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): October 1, 1998
FIRST SIERRA FINANCIAL, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-22525 76-0438432
(State or Other (Commission File (IRS Employer
Jurisdiction of number) Identification No.)
Incorporation)
Chase Tower, Suite 7050, 600 Travis Street, Houston,Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 221-8822
<PAGE>
ITEM 9 SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
On October 1, 1998, the Company acquired all of the outstanding shares of
capital stock of Titan Finance Limited, a company incorporated in England and
Wales, in exchange for $2,250,000 cash and convertible, subordinated
promissory notes (the "Notes" ) in the aggregate principal amount of
$2,250,000. The Notes bear interest at a rate of 6% per annum, payable
semi-annually, with the outstanding principal amount due on October 1, 2003.
The Company may prepay the Notes, in whole or in part, at any time without
penalty. The Notes will automatically convert into shares of common stock,
par value $.01 per share, of the Company (the "Common Stock" ) when the
average trading price of the Common Stock for the twenty trading days
preceding conversion equals or exceeds $20. Upon conversion, the Company will
issue one share of Common Stock for each $20 of outstanding principal amount
of the Notes.
The offering and issuance of the Notes was effected pursuant to Regulation S
promulgated under the Securities Act of 1933, as amended. The stock purchase
agreement entered into among the parties to the transaction was executed and
the closing of the transaction occurred in England. The former shareholders
of Titan Finance Limited are restricted from transferring the Notes or the
shares issuable on conversion thereof into the U.S. for one year and the
Notes bear a legend to that effect.
SIGNATURES
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 on this 14th day of October, 1998.
FIRST SIERRA FINANCIAL, INC.
By: /s/ Sandy B. Ho
------------------------
Name: Sandy B. Ho
Executive Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
10.1 Stock Purchase Agreement, dated as of October 1, 1998, by
and among First Sierra Financial, Inc., David Robert Jackson and
Paul David Connell
<PAGE>
Exhibit 10.1
THIS AGREEMENT is made on October 1998
BETWEEN:
(1) DAVID ROBERT JACKSON of 1 Beaconsfield Road, Bickley, Bromley, Kent
BR1 2BL ("Mr Jackson") and PAUL DAVID CONNELL of 251 Upton Road
South, Bexley, Kent DA5 1QU ("Mr Connell") (each individually a
"Shareholder" and together the "Shareholders").
(2) FIRST SIERRA FINANCIAL, INC, a Delaware corporation, whose principal
place of business is at Chase Tower, 70th Floor, 600 Travis Street,
Houston, Texas 77002, USA (the "Buyer").
RECITALS
(A) Whereas Titan Finance Limited (a private company limited by shares
incorporated in England and Wales under company number 2517406) (the
"Company") is engaged in the business of developing and maintaining
asset leasing business (the "Business").
(B) The Buyer desires to acquire the whole of the issued share capital
of the Company by means of a transaction exempt from registration
pursuant to Regulation S promulgated under the U.S. Securities Act
of 1933, as amended ("Regulation S").
(C) The Shareholders are the legal and beneficial owners of the Shares
(as defined below) and desire to sell their Shares to the Buyer
pursuant to the terms hereof.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement unless the context otherwise requires, the
following words and expressions shall bear the following meanings:
"Adjustment Proposal" has the meaning set forth in Clause 4.2 below.
"Affiliate" shall mean:
(a) any corporation, partnership, trust or other entity (i) in which
the Company or any person listed in (b) or (c) below has, directly
or indirectly, a five percent (5%) or greater interest or (ii)
which controls, is controlled by, or is under common control with
the Company, by any person listed in (b) or (c) below, any of the
entities described in the preceding clause (i) or any combination
thereof;Error! Bookmark not defined.
(b) the Shareholders; andError!
(c) any descendant, ancestor, spouse, brother, sister or other relation
of any person described in (b) above.
"Agreed Bundle" means the bundle of documents in the agreed form
which is annexed to the Disclosure Letter.
"agreed form" means in the form agreed in writing between the
Shareholders' Solicitors and the Buyer's Solicitors.
""A" Ordinary Shares" means the 60 fully paid "A" ordinary shares of
1 pound each registered in the name of Mr Jackson and the 40 fully paid
"A" ordinary shares registered in the name of Mr Connell being all
the issued "A" ordinary shares of 1 pound each in the capital of the
Company.
"Business" has the meaning set forth in the preface above.
"Business Day" means a day (excluding Saturday) on which banks
generally are open in London for the transaction of normal banking
business.
"Buyer's Group" means the Subsidiaries of the Buyer, any Holding
Company of the Buyer and the Subsidiaries of that Holding Company.
"Buyer's Solicitors" means Hammond Suddards of 7 Devonshire Square,
Cutlers Gardens, London EC2 4YH.
"Cash Consideration" has the meaning set forth in Clause 3.1(a)
"Closing" has the meaning set forth in Clause 2.1 below.
"Claim" means any claim brought by the Buyer against all or any of
the Shareholders for breach of any of the Representations or under
the Tax Deed.
"Closing Date" has the meaning set forth in Clause 2.1 below.
"Companies Act" means the Companies Act 1985, as amended.
"Disclosure Letter" means a letter from the Shareholders to the
Buyer in the agreed form disclosing exceptions to the
Representations.
"Dispute Notice" has the meaning set forth in Clause 4.2.
"Employment Contracts" means the employment contract in the agreed
form to be entered into by each of Mr Jackson and Mr Connell with
the Company on Closing.
"Holding Company" means a holding company as defined in section 736
of the Companies Act 1985.
"ICTA" means Income and Corporation Taxes Act 1988.
"Independent Auditor" has the meaning set forth in Clause 4.4.
"Instrument" means the instrument in agreed form constituting the
convertible subordinated fixed rate loan notes 1998/2003.
"knowledge" means knowledge of the Company which shall include
knowledge of its Affiliates and any of the Shareholders, having made
due and careful inquiry of the Company's directors, officers and
employees.
"Last Accounts" means the audited accounts of the Company for the
financial period ended 31 December 1997.
"Last Accounts Date" means 31 December 1997.
"Laws" means all laws, statutes, codes, rules, regulations,
ordinances or other requirements applicable to the Company or the
Business.
"Material Contract" has the meaning set forth in paragraph 24.1(b)
of Schedule 2.
"Material Adverse Effect" means an adverse effect which is material
to the business, the assets, financial condition or prospects of the
Company.
"Net Worth" means the total amount of the Company's called-up share
capital and accumulated reserves (and, in the case of the Net Worth
as at the Last Accounts Date, means the amount referred to in the
Last Accounts as "shareholders funds").
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Ordinary Shares" means the 60 fully paid ordinary shares of #1 each
registered in the name of Mr Jackson and the 40 fully paid ordinary
shares of #1 each registered in the name of Mr Connell being all the
issued ordinary shares of #1 each in the capital of the Company.
"Parties" means the Seller Group and the Buyer.
"Property" means the Company's leasehold interest in Units 3 and 4,
The Rectory Business Centre, 39, 41 and 43 Sidcup Hill, Sidcup,
Kent.
"Purchase Consideration" has the meaning set forth in Clause 3.1
below.
"Representations" means the warranties and representations set out
in Schedule 2 of this Agreement.
"Security Interest" means any mortgage, charge, pledge, security
interest, encumbrance, claim or lien of any kind or character,
direct or indirect, whether accrued, absolute, contingent or
otherwise.
"Seller Group" means the Company and the Shareholders.
"Shareholders' Solicitors" means Bermans of 7 Ralli Courts, West
Riverside, New Bailey Street, Manchester M3 5FT.
"Shares" means the "A" Ordinary Shares and the Ordinary Shares.
"Subsidiary" means a subsidiary as defined in section 736 of the
Companies Act 1985 as amended.
"Taxation" has the meaning given in the Tax Deed.
"Tax Deed" means the deed between the Buyer and the Shareholders
which relates to Taxation matters in the agreed form.
1.2 References to any statute, or to any statutory provisions, statutory
instrument, order or regulation made thereunder, includes that statute,
provision, instrument, order or regulation as amended, modified,
consolidated, re-enacted, or replaced from time to time, whether before
or after the date of this Agreement and also includes any previous
statute, statutory provision, instrument, order or regulation, amended,
modified, consolidated, re-enacted or replaced by such statute,
provision, instrument, order or regulation.Error! Bookmark not defined.
1.3 All references to a statutory provision shall be construed as
including references to all statutory instruments or orders,
regulations or other subordinate legislation made pursuant to that
statutory provision.Error! Bookmark not defined.
1.4 Unless the context otherwise requires, references to the singular
include the plural, references to any gender include all other genders,
and references to "persons" shall include individuals, bodies corporate,
unincorporated associations, professions, businesses and partnerships.
1.5 The term "including" shall be interpreted to mean "including without
limitation".
1.6 Clause headings are for information only and shall not affect the
construction of this Agreement.
1.7 The Schedules to this Agreement shall for all purposes form part of
this Agreement.
1.8 Each agreement, undertaking, covenant, warranty and Representation by
the Shareholders shall be deemed for all purposes to be made or given
jointly and severally.
2. SALE AND PURCHASE
2.1 The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of the Buyer's Solicitors
in London, England on the date of this Agreement (the "Closing
Date").
2.2 Each of the Shareholders agrees to sell, convey, transfer, assign and
deliver to Buyer at the Closing, on the terms and subject to the
conditions set forth in this Agreement, as legal and beneficial owner
with full title guarantee, all his Shares in the Company free and
clear of any and all Security Interests, together with accrued benefits
and rights attached thereto and all dividends declared after the Closing.
2.3 At the Closing:
(a) the Shareholders shall deliver, and shall cause the Company to
deliver, to the Buyer each of the various certificates,
instruments and documents referred to in Clause 9.1 below; and
(b) the Shareholders shall ensure that the Company's directors hold
a meeting of the board of directors of the Company at which the
directors:
(i) vote in favour of the registration of the Buyer (or its
nominees) as a member of the Company in respect of the
Shares (subject to the production of properly stamped
transfers);
(ii) appoint Michael Sabel and Tom Depping as directors of the
Company with effect from the end of the meeting; and
(iii) appoint David Jackson as the secretary of the Company with
effect from the end of the meeting.
2.4 The Buyer is not obliged to complete this Agreement unless:
(a) the Shareholders have complied with all their obligations under
Clause 2 and all other conditions specified in Clause 8.1 have
been either satisfied or waived in writing by the Buyer; and
(b) the purchase of all the Shares is completed simultaneously.
3. CONSIDERATION
3.1 The aggregate consideration for purchase of the Shares is four
million, five hundred thousand dollars (US$4,500,000) ("Purchase
Consideration") which shall be satisfied as follows:
(a) the sum of two million, two hundred and fifty thousand dollars
(US$2,250,000) shall be paid by the Buyer to the Shareholders
by wire transfer of immediately available funds to the accounts
designated by the Shareholders (the "Cash Consideration") in
respect of the "A" Ordinary Shares as follows:
(i) Mr Jackson - US$1,350,000; and
(ii) Mr Connell - US $900,000.
(b) the Buyer shall issue loan notes to each of the Shareholders
(as set out below) in accordance with the provisions of the
Instrument as follows:
(i) Mr Jackson shall be issued with a loan note having a
principal amount of US$1,350,000; and
(ii) Mr Connell shall be issued with a loan note having a
principal amount of US$900,000,
in respect of the Ordinary Shares.
3.2 After the execution of this Agreement and prior to the close of
business on the Closing Date, no transfers of Shares in the Company
shall be registered other than as contemplated by this Agreement.
4. ADJUSTMENT
4.1 The Purchase Consideration is based upon the Net Worth of the
Company being at least 44,774 pounds as at the Last Accounts Date.
In the event that the Buyer delivers an Adjustment Proposal to the
Shareholders under Clause 4.2 below on or before the First
Anniversary and the Shareholders are adjudged to be accountable to
the Buyer for a shortfall (the "Shortfall") in the Net Worth as at
the Closing Date below 44,774 pounds, the Shortfall will be dealt with
in accordance with the Conditions (as defined therein) of the
Instrument provided that such determination of the Shortfall is made
prior to the First Anniversary. If such Shortfall is determined on
a date after the First Anniversary (provided the Adjustment Proposal
is served prior to the First Anniversary), the Shareholders shall
pay the amount of the Shortfall to the Buyer in cash within 30
Business Days of such determination.
4.2 On the Closing Date, the Shareholders shall deliver to the Buyer a
preliminary statement (the "Preliminary Settlement Statement")
setting forth their good faith estimate of the amount of Net Worth as
of such date, which shall be the basis for any payment under Clause
3.1(a). If at any time thereafter (but not later than one year
following the Closing), the Buyer believes that the Preliminary
Settlement Statement did not represent the actual Net Worth on the
Closing Date, then the Buyer may deliver to the Shareholders a
statement (the "Adjustment Proposal") setting forth in detail its
proposed adjustments to the Preliminary Settlement Statement. The
Buyer shall provide the Shareholders and their representatives with
full access to all assets, records and work papers necessary to
compute and verify the accuracy of the Adjustment Proposal. This
Adjustment Proposal as delivered to the Shareholders shall be final
and binding for purposes of this Agreement unless, within thirty (30)
days after delivery to the Shareholders, they shall deliver to the
Buyer a notice setting forth in detail their disagreement with the
Adjustment Proposal ("Dispute Notice"). After delivery of a Dispute
Notice, the Buyer and the Shareholders shall promptly negotiate in
good faith with respect to the subject of the Dispute Notice, and if
they are unable to reach an agreement within thirty (30) days after
receipt by the Buyer of the Dispute Notice, the dispute (but only
such disputed items) may be submitted by any of the Parties within
10 days thereafter to the Independent Auditor (as defined below).
The Independent Auditor shall not have authority to redetermine any
matter except those which are in dispute. The Independent Auditor
shall be directed to issue a final and binding decision within sixty
(60) days of submission of the Dispute Notice, as to the issues of
disagreement referred to in the Dispute Notice and not resolved by
the Parties. The Adjustment Proposal, as so adjusted by agreement
or by the Independent Auditor (if required), shall be final and
binding on the parties.
4.3 The Preliminary Settlement Statement, Net Worth on the Closing Date
and Adjustment Proposal shall be prepared in accordance with UK
generally accepted accounting principles consistent with those
historically employed by the Company in preparation of its own
financial statements. More specifically the Net Worth on the
Closing Date should be calculated by taking the Net Worth at the
Last Accounts Date and adjusting it for:
(a) the profit or loss shown by the Company's profit and loss
accounts for the period from the Last Accounts Date to the Closing
Date; and
(b) any movements to the Company's share capital in the period from
the Last Accounts Date to the Closing Date.
4.4 The "Independent Auditor" shall mean one of the "Big Five" UK public
accounting firms with no material relationship to either of the
parties chosen by agreement of the parties, or if they are unable to
agree, shall mean one of the "Big Five" firms with no such material
relationship chosen by lot. The fees and expenses of the
Independent Auditor shall be equitably allocated by the Independent
Auditor based upon his decision. The Independent Auditor shall act
as an expert and not as an arbitrator. The decision of the
Independent Auditor with respect to the Adjustment Proposal shall in
the absence of fraud or manifest error be final and binding on the
parties. The full force and effect of the Representations shall in
no way be diminished by the Preliminary Settlement Statement, the
Adjustment Proposal or the determination of the Independent Auditor.
5. REPRESENTATIONS
5.1 Each of the Shareholders jointly and severally, represents and
warrants to the Buyer that each of the Representations contained in
Schedule 2 is true, accurate, correct and complete as at the date of
this Agreement.
5.2 All Representations, warranties, covenants and agreements contained
in this Agreement or in any document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Parties
hereto. All such Representations, warranties, covenants and
agreements shall survive the Closing and shall be fully effective
and enforceable until performed. Notwithstanding anything to the
contrary contained herein, the Representations contained in this
Agreement shall not be affected by any investigation, verification
or examination by any Party or by anyone on behalf of any such
Party.
6. LIMITATIONS ON CLAIMS
6.1 The Shareholders shall not be liable for any Claim unless they
receive from the Buyer written notice containing details of the
Claim including the Buyer's estimate to the extent reasonably
practicable (on a without prejudice basis) of the amount of such
Claim:
(a) on or before the second anniversary of Closing in the case of a
Claim other than Claims relating to Tax;
(b) in respect of any Claim relating to Tax on or before the sixth
anniversary of the end of the accounting reference period of
the Company in which Closing occurs.
6.2 The Buyer shall have no right to recover in respect of any breach of
any of the Representations unless and until the aggregate liability
of the Shareholders in respect of breach of Representations exceeds
50,000 pounds but if such aggregate liability exceeds that sum, the
Shareholders shall be liable for the whole amount not merely the
excess over 50,000 pounds.
6.3 The aggregate liability of the Shareholders for all Claims shall not
exceed the Purchase Consideration.
6.4 The Shareholders shall not be liable for any breach of any of the
Representations if and to the extent that the fact matter event or
circumstances giving rise to such breach was fully and fairly
disclosed in the Disclosure Letter.
6.5 No Claim shall lie against the Shareholders in respect of any matter
arising as a result of any change in the law or of any change in the
rates or principles of taxation subsequent to Closing.
6.6 The Shareholders shall not be liable for any Claim in respect of any
fact, matter, event or circumstances to the extent that specific
allowance, provision or reserve has been made for such specific
fact, matter, event or circumstances in the Last Accounts.
6.7 The Shareholders shall not be liable in respect of any Claim to the
extent that the Claim would not have arisen but for any act, matter
or thing done or omitted to be done after the date hereof by the
Buyer or any member of the Buyer's Group otherwise than in the
Ordinary Course of Business of the Company as carried on at Closing.
6.8 A breach of this Agreement which is capable of remedy shall not
entitle the Buyer to compensation except and to the extent that the
Shareholders are given written notice of such breach and following
such notice such breach (if capable of remedy) remains unremedied at
the expiry of 45 days following the date upon which such notice is
served.
6.9 If the Shareholders pay the Buyer any amount in discharge of any
Claim and if the Buyer or any member of the Buyer's Group
subsequently recovers from a third party (including any tax
authority) a sum which is directly referable to the subject matter
of the Claim, the Buyer shall repay to the Shareholders:
(a) an amount equal to the sum recovered from the third party less
any reasonable costs of recovery incurred by the Buyer or the
member of the Buyer's Group as a direct result of recovering
same and any tax suffered on the receipt or;
(b) if the figure resulting under Clause 6.9(a) above is greater
than the amount paid by the Shareholders to the Buyer or the
relevant member of the Buyer's Group in respect of the relevant
Claim, such lesser amount as shall have been so paid by the
Shareholders.
6.10 The Buyer agrees that it shall not be entitled to recover damages or
obtain payment, reimbursement, restitution or indemnity in respect
of any Claim to the extent that it has already recovered any sum in
respect of such Claim pursuant to any other provision of this
Agreement.
6.11 If a claim is made against the Company which in turn is likely to
lead to a Claim being made against the Shareholders (hereinafter a
"Third Party Claim"), the Buyer:
(a) shall procure that notice thereof is given to the Shareholders;
(b) shall not make (or as appropriate shall procure that no member
of the Buyer's Group shall make) any admission, liability,
agreement or compromise with any person body or authority in
relation to any such Third Party Claim without prior
consultation with the Shareholders;
(c) shall take (or as appropriate shall procure that any relevant
member of the Buyer's Group shall take) such action as the
Shareholders may reasonable request to avoid, dispute, resist,
appeal, compromise or defend such Third Party Claim provided
that such action does not prejudice the goodwill or conduct of
the business of the Company.
6.12 Nothing in this Clause 6 shall in any way restrict or limit the
general obligation in law on the Buyer to mitigate any loss or
damage which it may suffer in consequence of any breach by the
Shareholders of any of the Representations.
6.13 None of the limitations contained in this Clause 6 shall apply to
Representations and warranties contained in paragraphs 1
(Authority and No Conflict), 2 (Validity), 3 (Due Organisation) and
4 (Capitalisation) of Schedule 2.
6.14 Notwithstanding any other provision in this Agreement, the Tax Deed
or any agreement entered into pursuant to this Agreement, none of
the limitations contained in Clause 6 shall apply to any claim for
breach of any of the Representations or under the Tax Deed where a
fact, matter or circumstance giving rise to a claim arises as a
result of fraud, negligence, misrepresentation, wilful concealment
or non-disclosure on the part of any member of the Seller Group or
any Affiliate of any member of the Seller Group.
7. COVENANTS
7.1 In this Clause:
"Confidential Business Information" means all or any information
relating to:
(a) the business methods, corporate plans, management systems,
finances, new business opportunities or development projects of
the Company;
(b) the marketing or sales of any past or present or future product
or service of the Company; or
(c) any trade secrets or other information relating to the
provision of any product or service of the Company to which the
Company attaches confidentiality or in respect of which it
holds an obligation of confidentiality to any third party;
"Customer" means any person, firm or company who or which shall at
the Closing Date be in negotiation with the Company for the
provision of Restricted Services or to whom the Company has provided
Restricted Services during the period of one year prior to Closing;
"Intermediary" means any person, firm or company who introduces
business to the Company in respect of Restricted Services as at the
Closing Date or who has introduced business to the Company in
respect of Restricted Services during the period of one year prior
to Closing;
"Material Interest" means:
(a) the holding of any position as director, officer, employee,
consultant, partner, principal or agent;
(b) the direct or indirect control or ownership (whether jointly or
alone) of any shares or debentures or any voting rights
attached to them; or
(c) the direct or indirect provision of any financial assistance;
"Restricted Area" means the United Kingdom;
"Restricted Services" means the business of originating and
acquiring financial receivables including without limitation, the
leasing of computer and other equipment.
7.2 Without prejudice to any provisions operating to similar effect
which may be contained in any service contract or contract of
employment entered into now, or in the future between any of the
Shareholders and the Company or any members of the Buyer Group, each
of the Shareholders hereby covenants with the Buyer that without the
prior written consent of the Buyer:
(a) he will not for a period of 2 years after Closing hold any
Material Interest in any business (other than the Buyer or the
Company or any company which may acquire the Buyer or the
Company) which provides Restricted Services in competition with
the Business in the Restricted Area; or
(b) he will not at any time after Closing disclose or permit there
to be disclosed (save as authorised by the Buyer or required by
law) any Confidential Business Information, nor will he at any
time after Closing otherwise make use of any Confidential
Business Information for his own benefit, or for the benefit of
others, or in any way to the detriment of the Company; or
(c) he will not for a period of 12 months after Closing solicit or
entice away or seek to entice away any person who is, and was
at the Closing Date, a senior employee of the Company or any
Intermediary; or
(d) he will not for a period of 18 months after the Closing Date
within the Restricted Area and in respect of Restricted
Services directly or indirectly solicit the custom of, or
orders from, any Customer; or
(e) he will not for a period of 12 months, after the Closing Date
within the Restricted Area and in respect of Restricted
Services accept orders from any Customer; or
(f) that he will not for a period of 12 months after the Closing
Date interfere with or seek to interfere with the continuance
of supplies to the Company (or the terms relating to such
supplies) from any suppliers who have been supplying equipment
or services to the Company at any time during the 12 months
immediately preceding Closing; or
(g) that if he shall have obtained trade secrets or other
confidential information belonging to any third party under an
agreement which contained restrictions or disclosure, he will
not without the previous written consent of the Buyer at any
time infringe such restrictions.
7.3 The Parties agree that the restrictions contained in Clause 7.2(b)
shall not apply if and to the extent that the Confidential Business
Information concerned has ceased to be confidential or come into the
public domain (other than as a result of breach of any obligation of
confidence by any of the Shareholders or any Affiliate of any of the
Shareholders).
7.4 Each Shareholder shall procure that all companies and businesses
directly or indirectly owned or controlled by him shall be bound by
and observe the provisions of this Clause as if they were parties
covenanting with the Buyer.
7.5 Each Shareholder acknowledges that the Buyer is accepting the
benefit of the covenants contained in this Clause both on its own
behalf and on behalf of its Subsidiaries with the intention that the
Buyer may claim against any or all of the Shareholder on behalf of
any such Subsidiary for loss sustained by that Subsidiary as a
result of any breach of the covenants contained in this Clause.
7.6 Nothing in this Clause 7 shall preclude any Shareholder from being
the owner for investment purposes only of not more than 3% of the
equity share capital of any company listed on the Official List or
the Alternative Investment Market of The London Stock Exchange.
7.7 The restrictions contained in this Clause 7 are considered
reasonable by the Shareholders in all respects but if any of those
restrictions shall be held to be void in the circumstances where it
would be valid if some part were deleted the parties agree that such
restrictions shall apply with such deletion as may be necessary to
make it valid and effective.
7.8 The provisions contained in each of Clauses 7.1(a) to (g) are
separate and severable and shall be enforceable accordingly.
7.9 Each of the Shareholders undertakes to do all such acts and things
(including without limitation, sign and execute any document,
agreement or instrument) as the Buyer or the holder of the Senior
Debt (as defined in the Instrument) may consider necessary or
desirable in connection with the subordination of the loan notes
issued pursuant to the Instrument to any of the Senior Debt.
8. CONDITIONS TO OBLIGATION TO CLOSE
8.1 The obligation of Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions:
(a) the Company and the Shareholders shall have procured all of the
third party consents necessary to consummate this transaction
for the sale of the Shares;
(b) the Parties shall have received all required authorisations,
consents and approvals of governments and governmental
agencies;
(c) Mr Jackson and Mr Connell shall have each entered into their
respective Employment Contracts;
(d) the Parties shall have entered into the Tax Deed;
(e) the Buyer shall have received audited accounts of the Company
for the period ended 3 December 1997 which shall be reasonably
satisfactory in form and substance to the Buyer;
(f) all actions to be taken by the Company or the Shareholders in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated
hereby shall be reasonably satisfactory in form and substance
to the Buyer;
(g) any necessary waivers or consents having been obtained so as to
enable the Buyer to be registered as the holder of the Shares;
(h) the Buyer shall have received duly executed stock transfer
forms in its favour from each of the Shareholders in respect of
the Shares being sold by each of them, together with the share
certificates relating to the Shares;
(i) the Buyer shall have received all land certificates, charge
certificates and leases, title deeds and other documents
relating to the Property (save to the extent that the same are
in possession of mortgagees);
(j) the Buyer shall have received the common seals, certificates of
incorporation and the statutory books for the Company properly
completed up to Closing;
(k) the Shareholders shall have each signed a power of attorney in
the agreed form enabling the Buyer to vote on the Shares
pending their registration in the Buyer's name in the Company's
register of members.
8.2 The Buyer may waive in writing any condition specified in Clause 8.1.
9. INDEMNIFICATION
9.1 The Shareholders hereby agree to fully indemnify and keep fully
indemnified the Buyer from an against all costs, losses, claims,
demands, liabilities, damages, fees or expenses (including
reasonable legal fees) suffered or incurred by the Buyer or the
Company arising out of or in connection with
(a) the Business or the operation thereof (whether before or after
the Closing Date) not complying or not having complied with any
provision of the Consumer Credit Act 1974 (the "Act")as
amended, replaced or re-enacted from time to time, together
with any subordinate legislation made thereunder including,
without limitation, the failure to have the appropriate
licences under the Act relating to hire, credit and credit
reference agency;
(b) the statutory books of the Company not having been kept in
accordance with the Companies Act;
(c) the termination of the joint venture between the Company and
Hyphen (UK) Limited relating to Hyphen Finance Limited and
including, (without limitation), in connection with the
liquidation of Hyphen Finance Limited;
(d) the Deed of Indemnity dated 30 September 1996 between
Grovefield Finance Limited and the Company relating to a lease
agreement between Grovefield and Rapitech UK Limited, and the
Charge and Assignment dated 16 June 1998 given by the Company
in favour of Grovefield Finance Limited; and
(e) the sale or promotion of sale of any products or services
supplied by Asset Protection Administration Limited.
9.2 Mr Jackson hereby undertakes to the Buyer to notify the Office of
Fair Trading regarding the change of control of the Company for the
purpose of the Consumer Credit Act licences issued to the Company
within 21 days of Closing.
10. SECURITIES LAW MATTERS
10.1 The parties agree as follows with respect to the sale or other
disposition after the Closing Date of the notes issued pursuant to
the Instrument and the Consideration Shares (as defined in the
Instrument):
(a) The Shareholders agree that they will not directly or
indirectly sell, transfer or otherwise dispose of the notes
issued pursuant to the Instrument and any Consideration Shares
issued to them under the notes, into the United States prior to
one year after the date of the issue of the notes under the
Instrument, it being acknowledged that this covenant is made to
assure compliance with Regulation S.
(b) The certificates representing Consideration Shares shall bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). IN ADDITION, SHAREHOLDERS ACKNOWLEDGE THAT THE SHARES
BEING ACQUIRED BY THEM HAVE BEEN ISSUED UNDER APPLICABLE
EXEMPTIONS FROM REGISTRATION UNDER REGULATION S AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER IN THE
UNITED STATES PRIOR TO ONE YEAR AFTER THE DATE OF RECEIPT OF
SUCH SHARES, IT BEING ACKNOWLEDGED THAT THIS COVENANT IS MADE
TO ASSURE COMPLIANCE WITH REGULATION S.
(c) The Buyer may place stop transfer orders with its transfer
agents with respect to such certificates in accordance with
U.S. federal securities laws.
11. MISCELLANEOUS
11.1 No Party shall issue any press release, public announcement or
public disclosure relating to the subject matter of this Agreement
without the prior written approval of the other Parties; provided,
however, that the foregoing shall not prohibit disclosure to a
Party's attorneys, accountants, lenders or financial advisors (who
shall be bound by this provision), nor shall the foregoing prohibit
the Buyer from making any public disclosure it believes in good
faith is required by law (in which case the Buyer will advise the
Shareholders prior to making the disclosure, which must be approved
in content by the Shareholders, which approval cannot be
unreasonably withheld or delayed). After Closing, the Buyer shall
be entitled to make the first public disclosure regarding the
subject matter of this Agreement and the Buyer's prior written
consent shall be required prior to any public disclosures made by
the Seller Group.
11.2 This Agreement shall not confer any rights or remedies upon any
person other than the Parties and their respective successors and
permitted assigns.
11.3 This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes
any prior understandings, agreements or representations by or among
the Parties, written or oral, that may have related in any way to
the subject matter hereof, including but not limited to the letter
of intent dated 3 August 1998.
11.4 A variation of this Agreement, the Tax Deed or any agreement or
document entered into pursuant to this Agreement is valid only if it
is in writing and signed by or on behalf of each Party.
11.5 The failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not constitute a waiver of
the right or remedy or a waiver of other rights or remedies. No
single or partial exercise of a right or remedy provided by this
Agreement or by law prevents further exercise of the right or remedy
or the exercise of another right or remedy.
11.6 This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective heirs, successors and
permitted assigns. The Parties may not assign either this Agreement
or any of its rights, interests or obligations hereunder without the
prior written approval of the other Parties provided that the Buyer
may assign this Agreement or any of its rights, interests or
obligations under this Agreement to another member of the Buyer's
Group.
11.7 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will
constitute one and the same instrument. Any reference herein to an
agreement or contract shall be deemed to refer also to the other
(such terms being interchangeable) and shall include commitments and
understandings, whether written or oral, including all amendments
thereto.
11.8 All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered in person or sent by
registered or certified mail, postage prepaid or commercial
overnight courier addressed as follows with written verification of
receipt by it. A notice shall be deemed given:
(a) when delivered by personal delivery (as evidenced by the
receipt);
(b) five (5) Business Days after deposit in the mail if sent by
registered or certified mail or 10 Business Days if sent to an
address outside the United Kingdom;
(c) one (1) Business Day after having been sent by commercial
overnight courier as evidenced by the written verification of
receipt; or
(d) on the date of confirmation if telecopied.
If to the Shareholders:
David R Jackson
1 Beaconsfield Road
Bickley
Bromley
Kent
BR1 2BL
Copy to:
D B Gledhill
Bermans
7 Ralli Court
West Riverside
New Balley Street
Manchester
M3 5FT
If to Buyer:
Michael A Sabel
First Sierra Financial, Inc
Chase Tower, 70th Floor
600 Travis Street
Houston
Texas 77002
USA
Copy to:
Neal J. White, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Fax No.: (312) 984-3669
Bruce Gardner
Hammond Suddards
7 Devonshire Square
Cutlers Gardens
London EC2M 4YH
Fax No: 0171 655 1001
Any Party may change its address by giving the other Parties notice in
the manner herein set forth.
11.9 This Agreement shall be governed by and construed in accordance with
the laws of England and Wales save for the matters set out in
Clauses 7.9, 10 and the notes issued pursuant to the Instrument (the
"Delaware Matters") which shall be governed by the internal laws
(and not the laws of conflict) of the state of Delaware.
11.10 Each party hereby irrevocably and unconditionally consents and
submits to the non-exclusive jurisdiction of the English courts over
all matters relating to this Agreement save in respect of the
Delaware Matters in respect of which, each Party submits to the
exclusive jurisdiction of the courts of Delaware. Each party agrees
that service of process in any action or proceeding hereunder may be
made upon such party by certified mail, return receipt requested to
the address for notice set forth herein. Each party irrevocably
waives any objection it may have to the venue of any action, suit or
proceeding brought in such courts or to the convenience of the forum
and each party irrevocably waives the right to proceed in any other
jurisdiction. Final judgment in any such action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment, a certified or true copy of which shall be
conclusive evidence of the fact and the amount of any indebtedness
or liability of any party therein described.
11.11 Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.
11.12 Each party will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with the investigation,
negotiation and consummation of this Agreement and the transactions
contemplated hereby.
<PAGE>
SCHEDULE 1
Details of the Company
Company Number: 2517406
Date of incorporation: 2 July 1990
Authorised Share Capital #200 divided into 100 Ordinary
Shares of #1 each and 100 "A"
Ordinary Shares of #1 each.
Issued Share Capital 100 Ordinary Shares of #1 each
and 100 "A" Ordinary Shares of
#1 each.
Registered Office: 5 White Oak Square
London Road
Swanley
Kent
BR8 7AG
Directors: David Robert Jackson
Paul David Connell
Secretary: Rebecca Louise Jackson
Shareholders David Robert Jackson - 60
Ordinary Shares of #1 each and
60 "A" Ordinary Shares of #1
each.
Paul David Connell - 40
Ordinary Shares and 40 "A"
Ordinary Shares of #1 each
Accounting Reference Date: 31 December
<PAGE>
SCHEDULE 2
REPRESENTATIONS
1. AUTHORITY AND NO CONFLICT
Each member of the Seller Group has full right, power and authority,
without the consent of or filing with any other person (including
any governmental authority), to execute and deliver this Agreement
and the agreements contemplated hereby and to carry out the
transactions contemplated hereby and thereby. All corporate and
other acts required to be taken by any member of the Seller Group to
authorize the execution, delivery and performance of this Agreement
and all agreements and transactions contemplated hereby have been
properly taken. Such execution, delivery and performance will not
create any encumbrance nor terminate nor accelerate any obligation
of the Business and will not violate or conflict with any provision
of:
(a) the Articles of Association and Memorandum of Association of
the Company;
(b) any contract, permit, license or other instrument to which any
member of the Seller Group is a party or is bound;
(c) any injunction, decree or judgment of any court or governmental
agency; or
(d) any Law applicable to any member of the Seller Group or the
Business.
2. VALIDITY
This Agreement has been, and the agreements and other documents to
be delivered at Closing will be, duly executed and delivered and
constitute the valid and legally binding obligations of each member
of the Seller Group who are parties thereto, enforceable in
accordance with their respective terms. No approval, registration,
filing or other action by or with any person, including any
governmental authority, is required for any member of the Seller
Group to execute and consummate this Agreement.
3. DUE ORGANIZATION
The Company is a private company limited by shares, duly
incorporated in England and Wales under the Companies Act 1985 (as
amended). The copies of the Memorandum and Articles of Association
of the Company which have been delivered to Buyer are complete and
accurate in all respects, have attached to them copies of all
resolutions and other documents required by law to be so attached
and fully set out the rights and restrictions attaching to the share
capital of the Company and the Company is not in default or breach
in relation to any provision contained therein. The statutory books
(including all registers and minute books) of the Company have been
properly kept and contain an accurate and complete record of the
matters which should be dealt with in those books and no notice or
allegation that any of them is incorrect or should be rectified has
been received. All documents which should have been delivered by
the Company to the registrar of companies in relation to companies
incorporated in England have been properly so delivered. The
Company has full power and authority and all requisite licenses and
rights to carry on the Business.
4. CAPITALIZATION
The authorised share capital of the Company is #200 divided into 100
Ordinary Shares of #1 each and 100 "A" Ordinary Shares of #1 each.
The 100 Ordinary Shares and the 100 "A" Ordinary Shares which are in
issue have been properly allotted and issued, are fully paid up, and
Mr Jackson is the legal and beneficial owner of 60 Ordinary Shares
of 1 pound each and 60 "A" Ordinary Shares and Mr Connell is the legal
and beneficial owner of 40 Ordinary Shares of 1 pound each and 40 "A"
Ordinary Shares of 1 pound each. Each of the Shareholders is the sole
legal and beneficial owner of his Shares and has the absolute right
to sell, transfer and assign the same to Buyer, free and clear of
any and all Security Interests and adverse claims of any nature
whatsoever without the consent of any third party, and the Shares
constitute the entire issued share capital of the Company. All
issues of shares in the Company have been duly authorised and
validly made, including in compliance with all applicable laws.
Other than this Agreement, there is no option, right to acquire,
mortgage, charge, pledge, lien or other form of security or
encumbrance or equity on, over or affecting the unissued or issued
shares in the Company and there is no agreement or commitment to
give or create any and no claim has been made by any person to be
entitled to any. No share warrants to bearer have been issued with
respect to any shares in the Company. There are no voting trusts or
other agreements, arrangements or understandings between all or any
of the Shareholders or any other person applicable to the exercise
of voting or any other rights with respect to the unissued or issued
shares in the Company or with respect to the rights to the
management of the Company.
5. SUBSIDIARIES
The Company has not had and has no subsidiaries within the meaning
of section 736 of the Companies Act 1985 as amended.
6. DIRECTORS AND OFFICERS
The only directors of the Company are Mr Connell, and Mr Jackson.
Mrs. Jackson is the secretary of the Company.
7. TRANSACTIONS WITH AFFILIATES
No Shareholder or any Affiliate:
(a) owns, directly or indirectly, any interest in any entity which
is a competitor, lessor, lessee, customer, licensor or supplier
of the Company; or
(b) has any cause of action or other claim against or owes any
amount to, or is owed any amount by, the Company or any
licensor or supplier of the Company; or
(c) has any interest in or owns any assets, property, or rights
used in the conduct of the Business; or
(d) is a party to any contract, lease, agreement, arrangement or
commitment used in the Business; or
(e) is or has been a party to any contract or arrangement with the
Company; or
(f) has or owes any debt, liability or obligation to the Company;
or
(g) the Company does not have or owe any debt, liability or
obligation to any Shareholder or any Affiliate.
8. INSOLVENCY (THE COMPANY)
In respect of the Company:
(a) no order has been made and no resolution has been passed for
its winding up or for a provisional liquidator to be appointed;
(b) no petition has been presented and no meeting has been convened
for the purpose of its winding up;
(c) no administration order has been made and no petition for such
an order has been presented;
(d) no receiver (which term shall include an administrative
receiver) has been appointed or in respect of all or any of its
assets;
(e) it is not insolvent, nor unable to pay its debts within the
meaning of section 123 Insolvency Act 1986, nor has stopped
paying its debts as they fall due; and
(f) no voluntary arrangement has been proposed under section 1
Insolvency Act 1986. No event analogous to any of the
foregoing has occurred in or outside England. No unsatisfied
judgment is outstanding against the Company, and no guarantee,
loan capital, borrowed money or interest is overdue for
payment, and no other obligation or indebtedness is outstanding
which is substantially overdue for performance or payment.
9. BANKRUPY (SHAREHOLDERS)
In respect of each of the Shareholders:
(a) no bankrupy order has been made or a petition for such an order
presented;
(b) no application has been made for an interim order under section
253 Insolvency Act 1986;
(c) no Shareholder is unable to pay or has no reasonable prospect
of being able to pay any debt, as those expressions are defined
in section 268 Insolvency Act 1986;
(d) no person has been appointed by the court to prepare a report
under section 273 Insolvency Act 1986; and
(e) no interim receiver has been appointed of any Shareholder's
property under section 286 Insolvency Act 1986.
10. BANKING RELATIONSHIPS AND INVESTMENTS
The Disclosure Letter sets out an accurate, correct and complete
list of all banks and financial institutions in which the Company
has an account, deposit, safe-deposit box or borrowing relationship,
factoring arrangement or other loan facility or relationship,
including the names of all persons authorized to draw on those
accounts or deposits, or to borrow under loan facilities, or to
obtain access to such boxes. The Disclosure Letter sets out an
accurate, correct and complete list of all certificates of deposit,
debt or equity securities and other investments owned, beneficially
or of record by the Company (the "Investments"). The Company and
has good and legal title to all of its Investments.
11. INSURANCE
The Disclosure Letter sets out an accurate, correct and complete
list and summary description (including the name of the insurer,
coverage, premium and expiration date) of all binders, policies of
insurance or fidelity bonds ("Insurance") maintained by the Company
or in which the Company is a beneficiary or a named insured. All
Insurance has been issued under valid and enforceable policies or
binders for the benefit of the Company and all such policies or
binders are in such types and full force and effect and are in
amounts and for risks, casualties and contingencies customarily
insured against by enterprises in operations similar to the
Business. There are no pending or asserted claims against any
Insurance as to which any insurer has denied liability, and there
are no claims under any Insurance that have been disallowed or
improperly filed. The Disclosure Letter sets forth the Company's
complete claims experience (both insured and self-insured) for the
past two years. No notice of cancellation or nonrenewal with
respect to any Insurance has been received by the Company. The
Company has no knowledge of any facts or the occurrence of any event
which could materially increase the insurance premiums payable under
any Insurance.
12. MOTOR VEHICLES
12.1 The Disclosure Letter sets out an accurate, correct and complete
list of all motor vehicles used by the Company or any Subsidiary,
whether owned or leased. All such vehicles are:
(a) properly licensed and registered in accordance with applicable
law; and
(b) insured.
13. PROPERTY
13.1 Title
(a) The Property is the only property owned, occupied or otherwise
used in connection with the business of the Company and all the
estate, interest, right and title whatsoever (including
interests in the nature of options and rights in the nature of
contractual licences) of the Company in respect of any land or
premises. The particulars of the Property shown in Part 1 of
Schedule 3 are true and correct.
(b) The Property which is occupied or otherwise used by the Company
in connection with its business is so occupied or used under a
lease dated 16 July 1998 and made between UCB Bank Plc(1) and
the Company (2) ("the Lease") a copy of which is annexed as
Document Number 8.1 of the Agreed Bundle brief details of which
are contained in Part 2 of Schedule 3.
(c) The Company is the legal and beneficial owner of the Company's
leasehold interest in the Property and is in sole and
undisputed occupation of the Property and the Property is not
subject to any (sub)leases tenancies or other rights of
occupation in favour of any third party.
(d) The present use of the Property is as offices.
(e) The Company has a good and marketable title to the Property and
the Company's title to the Property is unregistered and
commences with the Lease. The Company's title to the Property
is not void for want of registration at HM Land Registry nor
open to challenge under the Insolvency Act 1986 as a transfer
at an undervalue or as a preference. All documents of title in
respect of the Properties are in the possession of and under
the control of the Company.
13.2 Encumbrances
(a) The Property is free from any mortgage, debenture, charge, rent
charge, lien or other encumbrance securing the repayment of
monies or other obligation or liability of the Company/or any
other person.
(b) The Property is not subject to any outgoings other than business
rates, water and sewerage charges, insurance premiums, rent and
service charges.
(c) Save for any referred to in the Lease, the Property is not
subject to any covenants, obligations, exceptions,
reservations, stipulations, easements, quai-easements, profits
a prendre, wayleaves, licences, grants, restrictions,
overriding interests or any other matters which may adversely
affect the value of the Property or its proper use, occupation
or enjoyment for the purposes of the business of the Company.
(d) Where any such matters as are referred to in Paragraphs
13.2.(a), 13.2.(b) and 13.2.(c) above have been disclosed in
the Disclosure Letter, the obligations and liabilities imposed
and arising under them have been fully observed and performed
and any payments in respect of them due and payable have been
duly paid.
(e) The Property is not subject to any option, right of pre-emption
or right of first refusal.
(f) The Property is not subject to any Local Land Charges or rights
of common and no matter exists which is capable of registration
as such against the Property and has not been so registered.
(g) All agreements, covenants, restrictions and other matters to
which the Property is subject have been complied with.
(h) There are no claims, disputes or outstanding orders or notices
affecting the Property (whether served by a landlord, local
authority, local planning authority or other body or person).
(i) There is no person who is in occupation or who, has or claims
any rights or easements of any kind, in respect of the
Property, adversely to the estate, interest, right or title of
the Company therein.
13.3 Environmental Matters To the best of the Shareholder's knowledge and
belief:
(a) None of the following are present or have every been present
under at, upon, in or under the Property, namely substances named
in the First Schedule to the Notification of Installations
Handling Hazardous Substances Regulations 1982 (No. 1357), all
substances named in the First Schedule to the Planning (Hazardous
Substances) Regulations 1992 (No. 656), explosives within the
meaning of the Explosives Act 1875, controlled waste within the
meaning of s.75(4) of the Environmental Protection Act 1990
("EPA"), radioactive waste as defined by s.18(4) of the
Radioactive Substances Act 1960, substances prescribed (for any
purpose) under regulations made under s.2(5) of the EPA any
substance capable of causing harm as defined by s.1(4) of the
EPA, save as contained in the Disclosure Letter.
(b) The Property has not been the subject of any complaint or
notice (including verbal) to the Company with respect to the
release of any substance (which shall include odour and noise)
into the environment ("release" and "environment" to be
interpreted in accordance with s.1 of the EPA), to the Planning
Acts (or any regulations made thereunder) or to the safety or
protection of health or property save as contained in the
Disclosure Letter and no claims with respect to such matters
are pending or threatened.
(c) At no time has there been:
(i) any release, discharge, seepage or treatment of any
hazardous substance upon, in or under the Property;
(ii) any storage, generation or disposal of any special,
hazardous or toxic chemicals or waste upon, in or under
the Property.
(d) The Company has received and has at all material times complied
with and is in full compliance with all consents,
notifications, orders, exemptions, licences, approvals,
permissions, registrations, authorisations and other
requirements under all laws, regulations, policies, codes and
guidelines (whether Local, National, European or International)
which are applicable to the Company and/or any uses or
operations undertaken at, upon, in or underneath the Property
with respect to the release of any substance (which shall
include odour and noise) into the environment ("release" and
"environment" to be interpreted in accordance with s.1 of EPA),
to the Planning Acts (or any regulations made thereunder), the
presence of any substance within the ambit of paragraph
13.3.(a) above or to the safety or protection of health or
property save as contained in the Disclosure Letter.
(e) Where any such consents, modifications, orders, exemptions,
licences, approvals, permissions, registrations, authorisations
or other requirements as are referred to in paragraph 13.3.(d)
have been disclosed in the Disclosure Letter, the obligations
and liabilities imposed and arising under them have been fully
observed and performed and any payments in respect of them due
and payable have been duly paid.
13.4 Planning Matters
(a) The use of the Property is the lawful use for the purposes of
the Planning Acts. All consents applicable to such use are
either unconditional or are subject only to conditions which
have been satisfied or are subject to continuing conditions all
of which have been and are being duly complied with and which
are not onerous. No consents are personal or for a limited
period only.
(b) Planning permission has been obtained or is deemed to have been
granted for the purposes of the Planning Acts in respect of all
development of the Property and any subsequent alteration,
extensions or other improvement of the same, and no such
planning permission is of a personal or temporary nature or has
been revoked, modified or suspended, or is the subject of a
High Court challenge, and no application for planning
permission in relation to the Property is either awaiting
decision or the subject of any appeal.
(c) Building regulation consents have been obtained with respect to
all development, alterations and improvements to the Property.
(d) There are not (and there have not been) any breaches of
planning control, listing building control, conservation area
control or other regulatory schemes imposed by the Planning
Acts, or regulations made thereunder, or the Building Act 1984
or regulations (or other secondary legislation made thereunder)
with respect to the Property.
(e) Compliance is being made and has at all times been made with
all agreements, relating to the Property, made under Section
106 of the Town and Country Planning Act 1990, Section 38 of
the Highways Act 1980, Section 33 of the Local Government
(Miscellaneous Provisions) Act 1982, or Section 111 of the
Local Government Act 1972.
(f) The Property is not listed as being of special historic or
architectural importance or located in a conservation area.
(g) All development charges, monetary claims and liabilities under
the Planning Acts or any other such legislation have been
discharged and no such liability, contingent or otherwise, is
outstanding.
13.5 Statutory Obligations
(a) No notice has been received of non-compliance with all
applicable statutory and bye-law requirements with respect to
the Property and in particular (but without limitation) with
the requirements as to fire precautions and under the Office,
Shops and Railway Premises Act 1963, the Public Health Acts
1936 to 1961, the Factories Act 1961, the Building (Inner
London) Regulations 1985, the Food Premises (Registration)
Regulations 1981 and the Food Safety Act 1990.
(b) There is no outstanding and unobserved or unperformed
obligation with respect to the Property necessary to comply
with the requirements (whether formal or informal) of any
competent authority exercising statutory or delegated powers.
(c) There are not in force or required to be in force any licences
which apply to the Property or the present use of the Properties
for the purpose of the business of the Company.
13.6 Adverse Orders
(a) There are no compulsory purchase notices, orders or resolutions
or blight notices affecting the Properties nor are there any
circumstances likely to lead to any being made.
(b) There are no closing, demolition or clearance orders,
enforcement notices or stop notices affecting the Property nor
are there any circumstances likely to lead to any being made.
13.7 Condition of the Property
(a) To the best of the Shareholder's knowledge and belief the
building and other structures on the Property have been
properly and soundly constructed without the use of any
generally known deleterious or unsafe materials and are in good
and substantial repair and fit for the purposes for which they
are presently used.
(b) There are no disputes with any adjoining or neighbouring owner
with respect to boundary walls and fences or with respect to
any easement, right of or means of access to the Property.
(c) The principal means of access to the Property is over roads
which have been taken over by the local or other highway
authority and which are maintainable at the public expense and
no means of access to the Property is shared with any other
party nor subject to rights of determination by any other
party.
(d) The Property enjoys full and unrestricted mains services of
water foul and surface water drainage, electricity and gas
which are adequate for the purposes for which the Property is
presently used. The pipes, wires, cables, sewers, drains and
other services which serve the Property either do not pass
through land in the ownership of another person or company
before connecting to the mains or the Property has the benefit
of the necessary easements in respect of the same perpetuity
and at no or only a nominal charge.
(e) The Property is not situated in an area of past or present
mining activities, and the Property is not located in an area
which is, nor is it for any other reason, particularly
susceptible to flooding.
13.8 Insurance
(a) The Property is insured against all normally insurable risks
(including terrorism) in its full reinstatement value (with no
unusual exclusions) and for not less than three years' loss of
rent and against third party and public liabilities to an
adequate extent.
(b) All premiums payable in respect of insurance policies with
respect to the Property which have become due have been duly
paid and no circumstances have arisen which would vitiate or
permit the insurers to avoid such policies.
(c) The information in the Disclosure Letter with respect to the
insurance policies is up to date and true and accurate in all
respects.
13.9 Leasehold Property
(a) The Company has paid the rent and observed and performed the
covenants on the part of the tenant and the conditions
contained in the lease under which the Property is held ("the
Lease"), and the last demand (or receipts for rent if issued)
were unqualified, and the Lease is valid and in full force.
(b) All licences, consents and approvals required from the
landlords and any superior landlord under the Lease have been
obtained and the covenants on the part of the tenant contained
in such licences, consents and approvals have been duly
performed and observed.
(c) There is no rent review under the Lease currently in progress.
(d) There is not outstanding or unobserved or unperformed any
obligation necessary to comply with any notice or other
requirement given by the landlord under the Lease.
(e) There is no obligation to reinstate the Property by removing or
dismantling any alteration made to it by the Company or any
predecessor in title to the Company.
(f) There are no circumstances which would entitle the landlord to
exercise any powers of entry or to take possession, whether by
way of forceable re-entry or proceedings, or which would
otherwise restrict the continued possession and enjoyment of
the Property.
(g) There are no side letters, collateral assurances, undertakings
or concessions which have been made by any party to the Lease,
other than as disclosed in Schedule 3 or the Disclosure Letter.
13.10 Preliminary Enquiries
All replies to preliminary enquiries raised by the Buyer's
Solicitors are true, complete and accurate in all respects.
14. THE LAST ACCOUNTS
14.1 The Last Accounts were prepared in accordance with the historical
cost convention and the bases and policies of accounting adopted for
the purposes of preparing the Last Accounts are the same as those
adopted in preparing the audited accounts of the Company in respect
of the last three preceding accounting periods.
14.2 The Last Accounts:
(a) give a true and fair view of the state of affairs and assets
and liabilities of the Company as at the Last Accounts Date and
of its profits for the financial period ended on that date;
(b) comply with the requirements of the Companies Act;
(c) comply with all generally accepted United Kingdom accounting
principles applicable to a United Kingdom company;
(d) are not affected by any extraordinary, exceptional item (as
defined by a statement of Standard Accountancy Practice and
generally accepted accounting principles);
(e) fully disclose all the assets of the Company;
(f) make full provisions or full reserve for all known liabilities
and capital commitments of the Company outstanding at the Last
Accounts Date, and make full provisions or note in accordance
with good accounting practice for known contingent,
unquantified or disputed liabilities.
14.3 No amount included in the Last Accounts in respect of any assets,
whether fixed or current, exceeds its purchase price or production
cost (within the meaning of Schedule 4 of the Companies Act 1985) or
(in the case of current assets) its net realisable value on the Last
Accounts Date.
15. INTERIM CHANGE
15.1 Since the Last Accounts Date, the Company has operated the Business
in the Ordinary Course of Business, consistent with past practice,
and there has not been any of the following in connection with the
Business:
(a) any event resulting in, or that could result in, a Material
Adverse Effect;
(b) any material change in personnel or relationships with third
parties, including suppliers, customers and others;
(c) any material increase in the compensation, or benefits payable
or to become payable to or on account of any director or
employee of the Company or third parties;
(d) any work stoppage or labor dispute;
(e) any damage to, destruction of or claim against a material
asset, or any disposition of assets, other than sales in the
ordinary course of business on terms consistent with past
practice;
(f) any material change in credit or any change in accounting
practices;
(g) any change in status of any Material Contract;
(h) the Company has not declared, made or paid any distribution
within the meaning of ICTA;
(i) no accounting period of the Company has ended;
(j) no event has occurred which will give rise to a tax liability
on the Company calculated by reference to deemed (as opposed to
actual) income, profits or gains or which will result in the
Company becoming liable to pay or bear a tax liability directly
or primarily chargeable against or attributable to another
person, firm or company;
(k) no disposal has taken place or other event occurred which will
or may have the effect of crystallizing a liability to taxation
which should have been included in the provision for deferred
taxation contained in the Financial Statements if such disposal
or other event had been planned or predicted at the date of
Financial Statements;
(l) the Company has not made any payment or incurred any obligation
to make a payment which will not be deductible in computing
trading profits for the purposes of corporation tax;
(m) the Company has not been a party to any transaction for which
any tax clearance provided for by statute has been or could
have been obtained; or
(n) any agreement to take any of the foregoing actions.
16. TITLE TO ASSETS
The Company is the sole and exclusive legal and beneficial owner of
all right, title and interest in and to all of the assets used in
the Business or shown on the Last Accounts (or acquired since the
date of the most recent Last Accounts) (the "Assets"), free and
clear of the interests and rights of any other party, including any
lease, license, right, Security Interest, mortgage, lien,
encumbrance, restriction or royalty arrangement of any kind or
character, direct or indirect, whether accrued, absolute, contingent
or otherwise, and no person other than the Company has any interest
in any assets employed in the Business. The Assets are in good
repair, order and condition (reasonable wear and tear excepted) and
are suitable for the purposes for which they are presently being
used, and are adequate to meet all present requirements of the
Business. The Assets constitute all assets used in the Business,
are sufficient to permit the Company to carry on the Business, and
will continue to be available and will furnish Buyer with all of the
rights to operate the Business in the same manner as presently
carried on and historically operated by the Company.
17. INTELLECTUAL PROPERTY
The Disclosure Letter sets out a complete list and summary
description of all patents, trademarks, trade names, service marks,
copyrights and applications for any of the foregoing, inventions and
trade secrets owned by the Company or used in the Business (the
"Intellectual Property"). There are no licenses or other agreements
relating to any Intellectual Property. None of the Intellectual
Property is subject to any extensions, renewals, taxes or fees due
within 90 days after Closing. With respect to the Intellectual
Property:
(a) the Company has the sole and exclusive right to use the
Intellectual Property free of rights or claims of others;
(b) no action, suit, proceeding or investigation is pending or, to
the Company's knowledge, threatened;
(c) none of the Intellectual Property interferes with, infringes
upon, conflicts with or otherwise violates the rights of
others, or is being interfered with or infringed upon by
others, and none is subject to any outstanding order, decree,
judgment, stipulation or charge;
(d) there are no royalty, commission or similar arrangements, and
no licenses, sublicenses or agreements, pertaining to any of
the Intellectual Property;
(e) none of the Intellectual Property, the use thereof by the
Company, or the activities of the Business infringe upon or
violate any rights of others; and
(f) the Company has agreed to indemnify any person for or against
any infringement of or by the Intellectual Property.
18. SOFTWARE AND INFORMATION SYSTEMS
18.1 All of the Company's Software is Year 2000 Compliant.
18.2 The Software does not violate or infringe any trade secret rights,
work rights, mask copyrights, patents or other rights of others and
no assertion to the contrary has been made by any third party.
18.3 The Company has not copied or used any of the Software in violation
of the applicable license or otherwise violated any of its
agreements or the rights of others with respect thereto.
18.4 The term "Software" means all computer software programs, program
specifications, charts, procedures, source codes (including
annotations), object codes, input data, diagnostic and other
routines, data bases and report layouts and formats, record file
layouts, diagrams, functional specifications and narrative
descriptions and flow charts owned or used by the Company or
employed in the Business. The term "Year 2000 Compliant" means,
with respect to the Company's Software such Software is designed to
be used prior to, during, and after the calendar Year 2000 A.D., and
the Software used during each such time period will accurately
receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) from, into and
between the twentieth and twenty-first centuries, including the
years 1999 and 2000, and leap year calculations and will not
malfunction, cease to function, or provide invalid or incorrect
results as a result of date/time data, to the extent that other
information technology, used in combination with the Software being
acquired, properly exchanges date/time data with it.
19. CUSTOMERS AND SUPPLIERS
19.1 The Seller Group has to the best of its knowledge and belief no
knowledge of nor has it received any notice of any fact, condition
or event which would:
(a) cause the Buyer's relationship with any customer or supplier to
be materially and adversely different than the current
relationship of such customer or supplier with respect to the
Business; or
(b) materially and adversely affect any customer or supplier's
ability to supply, purchase or lease products or services to or
from the Buyer.
20. EMPLOYEES; INDEPENDENT CONTRACTORS
20.1 The Disclosure Letter contains an accurate, correct and complete
schedule containing:
(a) a list of all employees (including name, title and position)
employed by the Company;
(b) the employee's length of service and date of hire and the
notice period;
(c) a list of all agreements, arrangements or understandings,
written or oral, with each employee, regarding services to be
rendered, terms and conditions of employment and
confidentiality;
(d) the compensation (including date and amount of last salary
increase, terms of payment, bonuses, commissions and deferred
compensation, as well as any benefits) of each employee; and
(e) a summary of all current and other arrangements with
independent contractors.
20.2 The contract of employment of each director and employee may be
terminated by the Company on 3 months' notice or less without giving
rise to any claim for damages or compensation. With respect to the
employees of the Company:
(a) there are and have been no actual or alleged violations of any
Laws respecting the employment of any employees; no employees
are represented by any union or covered by any collective
bargaining agreement and there has been no question concerning
representation raised or threatened;
(b) all employment-related books and records have been prepared in
the ordinary course of business;
(c) the Company is in compliance with all contracts of employment;
(d) there is no employment handbook, personnel policy manual,
similar document or action that creates prospective employment
rights or obligations;
(e) no workers' compensation claims shall arise after Closing
resulting from events, circumstances, exposures, conditions or
occurrences occurring prior to the Closing Date; and
(f) there exists no discrimination or harassment claims by any
employees against the Company or their respective officers or
employees, or the Shareholders, and there are no circumstances
which could give rise to any claim or allegation in regard
thereto. No persons treated as independent contractors by the
Company should under applicable law have been treated as
employees.
21. EMPLOYEE BENEFIT PLANS
21.1 The Disclosure Letter contains a complete list of all employee
pension benefit schemes, private medical plans, bonus, profit
sharing, deferred compensation, incentive or other compensation
plans or arrangements, and other employee fringe benefit plans
whether funded or unfunded (all the foregoing being herein called
"Benefit Plans") maintained or contributed to for the benefit of any
of the employees of the Company.
21.2 The Company is under no obligation or commitment nor is party to any
custom or practice to pay, provide or contribute towards the
provision of any "relevant benefits" within the meaning of section
612 of ICTA or any other death, retirement, contributed towards any
scheme or arrangement which as its purpose or one of its purposes
the provision of any such benefit (other than schemes which have
been fully wound up).
22. ADMINISTRATION
The Benefit Plans have been administered to date in compliance with
all requirements of law and in accordance with their terms. All
reports, returns and similar documents for the Benefit Plans
required to be filed with any government agency or distributed to
any participant have been duly and timely filed or distributed.
There are no investigations, proceedings or other claims (except
claims for benefits payable in the normal operation of either plan),
against or involving any Benefit Plan that could give rise to any
material liability to such plan, nor, are there any facts that could
give rise to any material liability to any plan.
23. LICENSES AND PERMITS
The Disclosure Letter contains a complete list and summary
description of all permits, licenses, approvals, registrations and
authorizations used or required for the operation of the Business
(the "Licenses and Permits"). The Company holds all the Licenses
and Permits in its name. The Licenses and Permits are valid and in
full force and effect, no violations exist in respect thereof and
there are not pending or threatened any proceedings or circumstances
which could result in the termination, revocation, limitation or
impairment of any License or Permit. There is no reason why any of
the Licenses or Permits should be suspended, threatened or revoked
to be invalid as a result of the consummation of the sale of the
Shares to Buyer and no person is entitled to suspend, threaten or
revoke any of the Licenses or Permits.
24. MATERIAL CONTRACTS
24.1 The Disclosure Letter sets out a complete list of all, written and
oral contracts, instruments, commitments, agreements, arrangements
and understandings, including all amendments and supplements thereto
to which the Company is a party or otherwise related to the
Business: or
(a) which are material to the operations (as historically conducted
or presently conducted), assets, liabilities, condition
(financial or otherwise), operations or prospects of the
Business; or
(b) which otherwise involve any of the following types of contracts
(the items in 24.1 and 24.2 being collectively referred to
herein as the "Material Contracts"); or
(c) all purchase orders or contracts for the purchase of any
materials or services involving an amount in excess of
5,000 pounds or which were not entered into in the ordinary course of
business; or
(d) any sales or service agreements; or
(e) any design, engineering, consulting, or distribution agreement;
or
(f) all real property leases; or
(g) all contracts providing the Company or any Subsidiary with the
right to reproduce or in any way deal with the works of others;
or
(h) any agreement not to compete or otherwise restricting
activities; or
(i) any contract relating to leasing/hire purchase held by the
Company in respect of the Business having an aggregate value of
45,000 pounds; or
(j) other than contracts relating to leasing/hire purchase held by
the Company in respect of the Business, any contract,
commitment, agreement, arrangement or understanding which
provides for payment or performance by any party thereto having
an aggregate value of 5,000 pounds or more.
24.2 Accurate, correct and complete copies of each Material Contract (of
the form of each such contract) have been delivered to Buyer. Each
Material Contract is in full force and effect and is valid, binding
and enforceable in accordance with its terms. Each party has
complied with all material commitments and obligations on its part
to be performed or observed under each Material Contract. No event
has occurred which is or, after the giving of notice or passage of
time, or both, would constitute a default under or a breach of any
Material Contract by the Company, or, to the knowledge of the Seller
Group, by any other party. The consummation of the transactions
contemplated hereby, without notice to or consent or approval of any
party, will not constitute a default under or a breach of any
provision of any Material Contract nor entitle the other party
thereto to terminate such Material Contract.
25. GRANTS AND ALLOWANCES
The Company has not applied for or received any grant, allowance,
aid or subsidy from any supranational, national or local authority
or government agency.
26. LEGAL PROCEEDINGS
No member of the Seller Group is engaged in or a party to or, has
been threatened with any dispute, action, arbitration, suit or other
proceeding, including any relating to the Business or its assets and
no circumstances exist which could give rise to any such proceeding.
No member of the Seller Group has no knowledge of any investigation
threatened or contemplated by any governmental or regulatory
authority. None of the Company, the Shareholders, the Business or
its assets is subject to any judgment, order, writ, injunction,
stipulation or decree of any court or any governmental agency or any
arbitrator.
27. COMPLIANCE WITH LAW
27.1 The Company, and the Business conform in all material respects to
all applicable Laws and restrictive covenants applicable thereto,
and each member of the Seller Group has complied with all Laws with
respect to the Business, and restrictive covenants applicable
thereto, and there is not and will not be any liability to Buyer
arising from or related to any prior violations thereof. No member
of the Seller Group has:
(a) made any unlawful political contributions;
(b) had any transactions or payments which are not recorded in its
accounting books and records or disclosed in its financial
statements in a manner reflecting their true nature;
(c) made any payment to officials in their individual capacities
for the purpose of affecting their action or the action of the
body they represent or to obtain special concessions; or
(d) made payments to individuals or taken similar actions to obtain
or retain business, other than customary business gifts or
entertainment.
28. BROKERS
The Seller Group has not retained any broker, finder or agent or
incurred any liability or obligation for any brokerage fees,
commissions or finders fees with respect to this Agreement or the
transactions contemplated hereby and as to which Buyer will incur
any liability.
29. DISCLOSURE
The representations and warranties of the Seller Group contained in
this Agreement, the Disclosure Letter and each agreement,
attachment, schedule, certificate or other written statement
delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby do not omit to state any fact
necessary in order to make the statements and information contained
herein or therein not misleading.
30. TAXATION
30.1 Administration
(a) The Last Accounts reserve or provide in full for all Taxation
(whether actual or contingent) of any nature whatsoever or
other sums imposed, charged, assessed, levied or payable under
the Taxation Statutes for which the Company was at the Last
Accounts Date liable or able to be made liable.
(b) The amount of the provision for deferred Taxation in respect of
the Company contained in the Last Accounts was, at the Last
Account Date adequate and fully in accordance with accountancy
practices generally accepted in the United Kingdom and commonly
adopted by companies carrying on businesses similar to those
carried on by the Company and, in particular, was in accordance
with Statement of Standard Accounting Practice 15.
(c) If all facts and circumstances which are now known to the
Company or any of the Shareholders had been known at the time
the Last Accounts were drawn up, the provision for deferred
Taxation that would be contained in the Last Accounts would be
no greater than the provision which was so contained.
(d) The Company has duly and punctually paid all Taxation which it
has become liable to pay or for which it has become liable to
account and is under no liability (and has not within the 6
years prior to the date hereof been liable) to pay any penalty,
fine, surcharge or interest in connection with any Taxation.
(e) All payments by the Company to any person which ought to have
been made under deduction of Taxation have been so made and the
Company has if required by law to do so accounted to the
relevant Taxation Authority for the Taxation so deducted and
the Company has not received any notice from any Taxation
Authority which will or may require the Company to withhold
Taxation from any payment made since the Last Accounts Date or
which may be made after the date of this Agreement.
(f) The Company has operated the Pay As You Earn system accurately
and correctly and has complied with all its reporting
obligations to the Inland Revenue and the Contributions Agency
in connection with benefits provided for employees and former
employees of the Company.
(g) 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:
(i) a person acting on the Company's behalf and either at the
expense of the Company or a person connected with the
Company; or
(ii) a trustee holding property for persons who include, or a
class of persons which includes, a director, other officer
or employee of the Company;
and for the purpose of paragraph (i) of this definition,
"connected" has the meaning given by section 839 of ICTA.
(h) All returns which should have been made by the Company for any
Taxation purpose have been made, were and remain correct and
complete in all material respects, were made on a proper basis
and the computations and returns have been agreed with or are
the subject of a determination by the relevant Taxation
Authority and the Company has provided all information required
to be provided under the Taxation Statutes or pursuant to any
notice served thereunder.
(i) There is no dispute or disagreement outstanding nor is any
contemplated at the date of this agreement with any Taxation
Authority regarding liability or potential liability to any tax
or duty (including in each case penalties or interest)
recoverable from the Company or regarding the availability of
any relief from tax or duty to the Company and there are no
circumstances which make it likely that any such dispute or
disagreement will arise.
(j) The Company has duly submitted all claims and disclaimers which
have been assumed to have been made for the purposes of the
Last Accounts. The Company has sufficient records relating to
past events, including any elections made, to calculate the tax
liability or relief which would arise on any disposal or on the
realisation of any asset owned at the Last Accounts Date by the
Company or acquired by the Company since that date but before
Closing.
(k) No Taxation Authority has agreed to operate any special
arrangement (being an arrangement which is not based on a
strict application of the relevant legislation) in relation to
the Company's affairs, whether in respect of benefits provided
by the Company to its officers or employees, or in relation to
the valuation of stocks or depreciation of assets or in respect
of any administrative or other matter whatsoever.
(l) The Company has not participated in or operated any payroll
deduction scheme as defined in Section 202 ICTA or any scheme
approved, or for which approval has been or is to be sought,
under Chapter III of Part V ICTA (profit related pay).
(m) All statements and disclosures made to any authority in
connection with any provision of the Taxation Statutes
whatsoever were when made and remain complete and accurate in
all material respects.
(n) The Disclosure Letter contains full and accurate particulars of
all transactions effected otherwise than in the ordinary course
of business since the Last Accounts Date in respect of which
the Company is required to make a specific return or provide
information to the relevant Taxation Authority and in respect
of which the time for making such return or providing such
information will expire on or after Completion.
(o) No transaction has been effected since the Last Accounts Date
by the Company in respect of which any consent or clearance
from a Taxation Authority was required or was or could have
been sought:
(i) without such consent or clearance having been validly
obtained before the transaction was effected; and
(ii) otherwise than in accordance with the terms of and so as
to satisfy any conditions attached to such consent or
clearance; and
(iii) otherwise than at a time when and in circumstances and in
which such consent or clearance was valid and effective.
(p) The Company has not since the Last Accounts Date taken any
action which has had, or will have, the result of altering,
prejudicing or any way disturbing any arrangement or agreement
which it has previously had with the Inland Revenue or Customs
& Excise or other Taxation Authority.
30.2 Status of the Company
(a) The United Kingdom is the only country whose tax authorities
seek to charge Taxation on the worldwide profits or gains of
the Company and the Company has never paid nor has it ever been
liable to pay tax on income profits or gains to any Taxation
Authority in any country except the United Kingdom in respect
of it.
(b) The Company is not and has at no time been an investment
company nor an investment trust company for the purposes of the
Taxation Statutes.
(c) The Company is not nor at any time has had an associated
company for the purposes of the Taxation Statutes.
30.3 Tax events since the Last Accounts Date
Since the Last Accounts Date:
(a) The Company has not declared, made or paid any distribution
within the meaning of ICTA 1988.
(b) No accounting period of the Company has ended.
(c) There has been no disposal of any asset (including trading
stock) or supply of any service or business facility of any
kind (including a loan of money or the letting, hiring or
licensing of any property whether tangible or intangible) in
circumstances where the consideration actually received or
receivable for such disposal or supply was less than the
consideration which could be deemed to have been received for
any Taxation purposes.
(d) No event has occurred which will give rise to Taxation payable
by the Company calculated by reference to deemed (as opposed to
actual) income, profits or gains or which will result in the
Company becoming liable to pay or bear any Taxation directly or
primarily chargeable against or attributable to another person,
firm or company.
30.4 The Company has not made any payment or incurred any obligation to
make a payment which will not be deductible in computing trading
profits for the purposes of corporation tax, or be deductible as a
management expense of an investment company.
30.5 Taxation Claims, Liabilities and Reliefs
(a) There are set out in the Disclosure Letter with express
reference to this paragraph, particulars of all matters
relating to Taxation in respect of which the Company (either
alone or jointly with any other person) has, or at Closing will
have, an outstanding entitlement:
(i) to make any claim, including a supplementary claim, for
relief under ICTA or any other statutory provision
relating to Taxation;
(ii) to make any election, including an election for one type
of relief, or one basis, system or method of Taxation, as
opposed to another;
(iii) to make any appeal (including a further appeal) against an
assessment to Taxation;
(iv) to make any application for the postponement of, or
payment by instalments of, Taxation; or
(v) to disclaim or require the postponement of any allowance
or relief;
such particulars being sufficient to enable the Buyer to
procure that any time limit to such entitlement expiring within
six months after Completion can be met.
(b) The Company is not, nor may become liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or
amounts corresponding thereto) in consequence of the failure by
any other person to discharge that Taxation within any
specified period or otherwise, where such Taxation relates to a
profit, income or gain, transaction, event, omission or
circumstances arising, occurring or deemed to arise or occur
(whether wholly or partly) prior to Closing.
(c) No relief (whether by way of deduction, reduction, set off,
exemption, postponement, rollover, holdover, repayment or
allowance, or otherwise) from, against or in respect of any
Taxation has been claimed and/or given to the Company which
could or might be effectively withdrawn, postponed, restricted,
clawed back or otherwise lost as a result of any act, omission,
event or circumstance arising or occurring at any time after
Closing.
30.6 Capital Gains
(a) On a disposal of all its assets by the Company for:
(i) In the case of each asset owned by the Company at the Last
Accounts Date, a consideration equal to the value
attributed to that asset in preparing the Last Accounts;
or
(ii) In the case of each asset acquired since the Last Accounts
Date, a consideration equal to the consideration given for
the acquisition;
then either:
(iii) in respect of any asset falling within (a) above, the
liability to tax (if any) which would be incurred by the
Company in respect of that asset would not exceed the
amount taken into account in respect of that asset in
computing the potential liability to deferred Taxation as
stated but not provided in the Last Accounts; or
(iv) in respect of any asset within (b) above, no tax liability
would be incurred by the Company in respect of that asset.
(b) Save as provided for in the Last Accounts, the Company has not
made any claim and is not entitled to make any claim under
Section 279 GA (Relief in respect of delayed remittances of
gains) or Section 585 ICTA (Relief from tax on delayed
remittances).
(c) There has not accrued any gain in respect of which the Company
may be liable to corporation tax by virtue of the provisions of
Section 13 GA (Non-resident company).
(d) Full particulars of each claim made under sections 152 or 153
of the GA 1992 made prior to the date of this agreement to
which section 154 GA 1992 applies and which affects any asset
which was owned by the Company on or after the Last Accounts
Date (except where the heldover gain is treated as having
accrued prior to the Last Accounts Date) have been disclosed in
writing to the Purchaser.
(e) The Company has not received any asset by way of gift or by way
of bargain not at arm's length to which Section 282 GA has
applied or could apply and will not receive any such asset
before Closing.
(f) Since the Last Accounts Date, there has not been any
transaction in respect of which the Company is or may become
liable to Taxation under the corporation tax provisions
relating to capital gains and the Company will not before
Closing enter into any such transaction without the prior
written consent of the Purchaser.
(g) The Company has not effected or been concerned in any demerger
such as is mentioned in Section 213 ICTA.
(h) The Company has not made any election under Section 35(5) GA or
paragraph 4 Schedule 2 GA.
(i) The Company has not disposed of or acquired any asset in
circumstances falling within Section 17 GA.
(j) No loss which has arisen or may arise on the disposal by the
Company of shares in or securities of any company is liable to
be disallowed in whole or in part by virtue of Section 176 or
Section 177 GA.
(k) The Company has not acquired any asset from any other company
which was, at the time of the acquisition, a member of the same
group of companies as the Company for the purposes of any tax
within the last six years.
30.7 Tax Losses
(a) No change of ownership of the Company has taken place in
circumstances such that section 768 ICTA (change in ownership
of Company: disallowance of trading losses) has been or may be
applied to deny relief for a loss or losses or excess charge or
charges incurred by the Company and, within the period of three
years ending with the date of this Agreement, there has been no
major change in the nature or conduct of any trade or business
carried on by the Company, nor has the scale of the activities
in any trade or business carried on by the Company at any time
become small or negligible for the purposes of the section.
(b) No change of ownership of the Company nor any major change in
the nature or conduct of any trade or business carried on by
the Company has occurred in circumstances such that section 245
ICTA (calculation of ACT on change of ownership) has been or
may be applied.
(c) All Taxation losses of the Company are trading losses and are
available to be carried forward and set off against income from
the same trade in succeeding periods and are agreed with the
Inland Revenue.
30.8 Inheritance Tax
(a) The Company has not entered into any transaction which has or
may give rise to a direct or indirect charge to inheritance
tax.
(b) The Company is not liable to be assessed to inheritance tax by
virtue of Part VII Inheritance Tax Act 1984.
(c) No circumstances exist whereby any person could have the power
to raise an amount of inheritance tax by sale or mortgage of or
by a terminable charge on any of the Shares or assets of the
Company as specified in Section 212 Inheritance Tax Act 1984.
(d) None of the Shares or assets of the Company is subject to an
Inland Revenue charge within Section 237 Inheritance Tax Act
1984.
(e) The Company is not entitled to an interest in possession in
settled property.
30.9 Stamp Duty and Stamp Duty Reserve Tax
(a) All instruments (other than those which have ceased to have any
legal effect) to which the Company is a party or in the
enforcement of which the Company is interested and which,
whether in the United Kingdom or elsewhere, attract either
stamp duty or require to be stamped with a particular stamp
denoting that no duty is chargeable or that the document has
been produced to the appropriate authority, have been properly
stamped; and no such documents which are outside the United
Kingdom would attract stamp duty if they were brought into the
United Kingdom.
(b) Since the Last Accounts Date the Company has not incurred any
liability to stamp duty reserve tax.
30.10 Anti Avoidance
(a) The Company has not entered into or been a party to any schemes
or arrangements designed partly or wholly for the purpose of
avoiding or deferring Taxation.
(b) No gain of a capital nature as defined in Section 776 ICTA
(Transactions in land: taxation of capital gains) has been
realised from the disposal of land in respect of which the
Company could be assessed to Taxation under the provisions of
that Section.
(c) The Company has not obtained any tax advantage in consequence
of any transaction in securities to which the provisions of
Section 703 ICTA (Cancellation of tax advantage) apply.
30.11 Close Companies
(a) No distributions within Section 418 ICTA (Additional matters to
be treated as distributions) have been made by the Company.
(b) No loan or advance within Section 419 ICTA (Loans to
participators e) has been made or agreed to by the Company and
the Company has not since the Last Accounts Date released or
written off the whole or part of the debt in respect of any
such loan or advance.
30.12 Value Added Tax
(a) The Company is registered for the purposes of VATA 1994 and
has made, given, obtained and kept full, complete, correct and
up-to-date records, invoices and other documents appropriate or
required for those purposes and is not in arrears with any
payments or returns due and has not been required by the
Commissioners of Customs & Excise to give security under
paragraph 4 of Schedule 11 VATA 1994.
(b) All VAT due and payable to the Commissioners of Customs &
Excise has been declared and paid in full.
(c) The Company has never been treated as a member of a group
under section 43 VATA 1994 and no application has ever been
made for the Company so to be treated.
(d) The Company has not within 12 months ending on the Last
Accounts Date been in default in respect of any prescribed
accounting period as mentioned in section 59(1) VATA 1994.
(e) Full details of any claim for bad debt relief under section 36
VATA 1994 or under section 11 Finance Act 1990 made by the
Company has been disclosed in writing to the Purchaser.
(f) The Company has not made an election to waive exemption in
relation to any land in accordance with paragraph 2 to Schedule
10 VATA 1994.
(g) The Disclosure Letter contains full details of any assets of
the Company to which the provisions of Part XV Value Added Tax
Regulations 1995 (the Capital Goods Scheme) apply and in
particular:
(i) the identity (including in the case of leasehold property,
the terms of years), date of acquisition and cost of the
asset; and
(ii) the proportion and amount of input tax for which credit
has been claimed (either provisionally or finally in a tax
year and stating which).
(h) The Company has not within 12 months ending on the Last
Accounts Date made supplies which are exempt from VAT of such
proportion that it is unable to claim credit for all input tax
paid or suffered by it.
(i) The Company is not nor has it agreed to become an agent for any
person for the purposes of Section 47 VATA 1994 neither is it
nor has it agreed to become a VAT representative for any person
for the purposes of Section 48 VATA 1994.
30.13 Duties
All value added tax, import duty and other taxes or charges payable
upon the importation of goods and all excise duties payable to
Customs & Excise payable in respect of any assets (including trading
stock) imported, owned or used by the Company [any member of the
Group] have been paid in full.
30.14 General
(a) The Company has not issued any share capital to which the
provisions of Section 249 ICTA (Stock dividends treated as
income) could apply nor does it own any such share capital.
(b) No security issued by the Company and remaining in issue at the
date of this Agreement was issued in such circumstances that
the interest payable thereon falls to be treated as a
distribution under Section 209 ICTA (Meaning of distribution).
(c) Since 6 April 1965, the Company has not made any repayment of
share capital to which section 210(1) ICTA 1988 applies or
issued any share capital or other security as paid up otherwise
than by the receipt of new consideration within the meaning of
Part VI ICTA 1988.
(d) No part of the amount payable on redemption of any share
capital or security will be a distribution (as defined in ICTA
1988).
(e) The Company is not a party to any transaction or arrangement or
series of transactions or series of arrangements made otherwise
than on arm's length terms or under which it may be required to
pay for an asset or any services or facilities of any kind an
amount which is in excess of the market value of that asset or
services or facilities or will receive any payment for an asset
or any services or facilities of any kind that it has supplied
or provided or is liable to supply or provide which is less
than the market value of that asset or services.
(f) The Company has not entered into any such transaction as is
mentioned in sections 779 and 780 ICTA (Sale and Leaseback).
(g) The Company has not entered into any unlawful transaction under
Section 765 ICTA or failed to give notice and any required
information to the Board of the Inland Revenue under Section
765A within the time limit provided for by that section.
30.15 Overseas Matters
(a) The Company has not transferred a trade carried on outside the
United Kingdom in circumstances such that a chargeable gain may
be deemed to arise at a date after such transfer under section
140 GA (postponement of charge on transfer of assets to non-
resident company).
(b) The Company has not been a party to any transaction to which
sections 140A to 140D GA apply.
<PAGE>
SCHEDULE 3
THE PROPERTY
Part 1
Brief description of the Property
Units 3 and 4, The Rectory Business Centre, 39, 41 and 43 Sidcup Hill,
Sidcup, Kent.
Part 2
Lease : UCB Bank Plc (1)
Titan Finance Limited (2)
Date : 16 July 1998
Term : 10 years from and including 29 September 1997
Rent : #20,500 per annum
Rent Review : 29 September 2002
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
SIGNED BY MICHAEL SABEL for )
and on behalf of FIRST SIERRA )
FINANCIAL, INC in the presence of: )
)
SIGNED BY DAVID ROBERT )
JACKSON in the presence of: )
)
SIGNED BY PAUL DAVID )
CONNELL in the presence of: )
)
<PAGE>
INDEX
-----
Clause Heading Page No.
------ ------- --------
1. INTERPRETATION ............................... 3
2. SALE AND PURCHASE............................. 6
3. CONSIDERATION................................. 6
4. ADJUSTMENT.................................... 7
5. REPRESENTATIONS............................... 8
6. LIMITATIONS ON CLAIMS......................... 8
7. CONVENANTS.................................... 10
8. CONDITIONS TO OBLIGATION TO CLOSE............. 12
9. INDEMNIFICATION............................... 12
10. SECURITIES LAW MATTERS........................ 13
11. MISCELLANEOUS................................. 13
SCHEDULE 1: Details of the Company..................... 17
SCHEDULE 2: Representations............................ 18
SCHEDULE 3: The Property............................... 39
AGREED FORM DOCUMENTS
Tax Deed
The Instrument
<PAGE>
DATED OCTOBER 1998
(1) DAVID ROBERT JACKSON
PAUL DAVID CONNELL
(2) FIRST SIERRA FINANCIAL, INC
AGREEMENT FOR THE SALE AND PURCHASE OF
THE WHOLE OF THE ISSUED SHARE CAPITAL OF TITAN FINANCE LIMITED
