Exhibit 2.1
Dated 12 November 1999
----------------------
NUMEREX CORP.
and
BRITISH TELECOMMUNICATIONS PLC
AGREEMENT
Relating to the sale and purchase
of the whole of the issued share capital of
Bronzebase Limited
This Agreement is made on 12 November 1999.
Between:
(1) Numerex Corp. whose principal place of business is at 0000 Xxxxxxxx
Xxxxxx, #000 Xxxxxxx, XX, XXX ("the Vendor"); and
(2) British Telecommunications Plc whose registered office is at 00, Xxxxxxx
Xxxxxx, Xxxxxx ECIA 7AJ ("the Purchaser").
RECITALS
A. The Vendor is the beneficial owner of the entire issued share capital of
BRONZEBASE LIMITED ("the Company"). At the date hereof such entire issued
share capital comprises 10,000 ordinary shares of 1 pound each all of
which are fully paid.
B. Short details of the Company are set out in Part 2 of Schedule 1.
C. The Company is the beneficial owner of the entire issued share capital of
Versus Technology Limited ("the Subsidiaries"). Short details of each of
the Subsidiaries are set out in Part 3 of Schedule 1.
D. The Vendor wishes to sell and the Purchaser wishes to acquire the entire
issued share capital of the Company subject to the terms and conditions
of this Agreement.
E. The Vendor currently operates three businesses derived exclusively from
the IPR of the Vendor based on transmitting and/or monitoring information
across certain types of networks. The first business of the Vendor
(described in this Agreement as the "Business") is classified as "derived
channel multiplexing" and has as its main aim the deployment and
monitoring of a secure protocol across a fixed line copper-wired network.
The second business of the Vendor consists of the same activities across
a wireless network. The third business of the Vendor concerns the
transmission of information across fixed line optical fibre networks.
F. In addition to Recitals A-D above, the Vendor wishes to sell and the
Purchaser wishes to acquire all Non-Group Business IPR.
It is agreed as follows:
1. Interpretation
In this Agreement, including its Schedules, the headings shall not affect
its interpretation and words denoting the singular shall include the
plural and vice versa and words denoting any gender shall include all
genders.
1.1 Definitions
Accounts means collectively the Audited Accounts and the Management
Accounts;
Accounts Date means 31 October 1997;
Agreed Net Asset Value means the sum of pounds 3,219,000;
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Agreed Rate means 4 per cent above the base rate from time to time of
NatWest Bank plc;
Audited Accounts means the audited accounts of the Company and of each of
the Subsidiaries and the audited consolidated group accounts of the Group
for the financial period ended on 31 October in any given year;
1998 Balance Sheet Date means 31 October 1998;
1999 Balance Sheet Date means 31 October 1999;
Balance Sheet means a document setting out the consolidated balance sheet
of the Group as at the 1999 Balance Sheet Date prepared in accordance
with clause 9;
Business means the research into, provision, support and maintenance,
including the enabling, assisting or licensing of third parties to do the
same, of a means of utilising a copper or aluminum wired local access
telephone line and discrete network equipment components (incorporating
software and firmware) to provide both a constantly monitored, secure
communication link and a means of transporting low rate data messages in
either direction without undue disruption to standard voice and data
signalling within the voiceband (this is known as derived channel
multiplexing) as these activities have been carried on in the past 2
years prior to Completion by the Vendor or its subsidiaries;
Business Day means a day on which banks are open for business in England
(excluding Saturdays, Sundays and public holidays);
Business IPR means all IPR required for use as part of or in the course
of the Business or the grant of the IPR Licence and the International
Support Agreement and all IPR used by a Group Company. For the avoidance
of doubt this includes the Protocol and the Software;
CHAPS means clearing houses automated payment systems;
Company means Bronzebase Limited details of which are contained in Part 2
of Schedule 1;
Completion means the completion of the sale and purchase of the Shares
pursuant to Clause 6;
Completion Date means the day on which Completion takes place;
Disclosure Letter means the letter of even date with this Agreement from
the Vendor to the Purchaser disclosing:
(i) information constituting exceptions to the Warranties; and
(ii) details of other matters referred to in this Agreement;
Encumbrance means any claim, charge, mortgage, security, lien, option,
equity, power of sale or hypothecation;
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Environmental Laws means all the laws of any jurisdiction in which the
Business is conducted (including, without limitation, the laws of the
European Community) relating to pollution or protection of the
environment, or to health and safety matters (including, without
limitation, laws relating to workers and public or consumer health and
safety, hygiene, emissions, discharges or threatened releases of
Hazardous Substances into the environment or the production, processing,
distribution, management, use, treatment, storage, burial, disposal,
transport or handling of any Hazardous Substances) and all bylaws, codes,
regulations, decrees, demands or demand letters, injunctions, judgements,
notices or notice demands, orders or plans issued, promulgated or
approved thereunder or in connection therewith;
Escrow Account means the joint interest bearing deposit account held with
the Escrow Bank opened in the joint names of the Vendor and the Purchaser
into which the Purchaser is to pay the Retention at Completion pursuant
to this Agreement;
Escrow Bank means National Westminster Bank plc at 00 Xxxxxxxxxxx, Xxxxxx
XX0X 0XX, sort code 50-00-00;
Exercise Notice means the notice set out Schedule 9
Group or Group Companies means the Company and the Subsidiaries and Group
Company means any one of them;
Hazardous Substances means wastes, pollutants, contaminants or other
substances (including without limitation liquids, solids, gases, ions,
living organisms, noise) that may be harmful to human health or other
life or the environment or a nuisance to any person;
ICTA 1988 means the Income and Corporation Tax Xxx 0000;
Indemnity means the indemnity set out in clause 10.1;
International Support Agreement means the agreed form support agreement
set out at Schedule 8;
Intra-Group Indebtedness means all debts outstanding between members of
the Group, on the one hand, and members of the Retained Group, on the
other;
IPR means all patents, including patent applications and any subsequent
patents or patent applications derived therefrom, all copyright including
Software, all trade marks and service marks, all title rights, database
rights, all design rights and registered designs, all semiconductor
topography rights, all confidential information, know-how and show-how
and any and all other such registered or non-registered proprietary
rights or information in which intellectual property rights subsist
anywhere in the world;
IPR Individuals means Xxxxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxx and
Xx Xxxxx,
IPR Licence means the agreed form IPR licence set out at Schedule 8;
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Losses means losses, damage, harm, expenses, claims and charges
(including, without limitation, all reasonable legal and other
professional fees incurred or suffered by the Party);
Licences means the agreed form Service Agreement, IPR Licence and
International Support Agreement, agreed forms of which are attached to
this Agreement at Schedule 8;
Management Accounts means the unaudited consolidated group accounts of
the Group for the financial period ended at the Management Accounts Date;
Management Accounts Date means 31 August 1999;
Net Asset Value means the amount by which the aggregate of the fixed and
current assets of the Group exceeds the aggregate of the liabilities
(being the actual, contingent and prospective liabilities so far as the
same can be quantified and whether current or not) as at the 1999 Balance
Sheet Date which amount shall be calculated using the information
contained in the Balance Sheet subject to the accounting policies,
procedures and adjustments set out in Schedule 13.
Non-Group Business IPR means all that Business IPR which is not legally
and beneficially owned by the Group;
Non-Group Business IPR Assignments means the assignments in the form set
out in Schedule 7 to this Agreement;
Option means the option set out in Clause 4 of this Agreement;
Option Securities means all the issued shares in Versus Australia;
Payment Account Details means, in relation to any payment to be made
under or pursuant to this Agreement, the name, account number, sort code,
account location and other details specified by the payee and necessary
to effect payment (whether by cheque, banker's draft telegraphic or other
electronic means of transfer) to the payee;
Pension Scheme means the Versus Technology Limited Pension and Death
Benefit Scheme administered by Legal & General;
Protocol means the set of rates enabling the secure communication of
signals within and between discrete network equipment components that are
used within the Business;
Properties means the leasehold properties brief details of which are set
out in Schedule 3 and Property means any one of them;
Purchaser's Account means the account in the name of Versus Technology
Limited, account number 0000000 at Lloyds TSB Bank plc, of Aldershot,
sort code 30-90-09;
Purchaser's Solicitors means Ashurst Xxxxxx Xxxxx of Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxx XX0 0XX;
Relevant Capacity means for its or his own account or for that of any
person, firm or company (other than the Purchaser and the Group
Companies) or in any other manner
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and whether through the medium of any company controlled by it or him
(for which purpose there shall be aggregated with its or his shareholding
or ability to exercise control the shares held or control exercised by
any person connected with the Vendor) or as principal, partner, director,
employee, consultant or agent;
Relevant Dates means respectively the 1998 Balance Sheet Date as concerns
the Audited Accounts and at 31 August 1999 as concerns the Management
Accounts;
Relevant Employee means Xx Xxxxxxxx Xxxxxxx, Mr K Xxxxxx and Xx Xxx
Xxxxx;
Restricted Period means five years from, but excluding, the Completion
Date;
Retained Group means the Vendor, any holding company of the Vendor and
any subsidiary of the Vendor or any such holding company (but excluding
any Group Company);
Retention means the sum of 750,000 pounds together with interest which
accrues thereon or so much thereof as remains subject to the provisions
of this Agreement from time to time;
Service Agreement means the agreed form service agreement set out at
Schedule 8;
Shares means 10,000 ordinary shares of 1 pound each of the Company being
the whole of the issued share capital of the Company;
Software means those software programmes deployed within the discrete
network components supplied in the course of the Business for the purpose
of relaying, encoding, decoding, monitoring and reacting to the Protocol
and the status information contained within the Protocol, excluding, for
the avoidance of doubt, non-bespoke ordinarily commercially available
software;
Subsidiaries means the subsidiaries of the Company details of which are
contained in Part 3 of Schedule 1;
Tax Deed of Covenant means the deed of covenant against Taxation in the
agreed terms to be entered into at Completion;
Taxation bears the meaning given in the Tax Deed of Covenant;
Telemetry means the provision, support and maintenance including the
enabling, assisting or licensing of third parties to do the same, of a
remote monitoring business or service whereby remote equipment is
monitored and/or remote events are captured and reported using any fixed
or radio network including via the first two business models identified
in recital (E) excluding the third business referred to in that recital;
Telemetry Notice means a notice which may be delivered only after the end
of month 24 of the Restricted Period, giving six months notice of the
intention to commence establishing a Telemetry business in the UK such
notice period to reduce between months 25 to 30 inclusive of the
Restricted Period by one month for every two months passed so that at the
end of month 30 of the Restricted Period only 3 months notice need be
given;
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Transaction means every event, act, omission, or transaction done or
omitted to be done by any Group Company or which in any way concerns or
affects any Group Company whether or not done or omitted to be done by
any Group Company;
Vendor's Account means the account in the name of Xxxxxx & Xxxxxx,
account number 00000000 at Citibank plc, of Hammersmith Grove sort code
30-00;
Vendor's Solicitors means Xxxxxx & Xxxxxx, Tower 42, 00 Xxx Xxxxx Xxxxxx,
Xxxxxx XX0X 0XX;
VTL means Versus Technology Limited;
Versus Australia means Versus Technology (Australia) Pty Limited details
of which are set out in Part 4 of Schedule 1;
Warranties means the warranties and representations set out in Schedule
2 and Warranty means any one of them;
Written Representations means the written representations delivered by
the Vendor's Solicitors to the Purchaser's Solicitors dated 22 October
1999 in answer to the Purchaser's Solicitors information request dated 20
September 1999 together with certain other correspondence listed in
Schedule 12.
1.2 Subordinate Legislation
Any reference to a statutory provision shall include any subordinate
legislation made from time to time under that provision;
1.3 Modification etc. of Statutes
Any reference to a statutory provision shall include such provision as
from time to time modified or re-enacted or consolidated whether before
or after the date of this Agreement so far as such modification,
re-enactment or consolidation applies or is capable of applying to any
transactions entered into under this Agreement prior to Completion and
(so far as liability thereunder may exist or can arise) shall include
also any past statutory provision (as from time to time modified,
re-enacted or consolidated) which such provision has directly or
indirectly replaced;
1.4 Connected Persons
A person shall be deemed to be connected with another if that person is
connected with such other within the meaning of Section 839 of the Income
and Corporation Taxes Xxx 0000;
1.5 Accounts
Any reference to accounts shall include the directors' and auditors'
reports, relevant balance sheets and profit and loss accounts and related
notes together with all documents which are or would be required by law
to be annexed to the accounts of the company concerned to be laid before
that company in general meeting in respect of the accounting reference
period in question;
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1.6 Companies Xxx 0000
The words holding company and subsidiary shall have the same meanings in
this Agreement as their respective definitions in the Companies Xxx 0000;
1.7 Interpretation Xxx 0000
The Interpretation Act 1978 shall apply to this Agreement in the same way
as it applies to an enactment;
1.8 SSAPs etc.
A reference to a SSAP means a Statement of Standard Accounting Practice
as adopted by the Accounting Standards Board and published by the
Institute of Chartered Accountants of England and Wales and a reference
to a FRS means a Financial Reporting Standard developed and issued by the
Accounting Standards Board and which may, where directed by the
Accounting Standards Board, supersede a SSAP;
1.9 Schedules etc.
Reference to this Agreement shall include any Recitals and Schedules to
it and references to Clauses and Schedules are to Clauses of and
Schedules to this Agreement;
1.10 Information
Any reference to books, records or other information means books, records
or other information in any form including paper, electronically stored
data, magnetic media, film and microfilm; and
1.11 If any statement in this Agreement (including the Schedules) is qualified
by the expression "to the best of Vendor's information or belief" or "so
far as the Vendor is aware" or any similar expression, that statement
shall be qualified to mean that it has been made with the actual
knowledge of Xx Xxxxxxxx Nicolaides, Mr Xxxxx Xxxxx and Xx Xxxxx Xxxxxxx
(and, with respect to the warranties set out in clause 8.6 of Schedule 2,
Xx Xx Xxxxx) on the basis of having made due and careful enquiry of the
subject matter of the statement.
1.12 Materiality
Where any word, phrase or other statement in this Agreement (including,
in particular, the Schedules) is qualified by the word "material" or
"materiality" or any similar word, that word, phrase or other statement
shall be qualified to mean only those matters concerning an amount of
consideration, damages, liability, gain, loss, charge or other payment
(as the context may allow), whether actual or potential, in excess of
10,000 pounds shall be relevant.
2. Agreement to Sell the Shares and the Non-Group Business IPR
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2.1 Sale of Shares
The Vendor shall sell with full title guarantee the shares and procure
the sale of the Non-Group Business IPR and the Purchaser, relying on the
several representations, warranties and undertakings contained in this
Agreement, shall purchase the same free from all Encumbrances and
together with all rights and advantages now and hereafter attaching
thereto.
3. Consideration
3.1 The consideration for the purchase of the Shares shall be the sum of
12,400,000 pounds to be paid to the Vendor on Completion of which 750,000
pounds shall be paid to the Escrow Account and held under the terms set
out in Schedule 10 and for the purchase of the Non-Group Business IPR
shall be the sum of 100,000 pounds.
3.2 Wherever in this Agreement provision is made for the payment by one party
to another, such payment shall be effected by crediting the account
specified in the Payment Account Details of the party entitled to the
payment by way of CHAPS on or before the due date for payment unless the
payee by notice to the payer, not later than three Business Days prior to
the due date for payment, elects to be paid by banker's draft drawn on
any international bank reasonably acceptable to the payer and having an
office in London.
4. The Option
4.1 The Vendor grants to the Purchaser an option to purchase all the Option
Securities at a price to be agreed on the terms set out in this Clause 4.
The parties agree that Versus Australia will be sold under this Option
with no net assets or liabilities.
4.2 Exercise Of The Option
(a) The Purchaser may exercise the Option only by serving an Exercise
Notice in accordance with clause 10.9 on the Vendor during the
period beginning on 15 January 2000 and ending on 15 September
2000 (inclusive).
(b) The Option may be exercised only in respect of all the Option
Securities.
(c) Exercise of the Option shall oblige the Vendor, subject to the
agreement of appropriate warranties and indemnities similar to
those set out in this Agreement, to sell and the Purchaser to
purchase the Option Securities.
(d) The Option Securities shall be sold together with all rights
attaching to the Option Securities at the date of service of the
Exercise Notice (including any dividend or other distributions
declared but not paid or made).
(e) If the Option is not duly exercised within the relevant period
specified in this clause, it shall cease to be exercisable and
shall lapse.
4.3 Completion of the sale and purchase of the Option Securities following
exercise of the Option shall take place at the offices of the Purchaser's
Solicitors on the date which is five days after the date of service of
the Exercise Notice.
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4.4 The Vendor will, at the Purchaser's written notice given prior to 15
September 2000 inclusive, use its best endeavours to procure the novation
(substantially in the form set out in Schedule 6) to the Purchaser or its
subsidiaries of the contract between Versus Australia and Telstra
Corporation Limited dated 22 June 1999, and such other contracts with
Versus Australia as are reasonably necessary to enable the completion of
Versus Australia's obligations under the contract with Telstra
Corporation Limited.
5. [This Clause has intentionally been left blank]
6. Completion
6.1 Date and Place
Subject to Clause 3, Completion shall take place at the offices of the
Purchaser's Solicitors on 11 November 1999 or at such other place or on
such other date as may be agreed between the Purchaser and the Vendor.
6.2 Vendor's Obligations on Completion
On Completion the Vendor shall:
6.2.1 deliver or make available to the Purchaser duly executed transfers
of the Shares in favour of the Purchaser or as it may direct
accompanied by the relevant share certificates (or an express
indemnity in a form satisfactory to the Purchaser in the case of
any certificate found to be missing);
6.2.2 deliver or make available to the Purchaser the written
resignations of each of the directors and secretaries of each
Group Company from his office as a director or secretary to take
effect on the date of Completion with acknowledgements signed by
each of them in the form attached at Schedule 16 to the effect
that he has no claim against any Group Company for compensation
for loss of office (whether contractual, statutory or otherwise),
redundancy or otherwise;
6.2.3 deliver or make available to the Purchaser the written
resignations of each of the Relevant Employees from their
employment with as an employee of the Group Company to take effect
on the date of Completion with acknowledgements signed by each of
them in agreed form to the effect that he has no claim against any
Group Company for compensation for breach of contract (whether
contractual, statutory or otherwise), redundancy or otherwise;
6.2.4 deliver or make available to the Purchaser the certificates of
incorporation, corporate seals (if any), cheque books, pay-in
books and statutory books of each Group Company (duly written
up-to-date), the share certificates in respect of each of the
Subsidiaries and transfers of all shares in the Subsidiaries held
by nominees in favour of the Purchaser or as it may direct;
6.2.5 deliver or make available to the Purchaser the Tax Deed of
Covenant duly executed by the Covenantors named in it,
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6.2.6 deliver or make available to the Purchaser all the financial and
accounting books and records of each Group Company and all
documents of title relating to the Properties;
6.2.7 deliver or make available to the Purchaser (if the Purchaser so
requires) irrevocable powers of attorney (in the form attached at
Schedule 11) executed by each of the holders of the Shares in
favour of the Purchaser to enable the Purchaser (pending
registration of the relevant transfers) to exercise all voting and
other rights attaching to the Shares and to appoint proxies for
this purpose;
6.2.8 deliver or make available to the Purchaser evidence satisfactory
to the Purchaser that the provisions of paragraph 5.2 of Schedule
2 ("Arrangements with Connected Persons etc.") have been duly
complied with insofar as they require certain matters to be dealt
with prior to completion;
6.2.9 deliver or make available to the Purchaser bank statements of all
bank accounts of all Group Companies as at the close of business
on the day prior to the date of Completion together with faxed
confirmation from the bank at which such accounts are held of the
current balance and details of pending transaction as at the date
of Completion;
6.2.10 procure, as soon as reasonably practicable, and in any event
within five working days, the change of name of Versus Australia
to a name not incorporating the name "Versus" or anything similar
thereto and, within a further 20 working days, the cessation of
use of "Versus" or anything similar thereto as a trading name by
Versus Australia; and
6.2.11 as soon as reasonably practicable (and in any event within 6
months) use its best efforts to procure and evidence the novation
or assignment to the Purchaser of all agreements, undertakings or
arrangements relating to the Business, including the agreement
between Detection Systems Inc. and the Vendor dated on or around
12 January 1998.
6.2.12 procure the release, within 10 working days, of any Encumbrances
over the members of the Company Group or its assets, whether fixed
or floating, evidence such release to the Purchaser to its
reasonable satisfaction, and file all necessary documents at
Companies House in order to secure the removal of any entries
relating to such a charge on the register.
6.3 Intellectual Property Rights and Service Agreements
6.3.1 On Completion the Vendor shall assign to the Purchaser, or procure
the assignment of, the legal and beneficial title to all Non-Group
Business IPR (including by means of the duly executed Non-Group
Business IPR Assignments).
6.3.2 After Completion the Vendor shall use its best efforts to secure
the novation (or where that novation is refused, despite those
best efforts, assign) to the Purchaser of all IPR licences granted
by or to the Vendor relating to Business IPR including those
identified in Schedule 4 parts 3 and 4.
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6.3.3 On Completion the Vendor and Purchaser shall execute the Licences.
6.4 Board Resolutions of the Group Companies
On Completion the Vendor shall procure the passing of Board Resolutions
of each Group Company inter alia:
6.4.1 revoking all existing authorities to bankers in respect of the
operation of its bank accounts and giving authority in favour of
such persons as the Purchaser may nominate to operate such
accounts;
6.4.2 accepting the resignations referred to in Clause 6.2.2 and
appointing such persons as the Purchaser may nominate as directors
and secretary;
6.4.3 approving the registration of the share transfers referred to in
Clause 6.2 subject only to their being duly stamped;
6.4.4 changing its registered office in accordance with instructions
given by the Purchaser, and
6.4.5 in the case of the Company, confirming it is the beneficial owner,
free from encumbrances, of the entire issued share capital of the
Subsidiaries;
and shall hand to the Purchaser duly certified copies of such
Resolutions.
6.5 Indebtedness
The Vendor hereby irrevocably and unconditionally undertakes forthwith to
pay to the Purchaser an amount, if any, equal to:-
(a) the aggregate amount of all bank and other similar borrowings of
the Group outstanding at Completion;
(b) the aggregate of all sums paid by the Group to the Retained Group
after the Balance Sheet Date up to and including Completion (or
paid after Completion in respect of Intra-Group Indebtedness owed
by the Group to the Retained Group at Completion) in the repayment
of any Intra-Group Indebtedness owed by the Group to the Retained
Group or in the payment to the Retained Group of any dividend or
other distributions or any other payment.
6.6 Payment of Price
Against compliance with the foregoing provisions the Purchaser shall
satisfy the purchase consideration in the manner specified in Clause 3
and shall deliver to the Vendor a duly executed counterpart of the Tax
Deed of Covenant.
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6.7 Access
Upon reasonable notice the Purchaser will facilitate access to Xxxxx
Xxxxxxxx and Group personnel which is reasonably necessary to facilitate
the Vendor receiving information which is reasonably necessary for the
preparation of its consolidated accounts.
7. Warranties
7.1 Incorporation of Schedule 2
7.1.1 The Vendor warrants and represents to the Purchaser and its
successors in title in the terms set out in Schedule 2 subject
only to:
(a) any matter which is fairly, accurately and fully disclosed in the
Disclosure Letter and any matter expressly provided for under the
terms of this Agreement; and
(b) any matter or thing hereafter done or omitted to be done pursuant
to this Agreement or otherwise at the request in writing or with
the approval in writing of the Purchaser.
7.1.2 The Vendor acknowledges that the Purchaser has entered into this
Agreement in reliance upon the Warranties and on the undertakings
contained in Clause 8. Save as expressly otherwise provided, the
Warranties shall be separate and independent and shall not be
limited by reference to any other paragraph of the said Schedule
or by anything in this Agreement or the Tax Deed of Covenant.
7.1.3 Subject to Clause 7.1.1 above, claims may be made whether or not
the Purchaser prior to signing this Agreement knew or could have
discovered (whether by any investigation made by it or on its
behalf into the affairs of any Group Company or otherwise) any
facts which might result in any Warranty not having been complied
with or carried out or any Warranty is otherwise untrue or
misleading SAVE THAT no such claim may be made by the Purchaser
where at the Completion Date the Purchaser knew of facts which it
knew constituted a claim under the Warranties.
7.1.5 To the extent that the Warranties and representations contained in
Schedule 2 relate to any arrangements; or agreements between the
Purchaser and any Group Company the Purchaser shall not have a
claim in relation to such arrangements and agreements SAVE THAT
this clause 7.15 shall not prevent the Purchaser from making a
claim with respect to any third party litigation brought against a
Group Company in relation to the arrangements or agreements
referred to in this clause which arises in respect of the period
prior to Completion.
7.2 Limitation of Liability
The Vendor and the Purchaser agree to perform and observe the provisions
of Schedule 5.
7.4 This Clause has intentionally been left blank
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8 Restrictions on the Vendor
8.1 Restrictions
The Vendor undertakes with the Purchaser and its successors in title as
trustee for itself and the Group Companies that the Vendor will not and
will procure that any subsidiary undertaking, fellow subsidiary
undertaking or holding company or director of the Vendor will not and
will procure that no person, firm or company carrying on with the consent
or privity of the Vendor any business in succession to the Vendor will
not in any Relevant Capacity during the Restricted Period:
8.1.1 directly or indirectly carry on any business which is of the same
or similar type to the Business except by way of a valid Licence
nor be concerned or interested within such area in any such
business save through the holding or being interested in not more
than 6 per cent of the outstanding share capital of a company the
shares of which are listed on any recognised stock exchange;
8.1.2 carry on any business in competition with the Business outside a
valid Licence or canvass or solicit the custom of any person, firm
or company who has within two years prior to Completion been a
regular customer of any Group Company; or
8.1.3 induce or seek to induce any present employee (other than Xxxxx
Xxxxxxx and Xxx Xxxxx) of any Group Company to become employed
whether as employee, consultant or otherwise by the Vendor or any
subsidiary undertaking or fellow subsidiary undertaking or holding
company of the Vendor.
9.1.4 directly or indirectly carry on any Telemetry business, or attempt
to establish a Telemetry business, in the U.K. nor be concerned or
interested within the U.K. in any such business save through the
holding or being interested in not more than 6 per cent of the
outstanding share capital of a company the shares of which are
listed on any recognised stock exchange SAVE THAT at any time
after two years from the Completion Date the Vendor may deliver a
Telemetry Notice to the Purchaser which shall give the Purchaser
the right of first refusal to participate as co-partner with the
Vendor in a U.K. Telemetry business on reasonable commercial
terms, those terms being specified in the Telemetry Notice. The
Vendor and Purchaser agree to discuss those terms on a commercial
basis and they shall have until the end of that notice period to
reach agreement on those terms. At the end of the notice period
set out in the Telemetry Notice the restriction on the Vendor in
this clause 8.1.4 shall cease. For the avoidance of doubt this
Clause 8.1.4 shall not grant any rights, or be taken to grant any
rights, over IPRs. The two year restriction period referred to in
this clause shall cease to apply with immediate effect upon an
assignment of this Agreement to any third party which in Numerex's
reasonable opinion is a material competitor to Numerex other than
upon any assignment to a related party to BT.
8.2 The Purchaser undertakes with the Vendor and its successors in title for
a period of two years from the Completion Date, that the Purchaser will
not and will procure that any subsidiary undertaking, fellow subsidiary
undertaking or holding company will
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not and will procure that no person, firm or company carrying on with the
consent or privity of the Purchaser any business in succession to the
Purchaser not in any Relevant Capacity during the Restricted Period
induce or seek to induce Xxxxx Xxxxxxx or Xxx Xxxxx to become employed
whether as employee, consultant or otherwise by the Purchaser or any
subsidiary undertaking or follow subsidiary undertaking or holding
company of the Purchaser.
8.3 Reasonableness of Restrictions
The Vendor and the Purchaser each agree that it considers that the
restrictions contained in this Clause 8 are no greater than is reasonable
and necessary for the protection of their respective interests of the
Purchaser but if any such restriction shall be held to be void but would
be valid if deleted in part or reduced in application, such restriction
shall apply with such deletion or modification as may be necessary to
make it valid and enforceable.
9. Net Asset Value
9.1 The Vendor and the Purchaser shall together use all reasonable endeavours
to procure that, as soon as practicable following Completion, the Balance
Sheet together with the statement (the "Statement") of the Net Asset
Value as at the 1999 Balance Sheet Date, are prepared in accordance with
the provisions of this Clause 9. The Balance Sheet shall be prepared on
the basis of the accounting policies and procedures set out in Schedule
13.
9.2 The Vendor confirms:-
(a) that is has undertaken a stock take and valuation of all stock as
at the 1999 Balance Sheet Date in conjunction with the Group on
the 1999 Balance Sheet Date; and
(b) that it has arranged for the Balance Sheet and the Statement to be
prepared by Xxxxx Xxxxxxxx in conjunction with the Group at the
Vendor's expense with a view to a draft of such Balance Sheet and
the Statement being delivered to the Purchaser within forty
Business Days of Completion together with the unqualified
accountants' report attached at Schedule 14.
9.3 The Purchaser shall notify the Vendor within twenty Business Days of
receipt of such draft Balance Sheet and Statement whether or not it
accepts them for the purposes of this Agreement. So as to allow the
Purchaser to make its appraisal, the Vendor shall procure that the
Purchaser and/or its accountants shall, if they so elect, be given full
access to Xxxxx Xxxxxxxx'x working papers and also be allowed to speak to
the accounting personnel and audit team members who prepared the draft
Balance Sheet and Statement.
9.4 If the Purchaser notifies the Vendor that it does not accept such draft
Balance Sheet and Statement.-
(a) it shall, at the same time, set out in a notice in writing its
reasons in full for such non-acceptance and specify the
adjustments which, in its opinion, should be made to the draft
Balance Sheet and the Statement in order to
14
comply with the requirements of this Agreement and deliver a copy
of such notice to the Vendor; and
(b) the parties shall use all reasonable endeavours to meet and
discuss the objections of the Purchaser and to reach agreement
upon the adjustments (if any) required to be made to the draft
Balance Sheet and Statement.
9.5 If the Purchaser is satisfied with the draft Balance Sheet and Statement
(either as originally submitted or after adjustments agreed between the
Purchaser and the Vendor), then the draft Balance Sheet and Statement
(incorporating any agreed adjustments) shall constitute the Balance Sheet
and the Statement for the purposes of this Agreement.
9.6 If the Purchaser and the Vendor do not reach agreement within twenty
Business Days of the Purchaser's notice of non-acceptance pursuant to
Clause 9.4 (or such other period as the parties mutually agree), then the
matters in dispute (and only those) shall be referred, on the application
of either party, for determination by an independent firm of
internationally recognised chartered accountants to be agreed upon by the
Purchaser and the Vendor or, failing agreement, to be selected, on the
application of either the Purchaser or the Vendor, by the President for
the time being of the Institute of Chartered Accountants in England and
Wales or his duly appointed deputy. The following provisions shall apply
to such determination:-
(a) the Purchaser and/or the Purchaser's accountants and the Vendor
and/or the Vendor's accountants shall each promptly prepare a
written statement on the matters in dispute which (together with
the relevant documents) shall be submitted to such independent
firm for determination;
(b) in giving such determination, the firm shall state what
adjustments (if any) are necessary to the draft Balance Sheet and
Statement in respect of the matters in dispute in order to comply
with the requirements of this Agreement;
(c) any such firm shall act as an expert (and not as an arbitrator) in
making any such determination which shall be final and binding on
the parties (in the absence of manifest error);
(d) each party shall bear the costs and expenses of all counsel and
other advisers, witnesses and employees retained by it and the
costs and expenses of the independent firm of accountants shall be
borne between the Purchaser and the Vendor in such proportions as
the firm shall in its discretion determine or, in the absence of
any such determination, equally between the Purchaser and the
Vendor.
9.7 When the Purchaser and the Vendor reach (or pursuant to Clause 9.6 are
deemed to reach) agreement on the Balance Sheet and the Statement or when
the Balance Sheet and the Statement are finally determined at any stage
in accordance with the procedures set out in this Clause 9;-
(a) the Balance Sheet and the Statement as so agreed or determined
shall be the Balance Sheet and the Statement for the purposes of
this Agreement and shall be final and binding on the parties; and
15
(b) the Net Asset Value as at the 1999 Balance Sheet Date shall be as
set out in the Statement.
9.8 Subject to any rule of law or any regulatory body or any provision of any
contract or arrangement entered into prior to the date of this Agreement
to the contrary, the Vendor shall procure that each member of the
Retained Group shall, and the Purchaser shall procure that the Group
shall, promptly provide each other, their respective advisers, and the
independent firm of chartered accountants appointed pursuant to this
Clause 9 to determine the Balance Sheet and the Statement and the
Purchaser's accountants and the Vendor's accountants with all information
(in their respective possession or control) relating to the operations of
the Retained Group and/or the Group, as the case may be, including access
at all reasonable times to all Retained Group and Group employees, books
and records, and all co-operation and assistance, as may in any such case
be reasonably required to:
(a) enable the production of the Balance Sheet and the Statement; and
(b) enable any independent firm of chartered accountants appointed
pursuant to this Clause 9 to determine the Balance Sheet and the
Statement.
The Purchaser and the Vendor hereby authorise each other, their
respective advisers and the independent firm of chartered accountants
appointed pursuant to this clause 9 to take copies of all information
which they have agreed to provide under this clause 9.8.
9.9 If the Net Asset Value as at the 1999 Balance Sheet Date, as determined
in accordance with Clause 9.1, is:-
(a) less than the Agreed Net Asset Value, then the Vendor shall make a
payment to the Purchaser which payment shall be satisfied by a
payment from the Retention held in the Escrow Account to the
extent that funds are available and thereafter directly from the
Vendor in respect of any outstanding balance;
(b) more than the Agreed Net Asset Value, then the Purchaser shall
make a payment to the Vendor (in either case such payment being
the "Final Payment"),
of an amount equal to the difference between the Net Asset Value as at
the 1999 Balance Sheet Date and the Agreed Net Asset Value, within seven
Business Days of the agreement or determination of the Balance Sheet (the
"Final Payment Date") together with interest on the principal amount
thereof at the Agreed Rate computed from the Completion Date to the date
of actual payment thereof both dates exclusive on the basis of the actual
number of days elapsed and a 365 day year. Any payment shall be by means
of telegraphic transfer of funds to the Purchaser's Account or the
Vendor's Account, as the case may require.
10. Other Provisions
10.1 Indemnity
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10.1.1 The Vendor shall be liable for and shall indemnify the Purchaser
and the Group (together with their officers, servants and agents)
against any and all liability, loss, damages, costs, legal costs,
professional and other expenses of any nature whatsoever incurred
or suffered by the Purchaser, or the Group, whether direct,
indirect or consequential (including but without limitation any
economic loss or other loss of profits, business or goodwill)
arising out of any dispute or contractual tortious or other claims
or proceedings brought against the Purchaser or the Group by a
third party claiming relief against the Purchaser or Group by
reason of:-
(a) any breach of clause 2 of the licence between Bronzebase
Limited and Detection Systems Inc. dated April 1997 (the
"Technology Licence") resulting from any licence of
Business IPR entered into by the Purchaser or its
subsidiaries (after the Completion Date only) or the Group
Companies, the Vendor or its subsidiaries (at any time) (or
any breach of the terms of those subsequent licences
resulting from clause 2 of the Technology Licence) up to a
maximum of 50,000 pounds in relation to products supplied
prior to the Completion Date and 400,000 pounds in relation
to products supplied thereafter,
(b) any hindrance, inability or additional expense incurred in
the prosecution or defence of any application, claim or
dispute of any nature whatsoever as a result of the
Business IPR which is registered or applied for not being
registered or applied for in the name of a company within
the Group (save for that Business IPR marked "No" in
Schedule 4 Part 1); and
(c) any proceeding, claim or demand by any Relevant Employee in
relation to the employment or the termination of employment
and/or loss of office of any Relevant Employee.
10.1.2 No claim may be made by the Purchaser under the Indemnity:
(a) to the extent such claim arises from any failure by the
Purchaser to take reasonable steps to mitigate its loss;
(b) set out in clause 10.1.1(a) to the extent such claim arises
from any licences entered into after Completion other than
non-exclusive licences between the Purchaser and a third
party for the manufacture and/or distribution of only those
products known as a Home STU or Serial STU (which are more
fully described in the specifications set out at Part 1 of
Schedule 15 and in accordance with the Overview document
set out in Part 2 of Schedule 15) which is substantially in
the terms of one of the following agreements which are
attached at Part 3 of Schedule 15:
(i) the Manufacturer's Licence for the Serial STU
between Xxxxxx Security Limited and VTL dated 22
February 1999;
(ii) the Manufacturer's Licence for the Home STU between
DA Detection Systems and VTL dated 2 September 1998;
17
(iii) the Original Equipment Manufacturer's (OEM)
Agreement for the Serial STU between DA Detection
Systems and VTL dated 2 September 1998; or
(iv) the Original Equipment Manufacturer's (OEM)
Agreement for the Home STU between DA Detection
Systems and Versus Technology dated 2 September,
1998.
10.1.3 The Purchaser shall:
(a) promptly give the Vendor full details of any claim under
the Indemnity;
(b) make no admissions in respect of the matter under which the
Purchaser is claiming on the Indemnity; and,
(c) allow the Vendor to conduct the defence and any settlement
negotiations relating to any claim made against which the
Purchaser wishes to claim on the Indemnity, with the
Purchaser providing such reasonable information and
assistance as may be required by the Vendor SAVE THAT the
Vendor shall only have these rights where the claim in
respect of which an indemnity is sought is of a total value
of less than 1,000,000 pounds. Where the total value of the
claim in respect of which an indemnity is sought under this
10.1 exceeds 1,000,000 pounds then the Purchaser shall have
the right, but not the obligation to conduct the defence
and any settlement negotiations with the Vendor providing
such reasonable information and assistance as may be
required by the Purchaser. The Purchaser shall not, in the
course of such conduct, reach any settlement without the
prior written consent of the Vendor, such consent not to be
unreasonably witheld or delayed.
10.2 Deliberately left blank
10.3 Successors and Assigns
10.3.1 The Vendor agrees that the benefit of every provision in this
Agreement is given to the Purchaser for itself and its successors
in title and assigns. Accordingly, the Purchaser (and its
successors and assigns) may, without the consent of the Vendor,
assign to the beneficial owner for the time being of the Shares
the benefit of all or any of the Vendor' obligations under this
Agreement, and/or any benefit arising under or out of this
Agreement.
10.3.2 The Vendor agrees that, upon the request of the Purchaser or his
successors in title or assigns, this Agreement may be novated (in
whole or in part) in favour of the beneficial owner for the time
being of the Shares, and the Vendor shall execute a Novation
Agreement substantially in the terms set out in Schedule 6 and the
Purchaser, in turn, agrees to meet the Vendor's reasonable costs
for doing so. If the Vendor fails to execute any such Agreement
within 14 days of the request by the Purchaser, the Purchaser may
execute it on behalf of the Vendor and for such purpose the Vendor
hereby irrevocably appoints the Purchaser as the Vendor's attorney
for the purpose
18
of executing any such Agreement. The Vendor agrees to ratify and
confirm any action taken by the Purchaser by virtue of this power
of attorney.
10.4 Variation
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of each of the parties to this Agreement.
10.5 Time of the Essence
Any time, date or period referred to in any provision of this Agreement
may be extended by mutual agreement between the parties but as regards
any time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
10.6 Further Assurance
10.6.1. The Purchaser shall for the six months after Completion provide
all reasonable assistance to the Vendor in applying for, and
carrying on, the registration of change of proprietor or
registered assignee of, or for the removal of the registration of
Encumbrances over, the Business IPR (not being the Non-Group
Business IPR) which is registered or capable of registration
(including the IPR set out in Part 1.1 of Schedule 4) necessary
in order to ensure that this IPR is registered in the current
name of a member of the Group, such application and carrying on
to be done by or on behalf of the Vendor;
10.6.2. Once the period in 10.6.1 is finished, the Purchaser shall be
entitled on notice to take over the activities described in
clause 10.6.1 and from such notice being given the Vendor shall
provide all reasonable assistance to the Purchaser in applying
for the registration of change of proprietor or registered
assignee of, or for the removal of the registration of
Encumbrances over, the Business IPR (not being the Non-Group
Business IPR) which is registered or capable of registration
(including the IPR set out in Part 1 of Schedule 4) necessary in
order to ensure that this IPR is registered in the current name
of a member of the Group, such application and carrying on to be
done by or on behalf of the Purchaser;
10.6.3 The Vendor shall pay, within 30 days of invoice by the Purchaser
or the Group, all the costs including agents fees incurred by the
Purchaser or Group relating to the recordal of the Business IPR
(not being the Non-Group Business IPR) which is registered or for
which registration is applied either from activities authorised
prior to Completion or from the actions set out in 10.6.1 and
10.6.2 above.
10.6.4 The Purchase shall carry out the registration of, and pay the
costs incurred in, the registration in change of ownership of the
Non-Group Business IPR effected by the Non-Group Business IPR
Assignments.
10.6.5 Save as set out in this clause 10.6, at any time after the date
of this Agreement the Vendor shall, at the Purchaser's expense,
use its best
19
endeavours to and to procure that any necessary third party shall
execute such other documents and do such other acts and things as
the Purchaser may reasonably require for the purpose of giving to
the Purchaser the full benefit of all the provisions of this
Agreement.
10.7 Costs
The Vendor shall bear all legal and accountancy costs and expenses
incurred by it and the Group in connection with this Agreement, the Tax
Deed of Covenant and the sale of the Shares. The Purchaser shall bear all
such costs and expenses incurred by it.
10.8 Interest
If the Vendor or the Purchaser default in the payment when due of any sum
payable under this Agreement or the Tax Deed of Covenant (whether
determined by agreement or pursuant to an order of a court or otherwise)
the liability of the Vendor or the Purchaser (as the case may be) shall
be increased to include interest on such sum from the date when such
payment is due until the date of actual payment (as well after as before
judgement) at a rate per annum of 4 per cent above the base rate from
time to time of National Westminster Bank PLC. Such interest shall accrue
from day to day.
10.9 Notices
10.9.1 Any notice or other communication requiring to be given or served
under or in connection with this Agreement or with any arbitration
or intended arbitration under this Agreement shall be in writing
and shall be sufficiently given or served if delivered or sent:
In the case of any of the Vendor to Numerex Corp at:
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx, XXX
Fax: 000 000 000 0000
Attention: Xxxxxx X Xxxx
In the case of the Purchaser to BT Group Legal at:
00 Xxxxxxx Xxxxxx
Xxxxxx
XXXX 0XX
Fax: (0000) 000 0000
Attention: Xxxx Xxxxxx-Xxxxxx
Ref: M138204
20
10.9.2 Any such notice or other communication shall be delivered by hand
or sent by courier, fax or prepaid first class post. If sent by
courier or fax such notice or communication shall conclusively be
deemed to have been given or served at the time of despatch, in
case of service in the United Kingdom, or on the following
Business Day in the case of international service. If sent by post
such notice or communication shall conclusively be deemed to have
been received two Business Days from the time of posting, in the
case of inland mail in the United Kingdom or three Business Days
from the time of posting in the case of international mail.
10.10 Severance
If any term or provision in this Agreement is held to be illegal or
unenforceable, in whole or in part, under any enactment of rule of law,
such term or provision or part shall to that extent be deemed not to form
part of this Agreement but the enforceability of the remainder of this
Agreement shall not be affected.
10.11 Counterparts
This Agreement may be executed in any number of counterparts each of
which shall be deemed an original, but all the counterparts shall
together constitute one and the same instrument.
10.12 Restrictive Trade Practices
Notwithstanding any other provision of this Agreement, no provision of
this Agreement which is of such a nature as to make the Agreement liable
to registration under the Restrictive Trade Practices Act 1976 shall take
effect until the day after that on which particulars thereof have been
duly furnished to the Director General of Fair Trading pursuant to the
said Act. For the purposes of this Clause 10.12, "Agreement" shall
include any agreement forming part of the same arrangement.
10.13 Governing Law and Submission to Jurisdiction
This Agreement and the documents to be entered into pursuant to it, save
as expressly referred to therein, shall be governed by and construed in
accordance with English law and all the parties irrevocably agree that
the courts of England are to have exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement and
such documents.
10.14 Appointment of Process Agent
10.14.1 The Vendor hereby irrevocably appoints Xxxxxx & Xxxxxx of Tower
42, 00 Xxx Xxxxx Xxxxxx, Xxxxxx, XX0X 0XX as its agent for the
service of process in England in relation to any matter arising
out of this Agreement, service upon whom shall be deemed
completed whether or not forwarded to or received by the Vendor.
10.14.2 The Vendor shall inform the Purchaser, in writing, of any change
in the address of its process agent within 28 days.
21
10.14.3 If such process agents cease to have an address in England, the
Vendor irrevocably agrees to appoint new process agents
acceptable to the Purchaser and to deliver to the Purchaser
within 14 days a copy of a written acceptance of appointment by
the process agents.
10.14.4 Nothing contained in this Agreement shall affect the right to
serve process in any other manner permitted by law or the right
to bring proceedings in any other jurisdiction for the purposes
of the enforcement or execution of any judgement or other
settlement in any other courts.
10.15 Entire Agreement
Subject to the Disclosure Letter, the Written Representations and Tax
Deed of Covenant, this Agreement and the documents in the agreed form
contains the whole agreement between the parties and supersedes all
previous understandings, transactions or communications, whether written
or oral relating to their subject matter and may not be amended or varied
except in writing, signed by a duly authorised representative of each
party.
10.16 Announcements
No party shall disclose the making of this Agreement nor its terms nor
any other Agreement referred to in this Agreement (except those matters
set out in the press release in the agreed terms) and each party shall
procure that each of its Related Persons and its professional advisers
shall not make any such disclosure without the prior consent of the other
party unless disclosure is:-
(a) to its professional advisers; or
(b) required by law or the rules of the London Stock Exchange or other
regulatory body and disclosure shall then only be made by that
party:-
(i) after it has taken all such steps as may be reasonable in
the circumstances to agree the contents of such
announcement with the other party before making such
announcement and provided that any such announcement shall
be made only after notice to the other party/parties; and
(ii) to the person or persons in the manner required by law or
the London Stock Exchange or as otherwise agreed between
the parties
provided that this clause 10.16 does not apply to announcements,
communications or circulars made or sent by the Buyer after
Completion to customers, clients or suppliers of any Group Company
to the extent that it informs them of the Buyer's acquisition of
the Shares or to any announcements containing only information
which has become generally available.
(c) The restrictions contained in this clause 10.16 shall apply
without limit of time and whether or not this Agreement is
terminated.
22
In witness whereof this Agreement has been duly executed.
Signed for and on behalf of Signed for and on behalf of
Numerex Corp. British Telecommunications plc
By: /s/ X. X. Xxxxxxxxxx By: /s/ Xxxxx Xxxxx
--------------------------- --------------------------
X. X. Xxxxxxxxxx Xxxxx Xxxxx
Title: C.O.O. Numerex Corp. Title: G.M. BT Telecom plc
12/11/99 12/11/99
---------------------- -----------------------
Date Date
23
