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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) July 23, 1998
HEALTHWORLD CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-23059 13-3922288
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(Commission File Number) (IRS Employer Identification Number)
100 Avenue of the Americas, New York, New York 10013
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 966-7640
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ITEM 2. ACQUISITION OF ASSETS.
On July 23, 1998, Healthworld Corporation ("Healthworld"), through its
wholly-owned subsidiary Healthworld International Holdings Inc. ("HIH"),
acquired 80% of the capital stock of HFT, a French holding company which owns
100% of the capital stock of Torrent, S.A. ("Torrent"), a French healthcare
communications agency, which in turn owns 100% of the capital stock of each of
Aigue Marine SARL ("Aigue") and Katchina Productions SARL ("Katchina"), each a
French company, from Dominique Agostini ("Agostini"), the founder of Torrent,
for a cash purchase price, exclusive of expenses, of 15,271,000 French Francs
(approximately US$2.56 million), in addition to amounts to be paid in cash on or
prior to April 15, 2000 and April 15, 2002 (such amounts, together, not to
exceed 19,000,000 French Francs (approximately US$3.17 million)) to be based
upon future consolidated operating profits of HFT, Torrent, Aigue and Katchina
(together, the "HFT Group Companies").
Beginning on January 1, 2002, Agostini shall have the option to sell the
remaining 20% of the capital stock of HFT owned by him (the "Remaining
Shares") to HIH, and beginning January 1, 2006, HIH shall have the option to
purchase the Remaining Shares from Agostini, in each case at a price not to
exceed 11,000,000 French Francs (approximately US$1.83 million) based upon the
value of the assets and operating profits of the HFT Group Companies at the
end of and for the two years immediately preceding the year in which such
option is exercised. The aggregate purchase price to be paid by HIH to
Agostini for 100% of the capital stock of HFT is not to exceed 45,271,000
French Francs (approximately US$7.55 million).
The Press Release of Healthworld Corporation dated July 28, 1998, pertaining
to the acquisition of the HFT Group Companies by HIH, which is annexed hereto
as Exhibit 20.01, is hereby incorporated by reference in this Form 8-K.
On July 24, 1998, Healthworld, through its wholly-owned subsidiary Healthworld
Holdings Limited ("Holdings"), acquired all of the capital stock of Colwood
House Medical Publications (UK) Limited ("Colwood"), a UK medical education
company, from Clive Davies and Stephen Cantle, for a cash purchase price,
exclusive of expenses, of (pound)4,000,000 (approximately US$6.60 million) and
subsequent payments in cash to take place in April 2000 and August 2001 to be
determined based upon the excess of future operating profits of Colwood in
each of the years 1998 through 2001 over agreed upon target levels. The
aggregate purchase price to be paid by Holdings for the capital stock of
Colwood is not to exceed (pound)7,482,000 (approximately US$12.35 million).
The Press Release of Healthworld Corporation dated July 27, 1998, pertaining
to the acquisition of Colwood by Holdings, which is annexed hereto as Exhibit
20.02, is hereby incorporated by reference in this Form 8-K.
All of the funds expended in the acquisition of each of HFT and Colwood were
derived from the proceeds of the initial public offering of the Common Stock,
par value $.01 per share, of Healthworld, which initial public offering was
completed on December 4, 1997.
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ITEM 7. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.01 -- Share Purchase Agreement between Dominique Agostini and
Healthworld International Holdings Inc., dated July 23, 1988
(as translated from the French).
10.02 -- Agreement for the sale and purchase of the share capital of
Colwood House Medical Publications (UK) Limited, dated July 24, 1998.
10.03 -- Deed of Indemnity among Clive Davies, Stephen Cantle and
Healthworld Holdings Limited, dated July 24, 1998.
20.01 -- Healthworld Corporation Press Release, dated July 28, 1998
(incorporated by reference in this Form 8-K).
20.02 -- Healthworld Corporation Press Release, dated July 27, 1998
(incorporated by reference in this Form 8-K).
Financial Statements of Colwood and pro forma financial information related to
the acquisition of Colwood will be filed in an amendment to this Form 8-K on
or before October 6, 1998.
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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 thereunto duly authorized.
HEALTHWORLD CORPORATION
By /s/ Stuart Diamond
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Name: Stuart Diamond
Title: Executive Vice President,
Chief Financial Officer,
Secretary and Treasurer
Date: August 6, 1998
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.01 -- Share Purchase Agreement between Dominique Agostini and
Healthworld International Holdings Inc., dated July 23, 1988
(as translated from the French).
10.02 -- Agreement for the sale and purchase of the share capital of
Colwood House Medical Publications (UK) Limited, dated July 24,
1998.
10.03 -- Deed of Indemnity among Clive Davies, Stephen Cantle and
Healthworld Holdings Limited, dated July 24, 1998.
20.01 -- Healthworld Corporation Press Release, dated July 28, 1998
(incorporated by reference in this Form 8-K).
20.02 -- Healthworld Corporation Press Release, dated July 27, 1998
(incorporated by reference in this Form 8-K).
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT, entered on July 23, 1998, between Mr. Dominique Agostini
residing at 7, rue des Augustins, 92160 Antony, (hereinafter referred to
as the "Seller") and Healthworld International Holdings Inc. a company
organized under the laws of Delaware, United States of America, with
principal offices at 100 Avenue of the Americas, New York, NY 10013,
U.S.A., (hereinafter referred to as the "Purchaser") represented by Mr.
Steven Girgenti, President, witnesseth :
WITNESSETH
Whereas :
The corporations listed below shall be referred to as the "HFT Group"
(excluding any corporations in which any one of the corporations in the
HFT Group may later acquire an interest) :
HFT ("HFT"), a societe anonyme with a stock capital of FRF 3,360,600
divided into 33,606 shares of FRF 100 each, having its registered
offices at 58, rue Pierre Charron, 75008 Paris, registered in the Paris
Register of Trade and Companies, # 402 339 329 ;
Torrent S.A. ("Torrent"), a societe anonyme with a stock capital of
FRF 1,000,000 divided into 2,500 shares of FRF400 each, having its
registered offices at 58, rue Pierre Charron, 75008 Paris, registered in
the Paris Register of Trade and Companies, # 334 489 788 ;
Aigue Marine SARL ("Aigue Marine"), a societe a responsabilite
limitee with a stock capital of FRF 500,000 divided into 500 shares of
FRF 100 each, having its registered offices at 10, rue Lincoln, 75008
Paris, 75008 Paris, registered in the Paris Register of Trade and
Companies, # 383 160 918 ;
Katchina Productions SARL ("Katchina"), a societe a responsabilite
limitee with a stock capital of FRF 100,500 divided into 670 shares of
FRF 150 each, having its registered offices at 58, rue Pierre Charron,
registered in the Paris Register of Trade and Companies, # 347 540 460.
The Seller represents and warrants that he is the owner of 33,606 shares
(100%) of the shares of HFT, which in turn owns 100% of the shares of
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Torrent, [the latter owning in turn 100% of the shares of Aigue Marine
and Katchina].
(The shares of HFT are hereinafter collectively referred to as the
"Shares" and individually as a "Share" ; a first block of 26,885 (twenty
six thousand eight hundred and eighty five) Shares is hereinafter
referred to as the "First Block" and the remainder, namely 6,721 (six
thousand seven hundred and twenty one) Shares, as the "Second Block")
The Seller wishes to sell the First Block to the Purchaser, who in turn
wishes to acquire the same. The Seller and the Purchaser are further
willing to enter into certain covenants regarding the future purchase by
the Purchaser of the Second Block.
The parties have determined themselves on the basis of the
representations, warranties and agreements which are recited in this
agreement.
Now therefore, the parties have agreed as follows:
1. Conditions Of The Sale
1.1 Purchase of the First Block - Purchase Price - Payment
1.1.1 The Seller hereby sells the First Block to the Purchaser, which
the Purchaser hereby accepts, for the price defined in paragraphs 1.1.2,
1.1.3 and 1.1.4 below, subject to the provisions of paragraph 1.1.5
below.
1.1.2 The down payment agreed between Purchaser and the Seller for the
First Block is FRF 15,271,000 (fifteen million two hundred and seventy
one thousand French Francs) (herein the "Down Payment").
For the purpose of this agreement the expression "Relevant Net Assets"
for a given fiscal year shall mean the consolidated net assets of the
HFT Group corporations (as defined above, i.e. excluding any
corporations in which anyone of the corporations in the HFT Group may
later acquire an interest) for that year, i.e. the sum of the
consolidated issued share capital and retained profits of the HFT Group
corporations (excluding any goodwill resulting from the purchase by any
one of the HFT Group corporations of shares of any one of such
corporations not owned by the Seller or anyone of the said corporations
prior to December 31, 1997), calculated in accordance with United States
Generally Accepted Accounting Principles consistently applied for all
periods ("USGAAP"). It is acknowledged that part of the shares of
Torrent, Aigue Marine and
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Katchina were acquired by the HFT Group corporations after December
31, 1997.
The expression "Relevant Profits" for a given fiscal year shall mean the
audited consolidated operating profits of the HFT Group corporations (as
defined above, i.e. excluding any corporations in which anyone of the
corporations in the HFT Group may acquire an interest in the future) for
that year, before interest and taxation, computed in accordance with
USGAAP. Moreover, any management fees other than those of the types
defined in paragraph 1.3.3 below shall be added back for the purpose of
calculating Relevant Net Assets and Relevant Profits.
In calculating the Relevant Net Assets and Relevant Profits as at
December 31, 1997, and for the year then ended, such calculation has
been made on a pro-forma basis (Annex A), under the assumption that HFT,
directly or indirectly owns 100% of Torrent, Aigue Marine and Katchina
during such period.
The parties acknowledge that the Down Payment is made up of two parts,
namely
(i) DP1, namely FRF 2,271,000 (two million two hundred and seventy
one thousand French Francs), and
(ii) DP2, namely FRF 13,000,000 (thirteen million French Francs).
The Purchaser has paid the Down Payment, to the Seller, by check or wire
transfer of immediately available funds, on the date hereof, which is
hereby acknowledged by the Seller.
The consolidated bank indebtedness of the HFT Group corporations between
September 15 and 30, 1998 shall be audited by the Purchaser. In the
event this would show an average daily net indebtedness in excess of FRF
100,000 (one hundred thousand French Francs), the Seller shall pay to
the Purchaser an amount equal to the said average indebtedness, plus any
interest and charges incurred by reason of the indebtedness over the
period comprised between the date hereof and September 30, 1998. By way
of exception, in the event it should appear that over the months of
October, November and December 1998, the average daily net indebtedness
is equal to zero, the provisions of the first sentence of this
grammatical paragraph shall not apply. Any sum which the Seller would be
owing to the Purchaser under this grammatical paragraph shall be set off
against any sums which may become due to the Seller under paragraph
1.1.3 and/or 1.1.4. In the event no sums are due by the Purchaser under
paragraphs 1.1.3 and/or 1.1.4, or if the said sums are insufficient,
then the Seller undertakes to pay all such amounts remaining due by him
under this grammatical paragraph out of his own funds, on or before
December 31, 2002. For the purpose of interpreting this grammatical
paragraph, the expenses incurred by Torrent in
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connection with the purchase of the Aigue Marine and Katchina shares
which were not owned by Torrent prior to December 31, 1997 shall be
added to the average bank indebtedness.
1.1.3 In addition, the Purchaser shall pay to the Seller, no later than
April 15, 2000, a sum equal to 5.5 times 80% of the average Relevant
Profits for the two years ended 31 December 1999, less DP2.
1.1.4 In addition, the Purchaser shall pay to the Seller, no later than
April 15, 2002, a sum equal to 6.5 times 80% of the average Relevant
Profits for the two years ended 31 December 2001, less the aggregate of
DP2 and the payment made pursuant to article 1.1.3 above, if any.
1.1.5 The Seller agrees, notwithstanding any of the above, that the
purchase price for the First Block and the Second Block shall not exceed
FRF 43,000,000 (forty three million French Francs) ; provided, however,
that (a) the amount paid pursuant to paragraph 1.1.3 above shall not
exceed FRF 20,000,000 (twenty million French Francs) less the amount of
DP2 and (b) the amount paid pursuant to paragraph 1.1.4 above shall not
exceed FRF 32,000,000 (thirty two million French Francs) less the amount
of DP2 and the amounts paid pursuant to paragraph 1.1.3.
If the result of the computation for the purposes of paragraph 1.1.3
above is zero or a negative number, then the Purchaser shall have no
payment obligation under the said paragraph and the Seller shall have no
obligation to repay any part of the Down Payment.
If the result of the computation for the purposes of paragraph 1.1.4
above is zero or a negative number, then the Purchaser shall have no
payment obligation under the said paragraph and the Seller shall have no
obligation to repay any amount received under paragraph 1.1.3, if any
was received, or any part of the Down Payment.
During the period from the date hereof to 31 December 2001,
notwithstanding the above, at the Seller's sole option, the Purchaser
shall pay to the Seller, or, as the case may be, his heirs (i) all
amounts due under paragraphs 1.1.3 and 1.1.4, or, (ii) alternately,
within 15 days after completion of the audit for the preceding year, a
final payment, equal to 6.5 times 80% of the average of the Relevant
Profits for the two preceding years, less the sums paid under DP2 and/or
paragraph 1.1.3 above.
1.2 Purchase of the Second Block-Purchase Price-Payment
1.2.1 From January 1, 2002, the Seller shall have the option to sell the
Second Block to the Purchaser, which the Purchaser accepts as a promise
to sell only.
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After January 1, 2006, the Purchaser shall have the option to purchase
the Second Block from the Seller, which the Seller accepts as a promise
to purchase only.
If one of the above options is exercised, the Seller shall be required
to sign the relevant movement orders in favor of the Purchaser and the
Purchaser shall be required to pay the price (as defined below), with
respect to the Second Block, within 90 (ninety) days from the date of
the notice of exercise of the option. The party which shall have taken
the initiative of exercising his option shall bear the registration tax
consequences of the sale.
So long as the Seller shall own the Second Block, the Seller shall have
the obligation, between January 1 and June 30 of each year, to give
notice to the Purchaser of his decision to sell or not sell the Second
Block to the Purchaser. If the decision is to sell, then the
corresponding movement orders in favor of the Purchaser shall be signed,
and the purchase price paid, on June 30 of the said year or within 90
(ninety) days following the notice, whichever is the earlier.
On the date of acquisition of the Second Block, the Purchaser shall pay
to the Seller 20% times the Relevant Net Assets as at 31 December of the
fiscal year of the HFT Group corporations preceding the fiscal year
during which the purchase of the Second Block shall have occurred
(hereinafter the "Preceding Year").
In addition, at the latest on June 30 of the fiscal year following the
Preceding Year, the Purchaser shall pay a sum equal to 6.5 times 20% of
the average Relevant Profits for the Preceding Year and the year
preceding the latter.
1.2.2 Without prejudice to the above, the Seller hereby undertakes to
sell the Second Block to the Purchaser and the Purchaser undertakes to
purchase the Second Bloc from the Seller, within 90 (ninety) days from
the date of the written request of the Purchaser, provided the said
request is made prior to 1 January 2002, in any one of the following
circumstances :
- a "person" or a "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 of the United States of
America, as amended (the "Exchange Act")), other than senior management
of Healthworld Corporation becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of in excess of 50% of the then
outstanding voting stock of Healthworld Corporation ; or
- during the period from the date hereof to 31 December 2001 the Seller
ceases to work for the HFT Group corporations as a result of death,
incapacity due to illness, dismissal or termination for any reason ;
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Upon the occurrence of any of the above circumstances, the Purchaser
shall, at the time of the purchase, pay to the Seller or shall cause to
be paid to the Seller :
(a) a sum equal to 20% of the Relevant Net Assets for the fiscal year
preceding the purchase of the Second Block ;
(b) 25% of DP2;
(c) 25% of the amount defined in paragraph 1.1.3. Such amount shall be
paid within 90 (ninety) days following the notification date if the
amount defined in paragraph 1.1.3 has been paid on such date or with the
same due date as such payment, if any.
(d) 25% of the amount defined in paragraph 1.1.4. Such amount shall be
paid within 90 (ninety) days following the notification date if the
amount defined in paragraph 1.1.4 has been paid on such date or with the
same due date as such payment, if any.
1.2.3 The Seller agrees that notwithstanding any of the above the
purchase price for the Second Block as calculated in paragraph 1.2.1 or
1.2.2 above shall not exceed FRF 11,000,000 (eleven million French
Francs).
The Seller undertakes for the future not to sell to a third party the
shares corresponding to the Second Block, nor to authorize any
encumbrances on the said shares for the benefit of a third party, and to
do the necessary so that no encumbrance affect the said shares, without
the prior written consent of the Purchaser.
1.3 Post acquisition implications
1.3.1 In the event of acquisitions being made after the date hereof by
any one of the HFT Group corporations of the kind defined in paragraph
3.3, first sentence, below, the results of such acquired businesses,
whatever may be their respective legal forms, as well as the costs,
expenses and charges which may be borne by any one of the HFT Group
corporations as a direct consequence of such acquisitions, shall not be
taken into account for the purpose of calculating any amounts which may
become due to the Seller, after the date hereof, under paragraphs 1.1 or
1.2 above.
1.3.2 The Seller acknowledges the fact that the Purchaser or any
Healthworld group company designated by Healthworld, may in the future
charge management fees to one, several or all the HFT Group companies.
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1.3.3 The Seller agrees that management fees corresponding to (i) costs
incurred at the Purchaser's request on behalf of, or for the purpose of
rendering services to, the HFT Group corporations as mentioned in the
preceding paragraph, and (ii) charges for services made to the said
corporations by Healthworld B.V. covering the cost of marketing
operations, to the extent the same do not exceed, on a yearly basis,
(pound) 21,854 (twenty one thousand eight hundred and fifty four Pounds
Sterling), shall be regarded as bona fide management fees for the
purpose of the computation of any amounts which may become due to the
Seller, after the date hereof, under paragraphs 1.1 or 1.2 above.
1.3.4 The Purchaser shall pay and the Seller shall accept all sums which
may become due to the Seller, after the date hereof, under paragraphs
1.1 or 1.2 above, in such currency as shall be legal tender at the time
in France (French Franc or Euro). If, at the time of payment there
exists a lawful option between the French Franc and the Euro, payment
shall be effected in the currency which the Seller shall notify to the
Purchaser in writing, at least 30 (thirty) days prior to the time when
the relevant payment shall be due and payable, failing which the
Purchaser shall pay the amount in the currency of his choice.
2 Representations And Warranties Of The Sellers
The Seller represents and warrants to the Purchaser as follows, except
as disclosed in the Annexes mentioned in this article 2 or in the last
annex to this agreement (the "Disclosure Schedule") :
2.1 General Warranties
With regard to the Shares, and the assets and liabilities of the HFT
Group corporations, Seller hereby confers upon Purchaser the warranties
provided in Sections 1625 et seq. and section 1641 of the Civil code, to
which this agreement has added further warranties, as permitted by
Section 1627 of the Civil Code.
2.2 Capacity of Seller - Admission of the Purchaser as a New Stockholder
The Seller is the unrestricted owner of the Shares and has full capacity
to sign this agreement and to perform his obligations thereunder.
The Purchaser has been approved as a new stockholder of HFT pursuant to
a decision of the board of directors of HFT dated June 30, 1998.
2.3 Absence of Charges on the Shares and on the assets of the
corporations
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The Shares and the assets owned by the HFT Group corporations are free
from any charge, lien, encumbrance, claim, mortgage, chattel mortgage or
pledge or any other charge, whether contractual, judicial or deriving
from by-laws, of any nature whatsoever. Notably, the Pledge of the
Torrent shares has been lifted as at the date hereof and the said
shares, as of the same date, are free and clear of all encumbrances.
More generally, there is no flaw in the Seller's title to the Shares or
the said corporations' title to the said assets.
2.4 Title to Corporate Assets
The HFT Group corporations hold full title :
2.4.1 to all the assets which are reflected in the audited consolidated
balance sheet of the HFT Group corporations as at December 31, 1997
included in Annex A hereto (the "1997 Balance Sheet"), and,
2.4.2 to all its intangible assets.
Since the date of the 1997 Balance Sheet there has been no reduction in
the net book value of the HFT Group corporations, except for losses
incurred in the normal course of business from January 1, 1998 to the
date hereof.
There exist no assets of the HFT Group corporations that are not
reflected in the Financial Statements (as defined in section 2.8),
excepting those which are reflected in the Disclosure Schedule. None of
the assets reflected in the Financial Statements have been sold or
otherwise disposed of by the HFT Group corporations, excepting those
that are reflected in the Disclosure Schedule.
As regards those assets subject to long- term movable or immovable
lease-purchase agreements, the HFT Group corporations are the sole
beneficiary of such lease-purchase agreements and have duly complied
with all their obligations thereunder. A list of the said assets is
attached as Annex B.
2.5 Shares
The share capital of each of the HFT Group corporations and the par
value of the Shares are as stated above.
All the Shares are issued and fully paid up and are all of the same
class.
The HFT Group corporations have issued no securities other than the
shares corresponding to their respective capital stocks, as shown above.
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Neither the HFT Group corporations nor the Seller have recognized to
anyone, contractually or otherwise, any rights which might require (i)
the issuance, exchange, assignment, contribution or redemption of shares
or other securities of the HFT Group corporations or (ii) any further
payments to previous shareholders.
There exist no stockholder agreements binding the Seller, previous
stockholders of the HFT Group corporations, the HFT Group corporations,
except for the agreements with the Healthworld Group.
2.6 Subsidiaries and Joint Ventures
With the exception of the stockholding relationships which exist among
them, the HFT Group corporations have no subsidiaries and hold no
interest in any other legal entity, whatever may be the nature or form
of such entity, excepting the interest in Healthworld B.V., with which
the parties are familiar.
Notably, neither of the HFT Group corporations any longer holds an
interest in Duetto S.A., and neither of the said corporations is in any
way liable to third parties or the Seller with respect to the sale of
the interest in Duetto S.A. or with respect to any obligation undertaken
by Duetto S.A. vis-a-vis third parties.
The HFT Group corporations have not entered with anyone into any
joint-venture agreements.
2.7 Organization of the HFT Group corporations
The HFT Group corporations have been lawfully organized and, since their
inception, have remained in good standing in regard to their
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respective legal obligations. The HFT Group corporations are in no way
legally restricted in their ability or capacity to pursue their
businesses as now pursued and as currently contemplated being pursued.
2.8 Financial Statements
2.8.1 The documents listed below, which are represented by the Seller to
be true and complete namely :
(a)the audited consolidated balance sheet of the HFT Group corporations
as of December 31, 1997 and the related audited consolidated statement
of operations [(verbatim in the French version)], cash flow [(verbatim
in the French version)] and stockholders' equity [(verbatim in the
French version)] for each of the years then ended, which, as regards HFT
and Torrent, have been certified by their respective statutory auditors,
including all notes and schedules relating thereto, and,
(b)the balance sheets and operating accounts at December 31, 1995 and
1996, certified by the statutory auditors as regards HFT and Torrent,
and approved by the shareholders as regards Katchina and Aigue Marine,
including all notes and schedules relating thereto,
are collectively referred to herein as the "Financial Statements" and
are annexed hereto as Annex A.
The Financial Statements referred to in 2.8.1 (a) above and any of the
financial statements required to be delivered pursuant to the terms
hereof are or will be prepared from the books and records of the HFT
Group corporations in accordance with USGAAP. All the Financial
Statements fairly and truly show the financial condition of the HFT
Group at such dates and the results of its operations as of the dates or
throughout the periods indicated.
The pro forma consolidated financial statements of the HFT Group
corporations and the related notes thereto annexed hereto as Annex A
have been prepared on a basis consistent with the historical financial
statements of the HFT Group, give effect to and present fairly, the
assumptions used in the preparation thereof on a reasonable basis and in
good faith.
Except as set forth in the Disclosure Schedule, and to the extent and in
the amount set forth in the 1997 Balance Sheet, the HFT Group did not
have any direct or indirect indebtedness, liability, claim loss, damage,
deficiency or obligation, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise (collectively the "Liabilities"). Except as
otherwise set forth in the Disclosure Schedule or on the other Annexes
to this agreement,
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there are no other Liabilities of the HFT Group corporations relating to
or arising out of any act, transaction, circumstance or state of facts
which occurred or existed on or after December 31, 1997, other than
those Liabilities arising in the ordinary course of business consistent
with past practice, those disclosed in this agreement and such
Liabilities are of the same character, type and magnitude as incurred in
the past.
Except as set forth in the Disclosure Schedule, no expenditure, accrued
or paid by the HFT Group corporations may be regarded, for tax purposes
or otherwise, as disproportionate.
Similarly, the liquidation of corporations other than the HFT Group
corporations as they exist on the date hereof, or the sale of shares or
assets previously owned by any one of the HFT Group corporations to the
Seller or third parties, prior to the date hereof, have been effected in
such a manner and under such conditions that such liquidations or sales
will not have a material negative impact on any one of the HFT Group
corporations, from a tax standpoint or otherwise.
2.8.2 The Seller warrants that the only dividends paid to the Seller by
any one of the HFT Group corporations in 1997 or in 1998 were the
following :
- 1997 Torrent : FRF 46,400 (voted and paid) ;
- 1997 Aigue Marine : FRF 35,000 (voted in 1997 and paid in 1998).
2.9 Representations and Warranties as to the Absence of Certain Changes
or Events Since December 31, 1997
For the period extending between December 31, 1997 and the date hereof,
excepting for the items disclosed by the Seller in the Annexes referred
to in this article 2.9 or in the Disclosure Schedule :
2.9.1 the tangible assets of the HFT Group corporations have not
suffered any damage, destruction, or loss (whether covered by insurance
or not) ;
2.9.2 The French medical advertising market environment is much less
favorable in 1998 and steps have been taken to remedy the difficulties
resulting from this state of fact. As a consequence of such
difficulties, the HFT Group corporations have suffered losses during the
first half year of 1998. Save for the aforementioned, the HFT Group
corporations have not experienced nor do they currently anticipate, any
material adverse change in their businesses, operations or financial
condition ;
2.9.3 the HFT Group corporations have not engaged in operations nor
undertaken obligations other than in the ordinary conduct of their
respective businesses ;
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2.9.4 the level and conditions of compensation or salary agreed between
the HFT Group corporations and their directors, officers or employees
and the profit sharing plans in favor of the above-mentioned persons
have not undergone any abnormal fluctuation ; all payments due to third
parties, including non obligatory private pensions, have been paid or
are accrued as required by law, and all payments in respect of the said
private pensions due in the year 1998 have either been paid or are
accrued in the books of the relevant HFT Group corporation or
corporations ;
2.9.5 there has been no termination of agreements and the HFT Group
corporations have waived no rights other than in the normal course of
business ;
2.9.6 the HFT Group corporations have remained current as regards their
financial obligations ;
2.9.7 the HFT Group corporations are not aware of any claim against them
which, notably, may jeopardize the marketability of their products or
services, or render the HFT Group corporations or their directors,
officers or employees, liable under civil or criminal law ;
2.9.8 the HFT Group corporations have not lost any major source of
business nor do they anticipate a significant reduction in the level of
the same.
2.10 Industrial and Intellectual Property Rights
The HFT Group corporations hold full title without any reservation to
all the industrial and intellectual property rights described in Annex
D, which Annex gives a full list of the rights owned by the said
corporations, and no third party has ever challenged the title to or the
validity of, such rights, nor has infringed the same.
The activities of the HFT Group corporations, up to the date hereof, are
not liable to create any conflict with industrial or intellectual
property rights of third parties.
The transactions contemplated in this agreement shall not cause any loss
of or reduction in, any of such rights.
The HFT Group corporations have granted no licensing rights and, more
generally, have granted no rights to third parties, bearing on any one
of the said corporations' industrial and intellectual property rights.
Similarly, the HFT Group corporations have not received any licensed
rights and, more generally, have received no rights from third parties
bearing on industrial or intellectual rights belonging to any such third
parties.
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2.11 Insurance
Insurance policies with respect to persons, property and the HFT Group
corporations' liability and, as the case may be, third party liability,
are fully binding upon the relevant insurance carriers. There are no
circumstances existing which would enable the said carriers to refuse or
limit the coverage provided in the policies ; no carrier has refused to
renew an insurance policy and there have been no increases in the rates
or insurance premiums, except in the normal course of business. The HFT
Group corporations are current with the payment of their premiums. The
list of insurance policies is shown in Annex E.
2.12 Contracts
2.12.1 All contracts to which the HFT Group corporations are parties,
and which are currently in force, are lawful and binding upon their
signatories and none of the parties to the said agreements have
challenged the validity thereof, or breached the same. None of the said
contracts are the subject matter of current or threatened litigation.
Contracts, other than service contracts, involving the payment by or to
the HFT Group corporations after the date hereof, of amounts, per
contract exceeding FRF 100,000 (one hundred thousand French Francs), are
listed in Annex F.
2.12.2 Excepting for the agency agreements, commissioning agreements
relating to the securing of business or to the sale of the HFT Group
corporations' goods or services listed in the said Annex F, no contracts
of such nature are binding on the HFT Group corporations, and if any
should come to light, the Seller shall bear all the consequences of
their termination, provided such termination by the relevant corporation
is notified to the relevant third party or is notified by the latter to
the relevant corporation, within 18 (eighteen) months from the date
hereof.
2.13 Litigation
All litigation, proceedings or judicial or administrative inquiries or
audits currently pending or threatened, to which anyone of the HFT Group
corporations, or, in connection with the conduct of the affairs of the
HFT Group corporations, the Seller personally or the HFT Group
corporations' directors, officers or employees, are parties, are listed
in Annex G. Since January 1, 1993, no court or administrative decision
has found against the HFT Group corporations or, in connection with the
conduct of the affairs of the HFT Group corporations, against Seller
personally or the HFT Group corporations' directors, officers or
employees, and there is no reason to anticipate that any such decisions
shall be rendered in respect of facts known, or which should have been
known to a prudent businessman, to the HFT Group corporations, their
directors, officers or employees, or the Seller.
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2.14 Taxes - Customs - Social Security and Labor Law Obligations
All French and foreign returns concerning taxes, turnover taxes, value
added taxes, recording taxes and other taxes, all customs returns and
social security and labor law returns and declarations which the HFT
Group corporations were under an obligation to file were so filed on or
before due date and the returns and declarations were prepared and
signed as prescribed by law. The HFT Group corporations have paid or
done the necessary to book adequate reserves to allow for the payment,
on due date, of all taxes and dues prescribed by law and resulting from
such returns.
No claims for non-reporting, late reporting, late payment or non-payment
of any of the above taxes or dues, or for non compliance with the law,
were received by the HFT Group corporations and no fact creates concerns
that any such claims may be notified. All books and registers that the
HFT Group corporations must keep as required by law for all of the above
are in existence, are duly kept, and are up to date.
In the event of a final reassessment of any one of the above mentioned
taxes or dues the amounts claimed shall be paid forthwith by the Seller
to the Purchaser as stated in article 7 below.
2.15 Conformity with Company Law
The HFT Group corporations and their directors and officers, in the
pursuit of their activities, have in all respects complied with their
legal obligations under company law and the minutes of stockholders' and
directors' meetings are true and sincere and faithfully reflect the
position of the HFT Group corporations under company law.
2.16 Compensation and salaries - Labor Law and Social Security Law
The HFT Group corporations and their directors and officers, in the
pursuit of their activities, have in all respects complied with their
legal obligations under labor law and social security law. The books and
registers which are required to be kept under social security and labor
law are true and sincere and faithfully reflect the position of the HFT
Group corporations under labor and social security law.
2.17 Permits
No permit or consent or approval of any governmental authority or agency
or any other party whatsoever is needed to allow the Seller to fulfill
its obligations hereunder.
2.18 Continuation of Business Relationships
Neither of the customers or suppliers of the HFT Group corporations
other than those referred to in the Disclosure Schedule may invoke
contractual provisions allowing for termination on the grounds that an
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agreement such as this agreement has been entered into between the
parties hereto.
2.19 Interests in the Business of Competitors, Suppliers or Customers
Neither of the Seller nor any of the directors, officers nor, to the
best of Seller's knowledge, the employees of the HFT Group corporations,
have an equity or other interest in the business of any competitor,
supplier or customer of the HFT Group corporations (except as regards
Duetto, FMCE and Bio Alliance) and neither of them personally owns or
has any right whatsoever over the assets used by the HFT Group
corporations for the pursuit of their activities. As regards Duetto,
FMCE and Bio Alliance, this representation may not be interpreted as
forbidding any future continuation of the existing trading
relationships.
2.20 Receivables
The HFT Group corporations' receivables recorded as of June 30, 1998 for
Aigue Marine and July 20, 1998 for Torrent and Katchina are listed in
Annex H, and neither of such receivables is delinquent by more than six
months from the date of the legal fact or act which generated the same,
and the Seller warrants that all such outstanding and unpaid
receivables, except those booked as bad debts, shall be fully settled in
favor of the relevant HFT Group corporation at the latest 6 (six) months
from the date hereof.
All the subsidies and grants which the HFT Group corporations have
received and which they are entitled to receive are mentioned in the
said Annex H.
2.21 Environment
The HFT Group corporations have adhered strictly to all applicable
environmental laws and regulations, and Sellers, the HFT Group
corporations and their directors and officers are not aware of any
problem or dispute in this respect.
2.22 Stockholder Guarantees - Stockholder Accounts
The Seller has granted no guarantees in support of the credit of the HFT
Group corporations, and does not hold receivable or payable accounts in
the books of any one of the HFT Group corporations, excepting for the
loan granted by the Seller to Torrent, in the amount of FRF 1,700,000
(one million seven hundred thousand French francs), as per the agreement
dated July 23, 1998, attached hereto in the Disclosure Schedule.
2.23 Intermediaries
Seller represents that no intermediary, at his request, or at the
request of the HFT Group corporations or Healthworld B.V. or their
directors or officers, assisted in procuring the conclusion of this
agreement and that
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no fee is therefore payable in this respect, in particular by any one of
the HFT Group corporations.
2.24 Year 2000 and Euro Compliance
Seller represents that the HFT Group companies accounting and software
systems are compliant with year 2000 and Euro technical requirements.
2.25 Certificates from URSSAF and the Revenue Service
The Seller certifies that the certificates of the Chief Tax Collector's
office and of URSSAF evidencing that, as at their respective dates of
issuance, the HFT Group corporations had no debt vis-a-vis such
organizations (Annex I), correspond to his awareness of the HFT Group
corporations' position vis-a-vis such authorities.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
3.1 Organization
Purchaser is a duly organized company and has full capacity to sign this
agreement and to perform the obligations contracted by Purchaser under
this agreement.
3.2 Permits
No permit whatsoever is needed to allow the Purchaser to fulfill its
obligations hereunder.
3.3 Further Investments in France in the Health Industry
The Purchaser hereby guarantees that, so long as the Seller shall own
the Second Block, the Purchaser shall not make any new investments in
the business of sales forces (medical and pharmaceutical agents
networks), medical advertising, public relations in the medical area or
medical training in France otherwise than through one of the HFT Group
companies.
In the event of any such acquisition(s), if the Seller is at the time in
charge of the management of the HFT Group corporations and of the new
acquisition(s), the Seller agrees that the said added responsibilities
will not in any way restrict his general obligation to develop the
business of the HFT Group corporations, as it exists on the date hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE MANAGEMENT
OF THE HFT GROUP CORPORATIONS SINCE DECEMBER 31, 1997 UP TO THE DATE
HEREOF
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The Seller represents and warrants to the Purchaser, subject to the
indications in the Disclosure Schedule, that since December 31, 1997 up
to the date hereof, the Seller, the managers, officers, and corporate
authorities of the HFT Group corporations :
4.1 have operated the businesses of the HFT Group corporations as
prudent businessmen ;
4.2 have used their best efforts to preserve the business organization
of the HFT Group corporations intact ;
4.3 have done the necessary so that the HFT Group corporations do not
experience any material adverse change in their businesses, operations
or financial conditions ;
4.4 have maintained the tangible assets of the HFT Group corporations in
sufficient operating condition and state of repair to enable them to
operate their businesses in the manner in which they were operated
immediately prior to December 31, 1997 ;
4.5 have maintained the insurance coverage of the HFT Group corporations
in full force and effect ;
4.6 have used their best efforts to keep available to the HFT Group
corporations the services of their present key employees beyond the date
hereof ;
4.7 have paid the accounts payable of the HFT Group corporations and
satisfied all their other obligations in general ;
4.8 have used their best efforts to maintain good business relationships
with the main suppliers and customers of the HFT Group corporations ;
4.9 have not made any change in their by-laws ;
4.10 have not made any change in their stock capital nor agreed to any
issuance or redemption of shares ;
4.11 have not declared or distributed any dividend, notably to the
Seller ;
4.12 have not contracted any substantial financial obligation, and
notably have contracted no loans (excepting the loan referred to in
paragraph 2.22), nor used any credit facility, nor participated in any
currency or other derivatives hedging, nor waived any right ;
4.13 have not agreed to any charge on their assets (likewise, the Seller
has not agreed to any charge on the Shares) ;
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4.14 have not sold or transferred any of their assets, nor waived any
claim or right whatsoever ;
4.15 have not made any material changes to the compensations, salaries
or profit sharing plans of the employees of the HFT Group corporations ;
4.16 have not hired or terminated any employees or transferred anyone of
the same, either geographically or among the HFT Group corporations,
excepting interim workforce contracts, not exceeding a duration of 3
(three) months for any one of the latter ;
4.17 have not made any material changes in the accounting methods,
principles or practices used by the HFT Group corporations ;
4.18 generally, have not behaved otherwise than as if they were managing
a third party's affairs as prudent professional business people,
pursuant to the provisions of s.1372 et seq. of the Civil Code.
5. CONFIDENTIALITY
Seller shall keep confidential any information which has been made
available to him by or on behalf of Purchaser, in connection with the
transactions being the subject matter of this agreement (hereinafter
"Confidential Information"). The Seller shall only use Confidential
Information for the purpose of finalizing the transactions agreed
herein. Confidential Information does not include information generally
available to the public or which may become available to the Seller
lawfully from a source other than the Purchaser or the HFT Group
corporations.
6. OBLIGATIONS OF THE PARTIES PERFORMED PRIOR TO OR ON THE DATE HEREOF
6.1 Management and Statutory Auditors
The directors and officers of the HFT Group corporations in office
(excepting for the Seller), have handed to the Purchaser a letter of
resignation from their respective offices, effective on the date on
which their successors will be appointed by the competent corporate
authorities of the HFT Group corporations. As regards statutory
auditing, the Seller agrees that the Purchaser may appoint co- statutory
auditors (in office and alternate), in the event where the Purchaser
would deem the same to be necessary.
Seller represents that he has caused the relevant corporate authorities
of the societes anonymes among the HFT Group corporations to call a
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meeting of the stockholders for July 23, 1998, the agenda of which
provides for the appointment of successors in lieu of resigning
directors.
6.2 Corporate Books and Records
Seller has delivered to Purchaser :
a copy, certified by the president general manager of HFT, of the
minutes of the appropriate corporate authority, evidencing that such
authority has accepted Purchaser as a new stockholder ;
the HFT Group corporations' corporate books and records (minutes
books, stock movement and stockholder accounts books, attendance
registers, attendance sheets, trade registry records), all of which
Seller represents are current on the date hereof and cover the corporate
life of the HFT Group corporations from its organization.
6.3 Delivery of the Shares
Seller has delivered to Purchaser on the date hereof the necessary
movement orders in favor of Purchaser which Seller represents are
validly binding upon the Seller for all and every one of the shares
included in the First Block.
6.4 Entity Classification Election
Seller has delivered to the Purchaser copies of the US Internal Revenue
Service forms 8832, the originals of which have been duly dated and
signed, and then filed with the US Internal Revenue Service prior to the
date hereof, in which both Aigue Marine and Katchina have made election
2(e) on the said forms
6.5 Purchase by Torrent of Aigue Marine Shares
By agreement dated July 23, 1998, attached hereto as Annex J, the Seller
has extended a loan of FRF 1,700,000 (one million seven hundred thousand
French Francs) to Torrent for the purchase by the latter, prior to the
date of execution of this agreement, of 245 (two hundred and forty five)
Aigue Marine shares. The said shares, added to the 255 (two hundred and
fifty five) shares of Aigue Marine previously owned by Torrent represent
100% of the capital stock of Aigue Marine. The said loan is
interest-free and the Purchaser agrees that it shall cause Torrent to
repay the principal of the loan at the latest one year following the
date hereof.
7 INDEMNIFICATION
The Seller agrees that all representations and warranties made or given
by the Seller in this agreement or in any certificate or other document
delivered pursuant hereto by Seller, shall remain in full force and
effect
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for a period of three years after the date hereof, excepting as regards
tax, social security and labor law matters, in which areas the periods
of the statutory statutes of limitations shall apply (hereinafter the
"Validity Period").
Seller undertakes to fully indemnify the Purchaser, up to 80% (eighty
percent) of any damage to the Purchaser or any one or all of the HFT
Group corporations (including interest, fees (including attorneys'
fees), expenses and costs), resulting, directly or indirectly, from a
violation (i) of an undertaking of the Purchaser made herein, or (ii) of
a discrepancy between a representation of the Seller made herein and the
facts observed (hereinafter, collectively, a "Violation"), irrespective
of the date (prior to the end of the Validity Period), on which the
Violation has been disclosed or becomes known to the Purchaser.
For the purpose of calculating the damage to the Purchaser above
mentioned, the gross amount thereof shall be reduced by any net cash
benefit (including tax-wise) which may result from the existence of the
damage. Furthermore, claims shall be subject to a one time claims
threshold of FRF 250,000 (two hundred and fifty thousand French Francs).
If that threshold is exceeded, the full amounts claimed shall become
due, including the first FRF 250,000 (two hundred and fifty thousand
French Francs).
Purchaser shall promptly notify Seller in writing of any claim for
indemnification, specifying in detail the basis of such claim, the facts
pertaining thereto and, if known, the amount or an estimate of the
amount which Purchaser regards as owing to it by Seller. Purchaser shall
provide to Seller, to the extent requested by Seller in writing, as
promptly as practicable following the claim, all information and
documentation as shall reasonably be necessary to support and verify the
claim asserted, and Seller, upon request in writing, shall be given
reasonable access to all books and records in the possession or control
of Purchaser or any of its affiliates, which may reasonably be
considered as related to the claim.
All claims for compensation with respect to a Violation shall need to be
notified by the Purchaser to the Seller in writing, at the latest before
the end of the third month following the end of the Validity Period. All
claims made timely may be pursued by Purchaser until finally resolved,
judicially or otherwise, notwithstanding the end of the Validity Period.
8 SET-OFF - INTEREST
All amounts which may become due and payable by the Seller to the
Purchaser hereunder may be set off, in the sole discretion of the
Purchaser, against any amount which the Purchaser may then be owing to
the Seller hereunder or otherwise.
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In the event of a dispute as to the existence of a Violation or its
consequences, the Court shall use, for the purpose of the computation of
interest on the damages principal, PIBOR (three months) plus three
interest points, counted from the date on which the damage shall have
financially impacted the relevant HFT Group corporation or corporations.
Any sum due by the Purchaser to the Seller hereunder which will not have
been paid to the Seller on due date shall bear interest in favor of the
Seller using the P.I.B.O.R. (three months) plus three interest points.
9. MISCELLANEOUS
9.1 Further Cooperation
From the date hereof the Seller, upon request of the Purchaser and at
Purchaser's cost, shall take any action and sign and deliver any
documents which may prove necessary to allow Purchaser to fully exercise
its rights hereunder.
9.2 Non compete
The Seller hereby undertakes not to compete directly or indirectly with
the HFT Group corporations, in any manner or under any form whatsoever,
in areas of business which are identical or similar to the areas of
business of any one of the HFT Group corporations or Healthworld B.V.,
i.e. the area of medical advertising and health in general, for a period
of time running from the date hereof until the later of the fourth
anniversary date hereof or 24 (twenty-four) months following the date on
which the Seller shall have ceased to be a salaried employee and/or a
corporate officer of any one of the HFT Group corporations.
In the event the ownership of the Purchaser or of the corporations in
its group, in the capital stock of the HFT Group corporations were to
fall below 50%, the Purchaser promises to pay to the Seller a sum equal
to the compensation which the Seller shall have received as compensation
from the HFT Group corporations during the fiscal year immediately
preceding the fiscal year during which the loss of control shall have
occurred.
9.3 Successors and Assigns
The provisions hereof shall inure to the benefit of and be binding upon
the respective heirs and/or successors of the parties hereto.
9.4 Modification and Waiver
No modification of the provisions of this agreement shall be binding
unless the same is in writing and duly executed by all the parties
hereto. Each of the parties may waive any one of its rights under this
agreement but only in a writing notified to the other party.
9.5 Public Announcements
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Any communications and notices to third parties and all other publicity
concerning the transactions contemplated by this agreement (other than
governmental or regulatory filings) shall be planned and coordinated by
and among each of the parties.
Unless required by applicable law or the rules and regulations of the
NASDAQ Stock market, none of the parties shall disseminate or make
public, or cause to be disseminated or made public, any information
regarding the transactions contemplated hereunder without the prior
written approval of the other parties, which approval shall not be
unreasonably withheld.
9.6 Treasury Department of the Ministry of Economy
This agreement is subject to the laws and regulations pertaining to
foreign investments into France. The Purchaser shall prepare and file
the requisite investment report to the said authorities.
9.7 Expenses and Fees
Any and all expenses, including attorneys fees, in connection with this
agreement or the transactions contemplated therein, shall be paid by the
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party incurring such expenses. The Seller and the Purchaser agree that
in no event any one of the HFT Group corporations shall have to pay or
advance any of such expenses or fees.
The recording hereof with the registration-tax office shall be effected
and paid for by the Purchaser. Any and all other taxes, dues or fees and
contributions resulting from the execution hereof shall be borne by the
individual or entity obligated to bear the same under the law.
9.8 Notices
Any documents, notices, requests or instructions to be given hereunder
by one of the parties to the other shall be in writing by registered
letter with bill of receipt requested, as provided below or to any other
duly notified address.
If the notice is to the Seller, the same shall be deemed validly made if
sent to his last known address, with copy to Mr. Michel Duplessis,
counsel for the Seller.
If the notice is to the Purchaser, the same shall be deemed validly made
if sent to the Purchaser at its address first above mentioned, with copy
to Mr. Stuart Diamond, Healthworld Corporation, and to the law firm of
Chambaz & Suermondt, 24 rue de Prony, 75017 Paris, counsel for the
Purchaser.
9.9 Headings
The headings of the articles and paragraphs hereof are inserted for
convenience only and shall not be deemed a constitutive part of this
agreement and shall not affect the construction thereof.
9.10 Documents Constituting this Agreement
This agreement and its Annexes A to J, together with the Disclosure
Schedule, constitute the sole understanding of the parties with respect
to the subject matter hereof, and replace all prior verbal or written
understandings between the parties on the said subject matter.
9.11 Governing Law and Venue
This agreement shall be governed by the laws of France. The parties
agree that any dispute which may arise between them with respect to this
agreement shall be referred to the Tribunal de Grande Instance of Paris.
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FINAL STATEMENT :
This agreement was presented to signature by the parties in a bound and
sealed format, and each of the parties have in consequence waived the
formality of initialing each one of the pages of this agreement and of
its exhibits, the signatures of the parties appearing solely below.
Signed in Paris on the date indicated on the first page of this
agreement, in three (3) copies, one of which for the Registration
Authority,
Purchaser, Seller,
/s/ Steven Girgenti /s/ Dominique Agostini
-------------------------------------- ------------------------
Healthworld International Holdings Inc. Dominique Agostini
by : Steven Girgenti
title : President
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LIST OF ANNEXES
Annexes Description
Annex A A Calculation of the Net Assets and Profit
at December 31, 1997, consolidated balance
sheet of the HFT Group at December 31, 1997,
Financial Statements
Annex B List of Assets
Annex C NONE
Annex D List of Industrial and Intellectual Property
Rights
Annex E List of Insurance Policies
Annex F List of contracts providing for the payment
by or to any one of the HFT Group companies
of amounts exceeding FRF 100,000 per contract
Annex G List of litigations, proceedings, judicial
or adminis-trative inquiries or audits
currently pending, threatened or expected
Annex H Schedule of subsidies and grants which the
HFT Group companies have received and are
entitled to receive
Annex I Certificates issued by the Revenue Service
and URSSAF
Annex J Loan agreement dated July 23, 1998
Disclosure Schedule
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DATED 24th July 1998
CLIVE DAVIES, STEPHEN CANTLE AND OTHERS
and -
HEALTHWORLD HOLDINGS LIMITED
--------------------------------------------------
AGREEMENT
for the sale and purchase of the share capital of
Colwood House Medical Publications (UK) Limited
----------------------------------------------------
RAKISONS
Clements House
14/18 Gresham Street
London EC2V 7JE
Telephone: +44 (0)171 367 8000
Fax: +44 (0)171 367 8001
<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS..............................................................1
2 AGREEMENT FOR SALE.......................................................7
3 CONSIDERATION............................................................7
4 DEFERRED CONSIDERATION..................................................10
5 NET ASSETS..............................................................13
6 COMPLETION..............................................................15
7 WARRANTIES AND INDEMNITY BY THE VENDORS.................................18
8 ASSIGNMENT AND SUCCESSIONS..............................................19
9 RESTRICTIVE AGREEMENT...................................................20
10 ANNOUNCEMENTS...........................................................22
11 COSTS...................................................................22
12 COMMUNICATIONS..........................................................22
13 INVALIDITY..............................................................23
14 PROPER LAW..............................................................23
15 REsCISSION..............................................................24
SCHEDULE 1 - VENDORS' HOLDINGS..............................................25
SCHEDULE 2 - DETAILS OF THE COMPANY.........................................26
SCHEDULE 3 - WARRANTIES.....................................................27
1 ACCOUNTS.............................................................27
2 CORPORATE MATTERS....................................................28
3 TAXATION.............................................................30
4 FINANCE..............................................................41
5 TRADING..............................................................43
6 ENVIRONMENTAL WARRANTIES.............................................49
7 EMPLOYMENT...........................................................50
8 ASSETS...............................................................52
9 PROPERTIES...........................................................54
SCHEDULE 4 - DEED OF INDEMNITY..............................................56
SCHEDULE 5 - EARNOUT PROTECTION.............................................63
SCHEDULE 6 - LIMITATIONS OF LIABILITY.......................................66
<PAGE>
DATED:
PARTIES:
1. "Vendors": the persons whose names and addresses are set out
in column 1 of Schedule 1;
2. "Purchaser": Healthworld Holdings Limited (registered number
3458882) whose registered office is at 1 Thames
Street, Windsor, Berkshire, SL4 1PL
OPERATIVE PROVISIONS
1 DEFINITIONS
1.1 In this agreement, including the Schedules (other than
Schedule 4), the following words and expressions have the
meanings stated, unless they are inconsistent with the
context:
"Actual Net Assets"
the issued share capital of the Company plus or minus the
amount standing to the credit of or debited to reserves
(including profit and loss account), as shown in the
Completion Accounts.
"Agreed Form"
a form agreed between the parties, a copy of which has been
initialled for the purpose of identification by their
respective solicitors.
"April 1998 Profits"
(pound)642,055.
"Associate"
(in relation to an individual):
any relative, that is any issue, spouse, brother, sister or
parent;
any company which is, or may be, directly or indirectly
controlled (within the meaning given in ICTA s840) by the
individual or any relative, or by any two or more of them;
(in relation to a company) any Subsidiary or holding company
of the company, and any other Subsidiary of any holding
company of the company, "holding company" having the same
meaning as in CA s736; and for this purpose a company is
controlled by one or more persons if he or they can exercise
more than fifty per cent of the voting rights in it.
"Bonus"
the amount including employer and employee national insurance
and tax to be paid pursuant to clause 4.9.10.
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"Business Days"
a day (other than a Saturday or Sunday or a UK public holiday)
on which clearing banks are open for business in England.
"CA"
Companies Act 1985.
"CAA"
Capital Allowances Act 1990.
"Companies Acts"
CA, the former Companies Acts (within the meaning of CA
s735(1)) and the Companies Act 1989.
"Company"
Colwood House Medical Publications (UK) Limited (a company
incorporated in England and Wales) details of which are set
out in Schedule 2.
"Completion"
completion of the purchase of the Shares in accordance with
clause 6.
"Completion Accounts"
the balance sheet of the Company as at 30 June 1998 and the
profit and loss account for the period from the Last Accounts
Date to 30 June 1998, prepared in accordance with clause 5.2.
"Completion Date"
the date of this agreement.
"Consideration"
the aggregate of the Initial Consideration, the First Deferred
Payment and the Second Deferred Payment.
"Deed of Indemnity"
a deed in the form set out in Schedule 4.
"Deferred Consideration"
the First Deferred Payment and the Second Deferred Payment.
"Deferred Consideration Loan Note Instrument"
the loan note instrument to be guaranteed by Bank of Scotland
for payment of the First Deferred Payment and/or the Second
Deferred Payment in the Agreed Form.
"Deficit"
the amount by which the Actual Net Assets are less than the
Relevant Net Assets.
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"Disclosure Letter"
the disclosure letter, of today's date, from the Warrantors
to the Purchaser but excluding the accompanying documents.
"FA"
Finance Act.
"FRS"
a financial reporting standard issued or adopted by The
Accounting Standards Board Limited.
"First Deferred Payment"
a sum equal to the lower of (i) (pound)4.5 x (the amount that
the Relevant 1999 Profits exceed the April 1998 Profits) -
(pound)18,000 and (ii) (pound)982,000
"First Tranche Loan Notes"
the loan notes to be issued pursuant to the First Tranche Loan
Note Instrument.
"First Tranche Loan Note Instrument"
the loan note instrument guaranteed by Bank of Scotland for
payment of part of the Initial Consideration in the Agreed
Form.
"Freehold Property"
the freehold property known as The Mitfords, Basingstoke Road,
Three Mile Cross, Reading, Berkshire RG7 1AT registered at HM
Land Registry under title number BK236792.
"ICTA"
Income and Corporation Taxes Act 1988.
"Initial Consideration"
that part of the Consideration payable in accordance with
clause 3.1
"Intellectual Property Rights"
a patent, patent application, know-how, trade or service mark
(whether registered or unregistered), trade or service mark
application, trade name and logo, registered design, design
right, copyright, right in databases or other intellectual,
industrial or commercial right similar to any of the foregoing
in any jurisdiction.
"IHTA"
Inheritance Tax Act 1984.
"Joint Account"
the account with Bank of Scotland number 00405315 sort code
12-01-03 opened in the joint names of the Purchaser's
Solicitors and the Vendors' Solicitors and designated client
account re the Purchaser and the Vendors
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"Joint Account Letter"
the letter from the Vendors and the Purchaser to the
Vendors' Solicitors and the Purchaser's Solicitors and in the
Agreed Form.
"Last Accounts"
the audited balance sheet of the Company, as at the Last
Accounts Date, and the audited profit and loss account of the
Company for the year ended on the Last Accounts Date and the
directors' report and notes.
"Last Accounts Date"
30 April 1998.
"Leasehold Property"
the leasehold property known as Building M, Parkside Business
Park, 15 Headley Road, Woodley, Reading, subject to the terms
of the lease dated 1 August 1996 made between Stephen Russell
Hicks, David John Hicks and John Leslie Hicks (1) and the
Company (2).
"Loan Notes"
the First Tranche Loan Notes, Second Tranche Loan Notes and/or
the Third Tranche Loan Notes.
"Planning Acts"
as defined in the Town and Country Planning Act 1990, s336.
"Pre-Completion Dividends"
the two interim dividends totalling(pound)700,000 in respect
of the financial year ending 30 April 1999.
"1998 Profits"
the profits of the Company for the 6 months ended 31 December
1998 adjusted in accordance with clause 4.11.
"1999 Profits"
the profits of the Company for the 12 months ended 31 December
1999, adjusted in accordance with clause 4.11.
"2000 Profits"
the profits of the Company for the 12 months ended 31 December
2000, adjusted in accordance with clause 4.11.
"2001 Profits"
the profits of the Company for the 6 months ended 30 June
2001, adjusted in accordance with clause 4.11.
"Property"
the Freehold Property and the Leasehold Property.
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"Purchaser's Accountants"
Arthur Andersen of Abbots House, Abbey Street, Reading,
RG1 3BD.
"Purchaser's Group"
the Purchaser and any Associates of the Purchaser.
"Purchaser's Solicitors"
Rakisons, Clements House,14/18 Gresham Street, London EC2V
7JE.
"Relevant Net Assets"
(pound)700,000, being the provisional value of the Actual Net
Assets of the Company.
"Relevant 1999 Profits"
two thirds of the aggregate of the 1998 Profits and 1999
Profits (as the same is stated in the certificate referred to
in clause 4.2.1 and as determined in accordance with
clause 4).
"Relevant 2001 Profits"
the aggregate of:
the 1998 Profits;
the 1999 Profits;
the 2000 Profits; and
the 2001 Profits
(as the same is stated in the certificate referred to in
clause 4.2.2 and as determined in accordance with clause 4)
divided by 3.
"SSAP"
a statement of standard accounting practice published by the
former Accounting Standards Committee or the present
Accounting Standards Board Limited.
"Second Deferred Payment"
a sum equal to the lower of (i) 6.9 multiplied by the amount
that the Relevant 2001 Profits exceeds the April 1998 Profits,
less the First Deferred Payment and (ii) the sum of
(pound)3,482,000 less the First Deferred Payment.
"Second Tranche Loan Notes"
loan notes to be issued in the form of the Deferred
Consideration Loan Note Instrument in respect of the
First Deferred Payment.
"Service Agreements"
the service agreements for each of the Vendors in the Agreed
Form.
"Shares"
the 10,000 issued ordinary shares of (pound)1.00 each
of the Company.
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"Subsidiary"
a subsidiary as defined in CA s736 (as substituted by section
144(1) Companies Act 1989).
"Taxation"
the same meaning as in the Deed of Indemnity.
"TCGA"
Taxation of Chargeable Gains Act 1992
"TMA"
Taxes Management Act 1970.
"Third Tranche Loan Notes"
loan notes to be issued in the form of the Deferred
Consideration Loan Note Instrument in respect of the Second
Deferred Payment.
"U.K. GAAP"
UK generally accepted accounting principles applied on a
consistent basis.
"VATA"
Value Added Tax Act 1994.
"Vendors' Accountants"
Kew Ford & Co, 60 High Street, Chobham, Surrey, GU24 8AA or
such other accountants as the Vendors (or a majority of them)
may notify to the Purchaser in writing from time-to-time.
"Vendors' Solicitors"
Cameron McKenna, Mitre House, 160 Aldersgate Street, London,
EC1A 4DD
"Warranties"
the warranties set out in clause 7.1 and in Schedule 3.
"Warrantors"
Clive Davies and Stephen Cantle whose addresses are set out in
column 1 of Schedule 1.
"Warranty Claim"
a claim made by the Purchaser for breach of any of the
Warranties or a claim made by the Purchaser under the Deed of
Indemnity.
1.2 Unless it is inconsistent with the context a reference to a
statutory provision includes a reference to:
1.2.1 any statutory amendment, modification, consolidation or
re-enactment (whether before or after the date of
this agreement);
1.2.2 any statutory instruments or subordinate legislation or orders
made pursuant to the statutory provision;
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1.2.3 statutory provisions of which the statutory provision is an
amendment, modification, consolidation or re-enactment;
1.2.4 but does not include a substituted provision (unless otherwise
stated).
1.3 A reference to the Vendors or the Warrantors includes, where
appropriate, their personal representatives.
1.4 Words denoting the singular include the plural and vice
versa; words denoting one gender include all genders; words
denoting persons include corporations and vice versa.
1.5 Unless otherwise stated, a reference to a clause or Schedule
is a reference to a clause of, or Schedule to, this agreement.
1.6 Clause headings in this agreement and in the Schedules are
for ease of reference only and do not affect the construction
of any provision.
2 AGREEMENT FOR SALE
2.1 Subject to the terms and conditions of this agreement, the
Vendors shall sell with full title guarantee and the Purchaser
shall purchase the Shares with all rights attaching to them
(other than the right to the Pre-completion Dividends), with
effect from the date of this agreement.
2.2 The Vendors waive any pre-emption rights they may have in
relation to any of the Shares, whether under the articles of
association of the Company or otherwise.
3 CONSIDERATION
3.1 The Initial Consideration for the Shares shall (subject to
adjustment in accordance with the provisions of clause 5) be
the sum of (pound)3,240,000 which shall be paid or satisfied
in cash and First Tranche Loan Notes to be issued at
Completion in the amounts set out opposite the Vendors'
respective names in sub-columns (a) and (b) of column 3 of
Schedule 1.
3.2 The balance of the Consideration, being the First Deferred
Payment and the Second Deferred Payment, shall be paid in
accordance with clause 4.
3.3 The Consideration shall, in any event, not exceed
(pound)6,722,000
3.4 The Vendors shall share the Consideration in the percentages
set out opposite their respective names in column 4 of
Schedule 1.
3.5 The Purchaser shall not be entitled to set off from the\
Initial Consideration and, save as provided in clause
3.6, the Purchaser shall not be entitled to set-off from the
First Deferred Payment and/or Second Deferred Payment any
amount claimed by it under the Warranties or under the Deed
of Indemnity.
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3.6 In the event that, prior to the date on which any amount of
the First Deferred Payment and/or Second Deferred Payment is
payable or paid and/or prior to the date on which all the Loan
Notes are redeemed, the Purchaser shall have given written
notice to the Warrantors of a Warranty Claim in accordance
with this agreement, the following provisions shall apply:
3.6.1 to the extent that any such claim or claims shall have been
settled (as defined in clause 3.6.4) but shall
not have been satisfied by a Warrantor prior to such date the
Purchaser shall be entitled to treat its obligations to issue
or redeem the relevant Loan Notes otherwise due to be issued
or redeemed to that Warrantor on that date as being reduced
pro tanto by the amount of such claim or claims;
3.6.2 to the extent that any such claim shall not have been settled
(as defined in clause 3.6.4) but provided that (a) such claim
is made in accordance with the terms of Schedule 6 and (b) a
leading counsel of more than 10 years' call chosen by
agreement between the Vendors' Solicitors and the Purchaser's
Solicitors within 14 days of such claim being made or, in
default of agreement within 7 days after request by the
Vendors' Solicitors or the Purchaser's Solicitors, nominated
at the instance of any party by the Chairman of the Bar
Council shall have, as soon as practicable after being
instructed, given a written opinion that such claim appears to
be genuine and such claim will on a balance of probabilities
succeed or such claim will have a greater than 50% chance of
success (a "Qualifying Claim") then: (a) if the Purchaser
intends to exercise a right of set-off over a Loan Note which
is yet to be issued an amount equal to the total amount so
claimed by the Purchaser from the relevant Warrantor pursuant
thereto (in so far as it does not exceed the amount of the
First Deferred Payment and/or Second Deferred Payment
otherwise payable to that Warrantor) shall be deducted from
the amount of the First Deferred Payment and/or the Second
Deferred Payment and paid from the Joint Account and (to the
extent that the Joint Account is insufficient and no Loan
Notes (other than First Tranche Loan Notes) are in issue, by
the Purchaser or otherwise to the extent the Joint Account is
insufficient and Loan Notes in respect of the Deferred
Consideration are in issue as provided in sub-paragraph (b)
below of this clause on the date on which the balance of the
First Deferred Payment and/or Second Deferred Payment would
otherwise be payable into an interest-bearing deposit account
with a UK clearing bank in the joint names of the Vendors'
Solicitors and the Purchaser's Solicitors (whose respective
partners will be the sole persons authorised to operate such
8
<PAGE>
account) (an "Escrow Account") to be dealt with in accordance
with clause 3.6.3 and no withdrawals shall be made from such
account pending the settlement of such Qualifying Claim or (b)
if the Purchaser notifies a Warrantor in writing that he
intends to exercise a right of set-off over Loan Notes (other
than First Tranche Loan Notes) which have been issued and
prior to the guarantee in respect of such Loan Notes expiring
Loan Notes in a nominal amount equal to the total amount so
claimed by the Purchaser from the relevant Warrantor pursuant
thereto shall be lodged with the Purchaser's Solicitors who
shall hold the same jointly to the order of the Vendors'
Solicitors and the Purchaser's Solicitors save that if such
certificates are not lodged within 10 Business Days of such
notice from the Purchaser the said Loan Notes shall be
transferred by the relevant Warrantor into the names of the
Vendors' Solicitors and the Purchaser's Solicitors to be held
in their joint names pending the settlement of such Qualifying
Claim and in that regard the relevant Warrantor hereby
appoints the Purchaser as his attorney to do all acts
reasonably required to perform such transfer
PROVIDED THAT if the relevant claim has not been settled by no
later than twenty-one days prior to the expiry of the
guarantee contained in the relevant Loan Note then the
Purchaser and the relevant Warrantor shall procure (in so far
as they are able) that a demand is made for repayment of such
Loan Notes and as soon as practicable thereafter a demand is
made on Bank of Scotland pursuant to the guarantee and any
monies received pursuant to such demand shall be paid into the
Escrow Account to be dealt with in accordance with
sub-paragraph (a) of this clause.
3.6.3 as soon as possible following the settlement (as defined in
clause 3.6.4) of the claim or claims the relevant Warrantor
and the Purchaser shall instruct the Vendors' Solicitors and
the Purchaser's Solicitors to:
(a) either make payment out of the Escrow Account to the
Purchaser or cancel (as appropriate) the relevant Loan
Notes of a sum equal to the amount for which the claim or
claims aforesaid shall have been settled (as defined in
clause 3.6.4) in favour of the Purchaser together with a
proportion of the total interest earned on the monies
deposited in the said account from the date of payment
into the Escrow Account until the date of payment out
(being that proportion which the sum payable to the
Purchaser out of the said account pursuant to this
clause bears to the total sums paid into the said account
pursuant to clause 3.6.2);
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<PAGE>
(b) as to the balance of the monies standing to the credit of
the said account, (less the amount referable to any
unsettled Qualifying Claim to which the provisions of
clause 3.6.2 shall continue to apply) pay the same to the
relevant Warrantor together with interest calculated on
the basis set out in paragraph (a) above or return or
transfer to the relevant Warrantor the equivalent amount
of the Loan Notes (if applicable).
3.6.4 A claim shall be regarded as settled for the purposes of this
clause if subject to the terms of Schedule 6 either:
(a) a Warrantor and the Purchaser (or their respective
solicitors) shall so agree in writing; or
(b) a court of competent jurisdiction has established the
liability of the Warrantors and awarded in respect of the
quantum of the claim and no right of appeal lies in
respect of such judgment or the parties are debarred
whether by the passage of time or otherwise from
exercising any such right of appeal or the other party
has stated in writing that it does not wish to exercise
its right of appeal.
4 DEFERRED CONSIDERATION
4.1 The Purchaser shall procure that the auditors (from time to
time) of the Company shall:
4.1.1 in addition to preparing the audited accounts of the Company
for the financial year ended 31 December 1999 and no later
than 31 March 2000, prepare a certificate of the Relevant 1999
Profits;
4.1.2 as soon as practicable following 30 June 2001 but no later
than 30 September 2001, prepare a certificate of the Relevant
2001 Profits.
4.2 The certificates delivered pursuant to this clause 4.1 above
shall be binding on all parties, unless within 15 Business
Days of the delivery of the same by the auditors, any of the
Vendors notifies the Purchaser in writing of any matters of
disagreement with the same in sufficient detail to enable the
Purchaser to consider them.
4.3 In the event that a notice is served under clause 4.2 the
parties shall attempt to resolve the dispute, but in default
of agreement as to the amount of the Relevant 1999 Profits
and/or the Relevant 2001 Profits within 15 Business Days of
such notice being delivered, the dispute shall be determined
by a single independent accountant to be appointed jointly by
the parties, or in default of agreement, within 5 Business
Days after request by the Vendors or
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<PAGE>
the Purchaser, appointed (on the application of any of the
parties) by the President for the time being of the Institute
of Chartered Accountants in England and Wales.
4.4 The said accountant shall be instructed (as appropriate):
4.4.1 to give his decision on the adjustments in dispute referred
to him as soon as practicable;
4.4.2 to ensure that his decision is consistent with the
requirements of this clause 4 and the principles and bases
in this agreement as relevant; and
4.4.3 to consider only the adjustments in dispute.
4.5 The said accountant shall act as expert and not as an
arbitrator and his decision on any matter shall be
final and binding on the Vendors and the Purchaser. His fees
shall be payable between the Vendors and the Purchaser as may
be determined by him.
4.6 The parties shall each procure (so far as they are able)
that they, their respective accountants and the Company will
afford each other and their respective accountants and (if
applicable) any independent accountant appointed pursuant to
clause 4.4 all facilities and full and prompt access to the
Company's premises, papers, books of account, records,
returns, directors and employees and such other relevant
documents (including working papers prepared by the
Purchaser's Accountants which support their calculations) as
are in their respective possession to enable the determination
of the Relevant 1999 Profits and/or the Relevant 2001 Profits
in accordance with this clause 4.
4.7 Subject to clause 3.5, the Purchaser shall enter into the
Deferred Consideration Loan Note Instrument and pay to the
Vendors the First Deferred Payment in the form of definitive
certificates in respect of the Second Tranche Loan Notes in
the percentages set out opposite their respective names in
column 4 of Schedule 1 on the later of:
4.7.1 14 April 2000;
4.7.2 15 days after Healthworld Corporation files the applicable
regulatory filing with the Securities Exchange Commission or
its equivalent for the financial year ended 31 December 1999
which shall be deemed to be no later than 30 June 2000;
4.7.3 the certificate becoming binding under clause 4.2; and
4.7.4 the resolution of any disagreement in respect of that
certificate in accordance with clauses 4.2 to 4.6.
4.8 Subject to clause 3.5, the Purchaser shall enter into the
Deferred Consideration Loan Note Instrument and pay
to the Vendors the Second
11
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Deferred Payment in the form of definitive certificates in
respect of the Third Tranche Loan Notes in the percentages set
opposite their respective names in column 4 of Schedule 1
within 15 days of the later of:
4.8.1 the certificate becoming binding under clause 4.2; and
4.8.2 the resolution of any disagreement in respect of the said
certificate in accordance with clauses 4.2 to 4.6.
4.9 In their determination of the Relevant 1999 Profits and/or
the Relevant 2001 Profits referred to in this
clause 4, the auditors shall adjust the relevant profits in
the following manner:
4.9.1 so as to adopt bases and policies of accounting applied
for the purposes of the Last Accounts;
4.9.2 to exclude any assets or profits or costs or liabilities
or losses incurred in respect of any acquisitions of any
company or business by the Purchaser or any of its Associates
after Completion;
4.9.3 to exclude any profits or losses of a capital nature arising
on a disposal of fixed assets, investments, plant or other
assets of the Company;
4.9.4 to exclude any payment made or liability incurred by the
Company by virtue of a breach of the provisions of Schedule 5;
4.9.5 before deducting any corporation tax;
4.9.6 save as provided in clause 4.9.10, after deducting all and any
accrued salaries, bonuses or other incentive payments due to
management and employees of the Company;
4.9.7 save as provided in clause 4.9.12, before deducting any
interest;
4.9.8 to exclude any liability incurred by the Company which
relates to payments due and payable by a member of the
Purchaser's group (other than the Company);
4.9.9 to exclude any liability of the Company in respect of the
payment or funding of the Pre-Completion Dividends;
4.9.10 to exclude any liability incurred by the Company in respect of
the bonus (including employer and employee national insurance
and tax totalling the sum of (pound)60,000) paid to Winifred
McFadzean immediately following Completion;
4.9.11 to exclude any liability of the Company in relation to the
Leasehold Property;
4.9.12 to include any interest on any borrowings incurred by the
Company (other than to fund the Pre-Completion Dividends or
the Bonus) whether from the Purchaser or otherwise for the
period from 1 July 1998 to 31 December 1998 with the consent
of the Vendors and in the event that such monies are borrowed
from the
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Purchaser or its Associates the interest shall be deemed to
accrue at an annualised rate equal to LIBID rate as the same
may fluctuate from time to time. but subject to the above
matters, so as to comply with UK GAAP.
4.10 If the Purchaser shall not have paid the First Deferred
Payment and/or the Second Deferred Payment on or before the
due date for payment specified in clauses 4.7 or 4.8 (as the
case may be) then without prejudice to the Vendors' rights,
interest shall accrue on the amount unpaid at the rate of 3
per cent per annum over the base rate of Bank of Scotland from
time to time calculated on a daily basis and to be paid at the
same time as the outstanding balance of the First Deferred
Payment and/or the Second Deferred Payment to which it relates
is paid.
5 NET ASSETS
5.1 Immediately following Completion the Purchaser shall procure
that the Purchaser's Accountants shall prepare as soon as
practicable and in any event within 30 Business Days after the
date of Completion draft Completion Accounts and a draft
statement of the Actual Net Assets and the Deficit (if any)
and submit the same to the Vendors and the Vendors'
Accountants together with any relevant working papers which
support their calculations.
5.2 The Completion Accounts shall (subject as provided in this
agreement):
5.2.1 be prepared as if the period from the Last Accounts Date to
30 June 1998 was a financial period of the Company;
5.2.2 show a true and fair view of the assets and liabilities of the
Company as a whole as at 30 June 1998 and of the profits of
the Company as a whole for the period ended on 30 June 1998;
5.2.3 adopt bases and policies of accounting applied for the
purposes of the Last Accounts.
5.3 The Vendors shall procure that the Vendors' Accountants review
the draft Completion Accounts and the draft statement of the
Actual Net Assets and the Deficit delivered by the Purchaser's
Accountants pursuant to clause 5.1 and, within 15 Business
Days of the delivery of those items (or such longer period as
the Vendors and the Purchaser may agree in writing), notify
the Purchaser and the Purchaser's Accountants in writing of
any matters of disagreement with those drafts in sufficient
detail to enable the Purchaser's Accountants to consider them
and, in the absence of any such written notification within
that period, the drafts shall be deemed to be agreed by the
Vendors whereupon the draft Completion Accounts shall
constitute the Completion Accounts and the
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Actual Net Assets and the Deficit contained in the draft
statements shall constitute the Actual Net Assets and the
Deficit.
5.4 If within 25 Business Days of the delivery of any notification
referred to in clause 5.3, there remains any outstanding
dispute in relation to the draft Completion Accounts or the
draft statements of the Actual Net Assets and the Deficit,
such dispute shall be referred to a single independent
chartered accountant for final settlement, such accountant to
be nominated jointly by the Vendors and the Purchaser or,
failing such nomination within 10 Business Days after request
by the Vendors or the Purchaser, nominated at the request of
either party by the President for the time being of the
Institute of Chartered Accountants in England and Wales. The
said accountant shall be instructed (as appropriate):
5.4.1 to give his decision on the adjustments in dispute referred to
him as soon as practicable;
5.4.2 to ensure that his decision shall be consistent with the
requirements of this clause and the principles and bases in
this agreement as relevant; and
5.4.3 only to consider the adjustments in dispute specifically
referred to him.
The said accountant shall act as expert and not as arbitrator
and his decision on any matter (in the absence of manifest
error) shall be final and binding on the parties. His fees
shall be payable between the Vendors and the Purchaser as may
be determined by him.
5.5 The Vendors shall repay to the Purchaser a sum equivalent to
the Deficit within 2 Business Days following the determination
of the Deficit in accordance with this clause 5 and the
Vendors shall pay interest (calculated on a daily basis) on
any unpaid balance of such sum (from time to time) until
payment of such sum in full at 3% above the base rate of Bank
of Scotland from time to time. The Consideration shall be
adjusted by the amount of the Deficit.
5.6 The parties shall each procure (so far as they are able) that
they, their respective accountants and the Company will afford
each other and their respective accountants and (if
applicable) any independent accountant appointed pursuant to
clause 5.4 all facilities and full and prompt access to the
Company's premises, papers, books of account, records,
returns, directors and employees and such other relevant
documents (including working papers prepared by the
Purchaser's Accountants which support their calculations) and
as are in their respective possession or control to enable the
determination of the Completion Accounts, the Actual Net
Assets and the Deficit in accordance with this clause 5.
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6 COMPLETION
6.1 Completion shall take place at the offices of the Purchaser's
Solicitors when all the transactions mentioned in clauses 6.2
to 6.7 shall take place.
6.2 The Vendors shall deliver to the Purchaser:
6.2.1 duly completed and signed transfers in favour of the
Purchaser, or as it directs, of the Shares, together with the
relative share certificates;
6.2.2 the Deed of Indemnity duly executed by the Vendors;
6.2.3 the resignation of Anthony Clive Davies as secretary of the
Company including an acknowledgement stating that he has no
claim of any nature whatsoever against the Company arising out
of this resignation as secretary in the Agreed Form;
6.2.4 the resignation of the auditors of the Company confirming that
they have no outstanding claims and containing a statement
under CA s394 (1) that there are no such circumstances as are
mentioned in that section;
6.2.5 a power of attorney in the Agreed Form executed by each of the
Vendors in favour of the Purchaser empowering the Purchaser to
exercise the Vendors' rights as shareholders of the Company
pending the stamping and registration of the transfers
referred to in clause 6.2.1;
6.2.6 a deed of termination in the Agreed Form in respect of the
shareholders agreement dated 25 November 1997 between the
Vendors and the Company.
6.3 There shall be delivered (in the case of the statutory books,
certificates of incorporation and incorporation on change of
name and common seal referred to in clause 6.3.1, current
statements and reconciliation referred to in clause 6.3.3 and
the written confirmations referred to clause 6.3.4) or made
available (in the case of the remaining items of this clause
6.3) to the Purchaser:
6.3.1 the statutory books, books of account and documents of record
of the Company, complete and up-to-date, and its certificate
of incorporation, certificate of incorporation on change of
name and common seals;
6.3.2 all the current cheque books of the Company, together with
current statements of all its accounts to a date within 5
Business Days of Completion and a reconciliation to
Completion, and the appropriate forms to amend, in such manner
as the Purchaser requires, the mandates given to the relevant
bank;
6.3.3 written confirmation in the Agreed Form from the Vendors that
there are no subsisting guarantees given by the Company in
favour of the Vendors or any of their respective Associates
and that, after compliance with clause 6.4, none of the
Vendors or their respective Associates will be indebted to the
Company.
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6.4 The Vendors shall repay, or procure to be repaid, all
monies owing by them and/or their Associates at Completion to
the Company, whether due for payment or not.
6.5 The Warrantors shall enter into their respective Service
Agreements.
6.6 Board meetings of the Company shall be held at which:
6.6.1 such persons as the Purchaser nominates are appointed
additional directors;
6.6.2 the transfers referred to in clause 6.2.1 are approved
(subject to stamping);
6.6.3 the resignations referred to in clauses 6.2.3 and 6.2.4 are
submitted and accepted;
6.6.4 the accounting reference date of the Company shall be changed
to 31 December; and
6.6.5 the registered office of the Company shall be changed to
1 Thames Street, Windsor, Berkshire, SL4 1PL.
6.6.6 an extraordinary general meeting is convened to approve the
adoption of new articles of association in the Agreed Form.
6.7 At Completion the Purchaser shall lend (interest free) to the
Company the amount of (pound)700,000 and the Vendors shall
procure that the Company shall pay immediately the
Pre-Completion Dividends.
6.8 Upon completion of the matters referred to in clauses 6.2 to
6.7 the Purchaser shall deliver to the Vendors' Solicitors:
the Initial Consideration:
(a) in cleared funds in respect of the cash element to the
bank account of the Vendors' Solicitors (Lloyds Bank Plc,
39 Threadneedle Street, London, account number 0230949,
sort code 30:00:09); and
(b) by way of definitive certificates in respect of the
relevant amount of the First Tranche Loan Notes;
6.8.2 the Deed of Indemnity duly executed by the Purchaser;
6.8.3 the Service Agreements duly executed by the Company;
6.8.4 a letter duly executed by the Bank of Scotland in the Agreed
Form; and board minutes of the Purchaser approving, inter
alia, the acquisition of the Company.
6.9 At Completion the Purchaser shall pay the sum of
(pound)1,000,000 into the Joint Account and the Vendors and
the Purchaser shall issue irrevocable written instructions
to the Vendors' Solicitors and the Purchaser's Solicitors
(respectively) to operate the Joint Account in accordance with
the terms of the Escrow Letter.
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6.10 The Warrantors and the Purchaser shall exercise all voting
rights and other powers of control available to them in
relation to the Company so as to procure (insofar as they are
able to do so by the exercise of those rights and powers)
that, within 45 days of 30 June and 31 December (a "Dividend
Date") in each year following Completion and subject to Part
VIII CA and to the provisions of this clauses 6.12 and 6.13,
an amount equal to the cash generated from trading profits of
the Company after corporation tax payments are distributed to
the Purchaser by way of dividend.
6.11 Subject to clauses 6.12 and 6.13, the Purchaser shall issue an
irrevocable direction to the Company that the cash payable to
the Purchaser pursuant to clause 6.10 is paid to the Joint
Account.
6.12 The maximum aggregate amount comprised in the Joint Account
shall not exceed (pound)3,500,000.
6.13 Dividends and payments shall only be made under clause 6.10
until payment of the First Deferred Payment and the Second
Deferred Payment (if any) has been made in accordance with
clauses 4.7 and 4.8, respectively.
6.14 All interest accruing on the Joint Account shall belong to the
Purchaser. No payment shall be made on the Joint Account or
instructions given to Bank of Scotland in respect of the Joint
Account except in accordance with the Joint Account Letter
and/or clause 3.6.2.
6.15 Subject to clause 3.6.2, as soon as practicable following the
relevant certificate becoming binding under clause 4.2 or
the resolution of any disagreement in respect of the said
certificate in accordance with clauses 4.2 to 4.6 for the
purposes of each of the Relevant 1999 Profits and the
Relevant 2001 Profits, the parties shall procure that a copy
of each certificate is delivered to the Vendors' Solicitors
and the Purchaser's Solicitors setting out the amount of
monies which shall be paid by way of the First Deferred
Payment and the Second Deferred Payment respectively and the
parties shall procure and shall irrevocably authorise the
Vendors' Solicitors and the Purchaser's Solicitors to
jointly instruct the Bank to pay from the Joint Account to
the cash collateral account designated by Bank of Scotland
as the "Deferred Consideration Loan Note Guarantee Cash
Collateral Account" the amount stated in the relevant
certificate.
6.16 The Purchaser shall not be obliged to complete the purchase
of any of the Shares unless the purchase of all the Shares is
completed in accordance with this agreement.
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6.17 Immediately following Completion the Purchaser shall make
available to the Company by way of interest free loan the
amount of (pound)60,000 to enable the Company to pay the
Bonus.
7 WARRANTIES AND INDEMNITY BY THE VENDORS
7.1 Each of the Warrantors jointly and severally warrant to the
Purchaser that:
7.1.1 each Vendor will perform his obligations under this agreement
and (where applicable) the Deed of Indemnity and that each of
this agreement and (where applicable) the Deed of Indemnity
constitute, or when executed will constitute, binding
obligations on him in accordance with their respective terms;
7.1.2 save as fairly set out in the Disclosure Letter, the
Warranties are true and accurate;
7.1.3 the contents of the specific disclosures in the Disclosure
Letter are true and accurate.
7.2 Each of the Warranties is without prejudice to any other
Warranty and, except where expressly stated otherwise, no
clause governs or limits the extent or application of the
Warranties.
7.3 Save as provided otherwise in this agreement, the rights and
remedies of the Purchaser in respect of a breach of the
Warranties shall not be affected by Completion by
investigations made by or on behalf of the Purchaser into the
affairs of the Company by the Purchaser rescinding or failing
to rescind this agreement, or failing to exercise or delaying
the exercise of any right or remedy, or, save as aforesaid, by
any other event or matter, except a specific and duly
authorised written waiver or release, and no single or partial
exercise of any right or remedy shall preclude any further or
other exercise.
7.4 Save in the case of fraud none of the information supplied\
by the Company or its professional advisers to the Vendors, or
their agents, representatives or advisers, in connection with
the Warranties and the contents of the Disclosure Letter, or
otherwise in relation to the business or affairs of the
Company, shall be deemed a representation, warranty or
guarantee of its accuracy by the Company to the Vendors, and
the Vendors waive any claims against the Company which they
might otherwise have in respect of it.
7.5 In relation to any Warranty which refers to the awareness,
knowledge, information or belief of the Warrantors the
Warrantors shall be deemed to have made all reasonable
enquiries into the subject matter of that Warranty except as
otherwise provided in paragraph 6.2 of Schedule 3 and as
specifically stated in the Disclosure Letter.
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7.6 Notwithstanding any rule of law or equity to the contrary, any
release, waiver or compromise or other arrangement which the
Purchaser agrees to or effects in relation to one of the
Warrantors in connection with this agreement, and in
particular the Warranties, shall not affect the rights and
remedies of the Purchaser as regards any other of the
Warrantors.
7.7 The parties agree that the terms of Schedule 6 shall apply in
determining the liability of the Warrantors pursuant to this
clause 7 and to the Warranties and to the Deed of Indemnity as
stated in that Schedule.
7.8 The Warrantors shall indemnify the Purchaser on demand against
all liabilities (which includes, without limitation, all
losses directly relating to such liabilities) incurred by the
Purchaser or the Company after Completion in respect of:
7.8.1 the acquisition of shares by their respective spouses prior to
Completion;
7.8.2 any claim in respect of the lease of the Leasehold Property
which arises either after Completion or to the extent not paid
by the Company prior to Completion including without
limitation all rent, service charges and other payments which
fall due by the Company under such lease provided that the
Warrantors shall be given full conduct of all matters relating
to the Leasehold Property and neither the Purchaser nor the
Company shall take any action in relation to the Leasehold
Property without the prior written consent of the Warrantors;
7.8.3 any liability to Taxation in connection with salaries paid to
Lesley Davies and/or Alison Cantle.
7.9 The Purchaser hereby warrants to the Vendors that all
authorisations, approvals, consents and licences required by
the Purchaser for entering into and the performance of its
obligations under this agreement and the Deed of Indemnity
have been obtained and have not been rescinded.
8 ASSIGNMENT AND SUCCESSIONS
8.1 The Purchaser may transfer any of the Shares together with the
benefit of each of the Warranties and the Deed of Indemnity
to any Associate of the Purchaser and/or, in the event that
any Vendor makes a demand under the Loan Notes against Bank
of Scotland as guarantor, to Bank of Scotland and, in either
case, the transferee shall accordingly be entitled to
enforce each of the Warranties and the Deed of Indemnity
against the Warrantors in the case of an Associate of the
Purchaser for so long as and providing such persons remain
an Associate of the Purchaser as if it were named in this
agreement and the Deed of Indemnity as the Purchaser.
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8.2 This agreement and the Deed of Indemnity binds each party's
successors and assigns and personal representatives (as the
case may be).
8.3 Except as expressly provided above, none of the rights of the
parties under this agreement or the Warranties or Deed of
Indemnity may be assigned or transferred.
9 RESTRICTIVE AGREEMENT
9.1 In this clause 9 the following words have the following
meanings:
"Prohibited Business"
any business or activity carried on by the Company or an
Associate at the Relevant Date or at any time in the Relevant
Period;
"Prospective Customer"
any person, firm or company who was at the Relevant Date
negotiating with the Company or an Associate with a view to
dealing with the Company or that Associate as a customer;
"Protected Supplier"
any supplier of the Company or an Associate (as appropriate)
during the Relevant Period;
"Relevant Date"
in respect of each Vendor, the later of the date of Completion
and the termination of the employment of the Vendor with the
Company;
"Relevant Period"
the 3 year period ending with the Relevant Date;
"Restricted Customer"
any person, firm, company or other entity who was at any time
in the Relevant Period a customer of the Company or an
Associate (as appropriate);
"Territory"
United Kingdom.
9.2 To assure to the Purchaser the full benefit of the business
and goodwill of the Company, each of the Vendors undertakes by
way of further consideration for the obligations of the
Purchaser under this agreement, as separate and independent
agreements, that he will not, subject to clause 9.6:
9.2.1 disclose to any person, or himself use for any purpose, and
shall use all reasonable endeavours to prevent the publication
or disclosure of, information concerning the businesses,
accounts or finances of the Company, or their clients' or
customers' transactions or affairs, of which he has knowledge;
20
<PAGE>
9.2.2 for three years after the Relevant Date directly or indirectly
on his own account or on behalf of or in conjunction with any
person, firm or company or other organisation carry on or be
engaged, concerned or interested in the Territory in:
(a) any Prohibited Business; or
(b) any other business similar to any Prohibited Business;
9.2.3 for three years after the Relevant Date directly or indirectly
on his own account or on behalf of or in conjunction with any
person, firm or company or other organisation canvass or
solicit or by any other means seek to conduct Prohibited
Business with or conduct Prohibited Business with any
Restricted Customer.
9.2.4 for three years after the Relevant Date directly or indirectly
on his own account or on behalf of or in conjunction with any
person, firm or company or other organisation canvass or
solicit or by any other means seek to conduct Prohibited
Business with or conduct Prohibited Business with any
Prospective Customer with whom he shall have had dealings at
any time in the Relevant Period or with whom and to his
knowledge any employee of the Company or an Associate shall
have had dealings in the course of their duties;
9.2.5 for three years after the Relevant Date directly or indirectly
induce or seek to induce any senior employee or executive of
the Company or an Associate engaged in the Prohibited Business
who was such a senior employee or executive at the Relevant
Date to leave the employment of the Company or that Associate
whether or not this would be in breach of contract on the part
of the employee;
9.2.6 for three years after the Relevant Date directly or indirectly
seek to entice away from the Company or an Associate or
otherwise solicit or interfere with the relationship between
the Company or that Associate and any Protected Supplier.
9.3 The Vendors agree that the covenants and undertakings
contained in clause 9.2 are reasonable and are entered into
for the purpose of protecting the goodwill of the business of
the Company and that accordingly the benefit of the covenants
and undertakings may be assigned by the Purchaser and its
successors in title without the consent of the Vendors.
9.4 Each covenant and/or undertaking contained in clause 9.2 shall
be construed as a separate covenant or undertaking. If one or
more of the covenants and/or undertakings is held to be
against the public interest or unlawful or in any way an
unreasonable restraint of trade, the remaining covenants and
undertakings shall continue to bind the Vendors.
9.5 If any covenant or undertaking contained in clause 9.2 were
void but would be valid if the period of application were
reduced or if some part of the covenant or
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undertaking were deleted, the covenant or undertaking in
question shall apply with such modification as is necessary to
make it valid.
9.6 The provisions of this clause 9 shall cease to apply if the
Purchaser shall default in any of its obligations to issue or
redeem any of its Loan Notes (save where such default is
rectified by Bank of Scotland pursuant to guarantees of Loan
Notes or if capable of remedy is remedied within 90 days of
such default).
10 ANNOUNCEMENTS
No announcement shall be made in respect of the subject matter
of this agreement, except as specifically agreed between the
parties, unless an announcement is required by law, the
regulators of any recognised stock exchange on which
securities of any of the parties or their respective
Associates are traded or any other regulatory or government
authority or accounting requirements or practices.
11 COSTS
11.1 Subject to clause 11.2, all expenses incurred by or on behalf
of the parties, including all fees of agents, representatives,
solicitors and accountants engaged by any of them in
connection with the negotiation, preparation or execution of
this agreement, shall be borne solely by the party who
incurred the liability, and the Company shall have no
liability in respect of them.
11.2 If the Purchaser determines or rescinds this agreement as a
result of fraudulent misrepresentation, then, in addition to
any right or remedy which it may have against any of the
Vendors for breach of this agreement or the Warranties, the
Warrantors shall jointly and severally indemnify the Purchaser
for all costs, charges and expenses incurred by it in
connection with the negotiation, preparation and determination
or rescission of this agreement and all matters which it
contemplates.
12 COMMUNICATIONS
12.1 All communications between the parties with respect to this
agreement shall:
12.1.1 be delivered by hand, or sent by post to, in the case of the
Vendors or the Warrantors, the address of the addressee as set
out in this agreement, in the case of the Purchaser, its
registered office from time to time; or to such other address
in Great Britain as the addressee notifies for the purpose of
this clause; or
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<PAGE>
12.1.2 be sent by facsimile transmission to the facsimile
transmission numbers stated below or such other numbers as
notified for the purpose of this clause provided that a hard
copy follows by pre-paid first class post.
12.2 Communications shall be deemed to have been received as
follows:
12.2.1 if sent by post - 3 Business Days after posting;
12.2.2 if delivered by hand - on the day of delivery, if delivered
at least 2 hours before the close of business hours on a
Business Day, and otherwise on the next Business Day;
12.2.3 if sent by facsimile transmission - at the time of
transmission, if received at least 2 hours before the close of
business hours on a Business Day, and otherwise on the next
Business Day.
For this purpose "business hours" mean between the hours of
09.00 and 18.00 inclusively local time.
12.3 A communication to the Vendors or the Warrantors must be
delivered or sent in accordance with clause 12.1 to both of
the Warrantors. Communications addressed to the Purchaser
shall be marked for the attention of the Chief Executive of
the Purchaser, currently W.L. Milton, and copied to the CEO of
Healthworld Corporation, currently S. Girgenti, at 100 Avenue
of the Americas, New York, NY 10013, USA.
12.4 The facsimile transmission numbers referred to in clause
12.1 are:
for the Vendors and/or the Warrantors: in the case of Mr and
Mrs Davies - 01276 858192; in the case of Mr and Mrs Cantle -
01252 812948;
for the Purchaser: 01628 630298 and a copy to Healthworld
Corporation: 001 212 966 2743,
13 INVALIDITY
If a term in or provision of this agreement is held to be
illegal or unenforceable, in whole or in part, under an
enactment or rule of law, it shall to that extent be deemed
not to form part of this agreement and the enforceability of
the remainder of this agreement shall not be affected.
14 PROPER LAW
14.1 The construction, validity and performance of this agreement
shall be governed by the laws of England and Wales and the
parties submit to the non-exclusive jurisdiction of the
English courts of England and Wales.
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15 RESCISSION
Save in the event of fraud, no right of rescission shall be
available to the Purchaser by reason of any breach of the
Warranties or any other provision of this agreement or the
Deed of Indemnity after the date which falls 6 months after
Completion.
Executed by the parties as a deed on the date of this agreement.
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<PAGE>
SCHEDULE 1 - VENDORS' HOLDINGS
<TABLE>
<CAPTION>
1 2 3 4
Vendor's name and address Number of Amount of Initial Proportion of Deferred
Shares Consideration Consideration
(pound)
(a) (b)
Cash First Tranche
Loan Notes
<S> <C> <C> <C> <C>
Anthony Clive Davies 4,580 300,000 1,183,920 45.8%
Barn Platt
Castle Grove Road
Chobham
Woking
Surrey GU24 8EF
Stephen Robert Cantle 4,790 1,000,000 551,960 47.9%
Broomrigg House
Broomrigg Road
Fleet
Hampshire GU13 8LR
Lesley Davies 420 33,900 102,180 4.2%
Barn Platt
Castle Grove Road
Chobham
Woking
Surrey GU24 8SF
Alison Cantle 210 33,900 34,140 2.1%
Broomrigg House
Broomrigg Road
Fleet _________ _________ _____
Hampshire GU13 8LR 1,367,800 1,872,200 100%
========= ========= ====
</TABLE>
25
<PAGE>
SCHEDULE 2 - DETAILS OF THE COMPANY
<TABLE>
<S> <C> <C>
Company number: 2213846
Date of incorporation: 26 January 1988
Share Capital: Authorised Issued
10,000 ordinary 10,000 ordinary
shares of (pound)1 each shares of (pound)1 each
Registered office: The Mitfords
Basingstoke Road
Three Mile Cross
Reading
Berkshire RG7 1AT
Directors: Anthony Clive Davies
Stephen Robert Cantle
Secretary: Anthony Clive Davies
Accounting reference date:. 30 April
Security granted by the Company: Mortgage debenture dated 9 September 1997 in
favour of National Westminster Bank plc
Legal Mortgage dated 9 September 1997 over
the Property in favour of National
Westminster Bank plc
26
<PAGE>
SCHEDULE 3 - WARRANTIES
1 ACCOUNTS
1.1 The Last Accounts
1.1.1 The Last Accounts were prepared in accordance with the
historical cost convention; and the bases and policies of
accounting, adopted for the purpose of preparing them, are the
same as those adopted in preparing the audited accounts of the
Company in respect of the three last preceding accounting
periods.
1.1.2 The Last Accounts:
(a) give a true and fair view of the assets and liabilities of
the Company at the Last Accounts Date and its profits for
the financial period ended on that date;
(b) comply with the requirements of the Companies Acts;
(c) comply with the FRSs then in force applicable to a United
Kingdom company;
(d) save as stated therein are not affected by extraordinary,
exceptional or non-recurring items.
1.1.3 No amount included in the Last Accounts in respect of an
asset, whether fixed or current, exceeds its purchase price or
production cost (within the meaning of CA Sched 4), or (in the
case of current assets) its net realisable value at the Last
Accounts Date.
1.2 Valuation of stock-in-trade and work in progress
In the Last Accounts and in the accounts of the Company for
the three preceding financial years stock in trade and work in
progress have been treated in accordance with SSAP 9.
1.3 Depreciation of fixed assets
In the Last Accounts and in the accounts of the Company for
the three preceding financial years, fixed assets have been
depreciated in accordance with SSAP 12.
1.4 Book debts
1.4.1 No part of the amounts included in the Last Accounts, or
subsequently recorded in the books of the Company, as owing
by debtors is overdue by more than twelve weeks, or has been
released on terms that the debtor pays less than the full
book value of his debt, or has been written off, or is
regarded by the Company as irrecoverable in whole or in
part.
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1.4.2 The amounts due from debtors as at Completion (less the
amount of any relevant provision or reserve, determined on the
same basis as that applied in the Last Accounts and disclosed
in the Disclosure Letter) will be recoverable in full in the
ordinary course of business; and none of those debts is
subject to a counter-claim or set off, except to the extent of
the provision or reserve.
1.5 Books and records
All the accounts, books, ledgers and financial records, of
the Company:
(a) are in its possession; and
(b) have been properly and accurately kept in all material
respects;
(c) which constitute accounting records, are sufficient to
show and explain the Company's transactions and are such
as to disclose with reasonable accuracy, at any time, the
financial position of the Company at that time in
accordance with s221 CA.
2 CORPORATE MATTERS
2.1 Directors and shadow directors
2.1.1 The only directors of the Company are the persons whose names
are listed as such in Schedule 2.
2.1.2 No person is a shadow director (within the meaning of CA s741)
of the Company but is not treated as one of its directors for
all the purposes of the Companies Acts.
2.2 Subsidiaries, associations and branches
2.2.1 The Company:
(a) is not the legal and beneficial owner of nor has agreed
to acquire share or loan capital of a company (whether
incorporated in the United Kingdom or elsewhere);
(b) has no branch, agency or place of business, or a permanent
establishment (as that expression is defined in the
relevant double taxation relief order) outside the United
Kingdom.
2.2.2 There are no subsidiary undertakings of the Company, within
the meaning of CA s258.
2.3 Options over the Company's capital
Except as required by this agreement, there are no agreements
or arrangements in force which provide for the issue,
allotment or transfer of, or grant to any person the right
(whether conditional or otherwise) to call for the issue,
allotment or transfer of, share or loan capital of the Company
(including an option or right of pre-emption or conversion).
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2.4 Issues of capital
2.4.1 None of the Shares were issued at a discount.
2.4.2 No share or loan capital has been issued or allotted, or
agreed to be issued or allotted, by the Company since the Last
Accounts Date.
2.5 Transfers of Shares
None of the Shares were, or represent assets which were, the
subject of a transfer at an undervalue (within the meaning of
Insolvency Act 1986, s238 or s339) within the past five years.
2.6 Single member companies
The Company has never had only one member.
2.7 Commissions
No one is entitled to receive from the Company a finder's fee,
brokerage or other commission in connection with the sale and
purchase of the Shares under this agreement.
2.8 Memorandum and articles of association, statutory books and
resolutions
2.8.1 The copy of the memorandum and articles of association of the
Company attached to the Disclosure Letter is accurate and
complete and has embodied in it, or annexed to it, a copy of
every resolution which is referred to in CA s380.
2.8.2 The register of members and other statutory books of the
Company have been properly kept and contain an accurate and
complete record of the matters with which they should deal.
2.8.3 No notice or allegation has been received that the
statutory books of the Company are incorrect or should be
rectified.
2.8.4 Since the Last Accounts Date no alteration has been made to
the memorandum or articles of association of the Company and
no resolution of the shareholders of the Company has been
passed (other than resolutions relating to routine business at
annual general meetings).
2.8.5 The Company has not passed an elective resolution under CA
s379A, which remains in force.
2.8.6 Notice of any written resolution passed or to be passed by the
Company on or after 1 April 1990 was duly given to its
auditors in accordance with CA s381B and no notice of
objection was given by the auditors.
2.9 Documents filed
2.9.1 All returns, particulars, resolutions and documents required
by the Companies Acts or any other legislation to be filed
with the Registrar of Companies, in respect of the Company
have been duly filed and were correct; and the
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<PAGE>
Company has complied with the Companies Acts in connection
with their formation, the allotment or issue of shares,
debentures and other securities, the payment of dividends and
the conduct of their business.
2.9.2 All charges in favour of the Company have (if appropriate)
been registered in accordance with the provisions of CA ss395,
409, 410 and 424.
2.10 Possession of documents
All documents of title relating to the assets of the Company,
and an executed copy of all subsisting written agreements to
which the Company is a party, and the original copies of all
other documents which are in force or otherwise relevant to
the Company which are owned by, or which ought to be in the
possession of, the Company are in its possession or under its
control.
2.11 Investigations
So far as the Vendors are aware, no investigations or
enquiries by, or on behalf of, any governmental or other body
in respect of the affairs of the Company are taking place or
pending.
3 TAXATION
3.1 Administration
3.1.1 All returns, notifications, computations and payments which
should have been made or given by the Company for Taxation
purpose were made or given within the requisite periods and
are up-to-date, correct and on a proper basis; and none of
them is, or is likely to be, the subject of a dispute with the
Inland Revenue or other Taxation authorities.
3.1.2 No application for a consent or clearance on behalf of the
Company, or affecting the Company has been made.
3.1.3 The Company has not taken any action which has had, or is
likely to have, the result of altering or prejudicing, for a
period commencing after the Last Accounts Date, an arrangement
or agreement which it has with a Taxation authority.
3.1.4 The Company has not paid nor, since the Last Accounts Date,
become liable to pay a penalty or interest charged under a
Taxation statute.
3.1.5 In calculating the provision or reserve for Taxation in the
Last Accounts (including deferred Taxation) which has been
noted as not having been provided for in the Last Accounts,
there has not been taken into account any indexation allowance
under TCGA s53 (The indexation allowance etc) which as a
result of FA 1994 s93 (Indexation losses) is not available or
is less than it would otherwise have been.
30
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3.2 PAYE and deductions
The Company has not been the subject of an investigation
3.2.1 involving a Taxation authority and, so far as the
Vendors are aware, there are no circumstances rendering it
likely that an investigation will take place.
3.2.2 The Company has paid all national insurance contributions for
which it is liable and has not been party to any scheme or
arrangement to avoid any liability to account for primary or
secondary national insurance contributions.
3.2.3 The Company has properly operated the PAYE system, by duly
deducting tax from all payments made, or treated as made, to
its employees or former employees, and accounting to the
Inland Revenue for all tax deducted and for all tax chargeable
on benefits provided for its employees or former employees.
3.2.4 The Company does not provide nor has it provided nor has
it agreed to provide:
(a) assessable income of an employee in the form of tradable
assets within the meaning of ICTA s203F (PAYE: tradable
assets) or (as respects provision made on or after 6
April 1998) in the form of readily convertible assets
within the meaning of s 203F, including assessable income
within s 203FA (PAYE: enhancing the value of an asset);
(b) for an employee by reason of his employment non-cash
vouchers to which ICTA s203G (PAYE: non-cash vouchers)
applies, credit-tokens to which ICTA s203H (PAYE:
credit-tokens) applies or cash vouchers to which ICTA
s203I(PAYE: cash vouchers) applies.
3.2.5 The Company has sufficient records relating to past events to
calculate the liability to Taxation or relief from Taxation
which would arise on a disposal or realisation of any of its
assets or a discharge of any of its liabilities.
3.2.6 The Company has not received a notice under ICTA s23
(Collection from lessees and agents) which is outstanding.
3.2.7 The Company has not made any payments to or provided benefits
for any officer or employee or ex-officer or ex-employee of
the Company, which is not allowable as a deduction in
calculating profits of the Company for Taxation purposes.
3.3 Taxation claims, liabilities and reliefs
3.3.1 The Disclosure Letter contains full and accurate details of
all matters relating to Taxation in respect of which the
Company (either alone or jointly with another person) is, or
at Completion will be, entitled:
(a) to make a claim (including a supplementary claim) for,
disclaimer of or election for relief under a Taxation
statute;
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(b) to appeal against an assessment to or a determination
affecting Taxation;
(c) to apply for the postponement of Taxation;
(d) to require the postponement or reduction of an allowance;
(e) to elect to treat machinery or plant as a short-life asset
within CAA s 37 (Election for certain machinery or plant
to be treated as short-life assets).
3.3.2 The Company has not made a claim under TCGA s24(2)(Disposals
where assets lost or destroyed, or whose value becomes
negligible) or s280 (Consideration payable by instalments) or
under TCGA Sched 4 (Deferred charges on gains before 31 March
1982).
3.3.3 The Company is not, or will it become, liable to pay, or to
reimburse or indemnify any person in respect of, Taxation (or
an amount corresponding to Taxation) in consequence of the
failure by another person (not being the Company) to discharge
that Taxation or amount, where the Taxation or amount relates
to a profit, income or gain, transaction, event, omission or
circumstance arising or occurring or deemed to have arisen or
occurred (whether wholly or partly) prior to Completion.
3.3.4 No relief from Taxation has been claimed or given to the
Company, or was taken into account in determining the
provision for Taxation in the Last Accounts, and which could
be withdrawn, postponed or restricted as a result of an act,
omission, event or circumstance arising or occurring at or
before Completion.
3.4 Distributions and deductibility of payments
3.4.1 The Company has not repaid, or agreed to repay, or redeemed,
or agreed to redeem, shares, or capitalised, or agreed to
capitalise profits or reserves in the form of redeemable
shares or debentures.
3.4.2 No distribution within the meaning of ICTA s209
(Distributions etc) has been made by the Company except
dividends shown in its audited accounts nor is the Company
bound to make any such distribution.
3.4.3 The Company has not since October 6 1996
(a) treated as franked investment income any qualifying
distribution received which would fall to be treated as a
foreign income dividend under FA 1997 Schedule 7
(Special treatment for certain distributions); nor
(b) made any qualifying distribution which would fall to be
so treated.
3.4.4 No outstanding security (within the meaning of ICTA s254(1)
(Company distributions, tax credits etc.: interpretation)), of
the Company was issued in such
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circumstances that the interest payable on it, or any other
payment in respect of it, falls to be treated as a
distribution under ICTA s209 (Meaning of "distribution").
3.4.5 No rents, interest, annual payments or other sums of an income
nature paid, or payable, since the Last Accounts Date by the
Company, or which the Company is under an obligation to pay
are or may be wholly or partially disallowable as deductions
in computing profits or as charges against profits for the
purposes of corporation tax by reason of ICTA s74 (General
rules as to deductions not allowable), ICTA s125 (Annual
payments for non-taxable consideration), ICTA s338 (Allowance
of charges on income and capital), ICTA s577 (Business
entertainment expense) ICTA s770 (Sales etc at an undervalue
or overvalue), ICTA ss779 to 785 (Leased assets), ICTA s787
(Restriction of relief for payments of interest) or otherwise.
3.4.6 The Company has not received a capital distribution to
which TCGA s189 (Capital distribution of chargeable gains:
recovery of tax from shareholder) could apply.
3.4.7 The Company has not incurred expenditure which was not or will
not be wholly deductible in computing, or against, profits as
a trading expense or expense of management, or as a charge on
income or non trading deficit, or in computing income for the
purposes of Schedules A or D, except for expenditure on the
acquisition of an asset to be held otherwise than as
stock-in-trade, details of which are set out in the Disclosure
Letter.
3.5 Carry forward of losses and ACT
3.5.1 Nothing has been done, and no event or series of events has
occurred, which is likely to cause in relation to the Company
the disallowance of the carry forward or carry back of losses,
excess charges or advance corporation tax under ICTA s393
(Losses other than terminal losses), s393A (Losses : set-off
against profits of the same or an earlier accounting period),
s768 (Change in ownership of company: disallowance of trading
losses), s768A (Change in ownership: disallowance of carry
back of trading losses), or ICTA s245 (Calculation etc. of ACT
on change of ownership of company) or s245A (Restrictions on
the application of s240 in certain circumstances).
3.5.2 The Company will not be restricted by ICTA s245B (Restriction
on set-off where asset transferred after change of ownership
of company) as to the amount of relief available to it in
respect of surplus ACT.
3.5.3 The Disclosure Letter gives details of all claims under ICTA
s242 (Set-off of losses etc against surplus of franked
investment income) for all periods up to 1 July 1997.
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3.6 Close companies
3.6.1 The Company is, and has been at all times during the six years
ended on the Last Accounts Date, a close company as defined in
ICTA s414 (Close companies).
3.6.2 The Company has not, since the Last Accounts Date, made a
distribution within ICTA s418 (`Distribution' to include
certain expenses of close companies).
3.6.3 The Company has not made (and will not be deemed to have made)
any loan or advance to a participator so as to become liable
to make any payment under ICTA s419 (Loans to participators
etc), and the Company has not released nor written off the
whole or part of any such loan or advance
3.6.4 The Company is not nor has it been a close investment-holding
company within the meaning of ICTA s13A (close
investment-holding companies).
3.7 Group relief and group surrender
The Company is not and never has been a member of a group for
the purposes of ICTA Part X Ch IV (Group relief).
3.8 Capital allowances
3.8.1 All expenditure which the Company has incurred or is likely to
incur under a subsisting commitment on the provision of
machinery or plant has qualified or will qualify (if not
deductible as a trading expense of a trade carried on by the
Company) for writing-down allowances under CAA s24
(Writing-down allowances and balancing adjustments).
3.8.2 All capital allowances made or to be made to the Company in
respect of capital expenditure incurred, or to be incurred
under a subsisting commitment, have been made, or will be
made, in taxing its trade.
3.8.3 Since the Last Accounts Date the Company has not done, omitted
to do, agreed to do or permitted to be done anything as a
result of which a disposal value may be brought into account
under CAA s24 (Writing-down allowances and balancing
adjustments), or there may be any recovery of excess relief
under CAA s46 (Recovery of excess relief: new expenditure).
3.8.4 No event has occurred since the Last Accounts Date which
may be treated as a notional sale by the Company of machinery
or plant pursuant to CAA s26 (The disposal value).
3.8.5 The Company is not nor may be in dispute with another person
as to the entitlement to capital allowances under CAA s51
(Application and interpretation of Chapter VI: Fixtures).
3.8.6 No capital expenditure incurred or to be incurred be
Company has been or will be deemed under CAA s159 (Capital
expenditure, capital sums and time
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when capital expenditure is incurred) to have been or be
incurred on a date other than that upon which the obligation
to pay the expenditure became or becomes unconditional.
3.8.7 No election has been made by the Company under CAA s11 (Long
Leases) in relation to a building or structure, or s53
(Expenditure incurred by equipment lessor) or s55 (Expenditure
incurred by incoming lessee: transfer of allowances) in
relation to fixtures.
3.8.8 The Company, which has obtained or is entitled to capital
allowances under CAA Part I in respect of capital expenditure
incurred on the construction of a building or structure in (or
partly in) an enterprise zone, or which has entered into a
contract under which it will or may incur such expenditure,
has not been nor is it a party to such arrangements as are
mentioned in CAA s4A(7) (Realisation of capital value).
3.9 Transactions not at arm's length
3.9.1 The Company has not carried out, nor been engaged in, a
transaction or arrangement to which ICTA s770 (Sale etc. at
an undervalue or overvalue) has been or may be applied.
3.9.2 The Company does not own, nor has it agreed to acquire, an
asset, nor has it received or agreed to receive services or
facilities (including the benefit of licences or agreements),
the consideration for the acquisition or provision of which
was or will be in excess of its market value or determined
otherwise than on an arm's length basis.
3.9.3 The Company has not disposed of nor acquired an asset in such
circumstances that TCGA s17 (Disposals and acquisitions
treated as made at market value) could apply.
3.10 Base values and acquisition costs
3.10.1 If each of the capital assets of the Company was disposed of
at Completion for a consideration equal to its book value in
or adopted for the purpose of the Last Accounts, no liability
to corporation tax on chargeable gains or balancing charge
under CAA (if each asset was treated as if used for the
purpose of a separate trade) would arise; and, for the purpose
of determining the liability to corporation tax on chargeable
gains, there shall be disregarded reliefs and allowances
available to the Company other than amounts falling to be
deducted under TCGA s38 (Acquisition and disposal costs etc).
3.10.2 The Company has not, since the Last Accounts Date, engaged in
a transaction in respect of which there may be substituted for
Taxation purposes, a
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consideration which is different from the actual consideration
given or received by it.
3.11 Tax avoidance
3.11.1 The Company has not, since the Last Accounts Date, engaged in,\
or been a party to a scheme or arrangement of which the main
purpose, or one of the main purposes, was the avoidance of, or
a reduction in liability to, Taxation.
3.11.2 The Company has not, since the Last Accounts Date, been a
party to a transaction to which any of the following has been
or could be applied other than transactions in respect of
which all necessary consents or clearances have been obtained:
(a) ICTA ss703 to 709 (Cancellation of tax advantages from
certain transactions in securities);
(b) ICTA s765 (Migration etc. of companies);
(c) ICTA s776 (Transactions in land: taxation of capital
gains);
(d) TCGA ss135 to 138 (Company reconstructions and
amalgamations);
(e) TCGA s139 (Reconstruction or amalgamation involving
transfer of business).
3.11.3 The Company has not at any time entered into or been a party
to a transaction or series of transactions containing one or
more steps inserted without any commercial or business
purpose.
3.12 Depreciatory transactions and value shifting
3.12.1 No allowable loss, which may accrue on the disposal by the
Company of an asset is likely to be reduced by reason of TCGA
s177 (Dividend stripping).
3.12.2 No chargeable gain or allowable loss arising on a disposal
by the Company is likely to be adjusted in accordance with
TCGA s30 (Value shifting: Tax-free benefits).
3.13 Stock dividends and deep discount securities
3.13.1 The Company has not issued or owns share capital to which
ICTA s249 (Stock dividends treated as income) or TCGA s141
(Stock dividends: consideration for new holding) could apply.
3.13.2 The Company has not since 13 March 1984 owned or issued a
deep discount security within the meaning of ICTA s57 and
Sched 4 (Deep discount securities).
3.14 Chargeable gains
3.14.1 In determining the liability to corporation tax on chargeable
gains in respect of an asset which has been acquired by the
Company, or which the Company has agreed to acquire (whether
conditionally, contingently or otherwise):
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(a) the sums allowable as a deduction will be determined solely
in accordance with TCGA s38 (Acquisition and disposal costs
etc) and s53 (The indexation allowance and interpretative
provisions);
(b) the amount or value of the consideration, determined in
accordance with TCGA s38(1)(a), will not be less than the
amount or value of the consideration actually given by it
for the asset;
(c) the amount of expenditure on enhancing the value of the
asset, determined in accordance with TCGA s38(1)(b), will
not be less than the amount or value of all expenditure
actually incurred by it on that asset.
3.14.2 No asset owned or agreed to be acquired by the Company (other
than plant and machinery in respect of which it is entitled to
capital allowances) is a wasting asset within the meaning of
TCGA s44 (Meaning of "wasting asset").
3.14.3 The Company is not owed a debt (not being a debt on a
security), upon the disposal or satisfaction of which a
liability to corporation tax on chargeable gains will arise by
reason of TCGA s251 (Debts: General provisions).
3.14.4 No part of the consideration given by the Company for a new
holding of shares (within the meaning of TCGA s126
(Reorganisation or reduction of share capital: Application of
Sections 127 to 131)) will be disregarded by virtue of TCGA
s128(2) (Consideration given or received by holder).
3.15 Losses
3.15.1 The Company has not incurred a capital loss to which TCGA
s18(3) (Transactions between connected persons) is
applicable.
3.15.2 The Company is not treated as a limited partner under ICTA
s118 (Restriction on relief: companies).
3.15.3 The Company had not immediately prior to the execution of
this agreement an allowable loss which was a pre-entry loss
within the meaning of TCGA Schedule 7A (Restriction on set-off
of pre-entry losses).
3.15.4 No capital loss of the Company is liable to be restricted or
disallowed under the provisions relating to pre-entry gains
within the meaning of TCGA Schedule 7AA.
3.16 Replacement of business assets
The Company has not made a claim under TCGA ss23 (Receipt of
compensation and insurance money not treated as a disposal),
152 (Replacement of business assets: Roll-over relief), 153
(Assets only partly replaced), 154 (New assets which are
depreciating assets), 175 (Replacement of business assets by
members of a group) or 247 (Rollover relief on compulsory
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acquisition) which would affect the amount of the chargeable
gain or allowable loss which would, but for the claim, have
arisen on a disposal of any of its assets.
3.17 Loan Relationships
3.17.1 The Company applies an authorised accruals method of
accounting (as that term is defined in FA 1996 s85) in respect
of all loan relationships (as defined in s81) to which it is a
party.
3.17.2 The Disclosure Letter contains full and accurate particulars
of any loan relationship to which the Company is a party,
whether as debtor or creditor, where any party to that loan
relationship is connected with the Company for the purposes of
FA 1996 Part IV Chapter II.
3.17.3 The Disclosure Letter contains full and accurate particulars
of any loan relationship to which the Company is a party and
to which FA 1996 s92 (Convertible securities etc) or s93
(Relationships linked to the value of chargeable assets)
apply.
3.17.4 The Disclosure Letter contains full and accurate particulars
of any debtor relationship (as defined in FA 1996 s103) of the
Company which relates to a relevant discounted security to
which FA 1996 Schedule 9 para 17 (Discounted securities where
companies have a connection) or para 18 (Discounted securities
of close companies) applies.
3.17.5 The Company has not entered into a transaction to which FA
1996 Schedule 9 para 11(1) (Transactions not at arm's length)
applies.
3.17.6 The Company has not been, or is entitled to be, released from
any liability which arises under a debtor relationship of the
Company.
3.17.7 The Disclosure Letter contains full and accurate particulars
of
(a) any loan relationship to which the Company is a party,
whether as debtor or creditor, to which FA 1996 Schedule
15 para 8 (Transitional provisions for chargeable assets
held after commencement) has applied or will apply on the
occurrence of a relevant event (as defined by para 8(2))
in respect thereof;
(b) in each case, the amount of any deemed chargeable gain or
deemed allowable loss which has arisen or will arise in
consequence of the relevant event; and
(c) any election made pursuant to FA 1996 Schedule 15 para 9
(Election for alternative treatment of amounts specified
in para 8).
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3.18 Value added tax
3.18.1 The Company:
(a) has duly registered and is a taxable person for the
purposes of value added tax;
(b) has complied in all material respects with all statutory
requirements, orders, provisions, directions or conditions
relating to value added tax;
(c) maintains complete, correct and up-to-date records for the
purposes of the relevant legislation.
3.18.2 The Company:
(a) has not applied for treatment as a member of a group;
(b) is not or has agreed to become an agent, manager or
factor (for the purposes of VATA s47 (Agents, etc.))
of any person who is not resident in the United Kingdom,
or the VAT representative within VATA s48 (VAT
representatives) of such a person;
(c) is not in arrears with a payment or return, or liable to
an abnormal or non-routine payment, or a forfeiture or
penalty, or to the operation of a penal provision;
(d) has not been required by the Commissioners of Customs and
Excise to give security.
3.18.3 The Disclosure Letter contains full particulars of claims for
bad debt relief made, or which may be made, by the Company
under VATA s36 (Bad debts).
3.18.4 All supplies made by the Company are taxable supplies, and the
Company is not and will not be denied credit for any input tax
by reason of VATA s26 (Input tax allowable under s25) and
regulations made thereunder.
3.18.5 No document has left the possession of the Company which, if
improperly used by a third party, would lead to a liability on
its part to pay an amount of value added tax under VATA Sched
11 para 5 (Recovery of VAT, etc.) which, but for the use,
would not have been payable by it.
3.18.6 The Company has not within the past twelve months received a
surcharge liability notice under VATA s59 (The default
surcharge).
3.18.7 The Company has not received a penalty liability notice under
VATA s64 (Repeated misdeclarations) or has made a return which
contains a material inaccuracy within the meaning of that
section.
3.18.8 The Company has not given a certificate for bvalue added tax
purposes falling within VATA s62 (Incorrect certificates as to
zero rating etc).
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3.18.9 The Company has not made a claim for repayment of value added
tax under VATA s80 (Recovery of overpaid VAT) which has not
been satisfied and in respect of which the Commissioners of
Customs and Excise have raised or could raise the defence of
unjust enrichment.
3.18.10 The Company has not acquired or brought into use on or after
1 April 1990 a computer or item of computer equipment costing
(pound)50,000 or more or land or buildings (or parts of
buildings) costing (pound)250,000 or more.
3.18.11 The net total of all errors required by law to
be corrected in VAT returns submitted by the Company (adding
up all under declarations and subtracting all over
declarations) as at the date of this agreement does not exceed
(pound)500.
3.19 Inheritance tax
3.19.1 The Company has not made a transfer of value (as defined in
ITA s3 (Transfers of value)).
3.19.2 No Inland Revenue charge for unpaid inheritance tax (as
provided by ITA ss237 and 238 (Inland Revenue charge for
unpaid tax)) is outstanding over an asset of the Company or in
relation to shares in the capital of the Company.
3.19.3 There are not in existence any circumstances whereby any power
mentioned in ITA s212 (Powers to raise tax) could be exercised
in relation to any shares, securities or other assets of the
Company, or could be exercised but for ITA s204(6) (Limitation
of liability).
3.20 Stamp duty
3.20.1 The Company has duly paid or has procured to be paid all
stamp duty on documents to which it is a party or in which it
is interested and which are liable to duty.
3.20.2 The Company has made all returns and paid all stamp duty
reserve tax (SDRT) in respect of any transaction relating to
chargeable securities to which it is a party or in respect of
which it is liable to account for SDRT under FA 1986 Part IV.
3.20.3 Within the past five years the Company has not made a claim
for relief or exemption under FA 1930 s42 (Relief from
transfer stamp duty in case of transfer of property as between
associated companies) or under FA 1986 s75 (Acquisitions:
reliefs).
3.20.4 The Company is not a party to a document held outside the
United Kingdom which, if brought into the United Kingdom,
would be liable to stamp duty under Stamp Act 1891 s14(4)
(Terms upon which instruments not duly stamped may be received
in evidence).
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3.21 Deferred taxation
Where provision for deferred taxation is not made in the Last
Accounts, full details of the amounts of deferred taxation are
disclosed in the Disclosure Letter.
4 FINANCE
4.1 Capital commitments
There were no commitments on capital account outstanding at
the Last Accounts Date with a value in excess of (pound)15,000
and, since the Last Accounts Date, the Company has not made or
agreed to make capital expenditure, or incurred or agreed to
incur capital commitments or disposed of or realised capital
assets or an interest in capital assets with a value in excess
of (pound)15,000.
4.2 Dividends and distributions
4.2.1 Since the Last Accounts Date and other than the Pre-completion
Dividends no dividend or other distribution (as defined in
ICTA Part VI Chapter II as extended by ICTA s418) has been, or
is treated as having been, declared, made or paid by the
Company.
4.2.2 All dividends or distributions declared, made or paid by the
Company were declared, made or paid in accordance with its
articles of association and the applicable provisions of the
Companies Acts.
4.3 Bank and other borrowings
4.3.1 Full and accurate details of all limits on the Company's bank
overdraft facilities are set out in the Disclosure Letter.
4.3.2 The total amount borrowed by the Company from its bankers does
not exceed its overdraft facilities.
4.3.3 The total amount borrowed by the Company (as determined in
accordance with the relevant instrument) does not exceed any
limitation on its borrowing powers contained in its articles
of association or other relevant document.
4.3.4 The Company has no outstanding nor has agreed to create nor
issue any loan capital; and it has not factored any of its
debts, or engaged in financing of a type which would not
require to be shown or reflected in the Last Accounts, or
borrowed money which it has not repaid, apart from normal
trade credit or borrowings not exceeding the amounts shown in
the Last Accounts.
4.3.5 The Company has not, since the Last Accounts Date, repaid or
become liable to repay any loan or indebtedness in advance of
its stated maturity.
4.3.6 The Company has not received notice (whether formal or
informal) from a lender of money, requiring repayment or
intimating the enforcement of a security; and, so far as the
Warrantors are aware, there is nothing likely to give rise to
a notice.
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4.4 Loans by and debts due to the Company
4.4.1 The Company has not lent money which has not been repaid to
it, or owns the benefit of any debt (whether or not due for
payment), other than debts which have arisen in the ordinary
course of its business.
4.4.2 The Company has not made a loan or quasi-loan contrary to
the Companies Acts.
4.4.3 The Company has not made a loan, which remains outstanding,
on terms entitling it to receive either a rate of interest
varying with, or a share of, the profits of a business.
4.5 Liabilities
4.5.1 There has been no exercise, purported exercise or claim for a
charge, lien, encumbrance or equity over fixed assets of the
Company.
4.5.2 There is no dispute directly or indirectly relating to fixed
assets of the Company.
4.5.3 The Company has not been the tenant of, or a guarantor in
respect of, leasehold property other than the Property.
4.6 Bank accounts
Since the date of each bank statement provided pursuant to
clause 6 there have been no payments out of the account to
which the statement relates, except for payments in the
ordinary and normal course of business.
4.7 Continuation of facilities
In relation to all debentures, acceptance credits, overdrafts,
loans or other financial facilities outstanding or available
to the Company (referred to in this clause as "facilities"):
(a) the Disclosure Letter sets out full and accurate details
and there are attached to it accurate copies of all
documents relating to the facilities;
(b) there has been no contravention of, or non-compliance
with, the provisions of those documents;
(c) no steps for the early repayment of indebtedness have
been taken or threatened;
(d) none of the facilities is dependent on the guarantee or
indemnity of, or security provided by, a person other
than the Company.
4.8 Creditors
There is no amount in excess of (pound)1,000 owing by the
Company to a creditor which has been due for more than seven
weeks.
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4.9 Government grants
The Company has not applied for or received a grant or subsidy
or financial assistance from a government department or agency
or a local or other authority.
5 TRADING
5.1 Changes since Last Accounts Date
Since the Last Accounts Date and, in particular, but without
limitation, in the period from 1 July 1998 to the date of
Completion:
(a) the business of the Company has been continued in the
normal course;
(b) there has been no deterioration in the gross income of
the Company.
5.2 Vendors' other interests and liabilities to the Company
5.2.1 Neither the Warrantors nor their respective Associates, have
any rights or interests, directly or indirectly, in businesses
other than those now carried on by the Company, which are or
are likely to be, or become, competitive with the businesses
of the Company, except as registered holder or owner with full
title guarantee of securities listed on the Stock Exchange, or
traded on the alternative investment market of the Stock
Exchange, and in respect of which a Warrantor, with his
Associates, holds with full title guarantee less than 5 per
cent of any single class of the securities in that company.
5.2.2 There is no outstanding indebtedness of a Vendor, or his
Associates, to the Company.
5.3 Effect of sale of Shares
5.3.1 So far as the Warrantors are aware, after Completion (whether
by reason of an existing agreement or arrangement or
otherwise) as a result of the proposed acquisition of the
Company by the Purchaser:
(a) no supplier of the Company will cease, or be entitled to
cease, supplying it or may substantially reduce its
supplies to it;
(b) no customer of the Company will cease, or be entitled to
cease, to deal with it or may substantially reduce its
existing level of business with it;
(c) the Company will not lose the benefit of a right or
privilege which it enjoys;
(d) no officer or senior employee of the Company is likely to
leave.
5.3.2 Compliance with the terms of this agreement does not and
will not:
(a) conflict with, or result in the breach of, or constitute
a default under an agreement or arrangement to which the
Company is a party, or a
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provision of the memorandum or articles of association of
the Company or an encumbrance, order, judgement, award,
injunction, regulation or other restriction or obligation
by which or to which an asset of the Company is bound or
subject;
(b) relieve another person from an obligation to the Company
(whether contractual or otherwise), or enable another
person to determine such an obligation, or a right or
benefit enjoyed by the Company, or to exercise a right,
whether under an agreement with, or otherwise in respect
of, the Company;
(c) result in the creation, imposition, crystallisation or
enforcement of an encumbrance on assets of the Company;
(d) result in present or future indebtedness of the Company
becoming due and payable, or capable of being declared
due and payable, prior to its stated maturity.
5.4 Conduct of businesses in accordance with memoranda and
articles of association
5.4.1 The Company has carried on business and conducted its affairs
in accordance with its memorandum and articles of association
from time to time.
5.4.2 The Company is empowered and duly qualified to carry on
business in all jurisdictions in which it carries on business.
5.5 Joint ventures and partnership
5.5.1 The Company is not, nor has it agreed to become, a participant
in or member of a joint venture, consortium, partnership or
other unincorporated association.
5.5.2 The Company is not, nor has it agreed to become, a party to an
agreement or arrangement for sharing commissions or other
income.
5.6 Agreements relating to the management and business
There are no agreements or arrangements between the Company
and a person who is a shareholder, or the owner with title
guarantee of an interest, in it, or in a company in which the
Company is interested, or an Associate of such a person,
relating to the management of the Company's business, or the
appointment or removal of directors of the Company, or the
ownership or transfer of ownership or the letting of assets of
the Company, or the provision, supply or purchase of finance,
goods, services or other facilities to, by or from the
Company, or in any other respect relating to its affairs.
5.7 Agency agreements and agreements restricting business
5.7.1 The Company is not a party to an agency, distributorship,
marketing, purchasing, manufacturing or licensing agreement
or arrangement, or a restrictive trading or
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other agreement or arrangement pursuant to which its business
is carried on, or which restricts its freedom to carry on its
business in the United Kingdom or elsewhere in such manner as
it thinks fit.
5.7.2 The Company is not bound by an undertaking or assurances given
to a court or governmental agency.
5.8 Unfair trade and restrictive practices
5.8.1 The Company has not committed, nor omitted to do, anything
which is likely to give rise to a fine or penalty.
5.8.2 The Company is not a party to an agreement, practice or
arrangement which:
(a) contravenes the Trade Descriptions Act 1968;
(b) contravenes the Fair Trading Act 1973 Part XI;
(c) would, or might, result in a reference of a "consumer
trade practice", within the meaning of the Fair Trading
Act 1973 s13, or be liable to reference to the Consumer
Protection Advisory Committee under Part II of the
said Act;
(d) contravenes the Consumer Credit Act 1974;
(e) contravenes, or is invalidated (in whole or in part) by,
or is subject to registration under, the Restrictive Trade
Practices Acts 1976 and 1977;
(f) contravenes, or is invalidated by, the Resale Prices Act
1976;
(g) contravenes the Treaty of Rome;
(h) contravenes any other anti-trust, anti-monopoly or
anti-cartel legislation or regulations.
5.8.3 The Company has not engaged in an anti-competitive practice
as defined in the Competition Act 1980.
5.9 Litigation, disputes and winding up
5.9.1 The Company is not engaged in litigation or arbitration
proceedings, as plaintiff or defendant; there are no
proceedings pending or threatened, either by or against the
Company; and, so far as the Warrantors are aware, there is
nothing which is likely to give rise to litigation or
arbitration.
5.9.2 There is no dispute with a revenue or other official
department in the United Kingdom or elsewhere in relation to
the affairs of the Company and, so far as the Warrantors are
aware, there is nothing which is likely to give rise to a
dispute.
5.9.3 There are no claims pending or threatened and, so far as the
Warrantors are aware, likely to arise, against the Company, by
an employee or third party in respect of an accident or
injury, which are not fully covered by insurance.
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5.9.4 No order has been made, or petition presented, or resolution
passed for the winding up of the Company; no distress,
execution or other process has been levied in respect of the
Company which remains undischarged; and there is no
unfulfilled or unsatisfied judgment or court order outstanding
against the Company.
5.9.5 The Company has not stopped payment nor is insolvent nor
unable to pay its debts within the meaning of Insolvency Act
1986 s123 (but omitting any requirement to prove anything to
the satisfaction of the court).
5.10 Compliance with statutes
5.10.1 Neither the Company, nor any of its officers, agents or
employees (during the course of their duties in relation to
it), has committed, or omitted to do, an act or thing, the
commission or omission of which is, or could be, in
contravention of an act, order, regulation or the like
(whether of the United Kingdom or elsewhere) giving rise to a
fine, penalty, default proceeding or other liability on its
part.
5.10.2 The Company has conducted and is conducting its business in
accordance with all applicable laws and regulations, whether
of the United Kingdom or elsewhere.
5.10.3 The Company does not carry on (or has, at any time when not an
authorised person under Chapter III, Financial Services Act
1986, carried on) investment business in the United Kingdom
within the meaning of that Act.
5.11 Data protection
5.11.1 The Company has complied with all relevant requirements of the
Data Protection Act 1984 including:
(a) the data protection principles established in the Act;
(b) requests from data subjects for access to data held by it;
(c) the requirements relating to the registration of data
users.
5.11.2 The Company has not received a notice or allegation from
either the data protection registrar or a data subject
alleging non-compliance with the data protection principles or
prohibiting the transfer of data to a place outside the United
Kingdom.
5.11.3 No individual has claimed, or will have the right to claim,
compensation from the Company under the Act for loss, or
unauthorised disclosure, of data.
5.12 Documents stamped
All documents which affect the right, title or interest of the
Company in or to any of its properties, undertaking or assets,
or to which the Company is a party, and which attract stamp
duty have been duly stamped within the requisite period for
stamping.
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5.13 Business names
The Company does not use a name for any purpose other than its
full corporate name.
5.14 Transactions involving directors
The Company has not been a party to a transaction to which CA
s320 or s330 may apply.
5.15 Powers of attorney and authority
5.15.1 No power of attorney given by the Company is in force.
5.15.2 No authorities (express or implied) by which another person
may enter into a contract or commitment to do anything on
behalf of the Company are outstanding.
5.16 Licences and consents
The Company has obtained all necessary licences and consents
for the proper carrying on of its business (short particulars
of each licence and consent being set out in the Disclosure
Letter); all the licences and consents are valid and
subsisting; the Company is not in breach of any of the
licences or consents; and, so far as the Warrantors are aware,
there is nothing that might prejudice their continuation or
renewal.
5.17 Subsisting contracts
5.17.1 The Company is not a party to a contract, transaction,
arrangement or liability which:
(a) is outside the ordinary and proper course of business;
(b) is for a fixed term of more than six months;
(c) is of a long-term nature (that is, unlikely to have been
fully performed, in accordance with its terms, more than
six months after the date on which it was entered into or
undertaken);
(d) cannot be terminated by it, in accordance with its terms,
on sixty days' notice or less;
(e) is of a loss-making nature (that is, known by the
Warrantors to be likely to result in a loss to it on
completion of performance);
(f) involves payment by it of amounts determined by reference
to fluctuations in the index of retail prices, or another
index, or in the rate of exchange for a currency;
(g) involves an aggregate outstanding expenditure by it of
more than (pound)50,000;
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(h) involves, or is likely to involve, the supply of goods the
aggregate sales value of which will represent in excess of
10 per cent of its turnover for the preceding financial
year; or
(i) is a contract for hire or rent, hire purchase, or purchase
by way of credit sale or periodical payment.
5.17.2 The provisions of the written contracts provided by the
Vendors and accompanying the Disclosure Letter
reflect the actual terms of such contracts.
5.18 Defaults under agreements by the Company
5.18.1 The Company is not:
(a) in default under an agreement or arrangement to which it
is a party, or in respect of another obligation or
restriction by which it is bound;
(b) in default under an obligation existing by reason of
membership of an association or body.
5.18.2 No threat or claim of default under an agreement, obligation
or arrangement has been made, and is outstanding, against the
Company; so far as the Warrantors are aware, there is nothing
whereby an obligation, right, benefit or entitlement may be
prematurely terminated or rescinded by any other party, or by
which the terms may be worsened.
5.19 Other party's defaults
So far as the Warrantors are aware, no party to an agreement
or arrangement with, or under an obligation to, the Company is
in default under it, being a default which is material in the
context of the Company's financial or trading position; and,
so far as the Warrantors are aware, there is nothing likely to
give rise to a default.
5.20 Outstanding offers
No offer, tender or the like is outstanding which may be
converted into an obligation of the Company by the unilateral
act of another person.
5.21 Purchases and sales from or to one party
Not more than 25 per cent of the aggregate amount of all the
purchases, and not more than 25 per cent of the aggregate
amount of all the sales, of the Company are obtained, or made,
from or to the same supplier or customer, (including a person
connected with the supplier or customer); and so far as the
Warrantors are aware, no material source of supply to the
Company, or material outlet for the sales of the Company, is
or is likely to be in jeopardy.
5.22 Guarantees and indemnities
No guarantee, or agreement for indemnity or for suretyship
given by the Company or for its accommodation is outstanding.
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5.23 Insider contracts
5.23.1 No agreement or arrangement to which the Company is a party
and which a Vendor, or an Associate of a Vendor, or a director
of the Company, or an Associate of such director, is or has
been interested, whether directly or indirectly, is
outstanding or existed during the past three years.
5.23.2 The Company is not a party to, and its profits or financial
position during the past three years have not been affected
by, an agreement or arrangement which was or is not at arm's
length.
5.24 Management reports
There have been no reports, concerning the Company by
financial or management consultants during the past three
years.
5.25 Pollution
So far as the Warrantors are aware, the Company has complied,
and has adequate facilities to continue to comply, with all
legislation relating to the disposal of industrial effluent.
6 ENVIRONMENTAL WARRANTIES
6.1 For the purposes of this clause the expression "Environmental
Legislation" means:
6.1.1 The Environmental Protection Act 1990 ("the EPA");
6.1.2 The Control of Pollution Act 1974;
6.1.3 The Planning (Hazardous Substances) Act 1990;
6.1.4 The Radioactive Substances Act 1960;
6.1.5 The Clean Air Act 1968;
6.1.6 The Health and Safety at Work etc Act 1974;
6.1.7 The Alkali etc Works Regulation Act 1906;
6.1.8 The Public Health Act 1936;
6.1.9 The Safety (Emissions into the Atmosphere) Regulations 1983.
6.2 So far as the Warrantors are aware and having made no
environmental searches or surveys, the Company is in
compliance with Environmental Legislation and no offence has
been committed on or in connection with the Freehold Property
or any activities, processes or substances in, on, over or
under the Freehold Property under the Environmental
Legislation.
6.3 No writ, summons, order, enforcement notice, prohibition
notice or other notice has been issued or served and no
direction of any public or other statutory authority has been
made with regard to the Freehold Property and/or any
activities, processes or substances, in, on, over, or under
the Freehold
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Property pursuant to the Environmental Legislation and no
prosecutions have been instituted with respect thereto.
6.4 No complaints have been made by any third party with regard
to the Freehold Property and/or any activities, processes or
substances in, on, over or under the Freehold Property as a
result of any actual or alleged breach of the Environmental
Legislation or the presence of any waste (as defined in the
EPA) of any kind, noise, vibration, smell, fumes or similar
matters nor have any such matters been spilled, released,
discharged or disposed of in the soil or water in, under or
upon the Freehold Property.
6.5 The Company has not received nor applied for any grants or
funds from any public authority in connection with
environmental improvements on the Freehold Property.
7 EMPLOYMENT
7.1 Employees and terms of employment
7.1.1 Complete and accurate particulars of the identities, dates of
commencement of employment, or appointment to office, and
terms of employment of all the employees and officers of the
Company, including profit sharing, commission or discretionary
bonus arrangements, are contained in the Disclosure Letter.
7.1.2 There are no agreements or arrangements between the Company
and a trade union or other body representing employees.
7.1.3 No contract of service exists between the Company and a
director or employee in relation to which the requirements of
CA s319 have not been fulfilled.
7.2 Bonus schemes
7.2.1 There are no schemes in operation entitling an employee of the
Company to a commission or remuneration calculated by
reference to the whole or part of the turnover, profits or
sales of the Company.
7.2.2 The Company has not registered a profit-related pay scheme
under the provisions of ICTA Part V Chapter III.
7.3 Changes in remuneration
7.3.1 During the period to which the Last Accounts relate and since
the Last Accounts Date or (where employment or holding of
office commenced after the beginning of the period) since the
commencing date of the employment or holding of office:
(a) no change has been made in the rate of remuneration,
emoluments or pension benefits, of an officer, ex-officer
or senior executive of the Company (a senior executive
being a person in receipt of remuneration in excess of
(pound)25,000 per annum);
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(b) no change has been made in any other terms of employment
of an officer or senior executive.
(c) The Company is not obliged nor accustomed to pay anything
other than in respect of remuneration or pension benefits,
to or for the benefit of an officer or employee of the
Company, or their Associates.
(d) No negotiations for an increase in the remuneration or
benefits of an officer or employee of the Company are
current or, so far as the Warrantors are aware, likely to
take place within six months after Completion.
7.4 Termination of contracts of employment
7.4.1 All contracts of service to which the Company is a party
are determinable at any time on three months' notice
or less without compensation (other than compensation in
accordance with the Employment Rights Act 1996).
7.4.2 No executive of the Company, who is in receipt of remuneration
in excess of (pound)25,000 per annum, and no officer of the
Company has given or received notice terminating his
employment, except as expressly contemplated in this
agreement, or will be entitled to give notice as a result of
this agreement.
7.5 Industrial disputes and negotiations
The Company nor its employees is involved in an industrial
dispute, and there are no facts known to the Company or its
directors or to the Warrantors which might suggest that there
may be an industrial dispute involving the Company or that
this agreement may lead to an industrial dispute.
7.6 Industrial agreements
The Company has not entered into a collective agreement with a
trade union nor has it recognised a trade union for any such
(or other) purpose nor has it done anything which amounts to
entering into a collective agreement or recognising a trade
union under the Trade Union and Labour Relations
(Consolidation) Act 1992.
7.7 Redundancies
No employee will become redundant and be entitled to a
redundancy payment as a result of this agreement.
7.8 Pensions
The Company is not under a legal or moral obligation, nor is
it a party to an ex-gratia arrangement, to pay pensions,
gratuities, superannuation allowances or the like, or
otherwise to provide "relevant benefits" within the meaning of
ICTA s612(1), to or for any of its past or present officers or
employees or their
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dependants; and there are no retirement benefits, or pension
or death benefits, or similar schemes or arrangements in
relation to the Company.
7.9 Personal injury
No employee has suffered personal injury during the course of
his employment with the Company at any time during the last 5
years.
7.10 No employee has notified the Company that he is disabled under
the Disability Discrimination Act 1995 and no "reasonable
adjustments" under section 6 of such Act have been requested
and/or, so far as the Warrantors are aware, contemplated.
8 ASSETS
8.1 Ownership of assets
8.1.1 The Company owned at the Last Accounts Date, and had good and
marketable title to, all the assets included in the Last
Accounts (other than the Property) and (except for current
assets subsequently sold or realised in the ordinary course
of business) still owns and has good and marketable title to
them and to all assets acquired since the Last Accounts
Date.
8.1.2 The Company has not created, nor granted, nor agreed to create
or grant, a security interest or other encumbrance in respect
of fixed assets included in the Last Accounts (excluding the
Property), or acquired or agreed to be acquired since the Last
Accounts Date, otherwise than in the ordinary course of its
business.
8.1.3 None of the assets, undertaking, goodwill or uncalled capital
of the Company (excluding the Property) is subject to, and the
Company has not agreed to grant an option, charge, lien or
encumbrance, or right of pre-emption.
8.2 Retention of title
The Company does not hold goods which it purchased on terms
that property does not pass until full payment is made or all
indebtedness discharged.
8.3 Insurance
8.3.1 Nothing has been done or omitted to be done which could make
any policy of insurance of the Company void or voidable, or
which is likely to result in an increase in premium. Full
particulars of all insurances maintained by the Company have
been disclosed to the Purchaser. Such policies are current, in
full force and effect and all premiums due on all such
policies of insurance have been paid.
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8.3.2 No claim is outstanding under any of the said policies and,
so far as the Warrantors are aware, no circumstances exist
which are likely to give rise to a claim.
8.4 Leased assets
No circumstance has arisen or so far as the Warrantors are
aware is likely to arise in relation to an asset held by the
Company under a lease or similar agreement as a result of
which the rental payable has been, or is likely to be,
increased and, in particular, all the leased assets have at
all relevant times been used for a qualifying purpose within
the meaning of CAA s39.
8.5 Plant in working order
8.5.1 The plant, machinery, vehicles and other equipment used in
connection with the business of the Company:
(a) are in a good state of repair and condition and in
satisfactory working order and have been regularly and
properly maintained;
(b) are in its possession and control, and are its absolute
property, except for the items which are the subject of
the hire purchase, leasing or rental agreements listed in
the Disclosure Letter, or in respect of which the
outstanding payments do not exceed (pound)1,000;
(c) are not expected to require replacements or additions
at a cost in excess of (pound)10,000 within the next
six months;
(d) are all capable, and (subject to normal wear and tear)
will remain capable, throughout the period of time during
which they are each written down to a nil value in the
accounts of Company (in accordance with the accounting
principles disclosed in the Last Accounts) of doing the
work for which they were designed or purchased.
8.5.2 Copies of all maintenance contracts have been provided to the
Purchaser prior to Completion and are in full force.
8.6 Intellectual property rights and trade secrets
8.6.1 No Intellectual Property Rights are owned by the Company.
8.6.2 Neither the business of the Company [nor any licence granted
by the Company]` nor any process or products of the Company
infringes an Intellectual Property Right of another person or
involves the unlicensed use of an Intellectual Property Right.
8.6.3 Particulars of any licences granted to the Company in
relation to Intellectual Property Rights are set out in the
Disclosure Letter and the Company has not committed a breach
of the licences.
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8.6.4 The Company has no liability to pay compensation under the
Patents Act 1977, ss40 and 41.
8.6.5 The Company has not (otherwise than in the ordinary and
normal course of business) disclosed, or permitted to be
disclosed, or undertaken or arranged to disclose, to a person
other than the Purchaser any of its know-how, technical
information, trade secrets, confidential information, price
lists or lists of customers or suppliers.
8.6.6 The Company is not a party to a secrecy agreement or
agreement which may restrict the use or disclosure of
information.
8.6.7 Nothing has been done or omitted by the Company which would
enable a licensee under a licence granted by the Company to
terminate it, or which constitutes a breach of its terms.
8.7 Year 2000
So far as the Warrantors are aware, in relation to hardware
and software used in the business of the Company, none of it
contains embedded logic or code which will fail to recognise
year 2000 as such, or which might fail or cause other
hardware or software to cease to perform according to
specification or to the needs of the Company's business by
reason of the date change after 31 December 1999, or cannot
accurately and correctly process data including dates from
different countries.
9 PROPERTIES
9.1 Title
The Property comprises all the properties owned, occupied or
otherwise used by the Company in connection with its business.
9.2 Statutory obligations
9.2.1 As far as the Warrantors are aware, the Company has complied
and is complying with applicable statutory and by-law
requirements with respect to the Freehold Property, and in
particular with the requirements as to fire precautions and
under the Public Health Acts, the Housing Acts, the Highway
Acts, Offices, Shops and Railway Premises Act 1963, the
Factory Acts and the London Building Acts.
9.2.2 As far as the Warrantors are aware, there is no unperformed
obligation with respect to the Freehold Property necessary to
comply with the requirements (whether formal or informal) of
a competent authority exercising statutory or delegated
powers.
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9.2.3 No licences are required, whether under the Licensing Act
1988 or otherwise, in relation to the Freehold Property.
9.2.4 Save in respect of the Leasehold Property, the Company has
not at any time been a tenant under any lease.
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SCHEDULE 4 - DEED OF INDEMNITY
DATED:
PARTIES:
1. "Covenantors": The persons whose names/addresses are set out in the schedule
2. "Purchaser": Healthworld Holdings Limited (registered number 3458882) whose
registered office is at 1 Thames Street, Windsor, Berkshire
SL4 1PL
RECITAL
This deed is entered into in accordance with an agreement (the "Agreement") made
between the Covenantors and the Purchaser relating to the acquisition of the
entire issued share capital of Colwood House Medical Publication (UK) Limited
(registered in England and Wales under no: 2213846).
1 Definitions
1.1 In this deed:
1.1.1 the same meaning is given to words and expressions defined in
the Agreement except where otherwise provided or expressly
defined below;
1.1.2 "Taxation" means all forms of taxation, duties and levies
whatsoever and whenever imposed, whether by governmental or
other authority and whether of the United Kingdom or
elsewhere, and (without limitation) includes:
1.1.3 income tax, corporation tax, capital gains tax, inheritance
tax, stamp duty, value added tax, customs and other import
duties and national insurance contributions and any payment
whatsoever which the Company may be or become bound to make to
any person as a result of any enactment relating to taxation
and any other taxes, duties or levies supplementing or
replacing any of the above;
1.1.4 all interest, fines and penalties incidental, or relating, to
any such taxation, duties or levies, whatsoever.
1.2 "Relief" includes (without limitation) any loss, relief,
allowance, exemption, set-off or deduction in computing, or
against, profits, income or gains of any description or from
any source, or credit against Taxation.
1.3 "Liability to Taxation" means any liability to make a payment
in respect of Taxation but does not include:-
1.3.1 the loss, counteracting or clawing back of any Relief which
would otherwise have been available to the Company;
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1.3.2 the nullifying, cancellation or set-off of a right to
repayment of Taxation which would otherwise have been
available to the Company;
PROVIDED however that if the loss, counteracting or clawing
back of any Relief referred to in paragraph 1.3.1, or the
nullifying, cancellation or set-off of a right to repayment
as referred to in paragraph 1.3.2 results in a liability of
the Company to make a payment in respect of Taxation in
respect of an accounting period commencing prior to
Completion, that liability shall itself be a "Liability to
Taxation" for the purposes of this deed.
1.4 "Claim for Taxation" includes (without limitation) any
notice, demand, assessment, letter or other document issued,
or action taken, by or on behalf of the Inland Revenue or
Customs and Excise authorities or any other statutory or
governmental authority or body whatsoever in any part of the
world or any form of self-assessment under the Pay and File
system introduced by the Finance Act 1990, whereby the
Company is, or is likely to be, subject to a Liability to
Taxation (whether or not it is primarily payable by the
Company and whether or not the Company has, or may have, any
right of reimbursement).
1.5 "Final Determination" means, in relation to a Claim for
Taxation where there is an appeal against that assessment or
self-assessment:
1.5.1 an agreement under section 54 Taxes Management Act 1970 or
any legislative provision corresponding to that section;
1.5.2 a decision of a court or tribunal from which either no appeal
lies or in respect of which no appeal is made within the
prescribed time limit.
1.6 References to paragraphs are to paragraphs of this deed,
unless otherwise stated.
2 Covenant
2.1 Subject as provided below, the Covenantors jointly and
severally covenant with the Purchaser that they will
indemnify the Purchaser against:
2.1.1 any Liability to Taxation or any depletion in the value of
the assets of the Company, arising by reason of, or in
consequence of, or in connection with, any Liability to
Taxation; and
2.1.2 the costs, charges and expenses reasonably incurred by the
Company in relation to any demands, actions, proceedings and
claims in respect of Liabilities to Taxation or Claims for
Taxation.
2.2 The covenant in paragraph 2.1 shall apply only where the
Liability to Taxation or the Claim for Taxation:-
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2.2.1 results from or is made wholly or partly in respect of or in
consequence of any acts, omissions or transactions whatsoever
of the Company occurring or entered into on or before the
Completion Date; or
2.2.2 results from, or is calculated by reference to, any actual or
deemed income, profits or gains earned, received or accrued,
or deemed to have been earned, received or accrued, on or
before the Completion Date; or
2.2.3 results from, or is calculated by reference to, any dividend
or distribution declared, paid or made, or deemed to have
been paid or made, on or before the Completion Date other
than the Pre-Completion Dividends.
2.3 If any payment due from the Covenantors under this deed will
be, or has been, subject to a Liability to Taxation, the
Purchaser shall be entitled to receive from the Covenantors
on demand such amount as ensures that the net receipt, after
Taxation, to the Purchaser in respect of the payment is the
same as it would have been were the payment not subject to
Taxation in the hands of the Purchaser.
3 Exclusions
3.1 The indemnity in paragraph 2.1 shall not apply to any
Liability to Taxation or Claim for Taxation:
3.1.1 to the extent that allowance, provision or reserve is made in
the Last Accounts or is specifically referred to and
quantified in the notes to those accounts;
3.1.2 for which the Company is, or may become, liable wholly or
primarily as a result of transactions in the ordinary course
of its business after the Last Accounts Date;
3.1.3 to the extent that the Liability to Taxation or Claim for
Taxation arises as a result of any increase in rates of
Taxation made after the Last Accounts Date;
3.1.4 which is attributable to the Company ceasing to be entitled
to the small companies' rate of corporation tax as a result
of the purchase of the Shares by the Purchaser;
3.1.5 to the extent that it would not have arisen but for the fact
that the treatment in future accounts of the Company of
assets or liabilities, or of the Taxation attributable to
timing differences, is different from the treatment in the
Last Accounts.
3.2 If any provision or reserve for Taxation in the Last Accounts
or the Completion Accounts shall at the date of any payment
required to be made by the Warrantors provide to have been an
overprovision or overreserve, then the amount of such
overprovision or overreserve shall be set-off against any
actual
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liability of the Warrantors in respect of any claim(s) under
the Deed of Indemnity.
3.3 The provisions of Schedule 6 of the Agreement shall apply to
this deed.
4 Mitigation
4.1 Except as provided in paragraph 4.2, the Covenantors shall be
liable under the indemnity in paragraph 2.1 notwithstanding
any Reliefs, rights of repayment, or other rights or claims
of a similar nature which may be available to any person
entitled to the benefit of the indemnity to set against or
otherwise mitigate any Liability to Taxation so that the
indemnity in paragraph 2.1 shall take effect as though the
Reliefs, rights of repayment, or other rights or claims were
not available.
4.2 The provisions of paragraph 4.1 shall not apply if and to the
extent that the Reliefs, rights of repayment or other rights
or claims arose wholly or mainly by reason of any act,
omission or transaction of the Company on or before the Last
Accounts Date.
4.3 Where and to the extent that paragraph 4.2 applies, credit
shall be given to the Covenantors against any liability under
this deed for any such Reliefs, rights of repayment or other
rights or claims as are mentioned in paragraph 4.1.
4.4 When the Covenantors have satisfied an obligation under this
deed to indemnify the Purchaser against a Liability to
Taxation and the Purchaser or the Company has (whether by
operation of law, contract or otherwise) a right of
reimbursement (including by way of indemnity) against any
other person or persons in respect of the Liability to
Taxation, the Purchaser shall or shall procure that the
Company shall take all reasonable steps to enforce the right,
and repay to the Covenantors any sum recovered by the
Purchaser or the Company by reason of the right, or shall or
shall procure that the Company shall, at the request and
expense of the Covenantors, assign the right to the
Covenantors, in such form as they shall reasonably require.
5 Notification of claims
The Purchaser shall notify the Covenantors in writing of any
Claim for Taxation which comes to its or the Company's notice,
whereby it appears that the Covenantors are or may become
liable to indemnify the Purchaser under this deed as soon as
reasonably practicable after the date on which the Claim for
Taxation comes to the notice of the Purchaser and no later
than 10 Business Days prior to the expiry of any time limit
for appealing the Claim for Taxation except that failure to
give such notice shall not prejudice the Purchaser's right to
bring a claim under this deed.
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6 Dates for and quantum of payments
6.1 This clause shall apply solely for determining the date on
which any payments or repayments shall be made by or to the
Covenantors pursuant to this deed and (where expressly
provided) the amounts of the payments or repayments.
6.2 The Covenantors shall make payment to the Purchaser to the
extent that, and on the date on which, the Company discharges
or is deemed to discharge a Liability to Taxation in respect
of which the Purchaser is entitled to be indemnified under
this deed.
6.3 The Purchaser shall make a repayment to the Covenantors to
the extent that, and on the date on which, the Purchaser or
the Company receives any repayment of any amount paid in
respect of any Liability to Taxation pursuant to paragraph
6.2. Any repayment to the Covenantors pursuant to this
paragraph 6.3 shall not prejudice the rights of the Purchaser
against the Covenantors in the event that a further Liability
to Taxation is imposed upon the Company, whether in respect
of matters to which the repayment relates or otherwise.
6.4 For the purposes of paragraph 6.2, the Company shall be
deemed to discharge a Liability to Taxation:
6.4.1 on the date on which the Company pays any amount of Taxation;
or
6.4.2 on the date on which any Liability to Taxation would have
fallen due but for Reliefs, rights of repayment, or other
rights or claims of a similar nature to which paragraph 4.1
applies.
6.5 For the purpose of paragraph 6.3, the Company shall be deemed
to receive a repayment:
6.5.1 on the date on which the Company receives a repayment of
Taxation to which paragraph 6.2 applies;
6.5.2 if and when the Company would have received a repayment but
for a Liability to Taxation in respect of which the Company
is not entitled to be indemnified under this deed;
6.5.3 if and when the Company would have received a repayment had
the Liability to Taxation been discharged by a payment of
Taxation; or
6.5.4 if and when the Company is able to obtain the benefit of a
reduction in its Liability to Taxation as a result of the
right to repayment.
6.6 Upon Final Determination of a relevant Claim for Taxation the
Covenantors shall promptly pay to the Purchaser such amount,
or further amount in addition to any sums already paid under
this deed, as is required to cover the full liability of the
Covenantors under this deed.
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6.7 Any dispute in relation to the provisions of paragraphs 6.4,
6.5 or 6.6 may be referred, by the Purchaser or the
Covenantors, to the auditors for the time being of the
Company, acting as experts and not as arbitrators, whose
certificate shall be final and binding upon the parties in
the absence of manifest error.
6.8 In lieu of making any payment under this deed to the
Purchaser the Covenantors shall at the direction of the
Purchaser be entitled to make it direct to the Inland Revenue
on behalf of the Company and any such payment shall pro tanto
discharge the obligations of the Covenantors under this deed.
7 General
7.1 The provisions of the Agreement relating to notices shall
apply to notices to be given under, or in
connection with, this deed except that references to
"Warrantors" in these provisions will be deemed to be
references to "Covenantors".
7.2 The construction, validity and performance of this deed shall
be governed by the laws of England and Wales.
Executed by the parties as a deed on the date of this deed.
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SCHEDULE
Anthony Clive Davies
Barn Platt
Castle Grove Road
Chobham
Woking
Surrey GU24 8EF
Stephen Robert Cantle
Broomrigg House
Broomrigg Road
Fleet
Hampshire GU13 8LR
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SCHEDULE 5 - EARNOUT PROTECTION
The Purchaser on behalf of itself, its Associates and assignees undertakes to
the Vendors that for the period from Completion to 30 June 2001, it shall
(otherwise than as required by law or pursuant to a commitment (whether legally
binding or not) created on or before Completion or otherwise than in the
ordinary course of business as carried on immediately before Completion) not
take any action or suffer anything to be done which it is reasonably able to
prevent with the intention of frustrating or preventing the maximum amount of
the Consideration being payable and being paid and (without prejudice to the
generality of the foregoing) during such period it shall exercise its powers in
relation to the Company and its rights as the beneficial owner of the whole or
the issued share capital of the Company to procure that, save with the prior
written consent of the Warrantors:
1 the Company complies with the provisions of the Service
Agreement in favour of each of Clive Davies and Stephen
Cantle;
2 neither the Company nor the Vendors nor any other employee of
the Company shall be required to provide the Purchaser or any
member of the Purchaser's Group or any other person with any
services or facilities which would cause unreasonable
interference with or be materially detrimental to the ability
of the Company to carry on its business properly, efficiently
and profitably;
3 subject to the provisions of the Service Agreements Clive
Davies and Stephen Cantle shall have day to day operational
control of the Company;
4 the Company shall not be required to make a substantial
change to the nature or scope of its business or trading
activities;
5 no dismissal of senior employees (being a person in receipt
of remuneration in excess of (pound)25,000 per annum) and no
material change of the terms of conditions of such senior
employees shall be made unless such dismissal is by way of
summary termination in accordance with the terms of the
relevant terms and conditions of employment;
6 no remuneration shall be payable by the Company for any
director of the Company appointed from time-to-time by or at
the direction of the Purchaser;
7 the Company will carry on its business as from time to time
constituted in good faith and on commercially reasonable
arm's length terms in the ordinary course and for its own
benefit and will not act with the intention of running down
the business of the Company in order to deprive the Vendors
of any Consideration;
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8 there shall be no merger or amalgamation of the business of
the Company with any other company or business and the
Company shall not dispose of the whole of or substantially
the whole of its business, undertaking or assets and the
Company shall not cease to carry on business other than in
circumstances to which the provisions of the Insolvency Act
1986 apply;
9 the Company, as a wholly owned subsidiary of the Purchaser,
receives the benefits and advantages generally enjoyed by the
other subsidiaries of the Purchaser subject to payment of any
applicable costs, charges or expenses for such benefits and
advantages;
10 other than in circumstances to which the provisions of the
Insolvency Act 1986 apply, the Company will not cease its
present trade nor will it petition for the liquidation of the
Company nor permit or procure the passing of a resolution for
a member's voluntary winding up of the Company;
11 other than in accordance with contract or in circumstances to
which the provisions of the Insolvency Act 1986 apply, the
Purchaser will not directly or indirectly request or procure
the appointment of a receiver or administrator over the whole
or any party of the assets or undertaking of the Company;
12 the Company does not make any change to its accounting
reference date save the changes of such date to 31 December
to be implemented on Completion;
13 the Company shall not enter into or agree to enter into any
joint venture, partnership or agreement or arrangement for
the sharing of profits or assets;
14 subject (after reasonable endeavours by the Purchaser in this
respect at the cost of the Company) to funds being available,
the Purchaser will make available to the Company sufficient
monies to enable the Company to carry on its business in the
ordinary and normal course;
15 the Company will not receive any professional services from a
third party, including without limitation an audit and/or any
accountancy and financial management services, having a cost
(exclusive of Value Added Tax) in excess of (pound)9,500 per
annum per type of service nor enter into any transaction
involving the purchase by the Company of any capital asset;
16 it will not and will procure that any of its Associates will
not directly or indirectly endeavour to entice away from the
Company or offer employment or a contract for service to or
employ or engage any present employee of the Company nor
directly or indirectly endeavour to entice away from the
Company (other than by way of a general advertisement placed
in the public
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domain) or offer employment or a contract for service to or
employee or engage any present employee of the Company;
17 no management charges, service charges or other related costs
or any property charges paid by the Company to the Purchaser
or any of the Purchaser's subsidiaries shall be incurred by
the Company;
18 the Company shall not be required to relocate the whole or a
material part of its business to new premises or office
accommodation outside the radius of 40 miles from its current
premises;
19 the Company shall not pay any dividends, other than as
provided in clause 6.9 and shall not make any loans to or
replay any loans from the Purchaser and/or any Associated.
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SCHEDULE 6 - LIMITATIONS OF LIABILITY
Notwithstanding anything in this agreement to the contrary, the provisions of
this Schedule shall operate to limit the liability of the Warrantors in respect
of any Warranty Claim by the Purchaser.
1 LIMITATIONS ON QUANTUM
1.1 Save in the event of fraud or dishonesty or gross negligence
on the part of the Warrantors:
1.1.1 subject to paragraphs 1.1.2, 1.1.3 and 1.1.4, the total
liability of the Warrantors for breach of the Warranties or
under the Deed of Indemnity shall not in any event exceed an
amount equal to the aggregate of the Consideration actually
received by the Vendors from time-to-time together with the
Pre-Completion Dividends; the Bonus and plus (pound)18,000;
1.1.2 the Warrantors shall not be liable in respect of any
individual claim under the Warranties or the Deed of
Indemnity unless the amount that would otherwise be
recoverable from the Warrantors in respect of such claim but
for this paragraph exceeds (pound)2,000;
1.1.3 subject to paragraph 1.1.2, the Warrantors shall not be
liable in respect of any claim or claims under the Warranties
or the Deed of Indemnity unless and until (and then in
respect of all such claims and not merely the excess) the
aggregate amount that would otherwise be recoverable from the
Warrantors in respect of all such claims shall exceed
(pound)50,000;
1.1.4 the total liability of each of the Warrantors shall in
respect of all claims under the Warranties and/or the Deed of
Indemnity be limited to the aggregate of (pound)2,000,000 and
one half of the amount of the First Deferred Payment and the
Second Deferred Payment actually paid by the Purchaser from
time-to-time;
1.1.5 the amount of any claim(s) under the Warranties or under the
Deed of Indemnity in respect of any particular matter or
circumstance shall be counted only once, so that the
Purchaser shall not be entitled to aggregate any claims which
it may make (or be entitled to make) under the Warranties
and/or the Deed of Indemnity in respect of that particular
matter or circumstance.
1.2 Nothing in this schedule shall in any way restrict or limit
the general obligation of the Purchaser to mitigate any loss
or damage which it may suffer in consequence of any breach of
this agreement.
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2 TIME LIMITS FOR BRINGING CLAIM
Save in the event of fraud, no claim shall be brought against
the Warrantors in respect of any breach of the Warranties or
under the Deed of Indemnity unless the Purchaser shall have
given to the Warrantors written notice of such claim
specifying (in reasonable detail) the matter which gives rise
to the breach or claim, the nature of the breach or claim and
an estimate of the amount claimed:
(a) on or before the date of the sixth anniversary of
Completion in respect of claims relating to Taxation; or
(b) on or before the date of the second anniversary of
Completion in respect of any other matters;
PROVIDED that the liability of a Warrantor under this
paragraph shall absolutely determine (if such claim has not
been previously satisfied, settled or withdrawn) if legal
proceedings in respect of such claim have not been commenced
within twelve months of the service of such notice and for
this purpose proceedings shall not be deemed to have been
commenced unless they have been properly issued and validly
served upon that Warrantor.
3 CONDUCT OF WARRANTY CLAIMS
Upon the Purchaser becoming aware of any claim, act or demand
against it or matter likely to give rise to any of these in
respect of the Warranties or the Deed of Indemnity, the
Purchaser shall:
(a) forthwith notify the Warrantors in writing as soon as it
appears to the Purchaser that any assessment or claim
of a third party received by or coming to the notice of
the Purchaser may result in a Warranty Claim (except
that failure by the Purchaser to give such notice shall
not prejudice its ability to bring a Warranty Claim or
to effect set-off pursuant to clause 3.6);
(b) make no admission of liability, agreement, settlement or
compromise with any third party in relation to any such
Warranty Claim without having first consulted the
Warrantors.
4 ACTS OF THE PURCHASER
No claim shall lie against the Warrantors under the Warranties
or under the Deed of Indemnity if such claim is wholly or
partly attributable to any voluntary act, omission,
transaction or arrangement carried out by the Purchaser or on
its behalf or by persons deriving title from the Purchaser or
the cessation of
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any business carried on by the Company in any case on or
after Completion otherwise than as required by law or
pursuant to a commitment (whether legally binding or not)
created on or before Completion
5 LAST ACCOUNTS
No matter shall be the subject of a claim for breach of any of
the Warranties or under the Deed of Indemnity to the extent
that allowance, provision or reserve in respect of such matter
shall have been made in the Last Accounts or has been included
in calculating creditors or deducted in calculating debtors in
the Last Accounts or shall have been otherwise taken account
of or reflected in the Last Accounts.
6 COMPLETION ACCOUNTS
No matter shall be the subject of a claim for breach of any
of the Warranties or under the Deed of Indemnity to the
extent that allowance, provision or reserve in respect of
such matters shall have been made in the Completion Accounts
or has been included in calculating creditors or deducted in
calculating debtors in the Completion Accounts or shall have
been otherwise taken into account or reflected in the
Completion Accounts and in all cases which shall have
resulted in a reduction in the Consideration pursuant to
clause 5.5.
7 RECOVERY FROM THIRD PARTIES
If the Warrantors pay at any time to the Purchaser an amount
pursuant to a claim in respect of the Warranties or under the
Deed of Indemnity and the Purchaser subsequently recovers
from some other person any sum in respect of any matter
giving rise to such claim, the Purchaser shall as soon as
practicable repay to the Warrantors so much of the amount
paid to the Purchaser as does not exceed the sum recovered
from such other person less all costs, charges and expenses
properly incurred by the Purchaser in recovering that sum
from such other person.
8 RETROSPECTIVE LEGISLATION
No liability shall arise in respect of any breach of any of
the Warranties or under the Deed of Indemnity to the extent
that liability for such breach occurs or is increased wholly
or partly as a result of any legislation not in force at the
date hereof which takes effect retrospectively.
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9 TAXATION
9.1 The Warrantors shall have no liability in respect of a
Warranty Claim to the extent that such claim would not have
occurred or arisen but for any change in the basis of, method
of calculation of, or increase in the rate or rates of
Taxation or changes in the practice of the Inland Revenue
made or coming into effect after the date of this agreement
or the withdrawal of any extra-statutory concession currently
granted by any tax authority.
9.2 The Warrantors shall have no liability in respect of a
Warranty Claim to the extent that such claim occurs or arises
or is increased as a result of any change made after
Completion in any accounting or taxation policies or practice
of the Company, the Purchaser or the Purchaser's Group.
10 NO LIABILITY FOR CONTINGENT OR NON-QUANTIFIABLE CLAIMS
If any breach of the Warranties or liability under the Deed
of Indemnity arises by reason of some liability which, at the
time such breach or claim is notified to the Warrantors, is
contingent only or otherwise not capable of being quantified,
then the Warrantors shall not be under any obligation to make
any payment in respect of such breach or claim unless and
until such liability ceases to be contingent or becomes
capable of being quantified, as the case may be. So long as
such claim shall have been notified to the Warrantors in
accordance with paragraph 2 above, as appropriate, then the
proviso to that paragraph shall be amended in relation to
such claim so as to require that legal proceedings be
commenced within twelve months from the date on which the
said liability ceases to be contingent or becomes capable of
being quantified, as the case may be, in order for the
liability of the Warrantors not to determine.
11 INFORMATION OF THE PURCHASER
The Purchaser acknowledges and declares that in entering into
this agreement it has not relied and is not relying on any
warranties, representations, covenants, undertakings,
indemnities, promises, forecasts or other statements
whatsoever whether written or oral (and whether implied or
otherwise) (collectively "Representations"), other than those
expressly set out in this agreement and in the Deed of
Indemnity, and the Purchaser hereby irrevocably and
unconditionally waives any right it may have to claim damage
for, or to rescind this agreement by reason of, any
Representation not
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expressly set out in this agreement or the Deed of Indemnity
unless such Representation was made fraudulently.
12 PAYMENT OF CLAIM TO BE REDUCTION IN PURCHASE PRICE
Any payment made by the Warrantors in respect of any claim
under the Warranties or the Deed of Indemnity shall be deemed
to be a reduction in the Consideration.
13 INSURANCE
No claim shall lie against the Warrantors under the Warranties
if such claim is wholly or partly recoverable by the Purchaser
or the Company or any member of the Purchaser's Group under
the terms of any insurance policy of the Company which is in
force as at the date of Completion.
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EXECUTED and DELIVERED as a deed )
by ANTHONY CLIVE DAVIES in the ) /s/ Anthony Clive Davies
presence of: )
Witness signature: /s/ Scott Lesner
Witness name: Scott Lesner
Witness address: 146 Regal Way, Kenton, Harrow, Middx, HA3, O5Q
Occupation: Trainee Solicitor
EXECUTED and DELIVERED as a deed )
by STEPHEN ROBERT CANTLE in the ) /s/ Stephen Robert Cantle
presence of: )
Witness signature: /s/ Scott Lesner
Witness name: Scott Lesner
Witness address: 146 Regal Way, Kenton, Harrow, Middx, HA3, O5Q
Occupation: Trainee Solicitor
EXECUTED and DELIVERED as a deed )
by LESLEY DAVIES in the ) /s/ Anthony Clive Davies
presence of: ) As Attorney for Lesley Davies
Witness signature: /s/ Scott Lesner
Witness name: Scott Lesner
Witness address: 146 Regal Way, Kenton, Harrow, Middx, HA3, O5Q
Occupation: Trainee Solicitor
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EXECUTED and DELIVERED as a deed )
by ALISON CANTLE in the ) /s/ Stephen Robert Cantle
presence of: ) As Attorney for Alison Cantle
Witness signature: /s/ Scott Lesner
Witness name: Scott Lesner
Witness address: 146 Regal Way, Kenton, Harrow, Middx, HA3, O5Q
Occupation: Trainee Solicitor
EXECUTED and DELIVERED as a deed )
by HEALTHWORLD HOLDINGS LIMITED )
acting by: )
/s/ Stuart Diamond
Director
/s/ Andrew J. Turnbull
Company Secretary
72
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DATED: 24th July 1998
- -----
PARTIES:
- -------
1. "Covenantors": The persons whose names/addresses are set out in the
------------- schedule
2. "Purchaser": Healthworld Holdings Limited (registered number
----------- 3458882) whose registered office is at 1 Thames
Street, Windsor, Berkshire SL4 1PL
RECITAL
- -------
This deed is entered into in accordance with an agreement (the "Agreement") made
between the Covenantors and the Purchaser relating to the acquisition of the
entire issued share capital of Colwood House Medical Publication (UK) Limited
(registered in England and Wales under no: 2213846).
1 Definitions
1.1 In this deed:
1.1.1 the same meaning is given to words and expressions defined in the
Agreement except where otherwise provided or expressly defined below;
1.1.2 "Taxation" means all forms of taxation, duties and levies whatsoever
and whenever imposed, whether by governmental or other authority and
whether of the United Kingdom or elsewhere, and (without limitation)
includes:
1.1.3 income tax, corporation tax, capital gains tax, inheritance tax, stamp
duty, value added tax, customs and other import duties and national
insurance contributions and any payment whatsoever which the Company
may be or become bound to make to any person as a result of any
enactment relating to taxation and any other taxes, duties or levies
supplementing or replacing any of the above;
1.1.4 all interest, fines and penalties incidental, or relating, to any such
taxation, duties or levies, whatsoever.
1.2 "Relief" includes (without limitation) any loss, relief, allowance,
exemption, set-off or deduction in computing, or against, profits,
income or gains of any description or from any source, or credit
against Taxation.
1.3 "Liability to Taxation" means any liability to make a payment in
respect of Taxation but does not include:-
1.3.1 the loss, counteracting or clawing back of any Relief which would
otherwise have been available to the Company;
1.3.2 the nullifying, cancellation or set-off of a right to repayment of
Taxation which would otherwise have been available to the Company;
<PAGE>
PROVIDED however that if the loss, counteracting or clawing back of any
Relief referred to in paragraph 1.3.1, or the nullifying, cancellation
or set-off of a right to repayment as referred to in paragraph 1.3.2
results in a liability of the Company to make a payment in respect of
Taxation in respect of an accounting period commencing prior to
Completion, that liability shall itself be a "Liability to Taxation"
for the purposes of this deed.
1.4 "Claim for Taxation" includes (without limitation) any notice, demand,
assessment, letter or other document issued, or action taken, by or on
behalf of the Inland Revenue or Customs and Excise authorities or any
other statutory or governmental authority or body whatsoever in any
part of the world or any form of self-assessment under the Pay and File
system introduced by the Finance Act 1990, whereby the Company is, or
is likely to be, subject to a Liability to Taxation (whether or not it
is primarily payable by the Company and whether or not the Company has,
or may have, any right of reimbursement).
1.5 "Final Determination" means, in relation to a Claim for Taxation where
there is an appeal against that assessment or self-assessment:
1.5.1 an agreement under section 54 Taxes Management Act 1970 or any
legislative provision corresponding to that section;
1.5.2 a decision of a court or tribunal from which either no appeal lies or
in respect of which no appeal is made within the prescribed time limit.
1.6 References to paragraphs are to paragraphs of this deed, unless
otherwise stated.
2. Covenant
--------
2.1 Subject as provided below, the Covenantors jointly and severally
covenant with the Purchaser that they will indemnify the Purchaser
against:
2.1.1 any Liability to Taxation or any depletion in the value of the assets
of the Company, arising by reason of, or in consequence of, or in
connection with, any Liability to Taxation; and
2.1.2 the costs, charges and expenses reasonably incurred by the Company in
relation to any demands, actions, proceedings and claims in respect of
Liabilities to Taxation or Claims for Taxation.
2.2 The covenant in paragraph 2.1 shall apply only where the Liability to
Taxation or the Claim for Taxation:-
2.2.1 results from or is made wholly or partly in respect of or in
consequence of any acts, omissions or transactions whatsoever of the
Company occurring or entered into on or before the Completion Date; or
2
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2.2.2 results from, or is calculated by reference to, any actual or deemed
income, profits or gains earned, received or accrued, or deemed to have
been earned, received or accrued, on or before the Completion Date; or
2.2.3 results from, or is calculated by reference to, any dividend or
distribution declared, paid or made, or deemed to have been paid or
made, on or before the Completion Date other than the Pre-Completion
Dividends.
2.3 If any payment due from the Covenantors under this deed will be, or has
been, subject to a Liability to Taxation, the Purchaser shall be
entitled to receive from the Covenantors on demand such amount as
ensures that the net receipt, after Taxation, to the Purchaser in
respect of the payment is the same as it would have been were the
payment not subject to Taxation in the hands of the Purchaser.
3 Exclusions
----------
3.1 The indemnity in paragraph 2.1 shall not apply to any Liability to
Taxation or Claim for Taxation:
3.1.1 to the extent that allowance, provision or reserve is made in the Last
Accounts or is specifically referred to and quantified in the notes to
those accounts;
3.1.2 for which the Company is, or may become, liable wholly or primarily as
a result of transactions in the ordinary course of its business after
the Last Accounts Date;
3.1.3 to the extent that the Liability to Taxation or Claim for Taxation
arises as a result of any increase in rates of Taxation made after the
Last Accounts Date;
3.1.4 which is attributable to the Company ceasing to be entitled to the
small companies' rate of corporation tax as a result of the purchase of
the Shares by the Purchaser;
3.1.5 to the extent that it would not have arisen but for the fact that the
treatment in future accounts of the Company of assets or liabilities,
or of the Taxation attributable to timing differences, is different
from the treatment in the Last Accounts.
3.2 If any provision or reserve for Taxation in the Last Accounts or the
Completion Accounts shall at the date of any payment required to be
made by the Warrantors provide to have been an overprovision or
overreserve, then the amount of such overprovision or overreserve shall
be set-off against any actual liability of the Warrantors in respect of
any claim(s) under the Deed of Indemnity.
3.3 The provisions of Schedule 6 of the Agreement shall apply to this deed.
3
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4 Mitigation
----------
4.1 Except as provided in paragraph 4.2, the Covenantors shall be liable
under the indemnity in paragraph 2.1 notwithstanding any Reliefs,
rights of repayment, or other rights or claims of a similar nature
which may be available to any person entitled to the benefit of the
indemnity to set against or otherwise mitigate any Liability to
Taxation so that the indemnity in paragraph 2.1 shall take effect as
though the Reliefs, rights of repayment, or other rights or claims were
not available.
4.2 The provisions of paragraph 4.1 shall not apply if and to the extent
that the Reliefs, rights of repayment or other rights or claims arose
wholly or mainly by reason of any act, omission or transaction of the
Company on or before the Last Accounts Date.
4.3 Where and to the extent that paragraph 4.2 applies, credit shall be
given to the Covenantors against any liability under this deed for any
such Reliefs, rights of repayment or other rights or claims as are
mentioned in paragraph 4.1.
4.4 When the Covenantors have satisfied an obligation under this deed to
indemnify the Purchaser against a Liability to Taxation and the
Purchaser or the Company has (whether by operation of law, contract or
otherwise) a right of reimbursement (including by way of indemnity)
against any other person or persons in respect of the Liability to
Taxation, the Purchaser shall or shall procure that the Company shall
take all reasonable steps to enforce the right, and repay to the
Covenantors any sum recovered by the Purchaser or the Company by reason
of the right, or shall or shall procure that the Company shall, at the
request and expense of the Covenantors, assign the right to the
Covenantors, in such form as they shall reasonably require.
5 Notification of claims
----------------------
The Purchaser shall notify the Covenantors in writing of any Claim for
Taxation which comes to its or the Company's notice, whereby it appears
that the Covenantors are or may become liable to indemnify the
Purchaser under this deed as soon as reasonably practicable after the
date on which the Claim for Taxation comes to the notice of the
Purchaser and no later than 10 Business Days prior to the expiry of any
time limit for appealing the Claim for Taxation except that failure to
give such notice shall not prejudice the Purchaser's right to bring a
claim under this deed.
4
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6 Dates for and quantum of payments
---------------------------------
6.1 This clause shall apply solely for determining the date on which any
payments or repayments shall be made by or to the Covenantors pursuant
to this deed and (where expressly provided) the amounts of the payments
or repayments.
6.2 The Covenantors shall make payment to the Purchaser to the extent that,
and on the date on which, the Company discharges or is deemed to
discharge a Liability to Taxation in respect of which the Purchaser is
entitled to be indemnified under this deed.
6.3 The Purchaser shall make a repayment to the Covenantors to the extent
that, and on the date on which, the Purchaser or the Company receives
any repayment of any amount paid in respect of any Liability to
Taxation pursuant to paragraph 6.2. Any repayment to the Covenantors
pursuant to this paragraph 6.3 shall not prejudice the rights of the
Purchaser against the Covenantors in the event that a further Liability
to Taxation is imposed upon the Company, whether in respect of matters
to which the repayment relates or otherwise.
6.4 For the purposes of paragraph 6.2, the Company shall be deemed to
discharge a Liability to Taxation:
6.4.1 on the date on which the Company pays any amount of Taxation; or
6.4.2 on the date on which any Liability to Taxation would have fallen due
but for Reliefs, rights of repayment, or other rights or claims of a
similar nature to which paragraph 4.1 applies.
6.5 For the purpose of paragraph 6.3, the Company shall be deemed to
receive a repayment:
6.5.1 on the date on which the Company receives a repayment of Taxation to
which paragraph 6.2 applies;
6.5.2 if and when the Company would have received a repayment but for a
Liability to Taxation in respect of which the Company is not entitled
to be indemnified under this deed;
6.5.3 if and when the Company would have received a repayment had the
Liability to Taxation been discharged by a payment of Taxation; or
6.5.4 if and when the Company is able to obtain the benefit of a reduction in
its Liability to Taxation as a result of the right to repayment.
6.6 Upon Final Determination of a relevant Claim for Taxation the
Covenantors shall promptly pay to the Purchaser such amount, or further
amount in addition to any sums already paid under this deed, as is
required to cover the full liability of the Covenantors under this
deed.
5
<PAGE>
6.7 Any dispute in relation to the provisions of paragraphs 6.4, 6.5 or 6.6
may be referred, by the Purchaser or the Covenantors, to the auditors
for the time being of the Company, acting as experts and not as
arbitrators, whose certificate shall be final and binding upon the
parties in the absence of manifest error.
6.8 In lieu of making any payment under this deed to the Purchaser the
Covenantors shall at the direction of the Purchaser be entitled to make
it direct to the Inland Revenue on behalf of the Company and any such
payment shall pro tanto discharge the obligations of the Covenantors
under this deed.
7 General
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7.1 The provisions of the Agreement relating to notices shall apply to
notices to be given under, or in connection with, this deed except that
references to "Warrantors" in these provisions will be deemed to be
references to "Covenantors".
7.2 The construction, validity and performance of this deed shall be
governed by the laws of England and Wales.
Executed by the parties as a deed on the date of this deed.
6
<PAGE>
SCHEDULE
Anthony Clive Davies
Barn Platt
Castle Grove Road
Chobham
Woking
Surrey GU24 8EF
Stephen Robert Cantle
Broomrigg House
Broomrigg Road
Fleet
Hampshire GU13 8LR
<PAGE>
EXECUTED and DELIVERED as a deed )
by ANTHONY CLIVE DAVIES in the ) /s/ Anthony Clive Davies
presence of: )
Witness signature: [illegible]
Witness name: [illegible]
Witness address: [illegible]
Occupation: Solicitor
EXECUTED and DELIVERED as a deed )
by STEPHEN ROBERT CANTLE in the ) /s/ Stephen Robert Cantle
presence of: )
Witness signature: [illegible]
Witness name: As above
Witness address:
Occupation:
EXECUTED and DELIVERED as a deed )
by HEALTHWORLD HOLDINGS LIMITED ) /s/ Stuart Diamond
acting by: )
Director
/s/ Andrew J. Turnbull
Company Secretary
<PAGE>
[Healthworld Corporation Letterhead]
Contact: Steven Girgenti
Chief Executive Officer
Healthworld Corporation
(212) 625-4216
Stuart Diamond
Chief Financial Officer
Healthworld Corporation
(212) 625-4249
FOR IMMEDIATE RELEASE
HEALTHWORLD CORPORATION ACQUIRES TORRENT S.A.
New York, New York, July 28, 1998 - Healthworld Corporation (NASDAQ:
HWLD), announced today the acquisition of 80% of Torrent S.A., France's
leading independent healthcare communications agency. Torrent, formed in 1986,
has been operating as a licensee of Healthworld B.V. since 1993. The Company
reported 1997 revenues of $4.4 million and has 31 full-time employees. Torrent
clients include Glaxo Wellcome, Rhone Poulenc Rorer, and Boots Healthcare. A
recently won contract was for Pfizer's Viagra.
The purchase price for the 80% interest was $2.56 million.
Healthworld has an option to acquire the remaining 20% of Torrent S.A., which
will continue to be held by Mr. Dominique Agostini, founder of the company.
Mr. Agostini will remain as President and be instrumental in expanding the
business by adding existing Healthworld services not presently offered by
Torrent.
"Torrent is one of the most respected and successful healthcare
communications companies in Europe winning the French Healthcare Agency of the
Year honors in 1996 and the recipient of the 1997 Best Ad Award in France. The
acquisition of Torrent is the first of the Healthworld B.V. affiliates. With
France being the second largest pharmaceutical market in Europe, Torrent
represents an important growth opportunity for Healthworld," Steven Girgenti,
Chairman and Chief Executive Officer of Healthworld Corporation commented.
Healthworld is an international marketing and communications services
company specializing in healthcare. The company provides many of the world's
largest pharmaceutical and other healthcare companies with a comprehensive
range of integrated strategic marketing services designed to accelerate the
market acceptance of new products and to sustain marketability throughout
their life cycles, including advertising and promotion, contract sales,
consulting, publishing, medical education, public relations, interactive
multimedia, database marketing and marketing research services.
This press release contains statements which constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Those statements include statements regarding the intent,
belief or current expectations of the Company and its management team.
Prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in the
forward-looking statements. Such risks and uncertainties include, among other
things, competitive, economic and regulatory factors in the health care
marketing and communications industry and the pharmaceutical and health care
industry, general economic conditions and other risks and uncertainties that
may be detailed, from time-to-time, in Healthworld's reports filed with the
Securities and Exchange Commission.
<PAGE>
(BW) (HEALTHWORLD) (HWLD) Healthworld Corporation Acquires Colwood House
NEW YORK -- (BUSINESS WIRE) -- July 27, 1998 -- Healthworld
Corporation (NASDAQ: HWLD), announced today the acquisition of Colwood House
Medical Publications, a leading UK medical education company. Colwood's
services include communications strategy and planning, publications
management, opinion leader and Advisory Group management, medical writing,
medical journalism, public relations and symposia development and management.
Colwood House reported Fiscal 1997 gross revenues of $4.3 million, net
revenues of $3.4 million, and has a staff of 44 full-time employees. Current
clients include most of the top European-based companies: Roche-Basle, Bayer,
Glaxo Wellcome, Roche-UK, Glaxo-UK, Allen & Hanbury, SmithKline Beecham,
Knoll, Janssen, Schering and Pharmacia & Upjohn.
Healthworld acquired Colwood House, for an initial purchase price of
approximately $6.6 million paid in cash at closing, plus up to an additional
$5.6 million in the aggregate paid in cash in two installments in April 2000
and August 2001, if future operating earnings of Colwood House exceed
established target levels. As part of the transaction Healthworld has entered
into employment agreements with Clive Davies and Stephen Cantle, Joint
Managing Directors of Colwood.
"Colwood is a perfect complement to our current U.S. and Europe-based
communications business. Colwood represents a tremendous growth opportunity in
medical education and will add to the overall profitability of Healthworld,"
said Steven Girgenti, Chairman and Chief Executive Officer of Healthworld.
"Colwood's experience and expertise in internationally focused communications
programs, especially pre-product launches provides the group with excellent
business development opportunities. The acquisition will also allow us to
realize strong synergies with Medical Education Technologies, our wholly-owned
medical education subsidiary in the U.S."
Davies enthusiastically commented: "This move allows Colwood for the
first time to develop its existing international business outside of Europe
and augment its existing services with the specialized branding, advertising,
design and related services of the Healthworld companies. Healthworld's
communications expertise in the U.S. will enhance our strategic consultancy
throughout the product cycle."
Healthworld is an international marketing and communications services
company specializing in healthcare. The company provides many of the world's
largest pharmaceutical and other healthcare companies with a comprehensive
range of integrated strategic marketing services designed to accelerate the
market acceptance of new products and to sustain marketability throughout
their life cycles, including advertising and promotion, contract sales,
consulting, publishing, medical education, public relations, interactive
multimedia, database marketing and marketing research services.
This press release contains statements which constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Those statements include statements regarding the intent,
belief or current expectations of the Company and its management team.
Prospective investors are cautioned that any such forward-looking are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the
forward-looking statements. Such risks and uncertainties include, among other
things, competitive, economic and regulatory factors in the health care
marketing and communications industry and the pharmaceutical and health care
industry, general economic
<PAGE>
conditions and other risks and uncertainties that may be detailed, from
time-to-time, in Healthworld's reports filed with the Securities and Exchange
Commission.
CONTACT: Steven Girgenti
Chief Executive Officer
Healthworld Corporation
(212) 625-4216
or
Stuart Diamond
Chief Financial Officer
Healthworld Corporation
(212) 625-4249
