1
EXHIBIT 2.7
SHARE PURCHASE AGREEMENT
AMONG
XXXXXX U.K. INC.,
AND
XXXX XXXXXX
XXXXXXX XXXXXXX
XXXXXXX XXX BROOMBY
XXXXX XXXXXXXXXXX
2
TABLE OF CONTENTS
PAGE
1. Definitions.............................................................. 1
2. Purchase and Sale of TARGET Shares....................................... 7
(a) Basic Transaction................................................. 8
(b) Purchase Price.................................................... 8
(c) The Closing....................................................... 8
(d) Deliveries at the Closing......................................... 8
(e) Pre-emption Rights Waiver......................................... 9
(f) Title to the TARGET Shares........................................ 9
(g) Purchase of all TARGET Shares..................................... 9
(h) Reduction of Purchase Price....................................... 9
3. Representations and Warranties Concerning the Transaction................ 10
(a) Representations and Warranties of the Sellers..................... 10
(i) Authorisation of Transaction.................................. 11
(ii) Noncontravention.............................................. 11
(iii) Brokers' Fees................................................. 12
(iv) Investment Representations.................................... 12
(v) TARGET Shares................................................. 13
(b) Representations and Warranties of Xxxxxx.......................... 13
(i) Organisation of Xxxxxx and the Parent......................... 14
(ii) Authorisation of Transaction.................................. 14
(iii) Noncontravention.............................................. 14
(iv) Capitalisation................................................ 14
(v) Sec Reports................................................... 14
(vi) Brokers' Fees................................................. 15
4. Representations and Warranties Concerning TARGET and its Subsidiaries.... 15
(a) Organisation, Qualification, and Corporate Power.................. 15
(b) Capitalisation.................................................... 15
(c) Noncontravention.................................................. 16
(d) Brokers' Fees..................................................... 16
(e) Title to Assets................................................... 16
(f) Subsidiaries...................................................... 17
(g) Financial Statements.............................................. 17
(h) Events Subsequent to Most Recent Fiscal Year End.................. 17
(i) Undisclosed Liabilities........................................... 20
(j) Legal Compliance.................................................. 20
(k) Tax Matters....................................................... 20
(l) Property.......................................................... 30
(m) Intellectual Property............................................. 32
(n) Tangible Assets................................................... 34
(o) Contracts......................................................... 34
3
(p) Book Debts........................................................ 35
(q) Powers of Attorney................................................ 36
(r) Insurance......................................................... 36
(s) Litigation........................................................ 37
(u) Guarantees........................................................ 42
(v) Environmental, Health, and Safety Matters......................... 42
(w) Certain Business Relationships.................................... 43
(x) Competition....................................................... 43
(y) Disclosure ....................................................... 43
5. Pre-Closing Covenants.................................................... 44
(a) General........................................................... 44
(b) Notices and Consents.............................................. 44
(c) Operation of Business............................................. 45
(d) Preservation of Business.......................................... 45
(e) Full Access....................................................... 45
(f) Notice of Developments............................................ 45
6. Post-Closing Covenants................................................... 46
(a) General........................................................... 46
(b) Litigation Support................................................ 46
(c) Transition........................................................ 46
(d) Confidentiality................................................... 46
(e) TARGET Shares..................................................... 47
(f) Indemnities....................................................... 47
7. Conditions to Obligation to Close........................................ 47
(a) Conditions to Obligation of Xxxxxx................................ 48
(b) Conditions to Obligation of the Sellers........................... 50
8. Remedies for Breaches of This Agreement.................................. 51
(a) Survival of Representations and Warranties........................ 51
(b) Indemnification Provisions for Benefit of Xxxxxx.................. 52
(c) Indemnification Provisions for Benefit of the Sellers............. 52
(d) Matters Involving Third Parties................................... 53
(e) Payments of and Interest on Indemnification Amounts............... 54
(f) Other Indemnification Provisions.................................. 54
(g) Rights Cumulative................................................. 54
(h) Information....................................................... 54
(i) Limitations on Indemnification.................................... 55
9. [Intentionally Omitted].................................................. 58
10. Termination.............................................................. 58
(a) Termination of Agreement.......................................... 58
(b) Effect of Termination............................................. 59
11. Miscellaneous............................................................ 59
(a) Nature of Certain Obligations..................................... 59
(b) Press Releases and Public Announcements........................... 59
(c) No Third-Party Beneficiaries...................................... 60
(d) Entire Agreement.................................................. 60
4
-iii-
(c) No Third-Party Beneficiaries...................................... 60
(d) Entire Agreement.................................................. 60
(e) Succession and Assignment......................................... 60
(f) Counterparts...................................................... 60
(g) Headings.......................................................... 60
(h) Notices........................................................... 60
(i) Governing Law..................................................... 62
(j) Amendments and Waivers............................................ 62
(k) Severability...................................................... 62
(l) Expenses.......................................................... 62
(m) Construction...................................................... 62
(n) Incorporation of Exhibits, Annexes, and Schedules................. 63
(o) Specific Performance.............................................. 63
(p) Address for Service............................................... 63
SCHEDULES
Schedule 1 -- Sellers, Share Holdings, Purchase Price Allocation, Etc.
Schedule 2 -- Premises
Schedule 3 -- Subsidiaries
Schedule 3(b) -- Exceptions to Xxxxxx'x Representations and Warranties
Disclosure Schedule -- Exceptions to Representations and Warranties Concerning
TARGET and its Subsidiaries
EXHIBITS
Exhibit 1 -- Tax Deed
Exhibit 2(b) -- Escrow Agreement
Exhibit 4(g) -- TARGET Financial Statements
Exhibit 7(a)(vii) -- Employment Agreements
Exhibit 7(a)(viii) -- Releases
Exhibit 7(a)(ix) -- Covenants
Exhibit 7(t)(iii) -- Specimen Existing Employment Contracts
5
SHARE PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is dated December 23, 1998
BETWEEN:
(1) THE PERSONS whose names and addresses are set out on Schedule 1 (the
"SELLERS"); and
(2) XXXXXX U.K. INC., an Ohio corporation, whose principal place of
business is at 700 Xxxxx Tower, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxx
00000, XXX ("XXXXXX").
RECITALS
A. The Sellers, in the aggregate, own all of the issued share
capital of Research Consultants (International) Holdings Limited (Company No:
02756939), a private company limited by shares registered in England and Wales
and having its registered office at Xxxxx Xxxxx, 00 Xxxxxxx Xxxx, Xxx,
Xxxxxxxxxxxxxx XX0 0XX ("TARGET").
B. This Agreement contemplates a transaction in which Xxxxxx will
purchase from the Sellers, and the Sellers will sell to Xxxxxx, all of the
issued share capital of TARGET in return for cash and shares of Xxxxxx
International Inc., an Ohio corporation (the "PARENT").
THE PARTIES AGREE as follows:
1. DEFINITIONS.
"ACCOUNTS" means the audited consolidated group accounts of TARGET and
its Subsidiaries, prepared in accordance with section 227 Companies Xxx 0000,
for the financial year ended 31 August 1998 including the notes to those
accounts and the associated directors' and auditors' reports and any profit and
loss account omitted in reliance on section 230 Companies Xxx 0000.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, Encumbrances, losses, expenses
and fees, including (without limitation) court costs and reasonable attorneys'
fees and expenses.
6
-2-
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control of, or related to, the
Sellers, TARGET, or any of its respective direct and indirect Subsidiaries.
"BASIS" means any known past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence.
"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
banks are open for ordinary banking business in London and Ohio.
"BUSINESS FACILITIES" means business facilities of any kind including,
without limitation, a loan of money or a letting, hiring or licensing of any
tangible or intangible property.
"CASH CLOSING PAYMENT" has the meaning set forth in ss.2(b) below.
"CLOSING" has the meaning set forth in ss.2(c) below.
"CLOSING DATE" has the meaning set forth in ss.2(c) below.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Exhibit
7(a)(ix).
"CURRENT USE" has the meaning set forth in ss.4(l)(v)(A).
"COVENANTS" has the meaning set forth in ss.7(a)(ix) below.
"DISCLOSURE SCHEDULE" means the disclosure schedule delivered by the
Parties hereto pursuant to ss.ss.3 and 4 below. Nothing contained in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made in this Agreement unless the exception is
identified in the Disclosure Schedule with reasonable particularity, describing
the relevant facts in reasonable detail.
"DOLLARS" and "$" mean dollars in the lawful currency of the United
States.
"EMPLOYEES" has the meaning set forth in Section 4(t)(i).
"EMPLOYMENT AGREEMENTS" has the meaning set forth in ss.7(a)(vii)
below.
"ENCUMBRANCES" means any Security Interest, warrant, lien option,
purchase right, pre-emptive right, or other right or claim of any character that
restricts the transfer of share capital.
7
-3-
"ENVIRONMENTAL LAW" means any European Union, national or local
statute, law, rule, regulation arising through statute, subordinate legislation,
or common law or any relevant code of practice, guidance, note, standard or
other advisory material issued by any competent authority relating to the
environment, health, safety, the protection of natural amenity or Hazardous
Materials, including without limitation the Health and Safety at Work etc. Xxx
0000, the Control of Pollution Xxx 0000, the Environmental Protection Xxx 0000,
the Water Industry Xxx 0000, the Water Resources Xxx 0000, the Statutory Water
Companies Xxx 0000, the Water Consolidation (Consequential Provisions) Xxx 0000,
the Clean Air Acts, the Alkali & c. Works Regulation Xxx 0000, the Planning
Hazardous Substance Xxx 0000, the Public Health Acts and the Radioactive
Substances Xxx 0000, and the Environment Xxx 0000.
"ESCROW AGREEMENT" has the meaning set forth in ss.2(b) below.
"EVENT" means any event, act, transaction, action or omission (whether
or not TARGET or any of its Subsidiaries is a party thereto).
"FINANCIAL STATEMENTS" has the meaning set forth in ss.4(g) below.
"HAZARDOUS MATERIALS" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law; (c) any pollutant, or any hazardous, toxic,
noxious, corrosive or caustic substance whether in solid, liquid or gaseous
form; and (d) any other chemical, material or substance exposure to which is
prohibited, limited or regulated by any governmental authority.
"INDEMNIFIED PARTY" has the meaning set forth in ss.8(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in ss.8(d) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trade marks, design rights, service marks,
rights (registered or unregistered) in any designs, trade dress, logos, trade
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and
8
-4-
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (e) all computer software
(including related licences, technical documentation and domain names), (f) all
other proprietary rights, and (g) all copies and tangible embodiments thereof
(in whatever form or medium).
"IRC" means Research Consultants (International) Limited (Company No:
02348938).
"XXXXXX" has the meaning set forth in the preface above.
"XXXXXX MATERIAL ADVERSE CHANGE" has the meaning set forth in
ss.7(b)(v) below.
"KNOWLEDGE" means knowledge after reasonable enquiries by the Sellers
including where relevant reasonable enquiry of the accountants, solicitors, tax
advisers and insurance brokers who act for the TARGET and/or the Subsidiaries
and that each of the Sellers has used all reasonable endeavours to ensure that
all information given, referred to or reflected in that statement is accurate in
all material respects.
"LIABILITIES" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including (without limitation) any liability for Taxes.
"MANAGEMENT ACCOUNTS" has the meaning set forth in ss.4(g) below.
"MARKET VALUE" means with respect to any Parent Shares, the average
closing bid price for shares of Parent common stock on NASDAQ during the twenty
Trading Days prior to either the date that a disputed claim under the Escrow
Agreement is finally determined or, if such claim is not disputed, the date of
release of such Parent Shares.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Management Accounts.
"MOST RECENT FINANCIAL MONTH END" has the meaning set forth in ss.4(g)
below.
"MOST RECENT FINANCIAL YEAR END" has the meaning set forth in ss.4(g)
below.
"NASDAQ" means the National Market System of the National Association
of Securities Dealers, Inc.
9
-5-
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARENT" has the meaning set forth in the preface above.
"PARENT SHARES" has the meaning set forth in ss.2(b) below.
"PARTIES" means collectively Xxxxxx and the Sellers.
"PERMITS" has the meaning set forth in Section 4(c).
"PENSION SCHEMES" means collectively (a) the Save & Prosper Scheme, (b)
the medical benefits scheme known as Private Patients Plans Group No. C56321,
(c) the Death in Service Scheme (Policy No RGLP00863212) and (d) the Long Term
Disability Insurance Scheme (Policy No 910389) all as currently operated by IRC.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organisation, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PERSONAL PENSION SCHEME" means any personal pension scheme as defined
in section 1 of Xxxxxxx Xxxxxxx Xxx 0000.
"PREMISES" means the land and premises particulars of which are set out
in Schedule 2 (and includes any part thereof and all buildings, structures and
works on such premises).
"PURCHASE PRICE" has the meaning set forth in ss.2(b) below.
"RELEASE" has the meaning set forth in ss.7(a)(viii) below.
"RELEVANT EMPLOYEE" means any past or present employee of TARGET and
its Subsidiaries.
"SAVE & PROSPER SCHEME" means the Save & Prosper Personal Retirement
Account (Centralised Occupational Money Purchase Pension Scheme) established by
a Declaration of Trust dated 2 January 1975, but only to the extent that the
Employees and TARGET and its Subsidiaries participate in the scheme.
"SEC" has the meaning set forth in ss.3(b)(v) below.
10
-6-
"SECURITIES ACT" means the US Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the US Securities Exchange Act of 1934,
as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, assignment, hypothecation, security interest (including any created by
law), title retention or other security agreement or arrangement, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due
and payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"SELLER" has the meaning set forth in the preface above.
"SELLERS' SOLICITORS" means Xxxxxxxx Xxxxx & Xxxx of Xxxxxxxxxxx Xxxxx,
00 Xxxxxxxxx Xxxx, Xxxxxxxxx, XX0 0XX.
"STERLING" and "(Pound)" shall mean the lawful currency for the time
being of the United Kingdom.
"SUBSIDIARY" means (a) when used to determine the relationship between
a company incorporated in England and another Person, any "subsidiary" and
"subsidiary undertaking" as defined in the Companies Xxx 0000, Sections 144 and
21 and Schedule 9 respectively, and (b) when used to determine the relationship
between a company not incorporated in England to another Person, any corporation
with respect to which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock (or similar interests) or has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors.
"TARGET" has the meaning set forth in the first recital above.
"TARGET MATERIAL ADVERSE CHANGE" means a material adverse change in the
business, assets, liabilities, income, financial condition, operations, results
of operations or business prospects of TARGET and its Subsidiaries.
"TARGET SHARE" means any of the ordinary shares of (pound)1.00 each in
the capital of TARGET.
"TAXES" means (i) all forms of tax duties imposts and levies in the
nature of tax whenever created or imposed and whether of the United Kingdom or
elsewhere including (without limitation) corporation tax advance corporation tax
income tax (including income tax or amounts equivalent to income tax required to
be deducted or withheld from or accounted for in respect of
11
-7-
any payment) capital gains tax any payment under section 601(2) ICTA 1988
inheritance tax value added tax landfill tax stamp duty stamp duty reserve tax
vehicle duty customs & excise duties national insurance social security or
similar contributions and any other taxes levies duties charges imposts or
withholdings similar to corresponding with or replaced by any of the foregoing;
and (ii) all penalties fines charges surcharges and interest in relation to any
tax within subclause (i) above or to any return or information required to be
provided for the purposes of any such tax.
"TAXES XXX 0000" means Income and Corporation Taxes Xxx 0000.
"TAX DEED" means the deed in the form of Exhibit 1 hereto.
"TAX LEGISLATION" means any statute, enactment, law or regulation
providing for the imposition of Taxes.
"TAX LIABILITY" means a liability to make an actual payment of, or of
an amount in respect of, Tax whether or not such liability is also or
alternatively a liability of or chargeable against or attributable to, any other
person and whether or not TARGET or any of its Subsidiaries shall or may have a
right of recovery or reimbursement against any other person.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TCGA 1992" means the Taxation of Chargeable Gains Xxx 0000.
"THIRD PARTY CLAIM" has the meaning set forth in ss.8(d) below.
"TRADING DAY" means those days on which NASDAQ is open for trading.
"UK GAAP" means United Kingdom generally accepted accounting
principles, as in effect from time to time.
"US GAAP" means United States generally accepted accounting principles,
as in effect from time to time.
"US" or "UNITED STATES" means the United States of America.
"VATA 1994" means the Value Added Tax Xxx 0000.
2. PURCHASE AND SALE OF TARGET SHARES.
12
-8-
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, Xxxxxx agrees to purchase from each of the Sellers
(relying inter alia, as the Sellers hereby acknowledge, on the representations,
warranties, undertakings and indemnities of the Sellers (or any of them)
referred to or contained in this Agreement and/or the Tax Deed), and each of the
Sellers agrees to sell to Xxxxxx, all of his or her TARGET Shares for the
consideration specified below in this ss.2.
(b) PURCHASE PRICE. At the Closing:
(i) Xxxxxx shall pay the Sellers a purchase
price of Three Million Seven Hundred Thousand Sterling
((pound)3,700,000.00) (THE "PURCHASE PRICE").
(ii) Two Million Four Hundred Seventy-Nine
Thousand Sterling ((pound)2,479,000.00) of the Purchase Price shall be
paid in cash to the Sellers' Solicitors at the Closing (the "CASH
CLOSING PAYMENT").
(iii) The balance of the Purchase Price (One
Million Two Hundred Twenty-One Thousand Sterling ((pound)1,221,000.00))
shall be satisfied by the issue of 87,558 shares of common stock, no
par value, of the Parent ("PARENT SHARES") to the Sellers as set forth
on Schedule 1. Each Seller shall immediately deliver to The Fifth Third
Bank as escrow agent under the Escrow Agreement (which shall be in the
form of Exhibit 2(b) hereto) his/her Parent Shares accompanied by duly
executed stock powers in favour of The Fifth Third Bank. The Fifth
Third Bank shall hold the Parent Shares as escrow agent under the
Escrow Agreement for the benefit of the Sellers.
(v) The Purchase Price shall be subject to
reduction from time to time as provided in ss.2(h) below.
(c) THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of the Sellers' Solicitors, commencing at 9:00 a.m., local time, on 5 January
1999, subject to the satisfaction or waiver of all conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself), or such other date as Xxxxxx and the Sellers may mutually
determine (the "CLOSING DATE").
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the
Sellers will deliver to Xxxxxx the various certificates, instruments and
documents referred to in ss.7(a) below, (ii) Xxxxxx will deliver to the Sellers
the various certificates, instruments and documents referred to in ss.7(b)
below, (iii) each of the Sellers will deliver to Xxxxxx share certificates
representing all of his or her TARGET Shares, accompanied by duly executed stock
transfer forms together with such
13
-9-
waivers or consents as Xxxxxx may require to enable Xxxxxx or its nominees to be
registered as holders of TARGET shares, (iv) Xxxxxx will deliver to the Sellers'
Solicitors (and the Sellers' Solicitors are hereby authorised to receive it) the
Cash Closing Payment specified in ss.2(b) above and the payment of such
consideration to the Sellers' Solicitors shall constitute a good discharge to
Xxxxxx and Xxxxxx shall have no obligation as to the distribution or allocation
of such consideration between the Sellers, (v) Xxxxxx will deliver to the
Sellers the Parent Shares, and (vi) the Sellers will deliver the Parent Shares
accompanied by duly executed stock powers to The Fifth Third Bank as escrow
agent in accordance with the terms of the Escrow Agreement.
(e) PRE-EMPTION RIGHTS WAIVER. The Sellers waive all
rights of pre-emption (if any) over TARGET Shares to which they may be entitled
under the Articles of Association of TARGET, or otherwise, in relation to the
sale and purchase of TARGET Shares pursuant to this Agreement.
(f) TITLE TO THE TARGET SHARES. Title to and beneficial
ownership of the TARGET Shares shall pass at Closing and the TARGET Shares shall
be sold and purchased together with all rights and benefits attached or accruing
to them at Closing (including the beneficial ownership right to receive all
dividends, distributions or any return of capital declared, paid or made by
TARGET on or after Closing).
(g) PURCHASE OF ALL TARGET SHARES. Xxxxxx shall not be
obliged to complete the purchase of any of the TARGET Shares unless the purchase
of all the TARGET Shares is completed simultaneously.
(h) REDUCTION OF PURCHASE PRICE.
(i) The Purchase Price shall be reduced on each
occurrence of the following events:
(A) If Xxxx Xxxxxx either Resigns
without Good Reason or is Terminated for Cause (as each such
term is defined below) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to thirty
percent (30%) of the Purchase Price, prior to the second
anniversary of the Closing Date, there shall be a reduction
equal to twenty percent (20%) of the Purchase Price, or prior
to the third anniversary of the Closing Date, there shall be a
reduction equal to ten percent (10%) of the Purchase Price;
and/or
(B) If Xxxxxxx Xxxxxxx either Resigns
without Good Reason or is Terminated for Cause (as each such
term is defined below) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to thirty
percent (30%) of the Purchase Price, prior to the second
anniversary of the Closing Date,
14
-10-
there shall be a reduction equal to twenty percent (20%) of
the Purchase Price, or prior to the third anniversary of the
Closing Date, there shall be a reduction equal to ten percent
(10%) of the Purchase Price; and/or
(C) If Xxxxx Xxxxxxxxxxx either Resigns
without Good Reason or is Terminated for Cause (as each such
term is defined below) prior to the first anniversary of the
Closing Date, there shall be a reduction equal to fifteen
percent (15%) of the Purchase Price, prior to the second
anniversary of the Closing Date, there shall be a reduction
equal to ten percent (10%) of the Purchase Price, or prior to
the third anniversary of the Closing Date, there shall be a
reduction equal to five percent (5%) of the Purchase Price.
(ii) For purposes of this ss.2(h) the terms
"Resigns without Good Reason" and "Terminated for Cause" shall have the
meanings as applied with respect to one of the individuals referred to
in paragraphs (A), (B) and (C) above, given in the Employment Agreement
between such individual and as such agreement is in effect on and from
the Closing Date, and without regard to whether such agreement is
amended or terminated in the future, unless Xxxxxx and the Sellers
shall specifically agree in writing that any such amendment or
termination shall have the effect of amending this ss.2(h).
(iii) The Purchase Price reductions required by
this ss.2(h) shall be calculated on the full amount of the Purchase
Price paid at Closing, and without regard to any prior or concurrent
Purchase Price reduction taken pursuant to this ss.2(h) or pursuant to
any other provision of this Agreement.
(iv) On the effective date of a Termination for
Cause or a Resignation without Good Reason (a "REDUCTION DATE") causing
a Purchase Price reduction pursuant to this ss.2(h), each of the
Sellers shall become liable to pay to Xxxxxx their respective pro rata
portions (based on the allocation percentages of the Purchase Price as
set out on Schedule 1 hereto) of such Purchase Price reduction, and
Xxxxxx shall be entitled to receive each such amount within ten (10)
days after the relevant Reduction Date, with interest thereon at the
rate of ten percent (10%) per annum from the Reduction Date to the date
of actual payment if such payment is not made in full by such date.
(v) If there are assets held under the Escrow
Agreement against which there is no claim pending at the time the
Sellers become obligated to refund a portion of the Purchase Price
under this ss.2(h), Xxxxxx shall be obligated and have the right to
receive from the escrow available cash or other assets to satisfy the
obligations of the Sellers to repay such portion of the Purchase Price,
but if the escrow is exhausted or unavailable for whatever reason,
Xxxxxx shall have the right to receive payment directly from the
Sellers.
15
-11-
(vi) Each of the events described in paragraph
(i) above are independent of each other, and the refund of a portion of
the Purchase Price in connection with termination of employment of one
of the Sellers shall not relieve the Sellers from any obligation to
make a further refund of the Purchase Price if required by this
ss.2(h). In addition, the termination of employment of a Seller shall
not relieve such Seller of his/her joint and several obligations
hereunder in the event of a later termination of employment by another
Seller which triggers a Purchase Price reduction in accordance with the
terms hereof. (vii) The liability of the Sellers under this ss.2(h)
shall in any event be subject to the limitations specified in
ss.8(i)(ii) and ss.8(i)(iii).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each
of the Sellers represents and warrants to Xxxxxx that the statements contained
in this ss.3(a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.3(a)) with respect to himself, herself or itself (but not
with respect to any other Seller). The statements made in ss.3(a) shall not in
any respect be extinguished or affected by the Closing.
(i) AUTHORISATION OF TRANSACTION. Such Seller
has full power and authority to execute and deliver this Agreement and
to perform his or her obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of such Seller, enforceable in
accordance with its terms and conditions. Such Seller need not give any
notice to, make any filing with, or obtain any authorisation, consent,
or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(ii) NONCONTRAVENTION. Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which such Seller is subject (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which such Seller is a
party or by which he or she is bound or to which any of his assets is
subject.
16
-12-
(iii) BROKERS' FEES. Such Seller has no Liability
or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which Xxxxxx, TARGET or any of its Subsidiaries could become liable
or obligated.
(iv) INVESTMENT REPRESENTATIONS. With respect to
the Parent Shares issued to and acquired by the Sellers hereunder:
(A) The Seller is not a US Person (as
defined in Regulation S promulgated under the Securities Act
("REGULATION S")) and has signed this Agreement outside the
United States.
(B) The Seller understands and
acknowledges that (i) the Parent Shares have not been
registered under the Securities Act and may not be offered or
sold in the United States or to, or for the account or benefit
of, any US Person unless such securities are registered under
the Securities Act or such offer or sale is made pursuant to
an exemption from the registration requirements of the
Securities Act and (ii) the Parent Shares are being
distributed by the Parent pursuant to the terms of Regulation
S, which permits securities to be sold to non-US Persons in
"offshore transactions" (as defined in Regulation S), subject
to certain terms and conditions.
(C) The Seller acknowledges that for a
period of one year following the Closing Date (the "RESTRICTED
PERIOD"), the Seller shall not (i) engage in any activity for
the purpose of, or which may reasonably be expected to have
the effect of, conditioning the market in the United States
for the Parent Shares or (ii) unless an exemption from the
registration requirements of the Securities Act is available,
offer, sell or transfer the Parent Shares in the United States
or to, or for the account or benefit of, a US Person. The
Seller understands that the Parent Shares or any interest
therein are only transferable on the books and records of the
transfer agent and registrar of the Parent. The Seller further
understands that such transfer agent and registrar will not
register any transfer of the Parent Shares during the
Restricted Period which the Parent reasonably believes
violates the restrictions set forth in this paragraph (C), and
that the Parent acting in good faith may place stop transfer
orders with its transfer agent with respect to certificates
representing Parent Shares to reflect the restrictions set
forth in this paragraph (C).
(D) Any proposed offer, sale or
transfer during the Restricted Period of any of the Parent
Shares shall be subject to the condition that the Seller must
deliver to the Parent (i) a written certification that neither
record nor
17
-13-
beneficial ownership of the Parent Shares has been offered or
sold in the United States or to, or for the account or benefit
of, any US Person, (ii) a written certification of the
proposed transferee that such transferee (or any account for
which such transferee is acquiring such Parent Shares) is not
a US Person, that such transferee is acquiring such Parent
Shares for such transferee's own account (or an account over
which he or she has investment discretion), and that such
transferee is knowledgeable of an agrees to be bound by the
restrictions on re-sale set forth in this section and
Regulation S during the Restricted Period, and (iii) a written
opinion of United States counsel, in form and substance
reasonable satisfactory to the Parent, to the effect that the
offer, sale and transfer of such Parent Shares are exempt from
registration under the Securities Act.
(E) The Seller agrees that for the
duration of the Restricted Period and until such time
thereafter as the Parent shall have received (if required by
it) a written opinion of United States counsel, in form and
substance reasonably satisfactory to the Parent, to the effect
that the Parent Shares are no longer "restricted securities"
within the meaning of Rule 144(a)(3) of the Securities Act,
the stock certificates representing the Parent Shares shall
bear the legend set forth below:
The shares of Common Stock
represented by this certificate may
not be offered, sold or transferred
except in accordance with the
provisions of Regulations S (Rule
901 through Rule 905, and the
Preliminary Notes) under the
Securities Act of 1933, as amended
(the "Securities Act"), pursuant to
registration under the Securities
Act, or pursuant to an available
exemption from registration.
(v) TARGET SHARES. Such Seller is the registered
and sole beneficial owner of the number of TARGET Shares set forth next
to his or her name in Schedule 1 free and clear of any Encumbrances and
with full title guarantee. Such Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any share capital of TARGET.
(b) REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx
represents and warrants to the Sellers that the statements contained in this
ss.3(b) are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3(b)) , except as set forth in Schedule 3(b).
18
-14-
(i) ORGANISATION OF XXXXXX AND THE PARENT. Each
of Xxxxxx and the Parent is a corporation organised, validly existing
and in good standing under the laws of the State of Ohio.
(ii) AUTHORISATION OF TRANSACTION. Xxxxxx has
full power and authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding
obligation of Xxxxxx, enforceable in accordance with its terms and
conditions. Assuming the truth and correctness of the Seller's
statements in ss.3(a) of this Agreement, Xxxxxx need not give any
notice to, make any filing with, or obtain any authorisation, consent,
or approval of any US government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which Xxxxxx is subject or any provision of its charter or
bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any
notice under any material agreement, contract, lease, license,
instrument, or other arrangement to which Xxxxxx is a party or by which
it is bound or to which any of its assets is subject.
(iv) CAPITALISATION. The Parent's authorised
equity securities consist of Fifteen Million (15,000,000) shares of
common stock, no par value per share, and One Hundred Thousand
(100,000) shares of undesignated preferred stock, no par value per
share. As of October 30, 1998, Ten Million Nine Hundred Fifty-One
Thousand Two Hundred Thirty-Two (10,951,232) shares of common stock
were issued and outstanding and no shares of undesignated preferred
stock were issued and outstanding. The Parent Shares to be received by
the Sellers in connection with the transactions contemplated hereby
will be duly authorised, validly issued, fully paid and non-assessable
shares of common stock free and clear of any and all Encumbrances other
than restrictions on transfer imposed by US federal and state
securities laws and regulations.
(v) SEC REPORTS. The Parent has timely filed
with the US Securities and Exchange Commission ("SEC") all materials
and documents required to be filed by it under the US Securities
Exchange Act of 0000 (xxx "XXXXXXXX XXX"). All the materials and
documents filed with the SEC by the Parent since July 2, 1997,
including its initial Registration Statement on Form S-1, are
hereinafter referred to as the "Xxxxxx SEC Reports." Xxxxxx has
previously provided to the Sellers a list of all the Xxxxxx SEC Reports
filed on or prior to the date of this Agreement. The Xxxxxx SEC
Reports, copies
19
-15-
of which have been delivered to the Sellers, are true and correct in
all material respects, including the financial statements and other
financial information contained therein, and do not omit to state any
material fact necessary to make the statements in such Xxxxxx SEC
Reports, in light of the circumstances in which they were made, not
misleading. The financial statements included in the Xxxxxx SEC Reports
fairly present in all material respects the financial condition and the
results of operations, changes in stockholders' equity and cash flow of
the Parent and its subsidiaries as at the respective dates of and for
the periods referred to in such financial statements, all in accordance
with US GAAP. Since the date of the most recent Xxxxxx SEC Report,
there has been no Xxxxxx Material Adverse Change.
(vi) BROKERS' FEES. Other than liability or
obligation to Technomark Limited (which shall be the liability of
Xxxxxx and not of the Sellers), Xxxxxx has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
any Seller could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING TARGET AND ITS
SUBSIDIARIES. The Sellers, jointly and severally, represent and warrant to
Xxxxxx that the statements contained in this ss.4 are correct and complete as of
the date of this Agreement, except as set forth in the Disclosure Schedule. All
references in this ss.4 to TARGET shall, unless the context requires otherwise,
be construed to include reference to its Subsidiaries.
(a) ORGANISATION, QUALIFICATION, AND CORPORATE POWER.
TARGET is a private company limited by shares duly incorporated and registered
and validly existing under the laws of England and Wales. Each of TARGET and IRC
is duly authorised to conduct business under the laws of each jurisdiction in
which TARGET conducts business. Each of IRC and TARGET has full corporate power
and authority and all licenses, permits, and authorisations required from any
government, statutory or other regulatory body to carry on the businesses in
which it is engaged. Section 4(a) of the Disclosure Schedule lists the directors
and officers of TARGET and IRC. The Sellers have delivered to Xxxxxx correct and
complete copies of the memoranda and articles of association of TARGET and IRC
(as amended to date). The statutory and other books containing among other
things the records of meetings of the shareholders, the board of directors and
any committees of the board of directors, the register of members and the
register of shares of TARGET and IRC are correct and complete. Neither TARGET
nor IRC is in default under or in violation of any provision of its memorandum
or articles of association.
(b) CAPITALISATION. The authorised share capital of
TARGET consists of One Thousand (1,000) TARGET Shares and the issued share
capital of TARGET consists of One Hundred (100) TARGET Shares. All of the issued
TARGET Shares have been duly authorised, are validly issued, fully paid and are
held legally by the respective Sellers as set forth in ss.4(b) of the Disclosure
Schedule. Except as set forth in ss.4(b) of
20
-16-
the Disclosure Schedule, there are no outstanding or authorised options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require TARGET to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorised stock appreciation, phantom stock, profit
participation, or similar rights with respect to TARGET. TARGET is not a party
to any voting trusts, proxies, or other agreements or understandings with
respect to the voting of the share capital of TARGET.
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which TARGET is subject or
any provision of the charter or bylaws of TARGET, (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license instrument to which
TARGET is a party or by which it is bound or to which any of its assets is
subject, or (iii) result in the imposition of any Security Interest upon any of
its assets. TARGET does not need to give any notice to, make any filing with, or
obtain any authorisation, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions contemplated by
this Agreement. TARGET and its Subsidiaries maintain, and ss.4(c) of the
Disclosure Schedule sets forth, all operating authorities, licenses, permits and
approvals and other authorisations from all governmental authorities
(collectively, the "PERMITS") as are necessary for the conduct of the business
of TARGET and its Subsidiaries. Except as expressly designated on ss.4(c) of the
Disclosure Schedule, none of TARGET's and its Subsidiaries' rights under each of
the Permits will terminate in connection with the change in control of TARGET at
Closing.
(d) BROKERS' FEES. TARGET has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. Excluding for the purposes of this
ss.4(e) the Premises and the Intellectual Property, TARGET and its Subsidiaries
have legal and beneficial ownership of the assets used by them, or shown on the
Most Recent Balance Sheet or acquired after the date thereof, free and clear of
all Security Interests, excepting only properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet and
certain other properties and assets involving in the aggregate more than Fifteen
Thousand Sterling ((pound)15,000.00) disposed of other than in the Ordinary
Course of Business as disclosed on the Disclosure Schedule.
21
-17-
(f) SUBSIDIARIES. TARGET has one Subsidiary, namely IRC.
Section 4(f) of the Disclosure Schedule sets forth the name and jurisdiction of
incorporation or organisation of each Person in which TARGET has a direct or
indirect equity or ownership interest in any business and the number of (and
percentage of outstanding) shares or other interests owned by TARGET. All of
such shares or other interests are owned free and clear of any Encumbrances
other than restrictions on transfer imposed by applicable securities laws and
regulations and such shares or other interests are duly authorised, validly
issued and fully paid and do not subject the holder thereof to further liability
for capital contributions. Each corporation or other entity listed on ss.4(f) of
the Disclosure Schedule validly exists and has been duly incorporated or
organised under applicable law. TARGET is not party to any voting trusts,
proxies or other agreements or understandings with respect to the voting trusts,
proxies, or other agreements or understandings with respect to the voting or
capital stock of any such corporation or entity. The Sellers have delivered to
Xxxxxx true, complete and correct (A) copies of the charter or other
organisational documents of each corporation or other entity listed on ss.4(f)
of the Disclosure Schedule, and (B) copies of all material financial information
with respect to such corporations deemed by the Sellers in their reasonable
discretion to be material to the business of such corporations or other entities
in the possession of or under the control of the Sellers.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit 4(g)
are the following financial statements (collectively the "FINANCIAL
STATEMENTS"): (i) audited consolidated and individual financial statements
(including the profit and loss accounts, balance sheets and cash flow
statements) for TARGET and its Subsidiaries as of and for the financial year
ended 31 August 1998 (the "MOST RECENT FINANCIAL YEAR END"), including, in each
case, the notes thereto and the directors' report and auditors' report; and (ii)
unaudited management accounts of IRC (including the profit and loss accounts,
balance sheets and cash flow statements) as of and for the two (2) months ended
31 October 1998 (the "MOST RECENT FINANCIAL MONTH END"), (the "MANAGEMENT
ACCOUNTS"). The Financial Statements (including where applicable the notes
thereto) have been prepared in accordance with UK GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly in all material
respects (and in the case of the Accounts give a true and fair view of) the
financial condition of TARGET and its Subsidiaries as of such dates and the
results of operations of TARGET and its Subsidiaries for such periods and are
consistent with the books and records of TARGET and its Subsidiaries; PROVIDED,
however, that the Management Accounts are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and do not include
any provision for corporation tax or depreciation.
(h) EVENTS SUBSEQUENT TO MOST RECENT FINANCIAL YEAR END.
Except as set forth in ss.4(h) of the Disclosure Schedule, since 31 August 1998,
there has not been any TARGET Material Adverse Change. Without limiting the
generality of the foregoing, since that date:
22
-18-
(i) neither TARGET nor any of its Subsidiaries
has sold, leased, transferred, or assigned any of its assets, tangible
or intangible, involving in the aggregate more than Fifteen Thousand
Sterling ((pound)15,000.00) other than for a fair consideration in the
Ordinary Course of Business;
(ii) other than agreements and contracts with
customers pursuant to which IRC will be entitled to be paid in excess
of Fifty Thousand Sterling ((pound)50,000), TARGET has not entered into
any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more than
Fifteen Thousand Sterling ((pound)15,000.00) or outside the Ordinary
Course of Business;
(iii) no party (including TARGET and its
Subsidiaries) has terminated, materially modified, or cancelled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
Fifteen Thousand Sterling ((pound)15,000.00) to which TARGET or any of
its Subsidiaries is a party or by which it is bound;
(iv) neither TARGET nor any of its Subsidiaries
has imposed or permitted to be imposed any Security Interest upon any
of its assets, tangible or intangible;
(v) neither TARGET nor any of its Subsidiaries
has made any capital expenditure (or series of related capital
expenditures) either involving more than Fifteen Thousand Sterling
((pound)15,000.00) or outside the Ordinary Course of Business;
(vi) neither TARGET nor any of its Subsidiaries
has made any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other Person (or series of related
capital investments, loans, and acquisitions) either involving more
than Fifteen Thousand Sterling ((pound)15,000.00) or outside the
Ordinary Course of Business;
(vii) TARGET has not issued any Share, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalised lease obligation either
involving more than Fifteen Thousand Sterling ((pound)15,000.00) singly
or Fifteen Thousand Sterling ((pound)15,000.00) in the aggregate;
(viii) neither TARGET nor any of its Subsidiaries
has delayed or postponed the payment of accounts payable and other
Liabilities outside the Ordinary Course of Business;
23
-19-
(ix) neither TARGET nor any of its Subsidiaries
has cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) either involving more than Fifteen
Thousand Sterling ((pound)15,000.00) or outside the Ordinary Course of
Business;
(x) neither TARGET nor any of its Subsidiaries
has granted any license or sublicense of any rights under or with
respect to any Intellectual Property;
(xi) there has been no change made or authorised
in the memoranda or articles of association or other constitutional
documents of TARGET or any of its Subsidiaries;
(xii) TARGET has not declared, set aside, or paid
any dividend or made any distribution with respect to its share capital
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its share capital;
(xiii) neither TARGET nor any of its Subsidiaries
has experienced any damage, destruction, or loss (whether or not
covered by insurance) to its assets and property in excess of Fifteen
Thousand Sterling ((pound)15,000.00);
(xiv) neither TARGET nor any of its Subsidiaries
has made any loan (that will remain outstanding on the Closing Date) to
or with any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xv) neither TARGET nor any of its Subsidiaries
has entered into any employment contract or collective bargaining
agreement, written or oral, or changed or modified remuneration and
benefits payable under such contract or agreement;
(xvi) neither TARGET nor any of its Subsidiaries
has granted any increase in the base compensation of any of its
directors, and employees outside the Ordinary Course of Business;
(xvii) TARGET has not in any material respect
adopted, amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any
such action with respect to the Pension Schemes);\
(xviii) neither TARGET nor any of its Subsidiaries
has made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business;
24
-20-
(xix) to the Knowledge of the Sellers there has
not been any other material occurrence, event or transaction outside
the Ordinary Course of Business which is likely to result in a TARGET
Material Adverse Change; and,
(xx) neither TARGET nor any of its Subsidiaries
has committed to any of the foregoing.
(i) UNDISCLOSED LIABILITIES. Neither TARGET nor any of
its Subsidiaries has any Liability (nor is there any Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability), that
individually or in the aggregate is material to the results of operations or the
financial or other condition of TARGET or any of its Subsidiaries except for (i)
Liabilities reflected or reserved against on the Most Recent Balance Sheet or
described on ss.4(i) of the Disclosure Schedule or in the notes to the
Management Accounts; or (ii) Liabilities which have arisen after the Most Recent
Financial Month End in the Ordinary Course of Business (none of which results
from, arises out of or was caused by any breach by TARGET or any of its
Subsidiaries of any contract or warranty, by any tort or infringement by TARGET
or any of its Subsidiaries or by any violation of law by TARGET or any of its
Subsidiaries).
(j) LEGAL COMPLIANCE. TARGET has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of European Union,
national, local and foreign governments (and all agencies thereof), except where
such failure to comply would not, individually or in the aggregate, have a
TARGET Material Adverse Effect; and to the Knowledge of the Sellers, no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any such failure
to comply.
(k) TAX MATTERS.
(i) Each of TARGET and its Subsidiaries is and
always has been resident for Tax purposes only in the jurisdiction in
which it is incorporated.
(ii) TARGET and its Subsidiaries have filed all
Tax Returns that they were required to file. All such Tax Returns were
correct and complete in all respects. All Taxes payable by TARGET and
its Subsidiaries (whether or not shown on any Tax Return) have been
paid. Neither TARGET nor any of its Subsidiaries is currently the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where TARGET or any of its Subsidiaries do not file Tax Returns that
TARGET or any of its Subsidiaries is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the assets
25
-21-
of TARGET or its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any Tax.
(iii) TARGET and its Subsidiaries have withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(iv) Full provision or reserve has been made in
the Financial Statements for all Taxes liable to be assessed on TARGET
and its Subsidiaries or for which TARGET or its Subsidiaries are
accountable in respect of income, profits or gains earned, accrued or
received on or before the Most Recent Financial Year End and proper
provision has been made in the Financial Statements (other than the
Management Accounts) for deferred Taxes calculated in accordance with
UK GAAP.
(v) No Seller or director (or employee
responsible for Tax matters) of TARGET or its Subsidiaries expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any
Tax Liability of TARGET or its Subsidiaries either (A) claimed or
raised by any authority in writing or (B) as to which any of the
Sellers and the directors (and employees responsible for Tax matters)
of TARGET or its Subsidiaries has Knowledge based upon personal contact
with any agent of such authority. ss.4(k) of the Disclosure Schedule
indicates those Tax Returns that have been disputed and/or investigated
by any governmental authority since 8 December 1992 and those Tax
Returns that currently are the subject of an investigation or
proceeding by any governmental authority. The Sellers have delivered to
Xxxxxx correct and complete copies of all European Union, national,
local, and foreign income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by TARGET or
any its Subsidiaries since August 31, 1992.
(vi) neither TARGET nor any of its Subsidiaries
has waived any statute of limitations in respect of outstanding Taxes
or agreed to any extension of time with respect to any outstanding Tax
assessment or deficiency.
(vii) Section 4(k)(vii) of the Disclosure Schedule
contains particulars of all arrangements and agreements relating to the
transfer of tax refunds to which the TARGET or its Subsidiaries are or
have been a party since 8 December 1992, and (A) all claims by TARGET
and its Subsidiaries for the transfer of tax refunds were when made and
are now valid and have been or will be allowed by way of discharging
the liability of the recipient company to pay any corporation tax, (B)
neither TARGET nor any of its Subsidiaries has made or is liable to
make any payment under any such arrangement save in consideration for
the transfer of tax refunds allowable to TARGET or any of its
26
-22-
Subsidiaries by way of discharge from liability to corporation tax and
mergers equivalent to the taxation for which TARGET or any of its
Subsidiaries would have been liable would it not have been for the
transfers, (C) TARGET and its Subsidiaries have received all payments
due to them under any such arrangement or agreement or transfer of tax
refunds made by it and no such payment is likely to be repaid, and (D)
save in respect of this Agreement, there have not been in existence in
relation to TARGET and its Subsidiaries any such arrangements as are
referred to in Xxxxxxx 000 Xxxxx Xxx 0000.
(viii) No distribution within the meaning of
Sections 209, 210 and 212 Taxes Act 1988 has been made by the TARGET
and its Subsidiaries except dividends shown in its audited accounts nor
is the TARGET and its Subsidiaries bound to make any such distribution.
(ix) No securities (within the meaning of Section
254(l) Taxes Act 1988) issued by TARGET and its Subsidiaries and
remaining in issue at the date hereof were issued in such circumstances
that the interest payable thereon falls to be treated as a distribution
under Section 209(2)(e)(iii) Taxes Xxx 0000.
(x) TARGET and its Subsidiaries have not made or
received any distribution which is an exempt distribution within
Xxxxxxx 000 Xxxxx Xxx 0000.
(xi) TARGET and its Subsidiaries have not
received any capital distribution to which the provisions of Section
189 TCGA 1992 could apply.
(xii) TARGET and its Subsidiaries have not used
any credit, relief or set off that may be disallowed pursuant to
Xxxxxxx 000 Xxxxx Xxx 0000.
(xiii) TARGET and its Subsidiaries have not issued
any share capital, nor granted options or rights to any person which
entitles that person to require the issue of any share capital to which
the provision of Section 249 Taxes Act 1988 could apply.
(xiv) TARGET and its Subsidiaries have not since 8
October 1996 (A) treated as franked investment income any qualifying
distribution received which would fall to be treated as if it were a
foreign income dividend pursuant to the provisions of Schedule 7 of the
Finance Xxx 0000; or (B) made any qualifying distribution which would
fall to be treated as a foreign income dividend pursuant to the
provisions of Schedule 7 of the Finance Xxx 0000.
(xv) No tax authority in any jurisdiction in
which TARGET and its Subsidiaries do not file Tax Returns has made or
asserted a claim that TARGET (or any Seller) is subject to taxation in
that jurisdiction based on the activities of TARGET.
27
-23-
(xvi) TARGET and its Subsidiaries have (to the
extent required by law) preserved and retained in its possession
accurate records relating to its Tax affairs as is required by law
including corporation tax, PAYE, National Insurance and VAT records and
TARGET and its Subsidiaries has sufficient records relating to past
events to calculate the profit, gain, loss, balance charge of balancing
allowance (all for Tax purposes) which would arise on any disposal or
on the realisation of any assets owned at the Most Recent Financial
Year End or acquired since that date but before the Closing.
(xvii) TARGET and its Subsidiaries have duly and
punctually paid all Taxes to the extent that the same ought to have
been paid and has not in the last three years paid or become liable to
pay any penalty or interest charged by virtue of the provisions of any
Tax Legislation.
(xviii) None of the following Events has occurred
since the Most Recent Financial Year End.
(A) a deemed (as opposed to an actual)
acquisition, disposal or supply of assets, goods, services or
business facilities;
(B) TARGET or any of its Subsidiaries
ceasing or being deemed to cease to be a member of any group
or associated with any other company for the purposes of any
Taxes;
(C) a disposal or supply of assets,
goods, services or businesses facilities by TARGET or any of
its Subsidiaries for a consideration which is treated for
purposes of Taxes as greater than the actual consideration;
(D) an acquisition or supply to TARGET
or any of its Subsidiaries of assets, goods, services or
business facilities for a consideration which is treated for
the purposes of Taxes as less than the actual consideration;
(E) a distribution within the meaning
given by Part VI Taxes Act 1988 (company distributions, tax
credits etc.) or within Section 418 Taxes Act 1988 (expenses
treated as distributions);
(F) an Event which results in TARGET or
any of its Subsidiaries being liable for Taxes for which it is
not primarily liable;
28
-24-
(G) an Event in respect of which a Tax
Liability arises as a result of a failure by TARGET or any of
its Subsidiaries to withhold, deduct or account for Taxes;
(H) an Event giving rise to a liability
under Part XVII Taxes Act 1988 (tax avoidance); or
(I) an Event giving rise to a balancing
charge.
(xix) The amount of Taxes chargeable on TARGET and
its Subsidiaries during any accounting period ending on or within three
years before the Most Recent Financial Year End or in respect of the
period from the Most Recent Financial Year End up to the Closing Date
has not, to any material extent, depended or (as the case may be) will
not depend on any concession, agreement or other formal or informal
arrangement with any Tax Authority.
(xx) TARGET and its Subsidiaries have not during
the period of three years ending on the date of this Agreement relied
on any formal or informal unpublished concession dispensation or
practice (whether general or specific to TARGET and its Subsidiaries)
which purports to modify or provide exemption from any obligation to
make or submit any computation, notice or return to any Tax Authority.
(xxi) Within the period of three years ending on
the date of this Agreement none of TARGET, its Subsidiaries or their
predecessors (within the meaning of Section 343 Taxes Act 1988) has
discontinued any trade or business or made a major change in the nature
of or conduct of a trade or business carried on by it and no change in
ownership of TARGET or any of its Subsidiaries has taken place.
(xxii) TARGET and its Subsidiaries are not and have
not at any time been close investment holding companies in respect of
any accounting period.
(xxiii) TARGET and its Subsidiaries have not made
any loan, advance or payment or given any consideration falling within
Sections 419 to 420 or Section 422 Taxes Act 1988 (charges to tax in
connection with loans) which has remained outstanding at any time since
8 December 1992.
(xxiv) TARGET and its Subsidiaries have not at any
time since 8 December 1992 made any payment which falls to be treated
as a distribution under Section 418 Taxes Act 1988 (distribution to
include certain expenses of close companies).
29
-25-
(xxv) TARGET and its Subsidiaries have made no
transfer of value such as is specified in Section 94(1) of the
Inheritance Tax Act 1984 (charge on participators) and there has been
no variation in TARGET's share or loan capital or any of its
Subsidiaries share or loan capital within Section 98 of that Act
(effect of alterations of capital etc.).
(xxvi) No liability to taxation or non-trading
deficit would arise from the loan relationships to which TARGET or any
of its Subsidiaries is party being repaid to the extent of the amounts
shown in respect of such loan relationships in the books of TARGET of
any of its Subsidiaries at the date hereof.
(xxvii) The sum which would be allowed as a
deduction from the consideration under Section 38 TCGA 1992
(acquisition and disposal costs etc.) of each asset of TARGET and its
Subsidiaries (other than trading stock) if disposed of on the date of
this Agreement:
(A) would not be less than (in the case
of an asset held on the Most Recent Financial Year End) the
book value of that asset shown or included in the Accounts or
(in the case of an asset acquired since the Most Recent
Financial Year End) an amount equal to the consideration given
for its acquisition; and in particular
(B) would not be treated or deemed for
the purposes of Tax to have been reduced by reason of any
claim made under Sections 152 (roll-over relief), 153 (assets
only partly replaced) 165 (relief for gifts of business
assets) or 175 (group roll-over) TCGA 1992 or by reason of the
operation of Section 17 (disposals and acquisitions treated as
made at market value), or Sections 126 to 140 TCGA 1992
(re-organisation of share capital, conversion of securities
etc).
(xxviii) Since 8 December 1992, no transaction has
been entered into by TARGET or any of its Subsidiaries to which the
provisions of Section 18 (transactions between connected persons) TCGA
1992 has been or could be applied.
(xxix) TARGET does not own any depreciating asset
in respect of which a heldover gain may accrue pursuant to sections
154(2) and/or 175(3) TCGA 1992.
(xxx) No balancing charge in respect of any
capital allowances claimed or given would arise if any asset of TARGET
and its Subsidiaries (or, where computations are made for capital
allowances purposes for pools of assets, all the assets in that pool)
were to be realised on the date hereof for a consideration equal to the
amount of the book value thereof as shown or included in the Accounts
(or, in the case of any
30
-26-
asset acquired since the Most Recent Financial Year End, for a
consideration equal to the consideration given for the acquisition).
(xxxi) To the Knowledge of the Sellers, all
necessary conditions for the availability of all capital allowances
claimed by TARGET and its Subsidiaries have at all material times been
satisfied and remain satisfied.
(xxxii) To the Knowledge of the Sellers no event has
occurred in consequence of which TARGET or any of its Subsidiaries is
or may be held liable to pay or bear any Tax which is primarily
chargeable against or attributable to some person, firm or company
other than TARGET and its Subsidiaries.
(xxxiii) TARGET and its Subsidiaries have duly paid
all stamp duty for which they are or have been or may be made liable
and without limitation:
(A) all documents in the enforcement of
which TARGET and its Subsidiaries are or may be interested
have been duly stamped; and
(B) there are no documents outside the
United Kingdom which if they were brought into the United
Kingdom would give rise to a liability to stamp duty payable
by TARGET or any of its Subsidiaries.
(xxxiv) TARGET and its Subsidiaries have duly paid
all stamp duty reserve tax for which they are or have become liable and
TARGET and its Subsidiaries have not been party to any transfer of
chargeable securities (within the meaning of Section 99 of the Finance
Act 1986) in respect of which TARGET or any of its Subsidiaries could
become liable to pay any stamp duty reserve tax.
(xxxv) TARGET and its Subsidiaries are not liable
to any penalty in respect of any stamp duty or stamp duty reserve tax
nor to the Knowledge of the Sellers are there any circumstances or
transactions in which TARGET and its Subsidiaries are or have been a
party which may result in TARGET or any of its Subsidiaries becoming
liable to such penalty.
(xxxvi) TARGET and its Subsidiaries have not in the
period of three years ending on the date of this Agreement been party
to any non-arms length transaction, to which principles on which the
case of Xxxxxxx v Xxxxxx could be applied.
(xxxvii) TARGET and its Subsidiaries have not in the
period of three years ending on the date of this Agreement been party
to or otherwise involved in any
31
-27-
scheme or arrangement the main purpose or one of the main purposes of
which was to avoid any Taxes.
(xxxviii) TARGET and its Subsidiaries are each
registered for VAT in the United Kingdom under schedule VATA 1994 and
have not at any time in the last six years been treated as (nor applied
to be) a member of a group of companies for VAT purposes.
(xxxix) TARGET and its Subsidiaries are not
registered (nor required to be registered) for local VAT or its
equivalent in any country other than the United Kingdom.
(xl) Each of TARGET and its Subsidiaries is a
taxable person for VAT purposes, has complied with all the requirements
of VATA 1994 and all applicable regulations and orders.
(xli) TARGET and its Subsidiaries have not in the
last three years been subject to any penalty or liability under any of
Sections 60 to 63 (inclusive), 65 or 67 to 69 (inclusive) VATA 1994 and
have not during such period been subject to any penalty or liability
nor been given any penalty liability notice within Section 64 of that
Act (repeated misdeclarations) nor been given any surcharge liability
notice within section 59 or 59A of that Act nor been given any notice
within section 66 of that Act nor been given a warning within section
76(2) of that Act and TARGET and its Subsidiaries have not been
required by HM Commissioners of Customs and Excise to give any
security.
(xlii) No circumstances exist whereby TARGET and
its Subsidiaries would or might become liable for value added tax
pursuant to the provisions of Sections 47 (agents etc.) or 48 (tax
representatives) VATA 1994.
(xliii) TARGET and its Subsidiaries have not made
any exempt supplies in consequence of which they are or will be unable
to obtain credit for all input tax paid by them during any value added
tax quarter ending after the Most Recent Financial Year End.
(xliv) TARGET and its Subsidiaries have not made
and are not otherwise bound by any election made pursuant to paragraph
2 of schedule 10 VATA 1994.
(xlv) TARGET and its Subsidiaries have not been
party to a transaction to which Article 5 of the Value Added Tax
(Special Provisions) Order 1995 (transfer of business as a going
concern) has (or has purported to have been) applied.
32
-28-
(xlvi) No asset of TARGET and its Subsidiaries is a
capital item, the input tax on which could be subject to adjustment in
accordance with the provisions of Part XV of the Value Added Tax
Regulations 1995.
(xlvii) TARGET and its Subsidiaries have no interest
in any new or uncompleted buildings or civil engineering works within
in the meaning of Group 1 Schedule 9 VATA 1994.
(xlviii) TARGET and its Subsidiaries have not been
engaged in any transaction which has resulted or could result in TARGET
and its Subsidiaries being treated as making any supply to themselves
for value added tax purposes.
(xlix) All value added tax payable upon the
importation of goods and all excise duties payable to HM Customs &
Excise payable in respect of any assets (including trading stock)
imported or owned by TARGET and its Subsidiaries have been paid in
full.
(l) TARGET and its Subsidiaries have not in the
period of six years ending on the date of this Agreement surrendered or
claimed nor is it obliged to surrender or claim any amount by way of
group relief under the provisions of section 402 Taxes Act 1988
(surrender or relief between members of groups and consortia) or any
advance corporation tax under the provisions of section 240 Taxes Act
1988 (set-off of company's surplus ACT against subsidiary's liability
to corporation tax).
(li) No tax is or may become payable by TARGET or
its Subsidiaries pursuant to Section 190 TCGA 1992 (tax on one member
or group recoverable from another member) in respect of any chargeable
gain accruing prior to the Closing Date.
(lii) TARGET and its Subsidiaries are not liable
(and will not after the Closing Date become liable pursuant to
arrangements entered into before the Closing Date) to make:
(A) any payment for group relief
(within the meaning of Section 402(6) Taxes Act 1988) or any
payment for advance corporation tax (as mentioned in Section
240(8) Taxes Act 1988) or any payment for a tax refund (as
mentioned in Section 102(7) Finance Act 1989); or
(B) any refund (in whole or in part) of
any such payment received by TARGET or its Subsidiaries before
the Closing Date,
save (in each case) any payment or refund to another Group Company.
33
-29-
(liii) TARGET and its Subsidiaries have not at any
time within the period of six years ending with the date of this
Agreement acquired any asset other than as trading stock from any other
company which at the time of the acquisition was a member of the same
group of companies as TARGET and its Subsidiaries (as defined in
Section 170 TCGA 1992 (groups of companies: definitions)) and no member
of any group of companies of which TARGET and its Subsidiaries are or
have at any material time been the principal company (as defined in
Section 170 TCGA 1992 (groups of companies: definitions)) has so
acquired any asset.
(liv) TARGET and its Subsidiaries have not in the
last seven years ceased to be a member of a group of companies for the
purposes of Section 178 or 179 TCGA 1992 (company ceasing to be member
of a group).
(lv) TARGET and its Subsidiaries have not carried
out or participated in any depreciatory transaction relating to any
shares of securities of a company which are in its beneficial
ownership.
(lvi) Section 4(k)(lxi) of the Disclosure Schedule
contains particulars of all elections made by TARGET and its
Subsidiaries under Section 247 Taxes Act 1988 which are still in force
(dividends etc. paid by one member of a group to another).
(lvii) TARGET and its Subsidiaries do not have and
have not had at any time since 8 December 1992 any associated company
within the meaning of section 13 Taxes Act 1988 other than another
Group Company.
(lviii) TARGET and its Subsidiaries have not in the
last three years made any payment or incurred any liability to make any
payment of a revenue nature other than in relation to expenditures for
entertainment purposes which could be disallowed as a deduction in
computing the taxable profits of TARGET and its Subsidiaries or as a
charge on the income of TARGET and its Subsidiaries.
(lix) To the Knowledge of the Sellers TARGET and
its Subsidiaries are not and will not become liable to be assessed to
inheritance tax as donor or donee of any gift or a transferor or
transferee of value (actual or deemed) nor as a result of any
disposition chargeable transfer or transfer of value (actual or deemed)
made by or deemed not be made by any other person.
(lx) There is no unsatisfied liability to capital
transfer tax or inheritance tax attached or attributable to the assets
of TARGET and its Subsidiaries or the shares of
34
-30-
TARGET and its Subsidiaries and neither such assets nor such shares are
subject to an Inland Revenue charge.
(lxi) To the Knowledge of the Sellers, no person
has the power under Section 212 of the Inheritance Tax Act 1984 (powers
to raise tax) to raise any capital transfer tax or inheritance tax by
sale or mortgage of or by terminable charge on any of TARGET's and its
Subsidiaries' assets or shares.
(lxii) No transaction described in section 765 (1)
Xxxxx Xxx 0000 (migration, etc of companies) has been carried out or
proposed by or in relation to TARGET and its Subsidiaries.
(lxiii) TARGET and its Subsidiaries do not have (in
the period of three years ending on the date of this Agreement has not
had) any branch, agent or permanent establishment (within the meaning
of the OECDS Model Double Taxation Agreement) outside the United
Kingdom.
(lxiv) TARGET and its Subsidiaries do not have and
have not in the last seven years had any interest in:
(A) a controlled foreign company within
the meaning of Section 747 Taxes Act 1988 (imputation of
chargeable profits and creditable tax of controlled foreign
companies); or
(B) a material interest in an offshore
fund within the meaning of Chapter V or Part XVII Taxes Xxx
0000.
(lxv) TARGET and its Subsidiaries are not liable
to be assessed to tax under Xxxxxxx 00X Xxxxx Xxx 0000 (non-residents
and their representatives) and has not received any such assessment.
(lxvi) Since 8 December 1992, TARGET and its
Subsidiaries have not established (nor is it a participant in) any
bonus, share option, profit related pay or other scheme or arrangement,
whether or not approved by the Inland Revenue, for the benefit of its
current or former officers or employees or any of them.
(l) PROPERTY.
(i) Schedule 2 sets forth a true and correct
description of the particulars of all property owned by TARGET and its
Subsidiaries. With respect to each such Premises:
35
-31-
(A) TARGET and its Subsidiaries are the
sole legal and beneficial owners of the Premises and are
entitled to and have good and marketable title and exclusive
occupation of such Premises; and
(B) TARGET and its Subsidiaries have
good and marketable title to the parcel of real property free
and clear of any mortgage or charge (whether legal or
equitable, fixed or floating), encumbrance, lease, sub-lease,
tenancy, licence or right of occupation, rent charge, and to
the Knowledge of the Sellers any exception, reservation,
easement, quasi-easement or privilege in favour of a third
party.
(ii) ss.4(l)(ii) of the Disclosure Schedule lists
all real property leased or subleased to any of TARGET and its
Subsidiaries. The Sellers have delivered to Xxxxxx correct and complete
copies of the leases and subleases listed in ss.4(l)(ii) of the
Disclosure Schedule (as amended to date). With respect to each lease
and sublease listed in ss.4(l)(ii) of the Disclosure Schedule:
(A) to the Knowledge of the Sellers,
the lease or sublease is in full force and effect and will
continue to be in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(B) TARGET and its Subsidiaries have
not assigned, transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the leasehold or
subleasehold;
(C) to the Knowledge of the Sellers,
the owner of each facility leased or subleased to TARGET has
good and marketable title to the parcel of real property free
and clear of any Security Interest other than Security
Interests that do not materially impair TARGET's or its
Subsidiaries' use of such facility.
(iii) TARGET and its Subsidiaries have not entered
into positive covenants or personal obligations (whether in a
conveyance, transfer or assignment to it or otherwise) neither does it
have any personal rights under which it has any subsisting liability
(whether actual or contingent).
(iv) Any necessary or appropriate action to
protect the interests of TARGET and its Subsidiaries has been taken
under the Landlord and Xxxxxx Xxx 0000 and in relation to rent review
provisions in relation to each lease, sub-lease, tenancy or agreement
for any of the same in respect of which the TARGET or its Subsidiaries
is the landlord or the tenant thereunder and all appropriate time
limits have been complied with and no rent reviews are outstanding at
the date hereof or exercisable prior to the Closing.
36
-32-
(v) Where the interest of the TARGET or its
Subsidiaries in any of the Premises is leasehold, there is no right for
the landlord to determine the lease except in the event of nonpayment
of rent or other breach of covenant by the tenant.
(vi) Except in relation to the Premises, TARGET
and its Subsidiaries have no liabilities (actual or contingent) arising
out of the conveyance, transfer, lease, tenancy, licence, agreement or
other document relating to land or premises or an interest in land or
premises, including, without limitations leasehold premises assigned or
otherwise disposed of.
(vii) Replies to enquiries given by Sellers'
Solicitors to enquiries raised by Xxxxxx'x solicitors are true and
accurate in all material respects.
(m) INTELLECTUAL PROPERTY.
(i) TARGET and its Subsidiaries own or have the
right to use pursuant to license, sublicense, agreement, or permission
all Intellectual Property that is material to the operation of the
businesses of TARGET and its Subsidiaries as presently conducted.
Except as set forth on ss.4(m) of the Disclosure Schedule, each such
material item of Intellectual Property will be owned or available for
use by TARGET and its Subsidiaries on identical terms and conditions
immediately subsequent to the Closing hereunder.
(ii) None of the Sellers and the directors (and
employees with responsibility for Intellectual Property matters) of
TARGET and its Subsidiaries have received any charge, complaint, claim,
demand, or notice which is outstanding alleging any such interference,
infringement, misappropriation, or violation (including any claim that
any of TARGET and its Subsidiaries must license or refrain from using
any Intellectual Property rights of any third party). To the Knowledge
of any of the Sellers and the directors and officers (and employees
with responsibility for Intellectual Property matters) of TARGET and
its Subsidiaries, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of any of TARGET and its Subsidiaries.
(iii) No patent or registration has been issued to
TARGET and its Subsidiaries with respect to any of its Intellectual
Property, no pending patent application or application for registration
has been made by TARGET and its Subsidiaries with respect to any of its
Intellectual Property, and no license, agreement, or other permission
has been granted by TARGET and its Subsidiaries to any third party with
respect to any of its Intellectual Property (together with any
exceptions). No trade name or unregistered
37
-33-
trademark is used by TARGET and its Subsidiaries in connection with any
of its businesses.
(iv) ss.4(m)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any third party owns
and that TARGET and its Subsidiaries use pursuant to license,
sublicense, agreement, or permission. The Sellers have delivered to
Xxxxxx correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each
item of Intellectual Property required to be identified in ss.4(m)(iv)
of the Disclosure Schedule:
(A) to the Knowledge of the Sellers,
the license, sublicense, agreement, or permission covering the
item is in full force and effect and will continue to be in
full force and effect on identical terms following the
consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in ss.2
above);
(B) to the Knowledge of the Sellers, no
party to the license, sublicense, agreement, or permission is
in material breach or material default or has repudiated such
license, sublicense, agreement or permission, and no event has
occurred which with notice or lapse of time would constitute a
material breach or material default or permit termination,
modification, or acceleration thereunder;
(C) to the Knowledge of the Sellers no
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(D) TARGET and its Subsidiaries have
not granted any sublicense or similar right with respect to
the license, sublicense, agreement, or permission.
(v) To the Knowledge of any of the Sellers and
the directors and officers (and employees with responsibility for
Intellectual Property matters) of TARGET and its Subsidiaries, TARGET
and its Subsidiaries will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, any Intellectual
Property rights of third parties as a result of the continued operation
of its businesses as presently conducted.
(vi) To the Knowledge of any of the Sellers, the
technology of TARGET and its Subsidiaries which is material for the
operation of their businesses is "Year 2000 compliant" in that it
correctly performs all date-related operations (A)
38
-34-
without human intervention, other than original data entry of any date,
(B) without regard to whether any date involved in the operation occurs
in the twentieth or twenty-first centuries and (C) without regard to
the system date at the time the calculation is performed.
(n) TANGIBLE ASSETS. TARGET and its Subsidiaries own or
lease all facilities, machinery, equipment, and other tangible assets necessary
for the conduct of its businesses as presently conducted. Each such tangible
asset has been maintained in accordance with normal industry practice, is in a
reasonable state of operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.
(o) CONTRACTS.ss.4(o) of the Disclosure Schedule lists
the following contracts and other agreements to which
TARGET or any of its Subsidiaries is a party:
(i) any agreement (or group of related
agreements) for the lease of personal property (other than capitalised
lease obligations) to or from any Person providing for lease payments
in excess of Fifteen Thousand Sterling ((pound)15,000.00) per annum;
(ii) other than agreements and contracts with
customers, as to which Fifty Thousand Sterling ((pound)50,000.00) shall
be the disclosure threshold for ss. 4(o) of the Disclosure Schedule,
any agreement (or group of related agreements) for the purchase or sale
of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a
material loss to TARGET, or involve consideration in excess of Fifteen
Thousand Sterling ((pound)15,000.00);
(iii) any agreement concerning a partnership or
joint venture;
(iv) any agreement (or group of related
agreements) under which it has created, incurred, assumed, or
guaranteed any indebtedness for borrowed money, or any capitalised
lease obligation, in excess of Fifteen Thousand Sterling
((pound)15,000.00);
(v) any agreement concerning confidentiality or
noncompetition other than standard provisions in contracts with
TARGET's customers;
(vi) any agreement with any of the Sellers and
their Affiliates (other than TARGET and its Affiliates);
39
-35-
(vii) any profit sharing, stock option, stock
purchase, phantom stock, stock appreciation, deferred compensation,
severance, or other material plan or arrangement for the benefit of its
current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any
individual on a full-time, part-time, consulting, or other basis
providing annual compensation in excess of Fifteen Thousand Sterling
((pound)15,000.00) or providing severance benefits in excess of Fifteen
Thousand Sterling ((pound)15,000.00);
(x) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xi) any agreement with customers and suppliers
under which the consequences of a default or termination could be
reasonably expected to result in a TARGET Material Adverse Change; or
(xii) other than agreements or contracts with
customers, any other agreement (or group of related agreements) the
performance of which involves consideration in excess of Fifteen
Thousand Seven Hundred Sterling ((pound)15,000.00).
The Sellers have delivered to Xxxxxx a correct and complete copy of each written
agreement listed in ss.4(o) of the Disclosure Schedule (as amended to date) and
a written summary setting forth the terms and conditions of each oral agreement
referred to in ss.4(o) of the Disclosure Schedule. With respect to each such
agreement: (A) to the Knowledge of the Sellers, the agreement is in full force
and effect; (B) to the Knowledge of the Sellers, the agreement will continue to
be in full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) to the Knowledge of the Sellers, no party
is in material breach or material default, and no event has occurred which with
notice or lapse of time would constitute a material breach or material default,
or permit termination, modification, or acceleration, under the agreement; and
(D) no party has repudiated any provision of the agreement. Except as listed on
ss.4(o) of the Disclosure Schedule, TARGET and its Subsidiaries are not parties
to any contract or agreement relating to provision by TARGET and its
Subsidiaries of services, with any applicable governmental authority.
(p) BOOK DEBTS.
(i) All book debts of TARGET and its
Subsidiaries included in the Accounts are reflected properly on their
books and records, are valid receivables subject to no setoffs or
counterclaims, are current and collectible and will be collected in
40
-36-
accordance with their terms at their recorded amounts other than book
debts not exceeding (pound)11,000 in the aggregate.
(ii) All book debts of TARGET and its
Subsidiaries included in the Management Accounts for services provided
through 30 November 1998 are reflected properly on their books and
records, are valid receivables subject to no setoffs or counterclaims
and are current. To the Knowledge of the Sellers, there is no
impediment to the collectibility of such book debts.
(q) POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of TARGET or its Subsidiaries.
(r) INSURANCE. ss.4(r) of the Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which TARGET or any of its
Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
(i) the name, address, and telephone number of
the agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of
coverage;
(iv) the scope (including an indication of
whether the coverage was on a claims made, occurrence, or other basis)
and amount (including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy: (A) to the Knowledge of the Sellers,
the policy is in full force and effect; (B) to the Knowledge of the Sellers, the
policy will continue to be in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) to the Knowledge
of the Sellers, neither TARGET and its Subsidiaries nor any other party to the
policy is in material breach or material default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a material breach or
material default, or permit termination, modification, or acceleration, under
the policy; and (D) no party to the policy has repudiated any provision thereof.
TARGET and its Subsidiaries have been covered during the past three (3)
41
-37-
years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. There are
no self-insurance arrangements affecting TARGET and its Subsidiaries.
(s) LITIGATION. Section 4(s) of the Disclosure Schedule
sets forth each instance in which TARGET or its Subsidiaries (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to the Knowledge of any of the Sellers and the directors of
TARGET and its Subsidiaries, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any applicable jurisdiction or before
any arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in ss.4(s) of the Disclosure Schedule is likely, if
adversely determined, to result in any TARGET Material Adverse Change. None of
the Sellers and the directors and officers (and employees with responsibility
for litigation matters) of TARGET and its Subsidiaries has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against any of TARGET or any of its Subsidiaries.
(t) EMPLOYEES AND PENSION SCHEMES.
(i) The individuals, details of whom are set
forth in ss.4(t)(i) of the Disclosure Schedule (the "EMPLOYEES") are
all employed by TARGET and its Subsidiaries at the date of this
Agreement. There are no other individuals employed by the TARGET and
its Subsidiaries at the date of this Agreement.
(ii) The particulars shown in ss.4(t)(i) of the
Disclosure Schedule show true and complete details of the names, ages
and lengths of continuous service of all of the Employees and by
reference to each of the Employees remuneration payable and other
benefits provided by TARGET or any of its Subsidiaries or which TARGET
or its Subsidiaries is bound to provide (whether now or in the future)
to each category of the Employees at Closing or any Person connected
with any such Person and (without limiting the generality of the
foregoing) include particulars of all the material terms of profit
sharing, incentive, bonus, commission arrangements and any other
benefit to which any such category of the Employees is entitled or
which is regularly provided or made available to them (including
details of their notice period and their entitlement to holiday).
(iii) All Employees (other than those set forth on
ss.4(t)(iii)) have entered into and are subject to the terms of
employment contracts in substantially similar form to the employment
agreement attached hereto as Exhibit 7(t)(iii).
42
-38-
(iv) There are no subsisting contracts for the
provision by any person of any consultancy services to TARGET and its
Subsidiaries.
(v) None of the Employees has given notice
terminating his contract of employment.
(vi) None of the Employees is under notice of
dismissal or has any outstanding dispute with TARGET or any of its
Subsidiaries in connection with or arising from his employment nor is
there any liability outstanding to such persons except for remuneration
or other benefits accruing due and no such remuneration or other
benefit which has fallen due for payment has not been paid.
(vii) During the period of six months ending with
the execution of this Agreement neither TARGET nor any of its
Subsidiaries has directly or indirectly terminated the employment of
any person employed in or by TARGET or its Subsidiaries.
(viii) None of the Employees belongs or has
belonged at any material time to an independent trade union recognised
by the TARGET and its Subsidiaries and no such trade union is
recognised by TARGET and its Subsidiaries.
(ix) There are no employee representatives
representing all or any of the Employees.
(x) The TARGET and its Subsidiaries has complied
with all of its statutory obligations to inform and consult appropriate
representatives as required by law.
(xi) There is no plan, scheme, commitment,
policy, custom or practice (whether legally binding or not) relating to
redundancy or termination of employment affecting any of the Employees
more generous than the statutory redundancy requirements.
(xii) All Pension Schemes comply in all material
respects with all relevant statutes, regulations and other laws and all
necessary consents in relation to such plans have been obtained and all
governmental filings in relation to such plans have been made.
(xiii) There are no loans owed by any of the
Employees to the TARGET and its Subsidiaries.
43
-39-
(xiv) Except for the Pension Schemes, neither
TARGET nor any of its Subsidiaries is under any present or future
liability to pay to any of the Employees or to any other person who has
been in any manner connected with TARGET and its Subsidiaries any
pension, superannuation allowance, death benefit, retirement gratuity
or like benefit or to contribute to any life assurance scheme, medical
insurance scheme, or permanent health scheme and TARGET and its
Subsidiaries have not made any such payments or contributions on a
voluntary basis nor is it proposing to do so.
(xv) There is no:
(A) outstanding or threatened claim by
any person who is now or has been an employee of the TARGET
and its Subsidiaries or any dispute outstanding with any of
the said persons or with any unions or any other body
representing all or any of them in relation to their
employment by the TARGET and its Subsidiaries or, to the
Knowledge of the Sellers, of any circumstances likely to give
rise to any such dispute;
(B) industrial action involving any
employee, whether official or unofficial, currently occurring
or threatened; or
(C) industrial relations matter which
has been referred to ACAS or any similar governmental agency
in the applicable jurisdiction for advice, conciliation or
arbitration.
(xvi) Save for the Pension Schemes, neither TARGET
nor any of its Subsidiaries is a party to or participates in or
contributes to any scheme, agreement or arrangement (whether legally
enforceable or not) for the provision of any pension, retirement,
death, incapacity, sickness, disability, accident or other like
benefits (including the payment after cessation of employment with
TARGET and its Subsidiaries of medical expenses) for any Relevant
Employee or for the widow, widower, child or dependent of any Relevant
Employee. The Save & Prosper Scheme is a money purchase scheme (as
defined in section 181(1) of the Pension Schemes Act 1993) and the
benefits payable under this scheme whether immediate, prospective or
contingent, are solely the benefits which can be provided by the funds
available for each member of this scheme.
(xvii) TARGET and its Subsidiaries have disclosed
to Xxxxxx:
(A) true and complete copies of the
following documents referable to the Pension Schemes:
(1) all deeds, rules and other
governing documents;
44
-40-
(2) all announcements, booklets
and the like of current effect;
(B) details of all amendments (if any)
to the Pension Schemes which have been announced or are
proposed but which have not yet been formally made;
(C) details of all discretionary
increases (if any) to pensions in payment or in deferment
under the Pension Schemes which have been granted in the six
years prior to the date of this Agreement or which are under
consideration;
(E) details of all discretionary
practices (if any) which may have led any person to expect
additional benefits in a given set of circumstances (by way of
example, but without limitations, on retirement at the behest
of the TARGET and its Subsidiaries or in the event of
redundancy); and
(F) details of the rate at which and
basis upon which the TARGET and its Subsidiaries currently
contribute to the Pension Schemes and any personal pension
scheme (as defined in section 1 of the Pension Schemes Act
1993) of any Employee or any other person, and any change to
that rate and/or basis which is proposed or which is under
consideration.
(xviii) Every person who has at any time had the
right to join, or apply to join, the Pension Schemes his been properly
advised of that right. No Relevant Employee has been excluded from
membership of the Pension Schemes or from any of the benefits
thereunder in contravention of Article 119 of the Treaty of Rome, the
Xxxxxxxx Xxx 0000 or other applicable laws or requirements or the
provisions of the Pension Schemes or otherwise.
(xix) None of the employees of TARGET and its
Subsidiaries is to the Knowledge of the Sellers (A) applying for or
about to apply for an ill health early retirement pension under the
Pension Schemes, or (B) terminally ill. To the Knowledge of any of the
Sellers, none of the Sellers has any medical condition or illness which
would prevent such person from fulfilling all of such person's
obligations under such person's respective Employment Agreement.
(xx) No transfer value has been paid (directly or
indirectly) to the Pension Schemes from another arrangement for any
member of the Pension Schemes.
45
-41-
(xxi) All benefits (other than any refund of
members' contributions with interest where appropriate) payable under
the Pension Schemes on the death of any person while in employment to
which the Pension Schemes relate are insured fully under a policy with
an insurance company of good repute and to the Knowledge of the Sellers
there are no grounds on which that company might avoid liability under
that policy.
(xxii) Contributions to the Pension Schemes and to
any Personal Pension Scheme in respect of the Employees which have
fallen due for payment have been paid at the time they were due.
Neither TARGET nor its Subsidiaries contribute to the Pension Schemes
or to any Personal Pension Scheme over an above the contributions
disclosed under ss.4(t)(xvii)(F) above.
(xxiii) No power under the Pension Schemes has been
exercised in relation to any employee of TARGET and its Subsidiaries or
in respect of any person:
(A) to provide terms of membership of
the Pension Schemes (whether as to benefits or contributions)
which are different from those generally applicable to the
members of the Pension Schemes; or
(B) to provide any benefits which would
not but for the exercise of that power have been payable under
the Pension Schemes; or
(C) to augment any benefits under the
Pension Schemes.
(xxiv) TARGET and its Subsidiaries:
(A) have observed and performed those
provisions of the Pension Schemes which apply to it; and
(B) may (without the consent of any
person or further payment) terminate its liability to subject
to the terms of employment of the active members of the
Pension Schemes but otherwise contribute to the Pension
Schemes or any other arrangement to which it contributes that
provides relevant benefits (as defined in section 612 of the
Taxes Act 1988) at any time subject only to giving such notice
(if any) as is expressly provided for in the documentation
containing the current provisions governing the Pension
Schemes.
(xxv) TARGET and its Subsidiaries are the only
employers for the time being participating in the Pension Schemes. No
employer other than TARGET and its Subsidiaries has previously
participated in the Pension Schemes.
46
-42-
(xxvi) To the Knowledge of the Sellers all
documentation and records in respect of the Pension Schemes are up to
date and complete and accurate in all material respects.
(xxvii) To the Knowledge of the Sellers the Save &
Prosper Scheme:
(A) is an exempt approved scheme
(within the meaning of Section 592(1) Income and Corporation
Taxes Act 1988);
(B) has properly and punctually
accounted to the Board of Inland Revenue for all and any tax
for which the Pension Schemes is liable or accountable; and
(C) has at all times complied with and
been administered in accordance with all applicable laws,
regulations and requirements (including those of the Board of
Inland Revenue and of trust law).
(xxviii) To the Knowledge of the Sellers none of the
Pension Schemes, TARGET or any of its Subsidiaries is engaged or
involved in any litigation or arbitration, investigation or
determination by the Pensions Ombudsman and/or the Occupational
Pensions Advisory Service or any complaint under the internal dispute
resolution procedure established in connection with the Pension Schemes
which relate to or are in connection with the Pension Schemes or the
benefits thereunder and no such proceedings are pending or threatened
and to the Knowledge of the Sellers there are no facts likely to give
rise to any such proceedings.
(xxix) In relation to the Pension Schemes or funds
which are or have been held for the purposes thereof, neither TARGET
and its Subsidiaries has given an indemnity or guarantee to any person
(other than in the case of TARGET and its Subsidiaries any general
indemnity in favour of the trustees or administrator under the
documentation governing the Pension Schemes).
(u) GUARANTEES. Neither TARGET nor any of its
Subsidiaries is a guarantor or otherwise is liable for any Liability or
obligation (including indebtedness) of any other Person.
(v) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS. Except as
disclosed in ss.4(v) of the Disclosure Schedule:
(i) Hazardous Materials have not at any time
been generated, used, treated or stored by TARGET and its Subsidiaries
in violation in any material respect of any applicable Environmental
Law, or in any way which will hereafter require material
47
-43-
remedial action under any applicable Environmental law, and TARGET and
its Subsidiaries have not received any notice of any such violation
with respect to Hazardous Materials;
(ii) to the Knowledge of the Sellers, there has
been no spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto any property owned or leased by TARGET and its
Subsidiaries, or into the environment surrounding any such property, of
Hazardous materials, other than releases permissible under applicable
Law or allowable under applicable permits;
(iii) TARGET and its Subsidiaries, their
operations and any property owned, leased or operated by them are in
compliance in all material respects with (i) all applicable
Environmental Laws, and (ii) the requirements of any permits issued
under such laws; and
(iv) there are no pending or threatened claims
against TARGET and its Subsidiaries or any property owned, leased or
operated by them relating to Hazardous Materials or environmental
matters.
None of the circumstances, conditions or occurrences disclosed in ss.4(v) of the
Disclosure Schedule or reflected in the Financial Statements involves or will
result in any material liability on the part of TARGET and its Subsidiaries.
(w) CERTAIN BUSINESS RELATIONSHIPS.
(i) Except as contemplated or permitted by this
Agreement, disclosed in ss.4(w)(i) of the Disclosure Schedule or
reflected in the Financial Statements, none of the Sellers is involved
in any business arrangement or relationship with TARGET and its
Subsidiaries and none of the Sellers owns any material asset, tangible
or intangible, which is used in the business of TARGET and its
Subsidiaries (other than motor vehicles owned and used by Xxxxx
Xxxxxxxxxxx).
(ii) Except as contemplated or permitted by the
Agreement, disclosed in ss.4(w)(ii) of the Disclosure Schedule or
reflected in the Financial Statements, neither TARGET nor any of its
Subsidiaries is involved in any business arrangement or relationship
with Xxxxxxxx Clinical Research Limited and Xxxxxxxx Clinical Research
Limited does not own any material asset, tangible or intangible, which
is used in the business of TARGET and its Subsidiaries.
(x) COMPETITION.
48
-44-
(i) To the Knowledge of the Sellers, TARGET and
its Subsidiaries are not, and have not been party to, or concerned in
any agreement, arrangement, understanding or concerted practice, or any
other conduct or practice (unilateral or otherwise) in relation to the
Business which constitutes a breach of any relevant undertaking, order,
assurance or other measure taken under the Fair Trading Xxx 0000, the
Restrictive Trade Practices Act 1976 or the Competition Xxx 0000
(ii) TARGET and its Subsidiaries are not subject
to any publication, order, condition, undertaking, assurance or similar
measure or obligation imposed by or under any of the laws referred to
in ss.4(x)(i).
(iii) TARGET and its Subsidiaries are not, and
have not been subject to any investigation, request for information,
notice or other communication (whether formal or informal, and whether
or not in writing) by any court, governmental or regulatory authority
pursuant to any of the laws referred to in ss.4(x)(i).
(iv) To the Knowledge of TARGET and its
Subsidiaries, no such action as is mentioned in ss.4(x)(i) will be
taken against them in relation to any of their current activities.
(y) DISCLOSURE.
(i) The representations and warranties contained
in this ss.4 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements and information contained in this ss.4, in light of the
circumstances under which they were made, not misleading in any
material respect.
(ii) The contents of the Disclosure Schedule and
of all documents accompanying it and referred to in it are true and
accurate in all material respects and fully and clearly disclose every
matter to which they relate.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his, her or its
best efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in ss.7 below).
(b) NOTICES AND CONSENTS. The Sellers will cause each of
TARGET and its Subsidiaries to give any notices to third parties, and will cause
TARGET to use its best efforts to
49
-45-
obtain any third party consents, that Xxxxxx reasonably may request in
connection with the matters referred to in ss.4(c) above. Each of the Parties
will (and the Sellers will cause TARGET and its Subsidiaries to) give any
notices to, make any filings with, and use its best efforts to obtain any
authorisations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(a)(ii), ss.3(b)(ii), and
ss.4(c) above.
(c) OPERATION OF BUSINESS. The Sellers will not cause or
permit TARGET and its Subsidiaries to engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business without
prior notification to and the consent of Xxxxxx (which consent shall not be
unreasonably withheld or delayed). Without limiting the generality of the
foregoing, the Sellers will not cause or (so far as they are able) permit TARGET
and its Subsidiaries to (i) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock or redeem, purchase, or otherwise
acquire any of its capital stock, (ii) otherwise engage in any practice, take
any action, or enter into any transaction of the sort described in ss.4(h)
above, or (iii) do any act or omit to do any act, or (so far as they are able)
permit any act or omission to act, which could be reasonably expected to cause
any of the statements contained in ss.4 to not be correct and complete as of the
Closing Date (except as set forth in the Disclosure Schedule). Notwithstanding
anything in this paragraph (c) to the contrary, IRC shall be permitted to take
all reasonable steps necessary to have that certain legal mortgage dated 6
September 1996 in favour of Midland Bank plc fully discharged. The Sellers shall
not be in breach of this paragraph (c) in respect of anything done or omitted or
permitted to be done by TARGET or IRC in the ordinary and proper course of its
trading activities or with the prior written consent or approval of Xxxxxx or in
order to comply with the Sellers' obligations under this Agreement.
(d) PRESERVATION OF BUSINESS. The Sellers shall use their
best efforts to cause TARGET and its Subsidiaries to keep their business and
properties substantially intact, including its present operations, physical
facilities, working conditions and relationships with lessors, licensors,
suppliers, customers and employees.
(e) FULL ACCESS. Each of the Sellers will permit, and the
Sellers will cause TARGET and its Subsidiaries to permit, representatives of
Xxxxxx to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of TARGET and its Subsidiaries, to
all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to TARGET and its Subsidiaries.
(f) NOTICE OF DEVELOPMENTS. The Sellers will give prompt
written notice to Xxxxxx of any material adverse development causing a breach of
any of the representations and warranties in ss.4 above. Each Party will give
prompt written notice to the others of any material adverse development causing
a breach of any of his, her or its own representations and warranties in ss.3
above.
50
-46-
6. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
ss.6 or ss.8 below or under the Tax Deed). The Sellers acknowledge and agree
that, from and after the Closing, Xxxxxx will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort within the possession of, or under the control of, any Seller
or TARGET and its Subsidiaries, relating to TARGET and its Subsidiaries (other
than such documents, books, records (including Tax records), agreements and
financial data that solely relate to one or more Sellers personally or to their
personal positions).
(b) LITIGATION SUPPORT. In the event and for so long as
any Party actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving TARGET and its Subsidiaries, each of the other
Parties will co-operate with him, her or it and his, her or its counsel in the
contest or defence, make available their personnel, and provide such testimony
and access to their books and records as shall be reasonably necessary in
connection with the contest or defence, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ss.8 below).
(c) TRANSITION. None of the Sellers will take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of TARGET and its
Subsidiaries from maintaining the same business relationships with TARGET and
its Subsidiaries after the Closing as it maintained with TARGET and its
Subsidiaries prior to the Closing. Each of the Sellers will refer all customer
inquiries relating to the businesses of TARGET and its Subsidiaries to TARGET
and its Subsidiaries from and after the Closing.
(d) CONFIDENTIALITY. Each of the Sellers will treat and
hold as such all of the Confidential Information, refrain from using any of the
Confidential Information (other than Confidential Information that solely
relates to the Seller personally) except in connection with this Agreement or
the business of TARGET and its Subsidiaries and will deliver promptly to Xxxxxx
or destroy, at the request of Xxxxxx, all copies of the Confidential Information
which are
51
-47-
in his, her or its possession. In the event that any of the Sellers is requested
or required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Seller will
notify Xxxxxx promptly of the request or requirement so that Xxxxxx may seek an
appropriate protective order or waive compliance with the provisions of this
ss.6(d). If, in the absence of a protective order or the receipt of a waiver
hereunder, Seller is compelled to disclose such Confidential Information, Seller
may disclose the Confidential Information to the tribunal; PROVIDED, HOWEVER,
that the disclosing Seller shall use his, her or its reasonable best efforts to
obtain, at the reasonable request of Xxxxxx, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as Xxxxxx shall designate.
(e) TARGET SHARES. Each of the Sellers hereby declares
that for so long as he/she remains the registered holder of any of the TARGET
Shares after Closing he/she will:
(i) hold the TARGET Shares and the dividends and
other distributions or profits or surplus of other assets declared,
paid or made in respect of them after Closing and all rights arising
out of or in connection with them in trust for Xxxxxx and its
successors in title; and
(ii) deal with and dispose of the TARGET Shares
and all such dividends, distributions and rights as are described
in ss.6(e)(i) as Xxxxxx or any such successor may direct.
(f) INDEMNITIES.
(i) The Sellers shall jointly and severally
indemnify TARGET and its Subsidiaries and any officer of TARGET and its
Subsidiaries against:
(A) any Adverse Consequences which
TARGET or its Subsidiary are or become liable to pay as a
result of any failure to comply with the Xxxxxxxx Xxx 0000 by
any person in respect of the Save & Prosper Scheme; and
(B) any Adverse Consequences arising in
any way from the lease dated 11 June 1995 by TARGET with
respect to office premises at Xxxxxxx Xxxx, 00-00 Xxxxxx
Xxxxxx, Xxx, Xxxxxxxxxxxxxx.
(xx) The liability of the Sellers under this
ss.6(f) shall be subject to the limitations specified in ss.8(i).
7. CONDITIONS TO OBLIGATION TO CLOSE.
52
-48-
(a) CONDITIONS TO OBLIGATION OF XXXXXX. The obligation of
Xxxxxx to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth
in ss.4 above shall have been true and correct in all material respects
(other than representations and warranties having materiality
qualifiers, which shall be true and correct in all respects) at and as
of the date of this Agreement and the representations and warranties
set forth in ss.3(a) above shall be true and correct in all material
respects (other than representations having materiality qualifiers,
which shall be true and correct in all respects) at and as of the
Closing Date;
(ii) the Sellers shall have performed and
complied with all of their covenants hereunder in all material respects
through the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavourable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect adversely
the right of Xxxxxx to own TARGET Shares and to control TARGET, or (D)
affect adversely the right of TARGET to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(iv) (A) each Seller shall have delivered to
Xxxxxx a certificate with respect to the satisfaction of the conditions
specified above in ss.7(a)(i) and (B) the Sellers shall have delivered
to Xxxxxx a certificate to the effect that each of the conditions
specified above in ss.7(a)(ii)-(iii) is satisfied in all respects;
(v) Xxxx Xxxxxx and Xxxxxxx Xxxxxxx shall have
had full medical examinations and Xxxxxx shall have been satisfied with
the form and substance of the report on each such medical examination;
(vi) TARGET'S bank creditors shall have given
their written consent to the transaction contemplated by this Agreement
(if required) and shall have discharged all Encumbrances given by
TARGET and its Subsidiaries in their favour;
53
-49-
(vii) Xxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx
Xxxxxxxxxxx shall have entered into Employment Agreements in the form
of Exhibit 7(a)(vii) hereto (the "EMPLOYMENT AGREEMENTS");
(viii) each of the Sellers shall have executed and
delivered releases in the form of Exhibit 7(a)(viii) hereto (the
"RELEASES");
(ix) each of the Sellers shall have executed and
delivered Non-Competition and Non-Disclosure Covenants in the form of
Exhibit 7(a)(ix) hereto (the "COVENANTS");
(x) no TARGET Material Adverse Change shall have
occurred; provided, however, if a TARGET Material Adverse Change shall
have occurred, Xxxxxx and the Sellers shall negotiate in good faith
with respect to a reasonable adjustment of the Purchase Price. If
agreement is not reached prior to 22 January 1999 with respect to such
an adjustment, Xxxxxx may terminate this Agreement for failure of a
condition precedent;
(xi) (A) TARGET and IRC shall have received all
authorisations, consents, and approvals of governments and governmental
agencies referred to in ss.3(a)(ii) and ss.4(c) above, and (B) Xxxxxx
shall have received all authorisations, consents, and approvals of
governments and governmental agencies referred to in ss.3(b)(ii);
(xii) Xxxxxx shall have received the resignations,
effective as of the Closing, of each director, secretary and officer of
TARGET and its Subsidiaries other than those whom Xxxxxx shall have
specified in writing at least five Business Days prior to the Closing,
each delivering to Xxxxxx a deed in form and substance satisfactory to
Xxxxxx made out in favour of TARGET and/or its Subsidiaries
acknowledging that he or she has no claim outstanding for compensation
or otherwise and without any payment under the Employment Rights Xxx
0000;
(xiii) each of the Sellers shall have executed and
delivered to Xxxxxx an affidavit pursuant to ss. 1.1445-2(b)(2) of the
Treasury Regulations: (A) stating that such Seller is not a
"non-resident alien" for United States income tax purposes; and (B)
setting forth that Seller's tax identification number and address;
(xiv) each of the Sellers shall have executed and
delivered the Escrow Agreement;
(xv) Xxxxxx shall have received (A) all the
statutory and other books (duly written up to date) of TARGET and each
of its Subsidiaries and its/their certificate(s) of incorporation, any
certificates of incorporation on change of name and
54
-50-
common seal(s); (B) transfers of all of the TARGET Shares duly executed
by the registered holders thereof in favour of Xxxxxx together with the
relative share certificates; (C) certificates in respect of all issued
shares in the capital of each of TARGET's Subsidiaries and transfers of
all shares in any Subsidiary not registered in the name of TARGET or
another Subsidiary in favour of such Persons as Xxxxxx shall direct;
and (D) the title deeds to the Premises (other than those title deeds
properly in the possession of Midland Bank plc);
(xvi) Xxxxxx shall have received an executed Tax
Deed;
(xvii) the Sellers shall have caused a board
meeting of TARGET and of each of its Subsidiaries to be held at which
there shall be (A) passed a resolution to approve, in the case of
TARGET, the transfers of TARGET Shares and (subject only to due
stamping) to register, in the register of members, each transferee as
the holder of the shares concerned; (B) appointed as directors and/or
secretary such Persons as Xxxxxx may nominate such appointments to take
effect at the close of the meeting; (C) tendered and accepted the
resignations and acknowledgements of the directors and secretary
referred to in ss.7(a)(xii) each such acceptance to take effect at the
close of the meeting; (D) revoked all existing authorities to banks and
new authorities shall be given to such banks and on such terms as
Xxxxxx may direct; (E) changed the situation of the registered office
and (subject to the Companies Acts) the accounting reference date, each
as Xxxxxx may direct; and (F) approved and entered into the Employment
Agreements;
(xviii) Xxxxxx shall have received, certified as
correct by the secretary of the relevant company, the minutes of each
board meeting referred to in ss.7(a)(xvii); and
(xix) Xxxxxx shall have received a power of
attorney from each Seller (if requested by Xxxxxx) in form and
substance satisfactory to Xxxxxx enabling Xxxxxx to vote the TARGET
Shares pending Xxxxxx'x registration as shareholder.
Xxxxxx may waive any condition specified in this ss.7(a) in writing at or prior
to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLERS. The
obligation of the Sellers to consummate the transactions to be performed by them
in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth
in ss.3(b) above shall be true and correct in all material respects
(other than representations and warranties having materiality
qualifiers, which shall be true and correct in all respects) at and as
of the Closing Date;
55
-51-
(ii) Xxxxxx shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavourable
injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) Xxxxxx shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
in ss.7(b)(i)-(iii) is satisfied in all respects;
(v) no material adverse change in the business,
assets, liabilities, income, financial condition or business prospects
of the Parent and its subsidiaries taken as a whole ("XXXXXX MATERIAL
ADVERSE CHANGE") shall have occurred since the date of the latest
Xxxxxx SEC Report; provided, however, that if a Xxxxxx Material Adverse
Change shall have occurred, the Seller and Xxxxxx shall negotiate in
good faith with respect to a reasonable adjustment to the Purchase
Price. If agreement is not reached with respect to such an adjustment
prior to 22 January 1999, the Sellers may terminate this Agreement for
failure of a condition precedent; and
(vi) the Parties and TARGET shall have received
all authorisations, consents, and approvals of governments and
governmental agencies referred to in ss.3(a)(ii), ss.3(b)(ii), and
ss.4(c) above.
The Sellers may waive any condition specified in this ss.7(b) if they execute a
writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of
the representations and warranties of the Sellers contained in ss.4(a)-(j),
ss.4(l)-(u) and ss.4(w)-(x) above shall survive the Closing hereunder and
continue in full force and effect through and until the second anniversary of
the Closing Date. All of the representations and warranties of the Sellers
contained in ss.4(k) and ss.4(v) above shall survive the Closing hereunder and
continue in full force and effect through and until the seventh anniversary of
the Closing Date. All of the other representations and warranties of the Parties
contained in this Agreement (including the representations and warranties of the
Sellers contained in ss.3(a)) shall survive the Closing and continue in full
force and effect forever thereafter (subject to any applicable statutes of
limitations).
56
-52-
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF XXXXXX.
(i) In the event any of the Sellers breaches any
of their representations, warranties, and covenants contained herein
(other than the covenants in ss.2(a) above and the representations and
warranties in ss.3(a) above), and, if there is an applicable survival
period pursuant to ss.8(a) above, provided that Xxxxxx makes a written
claim for indemnification against any of the Sellers in accordance with
ss.11(h) below within such survival period, then each of the Sellers
agrees, on a joint and several basis, to indemnify Xxxxxx, the Parent
and each of their respective directors, officers and affiliates from
and against the entirety of any Adverse Consequences any of them may
suffer through and after the date of the claim for indemnification
(including any Adverse Consequences any of them may suffer after the
end of any applicable survival period) resulting from, arising out of,
or caused by the breach (or the alleged breach).
(ii) In the event any of the Sellers breaches any
of his or her covenants in ss.2(a) above or any of his or her
representations and warranties in ss.3(a) above, and, if there is an
applicable survival period pursuant to ss.8(a) above, provided that
Xxxxxx makes a written claim for indemnification against the Seller in
accordance with ss.11(h) below within such survival period, then each
of the Sellers agrees, on a several basis, to indemnify Xxxxxx, the
Parent and each of their respective directors, officers and affiliates
from and against the entirety of any Adverse Consequences any of them
may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences any of them may suffer after the
end of any applicable survival period) resulting from, arising out of,
or caused by the breach.
(iii) Xxxxxx shall satisfy Sellers'
indemnification and/or refund obligations under this Agreement by first
recourse to the monies or assets held in the escrow fund held by The
Fifth Third Bank, as escrow agent, pursuant to the Escrow Agreement and
the Sellers shall have no liability to make any payment to Xxxxxx
hereunder until the escrow fund has been exhausted but recourse to that
escrow fund shall not constitute Xxxxxx'x sole remedy or source for
satisfaction of indemnification and/or other claims under this
Agreement.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
SELLERS. In the event Xxxxxx breaches any of its representations, warranties,
and covenants contained herein, and, if there is an applicable survival period
pursuant to ss.8(a) above, provided that any of the Sellers makes a written
claim for indemnification against Xxxxxx in accordance with ss.11(h) below
within such survival period, then Xxxxxx agrees to indemnify each of the Sellers
from and against the entirety of any Adverse Consequences the Seller may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Seller may suffer after the end of any
57
-53-
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or the alleged breach). Xxxxxx shall also
indemnify any Seller from and against the entirety of any Adverse Consequences
such Seller may suffer as a result of any obligations or liability of TARGET or
any TARGET Subsidiary (other than this Agreement) guaranteed by such Seller.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party
(the "INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY
CLAIM") which may give rise to a claim for indemnification against any
other Party (the "INDEMNIFYING PARTY") under ss.6(f) or this ss.8, then
the Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; PROVIDED, HOWEVER, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with
legal advisers of its choice reasonably satisfactory to the Indemnified
Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfil its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the
Indemnifying Party conducts the defence of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defence of the Third Party Claim in accordance with
ss.8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defence
of the Third Party Claim, (B) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and
58
-54-
(C) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (not
to be withheld unreasonably).
(iv) In the event any of the conditions in
ss.8(d)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this ss.8.
(e) PAYMENT OF AND INTEREST ON INDEMNIFICATION AMOUNTS.
Each amount claimed in respect of Adverse Consequences shall be payable within
ten (10) days after the date of claim by an Indemnified Party, and such amount
shall bear interest if not paid by such date at the annual rate of ten percent
(10%) until paid in full. Any amount paid by the Sellers to Xxxxxx in respect of
any breach of this Agreement or under the Tax Deed shall be treated for tax
purposes as a reduction in the consideration for the TARGET Shares.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and Safety Requirements) any
Party may have with respect to TARGET and its Subsidiaries or the transactions
contemplated by this Agreement.
(g) RIGHTS CUMULATIVE. The rights and remedies conferred
on Xxxxxx under this Agreement are cumulative and are additional to and not
exclusive of any rights or remedies provided by law or otherwise available at
any time to Xxxxxx in respect of any breach of this Agreement (including but not
limited to the rights to damages for any loss or additional loss suffered by
Xxxxxx).
(h) INFORMATION. Each of the Sellers agrees with Xxxxxx
(for itself and as trustee for TARGET and the Subsidiaries) and the directors,
employees, agents and advisers of TARGET and the Subsidiaries:
(i) that the giving by TARGET or the
Subsidiaries and/or any of their directors, employees, agents or
advisers to any of the Sellers or their agents or advisers of
59
-55-
any information or opinion in connection with this Agreement or the Tax
Deed or the Disclosure Schedule or otherwise in relation to the
business or affairs of TARGET and/or the Subsidiaries or in connection
with the negotiation in preparation of this Agreement, the Tax Deed or
the Disclosure Schedule shall not be deemed a representation, warranty
or guarantee to the Sellers of the accuracy of such information or
opinion;
(ii) to waive any right or claim which he may
have against TARGET or the Subsidiaries or any of their directors,
employees, agents or advisers for any error, omission or
misrepresentation in any such information or opinion; and
(iii) that any such right or claim shall not
constitute a defence to any claim by Xxxxxx under or in relation to
this Agreement or the Tax Deed.
(i) LIMITATIONS ON INDEMNIFICATION.
(i) No liability shall attach to the Sellers
under this Agreement or the Tax Deed (other than with respect to
ss.2(h) above) unless the aggregate amount of such liability shall
exceed (pound)25,000 but in that event the Sellers shall be liable for
the whole amount of such liability and not merely the excess.
(ii) The total aggregate amount payable by the
Sellers with respect to any liabilities accrued under this Agreement
and the Tax Deed shall not exceed(pound)2,775,000.
(iii) The total aggregate amount payable by any
Seller under this Agreement and the Tax Deed shall not exceed such
Seller's pro rata portion of the Purchase Price (which for the
avoidance of doubt is equal at any time to the sum of such Seller's pro
rata portion (based on the allocation percentages of the Purchase Price
as set out on Schedule 1 hereto) of (A) the assets and Parent Shares
held in the escrow fund pursuant to the Escrow Agreement, (B) all
assets and Parent Shares (valued at Market Value) released from such
escrow fund to the Sellers since the Closing Date, and (C) the Cash
Closing Payment).
(iv) Any claim made against the Sellers under
this Agreement (excluding a claim under ss.4(k) or under the Tax Deed)
shall (if it has not been previously satisfied, settled or withdrawn)
be deemed to be withdrawn at the expiration of 12 months from the date
of giving notice of such claim unless legal proceedings in respect
thereof have been commenced by the issuing and service of such
proceedings against the Sellers.
60
-56-
(v) Payment of any claim under this Agreement or
the Tax Deed shall pro tanto satisfy and discharge any other claim
under this Agreement or the Tax Deed which is capable of being made in
respect of the same loss.
(vi) The liability of the Sellers in respect of
any claim under the Tax Deed shall be subject to the further
limitations set out in the Tax Deed.
(vii) No portion of any liability shall attach to
the Sellers in respect of a claim under this Agreement (excluding the
Tax Deed) to the extent that with respect to such portion:
(A) such claim arises only as a
consequence of a change in the law or a change of any
previously published extra statutory concession or press
release from Inland Revenue or HM Customs and Excise after the
Closing Date;
(B) such claim or the events giving
rise to such claim or such claim is increased only as a result
of a voluntary act or transaction by or at the request of
Xxxxxx or Target or IRC (each a "GROUP COMPANY") or any of
their respective directors, officers or employees effected
after the Closing Date otherwise than as required by law and
otherwise than pursuant to a legally binding commitment of a
Group Company entered into before the Closing Date and
otherwise than in the ordinary course of business (which shall
not include communicating any information to any governmental
authority);
(C) provision or reserve in respect of
such amount of such claim is made in the Financial Statements;
(D) the liability giving rise to such
claim would have been insured had TARGET and its Subsidiaries
arranged insurance cover with effect from the Closing Date
which would be equivalent to the policies currently in force
in respect of the Group Companies but only to the extent and
limit of such policies; and
(E) such claim results from or is
increased or extended by any change in the accounting policies
of any Group Company after the Closing Date unless such change
was required under UK GAAP.
(viii) In assessing the liability of the Sellers
under this Agreement there shall be taken into account any proven tax
benefit accruing to Xxxxxx or any Group Company as a consequence of the
relevant breach..
61
-57-
(ix) The effect of the application of Section
8(i)(vii) and (viii) shall first be taken into account for the purpose
of determining the amount of liability for the purposes of Section
8(i)(i).
(x) Xxxxxx shall not be entitled to recover any
sum in respect of any claim for breach of any of the warranties or
otherwise obtain reimbursement or restitution more than once in respect
of the same loss.
(xi) In the event that Xxxxxx or any Group
Company is entitled to recover from a third party (whether by payment,
discount, credit, relief or otherwise howsoever) any sum in relation to
any loss, liability or damage which is the subject of a claim under
this Agreement, Xxxxxx shall (or shall procure for so long as it
remains a Subsidiary of the Parent that the relevant Group Company
shall):
(A) notify the Sellers as soon as
reasonably practicable and provide such information and
assistance as the Sellers may reasonably require relating to
such entitlement and the action taken or proposed to be taken
or proposed to be taken by Xxxxxx or the relevant Group
Company in respect of it;
(B) take (at the expense of the
Sellers) such reasonable steps or proceedings as the Sellers
may reasonably require (excluding any steps or proceedings
that would be to the commercial detriment of any Group
Company) and shall act in accordance with any such
requirements of the Sellers subject to Xxxxxx being
indemnified by the Sellers against all reasonable costs and
expenses incurred in connection therewith and shall keep the
Sellers promptly informed of the progress of any such steps,
proceedings or actions.
(xii) In the event of the Sellers having paid to
Xxxxxx an amount in respect of a claim under this Agreement and
subsequent to the date of making such payment Xxxxxx or any Group
Company recovers from a third party (whether by payment, discount,
credit, relief or otherwise howsoever) a sum which is directly related
to that payment then Xxxxxx shall forthwith repay or procure the
repayment by the relevant Group Company to the Sellers of so much of
the amount paid by the third party as does not exceed the sum paid by
the Sellers to Xxxxxx less (a) the reasonable costs of Xxxxxx or the
relevant Group Company in recovering such sum (including legal fees),
and (b) any amounts owed by the Sellers in respect of any other claims
under this Agreement on the Tax Deed.
(xiii) If any claim under this Agreement (excluding
the Tax Deed) shall arise by reason of some liability of a Group Member
which, at the time the claim is notified to the Sellers, is contingent
only, the Sellers shall not be under any obligation to
62
-58-
make any payment to Xxxxxx in respect of such claim until such time as
the contingent liability shall become an actual liability.
(xiv) Nothing in this Section 8 shall be deemed to
relieve Xxxxxx from any common law or other duty to mitigate any loss
or damage incurred by it.
(xv) Any amount paid by the Sellers to Xxxxxx in
respect of any breach of this Agreement or under the Tax Deed shall be
treated for tax purposes and not for any other purpose under this
Agreement or the Tax Deed as a reduction in the consideration for the
TARGET Shares.
(xvvi) The Sellers will be under no liability in
respect of any claim under ss.6(f) unless written particulars shall
have been given to the Sellers within a period of seven years from the
Closing Date.
9. [Intentionally Omitted.]
10. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below:
(i) Xxxxxx and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) Xxxxxx may terminate this Agreement by
giving written notice to the Sellers at any time prior to the Closing
(A) in the event any of the Sellers has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, Xxxxxx has notified the Sellers of the breach,
and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before 22 January 1999, by reason of the failure of any condition
precedent under ss.7(a) hereof (unless the failure results primarily
from Xxxxxx itself breaching any representation, warranty, or covenant
contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by
giving written notice to Xxxxxx at any time prior to the Closing (A) in
the event Xxxxxx has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, any of
the Sellers has notified Xxxxxx of the breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or before 22
January 1999, by reason of the failure of
63
-59-
any condition precedent under ss.7(b) hereof (unless the failure
results primarily from any of the Sellers themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. Except as set forth in this
ss.10(b), if any Party terminates this Agreement pursuant to ss.10(a) above, all
rights and obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party (except for any Liability of any Party
then in breach). Notwithstanding the foregoing, if after this Agreement has been
executed, Xxxxxx is obligated to consummate the transactions contemplated hereby
and Xxxxxx fails to do so, Xxxxxx shall (i) pay Sellers, as liquidated damages,
an amount equal to four percent (4%) of the Purchase Price and (ii) reimburse
Sellers for all out-of-pocket expenses (including attorneys' and accountants'
fees) TARGET incurs in connection with the transaction contemplated hereby;
PROVIDED, HOWEVER, that this aggregate amount shall not exceed One Hundred and
Fifty Thousand Sterling ((pound)150,000). Notwithstanding the foregoing, if
after this Agreement has been executed, the Sellers are obligated to consummate
the transactions contemplated hereby and any Seller fails to do so, the Sellers
shall (i) pay Xxxxxx, as liquidated damages, an amount equal to four percent
(4%) of the Purchase Price and (ii) reimburse Xxxxxx for all out-of-pocket
expenses (including attorneys' and accountants' fees) Xxxxxx incurs in
connection with the transaction contemplated hereby; PROVIDED, HOWEVER, that
this aggregate amount shall not exceed One Hundred and Fifty Thousand Sterling
((pound)150,000).
11. MISCELLANEOUS.
(a) NATURE OF CERTAIN OBLIGATIONS.
(i) The covenants of each of the Sellers in
ss.2(a) above concerning the sale of his, her or its TARGET Shares to
Xxxxxx and the representations and warranties of each of the Sellers in
ss.3(a) above concerning the transaction are several obligations. This
means that the particular Seller making the representation, warranty,
or covenant will be solely responsible to the extent provided in ss.8
above for any Adverse Consequences Xxxxxx may suffer as a result of any
breach thereof.
(ii) The remainder of the representations,
warranties, and covenants in this Agreement are joint and several
obligations. This means that each Seller will be responsible to the
extent provided in ss.8 above for the entirety of any Adverse
Consequences Xxxxxx may suffer as a result of any breach thereof.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior written
approval of Xxxxxx and the Sellers (which approval shall not be unreasonably
withheld or delayed); PROVIDED, HOWEVER, that any Party may make any
64
60-
public disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its best efforts to advise the other Parties
prior to making the disclosure).
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof. The Sellers hereby confirm that there are no other
agreements between any of them or any of them and TARGET or its Subsidiaries
other than this Agreement and any agreements referred to in this Agreement.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of his, her or its rights, interests, or obligations hereunder
without the prior written approval of Xxxxxx and the Sellers; provided, however,
that Xxxxxx may (i) assign any or all of its rights and interests hereunder to
one or more of its Affiliates (provided that if any such Affiliate shall cease
to be an Affiliate of Xxxxxx it shall forthwith reassign such rights to Xxxxxx
and pending such re-assignment such rights shall not be exercisable) and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Xxxxxx nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(f) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two Business Days after) it is sent (i) from and to the United Kingdom, by first
class pre-paid post, recorded delivery, or (ii) from or to any place outside the
United Kingdom, by pre-paid priority airmail, international recorded delivery
(or the equivalent thereof), in either case addressed to the intended recipient
as set forth below:
65
-61-
IF TO THE SELLERS: Xxxxxxx Xxx Xxxxxxx
Xxx Xxxxx
Xxxx Xxxxx Xxxx
Xxxxxxxxx
Xxxx XX00 0XX
Xxxx Xxxxxx
Owlesden
The Green
Fornham All Saints
Bury St Edmunds
Suffolk IPX 6JX
Xxxxxxx Xxxxxxx
Briarwood
0 Xxxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxxxxxxx XX00 0XX
Xxxxx Xxxxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxxxxxx XX0 0XX
COPY TO: Xxxxxxxx Xxxxx + Xxxx
Xxxxxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Attention: Xxxxx Xxxxxxxx
IF TO XXXXXX: XXXXXX INTERNATIONAL INC.
000 Xxxx Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
General Counsel
COPY TO: XXXXXXX XXXX LLP
00 Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: Xxxxxx X. Xxxxx, Esq.
66
-62-
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
facsimile, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(i) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with English law. In relation to any legal action or
proceedings to enforce this Agreement or arising out of or in connection with
this Agreement, each of the Parties irrevocably submits to the jurisdiction of
the English courts but this Agreement may be enforced by the Parties in any
court of competent jurisdiction.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by Xxxxxx and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) EXPENSES. Each of the Parties will bear his, her or
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favouring or disfavouring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any European Union, national,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
References to, or any provision of, any treaty, statute, directive, regulation,
decision, order, instrument, by-law or any other law of, or having effect in,
any jurisdiction shall be construed also as references to such provisions as
replaced,
67
-63-
amended or re-enacted from time to time. Any statute, statutory instrument,
regulation, by-law or other requirement of US federal, state or local law and
any US legal term of any action, remedy, method of judicial proceeding, legal
documents, legal status, procedure, court, official or any legal concept or
doctrine or other expression shall in respect of any non-US jurisdiction be
deemed to include that which most nearly approximates in such non-US
jurisdiction such US statute, statutory instrument, regulation, by-law or other
requirement of law or legal term. The word "including" shall mean including
without limitation. The Parties intend that each representation, warranty and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of relative levels of
specificity) which the Party has not breached shall not detract from or mitigate
the fact that the Party is in breach of the first representation, warranty or
covenant. Reference to an Event occurring on or before the Closing Date shall be
deemed to include: (i) any combination of two or more Events all of which shall
have occurred on or before the Closing Date; and (ii) any combination of two or
more Events only the first or some of which shall have occurred on or before
Closing Date provided that, there shall be disregarded any Event which shall
have occurred before the Closing Date in the ordinary course of business of
TARGET; and (iii) any Event which is treated or deemed to occur on or before the
Closing Date for the purposes of any Taxes.
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.
The Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties
acknowledges and agrees that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court having jurisdiction over
the Parties and the matter in addition to any other remedy to which they may be
entitled, at law or in equity.
(p) ADDRESS FOR SERVICE.
(i) Each Seller hereby irrevocably authorises
and appoints the Sellers' Solicitors marked for the attention of Xxxxx
Xxxxxxxx (or such other person or persons, being a firm of solicitors
resident in England, as such Seller may hereafter as regards himself by
notice in writing to all the other parties hereto from time to time
substitute) to accept on his behalf service of all legal process
arising out of or connected with this Agreement to be served prior to
the seventh anniversary of the Closing Date.
68
-64-
(ii) Service of such process of the person for
the time being authorised under ss.11(p)(i) to accept it on behalf of
such Seller shall be deemed to be service of that process on such
Seller.
(iii) From the date of this Agreement until the
Closing Date, Xxxxxx hereby irrevocably authorises and appoints Xxxxxxx
Xxxx LLP of 00 Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (or such other person
or persons Xxxxxx may hereafter as regards himself by notice in writing
to all the other parties hereto from time to time substitute) to accept
on his behalf service of all legal process arising out of or connected
with this Agreement.
(iv) As of the Closing Date and thereafter,
Xxxxxx hereby irrevocably authorises and appoints TARGET (or such other
person or persons, being a firm of solicitors resident in England, as
Xxxxxx may hereafter as regards himself by notice in writing to all the
other parties hereto from time to time substitute) to accept on his
behalf service of all legal process arising out of or connected with
this Agreement to be served prior to the seventh anniversary of the
Closing Date.
(v) Service of such process of the person for
the time being authorised under ss.11(p)(iii) or ss.11(p)(iv) (as
applicable) to accept it on behalf of Xxxxxx shall be deemed to be
service of that process on Xxxxxx.
AS WITNESS the hands of the duly authorised representatives of the Parties on
the date first before written.
69
-65-
SCHEDULE 1 -- SELLERS, SHARE HOLDINGS, PURCHASE PRICE ALLOCATION, ETC.
---------------------------------------------------------------------------------------------------
SELLERS' NAMES NUMBER OF TARGET NUMBER OF PARENT ALLOCATED PERCENTAGE
AND ADDRESSES SHARES HELD SHARES TO RECEIVE OF PURCHASE PRICE
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxx Broomby 19 16,636 19%
Xxx Xxxxx
Xxxx Xxxxx Xxxx
Xxxxxxxxx
Xxxx XX00 0XX
---------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 29 25,392 29%
Owlesden
The Green
Fornham All Saints
Bury St Edmunds
Suffolk IPX 6JX
---------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx 29 25,392 29%
Briarwood
0 Xxxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxxxxxxx XX00 0XX
---------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxxx 23 20,138 23%
00 Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxxxxxx XX0 0XX
---------------------------------------------------------------------------------------------------
70
-66-
SCHEDULE 2 -- PREMISES
1. The freehold premises known as 00x Xxxxxxx Xxxx, Xxx as registered at
HM Land Registry under title number CB116324.
2. The freehold premises known as numbers 24, 26 and 00 Xxxxxxx Xxxx, Xxx
as registered at HM Land Registry under title number CB146364.
71
SCHEDULE 3 - SUBSIDIARIES
--------------------------------------------------------------------------------
NAME REGISTERED REGISTERED OFFICE
NUMBER
--------------------------------------------------------------------------------
Research Consultants
(International) Limited 02348938 Xxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxx
Xxxxxxxxxxxxxx XX0 0XX
--------------------------------------------------------------------------------
72
-68-
SCHEDULE 3(B) -- EXCEPTIONS TO XXXXXX'X REPRESENTATIONS AND WARRANTIES
None.
73
-69-
SIGNED by ) /s/ Xxxx Xxxxxx
XXXX XXXXXX )
in the presence of: )
Witness: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Address: Owlesden
The Green
Furnham All Saints
Bury St. Xxxxxxx
Suffolk IPX 6JX
Occupation:
SIGNED by ) /s/ Xxxxxxx Xxxxxxx
XXXXXXX XXXXXXX
in the presence of: )
Witness: /s/ X.X. Xxxxxxx
Name: X.X. Xxxxxxx
Address: Briarwood
0 Xxxxxxx Xxxx
Xxxxxxxxxx
Xxxxxxxxxxxxxx XX00
0XX
Occupation:
SIGNED by ) /s/ Xxxxxxx Xxx Broomby
XXXXXXX XXX BROOMBY )
in the presence of: )
Witness: /s/ Xx. X. Xxxxxx
Name: Xx. X. Xxxxxx
Address: Xxx Xxxxx
Xxxx Xxxxx Xxxx
Xxxxxxxxx
Xxxx XX00 0XX
74
-70-
Occupation:
SIGNED by ) /s/ Xxxxx Xxxxxxxxxxx
XXXXX XXXXXXXXXXX )
in the presence of: )
Witness: /s/ Xxxx Xxxxxx Xxxxxxxxxxx
Name: Xxxx Xxxxxx Xxxxxxxxxxx
Address: 00 Xxxxxx Xxxxx
Xxxxxxx
Xxxxxxxxxxxxx XX0 0XX
Occupation:
SIGNED by Xxxxxxx X. Xxxxxx ) /s/ Xxxxxxx X. Xxxxxx
duly authorised for and on )
behalf of XXXXXX )
U.K. INC. )
Witness: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Address: Xxxxxx International Inc.
000 Xxxx Xx.
000 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Occupation:
