EXHIBIT 2.1
DATED JULY 3, 2001
LOGSYS HOLDINGS LIMITED (1)
and
AUTHORISZOR HOLDINGS LIMITED (2)
and
XXXXXXX XXXXXX ASHTON (3)
----------------------------------------------
Agreement
relating to the sale and purchase of part of the issued
share capital of Logsys Solutions Limited
----------------------------------------------
Xxxxxxx Xxxxxxxx Xxxx
0 Xxxx Xxxx Xxxxx XX0 0XX DX 26441 Leeds
Telephone x00 (0)000 000 0000 Fax x00 (0)000 000 0000
xxx.xxxxxxxxxxxxxxxxxxx.xxx
Reference MSS
CONTENTS
1 INTERPRETATION.........................................................................................3
2 SALE AND PURCHASE......................................................................................5
3 PRE-EMPTION RIGHTS WAIVER..............................................................................5
4 CONSIDERATION..........................................................................................5
5 COMPLETION.............................................................................................5
6 WARRANTIES.............................................................................................6
7 RESTRICTIVE COVENANT...................................................................................7
9 GENERAL................................................................................................8
10 NOTICES................................................................................................9
11 ENTIRE AGREEMENT.......................................................................................9
12 THIRD PARTY RIGHTS.....................................................................................9
13 GUARANTEE..............................................................................................9
14 BANK GUARANTEES.......................................................................................10
15 INDEMNITY.............................................................................................10
SCHEDULE 1...................................................................................................12
SCHEDULE 2 Part 1............................................................................................15
SCHEDULE 3 Warranties........................................................................................16
SCHEDULE 4 Letter of Representation..........................................................................21
SCHEDULE 5 Limitations on Seller's Liability.................................................................23
SCHEDULE 6 Tax Deed..........................................................................................24
SCHEDULE 7 Trade Debts and WIP...............................................................................32
SCHEDULE 8 The Retention.....................................................................................35
SCHEDULE 9 IPR Heads of Terms................................................................................36
DATE OF AGREEMENT JULY 3, 2001
PARTIES
(1) LOGSYS HOLDINGS LIMITED (Company Number 2361436) whose registered
office is at Logsys House, Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxx, XX00 0XX
(the "Seller")
(2) AUTHORISZOR HOLDINGS LIMITED (Company Number 3873915) whose registered
office is at Xxxxxxx Xxxxx Xxxxxxxx Xxxx Xxxxxxxxx X0 0XX (the
"Buyer"); and
(3) XXXXXXX XXXXXX ASHTON of Ridgecroft Xxxxxxxxxxxx Xxxxxx Xxxxxxxxxx
Xxxxxxxxx XX00 0XX ("Guarantor").
IT IS AGREED THAT:
1 INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the following
words and expressions have the following meanings.
"Agreed Form" in relation to any document, that document initialled for
the purposes of identification by or on behalf of the parties hereto.
"Associate" means any person, firm or company which is a connected
person (as defined in Section 839 of the Income and Corporation Taxes
Act 1988) of any of the Seller.
"Authoriszor Inc." means Authoriszor Inc. of Xxx Xxx xx Xxxxx Xxxxx
Xxxxx 000 Xxxxxxxxxx XX 00000 XXX.
"Bank Guarantee" means the unlimited guarantee given by XX Xxxxxx to
Lloyds TSB Bank plc.
"Buyer's Group" means the Buyer, and any company which is from time to
time a holding company of the Buyer or a subsidiary of the Buyer or
such holding company, as the expressions "holding company" and
subsidiary" are defined in section 736 of CA 1985.
"Buyer's Solicitors" means Xxxxxxx Suddards Edge of 0 Xxxx Xxxx Xxxxx
XX0 0XX.
"CA 1985" means the Companies Xxx 0000, as amended.
"CA 1989" means the Companies Xxx 0000.
"Common Stock" means the Common Stock of Authoriszor Inc., par value
$0.01.
"Companies Acts" means CA 1985 and CA 1989 and the former Companies
Acts (within the meaning of section 735(1) CA 1985).
"Completion" means completion of the sale and purchase of the Shares in
accordance with clause 5;
"Covenantors" means the Guarantor and Logsys Holdings Limited.
"Disclosure Letter" means the disclosure letter in Agreed Form.
"Last Accounts" means the audited balance sheet of the Target at the
Last Accounts Date, and audited profit and loss account of the Target
for the year ended on the Last Accounts Date, (if incorporated at the
Last Accounts Date) and the auditor's and directors' report and notes
thereon.
"Last Accounts Date" means 30 September 1999.
"Letter of Representation" means a letter of representation in a form
set out at Schedule 4.
"Other Agreements" means the agreements of even date between the Buyer
and the Remaining Shareholders to acquire all of the shares in the
Target owned by those persons or to which they may be entitled.
"Remaining Shareholders" means all shareholders other than the Seller.
"Retention Deposit" means the sum of (pound)40,000.
"Seller's Legal Advisor" means Xxxxx Xxxxx-Xxxxxx of The Malt House, 00
Xxx Xxxxxx, Xxxxxx-xx-Xxxxxx, Xxxxxxxxxxx, XX0 0XX.
"Shares" means 550,496 issued Ordinary Shares of (pound)0.10 each fully
paid or credited as fully paid and owned by the Seller as set out in
Schedule 1.
"Subsidiary" means the subsidiary as defined in section 736 CA 1985 (as
supplemented by section 736A CA 1985) of the Target.
"Target" means Logsys Solutions Limited, brief details of which are set
out in Schedule 2 Part 1.
"Tax Deed" means the provisions set out in Schedule 6.
"Taxation" means all forms of taxation, charges duties, imposts, rates
levies and governmental charges (whether national or local) in the
nature of tax whatsoever and whenever imposed, and whether of the
United Kingdom or elsewhere, and any payment whatsoever which the
Target may be or become bound to make to any person as a result of any
enactment relating to taxation and any taxation supplementing or
replacing the same and all fines, penalties, interest, costs, charges
and expenses in connection therewith.
"Threshold" means 75% of the value of the Trade Debts and 75% of the
value of the WIP.
"Trade Debts" means those debts of the Target listed in Schedule 7.
"Trading Day" means any day on which markets for public securities
traded in the United States are open for trading.
"Warranties" means the warranties on the part of the Seller set out in
Schedule 3, and "Warranty" shall mean any of them.
"WIP" means the work in progress of the Target detailed in Schedule 7.
1.2 All references in this Agreement to a statutory provision shall be
construed as including references to:
(a) any statutory modification, consolidation or re-enactment
(whether before or after the date of this Agreement) for the
time being in force;
(b) all statutory instruments or orders made pursuant to a
statutory provision; and
(c) any statutory provision of which a statutory provision is a
consolidation, re-enactment or modification;
1.3 Clause headings in this Agreement are for ease of reference only and do
not affect the construction of any provision.
2 SALE AND PURCHASE
Subject to the terms and conditions of this Agreement, the Seller shall
sell with full title guarantee and the Buyer shall purchase the Shares,
free from all liens, charges and encumbrances and together with all
accrued benefits and rights attaching to the Shares, with effect from
the date of this Agreement.
3 PRE-EMPTION RIGHTS WAIVER
The Seller waives all rights of pre-emption and all options (if any)
over the Shares to which they may be entitled under the articles of
association of the Target or otherwise, in relation to the sale and
purchase of the Shares pursuant to this Agreement.
4 CONSIDERATION
The consideration for the Shares shall be payable to the Seller as set
out at Clause 5 below.
5 COMPLETION
5.1 Completion of the purchase of the Shares shall take place at the
offices of the Buyer's Solicitors immediately after signature of this
Agreement.
5.2 On Completion the Seller shall:
(a) deliver to the Buyer duly executed transfers of the Shares in
favour of the Buyer together with the relative share
certificates or an indemnity for lost certificates in the form
reasonably satisfactory to the Buyer;
(b) deliver to the Buyer Letters of Representation executed by the
Seller; and
(c) deliver to the Buyer the resignations of [names of resigning
directors] as directors of the Target and the secretary of the
Target in the agreed form from their respective offices.
5.3 The Buyer shall satisfy the Consideration as follows:
(a) (pound) 260,687 shall be payable on Completion in pounds
sterling; and
(b) The issue and allotment of up to 186,453 fully paid shares of
Common Stock to the Seller within 20 Trading Days of the
receipt by the Target of an amount equivalent to the Threshold
by way of realisation of Trade Debts and issue and full
payment of invoices for WIP. If the amount equivalent to the
threshold by way of realisation of Trade Debts is not received
by the target within 120 days of Completion and the amount
equivalent to the Threshold by way of issue and full payment
of invoices for WIP within 180 days of Completion ownership of
these monies will transfer to and vest in the Buyer.
5.4 In addition the Seller will procure that, simultaneously with
Completion, the Retention Deposit is paid to the Buyer by such method
as may be agreed between the parties and in accordance with Schedule 8.
The Retention Deposit will be repaid to the Seller, together with any
interest accrued thereon, within 5 Business Days of the receipt by the
Target of an amount equivalent to the Threshold by way of realisation
of Trade Debts and issue and full payment of invoices for WIP. If the
amount equivalent to the Threshold by way of realisation of Trade Debts
is not received by the Target within 120 days of Completion and the
amount equivalent to the Threshold by way of issue and full payment of
invoices for WIP within 180 days of Completion ownership of these
monies will transfer to and vest in the Buyer.
5.5 In addition, the Buyer covenants that:
(a) the Common Stock to be issued pursuant to Clause 5.3 shall
rank pari passu in all respects with the Common Stock of
Authoriszor Inc already in issue and listed at the relevant
time and so far as regards any individual dividend on such
stock declared or paid by reference to a record date falling
on or after the date of their registration in the register of
members of Authoriszor Inc shall rank as if they had been
issued (fully paid) on and from the commencement of the period
in respect of which such dividend is declared or paid;
(b) it shall be a condition of the satisfaction of part of the
Consideration by Common Stock that the Common Stock shall be
listed on NASDAQ (whether on the OTC Bulletin Board or
otherwise) or listed on such other recognised and publicly
quoted market in North America or Europe of equivalent or
better standing provided that if such Common Stock is not so
listed or such listing is prevented as a result of the trading
of Common Stock being suspended on the relevant date of issue,
the Buyer shall have 30 Trading Days from Completion to
procure such listing, failing which the Buyer shall instead
(if required by the Seller) satisfy that part of the
Consideration in respect of which such Common Stock was issued
by a payment in cash and such Common Stock shall (if issued)
be transferred back to Authoriszor Inc (or its nominee) or
cancelled at the option of Authoriszor Inc;
5.6 On Completion, the Seller shall procure that the entire amount of the
debt owed by Lady Polgara Sailing Limited on behalf of Logsys Holdings
Limited and Logsys Holdings Limited to the Target shall be immediately
repaid in full.
5.7 The parties shall use all reasonable endeavours to enter into an
agreement for the exploitation of the DVA intellectual property, within
30 days of Completion, in accordance with those heads of terms set out
at Schedule 9.
6 WARRANTIES
6.1 Subject to matters disclosed in the Disclosure Letter, the Seller
warrants to the Buyer in the terms set out in Schedule 3 at the date of
this Agreement and acknowledge that the Buyer has entered into this
Agreement in reliance on the Warranties. The provisions of Schedule 5
shall apply to the Warranties.
6.2 Where any Warranty is qualified by the words "so far as the Seller is
actually aware" then this shall be a reference to the actual knowledge
of the Seller (and in the case of a corporate Seller, the board of
directors of such Seller) at the time of giving the Warranty without
imputing the knowledge of any other person to the Seller and the Seller
(and in the case of a corporate Seller, the board of directors of such
Seller) shall not be deemed to have made any enquiries whatsoever or
taken any steps to ensure accuracy (without prejudice to any enquiries
actually made or steps actually taken).
6.3 Where any Warranty is qualified by the words "so far as the Seller is
aware", then this shall be a reference to the knowledge of the Seller,
having been deemed to have made due and careful enquiry into the
subject matter of such Seller Warranty of the officers, legal advisors
and auditors of the Target.
7 RESTRICTIVE COVENANT
7.1 Subject to Clauses 7.6 and 7.7 each Covenantor covenants with the Buyer
that without the prior written consent of the Buyer, neither of them,
nor any Associate of them, will:
(a) for the period of 2 years after the date of Completion, either
as principal or partner, alone or jointly with, through or as
manager, advisor, consultant or agent or funder for any person
or in any other capacity whatsoever, directly or indirectly
carry on or be engaged, concerned or interested in any
business which directly competes with the business of the
Target at Completion; or
(b) for a period of 12 months after the date of Completion,
solicit or entice away or seek to entice away any person who
is, at the date of Completion, employed or engaged by the
Target, earning in excess of (pound)15,000 per annum
("Relevant Person"); or
(c) for a period of 12 months after the date of Completion employ
or engage for services any Relevant Person; or
(d) for a period of 12 months after the date of Completion,
solicit or endeavour to solicit in competition with the
business of the Target (as carried on at Completion) the
custom of any person, firm or company who has been a client of
the Target at any time during the period of 12 months
immediately preceding the date of Completion ("Relevant
Client"); or
(e) for a period of 12 months after the date of Completion,
accept, in competition with the business of the Target, the
custom of any Relevant Client; or
(f) for a period of 12 months after the date of Completion,
interfere with or seek to interfere with the continuance of
supplies to the Target from any suppliers who have been
supplying services to the Target at any time during the 12
month period immediately preceding Completion.
7.2 The restrictions contained in this clause 7 are considered to be
reasonable by the Covenantors in all respects but if any of those
restrictions shall be held to be void in the circumstances where it
would be valid if some part were deleted, the parties agree that such
restrictions shall apply with such deletion as may be necessary to make
it valid and effective.
7.3 Each Covenantor acknowledges that the Buyer is accepting the benefit of
the covenants contained in this clause both on its own behalf and on
behalf of each member of the Buyer's group, the Target with the
intention that the Buyer may claim against the Seller on behalf of any
person for loss sustained by that person as a result of any breach of
any of the covenants contained in this clause.
7.4 The provisions of clauses 7.1(a) to 7.1(f) are separate and severable
and shall be enforceable accordingly.
7.5 Each Covenantor shall not at any time before and after the date of
Completion use or disclose or permit there to be disclosed any
confidential business information which it has or acquires PROVIDED
THAT this clause shall not apply if and to the extent that:
(a) such confidential business information has come into the
public domain (other than as a result of breach of any
obligation of confidence by any of the Sellers or any of their
respective Associates); or
(b) any disclosure of such Confidential Business Information has
been authorised in writing by the Buyer; or
(c) disclosure of the confidential business information concerned
is required by law or by any regulatory body or the London
Stock Exchange.
8 TAXATION
The provisions of Schedule 6 shall apply with respect to the matters
contained or referred to therein.
9 GENERAL
9.1 This Agreement shall be binding upon and enure for the benefit of the
successors in title of the parties.
9.2 The benefits and obligations of this Agreement may be assigned by the
Buyer to any member of the Buyer's Group PROVIDED THAT if such assignee
ceases for any reason to be a member of the Buyer's Group, such
assignee shall be deemed to have assigned all such benefits back to the
Buyer immediately prior to its ceasing to be a member of the Buyer's
Group.
9.3 Each party shall at its/their own expense, execute and perform all such
further acts, deeds or assurances as may be required for effectually
vesting the Shares in the Buyer and otherwise for fulfilling the
provisions of this Agreement.
9.4 The provisions of this Agreement insofar as the same shall not have
been performed at Completion shall remain in full force and effect
notwithstanding Completion.
9.5 No delay or omission by any party in exercising any right, power or
remedy shall operate as a waiver thereof, and any single or partial
exercise thereof shall not preclude any other or further exercise
thereof or the exercise of any right, power or other remedy. The rights
and remedies of any party hereunder are cumulative and not exclusive of
any right or remedy provided by law.
9.6 No announcement shall be made by the Seller or the Buyer in connection
with this Agreement except with the consent of the other such party
unless required pursuant to any legal or regulatory requirement
applicable thereto.
9.7 This Agreement shall be governed by and interpreted and construed in
accordance with English law and the parties submit to the jurisdiction
of the English courts but nothing in this Agreement shall prevent or
restrict a party from enforcing any judgement or order outside such
jurisdiction.
10 NOTICES
Any notice to be given hereunder shall be in writing and delivered by
hand or by first class recorded delivery post or by facsimile letter
addressed and sent to the party to be served (in the case of the
Seller) at the address given herein and (in the case of the Buyer or
Holdings) at its respective registered office for the time being.
Notice delivered by hand shall be deemed to have been served at the
time of actual delivery. Notice sent by post shall be deemed to have
been served at the expiry of 48 hours after posting. Notices sent by
facsimile shall be deemed to have been served on production of a
transmission report from the machine which sent the facsimile
indicating that the facsimile was sent in its entirety to the facsimile
number of the recipient.
11 ENTIRE AGREEMENT
This Agreement and the Disclosure Letter constitute the entire
agreement between the parties relating to the sale and purchase of the
Shares and supersede all previous negotiations, understandings and
agreements, (whether written or oral) between the parties in relation
to the same. It is expressly agreed that no variations or additions to
this Agreement shall be effective unless made in writing, signed for
and on behalf of the parties or by their successors or solicitors (as
the case may be) and expressed to be such a variation or addition).
12 third party rights
12.1 No person who is not a party to this Agreement may enforce any term of
this Agreement. The parties agree that the Contracts (Rights of Third
Parties) Act 1999 shall not apply to this Agreement or to any agreement
or document entered into pursuant to this Agreement.
12.2 This Agreement may be varied by Agreement between the parties to this
Agreement and the consent of any person who is not a party to this
Agreement shall not be required for any such variation.
13 GUARANTEE
13.1 In consideration of the Buyer entering into this Agreement at the
request of the Guarantor and in consideration of the payment of
(pound)1 to the Guarantor by the Buyer (the receipt of which is hereby
acknowledged by the Guarantor), the Guarantor covenants with the Buyer;
and
(d) to procure and guarantee the performance of Logsys Holdings
Limited ("LHL") of all obligations under this Agreement which
are expressed to relate to LHL and of all obligations under
any agreement ("Ancillary Agreement") entered into by LHL
pursuant to this Agreement; and
(e) to guarantee to the Buyer the due payment by LHL of any monies
due to the Buyer under the terms of this Agreement or under
any Ancillary Agreement and this shall be a continuing
guarantee until all monies due are paid.
13.2 The liability of the Guarantor shall not be discharged or impaired by
any amendment to or variation of this Agreement, any release of or
granting of time or other indulgence to LHL or any third party or any
act, event or omission which but for this Clause would operate to
impair or discharge the liability of such party under this Clause.
14 BANK GUARANTEES
14.1 The Buyer agrees that it will use its best endeavours to procure that
the amount of the Bank Guarantee is reduced to (pound)50,000 as soon as
possible following Completion, and will indemnify X X Xxxxxx in respect
of any claim made by Lloyds TSB Bank plc under the Bank Guarantee after
Completion to the extent that this exceeds (pound)50,000.
14.2 Once the Threshold has been paid or realised (the "Final Date") the
Buyer agrees that it will use its best endeavours to procure that the
Bank Guarantee is released in full as soon as possible, and will
indemnify X X Xxxxxx with effect from the Final Date, in respect of any
claim made by Lloyds TSB Bank plc under the Bank Guarantee after the
Final Date.
15 INDEMNITY
15.1 The Covenantors hereby jointly and severally agree to indemnify the
Buyer for any and all costs, charges, expenses, fees, damages or other
similar obligations that it may incur as a result of either Schedule 1
or Schedule 2 being inaccurate or misleading in any respect.
15.2(a) Within 90 days of Completion the Buyer will prepare a statement of the
net asset value of the Target in accordance with generally accepted
accounting principles (the "Statement") following receipt of which the
Seller shall, within 14 days of receipt, communicate to the Buyer in
writing either its acceptance or disagreement with the Statement (for
the avoidance of doubt in the event that the Seller does not respond
within 14 days of receipt the Statement will be deemed to have been
accepted by the Sellers). In the case of dispute the net asset value of
the Target will automatically be prepared and certified by KPMG acting
as independent expert, such certification to be binding on the parties.
15.2(b) In the event that the net asset value of the Target, as either agreed
between the parties or certified by KPMG, exceeds (pound)80,000 the
Buyer hereby agrees to indemnify the Seller in the amount by which the
net asset value of the Target exceeds (pound)80,000 on a pound for
pound basis. In the event that the net asset value of the Target is
below (pound)70,000 the Covenantors hereby jointly and severally agree
to indemnify the Buyer in the amount by which the net asset value of
the Target falls below (pound)70,000 on a pound for pound basis. The
parties hereby agree that Schedule 5 of this Agreement shall not apply
to this clause 15.2.
IN WITNESS WHEREOF the parties have executed this Agreement as a deed on the
date set out on the first page.
EXECUTED (but not delivered until the
date hereof) as a deed by AUTHORISZOR
HOLDINGS LIMITED acting by:
Director:
Director/Secretary:
EXECUTED (but not delivered until the
date hereof) as a deed by LOGSYS HOLDINGS
LIMITED acting by:
Director:
Director/Secretary:
EXECUTED (but not delivered until the
date hereof) as a deed by XXXXXXX
XXXXXX ASHTON in the presence of:
Witness
Signature :
Name :
Occupation :
Address :
SCHEDULE 1
Part 1
Seller's Holdings
(1) (2) (3) (4)
Sellers' names and Holdings of Amount of Cash Common Stock to be
addresses Shares Consideration transferred
((pound)) subject to clause
5.3(b) (shares)
Logsys Holdings Limited 550,496 260,687 186,453
Part 2
Shareholders
This Schedule has been omitted in accordance with Item 601(b)(2) of Regulation
S-B and will be filed with the Securities and Exchange Commission upon request.
SCHEDULE 2
Part 1
Details of the Target
Company Number: ......... 1452614
Date of Incorporation: .... 5 October 1979
Share Capital: ......... Authorised Issued and Allotted
......... ((POUND)) ((POUND))
500,000 80,148
Options issued and outstanding: None
Registered Office: Logsys House, Xxxxxxxx Xxx,
Xxxxxxxxx, Xxxxx XX000 0XX
Directors: ......... Xxxxxxx Xxxxxx Ashton
......... Xxxxx Xxxxxx-Xxxxxx
Secretary: ......... Xxxxx Xxxxxxx Xxxxxx
Accounting Reference Date: 30 September
Subsidiaries ......... None
SCHEDULE 3
Warranties
1 CORPORATE
1.1 The information relating to the Target contained in Schedule 1 Part 2,
Schedule 2 and Schedule 7 to this Agreement is true and complete in all
respects.
1.2 Save as set out in this paragraph
(a) there are no agreements or arrangements in force, other than
this Agreement and the Other Agreements which grant to any
person the right to call for the issue, allotment or transfer
of any share or loan capital of the Target; and
(b) there are no third party consents required by the Target or
the Sellers to enter into or perform the obligations set out
in this Agreement
1.3 Save for immaterial errors the register of members and other statutory
books of the Target have been properly kept and contain an accurate and
complete record of the matters with which they should deal.
1.4 All returns, particulars, resolutions and documents required by any
legislation to be filed with the Registrar of Companies in respect of
the Target have been duly filed and were correct.
1.5 The Sellers have full power and authority to enter into and perform
this Agreement, which when executed will constitute valid and binding
obligations on the Sellers which are enforceable in accordance with
their respective terms.
1.6 The Target is validly incorporated as a private limited company under
the Companies Xxx 0000.
1.7 No order has been made or petition presented, meeting convened or
resolution passed for the winding up of the Target nor has any receiver
been appointed or any distress, execution or other process been levied
in respect of any of its business or the assets.
1.8 No composition in satisfaction of the debts of the Target or scheme of
arrangement of its affairs or compromise or arrangement between it and
its creditors or members or any class of either or both of its
creditors or members has been proposed, sanctioned or approved.
1.9 No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole or
any part of its business or the assets.
1.10 No event has occurred causing, or which upon intervention or notice by
any third party may cause, any floating charge created by the Target to
crystallise over any part of their business or assets or any of them or
any charge created by it to become enforceable over the business or
assets or any of them nor has any such crystallisation occurred nor is
such enforcement in process.
1.11 There have been no acquisitions or disposals of any business and assets
or shares by either the Target or the Subsidiary, save in relation to
the [describe sale of 2 subs] as described in the Disclosure Letter.
2 ACCOUNTS
2.1 The Last Accounts have been prepared in accordance with the historical
cost convention, and the bases and policies of accounting adopted for
the purpose of preparing the Last Accounts are the same as those
adopted in preparing the audited accounts of the Target in respect of
the last three preceding accounting periods apart from changes required
to conform to current FRSs.
2.2 The Last Accounts:
(a) give a true and fair view of the assets and liabilities of the
Target at the Last Accounts Date and its profits or losses for
the financial period ended on that date;
(b) comply with the requirements of the Companies Acts;
(c) comply with all generally accepted United Kingdom accounting
principles and practices which were applicable at the relevant
time to a United Kingdom Company;
(d) to the extent required by the Companies Act and the relevant
FRS provided or reserved for all actual liabilities and
capital commitments of the Target outstanding at the Last
Accounts Date including contingent liabilities and provision
reasonably regarded as adequate for all bad and doubtful
debts;
(e) provide or reserve in accordance with the principles set out
in the notes included in the Last Accounts for all Taxation to
the extent required by the relevant FRSs liable to be assessed
on the Group or for which it may be accountable in respect of
the period ended on the Last Accounts Date.
2.3 All the accounts, books, ledgers and financial records, of the Target
are in its possession, have been fully, properly and accurately kept
and completed and disclose with reasonable accuracy the financial
position of the Group at that time.
3 FINANCIAL
3.1 The Target did not have any capital commitments outstanding at the Last
Accounts Date and the Target has not, to any material extent since
then, incurred or agreed to incur any capital expenditure or
commitments or disposed of any capital assets.
3.2 Since the Last Accounts Date, the Target has not paid or declared any
dividend or made any other payment which is, or is treated as, a
distribution for the purposes of ICTA Part VI Chapter II.
3.3 The Target has not, since the Last Accounts Date, repaid, or become
liable to repay, any indebtedness in advance of its stated maturity.
3.4 There are no liabilities (including contingent liabilities) which are
outstanding on the part of the Target, other than those liabilities
disclosed in the Last Accounts or incurred in the ordinary and proper
course of trading. No liabilities have been discharged by the Target
since the Last Accounts Date other than in the ordinary course of
business.
3.5 No part of the amounts included in the Last Accounts as owing by any
debtor remains unpaid or has been released on terms that any debtor
pays less than the full book value of his debt.
3.6 There is not now outstanding in respect of the Target any guarantee, or
agreement for indemnity or for suretyship, given by, or for the
accommodation of any member of the Group.
3.7 There has been no material adverse change in the financial position of
the Target since the Last Accounts Date.
4 TAXATION
4.1 Save as provided for in the Last Accounts or disclosed in the
Disclosure Letter, there is no material existing contingent or deferred
liability for Taxation including (but without prejudice to the
generality of the foregoing) liability for Taxation which would arise
on Target:
(a) on the Target ceasing to trade or;
(b) on the Target ceasing to use or occupy any asset for the
purposes of its trade or;
(c) on the Target disposing of any asset at its book value as
shown in the Last Accounts or;
(d) as a result of the execution or Completion of this Agreement
or;
(e) if any other person fails to pay any tax charged, assessed or
payable by such other person (including any liability for
Taxation which might arise as a result of two or more such
events);
but excluding any liability for Taxation which arises solely as the
result of the realisation by the Target of trading stock or work in
progress in the ordinary course of its business and no material changes
in the assets and liabilities as shown in the Last Accounts have
occurred since the Last Accounts Date which might result in any such
liability.
4.2 The Target has duly complied with all requirements imposed upon it by
Taxation statutes.
4.3 The Target is not liable and has not since the Last Accounts Date been
liable to pay any interest, penalty, fine or sum of a similar nature in
respect of Taxation and there is in existence no Inland Revenue charge
over or in respect of any of the Target's assets.
4.4 The Target is not is in dispute with the Inland Revenue, HM Customs and
Excise or any other fiscal authorities (whether of the UK or elsewhere)
and the Sellers are not aware of any circumstances which may give rise
to such a dispute and in particular, (but without prejudice to the
generality of the foregoing) the Target has not within the last six
years been a party to, entered into, or been involved with any
artificial scheme for the avoidance or deferral of Taxation.
4.5 The Target is duly registered and are taxable persons for the purposes
of value added tax and comprise a value added tax group.
4.6 Since the Last Accounts Date no expenditure has been incurred or is or
has become liable to be incurred by the Target after that date which
will not be wholly deductible in computing the taxable profits of the
Target except for expenditure on the acquisition of an asset to be held
otherwise than as stock in trade.
5 TRADING
5.1 Since the Last Accounts Date the business of the Target has been
continued in the ordinary and normal course, and there has been no
deterioration in its turnover, trading position, or its prospects.
5.2 The Target is not and has not agreed to become a member of a
Partnership (as defined by the Partnership Act 1890).
5.3 The Target is not engaged in any litigation or arbitration proceedings,
as plaintiff or defendant or third party; there are no such proceedings
pending or threatened, either by or against the Target and there are no
circumstances of which the Sellers are actually aware which are likely
to give rise to any litigation or arbitration.
5.4 So far as the Sellers are aware, there is no dispute with any
government or any agency or body acting on behalf of such government or
any other authority in the United Kingdom or elsewhere, in relation to
the affairs of the Target and, so far as the Sellers are actually
aware, there are no facts or circumstances which may give rise to any
such dispute.
5.5 There are no claims pending or threatened, against the Target by an
employee, independent contractor or any other third party, in respect
of any accident, disease, illness or injury, which are not fully
covered by insurance.
5.6 The Target has conducted and is conducting its business in all respects
in accordance with all applicable laws and regulations, of the United
Kingdom.
5.7 There are no outstanding authorities (express or implied) by which any
person except a director may enter into any contract or commitment to
do anything on behalf of the Target.
5.8 The Target has not received notice of any unresolved complaints from
any customers with regard to the products or services provided by the
Target, save as disclosed in the Disclosure Letter.
5.9 The Target is not a party to, nor have its profits during the three
years prior to the date of this Agreement been affected by any contract
which is not of an entirely arm's length nature.
5.10 All material contracts entered into by the Target:
(a) have been entered into in the ordinary business;
(b) do not contain any change of control provisions; and
(c) have been entered into on arm's length terms.
6 PROPERTY
Save in respect of the leasehold premises, leases for which have been
disclosed in the Disclosure Letter, the Target does not occupy and has
no obligations or liabilities in respect of any other property or
premises.
7 EMPLOYMENT
7.1 Save as set out in paragraph 1.2 above, there are no schemes (whether
contractual or discretionary) in operation by or in relation to the
Target under which any employee of the Target is entitled to any
benefits.
7.2 All employees of the Target are employed on the standard terms and
conditions of employment of the Target.
8 ASSETS
8.1 The Target owned at the Last Accounts Date, and had good and marketable
title to, and (except for assets subsequently sold or realised in the
ordinary course of business) still owns and has good and marketable
title to, all the assets included in their respective Last Accounts and
to all assets acquired by it since the Last Accounts Date and not
subsequently sold or realised as mentioned.
8.2 The Target has not created or granted or agreed to create or grant any
mortgage, charge, encumbrance or other security interest in respect of
its undertaking or assets, and none of the undertaking or assets owned
absolutely by the Target is subject to any option or right of
pre-emption.
8.3 The plant, machinery, equipment, vehicles and other equipment used in
connection with the business of the Target are the absolute property of
the Target:
8.4 The schedules of the insurance polices held by the Target contained in
the Disclosure Letter are true and accurate and all premiums payable
under such policies have been paid in full.
8.5 No claim is outstanding, under any of such insurance policies.
8.6 So far as the Sellers are aware the Target owns or has valid and
subsisting licences to utilise all of the material intellectual
property it requires to operate its business in the manner operated as
at Completion, and the Sellers are not aware of any disputes relating
to such intellectual property.
8.7 All inventions, knowhow, processes, solutions, copyright or other
similar intellectual property rights created by any employees or
officers of the Target in their capacity as such, are the absolute
property of the Target.
9 GENERAL
The factual information set out in the documents contained in the
Disclosure Bundle referred to in the Disclosure Letter is true and
accurate and not misleading to any material extent as at the date
hereof, there have been no material adverse changes to the debtors,
creditors, work in progress and proforma completion balance sheet of
the Target, as disclosed in the Schedules contained in the Disclosure
Bundle.
SCHEDULE 4
Letter of Representation
Authoriszor Inc.
Xxx Xxx xx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx XX
XXX
Attention: Xx. Xxxx Xxxxx
President
Gentlemen:
In connection with the issuance to the undersigned of ____________ shares (the
"Shares"), of common stock, par value $.01 per share (the "Common Stock"), of
Authoriszor Inc., a Delaware corporation (the "Company"), the undersigned
warrants and represents that:
10 The undersigned is acquiring the Shares for investment solely for his
own account and not for distribution, transfer or resale to others.
11 The undersigned has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of the acquisition of the Shares.
12 The undersigned understands that the Shares to be acquired have not
been registered under the Securities Act of 1933, as amended (the
"Securities Act"), nor pursuant to the provisions of the securities
laws or other laws of any other applicable jurisdiction, in reliance
upon exemptions for private offerings contained in the Securities Act
and the regulations promulgated thereunder and in the applicable laws
of such jurisdictions. The undersigned is fully aware that the Shares
subscribed for by the undersigned are to be issued to the undersigned
in reliance upon such exemptions based upon the representations set
forth herein. The undersigned is also fully aware of the restrictions
on sale, transferability and assignment of the Shares.
13 The undersigned will be subject to the Company's Xxxxxxx Xxxxxxx Policy
and the Company's Regulation FD Policy, as such policies may be amended
from time to time.
Because the Shares have not been registered under any securities laws,
they will be "restricted securities" as defined in Securities and
Exchange Commission Rule 144. Accordingly, the undersigned, as a
stockholder, may not sell, transfer, or otherwise dispose of them
without registration under the Securities Act and applicable securities
laws or the applicability of an exemption from registration (in which
case the undersigned may be required to provide the Company with a
legal opinion, in form and substance satisfactory to the Company and
its counsel, that registration is not required).
14 The Shares are not being acquired directly or indirectly as nominee,
trustee, agent, or representative for any other person or persons.
15 The undersigned acknowledges and consents that certificates now or
hereafter issued for the Shares will bear a legend substantially as
follows:
"The shares of stock of Authoriszor Inc. (the "Company") represented by
this certificate have not been registered under the Securities Act of
1933, as amended (the "Act"), and the holder hereof cannot make any
sale, pledge, hypothecation, assignment or other transfer of any shares
of such stock except pursuant to an offering of such shares duly
registered under the Act, and any applicable state securities laws, or
under other such circumstances which in the opinion of counsel for the
Company, at the time, does not require registration under the Act or
any applicable state securities laws. The shares represented by this
certificate are "restricted securities" within the meaning of Rule 144
promulgated by the Securities and Exchange Commission under the Act and
may be subject to the limitations and reporting requirements of said
rule upon resale or other distribution thereof."
16 The undersigned warrants that the information set forth in this
Investment Letter is true and correct, with the knowledge that the
Company is relying on the accuracy of the information and truth of the
representations contained herein in connection with the Company's
compliance with applicable securities laws. The undersigned further
agrees to indemnify and hold harmless the Company from any and all
liabilities, losses, costs, and expenses arising out of or related to
the resale or other distribution by the undersigned of all or any
portion of the Shares in violation of the Securities Act or of any
applicable state securities laws as well as any and all liabilities,
losses, costs, and expenses to which the Company may be put or that the
Company may incur by reason of or in connection with any
misrepresentation made by the undersigned, any breach of any of its
warranties, or its failure to fulfil any of the covenants or agreements
set forth herein. The representations and warranties contained herein
(i) are made from the date the Board of Directors approved the issuance
of the Shares to the undersigned, and (ii) are binding upon the heirs,
legal representatives, successors, and assigns of the undersigned.
Executed as of this _______ day of _______________, 2001
[Shareholder]
Address (for purpose of the Company's stock transfer records):
SCHEDULE 5
Limitations on Seller's Liability
1 Notwithstanding anything to the contrary contained in Clause 6 of this
Agreement the Warranties shall be qualified by the provisions of this
Schedule and in the event of inconsistency between the provisions of
this Schedule and the Seller's Warranties the provisions of this
Schedule shall prevail.
2 The Seller shall not be liable in respect of any claim under the
Warranties to the extent that the matter or matters giving rise to such
claim are accurately disclosed in the Disclosure Letter.
3 The liability of the Seller in respect of breach of the Warranties
given by the Sellers under this Agreement shall be limited as follows:
(a) the aggregate maximum liability of the Sellers in respect of
all and any claims under the Warranties and Tax Deed shall in
any event not exceed(pound)368,832.32;
(b) the Sellers shall not be liable in respect of all and any
claims made by the Buyer under the Warranties unless and until
the aggregate cumulative liability of the Sellers in respect
of all and any such claims exceeds (pound)5,000 in which event
the Sellers shall be liable for the full amount (and not
merely the excess) of the relevant claims; and
(c) the Sellers shall not be liable in respect of any claim under
the Warranties unless it shall have been made in the case of
the Warranties set out in paragraph 4 of Schedule 3 to this
Agreement and/or under the Tax Deed before the expiry of 6
years from the date hereof and in the case of all other
Warranties before the expiry of 2 years from the date hereof.
4 The limitations on liability contained in this Schedule shall not apply
to any matters directly arising from the fraud and dishonesty of the
Seller involved in relation to that Seller.
5 In the event that any matter arises which is likely to give rise to a
claim under the Warranties they Buyer will notify the Seller of the
circumstances surrounding the claim and will give due and proportionate
regard to these comments and suggestions which the Seller may have such
comments and suggestions to be submitted to the Buyer in writing not
more than 15 days following receipt of notification from the Buyer.
SCHEDULE 6
Tax Deed
1 INTERPRETATION
1.1 In this Schedule unless the context otherwise requires, words and
expressions defined in the Agreement have the same meanings in this
Schedule and the following expressions have the following meanings:
"Claim for Taxation" any assessment, notice, demand, letter or other
document issued by or action taken by or on behalf of any Taxation
Authority or self assessment from which it appears that the Sellers
have or may have a liability to make a payment pursuant to paragraph 2
of this Schedule.
"Company" means the Target.
"Event" any transaction, arrangement, act, failure or omission and
includes (without limitation) any distribution, failure to distribute,
acquisition, disposal, transfer, payment, loan or advance but excludes
the execution and performance of this Agreement.
"Liability" any matter giving rise to a claim under paragraph 2.
"Payment of Taxation" any payment of Taxation (whether or not the same
is primarily payable by the Company or the Buyer and whether or not the
Company or the Buyer has, or may have, any right of reimbursement
against any other person or persons) and includes any payment of
Taxation which would have been due to be made but for the utilisation
of any Relevant Relief or any Post Completion Relief.
"Post Completion Relief" any Relief which arises to the Company by
reason of an Event occurring after the Completion Date;
"Relevant Relief" any Relief to the extent that it is taken into
account:
(a) in computing and so reducing or eliminating any provision for
Taxation (including deferred tax and recoverable input VAT)
which appears or but for such Relief would have appeared in
the Last Accounts; or
(b) which is otherwise treated as an asset in the Last Accounts;
or
(c) or any Relief which arises to the Company by reason of an
Event occurring after the Completion Date.
"Relief" any loss, allowance, credit, relief, deduction, exemption or
set off or any right to a repayment of Taxation.
"Taxation" all forms of taxation, charge, duty, impost, levy and
governmental charge (whether national or local) in the nature of tax
(including without limitation national insurance, social security and
other similar contributions, stamp duty and stamp duty reserve tax),
whatsoever and whenever created, enacted or imposed, and whether of the
United Kingdom or elsewhere, and any amount whatever payable to any
Taxation Authority or any other person as a result of any enactment
relating to taxation, together with all fines, penalties, interest,
costs, charges, surcharges and expenses connected therewith except as
attributable to the unreasonable delay or default of the Company or
Buyer after Completion.
"Taxation Authority" any statutory or governmental authority or body
(whether in the United Kingdom or elsewhere) involved in the collection
or administration of Taxation including (without limitation) the Inland
Revenue and H.M. Customs and Excise.
1.2 Reference in this Schedule to the result of any Event on or before the
Completion Date includes the combined result of any two or more Events
the first of which took place on or before the Completion Date provided
that any Event(s) which take place before Completion occur outside the
ordinary course of business of the Company as carried on at Completion
and the Event(s) after Completion occur inside the ordinary course of
business of the Company as carried on at Completion.
1.3 Reference in this Deed to income or profits or gains earned, accrued or
received on or before the Completion Date includes income or profits or
gains which are deemed to be earned, accrued or received on or before
the Completion Date for any Taxation purpose.
1.4 Without limiting the generality of the expression, reference in this
Deed to anything "in the ordinary course of business" does not
include:-
(a) an Event which results in the Company becoming liable for
Taxation for which it is not primarily liable;
(b) the acquisition, disposal or supply or deemed acquisition,
disposal or supply of any asset, goods, service or facility
(including a loan of money or the letting, hiring or licensing
of tangible or intangible property) in a transaction which is
not entered into at arm's length;
(c) the making of a distribution or deemed distribution for Tax
purposes,
(d) the creation, cancellation or reorganisation of any share or
loan capital or any company becoming or ceasing to be a member
of a group of companies for any Taxation purpose;
(e) the failure by the Company to deduct, charge, recover, or
account for Taxation;
(f) the acquisition or disposal (including any deemed disposal) of
a capital asset;
(g) an Event giving rise to a liability or potential liability
under Part XVII Taxes Act (tax avoidance), sections 29 to 36
or part VIIII TMA, or Schedule 9A VATA;
(h) a transaction or arrangement which includes, or a series of
transactions or arrangements which includes, any step or steps
having no commercial or business purpose apart from the
deferral, reduction or avoidance of a liability for Taxation;
and
(i) any Event which gives rise to any interest, fine, penalty,
charge or surcharge in connection with Tax.
1.5 The headings in this Schedule do not affect its interpretation.
1.6 Unless otherwise specified:-
(a) references to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or
may from time to time be, amended modified or re-enacted
except to the extent that such amendment modifications or
re-enactment would increase the liability of the Sellers under
this Schedule;
(b) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of
acts, matters or things;
(c) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general words;
(d) other expressions used in this Schedule shall where the
context so admits have the meanings ascribed in them in this
Agreement; and
(e) references to the Company in this Schedule shall be deemed to
include the Subsidiary.
2 COVENANT
Subject as provided in this Schedule the Sellers jointly and severally
covenants with and undertakes to the Buyer to pay to the Buyer an
amount equal to:
2.1 any Payment of Taxation made or to be made by the Company (including
any Payment of Taxation which has been made by the Company since the
Last Accounts Date) where such Taxation results from, or is calculated
by reference to, any income, profits or gains earned, received or
accrued by the Company on or before the Completion Date or which
results from, or is calculated by reference to, any Event which
occurred on or before the Completion Date or was deemed to occur on or
before the Completion Date for the purposes of any Taxation;
2.2 the value to the Company of a Relevant Relief which is unavailable,
lost, reduced or cancelled in consequence of an Event occurring on or
before the Completion Date (and for this purpose the value to the
Company is either the Taxation which would have been saved but for the
unavailability, loss, reduction or cancellation of the Relevant Relief
or the amount of the repayment of Taxation which is unavailable, lost,
reduced or cancelled);
2.3 any Inheritance Tax which is unpaid at the Completion Date and in
respect of which the Inland Revenue has a charge on any of the shares
or assets of the Company, or gives rise to a power to sell, mortgage or
charge any of the shares or assets of the Company or which after the
Completion Date becomes a charge on or gives rise to a power to sell,
mortgage or charge any of the shares or assets of the Company, being a
liability in respect of Inheritance Tax payable as a result of the
death of any person within seven years after a transfer of value (or a
deemed transfer of value) if a charge on or power to sell, mortgage or
charge any such shares or assets existed at the Completion Date or
would have existed at Completion, if the death had occurred immediately
before the Completion Date and the Inheritance Tax payable as a result
thereof had not been paid;
2.4 any Payment of Taxation made or to be made by the Company which arises
as a result of the application of Section 767A or 767AA ICTA 179, 189,
190 or 191 TCGA or Section 132 Finance Act 1988 as a result of
corporation tax being assessed on any company (other than the Company
the "Taxpayer Company") and remaining unpaid where the Taxpayer Company
either is or was under the control of any person who has at any time
prior to Completion had control of the Company or was under the control
of the Company prior to Completion (in each case within the meaning of
Section 767B ICTA); and
2.5 any costs or expenses incurred by the Buyer or the Company in
connection with or in consequence of any of the matters referred to in
paragraphs 2.1 to 2.4 or any claim therefor or in taking or defending
any action under this Deed.
3 EXCLUSIONS
3.1 Notwithstanding any other provision in this Schedule the covenant
contained in paragraph 2 does not apply to any Liability:
(a) to the extent (if any) to which full provision, reserve or
allowance was made for such Liability in the Last Accounts
thereto; or;
(b) to the extent that it arises in the ordinary course of
business of the Company since the Last Accounts Date.
(c) to the extent that such Liability arises or is increased only
as a result of any increase in rates of Taxation or variation
in the method of applying or calculating the rate of Taxation
announced or made after Completion with retrospective effect
or of any change in law occurring after Completion with
retrospective effect; or
(d) to the extent that such Liability arises or is increased as a
result of any change after Completion in the bases methods or
policies of accounting of the Company save where such change
is made to comply with generally accepted accounting practice,
the published practice of any Taxation Authority, the law or
rule of any regulating authority or body in force at the
Completion Date; or
(e) the loss occasioned thereby has been recovered pursuant to a
claim under the Warranties in the Agreement;
(f) to the extent that such Liability would not have arisen but
for any voluntary act of the Company after Completion which
the Company knew would give rise to such Liability but
excluding any act:
(i) carried out pursuant to a legally binding obligation
of the Company incurred prior to Completion; or
(ii) pursuant to an obligation imposed by any law,
regulation or requirement having the force of law; or
(iii) taking place with the written approval of the Sellers
or pursuant to the Agreement or any document executed
pursuant to the Agreement; or
(iv) occurring in the ordinary course of business of the
Company; or
(v) constituting the lodging of a document for stamping
at the Stamp Office of the Inland Revenue (or other
equivalent Taxation Authority outside the UK); or
(g) (in the case of the subsidiary) which results in a
corresponding saving by or benefit to WRDC Limited;
(h) to the extent it comprises Tax payable by the Purchaser of the
Company under this Agreement or any document executed pursuant
to the terms of this Agreement for the purpose of giving
effect to this Agreement.
(i) which is a liability in respect of value added tax relating to
supplies made by the Company in respect of which value added
tax has been properly charged and the tax invoice issued but
which value added tax is not yet due and payable to HM Customs
and Excise.
3.2 The provisions of paragraphs 3(a) and 3(b) Schedule 5 to this Agreement
shall apply to claims under paragraph 2 of this Schedule mutatis
mutandis as if set out herein.
4 CONDUCT OF CLAIMS
4.1 If the Company receives a Claim for Taxation, the Buyer shall as soon
as reasonably possible but no later than 10 business days after receipt
procure that the Company shall as soon as reasonably practicable give
notice thereof to the Sellers provided that delivery of such notice is
not a condition precedent to the liability of the Sellers under this
Schedule.
4.2 Subject to paragraph 4.3 and 4.4, the Buyer shall procure that the
Company takes such action to avoid, dispute, resist, appeal, compromise
or contest any Claim for Taxation as the Sellers may reasonably request
provided that:
(a) the Buyer shall not be obliged to procure any such action
unless the Sellers have indemnified and secured the Buyer and
the Company to their reasonable satisfaction against any
liabilities, costs or expenses (including additional Taxation)
which may be incurred thereby;
(b) the Sellers shall not be entitled to require the Company to
delegate the conduct of such action to itself of any
professional agent or advisor of the Sellers;
(c) neither the Buyer nor the Company shall be obliged to take any
action requested by the Sellers which could reasonably be said
to be frivolous or vexatious or which could adversely affect
their future Taxation position.
4.3 The Company shall not be obliged to comply with any request of the
Sellers which involves contesting any Claim for Taxation before any
court or other appellate body unless the Sellers obtains the written
opinion of Leading Tax Counsel that such contest will, on the balance
of probabilities, be successful.
4.4 The Buyer and the Company shall be free to take such action as they may
in their absolute discretion think fit and without prejudice to their
rights and remedies under this Schedule if within 28 days of service of
the notice under paragraph 4.1 the Sellers fail to notify the Buyer of
their intention to resist such Taxation or fail within that period to
give the indemnity and security referred to in paragraph 4.2(a).
4.5 Paragraph 4.2 shall not apply if any of the Sellers or the Company has
committed acts or omissions which constitute or are alleged to
constitute fraud, wilful default or negligent conduct.
5 PAYMENT
5.1 A payment to be made by the Sellers under this Schedule shall be made
in cleared funds on the following dates:
(a) in the case of an amount under paragraphs 2.1 or 2.3 on or
before the later of (a) seven days after written demand
therefor and (b) seven days before the date on which the
Taxation is finally due to the Taxation Authority demanding
the same (or would have been due but for the utilisation of
any Relevant Relief);
(b) in the case of an amount under paragraph 2.2 on or before the
later of (a) seven days after written demand therefor and (b)
seven days before the date on which Taxation becomes payable
which would not have been payable if no liability had arisen
under paragraph 2.2 or in the case of a repayment of Taxation,
the date on which such repayment would have been made;
(c) in the case of an amount under paragraph 2.6 within seven days
of the Buyer giving written notice of the costs and expenses
to the Sellers.
5.2 Where the Sellers fail to make a payment in satisfaction of a liability
under this Schedule by the due date for payment, the liability of the
Sellers shall be increased to include interest on such sum from the
date on which the Sellers become liable to make payment to the date of
actual payment at a rate per annum being two per cent above the base
rate from time to time of Barclays Bank plc (such interest to accrue
after as well as before judgement).
6 OVER-PROVISIONS, RELIEFS, ETC
6.1 If the auditors for the time being of the Company certify (at the
request and expense of the Sellers) that any provision for Taxation in
the Last Accounts (excluding any provision for deferred Taxation) has
proved to be an over-provision, then the amount of such over-provision
shall be dealt with in accordance with paragraph 7.3.
6.2 If the auditors for the time being of the Company certify (at the
request and expense of the Sellers) that any Liability which has
resulted in a payment having been made or becoming due from the Sellers
under this Schedule will give rise to a Relief for the Company which
would not otherwise have arisen, then, as and when the liability of the
Company to make an actual payment of or in respect of Taxation is
reduced by reason of that Relief and after taking account of the effect
of all other Reliefs that are or become available to the Company
(including any Relief derived from a subsequent accounting period), the
amount by which that liability is so reduced shall be dealt with in
accordance with paragraph 7.3.
6.3 Where it is provided under paragraph 7.1 or 7.2 that any amount (the
"Relevant Amount") is to be dealt with in accordance with this
paragraph 7.3:
(a) the Relevant Amount shall first be set off against any payment
then due from the Sellers under this Schedule; and
(b) to the extent there is an excess, a refund shall be made to
the Sellers of any previous payment or payments made by the
Sellers under this Schedule or the Seller's Warranties
relating to Taxation and not previously refunded under this
Clause up to the amount of such excess; and
(c) to the extent that the excess referred to in paragraph 7.3(b)
is not exhausted under that Clause, the remainder of that
excess shall be carried forward and set off against any future
payment or payments which become due from the Sellers under
this Schedule or under the Seller's Warranties relating to
Taxation and if it shall not be set off against any future
payment or payments which become due from the Sellers under
this Schedule or under the Seller's Warranties relating to
Taxation within 6 years of the date of this Agreement then it
shall be repaid by the Buyer to the Seller.
6.4 Where any such certification as is mentioned in paragraph 7.1 or 7.2
has been made, the Sellers or the Buyer or the Company may request that
the auditors for the time being of the Company review such
certification in the light of all relevant circumstances, including any
facts which have become known only since such certification, and to
certify whether such certification remains correct or whether in the
light of those circumstances the amount that was the subject of such
certification should be amended.
6.5 If the auditors certify under paragraph 7.4 that an amount previously
certified should be amended, that amended amount shall be substituted
for the purposes of paragraph 7.3 as the Relevant Amount in respect of
the certification in question in place of the amount originally
certified, and such adjusting payment (if any) as may be required by
virtue of the above-mentioned substitution shall be made as soon as
practicable by the Sellers or (as the case may be) to the Sellers.
7 RECOVERY FROM OTHER PERSONS
7.1 If, in the event of any payment becoming due from the Sellers under
paragraph 2, the Company either is immediately entitled at the due date
for the making of that payment to recover from any person (not being a
Company or an employee of the Company but including any Tax Authority)
any sum in respect of the Liability that has resulted in that payment
becoming due from the Sellers or at some subsequent date becomes
entitled to make such a recovery, then the Buyer shall procure that the
Company promptly notifies the Sellers of its entitlement and if so
required by the Sellers and at the Sellers' sole expense, takes all
appropriate steps to enforce that recovery (keeping the Sellers fully
informed of the progress of any action taken); and if the Sellers have
made a payment under paragraph 2 in respect of the Liability in
question, the Buyer shall account to each of the Sellers for whichever
is the lesser of:-
(a) any sum so recovered by the Company in respect of that
Liability (including any interest or repayment supplement paid
by the Tax Authority or other person on or in respect thereof
less any Taxation chargeable on the Company in respect of that
interest and all costs and expenses reasonably and properly
incurred by the Company or the Buyer in obtaining recovery of
such sum insofar as not previously made good to the Company or
the Buyer (as appropriate) by the Sellers or the Tax
Authority.; and
(b) the amount paid by the Sellers under paragraph 2 in respect of
that Liability;
8 TAX ADMINISTRATION
8.1 The Sellers or their duly authorised agents shall (at the Company's
expense) prepare the accounts and corporation tax returns of the
Company for all accounting periods ending on or before Completion to
the extent that the same have not been prepared before Completion.
8.2 Without prejudice to the Buyer's rights under this Schedule, the Buyer
shall procure that the Company shall cause the accounts and returns
mentioned in paragraph 9.1 above so far as they are legally able to do
so to be authorised, signed and submitted to the appropriate authority
with such reasonable amendments as the Buyer may request and shall give
the Sellers or their agents all such assistance as may be necessary or
reasonably required to agree those returns with the appropriate
authority PROVIDED THAT the Company shall not be obliged to sign and
submit a return which is wrong or inconsistent, in any material manner,
on its face.
8.3 The Sellers or their duly authorised agents shall (at the Company's
expense) prepare all documentation and deal with all matters (including
correspondence) relating to the accounts and returns of the Company for
all accounting periods ended on or before Completion and the Buyer
shall procure that the Company provides such access to its books,
accounts and records as is necessary or reasonable to enable the
Sellers or their duly authorised agents to prepare the documentation
and to deal with all matters relating thereto.
8.4 The Sellers shall ensure that all material communications to the
relevant Taxation Authorities under this Clause are first sent to the
Buyer and the Sellers shall consult with the Buyer regarding the
contents of such communications and shall incorporate any reasonable
comments of the Buyer.
8.5 The Buyer shall ensure that all material communications to the relevant
Taxation Authorities in respect of the accounting period in which
Completion takes place are first sent to the Sellers and the Buyer
shall consult with the Sellers regarding the contents of such
communications and (without prejudice to the Buyer's rights under this
Schedule or the Tax Warranties) shall incorporate any reasonable
comments of the Sellers.
8.6 Upon the agreement with the Inland Revenue or other Taxation Authority
of the matters conducted by the Sellers or their agents under this
Clause the Sellers or their agents shall forthwith hand copies of all
relevant files, documents and information obtained and deriving from
such matters to the Buyer.
8.7 The Sellers shall promptly notify the Buyer of any matter which in the
Sellers' reasonable opinion is likely to give rise to a claim under
this Schedule upon becoming aware of any such matter to the intent that
the Sellers shall obtain no advantage in respect of this Schedule
arising from any delay or failure to notify the Buyer of such a
liability or potential liability.
8.8 The Sellers shall use or shall procure that their agents use all
reasonable expedition to ensure that all the tax affairs of the Company
conducted by the Sellers or their agents under this Clause are
completed as soon as reasonably possible and in any event before 31
December 2001, if the tax affairs for which the Sellers are responsible
under this paragraph 9 are not agreed by 31 December 2001 the Sellers
shall lose all rights under this paragraph 9.
8.9 The Sellers shall promptly provide to the Buyer copies of all
information, documents and evidence in its possession or in the
possession of any of its agents in respect of any accounting period of
the Company ended on or before Completion which may reasonably be
requested by the Buyer.
SCHEDULE 7
Trade Debts and WIP
This Schedule has been omitted in accordance with Item 601(b)(2) of Regulation
S-B and will be filed with the Securities and Exchange Commission upon request.
SCHEDULE 8
The Retention
1 The Retention Deposit payable in accordance with clause 5.4 of this
Agreement by the Guarantor will be paid into a joint on-demand interest
bearing deposit account ("the Account") in the name of the Seller's
Legal Advisor and the Buyer's Solicitors who will hold the Retention
Deposit upon trust for the Seller and the Buyer upon those terms set
out in clause 5.4 of this Agreement.
2 The Seller's Legal Advisor and the Buyer's Solicitors will procure that
the Account is set up immediately following Completion and the details
of the account will be notified to the parties to this Agreement.
SCHEDULE 9
DVA Heads of Terms
AGREEMENT
Date: 29th June 2001-07-11
Parties: Logsys Solutions Limited
Logsys House
Xxxxxxxx Xxx
Xxxxxxxxx
Xxxxxxxxx XX00 0XX ("Logsys") (1)
Xxxxxxx Xxxxxx Ashton
Ridgecroft
Wellingtonia Avenue
Crowthorne
Berkshire ("SLA") (2)
Preliminary:
(1) Logsys have the intellectual property rights to the Defence Vatting
System known as Warrantor II ("the Software")
(2) Under it's agreement with the MOD regarding the software, Logsys has
the rights to worldwide exploitation of the software subject to
agreement with the MOD as to royalty payments to be made to MOD on the
commercial exploitation of the software.
(3) The parties have agreed on the assignment of Logsys worldwide
exploitation rights in the software to SLA or his nominated assignee.
Agreed:
(1) Logsys now grants SLA an exclusive worldwide license to exploit and
resale the software.
(2) SLA will either pay direct to MOD or reimburse Logsys (as the case may
Require) any and all royalties due to MOD in respect of such re-sales
and will in addition pay to Logsys a royalty of 25% of the net product
portion of the sale proceeds charged for the software received by SLA
from such re-sales. SLA will not be liable to pay any royalties except
those due to MOD for use of the software to provide a service to end
users.
(3) At the request fo SLA Logsys will supply at their standard rates such
support as may be necessary to install, support, enhance or change the
software of any such re-sale by SLA.
(4) Logsys will supply SLA with a copy of the software in source code form
and will keep that copy updated with any changes.
(5) If Logsys becomes insolvent or ceases to perform its obligations
hereunder after receiving reasonable written notice of breach then all
its intellectual property rights in the software will automatically
accrue to SLA together with all rights to support, maintain and enhance
the software to all the current users thereof.
