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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 26, 1997.
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NEW ERA OF NETWORKS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-22043 84-1234845
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7400 East Orchard Rd., Suite 230, Englewood, CO 80111
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 694-3933
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N/A
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITIONS OR DISPOSITION OF ASSETS
On September 26, 1997, New Era of Networks, Inc., a Delaware
corporation (the "Company"), acquired all the outstanding capital stock of
Menhir Ltd., a corporation organized under the laws of the United Kingdom
("Menhir") by means of a Share Purchase Agreement by and among Menhir, the
shareholders of Menhir, and New Era of Networks, Ltd.(Neon UK), a wholly-owned
UK subsidiary of the Company (the "Purchase Agreement"). The total purchase
price was $2.8 million cash, which was provided to NEON UK by the Company. The
description contained in this Item 2 of the transactions contemplated by the
Purchase Agreement is qualified in its entirety by reference to the full text
of the Share Purchase Agreement, a copy of which is attached hereto as Exhibit
2.
In connection with the Share Purchase, $268,318 of the consideration
payable in connection with the acquisition (the "Escrow Amount") was placed
into escrow, to be held as security for any losses incurred by NEON UK in the
event of certain breaches of the warranties contained in the Share Purchase
Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Financial Statements of Businesses Acquired.
(4) The Financial Statements required by this item will
be filed by amendment not later than 60 days after
the date of this initial report on Form 8-K.
(b) Pro forma financial information.
(2) The Pro Forma Financial Statements required by this
item will be filed by amendment not later than 60
days after the date of this initial report on Form
8-K.
(c) Exhibits.
2 Share Purchase Agreement dated September 26, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEW ERA OF NETWORKS, INC.
/s/ STEVE WEBB
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Steve Webb, Senior Vice President and
Chief Financial Officer
Date: October 10, 1997
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NEW ERA OF NETWORKS, INC.
CURRENT REPORT ON FORM 8-K
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2 Share Purchase Agreement dated September 26, 1997.
</TABLE>
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EXHIBIT 2
DATED 26 September 1997
- --------------------------------------------------------------------------------
R V GRIDLEY and others
and
NEW ERA OF NETWORKS LIMITED
Conformed Copy
- --------------------------------------------------------------------------------
AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE
ISSUED SHARE CAPITAL
OF MENHIR LIMITED
- --------------------------------------------------------------------------------
Nabarro Nathanson
Abbot's House
Abbey Street
Reading RG1 3BD
Tel: 0118 950 4700
Fax: 0118 950 5640
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CONTENTS
<TABLE>
<CAPTION>
CLAUSE SUBJECT MATTER PAGE
<S> <C> <C>
1.......................................... DEFINITIONS AND INTERPRETATION 1
2...........................................AGREEMENT TO SELL AND PURCHASE 6
3............................................................CONSIDERATION 7
4.......................................................PRE-EMPTION RIGHTS 7
5...............................................................WARRANTIES 7
6............................................LIMITATIONS TO THE WARRANTIES 8
7................................................ESCROW AND RETENTION FUND 12
8....................................................RELEASE OF GUARANTEES 13
9...............................................................COMPLETION 13
10...................................................RESTRICTIVE COVENANTS 14
11..................................................POST COMPLETION EFFECT 15
12..................................................SUCCESSORS AND ASSIGNS 15
13.........................................INFORMATION AND CONFIDENTIALITY 16
14.............................................ANNOUNCEMENTS AND PUBLICITY 16
15...................................................................COSTS 17
16.................................................................NOTICES 17
17.......................................................FURTHER ASSURANCE 18
18.................................................................WAIVERS 18
19...............................................................VARIATION 19
20.............................................JOINT AND SEVERAL LIABILITY 19
21.....................RESTRICTIVE TRADE PRACTICES ACT 1976 - REGISTRATION 19
22............................................................COUNTERPARTS 19
23..........................................................APPLICABLE LAW 19
SCHEDULE 1.................................................................21
</TABLE>
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<TABLE>
<S> <C> <C>
PARTICULARS OF THE VENDORS AND OF THE SHARES TO BE SOLD AND
CONSIDERATION TO BE RECEIVED BY EACH OF THEM.......................21
SCHEDULE 2.................................................................23
PARTICULARS CONCERNING THE COMPANY.................................23
SCHEDULE 3....................................................THE PREMISES 24
SCHEDULE 4.................................................................25
PART A - GENERAL WARRANTIES........................................25
PART B - WARRANTIES RELATING TO TAX................................39
PART C - PROPERTY WARRANTIES.......................................42
PART D - PENSION WARRANTIES........................................45
PART E - INTELLECTUAL PROPERTY WARRANTIES..........................47
PART F - HEALTH AND SAFETY WARRANTIES..............................50
SCHEDULE 5.........................................COMPLETION REQUIREMENTS 51
SCHEDULE 6........................................................TAX DEED 53
</TABLE>
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AGREEMENT FOR SALE AND PURCHASE OF SHARES
DATE 26 September 1997
PARTIES
(1) THE PERSONS whose names and addresses are set out in Column 1
of Parts A and B of Schedule 1 ("Vendors"); and
(2) NEW ERA OF NETWORKS LIMITED (registered in England and Wales under
Company Number 03207149) the registered office of which is at Ashgate
House, Hazelmoor Lane, Gallowstree Common, South Oxfordshire RG4 9DJ
("PURCHASER");
IT IS AGREED AS FOLLOWS:
DEFINITIONS AND INTERPRETATION
In this Agreement and (save as provided in Clause 1.6) in the Schedules:
"ACCOUNTING DATE"
means 30 June 1997;
"ACCOUNTS"
means the audited accounts of the Company comprising a balance
sheet as at the Accounting Date, a profit and loss account for the
period which commenced on 1st July 1996 and ended on the
Accounting Date, the notes thereto and the Directors' and
Auditors' reports thereon;
"AGREED FORM"
means in relation to any document such document in the form agreed
between the parties and initialled by the Purchaser's Solicitors
and the Vendors' Solicitors for the purposes of identification;
"BUSINESS DAY"
means any day which is not a Saturday, a Sunday or a bank or
public holiday in England and Wales;
"COMPANIES ACT"
means the Companies Act 1985;
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"COMPANY"
means MENHIR LIMITED, particulars relating to which are set out in
Schedule 2;
"COMPLETION"
means the completion of the sale and purchase of the Shares in
accordance with Clause 9 and Schedule 5;
"COMPLETION DATE"
means the date of this Agreement or, if Completion is deferred
pursuant to Clause 9.2, the date to which Completion is so
deferred;
"CONFIDENTIAL INFORMATION"
means all confidential information relating to the Company and/or
its business, property, assets, activities, goods, Products,
Services, operations, management and administration, business and
financial affairs and/or the sale or marketing of any of its
Products or Services including (without limitation) customer names
and lists, sales targets, sales statistics, market share
statistics, market surveys and reports on research, information
relating to future business development or planning, information
relating to litigation or legal advice and in whatever form such
information may be recorded and on whatever media;
"CONNECTED PERSON"
means in relation to a Vendor, that person's spouse and children
and step-children under the age of eighteen;
"DIRECTORS"
means the persons listed as directors of the Company in Schedule
2;
"DISCLOSED"
means fairly disclosed to the Purchaser expressly for the purposes
of this Agreement in the Disclosure Letter;
"DISCLOSURE LETTER"
means a letter of even date from the Principal Vendors to the
Purchaser in the agreed form;
"EMPLOYEE VENDORS"
means those of the Vendors who are employees of the Company at
Completion;
"ESCROW INSTRUCTION LETTER"
means a letter from the Principal Vendors and the Purchaser to the
Vendors' Solicitors and Purchaser's Solicitors in the agreed form
relating to the Retention Fund;
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"EVENT"
means an event as defined in the Tax Deed;
"FRS"
means a Financial Reporting Standard in the form last published
prior to the date of this Agreement by the Accounting Standards
Board;
"HOLDING COMPANY"
means a holding company as defined in Section 736 of the Companies
Act;
"INVESTOR"
means a holder of securities listed or quoted on the Alternative
Investment Market (AIM) or a recognised investment stock exchange
(as defined in Section 841(1) of the Taxes Act) or of shares
allotted under a prospectus issued pursuant to the Business
Expansion Scheme, provided that such holding does not exceed 5 per
cent of the class of securities of which the said holding forms
part;
"KNOW-HOW"
means the body of knowledge, technical experience, expertise and
skills, technical processes, secret processes, formulae and
technical information held by the Company and relating to its
business which is not in the public domain at Completion;
"MANAGEMENT ACCOUNTS"
means the unaudited management accounts of the Company comprising
a balance sheet as at 31 August 1997 and a profit and loss account
for the period which commenced on 1 July 1997 and ended on 31
August 1997, a copy of which is annexed to the Disclosure Letter;
"MR PAUL"
means Mr Aidan Paul one of the Vendors listed in Part A of
Schedule 1;
"NON DISCLOSURE AGREEMENTS"
means the agreements in the agreed form to be entered into at
Completion between the Company and the Employee Vendors;
"PREMISES"
means the premises of the Company short particulars of which are
set out in Schedule 3;
"PRINCIPAL VENDORS"
means the Vendors listed in Part A of Schedule 1 other than Mr
Paul;
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"PRODUCTS"
means products (including in this expression computer software) of
a type which within the 12 months up to the Completion Date have
been produced, marketed and/or sold or otherwise dealt in by the
Company in the ordinary course of its business and in respect of
which the Company has not discontinued such production, marketing,
sale or dealings;
"PURCHASER'S AUDITORS"
means Arthur Andersen or such other firm of chartered accountants
as may be appointed auditors of the Purchaser from time to time;
"PURCHASER'S GROUP"
means the Purchaser and any subsidiary or holding company of the
Purchaser and any subsidiary of such holding company;
"PURCHASER'S OFFICER'S CERTIFICATE"
means a certificate signed by a director or the secretary of the
Purchaser stating that the Purchaser has a claim under the
Warranties or Tax Deed and specifying in reasonable detail the
estimated amount of such claim and the basis of such claim;
"PURCHASER'S SOLICITORS"
means Nabarro Nathanson of Abbot's House, Abbey Street, Reading
RG1 3BD;
"RESTRICTED AREA"
means the UK, France and Germany;
"RESTRICTED PERSON"
means any person who at the Completion Date or during the period
of 12 months immediately preceding the Completion Date is or has
been a customer or client of the Company in respect of any of the
Products or the Services;
"RTPA"
means the Restrictive Trade Practices Act 1976;
"RETENTION FUND"
has the meaning given in Clause 7;
"SERVICES"
means services of a type which within the 12 months up to the
Completion Date have been provided and/or marketed by the Company
in the ordinary course of its business and in respect of which the
Company has not discontinued such provision or marketing;
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"SHARES"
means the issued 2,109 ordinary shares of L.1 each in the
capital of the Company;
"SSAP"
means a Statement of Standard Accounting Practice in the form last
published prior to the date of this Agreement by the Institute of
Chartered Accountants in England and Wales;
"SUBSIDIARY"
means a subsidiary as defined in Section 736 of the Companies Act;
"TAX"
means tax as defined in the Tax Deed;
"TAXES ACT"
means the Income and Corporation Taxes Act 1988;
"TAX AUTHORITY"
means a tax authority as defined in the Tax Deed;
"TAX DEED"
means a deed between the Principal Vendors and the Purchaser in
the form set out in Schedule 6;
"TCGA"
means the Taxation of Chargeable Gains Act 1992;
"UK"
means the United Kingdom;
"VARIATION LETTERS"
means letters in the agreed form from the Employee Vendors to the
Purchaser and the Company;
"VAT"
means Value Added Tax;
"VAT ACT 1994"
means the Value Added Tax Act 1994;
"PRINCIPAL VENDORS' REPRESENTATIVE"
means the person appointed in accordance with Clause 7;
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"VENDORS' ACCOUNTANTS"
means Smith & Williamson of No.1 Riding House Street, London W1A
3AS or such other accountants as may be appointed by the Vendors
from time to time;
"VENDORS' SOLICITORS"
means Clyde & Co of 51 Eastcheap, London EC3M 1JP;
"WARRANTIES"
means the warranties set out in Schedule 4;
The Schedules are deemed to be incorporated in this Agreement, and a
reference to "THIS AGREEMENT" includes a reference to the Schedules.
In this Agreement:
the index and the clause headings are included for convenience only and
shall not affect the construction of this Agreement;
words denoting the singular shall include the plural and vice versa;
words denoting any gender shall include a reference to each other gender;
and
references to persons shall be deemed to include references to natural
persons, firms, partnerships, companies, corporations, associations,
organisations, foundations and trusts (in each case whether or not having
separate legal personality).
References in this Agreement to "CLAUSES" and "SCHEDULES" are references
to Clauses of and Schedules to this Agreement and references to the "PARTIES" or
a "PARTY" are references to the parties or a party to this Agreement.
References in this Agreement to statutory provisions shall (where the
context so admits and unless otherwise expressly provided) be construed as
references to those provisions as respectively amended, consolidated, extended
or re-enacted as at the date of this Agreement and to the corresponding
provisions of any earlier legislation (whether repealed or not) directly or
indirectly amended, consolidated, extended, replaced or re-enacted thereby and
to any orders, regulations, instruments or other subordinate legislation made
under the relevant statute.
If any of the words and expressions defined in Clause 1.1 are also
defined in any of the Schedules then for the purposes of interpreting that
relevant Schedule such words and expressions shall have the meanings ascribed to
them in that Schedule.
For the purposes of the expression "so far as the Principal Vendors are
aware" the awareness of any of the Principal Vendors shall be deemed to be that
of all of them.
AGREEMENT TO SELL AND PURCHASE
Each of the Vendors agrees to sells with full title guarantee such of the
Shares as are set out opposite his name in Column 2 of Part A or B of Schedule 1
to the Purchaser and the
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Purchaser agrees to purchase the Shares, in each case free from all claims,
charges, liens, encumbrances, equities and adverse rights of any description and
together with all rights now attached or accruing thereto and the right to
receive all dividends, and other distributions as at and from the Accounting
Date provided that nothing in this Agreement shall oblige the Purchaser to
purchase some only of the Shares unless the Vendors shall at the same time
complete the sale to the Purchaser of all of the Shares.
CONSIDERATION
The consideration payable by the Purchaser to the Vendors in respect of
the sale of the Shares shall be the amount of US$2,800,000.
The consideration shall be apportioned between the Vendors as set out in
Column 3 of Part A or B of Schedule 1, and shall be satisfied at Completion as
follows:
as to US$2,531,682 by delivery to the Vendors' Solicitors and Olswang of
a banker's drafts for the amounts of US$2,250,886 and US$280,796
respectively drawn by a clearing bank in the UK in favour of the Vendors'
Solicitors or Olswang or by telegraphic transfer to a nominated bank
account of the Vendors' Solicitors or Olswang, who are irrevocably
authorised hereby to accept the same by the Vendors and whose receipt for
such banker's draft shall be an absolute discharge to the Purchaser of
its obligation to pay such amount; and
as to the balance being the aggregate of the sums payable to the
Principal Vendors as shown in column 5 of Part A of Schedule 1 by payment
of US$268,318 into a joint interest bearing deposit account in accordance
with the provision of Clause 7.
PRE-EMPTION RIGHTS
The Vendors irrevocably waive and undertake to procure that any other
person having such rights shall by Completion have irrevocably waived all and
any rights of pre-emption or other restrictions on transfer over or in respect
of the Shares existing by virtue of the Articles of Association of the Company
or otherwise.
WARRANTIES
The Principal Vendors severally warrant to the Purchaser for the benefit
of the Purchaser, its permitted successors and permitted assigns in the terms
set out in Schedule 4 all of the Warranties other than those in paragraph 16.2
of Part A of Schedule 4 shall be deemed to be qualified by the words "so far as
the Principal Vendors are aware (without having made due and careful enquiry").
The Principal Vendors agree with the Purchaser (for itself and as trustee
for the Company) that they waive all and any claims which they (or any of them)
have or may have against all or any of the Company or any of the officers,
employees, servants or agents of the Company in respect of any information or
opinions supplied or omitted to be supplied to
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any of the Principal Vendors in connection with any of the Warranties or the Tax
Deed or the compilation and preparation of the Disclosure Letter.
Each of the Warranties shall be separate and independent and shall not be
limited by reference to any other of the Warranties or subject to Clause 6 any
other provision of this Agreement and except as Disclosed no claim in respect or
arising out of the same shall be limited or otherwise affected by any knowledge
(other than actual knowledge of the Purchaser itself) which the Purchaser has or
is deemed to have in relation to the Company.
Mr Paul warrants to the Purchaser for the benefit of the Purchaser its
successors and permitted assigns in the terms set out in paragraph 16.2 of Part
A of Schedule 4 as regards the Shares held by him. The limitations in Clauses
7.1, 7.3 and 7.5 shall apply to Mr Paul's liability under this warranty as they
do to the Principal Vendors.
LIMITATIONS TO THE WARRANTIES
Subject to Clause 6.5 the aggregate liability of each of the Principal
Vendors in respect of all breaches of the Warranties when added to the aggregate
amount of any liability which he shall have under the Tax Deed shall not exceed
the consideration set opposite their respective names in Column 3 of Part A of
Schedule 1.
The Principal Vendors shall be under no liability in respect of breaches
of the Warranties or claims under the Tax Deed unless the aggregate liability of
the Principal Vendors in respect of all breaches of the Warranties when added to
the aggregate amount of any liability which they shall have under the Tax Deed
exceeds the sterling equivalent of US$25,000 converted at the London spot rate
on the date of the relevant Purchaser's Officer's Certificate.
Subject to Clause 6.5 the Purchaser shall not be entitled to make any
claim against the Principal Vendors in respect of any breach of the Warranties
contained in Part B of Schedule 4 or the Tax Deed unless the Purchaser has given
written notice of its intention by means of a Purchaser's Officer's Certificate
to make such a claim to the Vendors on or before the seventh anniversary of
Completion and the Purchaser shall not be entitled to make any claim against the
Vendors in respect of any breach of any of the other Warranties unless the
Purchaser has given written notice by means of a Purchaser's Officer's
Certificate of its intention to make such a claim on or before 28th February
1999.
The Principal Vendors shall not be in breach of the Warranties to the
extent that matters which would otherwise have constituted a breach of the
Warranties have been Disclosed.
None of the limitations or provisions in Clauses 6.1, 6.2 and 6.3 above
shall apply or to a claim against any of the Principal Vendors for breach of any
of the Warranties by reason of a fraudulent failure to disclose a matter or
thing in the Disclosure Letter.
A reference to "Claim" in the following provisions of this Clause 6
shall, unless the context otherwise requires, mean a Claim for breach of any of
the Warranties.
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Once notice of a Claim has been given, the Purchaser shall procure, so
far as it is able, that all relevant books of account, records and
correspondence of the Company are made available to the Vendors' Accountants as
and when any Principal Vendor or the Vendors' Accountants reasonably request the
same for the purpose of ascertaining or extracting information relevant to the
Claim.
Without prejudice to the duty of the Purchaser to mitigate loss, if the
Purchaser or the Company shall, in the reasonable opinion of the Principal
Vendors Representative be entitled to recover from a third party any amount
which is referable to any part of a loss which is the subject of a Claim, then
the Purchaser shall itself take, or procure that the Company shall take, in each
case upon the Purchaser and/or the Company being indemnified by the Principal
Vendors to the Purchaser's reasonable satisfaction against all costs and
expenses arising from any such action (without prejudice to the issue of the
liability of the Principal Vendors for such loss), all such steps as the
Principal Vendors Representative may reasonably require by notice in writing to
recover such amount from the third party concerned.
If any third party shall make any claim against the Purchaser or the
Company which the Purchaser considers may be the subject of a Claim, the
Purchaser shall as soon as reasonably practicable give notice in accordance with
the provisions of Clause 6.3 and provided notice by all the Principal Vendors is
given within 10 Business Days of the service on them of the Purchaser's
Officer's Certificate then:
the Principal Vendors Representative shall be entitled to resist any such
claim against the Purchaser or the Company in the name of the Purchaser
or the Company (as the case may be) and (subject as hereinafter
mentioned) to have the conduct of any appeal and any incidental
negotiations but in such a case the Principal Vendor shall keep the
Company and the Purchaser indemnified against all costs charges and
expenses which it may incur in resisting such claim or in conducting any
such appeal or negotiations; and
the Principal Vendors shall provide such information and/or documents as
are reasonably necessary to keep the Purchaser appraised of the claim
and/or such appeal or negotiations.
Whenever the Purchaser is required under Clause 6.8 to take or procure
the taking of any step in connection with legal proceedings, it shall use its
reasonable endeavours to provide the Vendors with such information and/or
documents as are reasonably necessary to keep the Principal Vendors'
Representative informed of all material matters relating to the progress of such
proceedings and the claim by or against the third party shall not without the
prior approval of the Principal Vendors' Representative be compromised or
admitted (such approval not to be unreasonable withheld or delayed).
The Principal Vendors shall not be liable in respect of any Claim to the
extent that the relevant loss of the Purchaser or the Company would not have
arisen but for any legislation (whether of the United Kingdom or elsewhere) not
in force at the date of this Agreement which takes effect retrospectively or the
alteration of any legislation or practice of any Tax Authority including,
without limitation, any change in the basis or method of calculation of or any
increase in the rates of Tax in force at the date of this Agreement
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<PAGE> 13
or any court decision altering the accepted interpretation of any legislation or
case law as at the date of this Agreement;
The Principal Vendors shall have no liability in respect of Tax for which
the Company is primarily liable and which arose in the ordinary course of
business of the Company since the Accounting Date;
The Purchaser shall not be entitled to recover damages for breach of or
Claim under any of the Warranties or the Tax Deed or otherwise obtain
reimbursement or restitution more than once in respect of the same facts or
matters giving rise to the breach of Warranty or claims under the Tax Deed.
If the Purchaser shall have a right to make a claim against the Principal
Vendors both for breach of any of the Warranties and under the Tax Deed, then,
to the extent that the claim may be validly made on either ground, it shall be
deemed made under the Warranties and not claimable under the Tax Deed. Payment
of any claim made on one ground shall pro tanto satisfy and discharge, insofar
as it is co-extensive, any other claim which is capable of being brought against
the Principal Vendors on any other ground.
The Purchaser hereby acknowledges that it has not entered into this
Agreement in reliance on any warranties, representations, covenants or
undertakings howsoever or to whomsoever made prior to the date of this Agreement
except insofar as such were made fraudulently or are embodied in the Warranties,
covenants, undertakings and indemnities on the part of the Vendors contained in
this Agreement or the Tax Deed.
Any breach of any of the Warranties or any other breach of this Agreement
by the Vendors shall give rise only to an action by the Purchaser for damages
and shall not entitle the Purchaser to rescind this Agreement.
Any payment by the Vendors to the Purchaser or the Company or any sum
released to the Purchaser from the Retention Fund in respect of a Claim or a
claim under the Tax Deed shall to the extent not recovered from any person
constitute a reduction in the consideration paid to the Vendors for the Shares.
Where the Company shall be insured against any loss or damage arising
from a Claim the Purchaser or the Company (as the case may be) shall not make
any such claim against the Principal Vendors without first procuring that the
Company shall make and pursue a claim against its insurers for compensation for
the loss or damage suffered and thereafter any Claim against the Principal
Vendors shall take into account in assessing the loss or damage suffered by the
Purchaser the compensation paid by the said insurers to the Company.
If the Principal Vendors have made any payment to the Purchaser in
respect of a Claim and the Purchaser of the Company subsequently recovers from a
third party any amount which is referable to any part of the loss in respect of
which the Principal Vendors' payment was made (whether such recovery is by way
of indemnity compensation damages or otherwise) or otherwise mitigates its or
their loss the Purchaser shall forthwith pay or procure the repayment to the
Principal Vendors to the extent of such recovery or mitigation any sums paid to
the Purchaser by the Principal Vendors in respect of the
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Claim up to the maximum of the total amount paid by the Principal Vendors in
respect of such Claim.
The Principal Vendors shall not be liable in respect of any Claim under
the Warranties contained in Part B of Schedule 4 to the extent that the relevant
loss of the Purchaser or the Company would not have arisen but for:
any act or transaction done or omitted to be done voluntarily by the
Purchaser, any member of the Purchaser's Group or by the Company or any
of their respective directors, officers, employees and agents after the
date of this Agreement outside the ordinary course of business of the
Company;
any change in accounting policy or practice of the Purchaser, any member
of the Purchaser's Group or of the Company introduced or having effect
after the date of this Agreement;
any cessation, diminution or alteration of the Company's trading
activities or business occurring after the date of this Agreement;
the payment of any unusual or abnormal dividend after Completion;
any act or omission by the Purchaser, any member of the Purchaser's Group
or by the Company after the date of this Agreement resulting in the
disallowance or clawback or any Tax allowance or relief claimed by or
granted to the Company prior to the date of this Agreement;
the performance of any part of this Agreement;
a revocation, waiver or disclaimer of or a failure on the part of the
Purchaser, any member of the Purchaser's Group or the Company to claim
any exemptions, set offs, deductions, allowances or other Tax relief
after the date of this Agreement; and
without prejudice to sub-clause (6.20.7), any claim, election, surrender
or disclaimer made or notice or consent given or any thing done after the
date of this Agreement (other than one the making, giving or doing of
which was taken into account in computing a provision for Tax in the
Accounts) by the Purchaser, any member of the Purchaser's Group or the
Company under the provision of any enactment or regulation relating to
Tax.
Any liability of the Principal Vendors in respect of any Claim under the
Warranties contained in Part B of Schedule 4 shall be reduced or extinguished by
an amount equal to:
the amount by which any Tax for which the Company is or may be liable to
be assessed or accountable is reduced or extinguished as a result of the
matter giving rise to the Claim;
the amount of any provision for Tax (including deferred Tax) contained in
the Accounts proving to be an over-provision in which event such
over-provision shall be set off against the liability (if any) of the
Vendors; and
in the case only of a liability for a claim in respect of Tax, the amount
of any reliefs, losses or other allowances arising in respect of an event
on or before the date of this
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Agreement and not shown as an asset in the Accounts available for the
purposes of calculating any liability to Tax of the Company.
ESCROW AND RETENTION FUND
As security for the Principal Vendors' obligations under the Warranties
and the Tax Deed the Principal Vendors and Mr Paul hereby agree with the
Purchaser that out of the cash consideration payable pursuant to Clause 3.1 the
Purchaser shall pay the sum of US$268,318 ("RETENTION FUND") into a joint
interest bearing account ("JOINT ACCOUNT") with Midland Bank Plc., 196a
Piccadilly, London W1 (or elsewhere as the Principal Vendors' Representative and
the Purchaser may agree) opened in the joint names of the Vendors' Solicitors
and the Purchaser's Solicitors ("the Escrow Agents"). The Retention Fund shall
be dealt with in accordance with this Clause 7 and the Escrow Instruction
Letter.
The Principal Vendors and Mr Paul and the Purchaser shall irrevocably
instruct the Escrow Agents in accordance with Paragraph 3 of the Escrow
Instruction letter:
to the Purchaser of any sums which are due to it as a result of any claim
by the Purchaser under the Warranties or the Tax Deed having been Settled
(as defined in Clause 7.4) on or prior to 28th February 1999 ("ESCROW
EXPIRY DATE") together with interest accrued on the monies so paid to the
Purchaser;
on the next Business Day following the Escrow Expiry Date to Olswang in
respect of Mr Paul's pro rata share of the balance, if any, of the
Retention Fund together with interest accrued on such pro rata balance
and to the Vendors' Solicitors on behalf of the Principal Vendors the
Principal Vendors pro rata share of the balance, if any, of the Retention
Fund together with interest accrued on such pro rata balance.
In the event that the Purchaser makes a claim or claims under the
Warranties or the Tax Deed by issue of a writ prior to the Escrow Expiry Date
then a sum equal to the amount determined by a Queen's Counsel appointed by the
Purchaser to be a reasonable pre-estimate of such claim or claims (which
pre-estimate shall be delivered to the Principal Vendors' Representative) shall
be retained in the Retention Fund pending Settlement of such claim or claims and
the amount of the balance in the Retention Fund shall be paid to the Principal
Vendors or Mr Paul in accordance with Clause 7.2 and the Purchaser shall
thereafter diligently and expeditiously pursue such claim or claims.
A claim shall be regarded as "Settled" for the purpose of this clause if
either:
the claim is contained in a Purchaser's Officer's Certificate which has
been delivered to the Vendors' Solicitors and no written objection by or
on behalf of the Principal Vendors' Representative to that claim has been
delivered to the Purchaser's Solicitors within 60 days of the delivery of
the Purchaser's Officer's Certificate; or
the Prinicpal Vendors' Representative and the Purchaser (or their
respective Solicitors) shall so agree in writing, such written agreement
not to be unduly withheld or delayed following any oral agreement between
the parties; or
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<PAGE> 16
a Court of competent jurisdiction has awarded judgment in respect of the
claim and either no right of appeal lies in respect of such judgment or
the parties are debarred whether by passage of time or otherwise from
exercising any such right of appeal or the parties in whose favour the
right of appeal subsists fails to lodge such appeal within 28 days of
such judgment.
and "Settlement" shall be construed accordingly.
The Principal Vendors and the Purchaser shall as and when necessary give
instructions in accordance with the Escrow Instruction Letter in order to
procure compliance with Clause 7.2 hereof.
The first Principal Vendors' Representative shall be John Fotheringham or
if he has a conflict of interest Mark Harrison who may be changed from time to
time by not less than 30 days prior notice by the Vendors' Solicitors to the
Purchaser.
RELEASE OF GUARANTEES
The Principal Vendors shall on or as soon as reasonably practicable after
Completion procure the absolute and unconditional release of the Company from
all guarantees, suretyships, indemnities and like undertakings given by the
Company in respect of any obligations of any person and shall fully and
effectually indemnify and keep indemnified the Purchaser (as trustee for the
Company) from and against any and all costs, claims, demands or liabilities
incurred or arising from any such guarantees, suretyships, indemnities and like
undertakings.
On or as soon as reasonably practicable after Completion the Purchaser
shall use its reasonable endeavours to procure the release of Mr N. Sedgwick, Mr
R. Gridley and Mr J. Perkins from the guarantees and other security given by
them to any bankers or lessors or other lenders to the Company details of which
are contained in the Disclosure Letter and if it is unable to obtain such
releases the Purchaser shall fully and effectively indemnify and keep
indemnified each of Mr N. Sedgewick, Mr R. Gridley and Mr J. Perkins in respect
of any costs claims losses demands or liabilities incurred by any of them
pursuant to such guarantees or other security after Completion.
COMPLETION
Completion will take place immediately after the signing of this
Agreement in accordance with Schedule 5 at the offices of Menhir Limited or at
such other time or on such other date as the Principal Vendors and the Purchaser
may agree when the business described in Schedule 5 will be transacted.
Without prejudice to the Purchaser's rights under this Agreement if the
Vendors or any of them or the Purchaser is unable to comply with any of their or
its respective obligations under Schedule 5 on the date fixed for Completion the
Purchaser (if any of the Vendors is unable) or the Vendors jointly (if the
Purchaser is unable) may defer Completion until a
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<PAGE> 17
date not more than 20 Business Days after such date and so that the provisions
of Schedule 5 shall apply to Completion as so deferred.
RESTRICTIVE COVENANTS
Each of the Employee Vendors hereby undertakes to and covenants with the
Purchaser (for itself and as trustee for the Company) that he will not either on
his own account or jointly with or as manager, agent, officer, employee or
otherwise on behalf of any other person, firm or corporation directly or
indirectly:
for a period of 2 years from the date of this Agreement carry on or be
engaged, concerned, or interested (otherwise than as an Investor) in or
assist any business which competes with any business of the Company as
carried on at the Completion Date;
for a period of 2 years from the date of this Agreement carry on or be
engaged, concerned or interested (otherwise than as an Investor) in or
assist any person concerned in the supply of the Products or of products
reasonably likely to be regarded by customers as equivalent to the
Products ("Equivalent Products") the Services or of services reasonably
likely to be regarded by customers as equivalent to the Services
("Equivalent Services") within the Restricted Area;
for a period of 2 years from the date of this Agreement canvass or
solicit business, orders or custom for the Products or any Equivalent
Products or the Services or any Equivalent Services from any Restricted
Person nor directly or indirectly assist any person to do so;
for a period of 2 years from the date of this Agreement supply the
Products or any Equivalent Products the Services or any Equivalent
Services to any Restricted Person;
for a period of 2 years from the date of this Agreement solicit or entice
away or endeavour to solicit or entice away from the Company or the
Purchaser any person who on the Completion Date or within the six months
prior to the Completion Date is or was a director, officer, employee or
other servant of the Company;
for a period of 2 years from the date of this Agreement employ in any
capacity or offer employment in any capacity to or enter into or offer to
enter into partnership with any person in relation to whom Clause 10.1.5
is applicable except where the person concerned left the Company more
than 6 months before the offer of employment was made;
induce or attempt to induce any person (including without limitations any
agent or independent distributor) who in the six months prior to the
Completion Date has been a supplier of any goods or services to the
Company to cease to supply, or to restrict or vary the terms of supply,
to the Company;
at any time after the Completion Date use or procure the use in
connection with any business of any corporate or business name which is
identical to or likely to be confused with the corporate name or any
business name of the Company or which might suggest a connection with the
business of the Company;
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<PAGE> 18
at any time after the Completion Date do or say anything which is harmful
to the reputation of the Company or which is reasonably likely to lead
any person to cease to do business with the Company on substantially
equivalent terms to those presently offered or at all;
The covenants in Clause 10.1 which are expressed to be limited in time
shall remain in force, in addition to the periods provided in Clause 10.1, for
such further period (if any) commencing upon the expiry of the relevant period
provided in Clause 10.1 and ending on the date one year after the date of expiry
or termination of the contract under which such Employee Vendor is employed by
the Company.
The above restrictions are considered reasonable by the relevant parties
for the legitimate protection of the business and goodwill of the Company but in
the event that any such restriction shall be found to be void but would be valid
if some part thereof was deleted or the scope, period or area of application
were reduced such restriction shall apply with the deletion of such words or
such reduction of scope period or area of application as may be required to
limit such restrictions to what is required for the legitimate protection of
such business and goodwill.
References in this clause to "the Company" include any member of the
Purchaser's Group which is the successor of the business of the Company.
POST COMPLETION EFFECT
This Agreement shall remain in full force and effect after and
notwithstanding Completion in respect of all obligations, agreements, covenants,
undertakings, Warranties or indemnities which have not been done, observed or
performed at or prior to Completion and subject to the terms of this Agreement
the parties may take action for any breach or non-fulfilment of any of such
obligations, agreements, covenants, undertakings, Warranties or indemnities
either before or after Completion it being agreed that Completion shall not be
deemed to constitute a waiver of or operate as an estoppel against any right to
take any such action.
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and enure for the benefit of each
party's successors and subject to Clause 12.2 shall not be assignable.
The Purchaser may not assign or transfer or purport to assign or transfer
a right or obligation under this Agreement except that the benefit of the
Warranties may be assigned or transferred in whole (but not in part) by the
Purchaser or its permitted assigns to a member of the Purchaser's Group but only
to the extent that the assignee or transferee is a successor in title to the
Shares under this Agreement provided that the terms of any assignment permitted
by this Clause 12.2 shall stipulate that, upon the assignee or transferee
company ceasing to be a member of the same group of companies as the Purchaser,
it shall cease to be entitled to enforce any claims for breach of Warranty, and
15
<PAGE> 19
any assignment purported to be made under this Clause 12.2 which does not
contain such a stipulation shall be invalid.
INFORMATION AND CONFIDENTIALITY
Each of the Vendors hereby undertakes to the Purchaser:
that he will at any time and from time to time after Completion give to
the Purchaser on request all information in his possession concerning the
business, dealings, transactions or affairs of the Company and all
Know-How which is within his knowledge and in particular, but without
prejudice to the generality of the foregoing, relating to claims made or
threatened against the Company and the source from and consideration for
which any assets of the Company were acquired or derived; and
that he will not, and will use all reasonable endeavours (not involving
undue time or expense) to ensure that no other person will, at any time
after the date hereof, take away or (directly or indirectly) make use of,
divulge or communicate to any person (except as may be necessary to
comply with any statutory or regulatory obligation or order of any court
or statutory tribunal of competent jurisdiction) any Confidential
Information or Know-How of the Company unless:
such Know-How or Confidential Information has entered the public
domain otherwise than by reason of the act or default of any
Vendor; or
such Know-How or Confidential Information is provided after
Completion to any Vendor by any third party who, so far as the
Vendor is aware or could on reasonable inquiry have been aware, is
under no obligation of confidentiality to the Purchaser or the
Company or is otherwise acquired by a Vendor in circumstances
which, so far as the Vendor is aware or could on reasonable
inquiry have been aware, do not give rise to any obligation of
confidentiality (express or implied) to the Purchaser or the
Company; or
such Know-How or Confidential Information was or is used by any
Vendor at any time prior to Completion and such use or disclosure
is required for the purpose of carrying on the business of such
Vendor after Completion.
ANNOUNCEMENTS AND PUBLICITY
Any announcement or circular or other publicity relating to this
Agreement or any termination hereof shall prior to its publication be approved
in writing by each of the parties as to its content, form and manner of
publication (such approval not to be unreasonably withheld or delayed) save for
any announcement, circular or other publicity required to be made or issued by
the Purchaser pursuant to the regulations of the rules of the United States SEC.
Nicholas Sedgwick and the Purchaser shall consult together upon the form of any
such announcement, circular or other publicity and the other party or parties
shall promptly provide such information and comment as the party issuing any
such announcement, circular or other publicity may from time to time reasonably
request and the issuing party shall take into account the reasonable
representations of the Purchaser
16
<PAGE> 20
or in the case of the other party being the Vendors, Nicholas Sedgwick, as to
the timing and content of any such announcement circular or other publicity. Any
approval of the Vendors required by this Clause may be given by Nicholas
Sedgwick on their behalf.
Save for any announcement or circular or other publicity permitted by
Clause 14.1 no party shall make any announcement or issue any circular or other
publicity relating to this Agreement or any termination hereof.
COSTS
The parties shall pay their own costs and expenses in relation to the
preparation, execution and carrying into effect of this Agreement save that the
Purchaser will contribute up to L.10,000 in aggregate towards the Vendors'
Solicitors fees reasonably incurred in connection with this Agreement.
NOTICES
Any notice required to be given under this Agreement shall be
sufficiently given:
if delivered personally; or
if sent by first class recorded delivery pre-paid post (by airmail if to
an overseas address); or
if sent by facsimile copier or other electronic means of communication
(other than telex) with confirmation by letter despatched by first class
recorded delivery pre-paid post (by airmail if to an overseas address) by
the close of business on the next following Business Day, such letter to
be accompanied by a copy of the confirmation of transmission of the
facsimile or communication printed by the machine used for its despatch
(in which case, the effective notice shall be that sent by facsimile
copier or other electronic means and not the confirmatory letter)
and the words "in writing" whenever contained in this Agreement shall be
deemed to include any communication sent by any of such means.
Any notice which is sent or despatched in accordance with this Clause 16
shall be deemed to have been received by the addressee:
if delivered personally, at the time of delivery;
in the case of a notice sent by post to a destination in the country
where it was despatched, 48 hours after the envelope containing the
notice was delivered to the postal authorities in that country;
in the case of a notice sent by post to a destination outside the country
where it was despatched, 7 days after the envelope containing the notice
was delivered to the postal authorities in the country where it was
despatched;
in the case of a notice sent by facsimile copier or other electronic
means of communication, if the notice was sent during the business hours
of the addressee then on the day of transmission; otherwise on the next
following Business Day.
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<PAGE> 21
In proving service by post it shall be necessary to prove only that the
notice was sent or despatched and that the notice was contained in an envelope
properly addressed, stamped first class and delivered to the postal authorities
in the country where despatched for the purpose of recorded delivery. In proving
service by facsimile copier or other electronic means of communication it shall
be necessary to prove only that the confirmatory letter and a copy of the
confirmation of the transmission of the facsimile or other communication were
sent or despatched in accordance with this Clause 16.
For the purposes of this Clause 16, "BUSINESS HOURS" means the hours of
9.00 a.m. to 5.30 p.m. local time in the country of the addressee.
Any notice required to be given under this Agreement shall be sent:
to the Vendors (other than Mr A Paul) c/o the Vendors' Solicitors at the
address in this Agreement:
Facsimile No: 0171 623 1244
For the attention of: Mr G M Thorpe (or failing him, the
Senior Partner for the time being)
to Mr Paul at the address specified under his name in Schedule 1;
and to the Purchaser at the address shown in this Agreement:
Facsimile No: 0171 329 4567
For the attention of: Kevin Scully
or to such other address or facsimile as is notified in writing from time
to time by the Vendors (or any one of them) or the Purchaser (as the case
may be) to the other parties to this Agreement in accordance with this
Clause.
FURTHER ASSURANCE
The Vendors shall do, execute and perform and shall procure to be done,
executed and performed all such further acts, deeds, documents and things as the
Purchaser may reasonably require from time to time effectively to vest the
beneficial ownership of the Shares in the Purchaser or as it directs free from
all liens, charges, options, encumbrances or adverse rights or interests of any
kind and otherwise to give to the Purchaser the full benefit of this Agreement.
WAIVERS
Save for the time limits set out in Clauses 6 and 7 of this Agreement a
failure by any party to exercise and any delay, forebearance or indulgence by
any party in exercising any right, power or remedy under this Agreement shall
not operate as a waiver of that right, power or remedy or preclude its exercise
at any subsequent time or on any subsequent occasion. The single or partial
exercise of any right, power or remedy shall not preclude any other or
18
<PAGE> 22
further exercise of that right, power or remedy or the exercise of any other
right, power or remedy. No custom or practice of the parties at variance with
the terms of this Agreement shall constitute a waiver of the rights of any party
under this Agreement.
VARIATION
No variation of this Agreement shall be effective unless made in writing
and signed by or on behalf of each of the parties.
JOINT AND SEVERAL LIABILITY
In relation to any two or more persons who are jointly and severally
liable under this Agreement, the liability under this Agreement of any one or
more of such persons shall not be prejudiced or affected in any way by the
giving of time or any forbearance or indulgence granted by any other party to
any other or others of such persons or by the release or compromise by any other
party of any liability under this Agreement of any other or others of such
persons.
RESTRICTIVE TRADE PRACTICES ACT 1976 - REGISTRATION
No provision of this Agreement or of any agreement or arrangement which
forms part of the same agreement for the purposes of the RTPA which (alone or
together with any other provision) renders or would render this Agreement or any
such agreement or arrangement liable to registration under the RTPA shall have
effect until the day after that on which the relevant particulars are furnished
to the Director General of Fair Trading pursuant to the RTPA.
COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, and which together shall constitute one and
the same Agreement. Unless otherwise provided in this Agreement, this Agreement
shall become effective and be dated (and each counterpart shall be dated) on the
date on which this Agreement (or a counterpart of this Agreement) is signed by
the last of the parties to execute this Agreement or, as the case may be, a
counterpart thereof.
APPLICABLE LAW
This Agreement shall be deemed to have been made in England and English
law shall govern:
its existence and validity;
its interpretation;
its performance;
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<PAGE> 23
within the limits of the powers of the Courts of England by its
procedural law, the consequences of its breach; and
the various ways of extinguishing obligations under it and limitations of
actions arising from it or its breach.
Each party submits to the exclusive jurisdiction of the Supreme Court of
Judicature of England, waives personal service of any proceedings, agrees that
service on him or it of proceedings may be effected by registered mail to his or
its address for service referred to in Clause 16 of this Agreement, and waives
any objection to proceedings in such Court on the grounds of venue or on the
grounds that the proceedings have been brought in an inconvenient forum.
The submission of the parties to the jurisdiction of the Supreme Court of
Judicature of England shall not affect the right of any party to take
proceedings for enforcement in any other jurisdiction nor shall the taking of
proceedings in any jurisdiction for such purpose preclude any party from taking
proceedings in any other jurisdiction for that purpose.
Each of the Vendors (other than Mr Paul) irrevocably appoints the
Vendors' Solicitors as his process agent to receive on his behalf service of any
process in any proceedings in England.
Nothing contained in this Clause 23 shall affect the right to serve
process in any other manner permitted by law.
AS WITNESS the hands of the parties hereto or their duly authorised
representatives the day and year first before written.
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<PAGE> 24
SCHEDULE 1
PARTICULARS OF THE VENDORS AND OF
THE SHARES TO BE SOLD AND CONSIDERATION
TO BE RECEIVED BY EACH OF THEM (U.S. DOLLARS)
PART A
PRINCIPAL VENDORS
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
NAME AND ADDRESS NUMBER OF CONSIDERATION CONSIDERATION CONSIDERATION IN
OF VENDOR SHARES TO BE PAYABLE TO RETENTION FUND
SOLD COMPLETION
<S> <C> <C> <C> <C>
Mark Harrison 201 $ 266,856 $ 240,170 $ 26,686
Flat 3
10 Gloucester Walk
London W8 4HZ
Nicholas Sedgwick 450 $ 597,440 $ 537,696 $ 59,744
Greyfern Cottage
Lords Hill Common
Shamley Green
Guildford
Surrey GU5 0UZ
Aidan Paul 235 $ 311,996 $ 280,796 $ 31,200
12 St Stephens Avenue
St Albans
Hertfordshire AL3 4AD
John Fotheringham 235 $ 311,996 $ 280,796 $ 31,200
17 Kent Road
East Molesey
Surrey KT8 9JZ
Robin Gridley 450 $ 597,440 $ 537,696 $ 59,744
9 Grovelands Road
Purley
Surrey CR8 4LB
James Perkins 450 $ 597,440 $ 537,696 $ 59,744
Summerfield House
Upper Wield
Alton
Hampshire SO24 9RT
---------- ---------- ---------- ----------
TOTALS 2,021 $2,683,168 $2,414,850 $ 268,318
</TABLE>
21
<PAGE> 25
<TABLE>
<CAPTION>
PART B
OTHER VENDORS
<S> <C> <C> <C> <C>
Fiona Scott-Smith 11 $ 14,604 --
9 Freshwood Way
Wallington
Surrey SM6 0RL
Michael Clywd Probert 55 $ 73,020 --
80A Uxbridge Road
Shepherds Bush
London W12 8LR
Stuart Gunn 11 $ 14,604 --
Garden Flat
18 Thornhill Crescent
Islington
London N1 1BJ
Graham Alcock 11 $ 14,604 --
21 Gayfere Road
Stonleigh
Surrey KT17 2JY
---------- --------- ---------- ----------
TOTALS 88 $ 116,832 --
========== ========= ========== ==========
</TABLE>
22
<PAGE> 26
SCHEDULE 2
PARTICULARS CONCERNING THE COMPANY
<TABLE>
<S> <C> <C>
1. Registered Office: Aldermary House, 15 Queen Street, London EC4N 1TX
2. Date of Incorporation: 11/07/1988
3. Registered Number: 02275868
4. Directors: J A Fotheringham, P Franklin, R V Gridley J R C Perkins,
M C Probert, N R Sedgwick
5. Secretary: Fiona Scott-Smith
6. Loan Capital: Zero
7. Tax District and Reference LPI 992/WM5493 Number:
8. VAT Number: 629 40 46 34
9. Mortgages and Charges: - Rent Deposit Deed registered on 16/12/95 in favour of
HelicalBar (City Investments) Limited
- Mortgage Debenture registered on 11/10/96 in favour of
National Westminster Plc
10. Share Capital: L.3,500 divided into 3,500 ordinary shares of L.1 each of
which 2,109 have been issued and are fully paid up.
</TABLE>
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<PAGE> 27
SCHEDULE 3
THE PREMISES
PART A
PART FIRST FLOOR, ALDERMARY HOUSE, 10-15 QUEEN STREET, LONDON EC4
Lease dated 24 March 1994 between Watling Street Properties Limited (1)
and Menhir Limited (2) for a term of ten years from 25/12/93 at an
initial annual rent of L.26,775 subject to review.
Rent deposit deed dated 24th March 1994 between Watling Street Properties
Limited (1) and Menhir Limited (2)
PART SECOND FLOOR, ALDERMARY HOUSE, 10-15 QUEEN STREET, LONDON EC4
Agreement for lease dated 8th December 1995 made between Helical Bar
(City Investments) Limited (1) and Menhir Limited (2).
Lease dated 8th December 1995 between Helical Bar (City Investments)
Limited (1) and Menhir Limited (2) for a term of years expiring on
24/12/2003 at an annual rent of L.47,310 subject to review.
Deed of Rental Deposit dated 8th December 1995 between Helical Bar (City
Investments) Limited (1) and Menhir Limited (2) re: lease of part Second
Floor Aldermary House.
PART B
VAT is payable under the two leases set out in Part A of Schedule 3.
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<PAGE> 28
SCHEDULE 4
PART A
GENERAL WARRANTIES
INFORMATION SUPPLIED AND CAPACITY OF VENDORS
All information contained in this Agreement and all matters contained in
the Disclosure Letter and all other information relating to the Company given by
any of the Vendors or their accountants or the Vendors' Solicitors to the
Purchaser or the Purchaser's accountants or the Purchaser's Solicitors listed in
the Disclosure Letter are true, accurate and complete in all material respects
and there is no fact or matter which has not been Disclosed which renders any of
such matters or information materially untrue, materially incomplete or
misleading in any material respect.
The Vendors have full power and authority to enter into and perform this
Agreement and the Tax Deed and this Agreement and the Tax Deed, when executed,
will constitute valid and binding obligations on the Vendors in accordance with
the respective terms thereof.
ACCOUNTS AND RECORDS
ACCOUNTING AND OTHER RECORDS
The Company has at all times properly maintained all books, accounts and
records of whatever kind required by UK law to be maintained.
The accounting records of the Company have been kept and maintained in
accordance with the provisions of the Companies Act applicable to small
companies and reflect in accordance with generally accepted accounting
principles and practice in the UK the assets and liabilities (actual,
prospective and contingent) of the Company and all transactions to which it is
or has been a party.
No notice or allegation that any of the books, accounts or records is
incorrect or should be rectified has been received by the Company.
Where any of the said books, accounts and records are kept on computer
the Company is the owner of all hardware and all software licences necessary to
enable it to use the said books, accounts and records as they have been used in
the business of the Company hitherto and the Company does not share any hardware
or software relating to the books, accounts and records with any person.
ACCOUNTS
The Accounts:
comply with the requirements of the Companies Act applicable to small
companies and generally accepted accounting principles in the UK, SSAPs
and FRSs and give a true and fair view of the financial position of the
Company as at the Accounting Date;
25
<PAGE> 29
disclose all assets and make proper provision or reserve in accordance
with generally accepted accounting principles in the UK for all
liabilities (whether or not quantified or disputed) and properly provide
for in accordance with generally accepted accounting principles in the UK
(or disclose by way of note) all contingent liabilities at the Accounting
Date.
make proper provision in accordance with generally accepted accounting
principles in the UK for depreciation of the fixed assets of the Company
having regard to their original cost and estimated life in accordance
with SSAP 12.
TAX
The Company has made full provision in the Accounts for all Tax liable to
be assessed on the Company or for which it is accountable in respect of income,
profits or gains earned, accrued or received on or before the Accounting Date
including distributions made down to that date.
MANAGEMENT ACCOUNTS
The Management Accounts have been prepared on a basis consistent with the
Accounts and reasonably reflect levels of turnover and expenses and provisions,
assets and liabilities of the Company as at 31 August 1997 and for the two month
period then ended and (save as expressly disclosed therein) there were no
exceptional, non-recurring or extraordinary items which materially affected such
accounts.
BUSINESS SINCE THE ACCOUNTING DATE
Since the Accounting Date:
the Company has carried on its business in the ordinary and usual course
and so as to maintain the same as a going concern;
the Company has not borrowed, raised or taken any money or any financial
facility;
the Company has paid its creditors within the times agreed with such
creditors and there are no debts outstanding by the Company which have
been due for more than 90 days;
the Company has not entered into any capital commitments or any
transaction or agreement for the disposal of any asset (including
Know-How) or under which it has incurred or will incur (otherwise than in
the ordinary and usual course of carrying on its business) any
liabilities (including contingent liabilities) not provided for in the
Accounts;
the Company has not entered into any unusual, long-term (that is to say,
incapable of performance in accordance with its terms within twelve
months after the date on which it was entered into or undertaken) or
onerous arrangements, commitments or contracts;
the business of the Company has not been adversely affected by the loss
of any customers;
26
<PAGE> 30
no distribution of capital or income (including for the avoidance of
doubt, any dividend) has been declared, made or paid or agreed or
resolved to be declared, made or paid by the Company;
no loans have been made by the Company and no loan capital or loan has
been or has become liable to be repaid by the Company in whole or in
part;
no resolutions (whether in general meeting or otherwise) have been passed
by the Shareholders of the Company or any class of its members;
no sum has been paid or voted to any Director or employee (or ex-director
or ex-employee) of the Company by way of remuneration or otherwise in
excess of the rates paid to him by the Company at the Accounting Date and
no new service agreements have been made by the Company;
no alteration has been made in the terms of employment or conditions of
service of any officer or any employee or agent of the Company or in the
pension or other benefits of any past officer or employee of the Company
or any of their dependants;
none of the fixed assets of the Company shown in the Accounts and none
acquired by the Company since the Accounting Date have been lost, damaged
or destroyed;
there has been no material adverse change in the financial position or so
far as the Principal Vendors are aware turnover of the Company.
TRADING AND CONTRACTUAL ARRANGEMENTS
ULTRA VIRES
None of the contracts or obligations entered into by the Company is ultra
vires the Company or exceeds the powers of the directors to bind the Company and
the Company is not in default under any such contracts or obligations.
CONTRACTS
The Company is not a party to any contract, transaction, obligation,
commitment or liability which, whether by reason of its nature, term, scope,
price or otherwise is or is reasonably likely to be material in relation to its
business, profits or assets or which:
is in any way otherwise than in the ordinary course of the Company's
business;
is of an unusual or abnormal nature, or not fully on an arm's length
basis in the ordinary and usual course of business;
is of a long term nature (that is to say incapable of performance in
accordance with its terms within six months after the date on which it
was entered into or undertaken);
is incapable of termination in accordance with its terms by the Company
on 90 days notice or less;
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is of a loss making nature (that is to say known to be reasonably likely
to result in a loss to the Company on completion of performance);
cannot readily be fulfilled or performed by the Company on time without
undue or unusual expenditure of money or effort;
involves payment by the Company by reference to fluctuations in the index
of retail prices or any other index or in the rate of exchange for any
currency;
involves the supply of goods and/or services the aggregate value of which
will represent in excess of 5 per cent of the turnover for the financial
year of the Company ended on the Accounting Date; or
requires an aggregate consideration payable by the Company in excess of
L.5,000 in respect of any one contract.
GUARANTEES
The Company is not and has not agreed to become bound by any debenture or
guarantee or contract for indemnity or suretyship or any like undertaking and
there is not now outstanding any guarantee or contract for indemnity or
suretyship or like undertaking given for the accommodation of or in respect of
any obligation on the part of the Company.
CONTRACTS, ETC. WITH CONNECTED PERSONS
No sums of whatever nature are owing by the Company to any of the Vendors
or any of the Directors or any person being a Connected Person of the Vendors or
the Directors or any of them respectively.
The Company has not been a party to any transaction to which any of the
provisions of Sections 320 (substantial property transactions involving
Directors, etc.), 322 (liability arising from contravention of Section 320), or
330 (general restrictions on loans, etc. to Directors and persons connected with
them) of the Companies Act may apply.
None of the Vendors nor any person being a Connected Person in relation
to any Vendor has any direct or indirect interest with any business which has a
close trading relationship with that of the Company or which is or is reasonably
likely to become competitive with the business of the Company.
There are no outstanding arrangements or understandings (whether legally
binding or not) between the Company and any of the Vendors or any person who is
a Connected Person of any of the Vendors relating to the management of the
Company's business, or the appointment or removal of the Directors, or the
ownership or transfer of ownership, or the letting of any of the assets of the
Company, or the provision, supply, purchase or finance of goods, services or
other facilities to, by or from the Company or otherwise howsoever in relation
to the Company's affairs.
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JOINT VENTURES, PARTNERSHIPS, ETC.
The Company does not have and so far as the Principal Vendors are aware
has never had any interest in or agreed to enter into any association,
partnership, consortium or joint venture arrangement with any other entity.
COMMISSIONS AND FINDERS FEES
No person is entitled to receive from the Company any finders fee,
brokerage or commission in connection with the sale of the Shares to the
Purchaser.
FOREIGN COMMITMENTS
The Company has no commitments in foreign exchange which are not covered
by forward purchase or sale (as appropriate) of the relevant currency.
POWER OF ATTORNEY
The Company has not given any power of attorney or similar authority
which remains in force and no person, as agent or otherwise, is entitled or
authorised to bind or commit the Company to any obligation not in the ordinary
course of the Company's business.
RESTRICTIVE CONTRACTS
The Company has not entered into or agreed to enter into any selling,
purchasing, or licensing agreement or arrangement or any agreement or
arrangement which in any way restricts the freedom of the Company to carry on
its business or any part thereof in such manner as it thinks fit.
BUSINESS NAMES
The Company does not carry on business under any name other than its own
corporate name.
WARRANTY AND INDEMNITY OBLIGATIONS
Save for the representations, indemnities and warranties under the Sale
of Goods Act 1979 and the Sale of Goods and Services Act 1982 or contained in
customer or client contracts the Company has not sold or otherwise disposed of
any assets or agreed to provide any services in circumstances such that it is,
or is reasonably likely to be, still subject to any liability (whether
contingent or otherwise) under any representation, warranty or indemnity given
or agreed to be given on or in connection with such sale or disposal or the
provision of such services.
ASSETS (OTHER THAN THE PREMISES)
TITLE TO ASSETS
The Company was at the Accounting Date the legal and beneficial owner of
all the assets included in the Accounts and now so owns and has in its
possession and under its control all such assets (save for current assets
subsequently disposed of in the
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ordinary course of its business) and all assets acquired by it after the
Accounting Date free from any charge, lien, encumbrance or equity and no other
person has or claims so far as the Principal Vendors are aware any rights in
relation to such assets or any of them.
The Company has not acquired or agreed to acquire any asset on terms that
the property therein does not pass until full payment is made or all
indebtedness discharged.
In relation to any asset held by the Company which is the subject of any
hire purchase, conditional sale, chattel leasing or retention of title agreement
or otherwise belonging to a third party so far as the Principal Vendors are
aware no event has occurred which entitles or which upon intervention or notice
by any third party is reasonably likely to entitle any such third party to
repossess the asset concerned, or terminate the agreement, or any licence in
respect of the same.
FURNITURE AND OFFICE EQUIPMENT
The furniture, fixtures, fittings, office equipment, vehicles used in
connection with the business of the Company are in the possession and control
and are the sole and absolute property of the Company free from any charge,
lien, encumbrance, hire purchase, leasing or rental agreement or agreement for
payment on deferred terms or bill of sale, and are in reasonable condition
having regard to their age and usage and in safe working order if used properly.
SUBSIDIARIES, ASSOCIATES AND BRANCHES
The Company:
is not and has never been the holder or beneficial owner of nor has it
agreed to acquire any share or loan capital of any other company (whether
incorporated in the United Kingdom or elsewhere);
does not have outside the United Kingdom any branch, agency or place of
business, or any permanent establishment (as that expression is defined
in the relevant double taxation relief orders current at the date of this
Agreement); and
does not have, nor has it had, any associated company (that is to say a
company which falls to be treated as such for the purposes of SSAP 1).
LEASING RENTALS
Rentals payable by the Company in relation to any leasing or similar
agreement to which it is a party have not been increased.
DEBTS
The Company is not entitled to the benefit of any debt otherwise than as
the original creditor and is not and has not agreed to become a party to any
factoring or discounting arrangement.
Save as specified in the Disclosure Letter, none of the debts in excess
of L.5,000 due as at the Accounting Date remain unpaid at the date of this
Agreement nor has any debt which
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has subsequently become due to the Company (or any part of any such debt)
remained unpaid for more than 90 days after the due date for payment or been
released or written off or proved to be irrecoverable, nor is any such debt now
regarded as irrecoverable.
EMPLOYEES AND AGENTS
PARTICULARS OF EMPLOYEES AND TERMS OF EMPLOYMENT
The names of all employees of the Company together with copies of the
standard contract of employment or service agreement applicable to them and all
material particulars of the current terms of employment of all officers,
employees, consultants and agents of the Company have been Disclosed.
There is not now outstanding any contract of service or for services
between the Company and any of its officers, employees, consultants or agents
which is not determinable by the Company at any time on three months notice or
less without compensation (other than under the Employment Protection
(Consolidation) Act 1978) or any liability (other than for accrued salary,
wages, commission or pension) on the part of the Company to or for the benefit
of any person who is or has been an officer, employee, consultant or agent of
the Company.
Save for the resignations of the Directors, Secretary and Auditors
provided for in Schedule 5, no present officer, employee, consultant or agent of
the Company has given or received notice terminating his employment or
appointment and no such officer, employee, consultant or agent is entitled nor
(so far as any of the Principal Vendors is aware) intends as a result of this
Agreement or Completion or otherwise to terminate his employment or appointment
with the Company.
LIABILITIES TO AND FOR EMPLOYEES
The Company has not since the Accounting Date paid or agreed to pay
remuneration or compensation for loss of office or made or agreed to make any
gratuitous payment to or for the benefit of any of its present or former
officers or employees.
All material particulars have been Disclosed of all loans and other
benefits enjoyed by any officer, employee, consultant or agent of the Company in
relation to the affairs of the Company and of all contracts, transactions and
arrangements made or entered into by the Company and to which any of Sections
330 (general restrictions on loans, etc. to directors and persons connected with
them) to 337 of the Companies Act applies.
The Company is not under any legal or moral liability or obligation to
pay bonuses, pensions, gratuities, superannuation, allowances or the like to any
of its past or present officers or employees or their dependants nor is it a
party to any arrangement or promise to make or in the habit of making ex gratia
or voluntary payments by way of bonus, pension, gratuity, superannuation,
allowance or the like to any such persons and there are no schemes or
arrangements for payment of retirement pension or death benefit or similar
schemes or arrangements in operation or contemplated in relation to the Company.
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The Company is not liable to pay any industrial training levy nor has
outstanding any undischarged liability to pay to any government or regulatory
authority in any jurisdiction any UK Tax arising in connection with the
employment or engagement of employees or directors by it.
Save to the extent (if any) to which provision or allowance has been made
in the Accounts, no liability has been incurred by the Company to make any
redundancy payments or any protective awards or to pay damages or compensation
for wrongful or unfair dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee and no gratuitous payment has
been made or promised by the Company in connection with the actual or proposed
termination or suspension of employment or variation of any contract of
employment of any present or former director or employee.
There are no claims served on or threatened against the Company (nor so
far as the Principal Vendors are aware any circumstance which might give rise to
the making of any such claim) by any employee or former employee or third party
in respect of an accident or injury which is not fully covered by insurance or
by any employee, former employee, director or former director in relation to his
terms and conditions of employment or appointment.
The Disclosure Letter contains all material particulars of the schemes
and arrangements operated by and contributed to by the Company for the
provisions of benefits for employees of the Company and the Company has complied
in all material respects with its obligations under or in relation to them.
Compliance with Statutes
The Company has complied in all material respects with the Redundancy
Payments Act 1965, the Trade Union and Labour Relations Act 1974, the Sex
Discrimination Act 1975, the Equal Pay Act 1970, the Employment Protection Act
1975, the Race Relations Acts 1976 and the Employment Protection (Consolidation)
Act 1978, the Transfer of Undertakings (Protection of Employment) Regulations
1981 and the Wages Act 1986 and there are no outstanding claims made against or
payments due from the Company thereunder.
LABOUR RELATIONS
The Company has not recognised any trade union or association of trade
unions or any other organisation of employees in respect of its employees or any
of them.
The Company is not a party to any collective agreement or other agreement
or arrangement and is not involved or reasonably likely to be involved in any
industrial or trade dispute or negotiation with any trade union or other
organisation of employees.
There is no industrial action or dispute existing or so far as the
Principal Vendors area aware threatened or so far as the Principal Vendors are
aware anticipated in respect of or concerning any of the employees of the
Company.
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So far as the Principal Vendors are aware the Company is not engaged in
any unfair labour practices which could individually or in the aggregate, result
in liability to the Company.
SHARE INCENTIVE AND OTHER SCHEMES
The Company has not in existence nor is proposing to introduce any share
incentive scheme, share option scheme or profit sharing scheme (including a
Profit Related Pay Scheme under Chapter III of Part V of the Taxes Act) or any
other scheme analogous to any of the foregoing schemes for all or any of its
directors, officers or employees.
INSURANCE
All material particulars of all insurances of the Company have been
Disclosed and there are no outstanding claims or so far as the Principal Vendors
are aware circumstances reasonably likely to give rise to a claim thereunder and
the Company has not done or so far as the Principal Vendors are aware omitted to
do anything which has made any policy of insurance void or voidable and none of
the Principal Vendors is aware of any threatened termination of insurances. All
premiums payable under all such policies have been duly paid and are up to
date.
GRANTS
Full particulars have been Disclosed of all investment and other grants
and allowances and of all loans or financial aid of any kind applied for or
received or receivable by the Company from any governmental department, board,
body or agency or any other supranational or national or local authority body or
agency.
No act or transaction has been effected or omitted in consequence of
which:
the Company is or may become liable to refund in whole or in part any
such grant, allowance, loan or aid as is referred to in Warranty 8.1 of
this Part A of this Schedule 4; or
any such grant, allowance, loan or aid for which application has been
made by the Company will or may not be paid or will or may be reduced.
CURRENT FINANCIAL POSITION
BORROWINGS
The amounts borrowed by the Company do not exceed any limitation on the
directors' borrowing powers contained in its Articles of Association nor do any
such borrowings breach any of the provisions contained in any debenture or other
deed or document binding upon the Company.
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BANKING FACILITIES
Material details of all overdrafts, loans or other financial facilities
outstanding or available to the Company and of all its bank and deposit accounts
have been Disclosed and none of the Principal Vendors or the Company has done or
omitted to do anything whereby the continuance of any such facilities in full
force and effect might be adversely affected or prejudiced.
OFF BALANCE SHEET FINANCING
The Company has not engaged in any borrowing or financing not required to
be reflected in the Accounts.
REGULATORY MATTERS
So far as the Principal Vendors are aware, neither the Company nor any of
its officers or employees has done or omitted to do any act or thing, the doing
or commission of which (as the case may be) is in contravention or breach of or
the subject of enquiry, complaint, investigation or proceedings or request for
undertakings or assurances or the revocation or refusal of any licence or permit
which it is necessary or desirable for the Company to hold under the provisions
of any Act, Order or Regulation whether made in the United Kingdom or elsewhere
and in particular (but without prejudice to the generality of the foregoing):
any of the provisions of the Companies Act or the Financial Services Act
1986 or the Data Protection Act 1984;
any of the provisions of the Restrictive Trade Practices Act 1976, the
Resale Prices Act 1976, the Fair Trading Act 1973 or the Competition Act
1980;
the Trade Descriptions Acts 1968 to 1972, the Consumer Credit Act 1974 or
the Consumer Protection Act 1987; or
any anti-trust, anti-monopoly or consumer law Act, Regulation or Order
made in the UK.
The Company has not received any aid from any European Community member
state or through any state resources in breach of Articles 92 and 93 of the
Treaty of Rome.
Full details have been Disclosed of any code of practice to which the
Company, either directly or through any trade association is subject, and the
Company has not been notified of any complaint that it is in breach of any such
code of practice.
The Company has no knowledge that any terms upon which the Company
regularly does business are or may be unenforceable by virtue of the Sale of
Goods Act 1979, the Sale of Goods and Services Act 1982, the Unfair Contract
Terms Act 1977, or the Consumer Credit Act 1974.
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PRODUCTS/SERVICES QUALITY AND SAFETY
Each product developed, sold, or delivered by the Company has been in
conformity in all material respects with all applicable contractual commitments
and all express and implied warranties, and the Company does not have any
liability for replacement or repair thereof or other damages in connection
therewith. No product developed, sold or delivered by the Company is subject to
any guarantee, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or beyond that implied or imposed by applicable law. The
Disclosure Letter sets out copies of the standard terms and conditions of sale
for the Company.
There are no material outstanding claims against the Company in respect
of defects in quality or delays in delivery or completion of contracts or
deficiencies of design or performance of equipment or otherwise relating to
liability for Products or services supplied or to be supplied by the Company and
no such claims are or so far as the Principal Vendors are aware anticipated or
threatened.
LITIGATION
Neither the Company nor any person for whose acts or omissions it may be
vicariously liable is engaged in or subject to any civil, criminal or
arbitration proceedings and no such proceedings have been served or as far as
any of the Principal Vendors are aware, threatened by or against the Company or
against any such person and so far as the Principal Vendors are aware there are
no facts or circumstances reasonably likely to give rise to any such
proceedings. The Company has received no notice that there are any
investigations current nor so far as the Company or any of the Principal Vendors
is aware, threatened against the Company or any of its officers or directors.
INSOLVENCY
No order has been made, or petition presented, or resolution passed for
the winding up of the Company and there is not outstanding:
any petition or order for the winding up of the Company;
any appointment of a receiver over the whole or any part of the
undertaking or assets of the Company;
any petition or order for the administration of the Company;
any voluntary arrangement between the Company and any of its creditors;
any distress or execution or other process levied in respect of the
Company, which remains undischarged;
any unfulfilled or unsatisfied judgment or court order against the
Company.
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There are no circumstances known to any of the Vendors which would
entitle any person to present a petition for the winding-up or administration of
the Company or to appoint a receiver over the whole or any part of the Company's
undertaking or assets.
The Company is not deemed unable to pay its debts within the meaning of
Section 123 of the Insolvency Act 1986.
The Company has not been party to any material transaction with any third
party which, in the event of any such third party going into liquidation or an
administration order or a bankruptcy order being made in relation to it or him,
would constitute (in whole or in part) a transaction at an undervalue, a
preference, an invalid floating charge or an extortionate credit transaction or
part of a general assignment of debts under Sections 238 to 245 (inclusive) and
Sections 339 to 344 (inclusive) of the Insolvency Act 1986.
COMPLIANCE
The Company has not been a party to any undertaking or assurance given to
any Court or governmental agency which is still in force and there are no
judgments or orders given or made by any Court or governmental agency against
the Company which have not been fully satisfied and complied with.
All necessary licences, consents, permits and authorities (public and
private) have been obtained by the Company to enable the Company to carry on its
business in the places and in the manner in which such business is now carried
on and all such licences, consents, permits and authorities are valid and
subsisting and none of the Vendors know of any reason why any of them should be
suspended, cancelled or revoked or should not be renewed upon the expiry of
their existing term.
COMPANIES ACT AND OTHER LEGISLATION
MEMORANDUM AND ARTICLES OF ASSOCIATION
A copy of the Memorandum and Articles of Association of the Company has
been Disclosed.
FILING
All documents required by the Companies Act to be filed with the
Companies Registration Office or any other authority or so required to be
published in respect of the Company have been duly filed or published as the
case may be and due compliance has been made in all material respects with all
other legal requirements relating to the formation of the Company and the
conduct of its business and to distributions and issues of shares, debentures
and other securities thereof and the keeping and filing of books, records and
documents.
CHARGES
No charge in favour of the Company is void or voidable for want of
registration.
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So far as the Principal Vendors are aware, no event has occurred causing,
or which upon intervention or notice by any third party may cause, any floating
charge created by the Company to crystallise or any charge created by it to
become enforceable nor has any such crystallisation occurred or is such
enforcement in process.
DIRECTORS AND OFFICERS
The Directors are the only directors of the Company and no person is a
shadow director (within the meaning of Section 741 of the Companies Act) of the
Company.
None of the persons who at present is a director or officer of the
Company is or was at any material time subject to any disqualification order
under the Companies Act the Insolvency Act 1986 or the Company Directors
Disqualification Act 1986.
CAPITAL OF THE COMPANY
The authorised and issued share capital of the Company is as set out in
Schedule 2.
The Vendors are the beneficial owners and registered holders of the
Shares which have been issued in proper legal form and fully paid or credited as
fully paid, and each of the Vendors is entitled as beneficial owner to sell such
of the Shares as are set out opposite his name in Column 2 of Schedule 1 free
from all claims, charges, liens, encumbrances, equities and adverse rights of
any description and together with all rights attached or accruing thereto and
the right to receive all dividends and other distributions as at and from the
Accounting Date.
The Company has never reduced its share capital or redeemed, repaid or
purchased any share capital or agreed to do so.
There is not now outstanding any loan capital of the Company nor any
agreement, arrangement or option (other than the Options) under which any person
may now or at any time hereafter call for the creation, allotment, issue, sale
or transfer of any loan or share capital of the Company or require any loan or
share capital of the Company to be put under option.
EFFECT OF AGREEMENT
There are no contracts or arrangements (whether written or oral) to which
the Company is a party which will by their terms be determinable as a result of
the provisions of this Agreement or Completion.
The execution and delivery of this Agreement and the fulfilment and
performance of and compliance with the terms thereof by the Vendors do not and
will not:
conflict with, violate or result in a breach by the Company or the
Vendors of the terms, provisions or conditions of any agreement or any
law, undertaking to or judgment, order, injunction or decree of any
Court;
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relieve any person of any contractual or other obligation to the Company
or entitle any person to terminate any such obligation;
so far as the Principal Vendors are aware result in any indebtedness,
present or future, of the Company becoming due or capable of being
declared due and payable prior to the stated maturity date; or
give rise to any contractual or other obligation of the Company to any
person or entitle any person to require the performance of or compliance
with any existing contractual or other obligation of the Company.
SUBSIDIARY UNDERTAKINGS
The Company has no subsidiary undertaking (as that term is defined in
Section 258 of the Companies Act).
PARTICIPATING INTERESTS
The Company has no participating interest (as that term is defined in
Section 260 of the Companies Act) in any undertaking (as that term is defined in
Section 259 of the Companies Act).
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SCHEDULE 4
PART B
WARRANTIES RELATING TO TAX
ADMINISTRATION AND RETURNS
PROVISION
The Company has no actual liability for Tax in respect of any financial
period down to and including the Accounting Date or referable to profits
(including income and gains) made or deemed to have been made on or before the
Accounting Date which has not been fully provided for in the Accounts.
No liability to Tax has been incurred by the Company since the Accounting
Date other than in the ordinary course of business.
PAYMENT OF TAX
At the date hereof the Company has duly paid all Tax which it has before
that date become liable to pay and there are (and at Completion there will be)
no liens or other encumbrances on the assets of the Company relating to or
attributable to Tax.
INTEREST/PENALTIES
The Company is under no liability to pay any interest, penalty, fine or
default surcharge in connection with any Tax.
RETURNS
The Company has, or prior to Completion will have, accurately prepared
and duly filed all tax returns, and or delivered all accounts, notices,
computations, statements and reports required to be filed or delivered on or
before that date under any applicable legislation or regulations relating to
Taxation (whether of the United Kingdom, United States or elsewhere in the
world) ("Returns") and relating to any and all Taxes attributable to the Company
or its operations, or for which the Company is liable or has become liable, and
except as set forth in the Disclosure Letter, such Returns are true and correct
in all material respects and have been completed in accordance with applicable
law in all material respects. The Company has duly and punctually withheld or
paid, or, prior to Completion, will have withheld or paid, all income tax,
social security and national insurance contributions and other Taxes the Company
is required to withhold or pay on or before that date with respect to its
employees, independent contractors or other third parties.
DISPUTES
None of the aforementioned Returns have been disputed by any Tax
Authority.
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INVESTIGATIONS
The Company's affairs have not been the subject of any dispute, audit or
investigation by any Tax Authority.
CLAIMS AND ELECTIONS
All claims, disclaimers, elections, appeals or applications which the
Company has made in respect of Tax have been Disclosed.
CLEARANCES AND CONSENTS
All clearances or consents relating to Tax (including for the avoidance
of doubt clearances made pursuant to section 765) obtained by or on behalf of
the Company have been properly obtained on the basis of full and accurate
disclosure to the relevant Tax Authority of all material facts and
circumstances; any transaction for which such consent or clearance was obtained
has been carried out in accordance with the terms of the relevant application
and consent or clearance; any such consent or clearance was and remains valid
and effective.
All agreements or other arrangements currently subsisting which have been
made with or by any Tax Authority and which make a clear departure from the
terms of the relevant legislation or the published practice of the relevant Tax
Authority have been Disclosed.
CAPITAL ALLOWANCES
The Company has made no claim for capital allowances under Sections 520
to 533 (inclusive) of the Taxes Act.
Up to the date hereof the Company has correctly operated:
a statutory sick pay scheme in accordance with the provisions of the
Social Security and Housing Benefits Act 1982 and the regulations made
thereunder;
a statutory maternity pay scheme in accordance with the provisions of the
Social Security Act 1986 and the regulations made thereunder.
The Company has complied with the provisions of Section 85 of the Finance
Act 1988 (duty to furnish returns where person acquires shares in a company in
certain circumstances).
The Company is not and has not been a party to any arrangement which has
been or is being challenged as being an abnormal pay practice under regulation
21 of the Social Security (Contributions) Regulations (SI 1979/591).
STAMP DUTY
All documents which are required to be stamped and which are in the
possession or under the control of the Company and to which the Company is a
party have been duly stamped and the appropriate stamp duty (if any) has been
paid and there is no liability for any
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penalty in respect of such duty and no such documents which are outside the
United Kingdom would attract stamp duty if they were brought into the United
Kingdom.
VALUE ADDED TAX
The Company is a taxable person for the purposes of VAT and has duly
registered with its local Customs and Excise Office.
The Company has at all times issued correct tax invoices to all persons
properly requiring the same in respect of its taxable supplies either by way of
goods or of services and has likewise received all appropriate tax invoices from
its suppliers and others and has kept all necessary records and documents
required to complete and verify its quarterly VAT returns.
The Company has in all other material respects complied with the VAT
legislation and all regulations, notices, orders, provisions and directions
relating to VAT.
The Company is not in arrears with any payments or returns under such
legislation or liable to any abnormal or non-routine payment or any forfeiture,
penalty, interest or surcharge or to the operation of any penal, interest or
surcharge provisions contained therein.
The Company is not and has never been partially exempt for VAT purposes.
The Company has never been required by the Commissioners of HM Customs
and Excise to give security.
There is not nor has there at any time been in force a group or similar
election for VAT purposes in relation to the Company and the Company has not
been the subject of our application for group registration.
The Company is not and has not agreed to become agent, manager or factor
(for the purposes of Section 47 of the VAT Act 1994) of any person who is not
resident in the United Kingdom.
Full particulars of any claim for bad debt relief made or which may be
made by the Company under part XVIII or XIX of the VAT Regulations 1995
(SI 1995/2518) or Section 11 of the Finance Act 1990 (refund of tax in cases of
bad debts) have been Disclosed.
The Company nor any relevant associate of the Company (within the meaning
of paragraph 3(7)) of Schedule 10 to the VAT Act 1994) has not made and will not
prior to Completion make an election under paragraph 2 of Schedule 10 to the VAT
Act 1994 (election to waive exemption).
The Company does not own any assets which are subject to the Capital
Goods Adjustment Scheme pursuant to part XV VAT Regulations 1995.
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SCHEDULE 4
PART C
PROPERTY WARRANTIES
PREMISES
In this Part C of Schedule 4 these warranties apply to each and every one
of the Premises as set out in Schedule 3.
THE PREMISES
The particulars of the Premises (and of any leases, underleases,
tenancies, licences and other agreements subject to and/or with the benefit of
which the same are held) as set out in Part A and Part B of Schedule 3 are true,
complete and accurate.
The Company does not own, use or occupy any premises other than the
Premises and has no liability (existing or contingent) in respect of any land or
building previously owned, occupied or otherwise used by the Company or in which
it had an interest.
TITLE
The Company is solely entitled at law and in equity to the Premises.
The Company is in physical possession and actual occupation of the whole
of the Premises on an exclusive basis and no right of occupation or enjoyment
has been acquired or is in the course of being acquired by any third party or
has been granted or agreed to be granted to any third party save for the rights
of occupation of third parties set out in Part B of Schedule 3.
All of the title deeds and documents necessary to prove title to the
Premises are in the Company's possession and control, have been properly
stamped. On Completion the documents of title to be handed over to the Purchaser
will consist of the original documents.
Save as referred to in the Leases no right, easement, quasi easement,
profit, licence or informal arrangement, public or private, is enjoyed or is in
the course of being acquired by or against the Premises and none so far as the
Principal Vendors are aware has been proposed or is necessary for the full use
and continued beneficial occupation of the Premises.
LEASEHOLD PREMISES
Each of the leasehold Premises is held under the lease ("Lease") details
of which are correctly set out in Part A of Schedule 3.
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All monies due to the lessor under each Lease (whether or not reserved as
rent) have been paid as and when they became due and none have been commuted,
waived or paid in advance of the due date for payment.
No monies, collateral assurances, undertakings, waivers or concessions
have been made paid or given by any party to each Lease.
There are no rent reviews in the course of negotiation or which have
fallen due at a date prior to the Completion Date.
The Company has strictly observed and performed all material covenants,
restrictions, stipulations and other obligations contained in each Lease and any
deeds or documents supplemental thereto and there has been no waiver (expressly
or impliedly) of or acquiescence to any breach thereof, nor is the Company aware
of any event that would constitute such a breach.
PLANNING AND USER OF PREMISES
The current use of the Premises is as offices.
So far as the Principal Vendors are aware the current use of the Premises
is the permitted use for the purposes of the Town & Country Planning Acts 1971
to 1990 (the "PLANNING ACTS").
All consents, orders and regulations issued under the Planning Acts and
building regulations consents and bye-laws for the time being in force have been
complied with in all material respects in relation to the Premises.
ENCUMBRANCES
The Company has not mortgaged or charged the Premises or caused the
Premises to be the subject of any (whether legal or equitable and whether fixed
or floating), lien or other right in the nature of security or any option, right
of pre-emption or right of first refusal nor is there any agreement or
commitment to give or create any of the foregoing.
The Premises are not subject to the payment of any outgoings other than
uniform business rates and water rates (and (in the case of leaseholds) rent,
insurance premiums, and service charges) and all outgoings have been paid when
due and none are disputed.
There are no circumstances which (with or without the taking of other
action) would entitle any third party to exercise a right of entry or forfeiture
or to take possession or which would in any other way affect or restrict the
continued possession, enjoyment or use of any of the Premises for its present
purpose.
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STATUTORY OBLIGATIONS
The Company has complied in all material respects with all applicable
statutory and bye-law requirements relating to the Premises and in particular
(but without limitation) with all requirements as to fire precautions and under
the Public Health Acts, the Housing Acts, the Highway Acts, the Offices, Shops
and Railway Premises Act 1963, the Fire Precautions Act 1971, the Health and
Safety at Work (etc.,) Act 1974, the Water Act 1989 and the Environmental
Protection Act 1990 and all regulations, rules and delegated legislation
thereunder.
The Premises have a fire certificate where required and comply with fire
regulations.
COMPLAINTS AND DISPUTES
No notices, complaints or requirements have been issued or made (whether
formally or informally) by any competent authority or undertaking exercising
statutory or delegated powers in respect of the Premises or the user thereof or
any machinery, plant or equipment therein and the Principal Vendors do not
expect and are not aware of any matter which could lead to any such notice or
complaint or requirement being issued or made.
There exists no dispute between the Company and the owner or occupier of
any other premises adjacent to or neighbouring the Premises or with any lessor,
lessee, licensee or other occupier of the Premises and the Principal Vendors do
not expect and are not aware of any circumstances which may give rise to any
such dispute hereafter.
The Company has not (nor has anyone on its behalf) expressly or impliedly
waived any breach by any person of any covenant, agreement, restriction,
stipulation or obligation relating to the Premises or any part thereof or of
which the Premises or any part thereof has the benefit.
VAT STATUS
Where an election under paragraph 2 of Schedule 10 to the VAT Act 1994
(election to waive exemption) has been made in respect of the Premises such fact
is correctly indicated in Part B of Schedule 3.
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SCHEDULE 4
PART D
PENSION WARRANTIES
In this Schedule "SCHEME" means each of the Pension Schemes referred to
in the Disclosure Letter.
Full particulars of the Scheme including true and accurate copies of all
booklets, announcements, governing trust deeds, rules, [members rules],
policies, latest accounts, latest actuarial reports and other deeds and
documents have been Disclosed.
In relation to the Company's participation in the Scheme in respect of
its members and of those persons who are spouses, children and dependants of
members ("MEMBERS"):
the Scheme complies, and has at all times complied with, all applicable
legislation relative to occupational pension schemes and has been
operated in accordance with the requirements of both the Pension Schemes
Office and Occupational Pensions Board and the requirements of EC law;
Employments in relation to the Scheme are not to be treated as
Contracted-Out employments for the purpose of the Pension Schemes Act
1993;
the assets, investments or policies held by the trustees of the Scheme
are sufficient to satisfy the liabilities and obligations (both current
and contingent) which the Scheme has to its Members at the date of this
Agreement;
the Scheme is exempt approved under Chapter I or Chapter IV of part XIV
of the Taxes Act for the purposes of the Pension Schemes Office of the
Inland Revenue and there is no reason why such approval should be
withdrawn;
all contributions due as at Completion to the trustees of the Scheme or
any insurance company have been paid and there are no actions, suits or
claims pending or threatened by any of the Members and there is no fact
or circumstance likely to give rise to any such proceedings;
no undertakings or assurances have been given or implied to the Members
as to the introduction, continuance, increase or improvement of any
retirement, death or disability benefits or increase or change of the
rate of contribution to be made by the Company (whether or not there is
any legal obligation to do so);
no discretion has been exercised under the Scheme to provide a benefit
which would not otherwise already be provided for under the Scheme and no
power to augment or provide new or additional benefits has been
exercised;
there do not exist any loans from the Scheme to the Vendors or any of
them or to the Company or to any of the Members or beneficiaries of the
Scheme or to any third party;
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all benefits payable on the death of a Member whilst in employment (other
than a return of the Member's own contributions and contributions paid in
respect of him) or during a period of sickness or disability are fully
insured with an insurance company of repute and each Member has been
covered for such insurance at normal rates and on normal terms for
persons in good health;
all pension benefits payable on the death or retirement of a Member under
the Scheme are related and dependent upon the investment of contributions
made by and in respect of that Member and are not guaranteed in relation
to a proportion of remuneration upon the occurrence of those events.
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SCHEDULE 4
PART E
INTELLECTUAL PROPERTY WARRANTIES
In this Part E of Schedule 4:
"INTELLECTUAL PROPERTY"
means any or all of the following and all rights in, arising out
of, or associated therewith: (i) all United Kingdom, United States
and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations in-part thereof; (ii) all inventions (whether
patentable or not), invention, disclosures, improvements, trade
secrets, proprietary information, know how, technology, technical
data and customer lists, and all documentation relating to any of
the foregoing; (iii) all copyrights, copyrights registrations and
applications therefor and all other rights corresponding thereto
throughout the world; (iv) all industrial designs and any
registrations and applications therefor throughout the world; (vi)
all trade names, logos, common law trademarks and service marks;
trademark and service mark registrations and applications therefor
and all goodwill associated therewith throughout the world; (vii)
all databases and data collections and all rights therein
throughout the world; and (viii) all computer software including
all source code, object code, development tools, files, records
and data, all media on which any of the foregoing is recorded; and
(ix) any similar, corresponding or equivalent rights to any of the
foregoing; and (x) all documentation related to any of the
foregoing.
"INTELLECTUAL PROPERTY RIGHTS"
means all Intellectual Property owned, used or enjoyed by the
Company in connection with the business carried on by the Company
at Completion and references to Intellectual Property Rights shall
be construed as including references to each individual right and
all of them;
The Company owns or has the right to use pursuant to licence,
sublicence, agreement or permission all Intellectual Property
reasonably necessary for the operation of its business as now
carried on. Except as indicated In the Disclosure Letter, each
Intellectual Property Right owned or used by the Company
immediately prior to Completion will be owned or available for
use by the Company on identical terms and conditions immediately
subsequent to the Completion.
Neither the Company nor any of the Company's employees has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property of third parties, nor has the Company ever received any
written charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company must license or refrain from using any Intellectual Property of
any third party). No third party has interfered with, infringed
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upon, misappropriated, or otherwise come into conflict with any of the
Intellectual Property Rights.
The Disclosure Letter describes the Intellectual Property Rights and
identifies each material licence, agreement, or other permission which the
Company has granted to any third party with respect to any of its Intellectual
Property. Except as disclosed in the Disclosure Letter, with respect to each
Intellectual Property Right:
the Company possesses all right, title, and interest in and to the right,
or has the valid right to use the Intellectual Property Rights, free and
clear of any lien, licence, or other restriction and to the extent that
any Intellectual Property has been developed or created by any person
other than the Company, the Company has a written assignment from such
person and the Company has obtained ownership of, and is the exclusive
owner of, all such Intellectual Property;
the right is not subject to any outstanding injunction, judgement, order,
decree, ruling, or charge;
no action, suite, proceeding, hearing, investigation, charge, complaint,
claim, or demand has been served or, to the knowledge of the Company, is
threatened which challenges the legality, validity, enforceability, use
or ownership of the right and
except for customary indemnification provided in connection with
agreements in the form previously provided by the Company to the
Purchaser in the contracts provided the Disclosure Letter, the Company
has not agreed to indemnify any person or third party for or against any
interference, infringement, misappropriation, or other conflict with
respect to the right.
The Disclosure Letter identifies each item of Intellectual Property that
any third party owns and that the Company uses in connection with its programs
referred to in paragraph 6 below. Except as disclosed in the Disclosure Letter,
with respect to each item of Intellectual Property identified in the Disclosure
Letter:
the licence, sublicence, agreement or permission is and will continue to
be legal, valid, binding, enforceable, and in full force and effect on
identical terms immediately following the consummation of the
transactions contemplated hereby (including any assignments or
assumptions required by the terms of any contract to which the Company is
a party);
neither the Company nor, to the knowledge of the Company, any other party
to the licence, agreement or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
no party to the licence, agreement or permission has repudiated any
material provision thereof;
to the knowledge of the Company, with respect to each sublicence, the
warranties set forth in paragraphs 5.1 to 5.3 above are true and correct
with respect to the underlying licence;
the Company has not granted any sublicence or similar right with respect
to the licence, sublicence, agreement or permission; and
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all the Company's products technology and services (including products
currently under development) and all of the Company's internal computer
and technology products and systems will record, store, process,
calculate and present calendar dates falling on and after (and if
applicable, spans of time including) January 1, 2000, and will calculate
any information dependent on or relating to such dates in the same
manner, and with same functionality, data integrity and performance, as
the products record, store, process, calculate and present calendar dates
on or before December 31, 1999, or calculate any information dependent on
or relating to such dates.
The Company is the sole legal and beneficial owner of the copyright in
the code for Rapport and the associated administration and operational programs,
Seminar Manager, Schedule Manager, Deal Manager, Fixed Income, Sales Manager,
Equity Sales Manager and Fund Manager.
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SCHEDULE 4
PART F
HEALTH AND SAFETY WARRANTIES
DEFINITIONS
"HEALTH AND SAFETY LEGISLATION"
means all applicable statutes, statutory instruments, common law,
treaties, regulations, directives, codes of practice, guidance
notes including but without limitation the Fire Precautions Act
1971 and the Health and Safety at Work etc Act 1974, the
Management of Health and Safety at Work Regulations 1992 and the
Workplace (Health Safety & Welfare) Regulations 1992 concerning
the health and safety of those who work for the Company whether as
employees or otherwise.
WARRANTIES
So far as the Principal Vendors are aware the Company has complied in all
material respects and continues to comply in all material respects with all
conditions, limitations, obligations, prohibitions and requirements contained in
any Health and Safety Legislation and so far as the Principal Vendors are aware
there are no facts or circumstances which are reasonably likely to lead to any
breach of any Health and Safety Legislation.
There have been no claims, investigations or proceedings against or
threatened against the Company or any of its directors, officers or employees in
respect of accidents, injuries, illness, disease or any other harm to the health
and safety of employees, contractors or any other persons caused by breaches of
Health and Safety Legislation and so far as the Principal Vendors are aware
there are no facts or circumstances which are reasonably likely to lead to any
such claims, investigations or proceedings.
The Company has and has maintained employers liability insurance and no
claims in respect of health and safety have been made or are contemplated under
such insurance policies.
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SCHEDULE 5
COMPLETION REQUIREMENTS
OBLIGATIONS OF THE VENDORS
At Completion the Vendors shall deliver to the Purchaser:
the Tax Deed duly executed under seal by the parties thereto (other than
the Purchaser);
duly executed transfers of the Shares in favour of the Purchaser or its
nominees and the share certificates in respect of the Shares together
with any power of attorney or other authority under which such transfers
have been executed;
a release executed under seal by each of the Vendors in the agreed form;
the statutory and other books duly written up to date, the Certificate of
Incorporation Certificates of Incorporation on Change of Name and common
seal of the Company;
the title deeds relating to the Premises and all insurance policies,
premium receipts, maintenance contracts and other documents relating to
the Premises;
all documents of title, certificates, deeds, licences, agreements and
other documents relating to the Company's Intellectual Property Rights
and all manuals, drawings, plans, documents and other materials and media
on which the Company's Know-How is recorded;
all books of account and other books and records and copies of the
Memorandum and Articles of Association of the Company;
letters of resignation from each of the Directors (other than Nicholas
Sedgwick) of the Company each of whom shall resign from all his offices
and employments with the Company with immediate effect after the
appointment of the Purchaser's nominees hereinafter mentioned and shall
at Completion deliver to the Purchaser a deed of acknowledgement in the
agreed form to the effect that he has no claim for any payment in respect
of redundancy or unfair dismissal or compensation for loss of office or
employment or any other claim or right of action against the Company;
statements showing the balances on all bank accounts of the Company at
the close of business on a date no earlier than two Business Days before
the Completion Date, together with a list of all sums received and
cheques drawn in excess of L.500 for any one item since that date;
the Non Disclosure Agreements duly executed by each of the relevant
Vendors;
(if so required by the Purchaser) irrevocable powers of attorney in the
original terms executed by each of the Vendors in favour of the Purchaser
to enable the Purchaser (pending registration of the Purchaser as the
holder of the Shares) to exercise all voting and other rights attaching
to the Shares and to appoint proxies for these purposes.
At Completion the Vendors shall procure that:
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the auditors of the Company shall resign their office in accordance with
Section 392 of the Companies Act (without any claim for compensation for
loss of office or otherwise) and that the notice of resignation so
deposited at the registered office of the Company shall bring to an end
the auditors' term of office on the Completion Date and contain a
statement in accordance with Section 394(1) of the Companies Act;
a board meeting of the Company be held at which:
it shall be resolved that the said transfers in respect of the
Shares be passed for registration subject only to them being
re-presented duly stamped;
all existing bank mandates shall be revoked and new instructions
to banks shall be given in such form as the Purchaser may require;
Messrs Arthur Andersen shall be appointed auditors of the Company;
Kevin Scully and Steve Webb shall be appointed additional
Directors of the Company;
the accounting reference date of the Company shall be changed to
31 December; and
the Variation Letters shall be approved and executed on behalf of
the Company;
all amounts owing to the Company by any of the Vendors or any of the
Directors or any Connected Person in relation to the Vendors, the
Directors or any of them shall be repaid in full; and
all the papers, books, records (in whatever medium) and all other assets
of the Company which are within the possession or under the control of
the Vendors, the Directors or any of them, or any Connected Person of the
Vendors the Directors or any of them are delivered to the Company.
OBLIGATIONS OF THE PURCHASER
On Completion the Purchaser shall:
deliver to the Vendors a counterpart of the Tax Deed duly executed by the
Purchaser; and
satisfy the consideration for the Shares as provided in Clause 3 of this
Agreement.
ESCROW
The Principal Vendors and the Purchaser shall sign the Escrow Instruction
Letter in duplicate and deliver one signed copy each to the Vendors' Solicitors
and the Purchaser's Solicitors.
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SCHEDULE 6
TAX DEED
DATE
PARTIES
(1) THE PERSONS whose names and addresses are set out in the Schedule hereto
("COVENANTORS"); and
NEW ERA OF NETWORKS LIMITED (Company Number: 3207149) the registered
office of which is situated at Ashgate House, Hazelmoor Lane, Gallowstree
Common, South Oxfordshire RG4 9D ("PURCHASER").
IT IS AGREED AS FOLLOWS:
DEFINITIONS AND INTERPRETATION
DEFINITIONS
In this Deed (including the Schedule):
"ACCOUNTS"
means the audited profit and loss account and balance sheet of the
Company as at the Accounting Date;
"ACCOUNTING DATE"
means 30 June 1997
"ACCOUNTING PERIOD"
has the meaning ascribed thereto in Section 12 Income and
Corporation Taxes Act 1988;
"AGREEMENT"
means the agreement of today's date between the Covenantors and
others as vendors and the Purchaser for the sale and purchase of
the Shares;
"ASSESSMENT"
includes any claim, assessment, notice, demand, letter,
counterclaim or other document issued or made, or action taken, by
or on behalf of any Tax Authority by virtue of which the Company
has, or is alleged to have, a Liability to Tax, or from which it
appears that the Company has, or will or may have, a Liability to
Tax, or
<PAGE> 57
from which it is sought to impose upon the Company a Liability to
Tax;
"BUSINESS DAY"
means any day which is not a Saturday, a Sunday or a bank or
public holiday in England and Wales;
"COMPANY"
means MENHIR LIMITED;
"CLAIM"
means any claim by the Purchaser against the Covenantors pursuant
to Clause 2;
"COMPLETION"
means completion of the sale and purchase of the Shares pursuant
to the Agreement;
"EVENT"
means any transaction (including entry into the Agreement or the
purchase or sale of an asset), act (including Completion the
migration of a company or the inclusion or exclusion of a Company
within a group of companies for any purpose), omission, receipt,
and distribution and failure to make sufficient distributions to
avoid an apportionment or deemed distribution of income and any
combination of two or more such occurrences;
"LIABILITY TO TAX"
means (i) a liability to pay Tax and (ii) such sums treated as
being a liability to Tax in Clause 1.3;
"RELIEF"
includes any relief, loss, allowance, exemption, set-off,
deduction or credit in respect of any Tax, or any set-off or
deduction in computing income, profits or gains for the purposes
of any Tax;
"SHARES"
means 2,109 Ordinary shares of L.1.00 each in the share capital
of the Company;
"TAX"
means all taxes, duties, levies, imposts, charges and withholdings
of any nature whatsoever, whether created or imposed in the United
Kingdom or elsewhere and at whatever time created or imposed which
are collected and administered by any Tax Authority acting as such
and includes:
(a) within the United Kingdom, income tax, corporation tax,
advance corporation tax, capital gains tax, value added
tax, customs' duties
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(including import duties, excise duties), capital duty,
stamp duty, stamp duty reserve tax, inheritance tax,
national insurance contributions, and any other forms of
taxes, duties, levies, imposts, charges or withholdings
similar to or supplementing or replaced by or replacing the
foregoing or any of them; and
(b) outside the United Kingdom, any liability to any taxes,
levies, duties, imposts, charges and withholdings of any
nature whatsoever, including (without limitation) taxes on
gross or net income, taxes on profits or gains and taxes on
receipts, sales, use, occupation, franchise, value added,
and personal property,
in all cases together with all incidental or supplemental
penalties, charges, interest, fines and default surcharges and
costs;
"TAX AUTHORITY"
means any taxing or other authority (whether within or outside the
United Kingdom) competent to impose, administer or collect any
Tax;
In this Deed:
references to the loss of a Relief or of a right to repayment of Tax
include references to the loss, withdrawal, nullifying or cancellation of
a Relief or of a right to repayment of Tax;
references to the utilisation of a Relief or of a right to repayment of
Tax include references to the utilisation or setting off of a Relief or
of a right to repayment of Tax; and
references to the loss or utilisation of a Relief shall be construed
accordingly.
Subject to Clause 1.4 there shall be treated as an amount equal to a
"Liability to Tax" which arises as a result of an Event occurring on or before
Completion:
any amount of Relief arising prior to Completion which has been taken
into account in computing, or in obviating the need for, any provision
for Tax or deferred tax in the Accounts which is not available to the
Company;
all or any part of a right to repayment of Tax which has been treated as
an asset of the Company in the Accounts or which has been taken into
account in computing, or in obviating the need for, any provision for Tax
or deferred tax in the Accounts which is not available to the Company;
any amount of consideration for Relief surrendered pursuant to an
agreement made on or before Completion which the Company is obliged to
pay or repay.
In any case falling within Clause 1.3 the amount that is to be treated
for the purposes of this Deed as a Liability to Tax of the Company (the "DEEMED
TAX LIABILITY") shall be determined as follows:
in a case which falls within Clause 1.3.1 where the relevant Relief
consisted of a deduction from or offset against Tax, the Deemed Tax
Liability shall be the amount of that deduction or offset;
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in a case which falls within Clause 1.3.1 where the relevant Relief
consisted of a deduction from or offset against income, profits or gains,
the Deemed Tax Liability shall be, if the Relief is not available the
amount of Tax which is payable and which would have been saved had such
Relief been available.
in a case falling within Clause 1.3.2 the Deemed Tax Liability shall be
the amount of such repayment of Tax or part thereof.
in a case falling within 1.3.5 the Deemed Tax Liability shall be the
amount which the Company is required to pay.
In this Deed references to an Event occurring on or before Completion
shall be deemed to include any combination of two or more Events the first of
which has taken place or took place on or before Completion provided that any
Event taking place before Completion occurred outside the ordinary course of
business of the Company and provided further that any Event taking place after
Completion takes place within the ordinary course of business of the Company.
Words and expressions (if any) which are defined in the Agreement and
which are not expressly defined in this Deed, and rules of interpretation which
are provided for in the Agreement and which are not otherwise expressly provided
for in this Deed, shall have the same meaning in and shall apply to this Deed
and shall be deemed to be incorporated in this Deed.
Words and expressions (if any) neither defined in this Deed nor in the
Agreement but which are defined or used in any legislation relating to Tax which
is relevant in the context shall have the same meaning in this Deed as they have
in such legislation.
In this Deed:
references to income, profits or gains accrued, or being earned or
received, on or before a particular date or in respect of a particular
period shall include any profits deemed for Tax purposes to have accrued,
or to have been earned or received, on or before that date or in respect
of that period; and
references to "INCOME, PROFITS OR GAINS" shall include receipts, value
and any other criterion used in establishing the incidence of any Tax or
measure in establishing the amount of any Liability to Tax.
In this Deed unless the context otherwise requires words importing the
singular only shall include the plural and vice versa, words importing the
masculine gender only shall include the feminine gender and vice versa, and
words importing natural persons only shall include corporations, unincorporated
associations and partnerships and vice versa.
Unless otherwise stated references to any Clause or Schedule is a
reference to the appropriate clause of or schedule to this Deed.
Clause headings are for convenience only and accordingly shall be
disregarded in interpreting this Deed.
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COVENANT
Subject as hereinafter provided the Covenantors hereby severally covenant
with the Purchaser as follows:
to pay to the Purchaser an amount equal to any Liability to Tax of the
Company which arises as a consequence of or by reference to:
any Event occurring on or before Completion; or
any income, profits or gains which accrued, or which were earned
or received, on or before Completion or in respect of a period
ending on or before Completion,
in each case whether or not such Liability to Tax is also
chargeable against or attributable to any other person.
to pay to the Purchaser from time to time amounts equal to any costs and
expenses reasonably incurred by the Purchaser or the Company in
connection with any Liability to Tax as is referred to in clause 2.1.1 or
any Claim of in taking or defending any action pursuant to this Deed.
Each of the covenants contained in paragraphs (a) and (b) of clause 2.1.1
shall be construed as giving rise to separate and independent obligations and
shall not be restricted by the other save that (for the avoidance of doubt) any
payment by the Convenantors in respect of a liability under one covenant shall
pro tanto discharge any liability under the other so far as it arises from the
same subject matter.
LIMITATIONS
EXCLUSIONS
The Covenantors shall not be liable under Clause 2 in relation to any
Liability to Tax of the Company:
to the extent that provision or reserve in respect of such Liability to
Tax was made in the Accounts (not being a provision or reserve for
deferred tax) or such liability to Tax was taken into account in
calculating any such provision or reserve; or
to the extent that provision or reserve made in the Accounts is
insufficient only by reason of any increase in rates of Tax or change in
Tax law or the published practice of any Tax Authority announced or
taking effect after the date of the Accounts with retrospective effect;
or
if and to the extent that such Liability to Tax arises in consequence of
an Event which has occurred since the Accounting Date in the ordinary
course of the business of the Company; or
to the extent that such Liability to Tax having previously been provided
for in audited accounts of the Company was discharged before Completion;
or
to the extent that any claim arising therefrom may be satisfied or
mitigated by the utilisation of the Reliefs of the Company at the date
hereof on the basis that such Reliefs shall to
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the extent possible be utilised first to satisfy any claim for Tax that
would otherwise be subject to the indemnity given by this Deed before
being utilised to satisfy any other Tax liability of the Company; or
to the extent that the Purchaser or the Company recovers in respect of
such Tax liability from a person or persons other than the Covenantors
provided that Clause 6.8 of the Agreement shall apply for the purposes of
this Clause 3.1.6 as it does for the purposes of a Claim; or
to the extent that such liability arises or is increased or any provision
or reserve in respect thereof in the Accounts is insufficient as a
consequence of any failure or delay by the Purchaser or the Company in
complying with the provisions of this Deed or the Agreement; or
to the extent that it would not have arisen or would have been reduced or
eliminated but for the failure or omission on the part of the Company or
the Purchaser after Completion to make any valid claim, election,
surrender or disclaimer or to give any valid notice, the making or giving
of which was taken into account in computing the provisions for Tax in
the Accounts; or
to the extent that it would not have arisen but for the voluntary act or
omission after Completion of the Company, the Purchaser, any member of
the Purchaser's Group or any of their respective employees, directors,
officers, agents after the date of this Deed outside the ordinary course
of business of the Company; or
to the extent that the liability concerns national insurance
contributions payable with reference to or in respect of options granted
or shares allotted or issued on the exercise of options granted under the
Menhir Unapproved Share Option Scheme (either in its original form or as
amended); or
to the extent that it would not have arisen or would have been reduced or
eliminated but for any change in accounting policy or practice of the
Purchaser, any member of the Purchaser's Group or of the Company
introduced or having effect after the date of the Agreement; or
to the extent that it would not have arisen or would have been reduced or
eliminated but for any cessation, diminution or alteration of the
Company's trading activities or business occurring after the date of this
Agreement;
to the extent that it would not have arisen or would have been reduced or
eliminated but for the payment of any unusual or abnormal dividend after
Completion.
TIME LIMITS FOR MAKING CLAIMS
No Claim shall be made unless notice of such Claim is given to the
Covenantors by the Purchaser within seven years from the date of this Deed.
CONDUCT OF CLAIMS
Upon whichever is the earlier of the Purchaser becoming aware of, or the
Company receiving, any Assessment which does or may give rise to a Claim the
Purchaser shall within 21
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days thereof give notice of such Assessment to the Covenantors. Such notice
shall contain such particulars of or relating to the Assessment as the
Purchasers can reasonably provide.
If the Covenantors shall indemnify the Company and the Purchaser to their
reasonable satisfaction against any additional Tax, and against any reasonable
charges, costs and expenses properly incurred by the Company and the Purchaser,
the Company and the Purchaser shall subject to the following sub-clauses take
such action as the Covenantors may reasonably request to avoid, dispute, resist,
appeal, compromise, or defend such Assessment ("THE COVENANTORS' ACTION").
Neither the Purchaser nor the Company shall be obliged to appeal against
any Assessment if, having given the Covenantors notice of the receipt of that
Assessment, it has not within fifteen Business Days received instructions in
writing from the Covenantors in accordance with the preceding provisions of this
clause to make that appeal.
Neither the Purchaser nor the Company shall be obliged to take any action
or further action under this clause in respect of any Assessment if any of the
Covenantors, or the Company prior to its being in the ownership of the
Purchaser, has committed acts or omissions which constitute fraud in relation to
Tax.
Neither the Purchaser nor the Company shall be obliged to continue any
action under this Clause 4 if within a reasonable period of being requested to
provide the same the Covenantors do not provide such security as the Purchaser
may reasonably require for the Tax the subject of the Claim and any other sums
referred to in Clause 4.2.
Neither the Purchaser nor the Company shall be obliged to take any action
under this clause 4 which involves continuing the Covenantors' Action or
contesting any Assessment before any court or other appellate body (excluding
the Tax Authority demanding the Tax in question) unless the Covenantors furnish
the Purchaser with the written opinion of Tax Counsel of at least seven years
standing (chosen by the Covenantors) to the effect that an appeal against the
Assessment in question will, on the balance of probabilities, be won.
The Purchaser and the Company shall be at liberty without reference to
the Covenantors to admit, compromise, settle, discharge or otherwise deal with
any Assessment after whichever is the earliest of:
the Purchaser or the Company being notified by any of the Principal
Vendors' Representative that they consider the Assessment should no
longer be resisted;
if appropriate, the expiration of any period prescribed by applicable
legislation for the making of an appeal against either the Assessment or
the decision of any court or tribunal in respect of any such Assessment,
as the case may be.
The Covenantors shall be bound to accept for the purposes of this Deed
any admission, compromise, settlement or discharge of any Assessment and the
outcome of any proceedings relating thereto made or arrived at in accordance
with the provisions of this clause 4.8.
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TAX RETURNS
The Covenantors or their duly authorised agents shall prepare the tax
returns of the Company for all accounting periods ended on or prior to the
Accounting Date, to the extent that the same shall not have been prepared before
Completion.
The Purchaser shall procure that the Company shall cause the returns
mentioned in clause 5.1 to be authorised, signed and submitted to the
appropriate Tax Authority without amendment or with such amendments as the
Purchaser shall reasonably require, and shall give the Covenantors or their
agents all such assistance as may be required to agree those returns with the
appropriate Tax Authority PROVIDED THAT the Purchaser and the Company shall not
be obliged to take any such action as is mentioned in this clause in relation to
any tax return that is not full, true and accurate in all material respects.
The Covenantors or their duly authorised agents shall prepare all
documentation and deal with all matters (including correspondence) relating to
the tax returns of the Company for all accounting periods ended on or prior to
the Accounting Date and the Purchaser shall procure that the Company shall
afford such access to its books, accounts and records as is necessary and
reasonable to enable the Covenantors or their duly authorised agents to prepare
those returns and conduct matters relating thereto in accordance with the
Covenantors' rights under this clause provided that the Covenantors shall keep
the Purchaser fully informed of all such dealings and shall obtain the
Purchasers prior written approval (not to be unreasonably withheld or delayed)
to the sending and content of all written communications to be communicated to
the appropriate Tax Authority.
Nothing done by the Purchaser or the Company pursuant to this clause
shall in any respect restrict or reduce any rights which the Purchaser may have
to make a Claim against the Covenantors.
DUE DATE FOR PAYMENT
Where the Covenantors become liable to make any payment pursuant to
clause 2, the due date for the making of that payment shall be:
in a case that involves an actual payment of Tax by the Company, the date
that is three Business Days before the later of the date on which such
Tax is actually to be paid by the Company (after taking account of any
postponement thereof) and the date 30 days after the receipt by the
Company of a demand for that Tax from the relevant Tax Authority.
in a case where the Tax liability giving rise to a claim under this Deed
does not involve an actual payment of Tax:
if involving the denial or loss or setting off in whole or in part
of a Relief which is a right to repayment of Tax, the date on
which such Tax would otherwise have been repaid;
if involving the denial of loss of any other Relief within clause
1.3 the date on which the Tax that would otherwise have been saved
becomes due and payable to the relevant Tax authorities;
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If any payment required to be made by the Covenantors under this Deed is
not made by the due date then that payment shall carry interest from
that due date until the date when the payment is actually made at the
rate of two per cent above the base rate from time to time of Midland
Bank Plc.
DEDUCTIONS FROM PAYMENTS
All sums payable by the Covenantors to the Purchaser under this Deed
shall be paid free and clear of all deductions or withholdings whatsoever, save
only as may be required by law.
If any deduction or withholding in respect of Tax or otherwise is
required by law to be made from any of the sums payable as mentioned in clause
7.1, the Covenantors shall be obliged to pay to the Purchaser such greater sum
as will, after such deduction or withholding as is required to be made has been
made, leave the Purchaser with the same amount as it would have been entitled to
receive in the absence of any such requirement to make a deduction or
withholding.
If any sum (other than interest under Clause 6.2 above) (the "FIRST SUM")
payable by the Covenantors to the Purchaser under this Deed shall be subject to
Tax in the hands of the Purchaser (or would have been taxable in the hands of
the Purchaser assuming that the Purchaser had sufficient taxable profits to use
all Reliefs available to it in the Accounting Period in which it receives a sum
hereunder) then the Covenantors shall pay to the Purchaser (as often as shall be
necessary) such additional sum or sums as will after such Tax (and any Tax on
such additional sum or sums) but after taking account of any credit available to
the Purchaser in respect of any such Tax leave the Purchaser with such amount as
the Purchaser would have been left with had the first sum not been subject to
Tax in the hands of the Purchaser.
All sums payable by the Covenantors under this Deed are to be paid in the
currency or currencies appropriate to the Assessment as a result of which the
liability to make a payment of Tax has arisen.
The Purchaser may direct the Covenantors to pay to the Company any sums
due to the Purchaser under this Deed and such payment shall be treated as a
payment to the Purchaser and not a payment to the Company.
SET-OFF
If on or before the date of any payment becoming due from the Covenantor
pursuant to the provisions of this Deed, the auditors for the time being of the
Company shall have certified (at the request and expense of the Covenantor) that
any specific provision for Tax contained in the Accounts (not being one already
taken into account under clause 3.2.2) is an over provision, the amount of such
over provision as certified by the auditors for the time being of the Company at
the request and expense of the Covenantor) shall be set off first against the
payment then due from the Covenantor under this Deed and secondly (to the extent
of any excess) against any such further payment or payments in chronological
order until the amount or value has been exhausted PROVIDED THAT if
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it shall be found subsequently that any such over provision or corresponding Tax
saving either did not exist or arise or the certified value thereof was
excessive, any amount which has been set off against such part of the over
provision or corresponding Tax saving as is found not to exist or to be
excessive shall forthwith on demand be paid by the Covenantor to the Purchaser.
If the Company recovers from a third party (including a competent
authority for Tax purposes) any sum in respect of a liability to Tax for which a
claim could or has been made against the Covenantor pursuant to this Deed, the
amount so recovered, together with any interest thereon paid by such third party
less any tax chargeable on the Company in respect of such sum or interest and
less the costs incurred by the Company or the Purchaser in effecting such
recovery shall:
if the Covenantor has at the time of the recovery made payment pursuant
to this Deed in respect of that Tax liability, be paid forthwith to the
Covenantor to the extent not exceeding the amount so paid by the
Covenantor;
if a claim has been made against the Covenantor pursuant to this Deed in
respect of that Tax liability but the Covenantor has not at the time of
recovery made payment in respect thereof, be set against and reduce pro
tanto the claim against the Covenantor in respect of such Tax liability;
to the extent that no claim has been made against the Covenantor in
respect of that and/or any other Tax liability at the time of the
recovery, be set against and reduce pro tanto any claim that subsequently
may be made against the Covenantor in respect of such and/or such other
Tax liability.
The Purchaser shall have no liability to account to the Covenantor
pursuant to Clause 8.2.1 for any sum so recovered to the extent that at the time
of such recovery any other payment is due from the Covenantor under this Deed or
under the Agreement in which case the sum so recovered shall be set against the
discharge the then outstanding liabilities of the Covenantor and the excess (if
any) of the sum thereafter remaining shall, to the extent that it does not
exceed the amount paid by the Covenantor in respect of that Tax liability, be
paid forthwith to the Covenantor.
RELEASE OF COVENANTORS
The Purchaser may release, or compromise the liability of, any Covenantor
or grant time or other indulgence to any Covenantor without releasing or
reducing the liability of the other Covenantors. Where a liability of one of the
Covenantors under any obligation which is both joint and several is released or
compromised, the remaining Covenantors shall continue to be severally liable in
respect of that obligation.
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GOVERNING LAW
This Deed shall be governed by and construed in all respects in
accordance with the laws of England and the parties hereby submit themselves to
the non exclusive jurisdiction of the English Courts for such purpose.
NOTICES
Any notice required or permitted to be given by or under this Deed may be
given by delivering the same to the party in question in person or in the case
of a body corporate by delivering it to its registered office for the time being
or by sending it in a pre-paid envelope by first-class mail to the party
concerned at his or its address shown in this Deed or to such other address as
the party concerned may have notified to the other and any such notice shall be
deemed to be served in the case of personal service at the time of delivery to
the party concerned and in any other case 48 hours after the time at which it is
put in the post and in proving such service it shall be sufficient to prove that
the notice was properly addressed and posted.
The provisions of clause 12 of the Agreement shall also apply to this
Deed; provided always that any assignment by the Purchaser shall not operate or
have effect to increase the liability of the Covenantors under this Deed and in
particular, but without prejudice to the generality of the foregoing provision
in this proviso, the Covenantor's liability under Clause 7 shall at all times be
determined as if such assignment had taken place.
IN WITNESS whereof this Deed has been duly executed the day and year
first before written.
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THE SCHEDULE
NAMES AND ADDRESSES OF THE COVENANTORS
Mark Harrison
Flat 3
10 Gloucester Walk
London W8 4HZ
Nicholas Sedgwick
Greyfern Cottage
Lords Hill Common
Shamley Green
Guildford
Surrey GU5 0UZ
John Fotheringham
17 Kent Road
East Molesey
Surrey KT8 9JZ
Robin Gridley
9 Grovelands Road
Purley
Surrey CR8 4LB
James Perkins
Summerfield House
Upper Wield
Alton
Hampshire SO24 9RT
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SIGNED by Mark Harrison
by his attorney John Fotheringham JOHN FOTHERINGHAM
in the presence of:
SUSAN BALL
SUSAN Ball
as under
SIGNED by Nick Sedgwick NICK SEDGWICK
in the presence of:
SUSAN BALL
SUSAN BALL
51 Eastcheap EC3M 1JP
Solicitor
SIGNED by Aidan Paul A R PAUL
in the presence of:
M Cowan
90 Long Acre
London WC2E 9TT
Solicitor
SIGNED by John Fotheringham JOHN FOTHERINGHAM
in the presence of:
SUSAN BALL
SUSAN BALL
as aforesaid
SIGNED by Robin Gridley ROBIN GRIDLEY
in the presence of:
SUSAN BALL
as aforesaid
SUSAN BALL
SIGNED by James Perkins JAMES PERKINS
in the presence of:
SUSAN BALL
SUSAN BALL
as aforesaid
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SIGNED by Fiona Scott-Smith FIONA SCOTT-SMITH
in the presence of:
SUSAN BALL
SUSAN BALL
51 Eastcheap EC3M 1JP
Solicitor
SIGNED by Michael Clwyd Probert M C PROBERT
in the presence of:
SUSAN BALL
SUSAN BALL
51 Eastcheap EC3M 1JP
Solicitor
SIGNED by Stuart Gunn STUART N. GUNN
in the presence of:
SUSAN BALL
SUSAN BALL
as aforesaid
SIGNED by Graham Alcock GRAHAM ALCOCK
in the presence of:
SUSAN BALL
SUSAN BALL
as aforesaid
SIGNED by Kevin Scully on behalf KEVIN SCULLY
of New Era of Networks Limited
in the presence of:
ROSEMARY MARTIN-JONES
Nabarro Nathanson
Abbot's House
Abbey Street
Reading RG1 3BD
Solicitor
66
