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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) June 12, 1998.
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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 June 12, 1998, New Era of Networks, Inc., a Delaware corporation
(the "Company"), acquired all the outstanding capital stock of MSB Consultants
Limited, a corporation organized under the laws of the United Kingdom ("MSB"),
by means of a Share Purchase Agreement (the "Purchase Agreement") by and among
MSB, the shareholders of MSB, and the Company. The aggregate consideration paid
by the Company was $4.8 million, of which $1.2 million was paid in cash and $3.6
million was paid in unregistered shares of common stock of the Company. In
addition, unregistered shares having a total value of $3,000,000 may be awarded
to shareholders of MSB upon the achievement of certain performance targets. 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 acquisition of all the capital stock of MSB,
10% of the shares of common stock of the Company otherwise issuable to MSB and
$120,000 of the cash consideration otherwise payable in connection with the
acquisition (the "Escrow Amount") were placed into escrow, to be held as
security for any losses incurred by the Company in the event of certain breaches
of the warranties contained in the Purchase Agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Financial Statements of Businesses Acquired.
None required.
(b) Pro forma financial information.
None required.
(c) Exhibits.
2 Share Purchase Agreement dated June 12, 1998.
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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/ STEPHEN E. WEBB
------------------------------------------
Stephen E. Webb, Senior Vice President and
Chief Financial Officer
Date: June 26, 1998
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NEW ERA OF NETWORKS, INC.
CURRENT REPORT ON FORM 8-K
INDEX TO EXHIBITS
Exhibit No. Description
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2 Share Purchase Agreement dated June 12, 1998.
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EXHIBIT 2
DATED 12 JUNE 1998
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GERARD BUGGY AND OTHERS
AND
NEW ERA OF NETWORKS, INC.
------------------------------------------------
AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE
ISSUED SHARE CAPITAL
OF MSB CONSULTANTS LIMITED
------------------------------------------------
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EXHIBIT 2
THIS AGREEMENT is made as a deed on 12 June 1998
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Column 1 of
Schedule 1 ("VENDORS"); and
(2) NEW ERA OF NETWORKS, INC. whose principal place of business is at
7400 East Orchard Road, Suite 230, Denver, Colorado 80111, U.S.A.
("PURCHASER");
NOW THIS DEED WITNESSES AS FOLLOWS:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and (save as provided in Clause 1.6) in the
Schedules the following words and expressions shall have the
following meanings unless the context otherwise requires:
"ACCOUNTING DATE" means the Last Accounting Date and/or
30 April 1996;
"ACCOUNTS" means the Last Accounts and the audited
accounts of the Company comprising a
balance sheet as at 30 April 1996, a profit
and loss account for the fiscal year ended
on 30 April 1996, 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;
"ALT" means ALT Systems LLC, a corporation
incorporated under the laws of Delaware,
US, fifty one percent (51%) of the issued
share capital of which is legally and
beneficially owned by the Company;
"BUSINESS DAY" means any day which is not a Saturday, a
Sunday or a bank or public holiday in
England and Wales and/or the US;
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"COMPANIES ACT" means the Companies Act 1985;
"COMPANY" means MSB Consultants Limited, brief
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 8 and Schedule 5;
"COMPLETION DATE" means the date of this Agreement;
"CONFIDENTIAL
INFORMATION" means any and all confidential information
and/or secret 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 and/or services including
(without limitation) customer names and
lists, sales targets, 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;
"CONSIDERATION" means the consideration described in Clause
3.1;
"CONSIDERATION SHARES" means collectively the Purchase Shares
and/or the Earn- Out Shares;
"DIRECTORS" means the persons listed as directors of
the Company in Schedule 2;
"DISCLOSED" means fairly disclosed to the Purchaser in
the Disclosure Letter;
"DISCLOSURE LETTER" means a letter of even date from the
Vendors to the Purchaser in an agreed form;
"EARN-OUT shall have the meaning ascribed thereto in
Clause SHARES"3.1(c);
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<TABLE>
<S> <C>
"EMPLOYEE STOCK means the employee stock option letter to
OPTION LETTER" be delivered by the Purchaser to the Vendors
in accordance with this Agreement in
substantially the form set out in Schedule 10;
"ENCUMBRANCE" means a mortgage, charge, pledge, lien,
assignment, right to acquire, option,
restriction, right of first refusal, right
of pre-emption, third party right or
interest, title retention or any other
encumbrance, equity, adverse right or
interest, claim or security interest of any
kind whatsoever or another type of
preferential arrangement (including without
limitation a title transfer and/or
retention arrangement) having similar
effect;
"ESCROW AGENT" means the escrow agent named and defined as
such in the Escrow Agreement;
"ESCROW AGREEMENT" means an agreement to be entered into and
made between the Purchaser and the Vendors
in the agreed form;
"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;
"INITIAL CONSIDERATION" shall have the meaning ascribed thereto in
Clause 3.1(a);
"INTELLECTUAL PROPERTY" means any or all of the following and all
rights in, arising out of, or associated
therewith: (i) all patents and applications
therefor; (ii) all inventions (whether
patentable or not), 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;
(iv)
</TABLE>
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all industrial designs and any
registrations and applications therefor;
(v) all trade names, logos, common law
trademarks and service marks; (vi)
trademark and service mark registrations
and applications therefor and all goodwill
associated therewith; (vii) all databases
and data collections; 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;
"INVESTOR" means a holder of securities listed or
quoted on the Official List of the London
Stock Exchange or 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
five (5) per cent of the class of
securities of which the said holding forms
part;
"LAST ACCOUNTS" means the audited accounts of the Company
comprising a balance sheet as at 30 April
1997, a profit and loss account for
the fiscal year ended on 30 April 1997, the
notes thereto and the Directors' and
Auditors' reports thereon;
"LAST ACCOUNTING DATE" means 30 April 1997;
"MR BUGGY" means Gerard Buggy;
"MR MANZIE" means Roderick Manzie;
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"MR MARTIN" means George Henry Martin;
"MR STRASZYNSKI" means Phillip Straszynski;
"PREMISES" means the premises of the Company short
particulars of which are set out in
Schedule 3;
"PRODUCTS" means products (including without
limitation computer software) of a type
which within the twelve (12) months
immediately preceding 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" (excepting only in relation to Clause
11) means the Purchaser and any
subsidiary or holding company of the
Purchaser and any subsidiary of such
holding company;
"PURCHASE SHARES" shall have the meaning ascribed thereto in
Clause 3.1(b);
"PURCHASER'S SOLICITORS" means Clyde & Co of 51 Eastcheap, London
EC3M 1JP;
"QUARTER OR QUARTERLY" means a calendar quarter namely, 1
January to 31 March, 1 April to 30
June, 1 July to 30 September and/or 1
October to 31 December;
"RELEVANT VALUE" in respect of a Purchase Share means the
value of such Purchase Share determined in
accordance with Clause 3.1(b) and, in
respect of an Earn-Out Share, means the
value of such Earn-Out Share (determined in
accordance with Clause 3.1(c)) on the date
of issue thereof to the relevant Vendor;
"RESTRICTED AREA" means Europe;
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"RESTRICTED PERSON" means any person who at the Completion Date
or during the period of twelve (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;
"SERVICE AGREEMENT
SIDE LETTER" means the side letter in the agreed form to
be entered into between the Purchaser and
each of the Vendors related to the service
agreements to be granted to them;
"SERVICES" means services of a type which within the
twelve (12) months immediately preceding
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;
"SHARES" means the issued 12,000 ordinary shares of
,1 each in the capital of the Company,
being the entire issued share capital of
the Company as at Completion;
"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;
"SUPPLEMENTAL AGREEMENT" means any deed or document to be entered
into pursuant to, or expressly contemplated
by, this Agreement (including without
limitation the Tax Deed and the Escrow
Agreement);
"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;
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"TAX DEED" means a deed between the 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;
"UNAUDITED ACCOUNTS" means the unaudited accounts of the Company
attached as Schedule 7 comprising a balance
sheet as at 30 April 1998 and a profit and
loss account for the fiscal year ended on
30 April 1998;
"US" means the United States of America;
"VAT" means Value Added Tax;
"VAT ACT 1994" means the Value Added Tax Act 1994;
"VENDORS' ACCOUNTANTS" means Freeman & Partners or such other
accountants as may be appointed by the
Vendors from time to time;
"VENDORS' SOLICITORS" means S J Berwin & Co of 222 Grays Inn
Road, London, WC1X 8HB; and
"WARRANTIES" means the warranties set out in Schedule 4.
1.2 The Schedules are deemed to be incorporated in this Agreement, and a
reference to "THIS AGREEMENT" includes a reference to the Schedules.
1.3 In this Agreement:
1.3.1 the clause headings are included for convenience only and
shall not affect the construction of this Agreement;
1.3.2 words denoting the singular shall include the plural and
vice versa;
1.3.3 words denoting any gender shall include a reference to
each other gender; and
1.3.4 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).
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1.4 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.
1.5 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 whether before or after 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; provided however, that no liability
of the Vendors under this Agreement shall be created, increased or
extended by any such amendment, consolidation, extension or
re-enactment after the date hereof.
1.6 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.
2 AGREEMENT TO SELL AND PURCHASE
Each of the Vendors agrees to sell with full title guarantee such of
the Shares as are set out opposite his name in Column 2 of Schedule 1
to the Purchaser and the Purchaser agrees to purchase the Shares, in
each case free from all Encumbrances and together with all benefits
and rights now attached or accruing thereto and the right to receive
all dividends declared and other distributions made or paid on or
after the date of this Agreement 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.
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3 CONSIDERATION
3.1 The aggregate consideration payable by the Purchaser to the Vendors
in respect of the sale and purchase of the Shares shall be as
follows:
(a) a total cash sum of US$1,200,000 ("the Initial
Consideration"), apportioned between the Vendors as set
out in Column 3 of Schedule 1, payable in accordance with
Clause 3.2(a) and Clause 3.2(c). For the avoidance of
doubt, US$120,000, being ten percent (10%) of the Initial
Consideration ("the Escrow Cash"), shall be delivered into
escrow at Completion in accordance with Clause 3.2(c);
(b) unregistered shares in the common stock of the Purchaser
having a total value of US$3,600,000, the number of shares
to be determined by dividing US$3,600,000 by (i) the
average closing price for such shares for the thirty (30)
Business Days immediately preceding the Completion Date as
derived from the last trade reported by NASDAQ on each of
such thirty (30) Business Days or (ii) US$26.00, whichever
is lower (collectively, "the Purchase Shares"), allotted
and newly issued to the Vendors in accordance with their
respective proportional entitlements as set out in Column
4 of Schedule 1 and in accordance with Clause 3.2(b). Ten
percent (10%) of the Purchase Shares ("the Escrow Shares")
shall be delivered into escrow upon their issue in
accordance with Clause 3.2(c);
(c) unregistered shares in the common stock of the Purchaser
having a total value of US$3,000,000 ("the Earn-Out
Shares") may be awarded to the Vendors in accordance with
this Clause 3.1(c) and will be valued for the purposes of
any such award at the time that such award is made in
accordance with this Clause 3.1(c).
A percentage of the Earn-Out Shares may be awarded to the
Vendors (in proportion to their respective holdings of
Shares as set out in Column 2 of Schedule 1), based on
attainment of the performance objectives set out below in
each of the periods 1 July 1998 to 30 June 1999 ("the
First Year" or "Year 1") and 1 July 1999 to 30 June 2000
("the Second Year" or "Year 2").
The performance objectives shall be based on the US dollar
contribution ("Contribution") from:
(i) the sales of the software products by the
Company and any successor acting as seller of
such software products ("the Earn-Out
Products") in respect of which the Contribution
shall comprise any and all [product license
revenues] (as determined in accordance with US
GAAP) for the Earn-Out Products ("Revenues"),
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(aa) less any royalties, commissions and
bonuses and/or any other direct
costs specifically attributable to
goods sold associated with the
Revenues; and
(bb) less any research and development
expenses;
! in excess of 30% of the Revenues in
respect of the First Year; and
! in excess of 25% of the Revenues in
respect of the Second Year; and
(ii) In addition, fifty percent (50%) of the revenue
(as determined in accordance with US GAAP)
recognised by the Company and any successor of
any part of its business from Utility Company
either directly or indirectly in each of the
First Year and the Second Year for the Year in
which it is recognised.
The Contribution goal ("Contribution Goal") for
the First Year shall be US$1,700,000. The
Contribution Goal for the Second Year shall be
US$2,120,000.
In the First Year, Earn-Out Shares to a maximum
aggregate value of US$1,500,000 may be awarded
to the Vendors. The number of Earn-Out Shares
(if any) to be awarded to the Vendors in
respect of each Quarter during the First Year
shall be calculated on each of 30 September
1998, 31 December 1998, 31 March 1999 and 30
June 1999 by dividing the cumulative Earn-Out
achieved as defined by the table set forth
below (less any Earn-Out from prior Quarters
for which Earn-Out shares have been previously
awarded), by the average closing price for the
Earn-Out shares for the thirty (30) Business
Days immediately preceding the Quarterly Date
in question, as derived from the last trade
reported by NASDAQ on each of such thirty (30)
Business Days.
In the Second Year, Earn-Out Shares to a
maximum aggregate value of the remaining
US$1,500,000 may be awarded to the Vendors. The
number of Earn-Out Shares (if any) to be
awarded to the Vendors in respect of each
Quarter during the Second Year shall be
calculated on each of 30 September 1999, 31
December 1999, 31 March 2000 and 30 June 2000
by dividing the cumulative Earn-Out achieved as
defined in the table set forth below (less any
Earn-Out from prior Quarters during the Second
Year for which Earn-Out Shares have been
previously awarded), by the average closing
price for the Earn-Out Shares for the thirty
(30) Business Days immediately preceding the
Quarterly date in question, as derived from the
last trade reported by NASDAQ on each of such
thirty (30) Business Days. Credit shall be
given in
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Year 2 for any Year 1 Contribution in excess of
the US$1,700,000 First Year Contribution Goal.
One hundred percent (100%) of the Earn-Out
Shares will be awarded if both Contribution
Goals specified above are met or exceeded. In
respect of each Contribution Goal, a partial
payment will be made based on achievement of
more than 60% of such Contribution Goal, as
detailed in the following table. In between the
percentage achievement of Contribution Goals
referred to in the left hand column of the
table below, payouts will be extrapolated pro
rata to the sums set out in the right hand
column.
<TABLE>
<CAPTION>
Cumulative Annual Contribution Earn-out
------------------------------ --------
% Year 1 Year 2 % Year 1/Year 2*
- ------ ------ - -------------
<S> <C> <C> <C> <C>
60 US$1,020,000 US$1,272,000 | 0 0
70 US$1,190,000 US$1,484,000 | 25 US$375,000
80 US$1,360,000 US$1,696,000 | 50 US$750,000
90 US$1,530,000 US$1,908,000 | 75 US$1,125,000
100 US$1,700,000 US$2,120,000 | 100 US$1,500,000
</TABLE>
*In shares, the number of shares determined with reference
to the closing price during the thirty (30) day period up
to the last trading day of the Quarter in which shares are
earned. In-between amounts will be extrapolated.
Example: Contribution in the first Quarter of Year 1 is
US$1,250,000. The Earn-Out amount is extrapolated to be
US$507,353. In the second Quarter of Year 1, cumulative
Year 1 Contribution reaches US$2,000,000. Earn-Out amount
is US$992,647 (US$1,500,000 less previous Earn-Outs
awarded). The US$300,000 Contribution overachievement in
Year 1 is credited to Year 2 Contribution.
3.2 The Consideration shall be paid/awarded as follows:
(a) as to US$1,080,000 (being part of the Initial
Consideration) in cash on Completion by bank transfer to a
nominated bank account of the Vendors' Solicitors, details
of which account have been provided by the Vendors'
Solicitors to the Purchaser's Solicitors. The Vendors'
Solicitors are hereby irrevocably authorised by the Vendors
to accept the Initial Consideration and the Vendors'
Solicitors' receipt therefor shall be an absolute discharge
to the Purchaser of its obligation to pay the Initial
Consideration;
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(b) as soon as reasonably practicable (and, save in the event
of any dispute as referred to in Clause 3.3, within thirty
(30) Business Days) after Completion, the Purchaser shall
allot and newly issue to each Vendor the number of
Purchase Shares to which he is entitled calculated in
accordance with Clause 3.1(b) and the percentage
entitlement set out opposite such Vendor's name in Column
4 of Schedule 1;
(c) the Escrow Cash shall within five (5) Business Days after
Completion and share certificates in respect of the Escrow
Shares shall as soon as reasonably practicable (and, save
in the event of any dispute as referred to in Clause 3.3,
within thirty (30) Business Days) after Completion be
delivered by the Purchaser to the Escrow Agent to be held
in escrow pursuant to the terms of the Escrow Agreement as
security for the obligations of the Vendors under this
Agreement and/or the Tax Deed;
(d) in the case of any Earn-Out Shares to be awarded to the
Vendors pursuant to Clause 3.1(c), and subject to Clause 5
and without prejudice to the provisions of Clause 3.1(c),
the Earn-Out Shares shall be allotted and newly issued and
share certificates in respect of such Earn-Out Shares
shall be delivered to the Vendors in accordance with their
respective entitlements within 45 days after each
Quarterly date (not ending on the Company's fiscal year
end) specified in Clause 3.1(c) on which any award has
been calculated as being due. For the Quarters ended 31
December 1998 and 1999, such Earn-Out Shares will be
delivered to the Vendors within 90 days after the Quarter
end. For the avoidance of doubt, if in relation to the
First Year, the Second Year and/or any Quarter thereof
specified in Clause 3.1(c) the Contribution Goals set out
in Clause 3.1(c) are not met or exceeded, no Earn-Out
Shares shall be awarded, allotted and/or issued by the
Purchaser to the Vendors under Clause 3.1(c) in respect of
the year or, as the case may be, Quarter period(s) in
question.
3.3 The Purchaser shall deliver to the Vendors within forty-five (45)
days after each Quarterly date specified in Clause 3.1(c) details of
the calculations made by the Purchaser under Clause 3.1(c) for the
purpose of determining whether any Contribution Goals have been met
or exceeded. Should the Vendors disagree in any material respect with
the Purchaser's determination of whether any Contribution Goals have
been met or exceeded, the Vendors shall notify the Purchaser in
writing of such disagreement within thirty (30) days after delivery
by the Purchaser of details of the Purchaser's calculations relating
thereto and in the absence of agreement the parties shall, within
fourteen (14) days after receipt by the Purchaser of any such
notification by the Vendors, agree to the appointment of a single
independent arbitrator to fully and finally settle such disagreement.
Should the parties fail to agree as to the choice of an arbitrator
within such fourteen (14) day period, any such disagreement shall be
settled fully and finally by a single independent arbitrator chosen,
upon the request of either party, by the President of the Chartered
Institute of Arbitrators and such arbitrator shall be instructed to
settle such disagreement as expeditiously as possible.
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3.4 The Purchaser agrees to register the Consideration Shares in
accordance with the terms of the Shareholder Agreement attached
hereto as Schedule 9.
3.5 The Consideration Shares to be issued pursuant to Clause 3.1 of this
Agreement have not been registered under the US Securities Act, in
reliance upon exemptions from registration provided by Regulation S
and/or Section 4(2) under the US Securities Act. The certificates for
shares of Consideration Shares to be issued pursuant to this
Agreement shall bear appropriate legends to identify such shares as
being "restricted securities" within the meaning of Rule 144(a)(3)
under the US Securities Act and to comply with applicable US state
securities laws. It is acknowledged and understood by the Vendors
that the Consideration Shares being offered and sold by the Purchaser
pursuant to this Agreement in reliance upon such exemptions from
registration is based in part upon the representations of each Vendor
contained in the Shareholder Agreement attached hereto as Schedule 9.
3.6 The Purchaser undertakes with the Vendors that neither it nor any
member of the Purchaser's Group will during either the First Year or
the Second Year (i) knowingly do any act or thing which is injurious
to the Company or its business or which materially impedes the
Vendors' ability to achieve the maximum Contribution Goals, or (ii)
fail to give fair and reasonable consideration to any request for
working capital made by the Company or any successor to any part of
its business which is consistent with the financial objections of the
consolidated financial position of the Purchaser's Group. For the
avoidance of doubt, the Purchaser's act of purchasing the Shares (and
any results flowing therefrom) shall not constitute any act or thing
which is injurious to the Company or its business or which materially
impedes the Vendor's ability to achieve the maximum Contribution
Goals.
3.7 The Vendors and the Purchaser shall as soon as reasonably practicable
after Completion complete and agree Schedule 1 of the Escrow
Agreement stating, inter alia, the number of Escrow Shares to be held
in escrow by the Escrow Agent and the proportion of such Escrow
Shares attributable to each Vendor. The Vendors and the Purchaser
shall procure that, as soon as reasonably practicable after such
Schedule has been completed and agreed in accordance with this Clause
3.7, a copy of such Schedule is delivered to the Escrow Agent.
4 PRE-EMPTION RIGHTS
4.1 Each of the Vendors hereby irrevocably waives (and undertakes that
any other person having any such rights has irrevocably waived) all
and any rights of pre-emption and/or other restrictions on,
conditions of and/or requirements relating to transfer over or in
respect of the Shares (or any of them), whether such rights of
pre-emption or other restrictions, conditions and/or requirements
exist by virtue of the Articles of Association of the Company or
otherwise.
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<PAGE> 15
4.2 Without prejudice to the generality of Clause 4.1, each of the
Vendors hereby irrevocably waives (and undertakes that any other
person having any such rights has irrevocably waived) all and any
rights of pre-emption and/or other restrictions on, conditions of
and/or requirements relating to transfer over or in respect of any
and all shares (including without limitation the Shares in the
capital of the Company at any time and from time to time in issue,
whether such rights of pre-emption and/or other restrictions,
conditions and/or requirements exist or existed (as the case may be)
by virtue of Article 8 of the Company's Articles of Association in
force as at the Completion Date, any other provisions of any Articles
of Association of the Company in force from time to time, or
otherwise.
5 SET-OFF
Without prejudice to any other rights or remedies available to the
Purchaser under this Agreement or otherwise, the Purchaser shall be
entitled to deduct from any award which may at any time become due to
the Vendors (or any of them) under Clause 3.1(c), Earn-Out Shares to
the value (at the Relevant Value) of any claims by the Purchaser in
respect of any breach of any of the Warranties, indemnities and/or
other terms of this Agreement which have at the time such award
becomes due been agreed by the Vendors and the Purchaser or
determined to be due in the circumstances described in Clause 3.3,
save that the arbitrator shall be an independent Queen's Counsel
nominated by the President for the time being of the Law Society.
6 WARRANTIES
6.1 Each of the Vendors jointly and severally warrants to the Purchaser
for the benefit of the Purchaser, its permitted successors and
permitted assigns that, as at the date of this Agreement, the
Warranties are true and accurate in all respects and not misleading.
For this purpose only, any reference (whether express or implied) in
a Warranty (i) to "the date of this Agreement" shall also be
construed as a reference to "the date of Completion", and (ii) to
"the date of Completion" shall also be construed as a reference to
"the date of this Agreement".
6.2 Each of the Warranties is given subject to the matters fairly
disclosed in the Disclosure Letter.
6.3 Each of the Warranties shall be construed separately and
independently of each other and no Warranty shall be limited or
restricted by reference to or inference from any other Warranty or
other provision of this Agreement save for the limitations set forth
in Schedule 8 and Clause 11.3.
6.4 The Warranties shall remain in full force and effect after Completion
and the Purchaser's rights and remedies in respect of any breach of
the Warranties or under any other provision of this Agreement shall
not be regarded as modified or varied by Completion, by any
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<PAGE> 16
investigation (including without limitation any due diligence
investigation) made by or on behalf of the Purchaser in connection
with the purchase of the Shares or any information or documents
supplied to it (save as fairly disclosed in the Disclosure Letter),
by the Purchaser failing to exercise or delaying the exercise of any
of its rights or remedies or by any other event or matter whatsoever
except a specific and duly authorised written waiver or release by
the Purchaser.
6.5 Where any of the Warranties is qualified by the phrase "so far as the
Vendors are aware" or any similar phrase, the Vendors shall be deemed
to have made reasonable enquiry with regard to the subject matter of
such Warranty.
6.6 Any payment made pursuant to the Warranties by the Vendors shall be
deemed to be an adjustment to the Consideration.
6.7 The Vendors each undertake (for themselves and any nominees) that so
long (after Completion) as they remain the registered holder of any
of the Shares they will:
(a) not represent themselves as the beneficial owners of any
of the Shares;
(b) exercise all powers, rights and privileges vested in the
registered holder of the Shares only in accordance with
the written directions of the Purchaser; and
(c) hold the Shares and any dividends or other distributions
of profits or assets in respect thereof in trust for the
Purchaser.
6.8 Each of the Vendors hereby waives all and any claims which they (or
any of them) have or may have against the Company and/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 any
of the Vendors in connection with any of the Warranties, any
Supplemental Agreement (including but not limited to the Tax Deed)
and/or the compilation and/or preparation of the Disclosure Letter or
on which the Vendors (or any of them) may otherwise have placed
reliance before entering into this Agreement.
6.9 The provisions of Schedule 8 (Limitations) shall apply.
6.10 The Purchaser represents and warrants to the Vendors in the terms of
Schedule 11.
7 INDEMNITIES
Not applicable.
8 COMPLETION
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<PAGE> 17
Completion will take place on 12 June 1998 immediately after the
signing of this Agreement in accordance with Schedule 5 at the
offices of the Purchaser's Solicitors when the business described in
Schedule 5 will be transacted.
9 RESTRICTIVE COVENANTS
9.1 Each of the Vendors other than Mr Martin (and the expression "the
Vendors" in this Clause 9 only shall be construed accordingly) hereby
undertakes to and covenants with the Purchaser 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:
9.1.1 for a period of two (2) years from the Completion Date
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;
9.1.2 for a period of two (2) years from the Completion Date
carry on or be engaged, concerned or interested (otherwise
than as an Investor) in or assist any person concerned in
the supply of:
(a) the Products or products reasonably likely to be
regarded by the Company's customers as similar or
equivalent to the Products ("EQUIVALENT
PRODUCTS"); and/or
(b) the Services or services reasonably likely to be
regarded by the Company's customers as similar
equivalent to the Services ("EQUIVALENT
SERVICES")
in any such case within the Restricted Area;
9.1.3 for a period of two (2) years from the Completion Date
canvass or solicit or attempt to canvas or solicit
business, orders and/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;
9.1.4 for a period of (2) years from the Completion Date supply
the Products, any Equivalent Products, the Services and/or
any Equivalent Services to any Restricted Person;
9.1.5 for a period of two (2) years from the Completion Date
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 (6) months
immediately preceding the
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<PAGE> 18
Completion Date is or was a director, officer, employee or
other servant of the Company;
9.1.6 for a period of two (2) years from the Completion Date
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;
9.1.7 induce or attempt to induce any person (including without
limitation any agent or independent distributor) who in
the six (6) months immediately preceding 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;
9.1.8 at any time after the Completion Date use or procure the
use in connection with any business other than that of the
Purchaser's Group 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; and/or
9.2 The above restrictions are considered reasonable by the 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.
9.3 References in this Clause 10 to "the Company" include without
limitation any member of the Purchaser's Group which is at any
relevant time the successor of the business of the Company.
10 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 and/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 and/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.
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<PAGE> 19
11 SUCCESSORS AND ASSIGNS
11.1 For the purposes of this Clause 11 only, "Purchaser's Group" shall
mean the Purchaser, any holding company and/or subsidiary of the
Purchaser (including but not limited to New Era of Networks Limited)
and/or any company which is an associated, affiliated or related
company of the Purchaser and/or of any holding company and/or
subsidiary of the Purchaser. For the purposes of this definition
only, an associated, affiliated or related company shall mean a
company in which the Purchaser and/or any holding company and/or
subsidiary of the Purchaser has a percentage shareholding of fifty
percent (50%) or more.
11.2 This Agreement shall be binding upon and enure for the benefit of
each party's successors.
11.3 The Purchaser may not assign or transfer or purport to assign or
transfer any right or obligation under this Agreement except that the
benefit of the Warranties may be assigned or transferred in whole or
in part by the Purchaser or its permitted assigns to any member for
the time being 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 and only for so long as such assignee or
transferee shall remain a member of the Purchaser's Group.
11.4 None of the Vendors may assign or transfer or purport to assign or
transfer any right or obligation under this Agreement.
12 INFORMATION AND CONFIDENTIALITY
Each of the Vendors hereby undertakes to the Purchaser:
12.1 that he will at any time and from time to time after Completion until
he ceases to be an employee of the Company or until 30 June 2000
(whichever is later) give to the Purchaser on request all information
in his possession concerning the business, dealings, transactions or
affairs of the Company and/or any Intellectual Property 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
12.2 that he will not 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 and/or
Intellectual Property of the Company unless:
12.2.1 such Intellectual Property and/or Confidential Information
has entered the public domain otherwise than by reason of
the act or default of any Vendor; or
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<PAGE> 20
12.2.2 such Intellectual Property and/or Confidential Information
is provided after Completion to any Vendor by any third
party who is under no obligation of confidentiality to the
Purchaser or the Company or is otherwise acquired by a
Vendor in circumstances which do not give rise to any
obligation of confidentiality (express or implied) to the
Purchaser or the Company.
13 ANNOUNCEMENTS AND PUBLICITY
13.1 Any announcement or circular or other publicity relating to this
Agreement or to 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. The Vendors
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 or in
the case of the other party being the Vendors, the Purchaser, as to
the timing and content of any such announcement circular or other
publicity. Any approval of the Vendors required by this Clause 14.1
may be given by Mr Buggy on their behalf.
13.2 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 to any
termination hereof.
14 COSTS
The parties shall pay their own costs and expenses in relation to the
preparation, execution and carrying into effect of this Agreement.
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<PAGE> 21
15 NOTICES
15.1 Any notice or other communication to be given under or in connection
with this Agreement shall be in writing, addressed to the party to be
served and delivered personally or sent by international overnight
courier or by facsimile:
(a) in the case of an individual, to the address herein
stated; and
(b) in the case of a company or corporation, to its principal
place of business for the time being,
or (in either case) to such other address as the addressee may from
time to time specify for the purpose of, and in accordance with the
provisions of, this clause 16.
15.2 In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
(a) if delivered personally, when left at the address referred
to in clause 16.1;
(b) if sent by international overnight courier, three (3)
Business Days after having been deposited with an
international overnight courier; and
(c) if sent by facsimile, three (3) hours after completion of
its transmission if transmitted before 2.00 pm on any
Business Day (at the place of receipt) and otherwise by
11.00 am on the next Business Day.
15.3 In proving the giving of notice it shall be sufficient to prove that
the notice was left or that the envelope containing such notice was
properly addressed and deposited with an international overnight
courier or that the facsimile was transmitted.
16 FURTHER ASSURANCE
The Vendors shall for a period of one (1) year from Completion and at
the Purchaser's cost do, execute and perform and shall (in so far as
they are able) 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 Encumbrances and otherwise to give to the Purchaser the
full benefit of this Agreement.
17 WAIVERS
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<PAGE> 22
17.1 Any failure by any party to exercise and any delay, forbearance 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.
17.2 The single or partial exercise of any right, power or remedy shall
not preclude any other or further exercise of that right, power or
remedy or the exercise of any other right, power or remedy.
17.3 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.
18 VARIATION
No variation of this Agreement shall be effective unless made in
writing and signed by or on behalf of each of the parties.
19 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.
20 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.
21 COUNTERPARTS
This Agreement may be executed in two or more counterparts and in
facsimile 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
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<PAGE> 23
Agreement (or a counterpart of this Agreement) is signed and
delivered by the last of the parties to execute this Agreement or, as
the case may be, a counterpart thereof.
22 APPLICABLE LAW
22.1 This Agreement shall be deemed to have been made in England and
English law shall govern:
22.1.1 its existence and validity;
22.1.2 its interpretation;
22.1.3 its performance;
22.1.4 within the limits of the powers of the Courts of England
by its procedural law, the consequences of its breach; and
22.1.5 the various ways of extinguishing obligations under it and
limitations of actions arising from it or its breach.
22.2 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 15 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.
22.3 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.
22.4 Nothing contained in this Clause 22 shall affect the right to serve
process in any other manner permitted by law.
THIS AGREEMENT is executed as a deed and is delivered on 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
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6)
NAME AND ADDRESS OF Number of Initial Percentage Cash to be Percentage of
VENDOR Shares to be Consideration entitlement held in Escrow
Sold US$ to Purchase escrow US$ Shares
Shares
<S> <C> <C> <C> <C> <C>
Gerard Buggy 3,900 351,000 32.5 39,000 32.5
Wellwood
Watts Lane
Chislehurst
Kent BR7 5PJ
Roderick Manzie 3,900 351,000 32.5 39,000 32.5
3 Heathside
Church Lane
St Albans
Hertfordshire AL4 0NH
Phillip Straszynski 3,900 351,000 32.5 39,000 32.5
2 North Park
London SE9 5AP
George Henry Martin 300 27,000 2.5 3,000 2.5
28 Tithe Barn Close
St Albans
Herts AL1 2QD
--------- ----------- -------- --------- ---------
TOTALS 12,000 1,080,000 100% 120,000 100%
</TABLE>
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<PAGE> 25
SCHEDULE 2
PARTICULARS CONCERNING THE COMPANY
1. Registered Office: Bowman House, 29 Wilson Street,
London EC2M 2SJ
2. Date of Incorporation: 3 June 1992
3. Registered Number: 2720145
4. Directors: Mr Buggy, Mr Manzie, Mr Martin,
Mr Straszynski
5. Secretary: Mr Manzie
6. Mortgages and Charges: - Charge dated 23 March 1995 in favour
of National Westminster Bank Plc
- Rent Deposit Deed dated 4 February
1998 in favour of First Commercial
Bank Limited
7. Share Capital: ,25,000 divided into 25,000 ordinary
shares of ,1 each of which 12,000 have
been issued and are fully paid up
8. Accounting Reference Date 30 April
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<PAGE> 26
SCHEDULE 3
THE PREMISES
<TABLE>
<CAPTION>
PREMISES TENURE DATE OF LEASE EXPIRY DATE USE
-------- ------ ------------- ----------- ---
<S> <C> <C> <C> <C>
Fifth Floor Leasehold 25 October 1995 23 June 1999 Offices
6/7 Queen Street
London EC4
Fifth Floor Leasehold 23 August 1995 22 August 2005 Offices
Bowman House
29 Wilson Street
London EC2
</TABLE>
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<PAGE> 27
SCHEDULE 4
PART A
GENERAL WARRANTIES
For the purposes of this Schedule 4, "Material" means having a value of US$5,000
or more.
1 INFORMATION SUPPLIED AND CAPACITY OF VENDORS
1.1 All information contained in this Agreement is true, accurate and
complete in all material respects.
1.2 The Vendors have full power and authority to enter into and perform
this Agreement and the Supplemental Agreements and this Agreement and
the Supplemental Agreements, when executed, will constitute valid and
binding obligations on the Vendors in accordance with the respective
terms thereof.
2 ACCOUNTS AND RECORDS
2.1 ACCOUNTING AND OTHER RECORDS
2.1.1 The Company has at all times properly maintained all
books, accounts and records of whatever kind required by
UK law to be maintained.
2.1.2 The accounting records of the Company have been kept and
maintained in accordance with the provisions of the
Companies Act in all material respects.
2.1.3 No notice or allegation that any of the books, accounts or
records is incorrect or should be rectified has been
received by the Company.
2.1.4 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.
2.2 ACCOUNTS
The Accounts:
2.2.1 comply with the requirements of the Companies Act 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;
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<PAGE> 28
2.2.2 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; and
2.2.3 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.
2.3 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.
2.4 UNAUDITED ACCOUNTS
The Unaudited 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 for the year
ended 30 April 1998.
3 BUSINESS SINCE THE LAST ACCOUNTING DATE
Since the Last Accounting Date:
3.1 the Company has carried on its business in the ordinary and usual
course and so as to maintain the same as a going concern;
3.2 the Company has not borrowed, raised or taken any money or any
financial facility;
3.3 the Company has paid its creditors in accordance with its usual
practice and there are no debts outstanding by the Company which have
been due for more than ninety (90) days;
3.4 the Company has not entered into any capital commitments or
(otherwise than in the ordinary course of carrying on its business)
any transaction or agreement for the disposal of any material asset
(including but not limited to any Intellectual Property);
3.5 the Company has not entered into any unusual, long-term (that is to
say, incapable of performance in accordance with its terms within
twelve (12) months after the date on which it was entered into or
undertaken) or onerous arrangements, commitments or contracts;
3.6 the business of the Company has not been materially and adversely
affected by the loss of any customers;
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<PAGE> 29
3.7 no distribution of capital or income (including without limitation
and 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;
3.8 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;
3.9 no resolutions (whether in general meeting or otherwise) have been
passed by the Shareholders of the Company or any class of its
members;
3.10 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
Last Accounting Date and no new service agreements have been made by
the Company;
3.11 no material alteration has been made in the terms of employment or
conditions of service of any officer or any employee, consultant,
sub-contractor 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;
3.12 none of the fixed assets of the Company shown in the Last Accounts
and none acquired by the Company since the Last Accounting Date have
been lost, damaged or destroyed;
3.13 there has been no material adverse change in the financial position
or so far as the Vendors are aware turnover of the Company.
4 TRADING AND CONTRACTUAL ARRANGEMENTS
4.1 ULTRA VIRES
None of the contracts or obligations entered into by the Company is
ultra vires or exceeds the powers of the directors to bind the
Company and so far as the Vendors are aware the Company is not in
Material default under any such contracts or obligations.
4.2 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:
4.2.1 is in any way otherwise than in the ordinary course of the
Company's business;
4.2.2 is of an unusual or abnormal nature, or not fully on an
arm's length basis in the ordinary and usual course of
business;
4.2.3 is of a long term nature (that is to say incapable of
performance in accordance with its terms within six (6)
months after the date on which it was entered into or
undertaken);
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<PAGE> 30
4.2.4 is incapable of termination in accordance with its terms
by the Company on ninety (90) days' notice or less;
4.2.5 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);
4.2.6 cannot readily be fulfilled or performed by the Company on
time without undue or unusual expenditure of money or
effect;
4.2.7 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;
4.2.8 involves the supply of goods and/or services the aggregate
value of which will represent in excess of five (5) per
cent of the turnover for the financial year of the Company
ended on the Last Accounting Date; or
4.2.9 requires an aggregate consideration payable by the Company
in excess of $50,000 in respect of any one contract
(excepting only any consultancy contract) during the six
(6) months immediately following Completion.
4.3 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.
4.4 CONTRACTS, ETC, WITH CONNECTED PERSONS
4.4.1 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.
4.4.2 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.
4.4.3 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.
4.4.4 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
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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.
4.5 JOINT VENTURES, PARTNERSHIP, ETC
The Company does not have and has never had any interest in or agreed
to enter into any association, partnership, consortium or joint
venture arrangement with any other entity.
4.6 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.
4.7 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.
4.8 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.
4.9 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.
4.10 BUSINESS NAMES
The Company does not carry on business under any name other than its
own corporate name.
4.11 WARRANTY AND INDEMNITY OBLIGATIONS
Save for the representations, indemnities and warranties under the
Sale of Goods Act 1979 and the Sales 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 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.
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5 ASSETS (OTHER THAN THE PREMISES)
5.1 TITLE TO ASSETS
5.1.1 The Company was at the Last Accounting Date the legal and
beneficial owner of all the assets included in the Last
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 ordinary course of its
business) and all assets acquired by it after the Last
Accounting Date are free from any Encumbrance and no other
person has or claims so far as the Vendors are aware any
rights in relation to such assets or any of them.
5.1.2 The Company has not acquired or agreed to acquire any
assets on terms that the property therein does not pass
until full payment is made or all indebtedness discharged.
5.1.3 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 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.
5.2 FURNITURE AND OFFICE EQUIPMENT
The furniture, fixtures, fittings, office equipment and 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 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.
5.3 SUBSIDIARIES, ASSOCIATES AND BRANCHES
The Company:
5.3.1 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 UK or
elsewhere);
5.3.2 does not have outside the UK 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
5.3.3 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).
5.4 LEASING RENTALS
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Rentals payable by the Company in relation to any leasing or similar
agreement to which it is a party have not been increased.
5.5 DEBTS
5.5.1 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.
5.5.2 Save as specified in the Disclosure Letter, none of the
debts in excess of ,5,000 due to the Company as at the Last
Accounting Date remain unpaid at the date of this Agreement
nor has any debt which has subsequently become due to the
Company (or any part of any such debt) remained unpaid for
more than ninety (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.
6. EMPLOYEES AND AGENTS
6.1 PARTICULARS OF EMPLOYEES ETC. AND TERMS OF EMPLOYMENT/APPOINTMENT
6.1.1 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 (including all
information required by law to be included in particulars
of terms of employment) or appointment (as the case may be)
of all officers, employees, consultants and agents of the
Company have been Disclosed. No other person is employed or
engaged by the Company and there is no other person
previously employed by the Company who now has the right or
who may in the future have the right to return to work.
6.1.2 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 (3) months' notice or
less without compensation (other than under the Employment
Rights Act 1996) 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.
6.1.3 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 Vendors are actually
aware) intends as a result of this Agreement or Completion
or otherwise to terminate his employment or appointment
with the Company.
6.2 LIABILITIES TO AND FOR EMPLOYEES ETC.
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6.2.1 The Company has not offered, promised or agreed for the
future any variation in any contract of employment or any
contract for service in respect of any employee, consultant
or agent.
6.2.2 The Company has not since the Last 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, employees or consultants.
6.2.3 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.
6.2.3 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, consultants 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, disability or death benefit or similar
schemes or arrangements in operation or contemplated in
relation to the Company.
6.2.4 The Company has no undischarged liability to pay to any
government or regulatory authority in any jurisdiction any
UK Tax or National Insurance Contributions arising in
connection with the employment or engagement of employees,
consultants or directors by it.
6.2.5 Save to the extent (if any) to which provision or allowance
has been made in the Last 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, equal pay award, sex, race or
disability discrimination awards or otherwise 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.
6.2.6 As far as the Vendors are aware there are no enquiries or
investigations existing, pending or threatened against the
Company or any of its directors, contractors or employees
by the Equal Opportunities Commission or the Commission for
Racial Equality or other similar authority.
6.2.7 There are no claims served on or threatened against the
Company (nor so far as the 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,
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director or former director in relation to his terms and
conditions of employment or appointment.
6.2.8 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.
6.3 COMPLIANCE WITH STATUTES
So far as the Vendors are aware the Company has complied in all
material respects with the Sex Discrimination Act 1975, the Equal Pay
Act 1970, the Race Relations Act 1976 and the Transfer of
Undertakings (Protection of Employment) Regulations 1981 the
Disability Discrimination Act 1995 and the Employment Rights Act 1996
and there are no outstanding claims made against or payments due from
the Company thereunder.
6.4 LABOUR RELATIONS
6.4.1 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.
6.4.2 The Company is not a party to any collective agreement or
other agreement or arrangement and is not involved in any
industrial or trade dispute or negotiation with any trade
union or other organisation of employees.
6.4.3 There is no industrial action or dispute existing or so far
as the Vendors are aware threatened in respect of or
concerning any of the employees of the Company.
6.5 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.
7 INSURANCE
All material particulars of all insurances of the Company have been
Disclosed and there are no outstanding claims or so far as the
Vendors are aware circumstances reasonably likely to give rise to a
claim thereunder and the Company has not done or so far as the
Vendors are aware omitted to do anything which has made any policy of
insurance void or voidable and none of the 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.
8 GRANTS
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8.1 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 or agency or any other supranational
or national or local authority body or agency.
8.2 No act or transaction has been effected or omitted in consequence of
which:
8.2.1 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
8.2.2 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.
9 CURRENT FINANCIAL POSITION
9.1 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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9.2 BANKING FACILITIES
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 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.
9.3 OFF BALANCE SHEET FINANCING
The Company has not engaged in any borrowing or financing not
required to be reflected in the Accounts.
10 REGULATORY MATTERS
10.1 So far as the Vendors are aware, neither the Company nor any of its
officers or employees has done or omitted to do any Material 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 UK or
elsewhere and in particular (but without prejudice to the generality
of the foregoing):
10.1.1 any of the provisions of the Companies Act or the
Financial Services Act 1986 or the Data Protection Act
1984;
10.1.2 any of the provisions of the RTPA 1976, the Resale Prices
Act 1976, the Fair Trading Act 1973 or the Competition Act
1980;
10.1.3 the Trade Descriptions Acts 1968 to 1972, the Consumer
Credit Act 1974 or the Consumer Protection Act 1987; or
10.1.4 any anti-trust, anti-monopoly or consumer law Act,
Regulation or Order made in the UK.
10.2 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.
10.3 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.
10.4 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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11 PRODUCTS/SERVICES QUALITY AND SAFETY
11.1 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. The Disclosure Letter sets out copies of the standard terms
and conditions of sale for the Company.
11.2 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 so far as the
Vendors are aware anticipated or threatened.
12 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 Vendors are aware, threatened by or against
the Company or against any such person and so far as the 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 Vendors is aware, threatened against the Company or any of its
officers or directors.
13 INSOLVENCY
13.1 No order has been made, or petition presented, or resolution passed
for the winding up of the Company and so far as the Vendors are aware
there is not outstanding:
13.1.1 any petition or order for the winding up of the Company;
13.1.2 any appointment of a receiver over the whole or any part
of the undertaking or assets of the Company;
13.1.3 any petition or order for the administration of the
Company;
13.1.4 any voluntary arrangement between the Company and any of
its creditors;
13.1.5 any distress or execution or other process levied in
respect of the Company, which remains undischarged;
13.1.6 any unfulfilled or unsatisfied judgment or court order
against the Company.
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13.2 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 undertakings or assets.
13.3 The Company is not deemed unable to pay its debts within the meaning
of Section 123 of the Insolvency Act 1986.
13.4 So far as the Vendors are aware, 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.
14 COMPLIANCE
14.1 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
so far as the Vendors are aware there are no judgments or orders
given or made by any Court or governmental agency against the Company
which have not been fully satisfied or complied with.
14.2 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.
15 COMPANIES ACT AND OTHER LEGISLATION
15.1 MEMORANDUM AND ARTICLES OF ASSOCIATION
A copy of the Memorandum and Articles of Association of the Company
has been Disclosed.
15.2 FILING
All documents required by the Companies Act to be filed with
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.
15.3 CHARGES
15.3.1 No charge in favour of the Company is void or voidable for
want of registration.
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14.3.2 So far as the 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.
15.4 DIRECTORS AND OFFICERS
15.4.1 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.
15.4.2 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.
16 CAPITAL OF THE COMPANY
16.1 The authorised and issued share capital of the Company is as set out
in Schedule 2.
16.2 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 Encumbrances 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 Last Accounting Date.
16.3 The Company has never reduced its share capital or redeemed, repaid
or purchased any share capital or agreed to do so.
16.4 There is not now outstanding any loan capital of the Company nor any
agreement, arrangement or option 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.
17 EFFECT OF AGREEMENT
17.1 There are no contracts or binding 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.
17.2 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:
17.2.1 conflict with, violate or result in a breach by the
Company or the Vendors of the terms, provisions or
conditions of any agreement or by law, undertaking to or
judgment, order, injunction or decree of any Court;
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17.2.2 relieve any person of any contractual or other obligation
to the Company or entitle any person to terminate any such
obligation;
17.2.3 so far as the 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 state maturity date; or
17.2.4 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.
18 SUBSIDIARY UNDERTAKINGS
The Company has no subsidiary undertaking (as that term is defined in
Section 258 of the Companies Act).
19 PARTICIPATING INTERESTS
The Company has no participating interest (as that term is defined in
Schedule 260 of the Companies Act) in any undertaking (as that term
is defined in Section 259 of the Companies Act).
20 FOREIGN CORRUPT PRACTICES ACT
Neither the Vendors, the Company nor any of its or their directors,
officers, employees, agents, distributors and/or contractors is an
officer or employee of a foreign government or any department, agency
or instrumentality thereof or any person acting in an official
capacity for or on behalf of any such government or department,
agency or instrumentality and the Vendors, the Company and its or
their directors, officers and employees and, so far as the Vendors
are aware, agents, distributors and contractors in its or their
associations with the Company:
(a) have complied at all times with all applicable laws,
regulations and acts of the governments of the US and
England;
(b) have not made directly or indirectly any payments in
violation of the Foreign Corrupt Practices Act and/or any
similar legislation aimed at prohibiting corrupt and/or
illegal practices in connection with the sale of products
and/or services, nor taken any action which would expose
them and/or any member of the Purchaser's Group to civil
or criminal penalties, or forfeiture of tax benefits,
under said laws.
21 ALT
21.1 As far as the Vendors are aware, the unaudited accounts of ALT
attached hereto at Schedule 10 for the fiscal year ended 31 December
1997 ("ALT Last Accounts") give a true and fair view of the financial
position of ALT as at 31 December 1997 and for the period then ended.
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21.2 As far as the Vendors are aware, the monthly management accounts of
ALT for the period which commenced on 1 January 1998 and ended on 30
April 1998 ("ALT Management Accounts") give a reasonable and fair
representation of the profits, losses, assets, liabilities and state
of affairs of ALT as at 30 April 1998 and for the four month period
then ended.
21.3 As far as the Vendors are aware, ALT has no Material liabilities
contingent or otherwise which are not disclosed in the ALT Last
Accounts and/or the ALT Management Accounts.
21.4 At the request of the Purchaser, the Vendors will procure that
audited accounts are prepared in respect of ALT's financial position
as at 31 December 1997 and for the period then ended as soon as
reasonable practicable after Completion.
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SCHEDULE 4
PART B
WARRANTIES RELATING TO TAX
1. ADMINISTRATION AND RETURNS
1.1 PROVISION
The Company has no liability for Tax in respect of any financial
period down to and including the Last Accounting Date or referable to
profits (including income and gains) made or deemed to have been made
on or before the Last Accounting Date which has not been fully
provided for in the Last Accounts.
1.2 No liability to Tax has been incurred by the Company since the Last
Accounting Date other than in the ordinary course of business.
1.3 PAYMENT OF TAX
1.3.1 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.
1.3.2 All assessments not so paid have been properly appealed
against and (where appropriate) payment of any Tax assessed
and not paid, has been postponed.
1.3.3 The Company has made adequate provision in the Unaudited
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
30 April 1998 including distributions down to that date.
1.4 INTEREST/PENALTIES
The Company is under no liability (and has not in the 6 years prior
to Completion been liable) to pay any interest, penalty, fine or
default surcharge in connection with any Tax.
1.5 RETURNS
The Company has, or prior to Completion will have, accurately
prepared and duly filed within applicable time limits 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
Tax (whether of the UK, US 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,
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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.
1.6 DISPUTES
None of the aforementioned Returns have been disputed by any Tax
Authority.
1.7 INVESTIGATIONS
The Company's affairs have not been (nor does the Company expect them
to be) the subject of any dispute, audit or investigation by any Tax
Authority other than routine visits and enquiries from any Tax
Authority.
1.8 The Company has sufficient records to determine the Tax consequences
which would arise on a disposal or on a realisation of each asset
owned by it at the Last Accounting Date, or acquired since the last
Accounting Date but before Completion.
1.9 CLAIMS AND ELECTIONS
All claims, disclaimers, elections, appeals or applications which the
Company has made in respect of Tax have been Disclosed.
1.10 CLEARANCES AND CONSENTS
1.10.1 All clearances or consents relating to Tax (including for
the avoidance of doubt clearances made pursuant to Section
765 of the Taxes Act) 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.
1.10.2 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.
2. PAYE AND NIC
2.1 The Company has properly operated the Pay As Your Earn system and has
complied with each reporting obligation in connection with benefits
provided for the Company's directors, other officers and employees
and in particular without prejudice to the generality of the
foregoing the Company has duly paid to the Inland Revenue all income
tax deductible for which it is required to
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account to the Inland Revenue prior to Completion by virtue of the
PAYE regulations from time to time in force.
2.2 No payment of, or on account of, income of a director, other officer
or employee of the Company has been made by an Intermediary. No
agreement or arrangement has been entered into under which a payment
of this kind will or might be made by an Intermediary in respect of
which the Company may be liable under the Pay As You Earn system or
any other system of payroll deduction of Tax. In this paragraph
"Intermediary" means:
(a) a person acting on the Company's behalf and either at the
expense of the Company or a person connected with the
Company; or
(b) a trustee holding property or persons to include, or a
class of persons which includes a director, other officers
or employees of the Company
and for the purposes of paragraph (a) of this definition, "connected"
has the meaning given by section 839 of the Taxes Act.
2.3 The Company has duly paid to the Inland Revenue or other appropriate
authority in respect of employees of the Company all National
Insurance Contributions (due from both the employer and the
employee).
2.4 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).
2.5 Up to the date hereof the Company has correctly operated:
2.5.1 a statutory sick pay scheme in accordance with the
provisions of the Social Security and Housing Benefits Act
1982 and the regulations made thereunder;
2.5.2 a statutory maternity pay scheme in accordance with the
provisions of the Social Security Act 1986 and the
regulations made thereunder.
3. TAX ON DISPOSAL OF ASSETS
3.1 On disposal of an asset by the Company for a consideration equal to
the value attributed to the asset in the Accounts, no liability to
corporation tax in respect of a chargeable gain will arise
(disregarding a statutory right to claim an allowance or relief).
3.2 In preparing the Accounts the value used for each asset or class of
assets in respect of which a separate computation for capital
allowances is required (whether as a result of an election or
otherwise) is such that, on a disposal of that asset or all the
assets in that class for a consideration equal to the value used (and
disregarding a statutory right to claim an allowance or relief), no
balancing charge would be made.
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3.3 No liability to Tax (other than value added tax) would arise if the
Company were to dispose of an asset acquired since the Last
Accounting Date for a consideration equal to the consideration
actually given for the acquisition.
3.4 Since the Last Accounting Date the Company has not entered into or
been a party to a transaction which will or may give rise to a
liability to corporation tax on chargeable gains.
4. REPLACEMENT OF BUSINESS ASSETS
The Disclosure Letter contains details(87) of each claim under
section 152 or 153 of the TCGA (replacement of business assets) made
before the date of this Agreement to which section 154 of the TCGA
(new assets which we depreciating assets) applies and which affects
any assets owned by the Company on or after the Last Accounting Date
(except where the held-over gain is treated as having accrued before
the Last Accounting Date).
5. The Company has not been a party to, or involved in any scheme or
arrangements whereby the value of any asset has been materially
reduced so that on a disposal of the asset by the Company, sections
30 to 34 (inclusive) of the TCGA may be applicable.
6. DISTRIBUTIONS AND ACT
6.1 The Company has duly paid to the Inland Revenue all Advance
Corporation Tax due in respect of Qualifying Distributions under
Section 14 of and Schedule 13 to the Taxes Act.
6.2 Since 6 April 1965 the Company has not made a repayment of share
capital to which section 210 of the Taxes Act (bonus issue following
repayment of share capital) applies or issued share capital as paid
up other than by the receipt of new consideration within the meaning
of Part VI of the Taxes Act (company distributions, tax credits etc).
7. STAMP DUTY
7.1 All documents which are required to be stamped and which are in the
possession or under the control of the Company or to which the
Company is a party or by virtue of which the Company has any right
have been duly stamped and the appropriate stamp duty (if any) has
been paid and there is no liability for any penalty in respect of
such duty and no such documents which are outside the UK would
attract stamp duty if they were brought in the UK.
7.2 The Company has no unsatisfied liability to stamp duty reserve tax or
interest or penalties on stamp duty reserve tax
8. VALUE ADDED TAX
8.1 The Company is a taxable person for the purposes of VAT and has duly
registered with its local Customs and Excise Office.
8.2 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
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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.
8.3 The Company has in all other material respects complied with the VAT
legislation and all regulations, notices, orders, provisions and
directions relating to VAT.
8.4 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.
8.5 The Company is not and has never been partially exempt for VAT
purposes.
8.6 The Company has never been required by the Commissioners of HM
Customs and Excise to give security.
8.7 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 any application for group
registration.
8.8 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 UK.
8.9 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.
8.10 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).
8.11 The Company does not own any assets which are subject to the Capital
Goods Adjustment Scheme pursuant to part XV VAT Regulations 1995.
9. INHERITANCE TAX
9.1 The Company has not entered into any transaction which has or may
give rise to a direct or indirect charge to inheritance tax.
9.2 The Company is not liable to be assessed to inheritance tax by virtue
of Part VII of the Inheritance Tax Act 1984.
9.3 There is no unsatisfied liability to inheritance tax attached or
attributable to the shares or any assets of the Company and, in
consequence, no person has the power to raise the amount of such tax
by sale or mortgage of or by a terminable charge on any of the shares
or assets of the Company as mentioned in Section 212 of the
Inheritance Tax Act 1984 and none of the shares or assets of the
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Company are subject to an Inland Revenue Charge within Section 237 of
the Inheritance Tax 1984.
9.4 The Company is not entitled to an interest in possession in settled
property.
10. CLOSE INVESTMENT COMPANY HOLDINGS STATUS
10.1 The Company has never been a Close Investment Holding Company for the
purposes of the Taxes Act.
10.2 The Company has made no covenanted payment or payments to charity
falling with Section 339 of the Taxes Act.
10.3 No distribution within Section 418 of the Taxes Act have been made by
the Company.
10.4 No loan or advance within Section 419 of the Taxes Act has been made
or agreed to by the Company.
10.5 The Company has not made any such transfer as is referred to in
Section 125 of the TCGA.
11. ANNUAL PAYMENTS AND INTEREST
The Company is not obliged to make at any time nor has it made since
the Last Accounting Date a payment which will not be wholly
deductible as an expense or a charge on income in the accounting
period in which it will or has been paid.
12. CONTROLLED FOREIGN COMPANIES
12.1 The Company has never been subject to an apportionment under Section
752 of the Taxes Act in respect of its interest in ALT Inc.
12.2 The activities of ALT Inc satisfy the provisions of paragraph 6 of
Schedule 25 to the Taxes Act.
13. LOAN RELATIONSHIPS
The Company has not entered into any transaction which would fall
within the scope of paragraph 13 of Schedule 9 to the Finance Act
1996.
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SCHEDULE 4
PART C
PROPERTY WARRANTIES
1. 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.
2. THE PREMISES
2.1 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 Schedule 3 are
true, complete and accurate.
2.2 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.
3. TITLE
3.1 The Company is solely entitled at law and in equity to the Premises.
3.2 The Company is in actual occupation of the whole of the Premises on
an exclusive basis and in so far as the Vendor is aware 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.
3.3 All of the title deeds and documents which relate to the Premises as
listed on the schedule attached to the Disclosure Letter are in the
Company's possession and control. On Completion the originals of such
deeds and documents will be handed over to the Purchaser.
3.4 So far as the Vendors are aware, no right, easement, quasi easement,
profit, licence or informal arrangement, public or private, is in the
course of being acquired by or against the Premises and none so far
as the Vendors are aware has been proposed.
4. LEASEHOLD PREMISES
4.1 Each of the leasehold Premises is held under the lease ("Lease")
details of which are correctly set out in Schedule 3.
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4.2 So far as the Vendors are aware, all payments of rent and other
outgoings due to the lessor under each Lease are up to date and none
have been commuted, waived or paid in advance of the due date for
payment.
4.3 No collateral assurances, undertakings, waivers or concessions have
been made or given by any party to each Lease.
4.4 So far as the Vendors are aware there are no rent reviews in the
course of negotiation.
4.5 The Vendors are not aware of any outstanding notice of any breach of
any of the covenants, restrictions, stipulations and other
obligations contained in each Lease and any deeds or documents
supplemental thereto.
5. PLANNING AND USER OF PREMISES
5.1 The current use of the Premises is as offices.
5.2 The Vendors are not aware of any outstanding notice that the current
use of the Premises is not the permitted or lawful use for the
purposes of the Town & Country Planning Acts 1971 to 1990 (the
"Planning Acts").
5.3 The Vendors are not aware of any outstanding notice of breach of any
consents, orders and regulations issued under the Planning Acts and
building regulations consents and bye-laws for the time being in
force in relation to the Premises.
6. ENCUMBRANCES
6.1 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.
6.2 So far as the Vendor is aware, 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).
6.3 The Vendors are not aware of any notice by any lessor to exercise a
right of entry or forfeiture.
7. STATUTORY OBLIGATIONS
7.1 The Vendors are not aware of any outstanding notice of breach of any
applicable statutory and bye-law requirements relating to the
Premises and in particular (but without limitation) arising from the
requirements as to fire precautions, 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.
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7.2 The Vendors are not aware of any outstanding notice of failure to
comply with applicable fire regulations in relation to the Premises.
8. COMPLAINTS AND DISPUTES
8.1 The Vendors are not aware of any outstanding complaints (whether
formally or informally) from 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.
8.2 The Vendors are not aware of any current 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 Vendors do not expect and are
not aware of any circumstances which may give rise to any such
dispute hereafter.
8.3 So far as the Vendors are aware, the Company has not (nor has anyone
on its behalf) expressly 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.
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SCHEDULE 4
PART D
PENSION WARRANTIES
For the avoidance of doubt expressions used in the following paragraphs are as
defined in the Agreement except as defined below. For the avoidance of doubt,
the definitions set out below in this Part D of Schedule 4 apply only to this
Part D of this Schedule 4.
"THE GROUP PERSONAL PENSION SCHEME" means the group personal pension
arranged by the Company and insured
with Legal & General Assurance
Society Limited.
"THE COMPANY" means the company in which the
shares are being acquired by the
Purchaser together with any
subsidiary of that company.
"THE EMPLOYEE" means any employee (or officer) or
former employee (or former officer)
of the Company.
"THE COMPANY LIFE ASSURANCE SCHEME" means the MSB Consultants Limited
Death Benefits Scheme established
by deed dated 22 March 1995 in
order to provide benefits on death
in service to Employees.
"THE SCHEMES" means the Group Personal Pension
Scheme and the Company Life
Assurance Scheme.
"THE SCHEME DOCUMENTS" means the documents relating to the
Schemes that have been identified
in the Disclosure Letter.
"CLAIM" means any claim brought against the
Company or the trustees or managers
of the Schemes by, or on behalf of,
an Employee relating to any
limitation on his or her level of
life assurance under the Company
Life Assurance Scheme as a result
of his or her failure to attend a
medical examination at the
Company's request but only to the
extent that the claim relates to a
period of service before
Completion.
1. Except under the Schemes there are not nor have there been any
agreements, arrangements, customs or practices in operation for the
provision of, or payment or contribution towards, any pension,
allowances, lump sums or other like benefits on, or after, retirement
or death for the benefit of any Employee or any of their dependants,
nor has any proposal been announced or promise made either orally or
in writing to establish any such agreement, arrangement or practice.
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<PAGE> 53
2. The Scheme Documents comprise all the material documents governing
the Schemes including all written communications to beneficiaries
under the Schemes describing the terms under the Schemes (other than
routine benefit statements) of current effect and also including the
particulars of any enhancement of benefit in respect of any person.
In relation to the Group Life Assurance Scheme the Scheme Documents
indicate the level of premium payable by the Company and the terms on
which future premium may be assessed.
3. The Schemes have at all times been administered in accordance with
all applicable laws. In particular (but without affecting the
generality of this warranty):
(a) no Employee has been excluded from or has had benefits
limited under the Schemes whether directly or indirectly
on grounds of sex or because of part time employment; and
(b) the Schemes have at all times complied with the
requirements of Article 119 of the Treaty of Rome.
4. The Company Life Assurance Scheme does not permit the payment of
additional voluntary contributions by members or the acceptance of
transfer values to the scheme in respect of them and does not provide
any retirement benefits to members.
5. No discretion or power has been exercised in relation to the Schemes in
respect of Employees to:-
(a) augment benefits under the Schemes;
(b) admit to membership of the Scheme an Employee who would
not otherwise have been eligible for admission to
membership;
(c) provide in respect of a member of the Schemes a benefit
which would not otherwise be provided under the Scheme in
respect of such member;
(d) pay a contribution to the Schemes which would not
otherwise have been paid;
and no agreement has been made or understanding given by the trustees
of the Schemes or the Company to so augment, admit, provide, pay or
increase in future.
6. (a) All death benefits payable under the Company Life
Assurance Scheme are, at the date of this Agreement, fully
insured under a policy effected with an insurance company
of good repute and all insurance premiums payable have
been paid and neither the trustees of the scheme nor any
other person has done or omitted to do anything which has
or might render any such policies of insurance void or
voidable.
(b) All Employees have been covered for insurance referred to
in (a) by the insurance company at its usual rates and on
its usual terms for persons in good health.
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7. All contributions due as at Completion have been paid in full in
accordance with the agreed contractual terms in respect of each
Employee to the Group Personal Pension Scheme by the Company. All
member contributions deducted from salary have been made lawfully and
correctly in accordance with prevailing tax legislation and have been
paid by the due date.
8. All professional fees and other fees charges and expenses of whatever
nature with respect to the Schemes have been paid and as at
Completion no services have been rendered for which an account or
invoice has not been delivered.
9. (a) The Group Life Assurance Scheme is approved as an exempt
approved scheme within the meaning of Section 592 of the
Taxes Act as of its commencement date and there is no
ground on which approval may be withdrawn or cease to
apply.
(b) The insured personal pension scheme to which the payments
under the Group Personal Pension Scheme are made is
approved under Chapter IV of Part XIV of the Taxes Act and
there is no ground on which the Group Personal Pension
Scheme or any arrangements made under it would prejudice
such approval.
10. (a) The Schemes have at all times been operated in accordance
with the Scheme Documents and any requirements of the
Inland Revenue for approval, the requirements of the
Department of Social Security applicable to the Schemes
and all applicable laws and no litigation has arisen or
been threatened in connection with the Schemes.
(b) There are no actions, suits or claims outstanding pending
or threatened including claims brought before an
industrial tribunal and complaints awaiting determination
by the Pensions Ombudsman or resolution by the
Occupational Pensions Advisory Service against the
trustees or administrator of the Schemes or against the
Company in respect of any act event omission or other
matter arising out of or in connection with the Schemes.
11. No plan, proposal or intention or amend, discontinue (in whole or in
part) or exercise a discretion in relation to the Schemes has been
communicated to an Employee who is a member of the Schemes.
12. The Company has agreed to make contractual contributions to the Group
Personal Pension Plan in respect of any employee or officer whilst he
or she remains in employment with the Company until the age of 60. In
addition the definition of salary used for the contractual rate of
contribution is not limited by reference to the "earnings cap" as
defined in section 640A of the Taxes Act.
13. The Vendors shall indemnify and keep indemnified the Purchaser
against all payments, damage, losses and reasonable costs and
expenses (including legal expenses) of whatever nature, arising from,
or in connection with, any Claim (as defined below) brought by, or on
behalf of, an Employee within one (1) calendar month of the date of
Completion.
14. Each Employee who is entitled to membership of the Schemes has been
offered, and admitted to, membership on the terms offered. In respect
of the Group Personal Pension Plan all Employees have been offered,
and admitted to, membership on the terms set out in the booklet
referred to in
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the Scheme Documents. In addition a system in respect of the
collection and administration of data adequate for the proper running
of the Schemes has been implemented and is in place and has
accurately recorded the entitlements of members under the Schemes.
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SCHEDULE 4
PART E
INTELLECTUAL PROPERTY WARRANTIES
1. The Company owns or has the right to use pursuant to licence,
sublicence, agreement or permission all Intellectual Property
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.
2. As far as the Vendors are aware 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). As
far as the Vendors are aware, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with
any of the Intellectual Property Rights.
3. The Disclosure Letter describes the Intellectual Property Rights
material to the Company's business and identifies each licence,
agreement, or other written or oral 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 or the
documents annexed thereto, with respect to each Intellectual Property
Right:
4. 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's employees, 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;
5. the right is not subject to any outstanding injunction, judgement,
order, decree, ruling or charge;
6. no action, suit, 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
7. the Company has not agreed to indemnify any person or third party for
or against any interference, infringement, misappropriate, or other
conflict with respect to the right.
8. The Disclosure Letter identifies each item of Intellectual Property
material to the Company's business (excluding standard office and
development tools) that any third party owns and that the
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Company uses in connection with its programs referred to in paragraph
6 below. Except as disclosed in the Disclosure Letter or the
documents annexed thereto, with respect to each item of Intellectual
Property identified in the Disclosure Letter:
9. 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);
10. neither the Company nor, to the knowledge of the Company, any other
party to the licence, agreement or permission is in material breach
or default, and so far as the Vendors are aware no event has occurred
which with notice or lapse of time would constitute a breach or
default or permit termination, modification or acceleration
thereunder;
11. no party to the licence, agreement or permission has repudiated any
material provision thereof;
12. to the knowledge of the Company, with respect to each sublicence, the
warranties set forth in paragraphs 4.1 to 4.3 above are true and
correct with respect to the underlying licence;
13. the Company has not granted any sublicence or similar right with
respect to the licence, sublicence, agreement or permission; and
14. all the Company's products, technology and/or services (including
products currently under development) and all of the Company's
internal computer and technology products and/or systems will
adequately, properly and correctly record, store, process, calculate
and present the date 9 September 1999 and the change of date from the
20th century to the 21st century and all other changes consequential
thereto and no such date and/or change shall result in any defect,
abnormality, reduction or error in the performance, functionality
and/or operation of the Company's products, technology and/or
services (including products currently under development) and all of
the Company's internal computer and technology products and/or
systems.
15. no modification to any of the Company's products, technology and/or
services (including products currently under development) or any of
the Company's internal computer technology products and/or systems
will be necessary to take account of the creation of European
Currency Units or any currency substituted therefor ("ECU") and the
Company's products, technology and/or services (including products
currently under development) and all of the Company's internal
computers and technology products and/or systems shall at all times
adequately, properly and correctly process any change of currency
involving ECU and all other changes consequential thereto and no such
change shall result in any defect, abnormality, reduction or error in
the performance, functionality and/or operation of the Company's
products, technology and/or services (including products currently
under development) and all of the Company's internal computers and
technology products and/or systems.
16. The Company is the sole legal and beneficial owner of the copyright
and all other intellectual property or property rights in the code
for:
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Price Server REI
Price Server Workbench (UNIX front end) MSBQ
FX+ (Price Server NT front end) BBV (digital Bloomburg GUI)
FXO
STW (Sales and Trading Worksheet) RMS (Risk Management Toolkit)
VIA (Vendor Independent API) aRTe
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SCHEDULE 4
PART F
HEALTH AND SAFETY WARRANTIES
1. 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.
2. WARRANTIES
1 So far as the Vendors are aware the Company has complied and
continues to comply with all conditions, limitations, obligations,
prohibitions and requirements contained in any Health and Safety
Legislation and so far as the Vendors are aware there are no facts or
circumstances which are reasonably likely to lead to any material
breach of any Health and Safety Legislation.
2 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 the Health and Safety Legislation
and so far as the Vendors are aware there are no facts or
circumstances which are reasonably likely to lead to any such claims,
investigations or proceedings.
3 The Company has and has maintained employers liability insurance and
no claims in respect of health and safety have been made.
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SCHEDULE 5
COMPLETION REQUIREMENTS
A. OBLIGATIONS OF THE VENDORS
1 At Completion the Vendors shall deliver to the Purchaser or as the
Purchaser shall direct:
1.1 the Tax Deed duly executed as a deed by the parties hereto (other
than the Purchaser);
1.2 duly executed transfers of the Shares in favour of the Purchaser or
its nominee(s) and the share certificates in respect of the Shares
(or indemnities in respect thereof) together with any power of
attorney or other authority under which such transfers have been
executed;
1.3 the statutory and other books duly written up to Completion, the
Certificate of Incorporation, Certificates of Incorporation on Change
of Name and the common seal of the Company;
1.4 the title deeds and documents relating to the Premises as listed on
the schedule attached to the Disclosure Letter;
1.5 insofar as the same are in the possession of the Vendors, 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 Intellectual Property is
recorded;
1.6 all books of account and other books and records and copies of the
Memorandum and Articles of Association of the Company;
1.7 letters of resignation from each of the Directors and the Secretary
of the Company (except those whom the Purchaser has notified to the
Vendors in writing prior to the date of Completion that it wishes to
continue in office), each of whom shall resign from all his offices
with the Company with effect from Completion 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 save as expressed to the contrary any other claim or
right of action against the Company;
1.8 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;
1.9 (if so required by the Purchaser) irrevocable powers of attorney in
the agreed 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;
1.10 the Service Agreement Side Letters duly executed by each of the
Vendors;
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1.11 the Escrow Agreement, duly executed by the Vendors;
1.12 a Disclosure Letter in an agreed form.
2 At Completion the Vendors shall procure that:
2.1 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 with effect from
Completion and contain a statement in accordance with Section 394(1)
of the Companies Act;
2.2 a board meeting of the Company be held at which:
(a) it shall be resolved that the said transfers in respect of
the Shares to the Purchaser be approved for registration
subject only to them being duly stamped;
(b) all existing bank mandates shall be revoked and new
instructions to banks shall be given in such form as the
Purchaser may require;
(c) such persons as the Purchaser shall nominate shall be
appointed as Directors and/or as Secretary of the Company;
(d) the resignations referred to in Clause 1.7 of this
Schedule 5 shall be accepted;
(e) the resignation of the auditors of the Company shall be
accepted and Messrs Arthur Andersen shall be appointed as
the new auditors of the Company;
(f) the accounting reference date of the Company shall be
changed to 31 December;
(g) any and all other Supplemental Agreements required to be
approved and executed by the Company shall be so approved
and executed by a duly authorised signatory on behalf of
the Company.
2.3 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
2.4 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 other than such items possession of which is
reasonably required to be retained by the Vendors for the purposes of
their employment by the Company.
B. OBLIGATIONS OF THE PURCHASER
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1 On Completion the Purchaser shall:
1.1 deliver to the Vendors a counterpart of the Tax Deed duly executed by
the Purchaser;
1.2 deliver to the Vendors a copy of the Disclosure Letter countersigned
by the Purchaser;
1.3 deliver to the Vendors counterparts of the Escrow Agreement duly
executed by the Purchaser and the Escrow Agent;
1.4 deliver to the Vendors the Service Agreement Side Letters duly
executed by it;
1.5 satisfy such of the Consideration as is required to be satisfied at
Completion under Clause 3 of this Agreement; and
1.6 have been duly authorised by its board of directors to execute and
deliver as a deed this Agreement and to execute and deliver any and
all relevant Supplemental Agreements (as deeds or otherwise, as
appropriate).
2 Post completion, upon the Vendors becoming employees of the Company
(which the Purchaser agrees to procure forthwith following
Completion), the Purchaser shall issue the Employee Stock Option
Letter to the Vendors in substantially the form set out in Schedule
10.
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SCHEDULE 6
TAX DEED
See attached
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SCHEDULE 7
UNAUDITED ACCOUNTS
See attached
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SCHEDULE 8
LIMITATIONS
1.1 The aggregate liability of each Vendor pursuant to this Agreement and
the Tax Deed shall not exceed the Consideration actually received by
such Vendor as determined in accordance with Clause 3 and Schedule 1
of this Agreement.
1.2 No claim may be made against a Vendor pursuant to this Agreement (a
"Claim"):
(a) unless notice of such claim is served on the Vendors in
writing specifying in reasonable detail the nature of such
claim and the amount claimed on or before 31 March 2000;
(b) unless notice of such claim is served on the Vendors in
writing specifying as fully as reasonably practicable
details of the nature of such claim and the amount claimed
as soon as reasonably practicable and in any event within
ninety (90) days of the Purchaser or one of the members of
the Purchaser's Group or any of their respective officers
becoming aware thereof;
(c) unless notice of such claim is served on the Vendors in
accordance with this clause 1.2 and within twelve (12)
months thereafter legal proceedings in respect of such
claim shall have been issued and served upon each of the
Vendors;
(d) where the amount so claimed in respect of such claim
against all the Vendors does not exceed $5,000 and such
claim shall be disregarded for all purposes; or
(e) which arises from a breach which is capable of remedy
unless and until the Vendors are given notice of such
breach and such breach is not remedied within thirty (30)
days of the date of receipt of that notice (the Purchaser
using all reasonable endeavours to assist and to procure
the assistance of the Group in remedying such breach).
1.3 No Claim or claims under the Tax Deed shall be made against a Vendor
unless the amount of the Claim or claim under the Tax Deed when
aggregated with all other Claims and claims under the Tax Deed
previously or in the process of being brought exceeds $50,000.
1.4 The total amount of the liability of the Vendors in respect of all
Claims and possible Claims and claims under the Tax Deed shall not
exceed the amount of the Consideration actually received by the
Vendors.
1.5 The Purchaser shall and shall procure that each member of the
Purchaser's Group shall promptly reimburse to the Vendors (or such of
the Vendors who have paid) all amounts (not exceeding the aggregate
sum paid by the Vendors (or such of the Vendors as aforesaid) in
respect of any Claim) paid by the Vendors in respect of any Claim
which is subsequently recovered by the Purchaser or a member of the
Group as the case may be from any insurance company or other third
party and the Purchaser hereby undertakes to use and to procure that
all relevant members of the Group use its or
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their reasonable endeavours to enforce any rights to recover such
sums from insurers or other third parties.
1.6 No Claims shall be made against any of the Vendors:
(a) to the extent that the breach giving rise to a possible
Claim occurs or is increased by reason of any event, act,
arrangement, occurrence or omission on the part of the
Purchaser or the Company (other than any event, act,
arrangement, occurrence or omission reasonably necessary
in the ordinary course of business) which occurs after the
date of this Agreement or if such claim would not have
arisen but for any change in legislation or any increase
in any rate of Taxation or any change occurring after the
date of this Agreement in Revenue practice or in any
principle of common law (whether or not any of the
foregoing purports to be effective retrospectively in
whole or in part);
(b) to the extent that a member of the Purchaser's Group is
entitled to recover against any loss or damage suffered by
a member of the Purchaser's Group arising out of a breach
giving rise to a Claim, under the terms of any insurance
policy for the time being in force or which would have
been in force if the insurance arrangements for the
Company immediately prior to the date of this Agreement
had been maintained after the date of this Agreement;
(c) to the extent of any over-provision or over-reserve made
in the Accounts or Unaudited Accounts in respect of any
liability actually provided for in such Accounts or
Unaudited Accounts;
(d) to the extent that note, allowance, provision or reserve
has been made in the Accounts or Unaudited Accounts in
respect of the matter to which such liability relates;
(e) to the extent that the breach giving rise to a possible
Claim arises as a result of any change in the basis of
accounting (including a change in the length of any
accounting period of the Company), tax computation, or
trading or winding up or cessation of any trade or
business of the Company after the date of this Agreement;
(f) to the extent that there are tax losses, reliefs or
allowances (which have not been taken into account in
computing (and so reducing) any provision for tax which
appears in the Accounts (or which but for the presumed
availability of such losses, reliefs or allowances, would
have appeared in the Accounts)) in the Company are
available (whether by surrender or otherwise) at the date
of this Agreement to be set against the tax to which the
Claim relates;
(g) based upon any liability by reason of the fact that any
losses of any kind of the Company shall not be capable of
being carried forward to a period beginning on or after
Completion by way of relief for taxation purposes;
(h) based upon any liability in respect of corporation tax or
any other Taxation arising in the ordinary course of
trading of the Company; or
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(i) based upon a liability which is contingent only unless and
until such contingent liability becomes an actual
liability and is due and payable. For the avoidance of
doubt, if notice of a contingent Claim is served on the
Vendors in accordance with Clause 1.2 of this Schedule 8,
this Clause 1.6(i) shall in no way prejudice or adversely
affect the Purchaser's right to pursue such Claim on or
after 31 March 2000.
(j) if and to the extent that the Tax Liability would not have
arisen or would have been reduced or eliminated but for a
failure by the Company to utilise a Relief which was taken
into account in computing any Tax Liability (or any
provision for deferred tax) or otherwise taken into
account as an asset in the Accounts or the Unaudited
Accounts arising in respect of an Event occurring on or
before Completion if such Relief is available to be used
against any profit, gain or Tax arising from the matters
which would have given rise to a Claim under the
warranties or would have been available to be used had it
not been used against any profit, gain or taxation arising
from a matter which occurred after Completion;
(k) if and to the extent that such Tax Liability would not
have arisen or would have been reduced or eliminated but
for the failure or omission on the part of the Company to
make any claim, election, surrender or disclaimer or give
any notice or consent or do any other thing under the
provisions of any enactment or regulation to Taxation
after Completion, the making giving or doing of which was
taken into account in computing (and so reducing)
provision for Tax which appears in the Accounts or the
Unaudited Accounts and of which specific notice and
details of such claims, election, surrender or disclaimer
notice or consent was given to the Purchaser at least
thirty (30) days before the last date upon which such
claim, election, disclaimer, notice or consent could
validly be made or given; or
(l) to the extent that the amount for which the Vendors are
liable for breach of Warranties does not exceed an amount
for which the Vendors are liable under the Tax Deed in
respect of the same liability and such liability has been
satisfied.
1.7 Subject always to Clause 1.8 of this Schedule 8, if any Demand (as
defined below) comes to the notice of the Purchaser or a member of
the Purchaser's Group or any of their respective officers, the
Purchaser shall and shall procure that each relevant member of the
Purchaser's Group shall:
(a) forthwith give written notice as soon as practicable
thereof to the Vendors specifying the nature of the
possible Claim in reasonable detail;
(b) not make any admission of liability, agreement or
compromise to or with any person in relation to any such
Demand without the prior agreement in writing of the
Vendors;
(c) give the Vendors and their professional advisers
reasonable access to the premises and personnel of the
Purchaser and the Purchaser's Group outside normal
business hours and to any relevant chattels, accounts,
documents and records within the possession or control of
the Purchaser or the Purchaser's Group to enable the
Vendors and their professional advisers to examine such
chattels, accounts, documents and records and to take
copies and photographs thereof at their own expense;
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(d) subject to the Vendors indemnifying the Purchaser or the
Purchaser's Group to the Purchaser's reasonable
satisfaction against any liability, costs, damages, awards
or expenses which may be incurred thereby take such action
as the Vendors may reasonably request to avoid, dispute,
resist, compromise or defend any such Demand; and
(e) subject to the Vendors indemnifying the Purchaser or the
Purchaser's Group to the Purchaser's reasonable
satisfaction against any liability, costs, damages, awards
or expenses which may be incurred thereby permit the
Vendors if they shall so request in writing to the
Purchaser to have the conduct of all proceedings relating
to the Demand including the appointment of solicitors or
other professional advisers and making any settlement or
compromise thereof provided that if the Purchaser shall in
writing so require, the Vendor shall procure that the
Purchaser is promptly sent copies of all written
communications pertaining thereto.
"Demand" for the purposes of this Clause 1.7 and Clause 1.8 of this
Schedule 8 means the issue of any notice, letter or other document or
the taking of any other action by or on behalf of any third party
from which notice, letter, document or action it appears that a third
party claim is to be, or may come to be, made in respect of which a
Claim may arise.
1.8 If any Demand arises out of or in connection with Tax, the provision
of Clause 1.7 of this Schedule 8 will not apply but the issue shall
be governed by the claims procedure set out in Clause 5 of the Tax
Deed.
1.9 Notwithstanding anything expressed or implied in this Agreement to
the contrary, any payment by the Vendors pursuant to a Claim shall be
treated for all purposes by the parties as a reduction in the
consideration payable for the Shares and Clause 3 shall be modified
accordingly.
1.10 The Purchaser acknowledges that in entering this Agreement it is
relying on the Warranties and the Tax Deed and not upon any other
warranties, undertakings or representations of any description given
by or on behalf of any of the Vendors, the Vendors' Solicitors or
other agents or advisers.
1.11 The Purchaser shall have no right after Completion to rescind or
terminate this Agreement or to delay performance of its obligations
under this Agreement or under the provisions of the Misrepresentation
Act 1967, the Unfair Contract Terms Act 1977 or for any other reason
whatsoever.
1.12 The Vendors shall each be entitled to satisfy any Claim or any claim
under the Tax Deed, or any part thereof, by transferring to the
Purchaser, or as it may direct, Consideration Shares and for the
purposes of this clause 1.12 each such Consideration Share so
transferred shall be deemed to satisfy an amount of the Claim equal
to the Relevant Value of such Consideration Share.
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SCHEDULE 9
SHAREHOLDERS AGREEMENT
See attached
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SCHEDULE 10
EMPLOYEE STOCK OPTION LETTER
See attached
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SCHEDULE 11
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Vendors as follows:
1. Organization, Standing and Power. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Delaware, and is duly qualified and in good standing as
a foreign corporation in the jurisdictions where the ownership of its
assets or the conduct of its business requires such qualification
(except where the failure to be so qualified would not have a
material adverse effect on Purchaser and its subsidiaries taken as
whole). Purchaser has the full corporate power to own its properties
and assets and to carry on its business as now being conducted.
2. Certificate of Incorporation, Bylaws and Agreements. A true, complete
and correct copy of the Certificate of Incorporation and Bylaws of
Purchaser as currently in effect have been delivered to Vendors.
Purchaser has no actual knowledge that there are any agreements by
and between or among Purchaser and any or all of its shareholders
imposing any restrictions upon the transfer of or otherwise
pertaining to the shares to be received by the Vendors or the
ownership thereof.
3. Authority. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been
duly authorised by all necessary corporate action on the part of
Purchaser. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and binding obligation of
Purchaser, enforceable in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by
laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
4. Purchaser Capital Structure; Issuance of Stock.
(a) The authorized capital stock of Purchaser consists of
2,000,000 shares of preferred stock, $0.0001 par value,
none of which are issued outstanding, and 45,000,000
shares of common stock, $0.0001 par value, of which
approximately 11,592,166 shares were issued and
outstanding as of 31 March 1998 after giving effect to the
sale by the Purchaser of 2,378,500 shares of common stock
in May 1998 pursuant to a public offering of such shares.
As of 31 March 1998 Purchaser had reserved 2,649,999
shares of common stock for issuance pursuant to
Purchaser's employer benefit plans, of which options to
purchase 2,177,985 shares were outstanding, and 600,000
additional shares of common stock have been reserved for
issuance under Purchaser's employee benefit plans and
approved by its shareholders.
(b) The shares of Purchaser common stock to be issued to the
Vendors pursuant to this Agreement have been duly
authorised by all necessary corporate action, and when
issued in
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accordance with the terms and provisions of this
Agreement, will be validly issued, fully paid and
non-assessable.
5. SEC Filings; Purchaser Financial Statements. Purchaser has furnished
or made available to the Vendors true and correct copies of its
Annual Report on Form 10-K for the year ended 31 December 1997 and
its Quarterly Report on Form 10-Q for the quarter ended 31 March
1998, and its final Proxy Statement dated 14 April 1998, each as
filed with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (all
of the foregoing being collectively referred to as the "SEC
Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the
Exchange Act, and the applicable rules and regulations of the SEC
thereunder, and none of the SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a document
subsequently filed with the SEC prior to the date hereof and
delivered to the Company. The financial statements of Purchaser,
including the notes thereto, included in the SEC Documents (the
"Purchaser Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting
principles consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) and present fairly the consolidated
financial position of Purchaser at the dates thereof and of its
consolidated results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal,
recurring audit adjustments). There has been no change in Purchaser's
accounting policies except as described in the notes to the Purchaser
Financial Statements; provided, however, Purchaser may have restated
or may restate one or more of the Purchaser Financial Statements to
reflect acquisitions entered into subsequent to the respective dates
thereof.
6. Litigation. Except as disclosed in the SEC Documents, there is no
action, suit, proceeding, claim, arbitration or investigation
pending, or as to which Purchaser has received any notice of
assertion, which, if determined adversely to Purchaser, would have a
material adverse effect on the business, consolidated financial
condition or consolidated results of operation of Purchaser and its
subsidiaries, taken as a whole.
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SIGNED and DELIVERED )
as a Deed by GERARD BUGGY )
in the presence of: )
)
SIGNED and DELIVERED )
as a Deed by RODERICK MANZIE )
in the presence of: )
)
SIGNED and DELIVERED )
as a Deed by GEORGE HENRY )
MARTIN in the presence of: )
)
SIGNED and DELIVERED )
as a Deed by PHILLIP )
STRASZYNSKI in the presence of: )
)
EXECUTED as a DEED )
by NEW ERA OF NETWORKS, INC. )
acting by: )
)
Director
Director/Secretary
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