANTY CLAIM"
a claim made by the Purchaser for breach of any one or more of the Warranties;
"VAT"
Value Added Tax or any similar Tax;
"VATA"
the VAT Xxx 0000 and any order, regulation instrument or other subordinate
instrument under it or any other applicable laws relating to Tax;
"VAT RECORDS"
The records of the Business required to be kept by paragraph 6 of Schedule 11 to
VATA or any other relevant legislation;
"1981 REGULATIONS"
The Transfer of Undertakings (Protection of Employment) Regulations 1981 (as
amended) or any other applicable legislation relating to the transfer of
undertakings.
1.2 reference to Clauses, sub-Clauses, paragraphs, sub-paragraphs, parts
and Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs
and parts of, and schedules to, this Agreement;
1.3 headings to Clauses and Schedules are for convenience only and do not
affect the interpretation of this Agreement;
1.4 the Schedules to this Agreement form part of this Agreement and shall
have the same force and effect as if expressly set out in the body of
this Agreement, and any reference to this Agreement shall include the
Schedules;
1.5 words denoting the singular include the plural and vice versa;
1.6 any reference in this Agreement to the Purchaser shall include its
successors and permitted assigns.
2. AGREEMENT FOR SALE AND PURCHASE
2.1 The Seller shall sell with full title guarantee and the Purchaser shall
purchase with effect from the Completion Date, all its rights, title
and interest in free from all charges, restrictions, liens and other
encumbrances attaching to them:
2.1.1 the Business (as a going concern); and
2.1.2 the Goodwill;
2.1.3 the Moveable Plant and Machinery;
2.1.4 the benefit of the Contracts and Third Party Rights;
2.1.5 all rights and title of the Seller in or to Intellectual
Property Rights used in or for the purpose of the Business and
the Business Information and the Business Records required for
or used in connection with the Business;
2.1.6 the Seller's Prepayments;
2.1.7 the Licence;
2.1.8 all other items (if any) of whatever nature owned by the
Seller and used in the conduct of the Business as at the
Completion Date
with the intention that the Business be sold to the Purchaser as a
going concern with effect from the Completion Date.
2.2 The Purchaser shall not be obliged to complete the purchase of the
Business or any of the Sale Assets unless the purchase of the Business
and all of the Sale Assets is duly completed at the same time.
2.3 The Excluded Assets and the Liabilities shall be specifically excluded
from the sale and purchase of the Business.
3. CONSIDERATION
3.1 The Consideration for the Sale Assets shall be [(pound)x] to be
satisfied by the issue to the Seller of the Consideration Shares. The
Consideration shall be apportioned between the Sale Assets as set out
in Schedule 6.
3.2 At Completion of the arrangements contemplated by this Agreement, the
amount of the Consideration shall become payable by the Purchaser but
will be held by it until all amounts owing under the Promissory Note
have been satisfied in full.
3.3 Without prejudice to Clause 3.2, the issue of the Consideration Shares
shall be made subject to the restrictions contained in the US
Securities and Exchange Commission's Regulation S, as such regulation
is in effect on the Completion Date, and otherwise in compliance with
applicable US and English law. The Seller acknowledges that it has
access to all filings made by DMD under the US Securities Exchange Act
of 1934, as amended, including its Annual Report on Form 10-KSB for the
year ended December 31, 1997 and each of its Quarterly Reports on Form
10-QSB filed with the Securities and Exchange Commission thereafter,
and that it has had access to such financial and other information
concerning DMD and the Consideration Shares as it deemed necessary in
connection with its agreement to permit Buyer to cause payment of the
Consideration to be satisfied by the issue of the Consideration Shares,
including an opportunity to ask questions of and request information
from DMD and its management. Without limiting the generality of the
foregoing the Seller acknowledges that the Consideration Shares which
may be delivered to it pursuant to this Clause 3.3 shall be restricted
securities which have not been registered under the Securities Act of
1933, as amended, and that until the expiration of the restricted
period provided under Regulation S, an offer or sale of the
Consideration Shares shall not be made by the Seller within the United
States or to, or for the account or benefit of, a US person within the
meaning of Rule 902(k) of the US Securities Act of 1933, as amended.
3.4 The Consideration shall be inclusive of VAT (if applicable).
4. COMPLETION
4.1 Completion shall take place on the Completion Date at the offices of
the Purchaser's Solicitors.
4.2 On Completion the Seller shall deliver to the Purchaser, at the
principal office of the Business, or (if so requested by the Purchaser)
make available to the Purchaser such of the Sale Assets as are capable
of being transferred by delivery, together with:
4.2.1 the Promissory Note duly executed by the Seller;
4.2.2 the Debenture duly executed by the Seller;
4.2.3 the Business Records;
4.2.4 all Business Information;
4.2.5 copies of all National Insurance and PAYE records completed
and up-to-date;
4.2.6 the original documents in the possession or control of the
Seller in respect of the Contracts;
4.2.7 such documents as are reasonably required by the Purchaser to
complete the sale and purchase of the Sale Assets and vest
title to the Sale Assets in the Purchaser; and
4.3 On Completion Xx Xxxxxx shall deliver to the Purchaser's Solicitors:
4.3.1 the Service Agreement duly executed by Xx Xxxxxx; and
4.3.2 the Guarantee duly executed by Xx Xxxxxx and DMD N.V..
4.4 If all or any of the transactions set out in Clauses 4.2 and 4.3 do not
take place as provided, the Purchaser may promptly rescind this
Agreement without prejudice to any other remedy it may have.
4.5 The Purchaser shall then deliver to Xx Xxxxxx the Service Agreement
duly executed by it.
4.6 Rights in and title to the Sale Assets shall pass to the Purchaser on
the Completion Date.
4.7 Subject to Clause 9 (Contracts and Third Party Consents) the Seller
shall at Completion or as soon as practicable after Completion deliver
to the Purchaser all transfers, assignments and novations of those Sale
Assets which are not capable of being transferred by delivery, together
with all relevant documents of title.
4.8 The Seller shall (and shall use its reasonable endeavours to procure
any third party as is necessary to) after the date of this Agreement,
upon reasonable request by the Purchaser, execute and perform any
further deeds, documents and acts so requested to give full effect to
the terms of this Agreement including (without limitation) to vest in
and assure to the Purchaser whatever right, title and interest the
Seller may have in the Sale Assets and pending which shall hold such
Sale Assets on trust for the Purchaser absolutely and will dispose,
transfer and deal with such Sale Assets at such time and in such manner
as the Purchaser directs.
4.9 The parties shall upon reasonable request afford to each other and to
each party's representatives such access during normal business hours
to the statutory and accounting records and all other documents
relating to the Business as are in each party's control for the
purposes of inspecting and copying the same, and neither party shall
use any such records, documents or the information contained in them
for any purpose other than for accounting, audit and tax purposes. Each
party shall keep such records, documents and information in strict
confidence.
5. VAT
The Seller and the Purchaser are of the opinion that the sale of the
Sale Assets and the transfer of the Business constitutes a transfer of
a business as a going concern and accordingly the sale of the Sale
Assets and the transfer of the Business is neither a supply of goods
nor a supply of services for the purposes of VAT.
6. LIABILITIES
6.1 Notwithstanding Completion of the purchase of the Business, the Seller
shall be solely responsible for all the Liabilities and shall duly and
punctually pay and discharge the Liabilities and shall indemnify the
Purchaser fully and effectively from and against the Liabilities and
any and all Losses arising or accruing in respect of or in connection
with any of them.
6.2 In addition to Clause 6.1 the Seller shall remain liable and be solely
responsible for and shall indemnify the Purchaser against any and all
Losses arising after the Completion
Date in respect of any activities of the Business, including goods
manufactured by or service supplied by the Seller or any act or
omission of the Seller, its employees, agents or sub-contractors prior
to the Completion Date or arising from defective products or parts of
products even if the defective products or parts or services were sold
by or supplied to the Purchaser.
6.3 The liability of the Seller under Clause 6.2 shall extend to any
settlement of a claim (including costs) made with the approval of the
Seller (such approval not to be unreasonably withheld).
6.4 If the Purchaser considers that it is desirable to take preventative
action with a view to avoiding claims under Clause 6.2 the Seller shall
bear the cost of that action.
6.5 No Liability in respect of the Business or Sale Assets shall pass to,
or be assumed by, or be construed as accepted by, the Purchaser except
as expressly set out in this Agreement.
7. EMPLOYEES
7.1 The Purchaser hereby agrees and acknowledges that the provisions of the
1981 Regulations apply to the sale of the Business and that the
contracts of employment of all the Employees shall not be terminated
but shall continue to have effect as if originally made between each
Employee and the Purchaser in accordance with the 1981 Regulations, or
any other law applicable in Germany.
7.2 The Seller agrees to execute (and agrees to use reasonable endeavours
to procure that it and its directors, officers, employees and agents
shall execute promptly) such deeds, documents and agreements as the
Purchaser may reasonably require to, inter alia, change the principal
employer or trustees (or both) of any pension scheme, salary
continuation, cash sum or life assurance schemes of which any employees
or directors of the Seller may belong.
7.3 The Seller shall indemnify the Purchaser against any order to pay
compensation made pursuant to the 1981 Regulations or any other Loss it
may suffer in relation to any claim made by an Employee pursuant to the
1981 Regulations or otherwise in relation to the transfer of the
Business provided that the order is not made as a result of any act or
omission of the Purchaser after Completion (other than those deemed to
have been done by the Purchaser by reason of the 1981 Regulations).
8. INSURANCE
8.1 The Seller shall notify the Purchaser's interest to the relevant
insurers and keep in force its existing insurance policies in respect
of the Sale Assets for 30 days from Completion.
8.2 The Purchaser shall pay the relevant proportion of the insurance
premiums from Completion until the cancellation of the relevant
policies or 30 days from Completion, whichever is earlier.
9. CONTRACTS AND THIRD PARTY CONSENTS
9.1 From the Completion Date the Purchaser shall perform, fulfil and
discharge the obligations of the Seller pursuant to the Contracts
(other than in respect of any breach, act, omission or neglect by the
Seller or to the extent any liability under the Contracts had accrued
due prior to the Completion Date) and the Purchaser shall be entitled
to the benefit of the Contracts.
9.2 Subject to Clause 10.1, the Purchaser shall from the Completion Date
indemnify and keep indemnified the Seller against all actions,
proceedings, liabilities, claims, demands, losses, costs and expenses
or other liability whatsoever arising from the acts or omissions of the
Purchaser in relation to any of the Contracts on or after the
Completion Date.
9.3 All Contracts which are capable of assignment without the need for any
third party consent shall hereby be assigned.
9.4 To the extent that any of the Sale Assets are not assignable without
the consent of another party or without an agreement of novation, this
Agreement shall not constitute an assignment or an attempted assignment
if such assignment or attempted assignment would constitute a breach of
that agreement.
9.5 In the event that such consent or novation is required, the Seller and
the Purchaser shall use all reasonable endeavours to obtain any
required consent or novation as soon as reasonably practicable.
9.6 Unless and until such consent shall be forthcoming and the relevant
agreement shall have been assigned or novated the Seller shall remain
liable under such agreement as a contracting party (and will enforce
at the Purchaser's request any and all rights of the Seller against
the other party to the contract) but the Purchaser shall indemnify the
Seller in respect of it and shall perform the obligations under such
agreement as agent for the Seller who shall account to the Purchaser
for all sums received from that agreement.
9.7 If such consent or novation is not obtained, the Seller will co-operate
with the Purchaser in any reasonable arrangements designed to provide
for the Purchaser all the benefits under any of the contracts,
including enforcement of any and all rights of the Seller against the
other party to the contract arising out of the cancellation by such
other party or otherwise.
10. APPORTIONMENTS
10.1 All periodical charges and outgoings attributable to the Business
(including, but not limited to, rents, rates, gas, water, electricity,
telephone charges, licences and fees) and all liabilities in relation
to salaries, wages, accrued holiday pay, national insurance, pension
contributions, PAYE and all other payments to and in respect of the
Employees up to the Completion Date or arising in respect of a period
prior to the Completion Date shall be borne by the Seller and as from
the Completion Date shall be borne by the Purchaser. All rents and
other periodical payments
receivable in respect of the Business up to the Completion Date shall
belong to and be payable to the Seller and from the Completion Date
shall belong to and be payable to the Purchaser.
10.2 Accruals shall belong to the Purchaser.
10.3 Where any amounts fall to be apportioned under this Agreement the
Seller shall provide the Purchaser with full details of the
apportionments together with supporting vouchers or similar
documentation within 14 days after the Completion Date. In the absence
of dispute the appropriate payments shall be made within 10 business
days of preparation of the list of apportionments. If the amount of any
apportionment is in dispute that dispute shall be referred for final
settlement to a firm of chartered accountants nominated jointly by the
Seller and the Purchaser or failing such nomination within 14 days
after request by either the Seller or the Purchaser nominated at the
request of either of them by the President for the time being of the
Institute of Chartered Accountants in England and Wales. The
accountants shall be entitled to call for and inspect the working
papers of the Seller's auditors and such other documents as they may
reasonably consider necessary. In making their determination the
accountants shall act as experts and not as arbitrators, their decision
shall be final and binding on the parties and their fees shall be borne
and paid by the Seller and the Purchaser in such proportions as the
accountants determine. The amount determined shall be paid within 14
days of the determination together with interest calculated on a daily
basis (as well after as before judgment) from the Completion Date until
the date of actual payment at the rate of 4 per cent per annum above
the base rate from time to time of Barclays Bank Plc.
11. POST COMPLETION
11.1 Immediately after Completion the Seller shall wholly discontinue
carrying on the Business.
11.2 If after the Completion Date the Seller receives any inquiries or
orders from any past, present or potential client of the Business or
any other person, or any notices, correspondence or information which
relate to the Business it shall refer that person or information to the
Purchaser as soon as reasonably practicable.
11.3 The Seller shall preserve all books, documents and records relating to
the Business in respect of the period prior to the Completion Date
which it retains following Completion for a period of seven years, and
shall permit and allow, upon being given reasonable notice and during
business hours, the Purchaser and or its agents, accountants or other
representatives access to, and at its own expense, to take copies of,
such books, documents and records for any purpose in connection with or
incidental to the Business.
11.4 To the extent that any monies are received after Completion by one
party which belong to the other party, the recipient shall (subject to
any provision to the contrary contained in this Agreement) hold the
same on trust for that other party and account to that other party for
the same within five business days of receipt.
12. WARRANTIES
12.1 The Seller represents and warrants to the Purchaser that each of the
Warranties is true, accurate and complete in all respects and not
misleading.
12.2 The Seller acknowledges that the Warranties were given with the
intention of inducing the Purchaser to enter into this Agreement and
that the Purchaser does so in reliance on the Warranties.
12.3 Each of the Warranties is a separate and independent Warranty and shall
not be limited by reference to any other Warranty or anything in this
Agreement.
12.4 The rights and remedies of the Purchaser in respect of any breach of
the Warranties shall not be affected by Completion; by any
investigation made (or which could have been made) by or on behalf of
the Purchaser into the affairs of the Seller; by the Purchaser failing
to exercise or delaying the exercise of any of its rights or remedies;
or by any other event or matter whatsoever except a specific and duly
authorised written waiver or release from the Purchaser.
12.5 Where any Warranty refers to the knowledge, information or belief of
the Seller it undertakes that it has made full enquiry into the subject
matter of the Warranty.
12.6 The amount of any successful claim under the Warranties or indemnities
in Clauses 6.1, 6.2 and 7.3 or any other amount paid by the Seller to
the Purchaser pursuant to the provisions of this Agreement shall be
deemed to constitute a reduction in the consideration for the Sale
Assets.
13. WARRANTIES BY PURCHASER
The Purchaser represents to the Seller that:
(i) it has the requisite power and authority to enter into and
perform this Agreement and perform its obligations under this
Agreement. The Agreement has been duly executed by the
Purchaser and constitutes valid and binding obligations of the
Purchaser.
(ii) the Consideration Shares, when issued in accordance with the
provisions of this Agreement, will be duly authorised and
validly issued and fully paid and non assessable and, assuming
the accuracy of the Warranties, will be issued in compliance
with Federal Securities laws.
(iii) all of the reports filed by DMD in connection with its
obligations under the Securities Exchange Act of 1934 as of
their respective dates complied as to form in all material
respects with requirements of that Act and the rules and
regulations promulgated by the Securities and Exchange
Commission thereunder and did not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements in
light of the circumstances under which they were made, not
misleading.
14. PURCHASER'S REMEDIES
14.1 The Seller shall fully and effectively indemnify and keep indemnified
the Purchaser against all Losses suffered directly or indirectly by the
Purchaser as a result of or in connection with any event, circumstance
or state of affairs relating to the Business or Sale Assets which is
not (whether at or after Completion) in all respects as represented and
warranted to the Purchaser under this Agreement.
14.2 The Seller undertakes to disclose in writing to the Purchaser anything
which is or may constitute a Warranty Claim or which is or may give
rise to a right to indemnification under this Agreement as soon as it
comes to their notice at any time.
14.3 If any amount payable to the Purchaser by the Seller is subject to
Taxation, the amount to be paid to the Purchaser by the Seller shall be
such so as to ensure that the net amount retained by the Purchaser
after such Taxation has been taken into account is equal to the full
amount which would be payable to the Purchaser had the amount not been
subject to Taxation.
14.4 If any Warranty Claim or indemnification claim is made, except in the
case of fraud or deliberate deception, the Seller agrees to release any
claim it may have against any director or employee of the Business on
whom it may have relied before agreeing to any terms of this Agreement.
14.5 In the event of a Warranty Claim, without prejudice to the right
of the Purchaser to claim damages on any basis available to it
(including under Clause 15.1) or to any other right or remedy
available to it, the Seller agrees to pay on demand in cash to the
Purchaser a sum by way of damages as agreed between the Seller and the
Purchaser or, in default of such agreement, as determined by order of
a court of competent jurisdiction which is the higher of:
(a) an amount sufficient to put the Purchaser into the position
which would have existed if the relevant Warranties had been
true and accurate or not misleading when given; and
(b) an amount equal to the resulting diminution in the value of
the Business and the Sale Assets.
15. CONDUCT OF WARRANTY CLAIMS
15.1 In any case where the Seller is or may be liable under this Agreement
to indemnify or compensate the Purchaser, the Purchaser shall notify
the Seller as soon as reasonably practicable in writing of the claim or
facts giving rise thereto or, in the reasonable opinion of the
Purchaser, likely to give rise to such liability.
15.2 The Purchaser shall at the request of the Seller take or procure to be
taken such action as the Seller may reasonably request to avoid,
dispute, resist appeal, compromise or defend any claim notified to it
by the Purchaser and any adjudication in respect thereof,
___________________________________________________________________
pursue against any third party in respect of the Business and the Sale
Assets and its right to them, including (without prejudice to the
generality of the foregoing) instructing such solicitors or other
professional advisers as that Party may nominate to act in the name of
and on behalf of the Purchaser but in accordance with the instructions
of the Seller so that such action shall be delegated entirely to the
Seller but subject to the Purchaser being indemnified by the Seller
against all costs, damages and expenses which may be thereby incurred.
15.3 Any sums recovered (including, without limitation, any damages or other
compensation awarded or obtained in settlement and any costs awarded)
as a result of the pursuit of any claim, whether by the Seller on the
Purchaser's behalf or by the Purchaser in the Seller's name, shall be
for the benefit of the Purchaser and shall be paid to the Purchaser
forthwith upon receipt. Until such sums are paid to the Purchaser, they
shall be held in trust for the Purchaser.
16. NOTICES
16.1 A notice or other information required or authorised by this Agreement
shall be in writing, may be delivered personally or sent by first-class
prepaid post or facsimile transmission to the other party at its
address as given in this Agreement or such other address as may have
been notified and shall have been deemed to have been given:
16.1.1 if personally delivered, at the time of delivery;
16.1.2 if given by prepaid first class post, two business days after
posting;
16.1.3 if sent by facsimile transmission, on the day of transmission
provided that a confirming copy is sent by prepaid first class
post within 12 hours of transmission.
16.2 Any notice sent to the Purchaser shall simultaneously be sent to the
Purchaser's Solicitors.
17. SUCCESSORS AND ASSIGNABILITY
17.1 This Agreement shall be binding and shall ensure for the benefit of
each party's successors and assigns (as the case may be) but except as
set out in Clause 17.2 shall not be assignable by any party without the
prior written consent of the other.
17.2 The Purchaser may assign the benefit of this Agreement (including,
without limitation, the Warranties) to any successor or subsequent
purchaser of the Business or any of the Sale Assets.
18. CERTIFICATE OF VALUE
It is hereby certified that the transaction hereby effected does not
form part of a larger transaction or of a series of transactions in
respect of which the amount or value or the aggregate amount or value
of the stampable consideration exceeds(pound) 60,000.
19. ANNOUNCEMENTS
No announcement of any kind shall be made by the Seller or Xx Xxxxxx in
respect of the subject matter of this Agreement without the prior
written approval of the Purchaser.
20. SURVIVAL OF CERTAIN PROVISIONS
Insofar as any provision of this Agreement shall not have been
performed at Completion, it shall survive and remain in full force and
effect notwithstanding Completion.
21. ENTIRE AGREEMENT
This Agreement, the Schedules and the documents referred to in this
Agreement shall constitute the entire agreement and understanding
between the parties in relation to its subject matter. It supersedes
any previous agreement between the parties in relation to that subject
matter.
22. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of England and Wales. The parties irrevocably submit to the
exclusive jurisdiction of the Courts of England in relation to any
legal action or proceedings arising out of or in connection with this
Agreement.
AS WITNESS the hands of the parties or their duly authorised representatives on
the day first before written.
SCHEDULE 1
CONTRACTS
[DETAILS REQUIRED]
SCHEDULE 2
EMPLOYEES
[DETAILS REQUIRED]
SCHEDULE 3
EXCLUDED ASSETS
- the Stock;
- the Book Debts;
- the Cash Float.
SCHEDULE 4
THE WARRANTIES
PART A - GENERAL
1. INFORMATION
INFORMATION PROVIDED BY SELLER
1.1 All information provided to the Purchaser or its advisers or
representatives in response to any request of the Purchaser was when
given and remains true, complete and accurate and is not misleading
because of any omission or ambiguity or for any other reason.
1.2 The Seller has fully and accurately disclosed to the Purchaser all
matters, information and documents which are necessary to qualify the
statements made in this Agreement in order for such statements to be
fair, accurate and not misleading.
1.3 So far as the Seller is aware, there are no facts or circumstances in
relation to the Business or Sale Assets which have not been clearly and
accurately disclosed to the Purchaser and which, if disclosed, might
have been expected to affect the decision of the Purchaser to enter
into this Agreement or the Consideration payable for the Sale Assets
pursuant to Clause 3.
2. CAPACITY
The Seller has the requisite power and authority to enter into and
perform this Agreement and perform its obligations under this
Agreement. The Agreement has been duly executed by the Seller and
constitutes valid and binding obligations of the Seller.
3. ACCOUNTS
3.1 The Accounts have been prepared in accordance with the requirements of
all relevant statutes and generally accepted accounting practices. The
Accounts are true and complete in all respects and present fairly the
financial position of the Company at the Accounts Date. They contain
full provision or reserve for all liabilities and for all capital and
revenue commitments of the Seller as at the Accounts Date. The profits
and losses of the Seller shown in the Accounts were not, save as
disclosed in the Accounts or in any note accompanying them, to any
material extent, affected by any extraordinary, exceptional, unusual or
non recurring income, capital gain or expenditure or by any other
factor known to the Seller rendering any such profit or loss for such
period exceptionally high or low.
3.2 ACCOUNTING RECORDS
The accounting records of the Seller comply with all applicable
requirements, do not contain or reflect any material inaccuracy or
discrepancy and present and reflect in accordance with
generally accepted accounting principles and standards the financial
position of, and all transactions entered into by, the Seller or to
which it has been a party.
4. BUSINESS RELATIONS
There is no actual or threatened loss of any customer or supplier of
the Seller, the loss of which would have an adverse effect upon the
Business.
5. REGULATORY MATTERS
5.1 LICENCES
All licences, permissions, authorisations and consents (collectively
"LICENCES") required or useful for carrying on the Business effectively
in the place and in the manner in which the Business is now carried on
have been obtained and the Licences are, and will following Completion,
remain in full force and effect and there is no reason why the Licences
will not be capable of being transferred to the Buyer without the
necessity for any special arrangement or expense.
6. ASSETS
6.1 OWNERSHIP
(a) All the rights and assets necessary to carry on the Business
as presently conducted are comprised in the Sale Assets and
the Seller does not own any assets which form part of the Sale
Assets which are not used in connection with the Business.
(b) All of the Sale Assets are the absolute property of the Seller
and are not the subject of any security interest or any
assignment, charge, lien, royalty, option, right of
pre-emption, factoring agreement, leasing agreement, hiring
agreement, hire purchase agreement, agreement for payment on
deferred terms or any similar agreement or arrangement and all
the Sale Assets are in the possession or under the control of
the Seller.
(c) None of the Sale Assets are affected by any of the following
matters:
(i) any dispute, notice, complaint, covenant, reservation
or restriction or condition which affects the use of
such Sale Asset;
(ii) any notice, order or demand issued by or on behalf of
any public authority requiring the discontinuance of
use of any Sale Asset or the carrying out of any
works on any such Sale Asset;
and no act or omission has occurred or is likely to occur
which will or is likely to result in any Sale Asset becoming
affected by any such matter;
(d) All the Moveable Plant and Machinery:
(i) are in proper state of repair and satisfactory
working order;
(ii) have been regularly and properly maintained in
accordance with standards generally followed in the
industry and in accordance with the requirements of
any lease;
(iii) are adequate for the requirements of the Business as
conducted at the date of this Agreement and during
the 12 months before;
(iv) would not be expected (if the sale of the Business
did not take place) to require replacement or
additions at a cost in excess of (pound)1,000 within
a period of six months after the Completion Date.
(e) All documents which in any way affect the right, title or
interest of the Seller in or to any of the Sale Assets and
which attract Stamp Duty or any other similar Tax have been
fully stamped with the requisite period for stamping.
6.2 INSURANCES
(a) The Seller has made available to the Purchaser all details of
the insurances maintained by or on behalf of the Business and
relating to the Sale Assets. The insurances are in full force
and effect and there are no circumstances resulting from any
act or omission of the Seller which might lead to any
liability under such insurance being avoided by the insurers
or the premiums being increased.
(b) No claim is outstanding under any such policy of insurance and
there are no circumstances resulting from any act or omission
of the Seller likely to give rise to such a claim.
7. PRODUCT LIABILITY
In relation to the Business, the Seller has not manufactured, sold or
provided any product or service which does not in every respect comply
with all applicable laws, regulations or standards or which is
defective or dangerous or not in accordance with any representation or
Warranty, express or implied, given in respect of it.
8. CONTRACTUAL MATTERS
8.1 MATERIAL CONTRACTS
(a) The Contracts listed in Schedule 1 are all the current
contracts and engagements whether written or oral relating to
the Business (excluding contracts with employees).
(b) There is not outstanding any agreement or arrangement relating
to the Business:
(i) which, by virtue of the acquisition of the Business
and Sale Assets by the Purchaser or other performance
of the terms of this Agreement, will result in any
party to that Contract being relieved of any
obligation or becoming entitled to exercise any right
(including any right of termination or any right of
preemption or other option) or being in default under
any such Contract or losing any benefit, right or
licence which it currently enjoys; or
(ii) which involves or is likely to involve obligations or
restrictions of an unusual or exceptional nature;
(iii) which is any other agreement or arrangement having or
likely to have a material effect on the financial or
trading position or prospects of the Business.
(c) None of the Contracts contain a notification of change of
ownership clause.
(d) Compliance with the terms of this Agreement does not and will
not materially conflict with, result in a material breach of
or constitute a material default under any of the terms,
conditions or provisions of any agreement or instrument to
which the Seller is now a party relating to the Business.
8.2 DEFAULTS
No party to any of the contracts is in default under it and there are
no circumstances which might give rise to such a default, there are no
circumstances (including, for the avoidance of doubt, acquisition of
the Business and Sale Assets pursuant to the terms of this Agreement)
likely to give rise to such a default.
9. LITIGATION
(a) The Seller is not a plaintiff or defendant in or otherwise a
party to any litigation, arbitration or administrative
proceedings which are in progress or, so far as the Seller is
aware, threatened or pending by or against or concerning the
Business or any of the Sale Assets.
(b) No governmental or official investigations or inquiry
concerning the Business is in progress or pending. There are
no circumstances which may give rise to any such proceeding,
investigation or inquiry.
(c) The Seller has not nor any of the officers, agents or
employees of the Business (during the course of their duties
in relation to the Business) has committed or omitted to do
any act or thing the commission or omission of which is or
could be in contravention of any act, order, regulation or the
like giving rise to any fine, penalty, default proceedings or
other liability in relation to the Business or any of the Sale
Assets.
10. CUSTOMERS
The Business Records contain a complete and accurate list of each of
the customers of the Business during the three years ending on the date
of this Agreement. The Seller has taken all commercially reasonable
steps to maintain the confidentiality of the customer list.
11. EMPLOYEES
11.1 A list of all Employees is set out in Schedule 2.
11.2 AGREEMENTS
There is not in existence any written or unwritten contact of
employment with any employee (or any contract for services with any
person) providing either for basic remuneration of more than
(pound)20,000 per annum or for a fixed term of service longer than one
year.
11.3 COMPLIANCE
All statutes, regulations, codes of conduct, collective agreements,
terms and conditions of employment, orders and awards relevant to the
conditions of service of employees or relations with employees (or
former employees, as the case may be) or any recognised trade union
have been complied with.
11.4 INCENTIVE SCHEME
There is not any share incentive scheme, share option scheme or profit
sharing, bonus, commission or other such incentive scheme for all or
any of the employees.
11.5 PAYMENTS ON TERMINATION
Except to the extent (if any) to which provision or allowances has been
made in the Accounts since the Accounts Date:
(a) no outstanding liability has been incurred for breach of any
contract of employment or for services or redundancy payments,
protective awards, compensation for wrongful dismissal or
unfair dismissal or for failure to comply with any order for
the reinstatement or re-engagement of any employee of the
Business or for any other liability accruing from the
termination of any contract of employment or for services;
(b) no gratuitous payment has been made or benefit given (or
promised to be made or given) in connection with the actual or
proposed termination or suspension of employment or variation
of any contract of employment of any present or former
employee relating to the Business;
(c) the PAYE system or other applicable deduction system in
respect of employee Taxation has been properly operated by the
Seller deducting taxation as required by law and accounting to
the Inland Revenue for all tax so deducted;
(d) all payments made by the Seller to any person which ought to
have been made under deduction of taxation have been so made
and the Seller has (where required) accounted to the proper
authority for the taxation so deducted;
(e) the Seller has paid all national insurance and graduated
pension contributions for which it is liable and has kept
proper books and records relating to the same.
12. INTELLECTUAL PROPERTY RIGHTS
12.1 All Intellectual Property Rights and licences in respect of such rights
relating to or used in connection with the Business (the "BUSINESS
INTELLECTUAL PROPERTY") are legally and beneficially owned by the
Seller and no payments are required in connection with any such
licences.
12.2 There have been no material claims, proceedings or actions and there
are no proceedings or actions pending impugning the validity or
enforceability of the Business Intellectual Property and there is no
reason why the Business Intellectual Property cannot be fully
exploited.
12.3 There have been and there are no infringements of any of the Business
Intellectual Property and none is threatened.
12.4 After Completion the Purchaser will be entitled to use all the
Intellectual Property Rights used by the Seller prior to Completion.
13. PENSIONS
13.1 There are no agreements or arrangements (whether legally enforceable or
not) for the payment of any pensions, allowances, lump sums or other
like benefits on retirement or on death or during periods of sickness
or disablement for the benefit of any of the Employees or any former
employees in the Business or for the benefit of dependants of such
persons in operation at the date of this Agreement.
14. BOOKS AND RECORDS
All the books and records of the Seller which will be delivered to the
Purchaser on Completion (including all records and invoices required
for VAT purposes):
(a) have been fully, properly and accurately kept and completed;
(b) do not contain any material inaccuracies;
(c) give a true and fair view of the financial, contractual and
trading position of the Business, its assets, liabilities,
debtors, creditors and stock in trade and all other matters
which would normally be expected to appear in them.
15. ENVIRONMENTAL MATTERS
15.1 The Business is being conducted and all assets owned or used by or
otherwise in possession of the Seller in accordance with all applicable
Environmental Laws and the Seller has never received any notification
under any Environmental Law requiring it to take or omit to take any
action.
15.2 The Seller has never been threatened with any investigation or enquiry
by any organisation, or received any compliant in connection with the
environment.
15.3 The Seller is not aware of any circumstance which may require
expenditure, whether by the Purchaser or otherwise, on cleaning up any
land now or formerly owned or occupied by the Seller or used in
relation to the Business.
16. THE LICENCE
[AWAIT COPY OF LICENCE]
17. CONSIDERATION SHARES AND SECURITIES ACT ISSUES
17.1 The Seller was outside of the United States at both the time the offer
of the Consideration Shares was received and at the time this Agreement
was entered into.
17.2 The Seller is acquiring the Consideration Shares for investment
purposes or for the purpose of selling and distributing the
Consideration Shares to third party purchasers outside of the United
States in a manner that qualifies for an exemption from registration of
such shares under Section 5 of the Securities Act pursuant to
Regulation S under the Security Act. The Seller is not acquiring the
Consideration Shares for the purpose of sale or distribution of the
Consideration Shares in the United Sates or in a manner that does not
comply with the requirements of Regulation S. The Seller acknowledges
that the Consideration Shares to be acquired by the Seller pursuant to
this Agreement are not registered under the Securities Act and cannot
be sold or otherwise disposed of except in compliance with the
Securities Act or in reliance upon an exemption from the Securities
Act. The Seller acknowledges that the certificate(s) representing the
Consideration Shares shall bear a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, REGULATIONS OR
AN EXEMPTION FROM REGISTRATION AND OTHERWISE IN ACCORDANCE
WITH THE TERMS OF AN
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL UNDERSIGNED OF
THE SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER."
SCHEDULE 4
PART B -- TAXATIOn
1. No Tax authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application
of the relevant legislation or on generally published statements of
practice or generally published extra-statutory concessions) in
relation to the Sale Assets or the Business.
2. All documents relating to the Sale Assets or the Business in respect of
which stamp duty (or any Tax of a like nature) is chargeable have been
duly and properly stamped.
3. None of the Sale Assets are such that they are, have been or could be
subject to the capital goods scheme (or any scheme of a like nature)
under VATA.
4. The Seller is a registered and taxable person for the purposes of the
VATA. The terms of all legislation, regulations, orders, provisions,
directions, conditions and notices relating to VAT arising in respect
of the Business have been complied with and observed in all material
respects. All accounts, records, invoices and other documents (as the
case may be) appropriate or requisite for the purposes of VAT arising
in respect of the Business have been maintained and obtained and are
complete, correct and up-to-date.
5. No payments or returns or notifications under the legislation,
regulations, orders, provisions, directions, conditions or notices
relating to VAT in respect of the Business are, nor have in the two
years prior to Completion been in arrears and there is not, nor has
there been in the two years prior to Completion, any forfeiture or
penalty or interest or surcharge or the operation of any penalty,
interest or surcharge provisions contained in the same in respect of
the Business.
6. The Seller has not elected to waive exemption for VAT purposes, and is
not aware of any election to waive exemption made by any other person,
in respect of any land or buildings comprised in the Business.
7. None of the Sale Assets agreed to be sold under this Agreement are the
subject of any security in favour of any competent Tax authority
entitled to collect VAT.
8. [The PAYE system has been properly operated and all income tax and
national insurance contributions as required from all payments to or
treated as made to Employees and all Taxation has been punctually
accounted for to the Inland Revenue and the Department of Social
Security for all Taxation deducted. All returns required by section 203
ICTA 1988 (pay as you earn), the Social Security Contributions and
Benefits Xxx 0000, the Social Security Administration Act 1992 and the
Xxxxxxx Xxxxxxx Xxx 0000 (national insurance contributions) and
regulations made thereunder have been made and are accurate and
complete in all respects. All such books and records relating to PAYE
and to national insurance contributions as are required to be
maintained and retained have been maintained and retained.]
9. No officer or employee of the Seller who is engaged in the Business
participates in any share option or profit sharing schemes or is a
beneficiary of any qualifying employee share ownership trust.
10. All sums payable and benefits provided under the existing arrangements
for remunerating officers and employees and rewarding persons rendering
services to the Seller in respect of the Business are deductible for
Tax purposes.
11. None of the Sale Assets agreed to be sold under this Agreement are
subject to any distraint, charge, power of sale or mortgage in favour
of any competent Tax authority nor are there any circumstances which
may give rise to the same.
SCHEDULE 5
APPORTIONMENT OF CONSIDERATION
[DETAILS TO BE INSERTED WHEN
LIST OF ASSETS TO BE TRANSFERRED HAS BEEN FINALISED]
SIGNED by )
for and on behalf of DMD GMBH ) /S/
in the presence of: )
SIGNED by )
XXXX XXXXXX ) /S/
in the presence of: )
SIGNED by )
for and on behalf of )
DMDS LIMITED ) /S/
in the presence of: )
