<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): April 12, 1999
SKYNET HOLDINGS, INC.
---------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-25229 65-0861800
- --------------------- ------------------------ ------------------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation)
</TABLE>
343 South Glasgow Avenue
Inglewood, CA 90301
---------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (310) 642-7776
--------------
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
Acquisition of Freight on Board International Limited
- -----------------------------------------------------
Background. On April 12, 1999, SkyNet Holdings, Inc. (the "Company")
-----------
completed the first of a scheduled two-tiered acquisition of Freight on Board
International Limited ("FOB"), a corporation organized under the laws of the
United Kingdom. FOB is headquartered in Heathrow, England and maintains branch
offices in the financial district of London, England and New York City, New
York. Since 1981, FOB has provided same-day and overnight express delivery
services throughout the United Kingdom principally to the financial, media and
advertising industries. FOB also provides international express courier,
freight forwarding and specialized mailing services. The Company's New York
based subsidiary forwards packages originated in England to destinations
throughout the United States, South America and Canada on behalf of FOB and
other smaller UK based courier companies. FOB derives substantially all of its
revenues in British Pound Sterling from its UK customer base. During its last
completed fiscal year, FOB realized revenues of approximately US $10 million and
employed approximately 100 persons.
Acquisition Agreement. The acquisition of FOB was completed pursuant
----------------------
to the terms of a Share Purchase Agreement dated April 12, 1999 (the
"Agreement"). At the initial closing (the "Closing"), the Company purchased 51%
of the issued and outstanding shares of capital stock of FOB for a purchase
price consisting of (i) cash in the amount of Pounds Sterling 411,840
(approximately $680,000); (ii) 31,119 shares of the Company's restricted common
stock ("Common Stock"); and (iii) a one (1) year cash earn-out payment in the
amount of up to Pounds Sterling 88,195 (approximately $144,000) based on
quarterly revenues of FOB for the one year period following the Closing (the
"Earn-out").
The remaining 49% of the capital stock of FOB is owned by Mr. John
Clark and is scheduled to be acquired during the third or fourth quarter of
1999. This will occur by virtue of reciprocal put and call features within the
Agreement which permits Mr. Clark to "put" his shares to the Company commencing
July 2, 1999 and terminating July 31, 1999; and the Company to "call" such
shares from Mr. Clark commencing August 1, 1999 and terminating September 29,
1999. The purchase price for the remaining 49% consists of (i) cash in the
amount of Pounds Sterling 338,160 (approximately $550,000); (ii) 83,067 shares
of restricted Common Stock; and (iii) a one year cash earn-out payment in the
amount of up to Pounds Sterling 161,805 (approximately $265,000) calculated and
payable on terms similar to those described above with respect to the Earn-out.
The Acquisition Agreement also contains (i) restrictive covenants
which prohibit the former shareholders of FOB from competing directly or
indirectly with FOB for a period of one year following the Closing; and (ii)
confidentiality provisions which prohibit the former shareholders of FOB from
disclosing any trade secrets or confidential information regarding FOB to any
person after the Closing.
2
<PAGE>
In order to secure the representations, warranties, agreements and
covenants of the principal shareholders of FOB (collectively, the "Principal FOB
Shareholders") under the Agreement, the shares of Common Stock issued in
connection with the acquisition shall be retained and held in escrow for a one
year period following Closing. In order to secure the Company's obligation to
purchase the remaining 49%, the Company has placed Pounds Sterling 338,160
(approximately $550,000) into escrow.
The source of the funds utilized to complete the acquisition of FOB
consisted of net proceeds form the Company's recently completed private
placement of its equity securities.
In connection with the acquisition, the Company entered into (i) a
Registration Rights Agreement; (ii) a Service Agreement with Mr. Clark; and
(iii) a Tax Covenant Agreement with the Principal FOB Shareholders.
Registration Rights Agreement. Under a Registration Rights
------------------------------
Agreement, the Company agreed to include the shares of Common Stock issued in
connection with the acquisition in any registration statement filed by the
Company after September 30, 1999 with respect to an offering of Common Stock for
the Company's own account (except registrations on Forms S-8, S-3 or similar of
successor forms). Except as set forth in the Registration Rights Agreement,
the shares of Common Stock issued in connection with the acquisition cannot be
offered for sale, sold or otherwise transferred without the consent of the
Company for the two year period following the Closing.
Service Agreement. At Closing, Mr. Clark entered into a Service
-----------------
Agreement with the Company and Sky International Limited, the Company's United
Kingdom based subsidiary ("SIL"), to serve as managing director of SIL and FOB
for a term of three years. The Service Agreement provides for annual base
compensation of Pounds Sterling 150,000 (approximately $240,000), subject to
annual review by the Board of Directors of the Company, and for Mr. Clark to
participate in the Company's 1998 Stock Option Plan. In this connection, the
Company agreed to make an initial grant of options to purchase 35,000 shares of
Common Stock which vest ratably over the three year period commencing on the
Closing. Any additional options shall be issued at the discretion of the Board
of Directors of the Company. The Service Agreement also contains standard
confidentiality and noncompete clauses which preclude Mr. Clark from competing
directly or indirectly with the Company, SIL or FOB, soliciting any customer of
the Company, SIL or FOB or soliciting any employee of the Company, SIL or FOB
during the term of the Service Agreement and for a one year period thereafter.
Tax Covenant Agreement. At Closing, the Company entered into a Tax
-----------------------
Covenant Agreement with the Principal FOB Shareholders. The Tax Covenant
Agreement provides for the Principal FOB Shareholders to pay to the Company an
amount equal to any tax liability incurred by FOB or any of its subsidiaries as
a direct or indirect consequence of any event occurring on or before the Closing
or in respect of any income, profits or gains which were earned, accrued or
received on or before the Closing. Notwithstanding the foregoing, the Principal
FOB Shareholders are not responsible for any tax liability to the extent that a
reserve in respect of such liability has been provided for by FOB, that are
result of any change in the tax rate applicable to
3
<PAGE>
FOB or incurred as a result of the failure to provide any notice or election to
any governmental authority after the Closing. The maximum amount payable under
the Tax Covenant Agreement is approximately Pounds Sterling 1.5 million
(approximately $2.5 million).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Acquired Business
-----------------------------------------
It is impracticable at the time of the filing of this Current Report
to provide the historical financial information for FOB required by Regulation
S-X. Accordingly, the Company will file the required historical financial
statements under cover of an Amendment to this Current Report on Form 8-K as
soon as practicable, but in any event, not later than 60 days after the date on
which this Current Report must be filed with the Commission.
(b) Pro Forma Financial Statements of Businesses
--------------------------------------------
It is impracticable at the time of the filing of this Current Report
to provide the pro forma financial information for FOB required by Regulation S-
X. Accordingly, the Company will file the required pro forma financial
statements under cover of an Amendment to this Current Report on Form 8-K as
soon as practicable, but in any event, not later than 60 days after the date on
which this Current Report must be filed with the Commission.
(c) Exhibits
--------
2.3 Agreement for the Sale and Purchase of the entire issued share capital
of Freight on Board International Limited dated April 12, 1999 by and
among SkyNet Holdings, Inc., Mr. J.W.M. Clark and the remaining
shareholders of Freight on Board International Limited.
10.13 Registration Rights Agreement dated April 12, 1999, by and among
SkyNet Holdings, Inc., J.W.M. Clark and certain other shareholders of
Freight on Board International, Limited.
10.14 Tax Covenant Agreement dated April 12, 1999, by and among SkyNet
Holdings, Inc. and J.W.M. Clark, D.V. Amos and C.S. Brooker, the
principal shareholders of Fright on Board International Limited.
10.15 Service Agreement dated April 12, 1999, by and between SkyNet
Holdings, Inc., Sky International Limited and J.W. M. Clark.
4
<PAGE>
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.
Dated: April 23, 1999 SKYNET HOLDINGS, INC.
BY: /s/Vjekoslav Nizic
--------------------
Vjekoslav Nizic
Chief Executive Officer
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
(Referenced to
Item 601 of
Reg. S-K)
<S> <C>
2.3 Agreement for the Sale and Purchase of the entire
issued share capital of Freight on Board International
Limited dated April 12, 1999 by and among SkyNet
Holdings, Inc., Mr. J.W.M. Clark and the remaining
shareholders of Freight on Board International Limited.
10.13 Registration Rights Agreement dated April 12, 1999, by
and among SkyNet Holdings, Inc., J.W.M. Clark and
certain other shareholders of Freight on Board
International, Limited.
10.14 Tax Covenant Agreement dated April 12, 1999, by and
among SkyNet Holdings, Inc. and J.W.M. Clark, D.V.
Amos and C.S. Brooker, the principal shareholders of
Fright on Board International Limited.
10.15 Service Agreement dated April 12, 1999, by and between
SkyNet Holdings, Inc., Sky International Limited and
J.W. M. Clark.
</TABLE>
6
<PAGE>
EXHIBIT 2.3
DATED 12th April 1999
(1) MR. J. W. M. CLARK AND OTHERS
and
(2) SKYNET HOLDINGS INC.
--------------------------------------
AGREEMENT
for the sale and purchase of the
entire issued share capital of
Freight on Board International Limited
--------------------------------------
Beaufort House
Chertsey Street
Guildford
Surrey GU1 4HA
Tel: 01483 55 55 55
Fax: 01483 56 73 30
JDR/9901062
<PAGE>
<TABLE>
<CAPTION>
INDEX
Page
----
<S> <C>
1. INTERPRETATION................................................ 2
2. SALE AND PURCHASE............................................. 9
3. INITIAL CONSIDERATION AND ESCROW.............................. 9
4. COMPLETION................................................... 11
5. THE OPTIONS.................................................. 16
6. WARRANTIES................................................... 19
7. CONSIDERATION SHARES......................................... 22
8. GLOBAL NETWORK ASSOCIATES LIMITED............................ 24
9. PROHIBITION ON TRADING IN SKYNET STOCK....................... 25
10. RESTRICTIVE COVENANTS........................................ 25
11. GENERAL...................................................... 28
12. NOTICES...................................................... 30
SCHEDULE 1......................................................... 33
THE SELLERS........................................................ 33
SCHEDULE 2......................................................... 35
DETAILS OF THE COMPANY AND THE SUBSIDIARY....................... 35
SCHEDULE 3......................................................... 37
WARRANTIES BY THE WARRANTORS.................................... 37
SCHEDULE 4......................................................... 88
THE PROPERTY.................................................... 88
SCHEDULE 5......................................................... 89
PENSIONS PROVISIONS............................................. 89
SCHEDULE 6......................................................... 90
INTELLECTUAL PROPERTY........................................... 90
</TABLE>
1
<PAGE>
THIS AGREEMENT is made the 12/th/ April 1999
BETWEEN:
(1) THE PERSONS whose names and addresses are set out in Schedule 1 ("the
Sellers")
(2) SKYNET HOLDINGS, INC. whose principal place of business is at 344 South
Glasgow Avenue, Inglewood, California 90301, U.S.A. ("the Buyer").
IT IS AGREED:
1. INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires:
"ASSOCIATE" means any person, firm or company which is a
connected person (as defined in Section 839 ICTA)
of a Seller
"BUSINESS DAY" means a day on which clearing banks are open for
business in both London and New York City
"THE BUYER'S GROUP" means the Buyer and any subsidiary or holding
company of the Buyer, and any subsidiary of such
holding company
"THE BUYER'S SOLICITORS" means Clyde & Co of Beaufort House, Chertsey
Street, Guildford GU1 4HA
2
<PAGE>
"CA 1985" means the Companies Act 1985
"CALL OPTION" means the option granted by clause 5.2
"CLAIM" means any claim by the Buyer against the
Warrantors under clause 6 or Schedule 3 or
under the Tax Covenant.
"THE COMPANY" means Freight on Board International Limited,
brief details of which are set out in Schedule
2 Part 1
"COMPLETION" means completion of the sale and purchase of
Shares in accordance with clause 2 or clause 5
"THE CONSIDERATION" means the Initial Consideration and the Option
Consideration
"THE CONSIDERATION SHARES" means 114186 shares of Common Stock of par
value $0.0001 each in the capital of the Buyer
to be allotted and issued pursuant to clause 3
or clause 5.
"DIRECTORS" means the directors of the Company or (where
appropriate) of a Subsidiary immediately before
the execution of this Agreement
"THE DISCLOSURE LETTER" means the letter of today's date from the
Sellers' Solicitors to the Buyer's Solicitors
"THE EMPLOYEES" means the employees of the Company and of the
Subsidiaries listed in the Disclosure Letter
"ENVIRONMENTAL LAWS" means all statutory, international, treaty,
conventions and local laws, regulations, codes
of practice, circulars and guidance notes
relating to pollution or human health or the
environment (including ambient air, surface
water, ground water, tidal water and the
foreshore between high and low tide, land
surface or sub-surface strata), including,
without limitation, laws and regulations
relating to Environmental Matters or otherwise
relating to the manufacture, possessing,
distribution, use, processing, treatment,
storage, disposal, transport or handling of
Hazardous Materials
"ENVIRONMENTAL LIABILITY" means (without limitation) any written or oral
notice given by any person or entity alleging
liability or potential liability or any
potential or actual liability for
3
<PAGE>
investigatory costs, clean-up costs, legal fees
and disbursements, administrative costs, natural
resource damages, damages for loss of existence
value, property damage, personal injuries and any
other claims, demands or penalties arising out of
or based on or resulting from either the presence
or release into the environment of any Hazardous
Materials at any location or circumstances forming
the basis of any violation or alleged violation of
Environmental Laws
"ENVIRONMENTAL MATTERS" means (without limitation) waste, land including
contaminated land, aquatic environment,
discharges, emissions, noise and vibration, heat,
light and radiation, dangerous, hazardous or toxic
substances and materials, nuisance and health and
safety
"ESCROW ACCOUNT" means the bank account opened in accordance with
clause 5.9.
"ESCROW AGREEMENT" means the agreement in the agreed terms relating
to the Escrow Consideration referred to in Clause
3.2
"ESCROW LETTER" means the letter in the agreed terms referred to
in clause 5.9.
"EVENT" means (without limitation) the death of any
person, any change in the residence of any person
for the purposes of Taxation, any payment,
transaction, action, omission or occurrence of
whatever nature and a failure and references to an
event occurring on or before Completion shall
include the combined result of two or more events
the first of which shall have taken place (or
shall be deemed to have taken place) or the
commencement of which shall have occurred (or
shall be deemed to have occurred) on or before
Completion, and shall also include Completion
"FA" means Finance Act
"GROUP COMPANIES" means the Company and the Subsidiary
"HAZARDOUS MATERIALS" means chemicals, pollutants, contaminants, waste,
petroleum, petroleum hydro-carbon products,
explosives, radioactive substances, dangerous,
hazardous or toxic substances and materials
including the substances prescribed in Schedules
4, 5 and 6 of the Environmental Protection
(Prescribed Processes
4
<PAGE>
and Substances) Regulations 1991 or any statutory
modification thereof
"ICTA" means the Income and Corporation Taxes Act 1988
"INITIAL COMPLETION" means Completion of the sale and purchase of the
Initial Shares in accordance with clause 3.
"INITIAL CONSIDERATION" means the consideration set out in Clause 3.
"INTELLECTUAL PROPERTY" means patents, trade marks, service marks,
designs, applications and rights to apply for any
of the foregoing, copyright (including all
copyright in any drawings, plans, specifications,
manuals, designs, and computer software)
inventions, trade secrets, financial information,
know how and other confidential information, and
business names and any similar rights, whether
registerable or registered or not, in any part of
the world, in each case owned by or used by a
Group Company for the purpose of its business,
including (without limitation) the Intellectual
Property details of which are set out in Schedule
6.
INITIAL SHARES" means those of the Shares which are held by
Sellers other than Mr J. W. M. Clark.
"THE LAST ACCOUNTS" means the audited balance sheet of each Group
Company (or in the case of the Subsidiary the
Financial Statement) as at the Last Accounts
Date, the audited profit and loss account of each
Group Company for the financial period ended on
the Last Accounts Date, and the audited
consolidated balance sheet as at such date and
the audited consolidated profit and loss account
for such period of the Company and the
Subsidiaries, and (in each case) the auditor's
and the directors' reports and notes thereon
"THE LAST ACCOUNTS DATE" means 31st October 1998
"LIABILITIES" means as at any relevant date, all actual or
contingent liabilities, whether liquidated,
quantified or unliquidated, known or not, arising
out of any event occurring before, or from
circumstances subsisting, at that date and
"liability" shall be construed accordingly
5
<PAGE>
"THE MANAGEMENT ACCOUNTS" means the unaudited profit and loss account of
the Company in respect of the period from 1st
November 1998 to 31/st/ January 1999
"THE OPTION CONSIDERATION" means the consideration set out in Clause 5.7
"THE OPTIONS" means the Call Option and the Put Option.
"THE OPTION SHARES" means the Shares held by Mr J. W. M. Clark as
set out in Column (2) of Schedule 1.
"THE PENSION SCHEME" means the pension scheme described in Schedule
5
"THE PLANNING ACTS" mean the Town and Country Planning Act 1990,
the Planning (Listed Buildings and Conservation
Areas) Act 1990, the Planning (Hazardous
Substances) Act 1990 and the Planning
(Consequential Provisions) Act 1990
"THE PROPERTY" means the leasehold land and buildings briefly
described in Schedule 4
"PUT OPTION" means the option granted by Clause 5.3.
"REGISTRATION RIGHTS means the agreement in the agreed terms between
AGREEMENT" the Buyer and those of the Seller who receive
consideration Shares.
"THE SELLERS' SOLICITORS" means Gordons of Winter Hill House, Marlow
Reach, Station Approach, Marlow, Bucks SL7 1NT
"THE SHARES" means the whole of the issued share capital of
the Company
"SSAP" OR "FRS" means either a Statement of Standard Accounting
Practice published by the Accounting Standards
Committee and adopted by the Institute of
Chartered Accountants in England and Wales or a
Financial Reporting Standard as issued by the
Accounting Standards Board
"THE STOCK EXCHANGE" means London Stock Exchange Limited
"THE SUBSIDIARY" means FOB Distribution Services Inc details of
which are set out in Schedule 2 Part 2
6
<PAGE>
"SUPPLEMENTAL AGREEMENT" means any deed or document to be Agreement
entered into pursuant to this Agreement
"TCGA" means the Taxation of Chargeable Gains Act 1992
"TAX COVENANT" means a deed relating to Taxation in the agreed
form
"TAXATION" means any and all forms of taxes, levies,
contributions, duties and charges (including any
relevant fine, penalty, surcharge or interest) in
all cases in the nature of tax or corresponding
to tax and all withholdings or deductions in
respect thereof; of whatever nature and whenever
imposed, (but excluding all forms of water,
business and local government rates) imposed or
levied by any tax authority acting as such
whether directly or primarily chargeable against,
recoverable from or attributable to the Company
or any other person
"TAXATION STATUTES" means statutes (and all regulations and
arrangements whatsoever made thereunder) whether
of the United Kingdom or elsewhere, and whether
enacted before or after the date of this
Agreement, providing for or imposing any Taxation
"TAXES ACT 1970" means the Income and Corporation Taxes Act 1970
"TRADE MARKS" means trade marks and service marks, registered
and unregistered, and applications to register
the same, and logos, devices and business names,
in each case owned and/or used by a Group Company
for the purpose of its business
"THE WARRANTIES" means the warranties, representations and
undertakings set out in Schedule 3.
"THE WARRANTORS" means Mr J. W. M. Clark, Mr D Amos and Mr C
Brooker
"1933 ACT" means the Securities Act, as amended of the
United States of America
"1934 ACT" means the Securities Exchange Act of 1934, as
amended of the United States of America
7
<PAGE>
1.2 The Schedules form part of this Agreement and take effect as if set out in
this Agreement and references to this Agreement include the Schedules.
1.3 References to a statute or statutory provision include all subordinate
legislation made pursuant to it, and include any statute, statutory
provision or subordinate legislation which, before, on or after the date of
this Agreement, amends, consolidates or replaces it and (so far as the
liability under such provisions may exit or can arise) include also any
statutory provision (as from time to time amended, consolidated or
replaced) which the provision referred to (or any part thereof) had
directly or indirectly replaced.
1.4 Words defined in CA 1985 have the same meaning when used in this Agreement.
1.5 Unless the context otherwise requires, references to the singular include
the plural and vice versa, references to any gender include each other
gender, and references to "person" include a natural person, a firm, a body
corporate, an unincorporated association, a business, a foundation, a
trust, and a partnership (in each case whether or not being a separate
legal personality).
1.6 Clause headings are for information only and shall not affect the
construction of this Agreement.
1.7 References to "in the agreed form" mean in the form agreed between the
Sellers and the Buyer and for the purpose of identification initialled by
the Sellers' Solicitors and the Buyer's Solicitors.
1.8 References to "including" or "include" or any derivative of either means
including without limiting the generality of any description preceding such
reference.
8
<PAGE>
2. SALE AND PURCHASE
2.1 Each of the Sellers shall sell with full title guarantee and the Buyer
shall purchase the Initial Shares and, if either of the Options shall be
duly exercised, the Option Shares in each case free from all claims, liens,
charges and encumbrances, and together with all benefits and rights
attaching to the Initial Shares, and the Option Shares including all
dividends declared, and distributions made or paid, on or after the date of
this Agreement.
2.2 Each of the Sellers hereby waives any pre-emption rights we may have in
relation to any of the Shares under the Articles of Association of the
Company or otherwise.
3. INITIAL CONSIDERATION AND ESCROW
3.1 The Initial Consideration shall consist of:-
(a) the sum of (Pounds)411,840 payable in cash on Completion to the
Sellers (except Mr J.W.M. Clark) in the sums set out against their
respective names in column (3) of Schedule 1.
(b) 31,119 Consideration Shares apportioned between the Sellers (except Mr
J.W.M. Clark) as is set against their names in Column (6 ) of Schedule
l and issued to the Seller at Completion.
(c) The sum of (Pounds)88,195 ("Earn Out Consideration") payable in
accordance with, and subject to the provisions of, Clause 3.3 and
apportioned between the Sellers (except Mr J.W.M. Clark) in the same
proportions as is set out against their respective names in column (5)
of Schedule 1.
9
<PAGE>
3.2 (a) At Completion, the Buyer shall deposit into escrow 31,119
Consideration Shares (being part of the Initial Consideration) (the
"Escrow Consideration"), which shall serve as collateral for the
obligations of the Warrantors pursuant to this Agreement.
(b) The deposit, maintenance and ultimate disposition of the Escrow
Consideration shall be governed by the terms of the Escrow Agreement.
3.3 (a) Within 14 days after the end of each of the four successive periods of
3 calendar months calculated from the date of Completion (each an
"Accounting Period"), the Buyer shall procure that the Company shall
certify to the parties the aggregate gross revenue earned by the
Company in the Accounting Period immediately expired, from those
persons who are customers of the Company at the date of Completion
("Existing Customers") or have become customers during that Accounting
Period on the introduction of the Seller ("New Customers").
(b) If the aggregate gross revenue certified in accordance with sub-clause
(a) shall be not less than (Pounds)1,250,000, then the Buyer shall pay
to the Sellers on account of the Earn Out Consideration the sum of
(Pounds)22,049.
(c) Within 14 days after the expiry of the fourth Accounting Period the
Buyer shall procure that the Company shall certify to the Sellers the
aggregate gross revenue earned by the Company during the four
Accounting Periods from Existing Customers and New Customers.
(d) If the aggregate gross revenue certified in accordance with sub-clause
3.3 (c) amounts to (Pounds)5,000,000 or more then the Buyers will pay
to the Seller the Earn Out Consideration, less any sums paid on
account under sub-clause 3.3 (b) : if the aggregate gross revenue so
certified is less than (Pounds)5,000,000, then the Earn Out
10
<PAGE>
Consideration shall be reduced to that proportion of (Pounds)88,195
which is equal to the proportion which the aggregate gross revenue
bears to (Pounds)5,000,000
(e) All sums payable by the Sellers under this sub-clause 3.3 shall be
paid 7 days after the issue of the Company's certificates as to the
amount of its aggregate gross revenue.
4. COMPLETION
4.1 Completion of the sale and purchase of the Initial Shares shall take place
at the offices of the Buyer's Solicitors immediately after the signing of
this Agreement when the matters set out in this clause shall be carried
out.
4.2 The Sellers will deliver to the Buyer's Solicitors:-
(a) duly executed transfers of the Initial Shares in favour of the Buyer
or as it directs together with any power of attorney under which such
transfers have been executed;
(b) the certificates for the Initial Shares;
(c) duly executed transfers in favour of the Buyer or its nominee of all
shares in Group Companies (other than the Company) not registered in
the name of a Group Company, together with the relevant share
certificates;
(d) the Tax Covenant duly executed by the Warrantors and each Group
Company;
(e) the resignation from office of each director and the Secretary of each
Group Company (except those whom the Buyer has notified to the Sellers
in writing
11
<PAGE>
prior to the date of this Agreement that it wishes to continue in
office) with a written acknowledgement under seal from each of them,
in such form as the Buyer requires, that he has no outstanding claim
against the Company or any Group Company;
(f) the resignation of the auditors of each Group Company confirming that
they have no outstanding claims of any kind against any Group Company
and containing a statement complying with Section 394(1) CA 1985; and
(g) a service agreement in the agreed form between Sky International
Limited and Mr J. W. M. Clark duly executed by him.
(h) evidence of the transfer to Mr. John Clark and others of the Company's
shareholding in Global Network Associates Limited
(i) evidence of the resignation of Mr C Brooker as a director of Global
Network Associates Limited.
4.3 The Sellers will procure delivery of the following to the Buyer or as
it may direct:-
(a) the certificate of incorporation of each Group Company;
(b) the minute book of each Group Company duly made up to Completion;
(c) the register of members and other statutory registers and books of
each Group Company duly made up to Completion;
(d) the common seal of each Group Company;
(e) all unissued share certificates of each Group Company;
12
<PAGE>
(f) the title deeds relating to the Property (if required);
(g) all books of accounts and documents of record and all other documents
in the possession or control of the Sellers in connection with each
Group Company, all complete and up to date, together with bank
statements of all bank accounts of each Group Company as at a date not
more than two days prior to Completion and bank reconciliation
statements in respect of each such account made up to Completion (if
required);
(h) all the current cheque books, paying books and unused cheques of each
Group Company; and
(i) releases in the form required by the Buyer of all mortgages or charges
affecting each Group Company, except as agreed in writing before
execution of this Agreement.
4.4 (Except as regards Global Network Associates Limited):-
(a) Each of the Sellers will, and will procure that his Associates will,
repay monies owing by any of them to each Group Company and will
provide such evidence of payment on Completion as the Buyer shall
require
(b) The Buyer shall procure that the loans of which details are referred
to in paragraph 6.6(a)(ii) of the Replies to Enquiries shall be repaid
by the Company
4.5 The Sellers will procure board meetings of the Company and the Subsidiary
to be held at which the Directors shall resolve to:-
13
<PAGE>
(a) register the transfers referred to in clauses 4.2(a) and 4.2(c)
(subject to stamping);
(b) appoint such persons as the Buyer shall nominate as directors and/or
secretary;
(c) accept the resignations referred to in clause 4.2(e);
(d) accept the resignation referred to in clause 4.2(f) and appoint the
Buyer's Accountants as auditors of each Group Company;
(e) approve and authorise for execution service agreements in the agreed
form relating to the individuals referred to in clause 4.2(g); and
(f) revoke all current instructions to bankers and replace them with new
instructions stipulated by the Buyer (if required).
4.6 Upon completion of the matters referred to in clauses 4.1 to 4.5 the Buyer
will:-
(a) deliver the part of the Initial Consideration payable in cash on
Completion by means of banker's draft to the Sellers' Solicitors
(whose receipt will be a sufficient discharge therefor) and allot to
the Sellers those of the Consideration Shares falling to be allotted
on Completion;
(b) pay into the Escrow Account the sum of (Pounds)338,160 (that is, the
element of the Option Consideration payable under clause 5.7(a);
14
<PAGE>
(c) deliver to the Sellers a counterpart of the Tax Covenant duly executed
by the Buyer; and
(d) deliver to the persons referred to in clause 4.2(g) counterparts of
the service agreement duly executed by the Company.
(e) deliver the Registration Rights Agreement duly executed.
4.7 The Buyer will not be obliged to complete the purchase of any of the
Initial Shares unless each of the Sellers complies with all his obligations
under sub-clauses 4.2 to 4.5.
4.8 If any Sellers fail to comply with any of his obligations under any
such sub-clauses, the Buyer may:
(a) defer Completion to a time, place and date (not more than 7 days
later) notified to the Seller (so that the provisions of this clause 4
shall apply to Completion so deferred); or
(b) proceed to Completion as far as practicable (without prejudice to its
rights under this Agreement); or
(c) treat this Agreement as terminated for breach of condition (but
without prejudice to the rights and obligations of the Buyer which
have accrued prior to termination).
4.9 Each of the Sellers undertakes (for himself and any nominee) that so long
as he remains the registered holder of any of the Initial Shares he will:-
15
<PAGE>
(a) not represent himself as the beneficial owner of any of the Initial
Shares;
(b) exercise all powers, rights and privileges vested in the registered
holder of the Initial Shares only in accordance with the written
directions of the Buyer; and
(c) hold the Initial Shares and any dividends or other distributions of
profits or assets in respect thereof on trust for the Buyer.
4.10 Following Completion, the Buyer shall use its reasonable endeavours to
procure release of the Sellers from all liability arising after Completion
under the guarantees given by them on behalf of the Group Companies, of
which details are set out in paragraph 7.7(e) of the Disclosure Letter.
5. THE OPTIONS
5.1 In this clause "the Seller" means Mr J. W. M. Clark.
5.2 (a) The Buyer grants to the Seller the right to require the Buyer to
purchase the Option Shares for the consideration stated in sub-clause
5.7 and otherwise upon and subject to the terms and conditions of
this Agreement.
(b) The Option granted by this sub-clause shall be exercisable at any
time after 2/nd/ July 1999 and before 31/st/ July 1999.
16
<PAGE>
5.3 (a) The Seller hereby grants to the Buyer the right to require the Seller
to sell to the Purchaser the Option Shares held by the Seller for the
consideration stated in sub-clause 5.7 (less (Pounds)1,000) and
otherwise upon the terms and subject to the conditions of this
Agreement.
(b) The Option granted by this sub-clause shall be exercisable at any time
after within 60 days after 31st July 1999.
5.4 The Options shall be exercisable in respect of all, and not some only, of
the Option Shares by notice in writing from the Buyer to the Seller or vice
versa.
5.5 Completion of the sale and purchase of the Option Shares shall take place
14 days after the date of service of the notice of exercise of an Option
(or on the next succeeding Business Day if Completion would otherwise fall
on a day which is not a business day): and in this clause, "Completion"
means completion of the sale and purchase of the Option Shares.
5.6 The provisions of Clause 4 shall apply to Completion of the sale and
purchase of the Option Shares, as if in that clause "Option Shares" were
substituted for "Initial Shares".
5.7 The Option Consideration shall consist of :-
(a) the sum of (Pounds)338,160 payable in cash on Completion to the
Seller.
(b) 83067 Consideration Shares issued to the Seller on Completion.
(c) The sum of (Pounds)161,805 ("Option Earn Out Consideration") payable
in accordance with, and subject to the provisions of Clause 5.8.
17
<PAGE>
5.8 (a) Within 14 days after the end of each of the four successive periods of
3
calendar months calculated from the date of Completion of the sale and
purchase of the Initial Shares (each an "Accounting Period"), the
Buyer shall procure that the Company shall certify to the parties the
aggregate gross revenue earned by the Company in the Accounting Period
immediately expired, from those persons who are customers of the
Company at the date of Completion ("Existing Customers") or have
become customers during that Accounting Period on the introduction of
the Seller ("New Customers").
(b) If the aggregate gross revenue certified in accordance with sub-clause
(a) shall be not less than (Pounds)1,250,000, the Buyer shall pay to
the Seller on account of the Option Earn Out Consideration the sum of
(Pounds)40,451.
(c) Within 14 days after the expiry of the fourth Accounting Period the
Buyer shall procure that the Company shall certify to the Seller the
aggregate gross revenue earned by the Company as defined in clause 5.8
(a) during the four Accounting Periods from Existing Customers and New
Customers.
(d) If Completion shall take place after the expiry of the first
Accounting Period, the Buyer shall pay on Completion the sum payable
under sub-clause 5.8(b) in respect of that Accounting Period
(e) If the aggregate gross revenue certified in accordance with sub-clause
5.8 (c) amounts to (Pounds)5,000,000 or more then the Buyer will pay
to the Seller the Option Earn Out Consideration, less any sums paid on
account under sub-clause 5.8(b): if the aggregate gross revenue so
certified is less than (Pounds)5,000,000, then the Option Earn Out
Consideration shall be reduced to that proportion of (Pounds)161,805
as is equal to the proportion which the aggregate gross revenue bears
to (Pounds)5,000,000.
18
<PAGE>
(f) All sums payable by the Seller under this sub-clause 5.8 shall be paid
7 days after the issue of the Company's certificates as to the amount
of its aggregate gross revenue.
5.9 Upon Completion of the sale and purchase of the Initial Shares the Buyer
will pay into a deposit account at the National Westminster Bank plc,
(City) Branch in the joint names of the Sellers' solicitors and the Buyer's
solicitors the sum of (Pounds)338,160 to be held by them in accordance with
the terms of the Escrow Letter.
5.10 The Consideration Shares to be issued to the Seller in accordance with sub-
clause 5.7(b) shall be deposited into escrow as one fund with the Escrow
Consideration referred to in clause 3.2(a), and held upon the terms and
provisions of the Escrow Agreement.
6. WARRANTIES
6.1 The Warrantors, jointly and severally, to the extent and subject as set out
in this clause 6, warrant, represent and undertake to the Buyer that the
Warranties are true and accurate in all respects.
6.2 Each of the Warranties is given subject to the matters fully and fairly
disclosed in the Disclosure Letter.
6.3 Each Warranty in respect of "the Company" shall be deemed to be a Warranty
given in respect of the Company and each other Group Company and (unless
the context or
19
<PAGE>
subject matter otherwise requires) the expression "the Company" in this
clause and Schedule 3 shall be construed accordingly.
6.4 Each of the Warranties is a separate and independent Warranty and, except
where expressly stated, no other Warranty or other clause in this Agreement
restricts or limits the extent or application of any other Warranty or
other clause.
6.5 The Buyer's rights and remedies in respect of any breach of the Warranties
or under any other provision in this Agreement shall not be regarded as
modified or varied by Completion, by any investigation made by or on behalf
of the Buyer into the affairs of the Company and any Group Company, by the
Buyer's rescinding or failing to rescind this Agreement, or by any failure
to exercise or delay in exercising any right or remedy available to the
Buyer.
6.6 The Warrantors undertake that, if the Buyer makes any claim under this
Agreement, they shall not make any claim against the Company, or any other
Group Company, or any director, officer or employee of any Group Company
who is continuing in office or employment in a Group Company immediately
after Completion, notwithstanding that the Warrantors may have placed
reliance on any of them before entering into this Agreement.
6.7 The Warrantors undertake to the Buyer (for itself and as trustee for each
Group Company) to indemnify the Buyer and each Group Company against any
diminution in the value of the assets, or any increase in any liability of,
and/or any payment necessarily made or required to be made by the Buyer or
any Group Company, as a result of or in connection with, any breach of any
of the Warranties, or required to put such Group Company in the position in
which it would have been had there being no such breach of the Warranties,
and against all costs and expenses incurred in connection therewith. This
indemnity shall be without prejudice to any other rights and remedies of
the Buyer in relation to the breach.
20
<PAGE>
6.8 The Warrantors warrant and represent, in relation to any warranty which
refers to the knowledge, information, belief and/or awareness of the Seller
or any similar expression, that they have made full, due and careful
enquiry into the subject matter of that warranty.
6.9 The Warrantors undertake with the Buyer immediately to disclose in writing
to the Buyer any matter or thing which may arise or become known to them on
or after the date of this Agreement and before Completion which is
inconsistent with any of the Warranties or any of the contents of the
Disclosure Letter, or which might be material to be known by a purchaser
for value of the Shares.
6.10 The Buyer acknowledges that it has not been induced to enter into this
Agreement by any representation or warranty other than the Warranties.
6.11 The provisions of Schedule 7 shall apply to the Warrantors' liability in
respect of the Warranties.
6.12 (a) The Buyer shall be entitled to set off against any sum due from it to
any of the Sellers in respect of the Earn Out Consideration, the
amount of any Claim to which this sub-clause applies.
(b) This sub-clause applies to any Claim if:-
(i) notice of the Claim has been given in accordance with paragraph
(1) of Schedule 7 and
(ii) proceedings have been commenced in respect of the Claim; or
(iii) Queen's Counsel has advised the Buyer that the Buyer has an
arguable claim in respect of the Claim.
21
<PAGE>
(c) Any sum set-off under the provisions of this sub-clause may be held by
the Buyer until such time as the amount of the Warrantors' liability
shall have been agreed between the parties, or judgment in respect of
the Claim has been given, and shall then be retained by the Buyer in
or towards satisfaction of the amount for which the Warrantors are
liable, or (as the case may be) released in whole or in part to the
Sellers.
7. CONSIDERATION SHARES
7.1 The Consideration Shares are not being registered under the 1933 Act on the
basis of the statutory exemption provided by Section 4(2) thereof, relating
to transactions not involving a public offering, and Buyer's reliance on
the statutory exemption thereof is based in part on the representations of
Sellers contained in this Agreement.
7.2 The Sellers represent:
(a) that they have, or as of the Completion, will have reviewed such
reports and registration statements of the Buyer as have been filed
with the Securities and Exchange Commission and the Confidential
Private Placement Memorandum dated 8th April 1999 as supplemented (the
"Securities Reports") and that they have such knowledge and experience
in financial and business matters that they are capable of utilising
the information set forth therein concerning the Buyer to evaluate the
risk of investing in the Buyer;
(b) that they have been advised that the Consideration Shares to be issued
by the Buyer will not be registered under the 1933 Act, except as
otherwise provided in this Agreement or the Registration Rights
Agreement, and accordingly, the Seller
22
<PAGE>
may only be able to sell or otherwise dispose of such shares in
accordance with Rule 144 or the Registration Rights Agreement, or
except as otherwise provided in this Agreement;
(c) that the Consideration Shares will be held for investment and not with
a view to, or for resale in connection with the public offering or
distribution thereof;
(d) that the Consideration Shares so issued will not be sold without
registration thereof under the 1933 Act (unless such shares are
subject to registration or in the opinion of counsel to the Buyer an
exemption from such registration is available), or in violation of any
law; and
(e) that the certificate or certificates representing the Consideration
Shares will be imprinted with a legend in form and substance
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION, UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON
AN OPINION LETTER OF COUNSEL FOR THE COMPANY OR A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION."
And the Buyer is hereby authorised to notify its transfer agent of the
status of the Consideration Shares and to take such other action
including, but not limited to, the placing of a "stop-transfer" order
on the transfer agent's books and records to assure compliance with
the 1933 Act.
23
<PAGE>
(f) The Sellers have, either upon the date hereof or before Completion
hereunder been afforded the opportunity to review and are familiar
with the Securities Reports and have based their decision to invest
solely on the information contained therein, and the information
contained within this Agreement and the associated exhibits and
schedules, and have not been furnished with any other literature,
prospectus or other information except as included in the Reports or
this Agreement; and
(g) The Sellers understand that no federal or state agency has approved or
disapproved the Consideration Shares, passed upon or endorsed the
merits of the transfer of such shares set forth within this Agreement,
or made any finding or determination as to the fairness of such shares
for investment.
8. GLOBAL NETWORK ASSOCIATES LIMITED
8.1 Mr J. W. M. Clark hereby undertakes that he will at all times after the
date of this agreement indemnify each Group Company and the Buyer against
all and any costs claims charges or expenses which any of them may incur
directly or indirectly from or in consequence of:
(a) the Company's holding or having held shares in the capital of Global
Network Associates Limited; or
(b) the disposal of the Company's shareholding in Global Network
Associates Limited
8.2 Mr J. W. M. Clark's liability under this clause shall not exceed the limit
set out in paragraph (3)(a) of Schedule 7.
24
<PAGE>
9. PROHIBITION ON TRADING IN SKYNET STOCK
9.1 The Sellers acknowledge that the United States Securities Laws prohibit
any person who has received material non-public information concerning the
matters which are the subject matter of this Agreement from purchasing or
selling the securities of the Buyer, or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell securities of
the Buyer. Accordingly, the Sellers agree that they will not purchase or
sell any Securities of the Buyer, or communicate such information to any
other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell securities of the Buyer,
until no earlier than 72 hours following:
(a) The termination of a current report on Form 8-K to the Security and
Exchange Commission announcing Completion pursuant to this Agreement
provided that the Form 8-K is timely filed; or
(b) the publication of a press release announcing Completion of this
Agreement
10. RESTRICTIVE COVENANTS
10.1 In this clause 10
(a) "the Business" means international freight forwarding and
international courier services; and
25
<PAGE>
(b) "the Prohibited Area" means (i) England, Wales, Scotland, Northern
Ireland, Eire, Channel Isles and the Isle of Man, and (ii) any other
country in the world in which any Group Company has supplied goods or
services within the two years preceding Completion.
10.2 In further consideration of the sale and purchase effected by this
Agreement and in order to protect the goodwill of each Group Company each
of the Sellers hereby covenants and undertakes with the Buyer as follows:
(a) he shall not at any time hereafter divulge or communicate to any
person for his own or any other person's benefit or to the detriment
or possible detriment of any Group Company or the Buyer, any of the
trade secrets or other confidential information of any Group Company
or the Business or of any client customer or supplier, which has or
may come to his knowledge;
(b) if he has obtained trade secrets or other confidential information
belonging to any third party under an agreement which contained
restrictions on disclosure he will not at any time infringe such
restrictions;
(c) he will not either directly, or indirectly as a director, employee,
partner or shareholder, within 1 years after Completion carry on, or
be engaged, concerned or interested in carrying on the Business
within the Prohibited Area in competition with any Group Company;
(d) in connection with any business competing or likely to compete with
the Business, he will not use any business name, trade mark or logo
used by any Group Company within the two years preceding Completion,
or any confusingly similar business name, trade mark or logo;
26
<PAGE>
(e) he will not within 1 years after Completion, provide any advice,
technical or otherwise, to any person carrying on business in the
Prohibited Area in competition with or likely to be in competition
with any Group Company;
(f) he will not within 1 years after Completion solicit the custom of,
interfere with, or endeavour to entice away from the Company, any
person who at any time during the two years immediately preceding
Completion was a customer of a Group Company in relation to goods
sold or services supplied to that person by that Company;
(g) he will not within 1 years after Completion employ, seek to employ,
interfere with, or endeavour to entice away from, the Company any
person employed by any Group Company at any time during the two years
immediately preceding Completion; and
(h) he will not do any of the above-mentioned things, directly or
indirectly, with or for or on behalf of any other person.
10.3 Each of the Sellers shall procure that each of his Associates shall be
bound by and observe the provisions of this clause as if they were parties
covenanting with the Buyer.
10.4 Nothing in this clause shall preclude a Seller from being the owner for
investment purposes only of not more than 2% of the equity share capital
of any company listed on The Stock Exchange.
10.5 The parties confirm that they consider the restrictions contained in this
clause 10 to be reasonable in all respects, but if any such restriction is
held to be invalid or ineffective,
27
<PAGE>
but would not be so held if some part of it were deleted, or some
modification were made to its terms, the parties agree that such
restriction shall apply with such deletion or modification as may be
necessary to make it valid and effective.
10.6 The provisions of sub-clauses 10.2(a) to 10.2(h) are separate and
severable undertakings and shall be enforceable accordingly.
11. GENERAL
11.1 This Agreement shall enure for the benefit of the successors in title and
assigns of each party: but no party may transfer its obligations
hereunder. The Buyer may assign all or any of its rights under this
Agreement or any Supplemental Agreement, to any person who is for the time
being the holder of any Shares in the capital of the Company.
11.2 Any assignment by the Buyer of its rights under this Agreement may be
partial; so that the benefit of the Warranties or the Tax Covenant or any
other indemnities and guarantees in this Agreement or any Supplemental
Agreement may enure to the benefit of the holders of the Shares in
proportion to their respective interests.
11.3 The Sellers shall secure an undertaking of the Company's auditors to
provide SkyNet as may reasonably be requested from time to time following
Completion such consents and other assistance as may be required to permit
SkyNet to comply with its requirements under the 1933 Act or the 1934 Act,
including, without limitation, consents to the inclusion of the Financial
Statements and their report thereon in periodic reports, registration
statements, or other filings of SkyNet under the 1933 Act or the 1934 Act
from time to time.
28
<PAGE>
11.4 The Sellers undertake that they and any necessary third party shall
execute and perform all such further acts, deeds or assurances as may be
required to vest the Shares in the Buyer and otherwise to fulfil the
provisions of this Agreement.
11.5 Insofar as any provisions of this Agreement are not performed at
Completion they will remain in full force and effect notwithstanding
Completion.
11.6 Unless expressly stated otherwise, all obligations of the Sellers or the
Warrantors under this Agreement and any Supplemental Agreement are joint
and several obligations.
11.7 The Buyer may release or compromise the liability of, or grant any time,
forbearance or indulgence to, any Seller or Warrantor under this
Agreement and any Supplemental Agreement without modifying, affecting or
prejudicing its rights against any other Seller or Warrantor.
11.8 The Buyer's rights and remedies under this Agreement are additional to
any other rights and remedies which may be available to it; and its
exercise of or failure to exercise, any right or remedy will not
constitute a waiver of any other right or remedy.
11.9 If any term or provision of this Agreement or any Supplemental Agreement
is held to be wholly or partly illegal or unenforceable at law, that term
or provision shall to that extent be deemed not to form part of this
Agreement or that Supplemental Agreement but the enforceability of the
remainder of this Agreement or that Supplemental Agreement shall not be
affected.
11.10 The Sellers will make no announcement in connection with this Agreement
without the Buyer's written approval, unless required by law or The Stock
Exchange, or the New York Stock Exchange and then only after prior
consultation with the Buyer.
29
<PAGE>
11.11 If any provision of this Agreement (or of any agreement or arrangement of
which this Agreement forms part) renders this Agreement, or the said
agreement or arrangement, liable to registration under the Restrictive
Trade Practices Act 1976, that provision will not take effect until the
day after particulars of this Agreement, or the said agreement or
arrangement, have been duly furnished to the Director General of Fair
Trading pursuant to Section 24 of the said Act.
11.12 Each party will bear all professional or other fees and expenses incurred
by it in connection with the negotiation and completion of this
Agreement, and all acts and events contemplated by it.
11.13 Time shall be of the essence of this Agreement, both as regards the dates
and periods specifically mentioned, and as to any substituted dates and
periods agreed in writing by the Sellers and the Buyer.
11.14 This Agreement and all Supplemental Agreements together constitute the
entire agreement between the parties relating to the sale and purchase of
the Shares and no variation of its or their terms will have effect unless
it is in writing and signed by each party.
11.15 This Agreement shall be governed by and construed in accordance with
English Law and the parties submit to the jurisdiction of the English
Courts.
12. NOTICES
12.1 Any notice to be given under this Agreement or any Supplemental Agreement
shall be in writing, and may be delivered by hand, or sent by first class
recorded delivery post, or by telex, or facsimile message, addressed to
the party to be served (in the case of an individual) at the address
herein stated and (in the case of a company) at its registered
30
<PAGE>
office for the time being or (in either case) to such other address as
the addressee may from time to time have notified for the purpose of this
clause.
12.2 Notices delivered by hand shall be deemed to have been served at the time
of actual delivery. Notices sent by post shall be deemed to have been
served at the expiry of 48 hours after posting. Notices sent by telex or
by facsimile shall be deemed to have been served three hours after
transmission if transmitted before 2 p.m. on a business day, and
otherwise by 11 a.m. on the next business day.
12.3 In proving service by post it shall be sufficient to prove that the
envelope containing the notice was properly addressed, and posted.
EXECUTED as a Deed by the parties on the day and year first before written.
EXECUTED AND DELIVERED ) /s/ DV AMOS
AS A DEED BY )
DAVID VICTOR AMOS )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ DV AMOS AS ATTORNEY FOR KIM AMOS
AS A DEED BY )
KIM AMOS )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ C BROOKER AS ATTORNEY FOR
AS A DEED BY ) SUSAN BROOKER
SUSAN JANE BROOKER )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ C BROOKER
AS A DEED BY )
CHRISTOPHER SHAUN BROOKER )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
31
<PAGE>
EXECUTED AND DELIVERED )/s/ JOHN CLARK
AS A DEED BY )
JOHN WILLIAM MURRAY CLARK )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ JOHN CLARK AS ATTORNEY FOR
AS A DEED BY ) LOUISA CLARK
LOUISA JANE CLARK )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ JOHN CLARK AS ATTORNEY FOR
AS A DEED BY ) IAN CLARK
IAN GEORGE CLARK )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ DJ SOAME
AS A DEED BY )
DAVID JAMES SOAME )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED ) /s/ DJ SOAME AS ATTORNEY FOR
AS A DEED BY ) CAROLYN SOAME
CAROLYN JOANE SOAME )
In the presence of )
KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AS A DEED ) /s/ VJEKOSLAV NIZIC
for and on behalf of ) Director
SKYNET HOLDINGS INC )
By ) /s/ MARTIN G. PARAVATO
Secretary
32
<PAGE>
Schedule 1
THE SELLERS
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6)
Names and Address Shares Initial Option Earn out Consideration
----------------- ------ ------- ------ -------- -------------
of Shareholder Consideration consideration Consideration Shares
-------------- ------------- ------------- ------------- ------
((Pounds)) ((Pounds)) ((Pounds)) (No.)
---------- ---------- ---------- -----
<S> <C> <C> <C> <C> <C>
(a) David Victor Amos 695 33,845 - 16,194 5,714
4 Corby Drive
Englefield Green
Surrey TW20 OSD
(b) Kim Amos 694 33,796 - 16,171 5,706
4 Corby Drive
Englefield Green
Surrey TW20 OSD
(c) Christopher Shaun 695 33,845 - 16,194 5,714
Brooker
7 Gables Close
Datchet
Berkshire SL3 9BB
(d) Susan Jane Brooker 694 33,796 - 16,171 5,706
7 Gables Close
Datchet
Berkshire SL3 9BB
(e) John William 6,944 - 338,160 161,805 83,067
Murray Clark
North House
Pheasants Hill
Hambledon
Henley-on-Thames
Oxon RE9 6SN
(f) Louisa Jane Clark 1,007 49,039 - 23,465 8,279
North House
Pheasants Hill
Hambledon
Henley-on-Thames
Oxon RE9 6SN
(g) Ian George Clark 625 45,000 - - -
35 Welley Road
Wraysbury
Staines
Middlesex TW19 5DW
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(h) David James Soame 2,435 175,319 - - -
Gardeners Cottage
Mill Street
Stanton St John
Oxford OX33 1HP
(i) Carolyn Joane Soame 100 7,200 - - -
Gardeners Cottage
Mill Street
Stanton St John
Oxford OX33 1HP
(a) (a) (a)
(b) (b)Total 13,889, 411,840 (B) 338,160 250,000 114,186
</TABLE>
34
<PAGE>
SCHEDULE 2
Details of the Company and the Subsidiary
PART 1: THE COMPANY
Company Number: 01586737
Date and Place of incorporation: UK 21.10.81
Share Capital: Authorised Issued Ordinary shares of (Pounds)l each
-------------- ----------------------------------------
(Pounds)50,000 (Pounds)50,000 (Pounds)13,889
Registered Office: Unit 16, Britannia Industrial Estate, Poyle Road, Colnbrook,
Berkshire SL3 OBH
Directors: David James Soame
Christopher Shaun Brooker,
John William Murray Clark,
Secretary: David Soame
Accounting Reference Date: 31st October
Auditors: Harben Barker of Drayton Court, Drayton Road, Solihull B90 4NG
Tax District and Reference Number:London City 3 Ref. 176/17994 11760
VAT Registration Number and local VAT office: 349030468
Hoyce
Thames Valley
Staines Area Businesses
Staines, Middlesex
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PART 2: THE SUBSIDIARY OF THE COMPANY
Name of Subsidiary: FOB Distribution Services Inc.
Company Number:
Date and Place of Incorporation: New York
Share Capital: Authorised Issued and Allotted
---------- -------------------
Issued Shares 200 without par value common stock
held by: 10 allotted to the Company
Number and
Shareholder Class of Shares Beneficial Owner
----------- --------------- ----------------
Registered Office:
Directors: John Clark (President)
Secretary: David Soame
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SCHEDULE 3
Warranties by the Warrantors
1. THE SHARES
1.1 The Sellers are the beneficial owners and registered holders of all the
Shares and have full power and authority to sell and transfer the same to
the Buyer on the terms of this Agreement without the consent of any third
party.
1.2 The Shares are fully paid or are credited as fully paid and constitute the
whole of the issued and allotted share capital of the Company.
1.3 There is in force no agreement or arrangement which provides (conditionally
or otherwise) for the issue, allotment or transfer of any share or loan
capital of the Company (including any option or right of pre-emption or
conversion).
1.4 None of the Shares was, or represents assets which were the subject of a
transfer at undervalue, (within the meaning of the Insolvency Act 1986,
s.238 or s.339) within the past 5 years.
1.5 None of the Shares was allotted at a discount.
2. THE SELLERS' CAPACITY
2.1 The Sellers have full power and authority to enter into and perform this
Agreement and the documents to be delivered by them at Completion, without
the consent of any third party, and the obligations herein do, and in such
documents shall, constitute binding obligations, enforceable on them in
accordance with their terms.
2.2 There is no charge, pledge, lien or other encumbrance on, over or affecting
the Shares or arrangement to give or create any such charge, pledge, lien
or encumbrance.
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3. ACCOUNTS
3.1 The Last Accounts were prepared in accordance with the historical cost
convention; and the bases and policies of accounting adopted for the
purposes of preparing the Last Accounts are the same as those adopted in
preparing the audited accounts of the Company in respect of the last three
preceding accounting periods.
3.2 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 and other relevant
statutes;
(c) comply with all current SSAPs and FRSs applicable to a United Kingdom
company;
(d) are not affected by any extraordinary, exceptional or non-recurring
item;
(e) properly reflect the financial position of the Company as at the Last
Accounts Date;
(f) fully disclose all the assets of the Company as at the Last Accounts
Date; and
(g) make full provision or full reserve for all liabilities and capital
commitments of the Company outstanding at the Last Accounts Date,
including contingent, unquantified or disputed, liabilities.
3.3 No amount included in the Last Accounts in respect of any asset, whether
fixed or current, exceeds its purchase price or production cost (within the
meaning of Schedule 4 CA 1985) or (in the case of current assets) its net
realisable value on the Last Accounts Date.
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3.4 In the Last Accounts and in the accounts of the Company for the three
preceding financial years, the fixed assets of the Company have been
depreciated in accordance with SSAP 12.
3.5 (a) No part of the amounts included in the Last Accounts, or subsequently
recorded in the books of the Company, as owing by any debtor, is
overdue by more than twelve weeks, or has been released on terms that
any debtor pays less than the full book value of his debt, or has been
written off, or has proved to any extent to be irrecoverable or is now
regarded by the Company as irrecoverable in whole or in part.
(b) 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 in
any event not later than twelve weeks after Completion; and none of
those debts is subject to any counter-claim or set off, except to the
extent of any such provision or reserve.
3.6 The Company has not at any time had an accounting reference date for the
purposes of Section 224 CA 1985 other than the current accounting reference
date.
3.7 All the accounting records, books, ledgers, financial and other records, of
whatsoever kind of the Company:
(a) are in its possession or control;
(b) have been fully, properly and accurately kept and completed;
(c) do not contain any material inaccuracies or discrepancies; and
(d) give a true and fair view of its trading transactions, and its
financial, contractual and trading position.
3.8 The Management Accounts:-
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(a) give a true and fair view of the profits, assets and liabilities of
the Company for the periods to which they relate;
(b) were prepared in accordance with the historical cost convention and
generally accepted accounting principles in the United Kingdom,
consistently applied throughout;
(c) properly reflect the financial position of the Company as at their
date; and
(d) contain or make direct reference to all information and factors
necessary fairly to determine the gross profit margin (as that term is
commonly understood) on sale of products and supply of services by the
Company.
3.9 The Company maintains a system of internal accounting controls sufficient
to provide reasonable assurance that transactions are executed with
management's authorisations.
4. CORPORATE MATTERS
4.1 (a) The only directors of the Company are the persons whose names are
listed in Schedule 2 Part 1.
(b) No person is a shadow director (within the meaning of Section 741 CA
1985) of the Company but is not treated as one of its directors for
all the purposes of CA 1985.
4.2 The Company:-
(a) is not the holder or beneficial owner of, nor has agreed to acquire,
any share or loan capital of any company (whether incorporated in the
United Kingdom or elsewhere) other than the Subsidiary; and
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(b) has no branch, agency or place of business, or any permanent
establishment (as the expression is defined in the relevant double
taxation relief order current at the date of this Agreement) outside
the United Kingdom.
4.3 Since the Last Accounts Date the Company has not issued or allotted, or
agreed to issue or allot, any share or loan capital.
4.4 No one is entitled to receive from the Company any finder's fee, brokerage
or other commission in connection with the sale and purchase of the Shares
under this Agreement.
4.5 (a) The copy of the Memorandum and Articles of Association of the Company
which is attached to the Disclosure Letter is accurate and complete in
all respects and has embodied in it or annexed to it a copy of every
such resolution as is referred to in Section 380 CA 1985.
(b) 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.
(c) No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received.
(d) Since the Last Accounts Date no resolution of any kind of the
shareholders of the Company has been passed (other than resolutions
relating to business at Annual General Meetings which was not special
business).
4.6 (a) All returns, particulars, resolutions and documents required by the CA
1985 or any other legislation to be filed with the Registrar of
Companies, or any other authority, in respect of the Company have been
duly filed and were correct.
(b) Due compliance has been made with all the provisions of the CA 1985
and other legal requirements in connection with the formation of the
Company, the
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allotment or issue of shares, debentures and other securities, the
payment of dividends and the conduct of its business.
(c) All charges in favour of the Company have (if appropriate) been
registered in accordance with the provisions of Sections 395, 409, 410
and 424 CA 1985.
4.7 The Company has in its possession all title documents relating to its
assets, an executed copy of all agreements to which it is a party, and the
original copies of all other documents which it owns or which ought to be
in its possession.
4.8 To the best of the Warrantors' knowledge and belief there are not pending,
or in existence, any investigations or enquiries by, or on behalf of, any
governmental or other body in respect of the affairs of the Company.
5. INFORMATION GIVEN TO BUYER
5.1 To the best of the Warrantors' knowledge and belief all information given
by the Sellers, or the Sellers' Solicitors or any other person on behalf of
the Sellers to the Buyer, or the Buyer's Solicitors relating to the
business, activities, affairs, assets and liabilities of the Company was,
when given, and is now accurate and comprehensive in all respects.
5.2 The contents of the Disclosure Letter, and of all documents accompanying it
and referred to in it, are true and accurate in all respects, and fully and
accurately disclose every matter to which they relate.
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6. TAXATION
6.1 ADMINISTRATION
(a) The Last Accounts reserve or provide in full for all Taxation of any
nature whatsoever or other sums imposed, charged, assessed, levied or
payable under the Taxation Statutes for which the Company was at the
Last Accounts Date liable or able to be made liable, and the Last
Accounts reserve in full for any contingent or deferred liability to
Taxation.
(b) The Company has duly and punctually paid all tax which it has become
liable to pay and is under no liability (and has not within the 6
years prior to the date hereof been liable) to pay any penalty or
interest in connection with any claim for tax.
(c) All payments by the Company to any person which ought to have been
made under deduction of tax have been so made and the Company has if
required by law to do so, accounted to the Inland Revenue for the tax
so deducted.
(d) The Company has operated the Pay As You Earn system accurately and
correctly and has complied with its reporting obligations to the
Inland Revenue in connection with benefits provided for employees of
the Company.
(e) All returns which should have been made by the Company for any
Taxation purpose in respect of any accounting period up to and
including the accounting period ending on the Last Accounts Date have
been made, are correct and on a proper basis and not the subject of
any dispute with the Inland Revenue, and the computations have been
agreed with the Inland Revenue and the Company has made all returns
and provided all information required to be provided under the Taxes
Management Act 1970 or pursuant to any notice served thereunder.
(f) The Company is not involved in any dispute with any Taxation authority
whether within the United Kingdom or overseas.
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(g) Without prejudice to the generality of sub-clauses (b) and (d) above,
the Company will on Completion have duly paid to the Inland Revenue or
other appropriate authority:
(i) all amounts of value added tax due by the Company in respect of
goods or services supplied prior to Completion;
(ii) all amounts of import duty and other taxes or charges payable
upon the importation of goods and all excise duties payable in
respect of any assets (including trading stock) imported or
owned by the Company;
(iii) all income tax deductible prior to Completion by virtue of the
PAYE regulations from time to time in force;
(iv) all advance corporation tax due in respect of franked payments
under Section 14 ICTA and Schedule 13 thereof; and
(v) all National Insurance contributions (due from both the employer
and the employee) in respect of the employees of the Company.
(h) The Company has not participated in any payroll deduction scheme as
defined in Section 202 ICTA.
(i) All statements and disclosures made to any authority in connection
with any provision of the Taxation Statutes were when made, and
remain, complete and accurate in all material respects.
6.2 (a) The Company is and has always been resident in the United
Kingdom for Taxation purposes.
(b) The Company is not and has at no time been an investment company nor
an investment trust for the purposes of the Taxation Statutes.
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(c) The Company is not and has at no time been a close company for the
purposes of the Taxation Statutes.
(d) The Company has no and has at no time had any associated company for
the purposes of the Taxation Statutes.
(e) The Company is not a member of a European Economic Interest Grouping
or any other kind of partnership, consortium or joint venture.
(f) All tax clearances obtained (if any) have been disclosed.
(g) All tax warranties and indemnities given to or received from third
parties (if any) have been disclosed.
6.3 CAPITAL GAINS
(a) If each of the capital assets of the Company were disposed of
otherwise than to an Associate for a cash consideration equal to the
book value of the asset in, or adopted for the purpose of the Last
Accounts no chargeable gain would accrue for the purposes of TCGA.
(b) Save as provided for in the Last Accounts, the Company has not made
any claim and is not entitled to make any claim under Section 279 TCGA
(relief in respect of delayed remittances of gains) or Section 585
ICTA (relief from tax on delayed remittances).
(c) No claims for rollover relief under Section 23 or 247 TCGA have been
made by the Company.
(d) There are no capital losses carried forward by the Company.
(e) The Company has not acquired any assets subject to a claim for
holdover relief under Sections 165 or 260 TCGA or Section 79 FA 1980.
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(f) There has not accrued any gain in respect of which the Company may be
liable to corporation tax by virtue of the provisions of Section 13 TCGA
(non-resident Company).
(g) No claim for rollover relief under Sections 152 to 158 TCGA made or
provided for in the Company's accounts will or may be withdrawn when the
Company leaves its existing group.
(h) The Company has not made any claim under Sections 152, 153 and 154 TCGA
(replacement of business assets) with regard to the consideration for the
disposal of or of its interest in any assets which are defined in the said
Section 152(1) as "the old assets", and no assets owned by the Company and
"the new assets" (as so defined) in relation to any claim made by any other
company.
(i) The Company has not received any asset by way of gift as mentioned in
Section 282 TCGA and will not receive any such asset before Completion.
(j) Since the Last Accounts Date there has not been any transaction in respect
of which the Company is or may become liable to Taxation under the
corporation tax provisions relating to capital gains and the Company will
not before Completion enter into any such transaction without the prior
written consent of the Buyer.
(k) The Company has not been a party to, or involved in any scheme or
arrangements whereby the value of any asset has been materially reduced so
that on a disposal of the asset by the Company, Sections 30 to 34 inclusive
TCGA (capital gains: value shifting) may be applicable.
(l) No gain chargeable to corporation tax will accrue to the Company on the
disposal or satisfaction of a debt by reason of Section 251 TCGA (debts).
(m) No part of the consideration given by the Company for a new holding of
shares (within the meaning of Section 126 TCGA) will be disregarded by
virtue of Section 128(2) TCGA.
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(n) The Company has not been a party to, or involved in any share for share
exchange nor any scheme of reconstruction or amalgamation such as are
mentioned in Sections 135 and 136 TCGA or Section 139 TCGA under which
shares or debentures have been issued or any transfer of assets effected.
(o) The Company has not effected any demerger such as is mentioned in Section
213 ICTA.
(p) The Company has not made any election under paragraph 4 of Schedule 2 to
the TCGA.
(q) The Company has not made any election for all the Company's assets then
held (subject to paragraph 7 of Schedule 3 to the TCGA) to have a 31 March
1982 base value pursuant to Section 35(5) TCGA.
(r) The Company has not disposed of or acquired any asset in circumstances
falling within Section 17 TCGA and is not entitled to any capital loss to
which Section 18(3) TCGA will apply.
(s) The Company is not liable to be assessed to any taxation under the
provisions of Section 189 or Section 190 TCGA.
(t) No loss which has arisen or may arise on the disposal by the Company of
shares in, or securities of any company is liable to be disallowed in whole
or in part by virtue of Section 176 or Section 177 TCGA.
(u) The Company has not ceased to be a member of a group of companies for the
purposes of Section 178 and 179 TCGA, (deemed disposal of a chargeable
asset) otherwise than as part of a merger to which Section 181 of the TCGA
applies.
(v) The Company does not own any asset which was acquired from another company
which was at the time a member of a group of Companies for the purposes of
Section 170 TCGA.
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(w) The execution or completion of this Agreement will not result in any
profit or gain being deemed to accrue to the Company for Taxation
purposes.
6.4 PROFITS AND LOSSES
(a) The Company has not paid remuneration or compensation for loss of
office nor made any gratuitous payment to any of its present or former
directors or employees which will not be deductible in computing the
taxable profits of the Company.
(b) No provision has been made in the Last Accounts which will not be
allowable for Taxation purposes.
(c) No change of ownership of the Company has taken place in circumstances
such that Section 768 ICTA (change in ownership of company:
disallowance of trading losses) has or may be applied to deny relief
for a loss or losses incurred by the Company and within the period of
three years ending with the date of this Agreement, there has been no
major change in the nature or conduct of any trade or business carried
on by the Company, nor has the scale of the activities in any trade or
business carried on by the Company at any time become small or
negligible for the purposes of the section.
(d) No change in ownership of the Company nor any major change in the
nature or conduct of any trade or business carried on by the Company
has occurred in circumstances such that Section 245 ICTA (calculation
of advance corporation tax on change of ownership) has been or may be
applied.
(e) All Taxation losses of the Company are trading losses and are
available to be carried forward and set-off against income from the
same trade in succeeding periods and are agreed with the Inland
Revenue.
(f) The Company has not made and is under no obligation under which it is,
or at any time may become, liable to make any payment of interest, an
annuity or
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other annual payment such as may be disallowed as a deduction, as a set-off
or as a charge on income or otherwise be unrelieved for corporation tax
purposes whether by virtue of Section 787 ICTA (restriction of Relief for
Payments of Interest) or Section 125 ICTA (annual payments for non-taxable
consideration) or otherwise.
(g) The Company has not since 22 June 1971 entered into any such transaction as
is mentioned in Section 780 ICTA (sale and leaseback: taxation of
consideration received).
(h) The Company has not effected or entered into any act, transaction or
arrangement of any nature whereby it has incurred, or may hereafter incur,
any liability under, or by virtue of any of Sections 770, 781, 782 and 783
ICTA.
(i) The Company has not surrendered nor agreed to surrender any amount by way
of group relief under the provisions of Chapter IV of Part X of ICTA (group
relief).
(j) The Company is not, and has not at any time been, party to any arrangements
falling within Section 410 ICTA (arrangements for transfer of company to
another group or consortium).
(k) The Company is not, and will not become, liable to make any payment for an
amount surrendered by any other company under, or in connection with the
provisions of Sections 240 and 402 ICTA.
(l) Since the Last Accounts Date the Company has not surrendered or claimed any
advance corporation tax under the provisions of Section 240 ICTA (set-off
of Company's surplus advance corporation tax against subsidiary's liability
to corporation tax).
(m) The Disclosure Letter contains:
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(i) particulars of all elections made by the Company under Section
247 ICTA which are now in force;
(ii) particulars of all arrangements and agreements relating to group
relief as defined in Section 402 ICTA to which the Company is or
has been a party; and
(iii) particulars of all agreements or arrangements to which the
Company is or has been a party relating to the surrender of
advance corporation tax (whether made or received by the
Company) under Section 240 ICTA.
(n) All capital allowances made or to be made to the Company in respect of
capital expenditure incurred prior to the date of this Agreement, or
to be incurred under any subsisting commitment, have been made, or
will be made in taxing its trade.
(o) No allowances have been claimed by the Company which are liable to be
reduced or withdrawn by virtue of Sections 1(6), 24, 46 and 47 Capital
Allowances Act 1990.
(p) The Company has neither made any claim for, nor received any payment
by way of, grant under the Industrial Development Act 1982, such that
a charge to tax under Case 1 or Case VI of Schedule D might be made
under Section 93 ICTA.
(q) Since the Last Accounts Date and pending Completion, the Company has
not and will not have made or received any surrender relating to group
relief or advance corporation tax.
6.5 INHERITANCE TAX
(a) The Company has not entered into any transaction which has or may give
rise to a direct or indirect charge to inheritance tax.
(b) The Company is not liable to be assessed to inheritance tax by virtue
of Part VII of the Inheritance Tax Act 1984.
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(c) There is no unsatisfied liability to inheritance tax attached or
attributable to the Shares or any asset of the Company, and in
consequence, no person has the power to raise the amount of such tax
by sale or mortgage of or by a terminable charge on any of the Shares
or assets of the Company as mentioned in Section 212 Inheritance Tax
Act 1984 and none of the Shares or assets of the Company are subject
to an Inland Revenue charge within Section 237 Inheritance Tax Act
1984.
(d) The Company is not entitled to an interest in possession in settled
property.
6.6 VALUE ADDED TAX
(a) The Company is duly registered for Value Added Tax purposes and has
complied in all respects with the Value Added Tax Act 1994, all
orders, provisions, directions or conditions made or imposed
thereunder and all provisions relating to Value Added Tax contained in
the Taxation Statutes and has made and obtained full complete correct
and up-to-date records invoices and other documents appropriate or
requisite for the purposes of such legislation and is not liable to
any forfeiture or penalty or to the operation of any penal provisions
and has not been required by the Commissioners of Customs and Excise
to give security and the Company is not registered for Value Added Tax
as a member of a group of companies.
(b) The Disclosure Letter contains full details of any assets of the
Company to which the provisions of Part XV Value Added Tax (General)
Regulations 1995 (the Capital Goods Scheme) apply and in particular
the identity (including in the case of leasehold property the terms of
years), date of acquisition and cost of the asset and the proportion
of input tax for which credit has been claimed (either provisionally
or finally in a tax year and stating which).
(c) 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
the operations of Section 26 Value Added Tax Act 1994 and regulations
made thereunder.
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(d) No supplies have been made to the Company to which the provisions of
Section 8 Value Added Tax Act 1994 might apply.
(e) The Disclosure Letter contains details and copies of all elections,
together with the relevant notification, made by the Company pursuant
to paragraph 2 Schedule 10 Value Added Tax Act 1994.
(f) The Company is not and has not since 1 August 1989 been in relation to
any land, building or civil engineering work a developer within the
meaning of paragraph 5(5) Schedule 10 Value Added Tax Act 1994.
(g) The Disclosure Letter contains copies of all certificates issued by
the Company pursuant to paragraph 13(4)(f) Schedule 3 Finance Act
1989.
(h) Full details of any claim for bad debt relief under Section 36 of the
Value Added Tax Act 1994 made by any member of the Group has been
disclosed in writing to the Buyer.
6.7 STAMP DUTY, STAMP DUTY RESERVE TAX AND CAPITAL DUTY
(a) The Company has duly paid all capital duty and all loan capital duty
for which it has at any time been liable.
(b) Within the 7 years ending on the date of this Agreement, the Company
has not made any claim for relief or exemption under Section 55 FA
1927, or Section 42 FA 1930, or Part III Schedule 19 FA 1973, or
Section 78 FA 1985 or Sections 75, 76 and 77 FA 1986.
(c) All instruments (other than those which have ceased to have any legal
effect) to which the Company is a party have been duly stamped.
(d) The Company has duly paid all stamp duty reserve tax for which it has
at any time been liable.
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6.8 ANTI AVOIDANCE
(a) The Company has not entered into or been a party to any schemes or
arrangements designed partly or wholly for the purpose of avoiding or
deferring Taxation.
(b) No gain of a capital nature as defined in Section 776 ICTA
(transactions in land: taxation of capital gains) has been realised
from the disposal of land in respect of which the Company could be
assessed to Tax under the provisions of that section.
(c) The Company has not obtained any tax advantage in consequence of any
transaction in securities to which the provisions of Section 703 ICTA
(cancellation of tax advantage) apply.
6.9 OVERSEAS ELEMENTS
(a) The Company does not carry on any trading activities outside the
United Kingdom.
(b) The Company has made all appropriate claims for relief under Double
Taxation Relief Conventions, orders or other arrangements current at
the date of this Agreement and has obtained full double tax relief for
all income from outside the United Kingdom.
(c) The Company has not transferred a trade carried on by it outside the
United Kingdom in circumstances such that a chargeable gain may be
deemed to arise at a date after such transfer under Section 140 TCGA
(postponement of charge on transfer of assets to non-resident
company).
(d) The Company has not been a party to any election made under Section
187(1)(b) TCGA.
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(e) The Company does not have an overseas subsidiary.
(f) The Company is not a member of an overseas partnership.
(g) The Company has not entered into any unlawful transaction under Sections
765 and 766 ICTA (migration of companies). There are attached to the
Disclosure Letter copies of all notices required pursuant to The Movements
of Capital (Required Information) Regulations 1990.
(h) The Company has not received foreign loan interest on which double taxation
relief will or may be restricted under Section 798 ICTA (Interest on
Certain Overseas Loans).
(i) No notice of the making of a direction under Section 747 ICTA (imputation
of chargeable profit and creditable tax of controlled foreign companies)
has been received by the Company and no circumstances exist which would
entitle the Inland Revenue to make such a direction and to apportion any
profit of a controlled foreign company to the Company pursuant to Section
752 ICTA (apportionment of chargeable profit and creditable tax).
(j) The Company has not and has at no time had for the purposes of Chapter V of
Part XVII ICTA an interest in an offshore fund which is or has at any time
been a non-qualifying offshore fund.
(k) The Company will not at Completion have any liability for any Taxation
outside the United Kingdom.
(l) The Disclosure Letter contains full particulars of all notices given to the
Company under the Double Tax Relief (Taxes on Income) (General) Regulations
1970 and the Double Tax Relief (Taxes on Income) (General) (Dividend)
Regulations 1973.
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6.10 CLOSE COMPANIES
(a) The Company has not made any such transfer as is referred to in
Section 125 TCGA (transfer of assets at an undervalue).
(b) The Company has at all times up to the Last Accounts Date, been a
trading company or a member of a trading group as defined in paragraph
7 Schedule 19 ICTA.
(c) No distributions within Section 418 ICTA (additional matters to be
treated as distributions) have been made by the Company.
(d) No loan or advance within Section 419 ICTA (loans to participators
etc) has been made or agreed to by the Company and the Company has not
since the Last Accounts Date released or written off the whole or part
of the debt in respect of any such loan or advance.
6.11 TAXATION GENERALLY
(a) The Company has not issued any share capital to which the provisions
of Section 249 ICTA (Stock Dividends) could apply nor does it own any
such share capital.
(b) Since the Last Accounts Date, the Company has not made any purchase of
its own shares such as is mentioned in Section 219 ICTA or otherwise
in respect of which no Inland Revenue clearance has been obtained.
(c) No security issued by the Company and remaining in issue at the date
of this Agreement was issued in such circumstances that the interest
payable thereon falls to be treated as a distribution under Section
209 ICTA (meaning of distribution).
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(d) The Company has not issued or acquired any deep discount securities as
defined in Schedule 4 ICTA or any deep gains securities as defined in
Schedule 11 FA 1989.
(e) The Company has not at any time:
(i) repaid or redeemed or agreed to repay or redeem any shares of any
class of its share capital, or otherwise reduced or agreed to reduce
its share capital or any class thereof; or
(ii) capitalised or agreed to capitalise in the form of shares,
debentures or other securities or in paying up any amounts unpaid on
any shares, debentures or other securities, any profits or reserves
of any class or description or passed or agreed to pass any
resolution to do so.
(f) Neither the Company nor any of its employees are affected by any of the
following kinds of employee benefit schemes (whether approved by the Inland
Revenue or not):
(i) profit sharing scheme;
(ii) savings related share option scheme;
(iii) executive share option scheme;
(iv) employee share ownership plan;
(v) qualifying share ownership trust;
(vi) profit related pay scheme;
(vii) single company or corporation personal equity plan.
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(g) Since the Last Accounts Date and pending Completion, the Company has
not carried out or entered into any transactions and no other event
has occurred in consequence of which (whether alone or together with
any one or more transactions or events occurring on or after the date
of this Agreement) any liability to Taxation of the Company has arisen
or will or any arise (or would have arisen or would or might arise but
for the availability of any relief allowance deduction or credit)
other than corporation tax on actual income (and not chargeable gains
or deemed income) of the Company arising from transactions entered
into in the ordinary course of business.
7. FINANCE
7.1 CAPITAL COMMITMENTS
There were no commitments on capital account outstanding at the Last
Accounts Date and since the Last Accounts Date the Company has not made or
agreed to make any capital expenditure, or incurred or agreed to incur any
capital commitments, nor has it disposed of or realised any capital assets
or any interest therein.
7.2 DIVIDENDS AND DISTRIBUTIONS
(a) Since the Last Accounts Date no dividend or other distribution (as
defined in ICTA Chapter II of Part VI as extended by Section 418 ICTA)
has been, or is treated as having been, declared, made or paid by the
Company.
(b) All dividends or distributions declared, made or paid by the Company
have been declared, made or paid in accordance with its Articles of
Association and the applicable provisions of CA 1985.
7.3 BANK AND OTHER BORROWINGS
(a) Full details of the Company's bank facilities are set out in the
Disclosure Letter.
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(b) The total amount borrowed by the Company from each of its bankers does
not exceed its respective overdraft facilities.
(c) The total amount borrowed by the Company (as determined in accordance
with the provisions of the relevant instruments) does not exceed any
limitations on its borrowing powers contained in its Articles of
Association or in any debenture or other deed or document binding upon
it.
(d) The Company has not outstanding, nor has it agreed to create or issue,
any loan capital; the Company 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 any money which it has not
repaid, save for borrowings not exceeding the amounts shown in the
Last Accounts.
(e) 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.
(f) The Company has not received notice (whether formal or informal) from
any lenders of money to it, requiring repayment or intimating the
enforcement of any security the lender may hold over any of its
assets; and there are no circumstances likely to give rise to any such
notice.
7.4 LOANS BY AND DEBTS DUE TO THE COMPANY
The Company has not lent any money which has not been repaid to it, nor
does the Company own the benefit of any debt (whether or not due for
payment) other than debts which have arisen in the ordinary course of its
business and the Company has not made any loan or quasi-loan contrary to CA
1985.
7.5 LIABILITIES
(a) The Company has no outstanding liabilities (including contingent
liabilities) except as disclosed in the Last Accounts or incurred in
the ordinary course of trading since the Last Accounts Date.
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(b) There has been no exercise, purported exercise or claim in respect of
any charge, lien, encumbrance or equity over any of the fixed assets
of the Company and there is no dispute directly or indirectly relating
to any of its fixed assets.
(c) The Company has not been the tenant of, or a guarantor in respect of,
any leasehold property other than the Property.
7.6 WORKING CAPITAL
Having regard to existing bank and other facilities, the Company has
sufficient working capital for the purposes of continuing to carry on its
business in its present form and at its present level of turnover for the
period of forty five days after Completion.
7.7 CONTINUATION OF FACILITIES
In relation to all debentures, acceptance credits, overdrafts, loans and
other financial facilities outstanding or available to the Company
(referred to in this paragraph as "facilities"):-
(a) the Disclosure Letter sets out full details, and there are attached to
it accurate copies of all documents relating to the facilities;
(b) the Company has complied with all the provisions of those documents;
(c) no steps for the early repayment of any indebtedness have been taken
or threatened;
(d) there are no circumstances whereby the continuation of any of the
facilities might be prejudiced, or which might give rise to any
alteration in the terms and conditions of any of the facilities;
(e) none of the facilities is dependent on the guarantee or indemnity of
or any security provided by a third party; and
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(f) to the best of Warrantors' knowledge and belief none of the facilities
is liable to be terminated, or any loan repaid, as a result of the
acquisition of the Shares by the Buyer or any other thing contemplated
in this Agreement.
7.8 GOVERNMENT GRANTS
(a) The Disclosure Letter contains full details of all grants, subsidies
or financial assistance applied for or received by the Company from
any governmental department or agency or any local or other authority.
(b) The Company has not done or omitted to do any act or thing which could
result in all or any part of any investment grant, employment subsidy
or other similar payment made, or due to be made to it becoming
repayable or being forfeited or withheld in whole or in part.
8. TRADING
8.1 CHANGES SINCE LAST ACCOUNTS DATE
(a) Since the Last Accounts Date:
(i) the business of the Company has been continued in the ordinary
and normal course;
(ii) there has been no deterioration in the turnover or the
financial or trading position or prospects of the Company;
(iii) the Company has not by doing or omitting to do anything
prejudiced its goodwill;
(iv) no part of the business of the Company has been affected by any
abnormal factor not affecting similar businesses to a like
extent; and
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(v) the Company has paid its creditors in accordance with their
respective credit terms and there are no amounts owing by the
Company which have been due for more than six weeks.
(b) The value of the realisable assets of the Company is not now less than
at the Last Accounts Date.
(c) The trading prospects of the Company have not been adversely affected
as a result of any event or circumstance arising since the Last
Accounts Date.
8.2 SELLERS' OTHER INTERESTS AND LIABILITIES TO THE COMPANY
(a) Neither the Sellers, nor any member of the Sellers' Group, has any
rights or interests, directly or indirectly, in any business other
than that now carried on by the Company, any of which are, or are
likely to be or become, competitive with the business of the Company.
(b) There is no outstanding indebtedness of the Sellers or their
Associates to the Company.
8.3 EFFECT OF SALE OF SHARES
(a) To the best of the Warrantors' knowledge and belief a result of the
purchase of the Shares by the Buyer:
(i) no supplier to the Company will cease or be entitled to cease
supplying it or may substantially reduce its supplies to it;
(ii) 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;
(iii) the Company will not lose the benefit of any right or privilege
which it enjoys; and
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(iv) no officer or senior employee of the Company will leave, or be
entitled to terminate his employment.
(b) To the best of the Warrantors' knowledge and belief compliance with
the terms of this Agreement does not and will not:
(i) conflict with, or result in the breach of, or constitute a
default under any of the terms, conditions or provisions of any
agreement or instrument to which the Company is a party, or any
provision of the Memorandum or Articles of Association of the
Company, or any order, judgement, award, injunction, regulation
or other restriction or obligation of any kind by which the
Company is bound or to which any of the Company's assets is
subject;
(ii) relieve any person from any obligation to the Company, or
enable any person to terminate any right or benefit enjoyed by
the Company, or exercise any right in respect of the Company;
(iii) cause any encumbrance on any of the assets of the Company to
crystallise or become enforceable; or
(iv) cause any present indebtedness of the Company to become due and
payable prior to its stated maturity.
8.4 CONDUCT OF BUSINESS IN ACCORDANCE WITH MEMORANDUM AND ARTICLES OF
ASSOCIATION
(a) The Company has at all times carried on business and conducted its
affairs in all respects in accordance with its Memorandum and Articles
of Association for the time being in force, and any other documents to
which it is or has been a party.
(b) The Company is empowered and duly qualified to carry on business in
all jurisdictions in which it now carries on business.
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8.5 JOINT VENTURE AND PARTNERSHIP
The Company is not, and has not agreed to become, a member of any joint
venture, consortium, partnership or other unincorporated association and it
is not, and has not agreed to become, a party to any agreement or
arrangement for sharing commissions or other income.
8.6 MARKETING AGREEMENTS
(a) The Company is not a party to any agency, distributorship, marketing,
purchasing, manufacturing or licensing agreement or arrangement, or to
any trading or other agreement or arrangement, which in any way
restricts its freedom to carry on the whole or any part of its
business in any part of the world in such manner as it thinks fit.
(b) The Company is not bound by any undertaking or assurance given to any
court or governmental agency.
8.7 UNFAIR TRADING AND RESTRICTIVE PRACTICES
(a) To the best of the Warrantors' knowledge and belief the Company has
not done or omitted to do any act or thing which directly or
indirectly:
(i) contravenes any provision of the Trade Descriptions Acts 1968
and 1972;
(ii) would or might result in a reference of a consumer trade
practice, within the meaning of Section 13 of the Fair Trading
Act 1973, or be liable to reference to the Consumer Protection
Advisory Committee under Part II of the said Act;
(iii) contravenes the provisions of the Consumer Credit Act 1974;
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(iv) contravenes or is invalidated (in whole or in part) by, or is
subject to registration under, the Restrictive Trade Practices
Acts 1976 and 1977;
(v) contravenes any provision of the Treaty of Rome; or
(vi) contravenes any other anti-trust, anti-monopoly or anti-cartel
legislation or regulations.
(b) To the best of the Warrantors' knowledge and belief the Company has
not engaged in any anti-competitive practice as defined in the
Competition Act 1980.
8.8 LITIGATION ETC
(a) The Company is not a party to, or involved in, any litigation,
arbitration, prosecution or other legal proceedings, and has not been
engaged in any such proceedings during the three year period ending on
the date of this Agreement. There are no claims or actions (whether
criminal or civil) pending, threatened or anticipated against the
Company or any of its directors or employees in relation to the
Company, or in respect of which the Company is liable to indemnify any
party concerned, or for which the Company may be vicariously liable.
To the best of the knowledge and belief of the Warrantors, there are
no facts which are likely to give rise to any such proceedings,
actions or claims.
(b) There is no dispute with any revenue or other official department in
the United Kingdom or elsewhere, in relation to the affairs of the
Company, and there are no facts which may give rise to any dispute.
(c) To the best of the Warrantors' knowledge and belief there are no
claims pending or threatened or capable of arising against the Company
by an employee or workman or third party, in respect of any accident
or injury, which are not fully covered by insurance.
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8.9 WINDING-UP ETC
(a) 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;
there is no unfulfilled or unsatisfied judgment or court order
outstanding against the Company; no receiver or administrative
receiver has been appointed over all or any part of the Company's
assets or business.
(b) No director or officer of the Company has had a bankruptcy petition
presented against him or has been convicted of, or charged with, and
not acquitted of a criminal offence (other than a traffic offence the
subject of a fixed penalty fine); no person who is or has at any time
within the last three years been a director or officer of the Company
is or was, when a director or officer of the Company, subject to any
disqualification order or proceedings under CA 1985, the Insolvency
Act 1985 or the Company Directors Disqualification Act 1986.
8.10 COMPLIANCE WITH STATUTES
(a) To the best of the Warrantors' knowledge and belief, in the course of
their duties to the Company, none of its officers, agents and
employees has done or failed to do any act or thing, in contravention
of any act, order, regulation or the like (whether of the United
Kingdom or elsewhere) giving rise to any fine, penalty, default
proceedings or other liability on its part.
(b) The Company has conducted and is conducting its business in all
respects in accordance with all applicable laws and regulations
whether of the United Kingdom or elsewhere.
8.11 DATA PROTECTION
(a) To the best of the Warrantors' knowledge and belief the Company has
complied with all relevant requirements of the Data Protection Act
1984.
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(b) The Company has not received a notice or allegation from either the
Data Protection Registrar or a data subject (as defined in that Act)
alleging non-compliance with the data protection principles or
prohibiting the transfer of data to a place outside the United
Kingdom.
(c) No individual has claimed, or (to the best of the Warrantors'
knowledge and belief) will have the right to claim, compensation from
the Company under that Act for loss or unauthorised disclosure of
data.
8.12 DOCUMENTS STAMPED
All documents which in any way affect the right, title or interest of the
Company in or to any of its property, 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.
8.13 BUSINESS NAMES
The Company does not use for any purpose a name other than its full
corporate name.
8.14 TRANSACTIONS INVOLVING DIRECTORS
The Company has not been a party to any transaction to which any of the
provisions of Section 320 CA 1985 or Section 330 CA 1985 may apply.
8.15 POWERS OF ATTORNEY AND AUTHORITY
(a) No power of attorney given by the Company is in force.
(b) There is not outstanding any authority (express or implied) under
which any person may enter into any contract or commitment binding
upon the Company.
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8.16 LICENCES AND CONSENTS
(a) The Company has obtained all licences and consents from any person,
authority or body required for the conduct of its business copies of
all such licences and consent are annexed to the Disclosure Letter and
all are valid and in force.
(b) The Company is not in breach of any of the terms or conditions of any
of the licences or consents and there are no factors which might in
any way prejudice the continuation or renewal of any of them.
8.17 SUBSISTING CONTRACTS
The Company is not a party to any contract, transaction, arrangement or
liability which is of an unusual or abnormal nature or outside the ordinary
course of its business or the objects clause of the Company;
(a) is for a fixed term of more than twelve months;
(b) is unlikely to have been fully performed, in accordance with its
terms, more than twelve months after the date on which it was entered
into or undertaken;
(c) is incapable of termination by it in accordance with its terms on
sixty days' notice or less;
(d) is reasonably foreseeable to result in a financial loss to it on
completion of performance;
(e) involves an aggregate outstanding expenditure by it of more than
(Pounds)20,000;
(f) is a contract for hire or rent, hire purchase or purchase by way of
credit sale or periodical payment; or
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(g) involves or is likely to involve obligations or liabilities which by
reason of their nature or magnitude ought reasonably to be made known
to an intending purchaser of the Shares.
8.18 DEFAULT UNDER AGREEMENTS
(a) The Company is not, and will not, with the lapse of time, or by the
execution of this Agreement, become:-
(i) in default under any agreement or covenant to which it is a
party or in respect of any other obligations or restrictions
binding upon it;
(ii) in default under any obligations existing by reason of
membership of any association or body; or
(iii) liable in respect of any representation or warranty (whether
express or implied) or any matter giving rise to a duty of care
on its part.
(b) No party to any agreement with the Company is in default under it, to
a degree which is or would be material in the context of the Company's
financial or trading position and there are no circumstances likely to
give rise to such a default.
8.19 OUTSTANDING OFFERS
No offer, tender or the like is outstanding which is capable of being
converted into an obligation of the Company by acceptance or other act of
some other person.
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8.20 DEFECTIVE PRODUCTS
The Company has not manufactured, sold or supplied products or services
which were or are or will become in any material respect faulty or
defective, or which were negligent, or which do not comply in any material
respect with all warranties or representations, express or implied, made in
relation to them, or with all applicable regulations, standards and
requirements.
8.21 SERVICE LIABILITIES
The Company is not liable (save as may be implied by law) to service,
repair, maintain, take back or otherwise do, or not do, anything in respect
of any goods that have been, or are after the date of this Agreement,
delivered by it.
8.22 MAJOR SUPPLIERS AND CUSTOMERS
The Company does not buy more than 10 per cent in value of its total
purchases from the same supplier, or sell more than 10 per cent in value of
its total sales to the same customer.
8.23 GUARANTEES AND INDEMNITIES
There is not now outstanding in respect of the Company any guarantee,
indemnity or agreement for suretyship, given by it or for its
accommodation.
8.24 INSIDER CONTRACTS
(a) The Company is not, and has not at any time during the last three
years been, a party to any contract or arrangement in which the
Sellers or any director of the Company, is or has had any interest,
direct or indirect.
(b) The Company is not a party to, nor have its profits or financial
position during the three years ending on the date of this Agreement
been affected by, any contract or arrangement which is not of an
entirely arm's length nature.
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8.25 MANAGEMENT REPORTS
There have been no reports concerning the Company by financial or
management consultants within the period of three years ending on the date
of this Agreement.
9. EMPLOYMENT
9.1 EMPLOYEES AND TERMS OF EMPLOYMENT
(a) The Disclosure Letter contains full particulars of the names, dates of
commencement of employment, and the terms and conditions of employment
of all employees and officers of the Company, including (without
limitation) remuneration, pension contributions and profit sharing,
commission or discretionary bonus arrangements.
(b) There are no agreements or other arrangements (whether or not legally
binding) between the Company and any trade union or other body
representing employees.
(c) The Company is not a party to any contract to which Section 319 CA
1985 applies.
9.2 BONUS SCHEMES
(a) The Company operates no scheme or arrangement under which any person
is entitled to a commission, remuneration or other emolument
calculated by reference to the turnover, profits or sales of the
Company.
(b) The Company has not registered a profit-related pay scheme under the
provision of Part V Chapter III ICTA.
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9.3 CHANGES IN REMUNERATION
(a) Since the Last Accounts Date:
(i) no change has been made in the rate of remuneration, or the
emoluments or pension benefits of any officer, ex-officer or
senior executive of the Company (that is, a person receiving
remuneration exceeding (Pounds)15,000 per annum); and
(ii) no change has been made in any other terms of employment of any
officer or senior executive.
(b) The Company is not liable for nor accustomed to pay any moneys to or
for the benefit of any officer or employee of the Company other than
remuneration or emoluments of employment or pension contributions.
9.4 TERM INATION OF CONTRACTS OF EMPLOYMENT
(a) All subsisting contracts of service to which the Company is a party
are terminable at any time on three months' notice or less, without
compensation (other than compensation in accordance with the
Employment Rights Act 1996).
(b) No employee of the Company, who receives remuneration exceeding
(Pounds)15,000 per annum, and no officer of the Company, has given or
received notice terminating his employment.
9.5 INDUSTRIAL DISPUTES AND NEGOTIATIONS
Neither the Company nor its employees is involved in any industrial
dispute, and there are no facts known, or which would on reasonable enquiry
be known, to the Company or to the Sellers or to any of their respective
directors which might suggest that there may be an industrial dispute
involving the Company or that any of the provisions of this Agreement may
lead to an industrial dispute.
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9.6 INDUSTRIAL AGREEMENTS
The Company has not entered into any recognition agreement with a trade
union nor has it done any act which might be construed as recognition.
9.7 PENSIONS
(a) Save for the Pension Scheme, neither the Company nor any Subsidiary is
under any legal or moral liability or obligation, or a party to any ex
gratia arrangement or promise, to pay pensions, gratuities,
superannuation allowances or the like, or otherwise to provide
"relevant benefits" within the meaning of Section 612(1) ICTA to or
for any of its past or present officers or employees or their
dependants; and there are no retirement benefit, or pension or death
benefit, or similar schemes or arrangements in relation to or binding
on any of the Group Companies or to which any of them contributes.
(b) Full particulars of the Pension Scheme, including particulars of the
basis on which the employer and the employees make or are liable to
make contributions thereto, and the most recent actuarial report and
valuation and full and accurate details of the assets and current
membership are contained in or annexed to the Disclosure Letter, and
the Warrantors warrant that the Pension Scheme is solely governed by
the deeds and documents, copies of which have been supplied to the
Buyer and are listed in the Disclosure Letter.
(c) The Pension Scheme is approved or capable of approval under Chapter 1
of Part XIV of ICTA as an exempt approved scheme and so far as the
Seller are aware nothing has been done or omitted to be done which
will or is likely to result in the Pension Scheme ceasing to be
approved or capable of approval as an exempt approved scheme.
(d) A contracting-out certificate (within the meaning of Section 30 of the
Social Security Pensions Act 1975) is in force covering the
employments of all employees who are members of the Pension Scheme and
so far as the Warrantors are aware there is no ground on which it
could be cancelled.
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(e) The Pension Scheme has been administered in accordance with the
preservation requirements within the meaning of Section 63 of the
Social Security Act 1973 and the equal access requirements of Part IV
of the Social Security Pensions Act 1975 and subject thereto in
accordance with the trusts powers and provisions of the Pension
Scheme.
(f) All lump sum death benefits which may be payable under the Pension
Scheme are fully insured at normal rates.
(g) All contributions and premiums which are currently payable in respect
of members of the Pension Scheme by the Company and the Subsidiary
participating in the Pension Scheme have been paid (and there has been
no suspension of or reduction in the employer's contribution during
the three years ending on the date hereof) and the Company and the
Subsidiary have fulfilled their obligations under the Pension Scheme
in all material respects.
(h) No claim has been made against the trustees of the Pension Scheme or
any of them or against any person whom the Sellers are or may be
liable to indemnify or compensate in respect of any act, event,
omission or other matter in respect of the members arising out of or
in connection with the Pension Scheme and the Warrantors are not aware
of any circumstances which might give rise to any such claim.
(i) No undertakings or assurances have been given to all or any of past or
present employees of the Company or of the Subsidiary as to the
continuance, introduction, increase or improvement of any pension
rights, entitlements, disability or death benefits and which the Buyer
would be required to implement in accordance with good industrial
relations practice whether or not there is any legal obligation so to
do.
(j) No promise or assurance has been given to any member of the Pension
Scheme which is exclusively a defined contribution scheme that his or
her benefits
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deriving therefrom will in any way be calculated by reference to his
or her remuneration or equal (exactly or approximately) any particular
amount.
(k) Since the date of the latest actuarial valuation and report of the
Pension Scheme:
(i) no power or discretion has been exercised to augment or improve
any benefits of any members thereof nor has any promise or
announcement been made to do so;
(ii) nothing has happened since the effective date of such valuation
and report which would materially modify any statements or
advice contained in the actuary's report on such valuation;
(iii) no payment or repayment of any of the assets of the Pension
Scheme has been made to the Company or to any other person, firm
or company participating in the Scheme; and
(iv) the Pension Scheme does not hold any legal or beneficial
interest in any securities issued by or in any property leased
to or occupied by any of the Group Companies and no loans have
been made to any of the Group Companies.
10. ASSETS
10.1 OWNERSHIP
The Company owned at the Last Accounts Date and still owns, and had and
still has a good and marketable title to, all assets included in the Last
Accounts or acquired since that date, except current assets since sold or
realised in the ordinary course of business.
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10.2 ASSETS SUFFICIENT FOR THE BUSINESS
The assets owned by the Company, together with the assets held under the
hire purchase, leasing or rental agreements listed in the Disclosure
Letter, comprise all assets necessary for the continuation of the business
of the Company as now conducted.
10.3 STOCKS AND WORK IN PROGRESS
(a) The stock of raw materials, packaging materials and finished goods now
held are not excessive and are adequate in relation to the current
trading requirements of the Company's business; none of the stock is
obsolete, slow moving, unusable, unmarketable or inappropriate or of
limited value in relation to the Company's current business and no
contracts are outstanding which are likely to change this.
(b) The current work in progress of the Company is adequate to maintain
current cash flow and profitability at a level not less than is
disclosed in the Management Accounts.
(c) The stock-in-trade of the Company is in good condition and is capable
of being sold by the Company in the ordinary course of its business in
accordance with its current price list without rebate or allowance to
a purchaser.
10.4 RETENTION OF TITLE
The Company has not purchased any stock, goods or materials from any of its
suppliers (which are material to its business) on terms that property in it
does not pass until full payment is made or all indebtedness discharged.
10.5 LEASED ASSETS
No circumstance has arisen or is likely to arise in relation to any asset
held by the Company under a lease or similar agreement whereby the rental
payable has been or is likely to be increased; and all such assets have at
all relevant times been used for a qualifying purpose within the meaning of
Section 64 FA 1980 and Section 70 FA 1982.
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10.6 CONDITION OF PLANT
(a) To the best of the Warrantors' knowledge and belief the plant,
machinery, vehicles and other equipment used in connection with the
Company's business:
(i) are in a good and safe state of repair and condition and
satisfactory working order and have been regularly and properly
maintained;
(ii) are not surplus to requirements;
(iii) are in its possession and control, and its absolute property,
save for those items the subject of hire purchase, leasing or
rental agreements listed in the Disclosure Letter, or in respect
of which the aggregate outstanding payments do not exceed
(Pounds)1,000;
(iv) are not expected to require replacements or additions at a cost
in excess of (Pounds)5,000 within six months from the date of
this Agreement; and
(v) are all capable and (subject to normal wear and tear) will
remain capable throughout the respective periods of time during
which they are each written down to a nil value in the accounts
of the Company (in accordance with the normal recognised
accountancy principles consistently applied prior to the date
hereof) of doing the work for which they were designed or
purchased.
(b) Maintenance contracts are in full force and effect in respect of all
assets of the Company which it is normal or prudent to have maintained
by independent or specialist contractors, and in respect of all assets
which the Company is obliged to maintain or repair under any leasing
or similar agreement; and all those assets have been regularly
maintained to a good technical standard and in accordance with safety
regulations usually observed in relation to assets of that
description, and in accordance with the terms and conditions of any
applicable leasing or similar agreement.
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11. INSURANCE
11.1 All the assets and undertaking of the Company of an insurable nature are,
and have at all material times been, insured in amounts representing their
full replacement or reinstatement value, against fire and other risks
normally insured against by persons carrying on the same business as that
carried on by the Company.
11.2 Full particulars of all the policies of insurance effected by the Company
are set out in the Disclosure Letter. Such policies are currently in full
force and effect, and nothing has been done or omitted to be done which
could make any such policy void or voidable or which is likely to result in
an increase in premium.
11.3 None of the said policies are subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the normal rate.
11.4 No claim is outstanding or may be made under any of the said policies and
no circumstances exist which are likely to give rise to such a claim.
12. ENVIRONMENT
12.1 COMPLIANCE WITH ENVIRONMENTAL LAWS
The Warrantors are not aware of any breach of Environmental Laws.
12.2 HAZARDOUS MATERIALS
The Company has not engaged in or permitted any operations or activities
upon or in connection with the use of the Properties or any portion thereof
for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, recycling, release, discharge,
refining, dumping or disposal of any Hazardous Materials
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under, in or about the Properties, or has transported any Hazardous
Materials to, from or across the Properties, or has permitted any Hazardous
Materials to be used in any construction, or to be deposited or stored or
otherwise located on, under, in or at the Properties, or has permitted any
Hazardous Materials to migrate from the Properties upon or beneath other
properties, or has any knowledge of any Hazardous Materials migrating or
threatening to migrate from other properties on, about or beneath the
Properties.
12.3 NOTICE OF VIOLATION
The Company has not received any notice or other communication from any
relevant authority or any other person or group of persons that any aspect
of the business, operations or facilities of the Company is, or may be, in
violation (or alleged violation) of Environmental Laws or Environmental
Approvals or that it is or may be responsible for the cleanup or
remediation of any substances at any location or of any other matter which
is likely to lead to the Company incurring any Environmental Liability. So
far as the Warrantors are aware, there are no circumstances known to the
Seller or the Company that may prevent or interfere with full compliance
with Environmental Laws in the future. There is no Environmental Liability
pending or threatened against the Company nor, so far as the Warrantors are
aware, against any person whose liability for any Environmental Claim the
Company has or may have retained or assumed, either contractually or by
operation of law.
12.4 LIABILITIES
To the best of the Warrantors' knowledge and belief the Company has no
Environmental Liability. Neither the Warrantors nor the Company are aware
of any actions, claims or proceedings, whether actual or potential,
relating in any way to Environmental Matters or any claims, costs or
demands whatsoever and howsoever arising therefrom, nor has any reason to
believe that the Sellers or the Company have or are likely to have any
liability in relation to such matters.
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12.5 USE
The Properties have not been and are not affected by any nuisance,
pollution, noise or other factors whatsoever adversely affecting the
Company's use or other rights in respect thereof.
13. INTELLECTUAL PROPERTY
13.1 OWNERSHIP
(a) The Company is the sole beneficial owner of all the Intellectual
Property. All registered Intellectual Property is registered in the
sole name of the Company and all applications for registration have
been applied for in the sole name of the Company.
(b) All the Intellectual Property is valid and subsisting and enforceable
and has been and remains properly registered in any jurisdiction in
which registration is available.
(c) Details of all Intellectual Property which is registered or for which
applications for registration have been made in the name of the
Company are set out in Schedule 6. All renewal fees therefor have been
paid, and, in the case of applications, all steps necessary for their
prosecution have been taken to date. Nothing has been done or omitted
to be done whereby any person will be able to seek the cancellation,
rectification, expungement or any other modification of, or of the
registration of, any of the Intellectual Property.
(d) The subject matter of the Intellectual Property has been devised,
made, created or otherwise generated by employees of the Company in
the normal course of their employment.
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13.2 INFRINGEMENT AND LEGAL PROCEEDINGS
(a) There is and has been no infringement or threatened infringement of
any of the Intellectual Property by any other person, and the Company
has not made any claim, threat or intimation of proceedings or
considered proceedings against any other person in respect of any
Intellectual Property.
(b) There are and have been no proceedings actions or claims and the
Company has not received any notice of any claim impugning the title,
validity or enforceability of any of the Intellectual Property or
claiming any right or interest in it, or any threat or intimation of
any such proceedings.
(c) The conduct of its business by the Company does not, and the use by
the Company of the Intellectual Property, does not and will not,
infringe the rights of any other person, and there are no grounds on
which any other person is likely to bring any proceedings relating to
infringement of any of such other person's rights.
13.3 LICENCES
(a) The Company has not granted, nor is there subsisting, any licence,
permission, consent, charge or assignment of or in respect of any of
the Intellectual Property in whole or in part in favour of any other
person, and there are no circumstances which could entitle any other
person to call for such a licence, permission, consent, charge or
assignment.
(b) There are no licences, consents or permissions from, or arrangements
or settlements with, any other person, or payments due to any other
person, for use of or working in accordance with any of the
Intellectual Property.
13.4 TRADE MARKS
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(a) The list of trade marks in Schedule 6 is a complete list of all trade
marks, registered, unregistered, or for which application for
registration has been made, included in the Intellectual Property.
(b) The registered proprietor of each registered trade mark and the
applicant for each application made before Completion to register a
trade mark, included in the Intellectual Property, used that trade
mark on all goods or services to which it applies, within two years of
the date of application for registration of it and has not ceased to
use that trade mark for any period exceeding two years.
(c) All assignments of any trade marks have been properly executed and
advertised in accordance with Section 22 of the Trade Marks Act 1938.
13.5 KNOW-HOW, ETC
(a) All formulae, processes and other information ("technical
information") owned or used by the Company in the course of its
business are adequately documented, and to the extent that the same
are confidential, no part thereof has been or will be disclosed to any
other person, nor is there any agreement or other arrangement under
which any other person can require such disclosure.
(b) All confidential technical information forming part of the
Intellectual Property which has been disclosed or to which access has
been permitted to any other person has been made available under a
written confidentiality undertaking, a copy of which is annexed to the
Disclosure Letter.
13.6 GENERAL
All advertising and marketing materials used by the Company in connection
with its business comply with all legal requirements in all countries in
which these materials are used or proposed to be used. Such materials are
not defamatory and there are no grounds under which such materials could be
challenged for any reason whatsoever, including (without limitation)
defamation, trade libel or any analogous law.
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14. PROPERTY
14.1 TITLE AND TENURE
(a) The Property comprises all the real property owned, occupied or
otherwise used by the Company in connection with its business.
(b) The Property which is occupied or otherwise used by the Company in
connection with its business is so occupied or used by right of
ownership or under lease or licence, and the terms of any such lease
or licence permit such occupation or use.
(c) The Company is the legal and beneficial owner of the Property.
(d) The information contained in Schedule 4 as to the tenure of the
Property, the principal terms of the lease or licences held by the
Company, and the principal terms of the tenancies and licences subject
to, and with the benefit of which, the Property is held, is true and
accurate in all respects.
(e) The Company has a good and marketable title to the Property.
14.2 ENCUMBRANCES
(a) The Property is free from any debenture charge, rent charge, lien or
other encumbrance securing the repayment of monies or other obligation
or liability of the Company or any other person.
(b) The Property is not subject to any outgoings other than uniform
business rates, water charges and insurance premiums and (in the case
of leasehold property) rent and service charges. All outgoings have
been discharged and no liability, contingent or otherwise is
outstanding.
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(c) The Property is not subject to any restrictive covenants,
stipulations, easements, profits a prendre, wayleaves, licences,
grants, restrictions, overriding interests or other such rights vested
in third parties.
(d) Where any such matters as are referred to in paragraphs 14.2 (a) (b)
and (c) are disclosed in the Disclosure Letter, the obligations and
liabilities imposed under them have been fully observed and performed
and any payments in respect of them have been duly paid.
(e) The Property is not subject to any option, right of pre-emption or
right of first refusal.
14.3 PLANNING MATTERS
(a) The Company's use of the Property is the permitted use for the
purposes of the Planning Acts.
(b) Planning permission has been obtained or is deemed to have been
granted for the purposes of the Planning Acts with respect to the
development of the Property and no such permission has been suspended
or called in and no application for planning permission is awaiting
decision.
(c) No planning or building regulation consent has been refused or granted
subject to unusual or onerous terms in respect of the Properties or
any parts thereof or the modification of any consent in respect
thereof.
(d) To the best of the Warrantors' knowledge and belief compliance is
being made and has at all times been made in all respects with
planning permissions, orders, and regulations issued under the
Planning Acts, the London Building Acts and building regulation
consents and byelaws for the time being in force with respect to the
Property.
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(e) To the best of the Warrantors' knowledge and belief compliance is
being made and has at all times been made with all agreements under
the Town and Country Planning Act 1990 s.106 made with respect to the
Property.
(f) To the best of the Warrantors' knowledge and belief compliance is
being and has been made with all agreements made under the Highways
Act 1980 s. 38, with respect to the Property.
(g) The Property is not listed as being of special historic or
architectural importance or located in a conservation area.
(h) All development charges, monetary claims and liabilities under the
Planning Acts or any other such legislation have been discharged and
no such liability, contingent or otherwise, is outstanding.
14.4 STATUTORY OBLIGATIONS
To the best of the Warrantors' knowledge and belief:-
(a) compliance has been made with all applicable statutory and bye-law
requirements with respect to the Property and in particular (but
without limitation) with the requirements as to fire precautions, are
environmental laws on other legislation, and under the Public Health
Acts and the Office, Shops and Railway Premises Act 1963.
(b) All requirements (formal or informal) of any competent authority
(exercising statutory or delegated powers) in relation to the
Property, have been complied with.
(c) No licences or permissions, under the Licensing Act 1964 (or
otherwise) are required for the conduct of the Company's business at
the Property.
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14.5 ADVERSE ORDERS
(a) There are no compulsory purchase notices, orders or resolutions
affecting the Property and to the best of the Warrantors' knowledge
and belief no circumstances likely to lead to any being made.
(b) There are no closing, demolition or clearance orders, enforcement
notices or stop notices affecting the Property and to the best of the
Warrantors' knowledge and belief no circumstances likely to lead to
any being made.
14.6 CONDITION
(a) In all material respects the Building and other structures on the
Property are in good and substantial repair and fit for the purposes
for which they are presently used.
(b) There are no disputes with any adjoining or neighbouring owner with
respect to boundary walls and fences or with respect to any easement,
right of or means of access to the Property.
(c) The principal means of access to the Property is over roads which have
been taken over by the local or other highway authority and which are
maintainable at the public expense and no means of access to the
Property is shared with any other party nor subject to rights of
termination by any other party.
(d) The Property enjoys the main services of water, drainage, electricity
and gas.
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14.7 LEASEHOLD PROPERTIES
(a) The Company has paid the rent and observed and performed the covenants
on the part of the tenant, and the conditions contained in any lease
under which any part of the Property is held, and all such leases are
valid and in full force. As regards repairing obligations, the Company
has received no notice that is in breach in any material respect.
(b) All licences, consents and approvals required from the landlords and
any superior landlords under any lease of the Property have been
obtained, and the covenants on the part of the tenant contained in
such licences, consents and approvals have been duly performed and
observed.
(c) No rent reviews are currently in progress in respect of the Property.
14.8 TENANCIES
(a) The Property is held subject to and with the benefit of tenancies as
set out in Schedule 4.
(b) With respect to such tenancies the Disclosure Letter contains
particulars of:-
(i) the rent and any rent review and, with respect to rent reviews,
the date for giving notice of exercise of such reviews and the
operative review date;
(ii) the term and any rights to break or renew the term;
(iii) the obligations of the landlord and tenant in respect of
outgoings, repairs, insurance, services, and service charge;
(iv) any options, pre-emption or first refusal rights;
(v) the user required or permitted under the terms of the tenancies;
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(vi) an entitlement of a tenant to compensation on quitting the
premises let to him in respect of disturbance and improvements
or otherwise; and
(vii) any unusual provisions.
(c) There has been no material or persistent breach of covenant by a
tenant of any part of the Property.
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SCHEDULE 4
The Property
1. Lease of Unit 16, Brittania Industrial Estate, Poyle Road, Colnbrook dated
7th November 1984 between Severn-Trent Water Authority (1) Nevin Electric
Limited (2) and Nevin Electric (Holdings) Limited (3).
2. Lease of Unit 4, Bermondsey Trading Estate, Rotherhithe New Road, London
SE16 dated 5th May 1998 between Industrial Property Investment Fund (1) and
Freight On Board International Limited (2).
3. Agreement for lease of 11-13 Yeldon Court, Sanders Road, Wellingborough
between Armfibre Limited (1) and Freight On Board International Limited
(2).
4. Licence to occupy Unit 17, Brittania Industrial Estate, Poyle Road,
Colnbrook dated 25th June 1997 between Lex Komatsu Forklift (South) Limited
(1) and Freight On Board International Limited (2).
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SCHEDULE 5
Pensions Provisions
None
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SCHEDULE 6
Intellectual Property
1. The trade mark "FOB" registered on 14/th/ June 1996 at the Trade Mark
Registry in respect of class 39 of the WIPO International Classification of
Goods and Services with the registration number 2102705.
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SCHEDULE 7
WARRANTORS' PROTECTION PROVISIONS
(1) The liability of the Warrantors in relation to the Warranties shall cease
on the expiry of 15 calendar months after the date of Completion save as
regards any alleged breach of which notice in writing (containing
sufficient details of the event or circumstance giving rise to the breach
to allow the same to be reasonably identified has been given to the
Warrantors prior to that anniversary.
(2) The Warrantors shall not be liable for any Warranty claim unless their
aggregate liability (or what would be their liability apart from this
paragraph) exceeds (Pounds)10,000 but they shall then be liable for all
such claims and not merely the excess over (Pounds)10,000.
(3) The total liability of the Warrantors under the Warranties and the Deed of
Indemnity shall not in any event exceed the aggregate consideration which
all the Warrantors receive for their shares and the liability of each
individual Warrantor shall not exceed the following sums:-
(a) Mr J. W. M Clark (Pounds)1,199,980
(b) Mr D Amos (Pounds)150,010
(c) Mr C Brookes (Pounds)150,010
(4) If the Buyer and the Group Companies, or any of them, are entitled to make
a claim in respect of any act, event or default both under the Warranties
and under the Deed of Indemnity, the claim shall be made first under the
Deed of Indemnity and any amount payable to the Buyer or any Group Company
under the Warranties shall be reduced to the extent of the claim.
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EXHIBIT 10.13
REGISTRATION RIGHTS AGREEMENT
------------ ------ ---------
This Registration Rights Agreement is dated as of 12th April , 1999 by and among
SkyNet Holdings, Inc., a Delaware corporation (the "Company") and David Victor
Amos, Christopher Shaun Brooker, John William Murray Clark, Louisa Jane Clark,
Kim Amos and Susan Jane Brooker (collectively the "Holders"), shareholders of
Freight on Board International Limited, a United Kingdom corporation
("Acquiree").
WITNESSETH:
----------
WHEREAS, the Company and Holders are parties to a Share Purchase Agreement dated
as of 12th April, 1999 (the "Agreement") pursuant to which the Company has
elected to purchase shares of shares of Acquiree (the "Share Acquisition");
WHEREAS, pursuant to the Share Acquisition, the Holders are to receive certain
shares of the Company's $0.000l par value common stock (the "Common Stock"); and
WHEREAS, the parties hereto desire to set forth their agreement concerning the
registration under the Securities Act of 1933, as amended, of the Common Stock
to be issued to the Holders in connection with the Share Acquisition.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
---------
1. Definitions.
-----------
(a) "Closing" shall mean that date upon which a closing of the Share
Acquisition occurs.
(b) "Company" shall mean SkyNet Holdings, Inc.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(d) "Holders" shall mean David Victor Amos, Christopher Shaun Brooker, John
William Murray Clark, Louisa Jane Clark, Kim Amos and Susan Jane Brooker,
constituting the former shareholders of Acquiree who have received, and may
receive subsequent to the date hereof, shares of the Company's Common Stock
pursuant to the Share Acquisition.
(e) "Person" means an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organisation, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or
<PAGE>
incompetent person, a quasi-governmental entity, a government or any agency,
authority, political subdivision or other instrumentality thereof, or any other
entity.
(f) "Registration Statement' shall mean the Registration Statement of the
Company filed with the SEC pursuant to the provisions of Section 2 of this
Agreement which covers the resale of the Restricted Stock on an appropriate form
then permitted by the SEC to be used for such registration and the sales
contemplated to be made thereby under the Securities Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
Registration Statement, including any pre-and post-effective amendments thereto,
in each case including the prospectus contained therein, all exhibits thereto
and all materials incorporated by reference therein.
(g) "Restricted Stock" shall mean all or any shares of Common Stock or other
equity securities of the Company that may be issued to the Holders pursuant to
the Share Acquisition, and any additional shares of Common Stock or other equity
securities of the Company issued or issuable after the date hereof in respect of
any such securities (or other equity securities issued in respect thereof) by
way of a stock dividend or stock split, in connection with a combination,
exchange, reorganisation, recapitalisation or reclassification of Company
securities, or pursuant to a merger, division, consolidation or other similar
business transaction or combination involving the Company; provided that: as to
any particular shares of restricted stock, such securities shall cease to
constitute restricted stock (i) when a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of thereunder, or (ii) when and to
the extent such securities are permitted to be distributed pursuant to Rule 144
(or any successor provision to such Rule) under the Securities Act or are
otherwise freely transferable to the public without further registration under
the Securities Act.
(h) "Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at any relevant time.
(i) "SEC" shall mean the United States Securities and Exchange Commission.
(k) "Trading Day" shall mean any day on which the New York Stock Exchange is
open for trading.
(j) "Share Acquisition" shall mean the acquisition of shares of the Acquiree
pursuant to the terms of the Agreement entered into on April 1999.
Capitalised terms used in this Registration Rights Agreement and not otherwise
defined herein shall have the same meaning ascribed thereto in the Agreement.
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2. Incidental ("Piggyback") Registration Rights.
------------------------ -------------------
(a) If at any time after September 30, 1999, the Company proposes to file a
registration statement under the Securities Act (except with respect to
registration statements on Forms S-4, S-8, or any other form not available for
registering the Restricted Stock for sale to the public), with respect to an
offering of Common Stock for its own account, then the Company shall in each
case give written notice of such proposed filing to the Holders at least 15 days
before the anticipated filing date of the registration statement with respect
thereto (the "Piggyback Registration"), and shall, subject to Section 2(b) and
2(c) below, include in such Piggyback Registration such amount of Restricted
Stock as each such Holder may request within 20 days of the receipt of such
notice.
(b) If a Piggyback Registration relates to an underwritten primary registration
on behalf of the Company, and the managing underwriter thereof advises the
Company in writing that in its opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in an orderly
manner in such offering within a price range acceptable to the Company, the
Company shall include in such registration (i) first, the securities the Company
proposes to sell, (ii) second, the Restricted Stock requested to be included in
such registration to the extent that the number of shares to be registered will
not, in the opinion of the managing underwriter, adversely affect the offering
of the securities pursuant to clause (i), pro rata among the Holders of such
Restricted Stock on the basis of the number of shares owned by such Holders and
(iii) third, provided that all Restricted Stock requested to be included in the
registration statement have been so included, any other securities requested to
be included in such registration.
(c) Notwithstanding anything to the contrary contained herein, the Company's
obligation in subparagraphs 2(a) and 2(b) above shall extend only to the
inclusion of the Restricted Stock in a Piggyback Registration Statement filed
under the Securities Act. The Company shall have no obligation to assure the
terms and conditions of distribution, to obtain a commitment from an underwriter
relative to the sale of the Restricted Stock or to otherwise assume any
responsibility for the manner, price or terms of the distribution of the
Restricted Stock.
(d) EXCEPT WITH RESPECT TO THE SHARES OF COMMON STOCK PERMITTED TO BE SOLD BY
THE HOLDERS PURSUANT TO SUBPARAGRAPHS 2(A) AND 2(B) ABOVE, THE REMAINDER OF THE
SHARES OF THE COMPANY'S COMMON STOCK ACQUIRED (OR TO BE ACQUIRED) BY THE HOLDERS
PURSUANT TO THE SHARE ACQUISITION MAY NOT, WITHOUT THE WRITTEN CONSENT OF THE
COMPANY, BE SUBJECT TO ANY TRANSFER, DISPOSITION, SALE OR ENCUMBRANCE FOR A
PERIOD OF TWENTY-FOUR (24) MONTHS FROM THE CLOSING OF THE SHARE ACQUISITION.
3. Registration Procedures. Whenever it is obligated to register any
-----------------------
Restricted Stock pursuant to this Agreement, the Company shall:
(a) prepare and file with the Commission a Registration Statement with respect
to the Restricted Stock in the manner set forth at Paragraph 2 hereof and use
its best
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efforts to cause such Registration Statement to become effective as promptly as
possible and to remain effective for that period identified in subparagraph 3(g)
hereafter;
(b) prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the period
specified in subparagraph 3(g) below and to comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such Registration Statement in accordance with the Holders' intended method
of disposition set forth in such Registration Statement for such period;
(c) furnish to the Holders and to each underwriter, if any, such number of
copies of the Registration Statement and the prospectus included therein
(including each preliminary prospectus), as such persons may reasonably request
in order to facilitate the public sale or other disposition of the Restricted
Stock covered by such Registration Statement;
(d) use its best efforts to register or qualify the Restricted Stock covered by
such Registration Statement under the securities or blue sky laws of such
jurisdictions as the Holders, or, in the case of an underwritten public
offering, the managing underwriter shall reasonably request; provided, however,
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(e) immediately notify the Holders under such Registration Statement and each
underwriter, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus contained in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required or necessary to be stated therein in order to make the
statements contained therein not misleading in light of the circumstances under
which they were made;
(f) make available for inspection by the Holders, any underwriter participating
in any disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by any such Holders or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Holders, underwriter, attorney,
accountant or agent in connection with such Registration Statement,
(g) for purposes of subparagraphs 3(a) and 3(b) above, the period of
distribution of Restricted Stock shall be deemed to extend until the earlier of:
(A) in an underwritten public offering of all of the Restricted Stock, the
period in which each underwriter has completed the distribution of all
securities purchased by it; (B) in any other registration, the period in which
all shares of Restricted Stock covered thereby shall have been sold; and (C) a
period of two (2) years from the effective date of the
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first Registration Statement filed by the Company with the SEC pursuant to this
Agreement.
(h) if the Common Stock of the Company is listed on any securities exchange or
automated quotation system, the Company shall use its best efforts to list (with
the listing application being made at the time of the filing of such
Registration Statement or as soon thereafter as is reasonably practicable) the
Restricted Stock covered by such Registration Statement on such exchange or
automated quotation system;
(i) enter into normal and customary underwriting arrangements or an
underwriting agreement and take all other reasonable and customary actions if
the Holders sell their shares of Restricted Stock pursuant to an underwriting
(however, in no event shall the Company, in connection with such underwriting,
be required to undertake any special audit of a fiscal period in which an audit
is normally not required);
(j) notify the Holders if there are any amendments to the Registration
Statement, any requests by the SEC to supplement or amend the Registration
Statement, or of any threat by the SEC or state securities commission to
undertake a stop order with respect to sales under the Registration Statement;
and
(k) cooperate in the timely removal of any restrictive legends from the shares
of Restricted Stock in connection with the resale of such shares covered by an
effective Registration Statement,
4. Expenses.
--------
(a) For the purposes of this Paragraph (4), the term "Registration Expenses
shall mean: all expenses incurred by the Company in complying with paragraph (2)
of this Agreement, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, "blue sky" fees, fees of the National
Association of Securities Dealers, Inc. ("NASD"), fees and expenses of listing
shares of Restricted Stock on any securities exchange or automated quotation
system on which the Company's shares are listed and fees of transfer agents and
registrars. The term "Selling Expenses" shall mean; all underwriting discounts
and selling commissions applicable to the sale of Restricted Stock and all
accountable or non-accountable expenses paid to any underwriter in respect of
the sale of Restricted Stock.
(b) Except as otherwise provided herein, the Company will pay all Registration
Expenses in connection with the Registration Statement filed pursuant to
paragraph (2) of this Agreement. All Selling Expenses in connection with any
Registration Statement filed pursuant to paragraph (2) of this Agreement shall
be borne by the participating Holders in proportion to the number of shares sold
by each, or by such persons other than the Company (except to the extent the
Company may be a seller) as they may agree.
5. Obligations of Holders.
-------------- -------
5
<PAGE>
(a) In connection with each registration hereunder, each selling Holder will
furnish to the Company in writing such information with respect to such seller
and the securities held by such seller, and the proposed distribution by him or
them as shall be reasonably requested by the Company in order to assure
compliance with federal and applicable state securities laws as a condition
precedent to including such seller's Restricted Stock in the Registration
Statement. Each selling Holder also shall agree to promptly notify the Company
of any changes in such information included in the Registration Statement or
prospectus as a result of which there is an untrue statement of material fact or
an omission to state any material fact required or necessary to be stated
therein in order to make the statements contained therein not misleading in
light of the circumstances then existing.
(b) In connection with each registration pursuant to this Agreement, the
Holders whose shares are included therein will not effect sales thereof until
notified by the Company of the effectiveness of the Registration Statement, and
thereafter will suspend such sales after receipt of telegraphic or written
notice from the Company to suspend sales to permit the Company to correct or
update a Registration Statement or prospectus. At the end of any period during
which the Company is obligated to keep a Registration Statement current, the
Holders included in said Registration Statement shall discontinue sales of
shares pursuant to such Registration Statement upon receipt of notice from the
Company of its intention to remove from registration the shares covered by such
Registration Statement which remain unsold, and such Holders shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
6. Information Blackouts and Holdbacks.
----------- ------------- ---------
(a) At any time when a Registration Statement effected pursuant to Paragraph 2
relating to Restricted Stock is effective, upon written notice from the Company
to the Holders that the Company has determined in good faith that sale of
Restricted Stock pursuant to the Registration Statement would require disclosure
of non-public material information, the Holders shall suspend sales of
Restricted Stock pursuant to such Registration Statement until such time as the
Company notifies the Holders that such material information has been disclosed
to the public or has ceased to be material or that sales pursuant to such
Registration Statement may otherwise be resumed.
(b) Each Holder of Restricted Stock shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, during the 30 days prior to and the 120-day period beginning on
the effective date of any underwritten primary registration undertaken by the
Company (except as part of such underwritten registration), unless the
underwriter managing the registered public offering otherwise agrees.
7. Indemnification.
---------------
(a) The Company agrees to indemnify, to the extent permitted by law, each
Holder of Restricted Stock, its officers and directors and each Person who
controls such Holder (within the meaning of the Securities Act) against all
losses, claims,
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damages, Liabilities and expenses joint or several, to which an Indemnified
person may become subject under the Securities Act or any other statute or at
common law, insofar as such liability (or action in respect thereof) arises out
of or is based upon (a) any alleged untrue statement of material fact contained
in any Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or (b) any alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
state securities or other blue sky laws applicable to the Company in connection
with such registration, except insofar as the same are caused by or contained in
any information furnished to the Company by such Holder for use therein or by
such Holder's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such Holder with a sufficient number of copies of the same.
(b) In connection with any Registration Statement m which a Holder of
Restricted Stock is participating, each such Holder shall furnish to the Company
in writing such information and affidavits as the Company reasonably requests
for use in connection with any such Registration Statement or prospectus and, to
the extent permitted by law, shall indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the Registration Statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished by such
Holder; provided that the obligation to indemnify shall be individual, not joint
and several, for each Holder and shall be limited to the net amount of proceeds
received by such Holder from the sale of Restricted Stock pursuant to such
Registration Statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defence of such claim with counsel
reasonably satisfactory to the indemnified party. If such defence is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defence of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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(d) The indemnification provided for under this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities, The Company also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event the Company's indemnification
is unavailable for any reason.
8. Miscellaneous Provisions.
------------- ----------
(a) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware.
(b) Counterparts This Agreement may be signed in any number of counterparts,
------------
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(c) Amendment and Waivers. Except as otherwise provided herein, the provisions
---------------------
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given without the
written consent of the Company and the Holders.
(d) Notices. All communications under this Agreement shall be sufficiently
-------
given if delivered by hand or by overnight courier or mailed by registered or
certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Mr. Vjekoslav Nizic
President and Chief Executive Officer
SkyNet Holdings, Inc.
343 Glasgow Avenue
Inglewood, CA 90301
Telephone Number: (310) 642-7776
Telecopy Number: (310) 568-9637
8
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with a copy to
Stephen M. Cohen, Esquire
Buchanan Ingersoll, P.C.
Eleven Penn Center
1835 Market Street, 14th Floor
Philadelphia, PA 19103
Telephone Number: (215) 665-3873
Telecopy Number: (215)6654760
and
Jon D E. Rayman
Clyde & Co.
Beaufort House Chertsey Street
Guildford Surrey GUI 4HA
Telephone Number: +44(0) 1483 55 55 55
Facsimile Number: 1483 5673 30
(ii) if to the Holders, to the address identified on the books and records of
the Company;
or, at such other address as any of the parties shall have furnished in writing
to the other parties hereto.
(e) Successors and Assigns: Holders as Beneficiaries. This Agreement shall
------------------------------------------------
inure to the benefit of and be binding upon the parties and their respective
successors and assigns, and the agreements of the Company herein shall inure to
the benefit of the Holders and their respective successors and assigns.
(f) Headings. The headings in this Agreement are for convenience of reference
--------
only and shall not limit or otherwise affect the meaning hereof.
(g) Entire Agreement: Survival Termination. This Agreement is intended by the
------ -------------------------------
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
9
<PAGE>
ATTEST: SKYNET HOLDINGS, INC.
By: /s/ VJEKOSLAV NIZIC By: /s/ MARTIN G. PARAVATO
Name: Vjekoslav Nizic Martin G. Paravato
Title: President Chief Financial Officer
HOLDERS
KEITH GORDON /s/ D V AMOS
Witness David Victor Amos
KEITH GORDON /s/ C BROOKER
Witness Christopher Shaun Brooker
KEITH GORDON /s/ JOHN CLARK
Witness John William Murray Clark
KEITH GORDON /s/ JOHN CLARK AS ATTORNEY FOR LOUISA CLARK
Witness Louisa Jane Clark
KEITH GORDON /s/ C BROOKER AS ATTORNEY FOR SUSAN BROOKER
Witness Susan Jane Brooker
KEITH GORDON /s/ D V AMOS AS ATTORNEY FOR KIM AMOS
Witness Kim Amos
10
<PAGE>
EXHIBIT 10.14
DATED 12/TH/ APRIL 1999
MR. J. CLARK AND OTHERS
- and -
SKYNET HOLDINGS INC
----------------
TAX COVENANT
----------------
ABX
Beaufort House
Chertsey Street
Guildford GU1 4HA
Tel: 01483 555 555
Fax: 01483 567 330
Ref: JDR/NM/9901062
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THIS DEED OF COVENANT is made on 12/th/ April 1999
BETWEEN :
(1) THE PERSONS whose names and addresses are stated in Schedule 1 (the
"COVENANTORS"); and
(2) SKYNET HOLDINGS INC, whose principal place of business is at 344 South
Glasgow Avenue, Inglewood, Califonia 90301, USA (the "BUYER").
RECITAL
This Deed is entered into pursuant to the Agreement (as defined in clause 1.1
below).
THIS DEED WITNESSES as follows:
1. INTERPRETATION
1.1 In this Deed:
"AGREEMENT" means the agreement dated 12/th/ April 1999 and made
between inter alia the Covenantors and the Buyer for
the acquisition of the entire issued share capital of
the Company
"COMPANY" means Freight on Board International Limited, a company
incorporated in England and Wales (registered no.
01586737 whose registered office is at Unit 16,
Brittania Industrial Estate, Poyle Road, Colnbrook,
Berkshire SL3 0BH;
"DEMAND" means the issue of any notice, letter or other document
by or on behalf of any Tax Authority or the taking of
any other action by or on behalf of any Tax Authority
from which notice, letter, document or action it
appears that a Tax Liability is to be, or may come to
be, imposed on any Group Company;
"EVENT" means (without limitation) the death of any person, any
change in the residence of any person for the purposes
of Taxation, any payment, transaction, action, omission
or occurrence of whatever nature or any deemed
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distribution of income, and references to an event
occurring on or before Completion shall include the
combined result of two or more events the first of
which shall have taken place outside the ordinary
course of business of the relevant Group Company and
which shall have occurred on or before Completion, and
that event or those latter events occurring after
Completion shall have taken place inside the ordinary
course of business which shall be deemed for this
purpose to include Completion;
"Group Company" means the Company and any of the Subsidiaries
"Last Accounts" means the audited balance sheet of each Group Company
as at the Last Accounts Date, the audited profit and
loss account of each Group Company for the financial
period ended on the Last Accounts Date, and the audited
consolidated balance sheet as at such date and the
audited consolidated profit and loss account for such
period of the Company and the Subsidiaries and (in each
case) the auditor's and the directors' reports thereon;
"Last Accounts
DATE" means 31/st/ October 1998;
"THE MANAGEMENT
Accounts" means the unaudited consolidated balance sheet and
profit and loss account of the Company in respect of
the period ending 31/st/ January 1999;
"RELIEF" means any relief, allowance or credit in respect of
any Tax or deduction in computing income, profits or
gains for the purposes of any Tax;
"THE SUBSIDIARIES" has the meaning given in the Agreement;
"TAX" AND
"TAXATION" means all forms of taxation, charges, duties, imposts,
withholdings, rates, levies and governmental charges
(including any related fine, penalty, surcharge or
interest and whether
3
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national, state, provincial or local) of whatever
nature and whatsoever and whenever created, enacted or
imposed, and whether of the United Kingdom or
elsewhere;
"TAX ASSESSMENT" means any assessment, demand or other similar formal
notice of a tax liability issued by or on behalf of any
Tax Authority by virtue of which any Group Company is
liable to make a payment of Tax or will, with the
passing of time, become so liable (in the absence of
any successful application to postpone any such
payment);
"TAX AUTHORITY" means any local, municipal, governmental, state,
federal or other fiscal, revenue, customs or excise
authority, body or official anywhere in the world,
including without limitation the Inland Revenue and HM
Customs & Excise.
Save as otherwise expressly provided, words and expressions defined in the
Agreement shall have the same meaning in this Deed.
1.2 In this Deed:
(a) references to any "TAX LIABILITY" of any Group Company shall mean
both liabilities of the relevant Group Company to make actual
payments of Tax (or amounts in respect of Tax) and also:
(i) the loss, or the setting off against Tax or against income,
profits or gains, of any Relief which would (were it not for the
said loss or setting off) have been available to any Group
Company and which has been taken into account in computing (and
so reducing or obviating the need for) any provision for Tax
including any provision for deferred Tax which appears or would
but for such taking into account have appeared in the Last
Accounts;
(ii) the loss of a right to repayment of Tax which has been treated as
an asset of any Group Company in preparing the Last Accounts or
the setting off of any right to repayment of Tax against any
actual Tax Liability in respect of which the Buyer would, but for
that setting off, have been able to make a claim against the
Covenantors under this Deed; and
4
<PAGE>
(iii) the setting off against income, profits or gains earned, accrued
or received on or before Completion of any Relief which arises
in respect of an Event occurring after Completion and not in
respect of any Event occurring on or before Completion in
circumstances where, but for such setting off, any Group Company
would have had actual Tax Liability in respect of which the
Buyer would have been able to make a claim against the
Covenantors under this Deed;
(b) in any case falling within any of sub-paragraphs (i), (ii) and (iii)
of clause 1.2(a), the amount that is to be treated for the purposes of
this Deed as a Tax Liability of any Group Company (the "DEEMED TAX
LIABILITY") shall be determined as follows:
(i) in a case which falls within sub-paragraph (i) of clause 1.2(a)
the Deemed Tax Liability shall be the amount of the additional
Tax which any Group Company is (or would but for the
availability of any Relief arising after Completion be) liable
to pay as a result of such loss or setting-off; and that Deemed
Tax Liability shall for the purposes of clause 7 of this Deed be
treated as an actual Tax Liability due and payable on the date
on which such additional Tax is or would have been due and
payable, as the case may be;
(ii) in a case which falls within sub-paragraph (ii) of clause
1.2(a), the Deemed Tax Liability shall be the amount of the
repayment that would have been obtained but for the loss or
setting off mentioned in that sub-paragraph;
(iii) in a case which falls within sub-paragraph (iii) of clause
1.2(a), the Deemed Tax Liability shall be the amount of Tax
which would have been payable by any Group Company but for such
setting-off; and that Deemed Tax Liability shall for the
purposes of clause 7 of this Deed be treated as an actual Tax
Liability due and payable on the date on which the amount of Tax
saved would have been due and payable had it not been saved;
(c) references to:
(i) "INCOME, PROFITS OR GAINS" shall include any other standard or
measure for the purposes of any tax and shall also include any
such income, profits or gains which are deemed to be earned,
accrued or received for the purposes of any Tax;
5
<PAGE>
(ii) income, profits or gains (as defined in paragraph (i) of this
sub-clause) as being earned, accrued or received on or before a
particular date or in respect of a particular period shall
include income, profits or gains which are deemed to have been
earned, accrued or received on or before that date or in respect
of that period for the purposes of any Tax;
(iii) any payment or distribution as being made on or before a
particular date shall include any payment or distribution which
has fallen due and payable on or before that date;
(iv) any "DIVIDEND" shall include anything which is deemed to be a
dividend or distribution for the purposes of any Tax and shall
also include any other Event which gives rise to an obligation
to account for advance corporation tax or amounts corresponding
to or similar to advance corporation tax.
(d) unless the context otherwise requires, references to:
(i) any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court,
official or any legal concept or thing shall in respect of any
jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English legal
term; and
(ii) "WRITING" shall include any modes of reproducing words in a
legible and non-transitory form;
(e) headings shall be for convenience only and accordingly shall be
disregarded; and
(f) (i) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of
acts, matters or things; and
(ii) general words shall not be given a restrictive meaning by reason
of the fact that they are followed by particular examples
intended to be embraced by the general words.
2. COVENANT TO PAY
2.1 Subject to the provisions of clause 3 the Covenantors hereby jointly and
severally covenant with the Buyer that they will pay to the Buyer a sum
equal to each of the following:
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<PAGE>
(a) any Tax Liability of any Group Company arising:
(i) as a direct or indirect consequence of any Event which occurred
on or before Completion or was deemed to occur on or before
Completion for the purposes of any Tax; or
(ii) in respect of any income, profits or gains which were earned,
accrued or received on or before Completion or in respect of a
period ending on or before Completion;
(b) any Tax Liability of any Group Company arising as a direct or
indirect consequence of any of the following occurring or being deemed
to occur on or before Completion:
(i) the payment of any dividend; or
(ii) the disposal of any asset or the supply (including the
undertaking of an obligation in respect of or the making of
arrangements for any future supply) of any service or business
facility of any kind (including a loan of money or the letting,
hiring or licensing of any tangible or intangible property) in
circumstances where the consideration actually received (if any)
for such disposal or supply is less than the consideration
deemed to have been received for the purposes of any Tax but
only to the extent that the Tax Liability is attributable to the
difference between the consideration (if any) actually received
by any Group Company and the consideration deemed to have been
received for the purposes of any Tax; or
(iii) any Group Company ceasing to be a member of any group or
associated with any other company for the purposes of any Tax;
or
(iv) any Event or the earning of any income, profits or gains which
results in any Group Company becoming liable to pay or bear a
Tax Liability chargeable directly or primarily against or
attributable directly or primarily to another person; or
(v) any other Event which gives rise to a Tax Liability on deemed
(as opposed to actual) income, profits or gains;
(c) any depletion in or reduction in value of the assets or increase in
the liabilities of the Buyer or any Group Company as a result of any
inheritance tax which:
7
<PAGE>
(i) is at Completion a charge on any of the shares or assets of Buyer
or any Group Company or gives rise to the power to sell, mortgage
or charge any of the shares or assets of the Buyer or any Group
Company; or
(ii) after Completion becomes a charge on or gives rise to a power to
sell, mortgage or charge any of the shares or assets of the Buyer
or any Group Company being a liability in respect of inheritance
tax payable as a result of the death of any person (whenever
occurring) within seven years after a transfer of value or a
deemed transfer of value where such transfer of value or deemed
transfer of value occurred on or before Completion.
For the avoidance of doubt, the assets of the Buyer or any Group
Company are deemed to be depleted by such amount as is necessary to
pay in order to discharge or remove any charge on or power to sell,
mortgage or charge, any of the shares or the assets of the Buyer or
any Group Company, and notwithstanding any provision in this Deed the
Buyer or any Group Company, any Group Company may disregard any right
to pay Tax in instalments in discharging or removing a charge or
power;
(d) any costs and expenses reasonably and properly incurred by the Buyer
or any Group Company in connection with any such Tax Liability or
depletion in or reduction in the value of assets or increase in
liabilities as is mentioned in clauses 2.1(a) to 2.1(c) inclusive or
with any Demand therefor or in taking or defending any action under
this Deed; and
(e) any amount recovered by the Buyer from the Covenantors pursuant to
this Deed shall be treated as a reduction in the Consideration
received by the Covenantors for the Shares under the Agreement.
3. LIMITS ON COVENANT
3.1 The covenant given by clause 2 shall not apply to any claim in respect of
any Tax Liability of any Group Company:
(a) to the extent that allowance provision or reserve in respect of the
matter or thing giving rise to such claim has been provided for,
reserved or noted in the Last Accounts;
(b) to the extent that such Tax Liability would not have arisen but for a
change in the rate of Tax or change in legislation or published
administrative practice made after the date hereof or change in the
8
<PAGE>
interpretation of the law after the date hereof, or a change by any
Tax Authority in the method of applying or calculating the rate of Tax
after the date hereof, or change made by any Tax Authority in any
extra statutory concession or previously published practice;
(c) to the extent that such Tax Liability would not have arisen but for
(i) any change in the treatment of assets and liabilities or of the
Tax attributable to timing differences (including capital allowances)
in future accounts of any Group Company or (ii) any other change in
the accounting bases upon which any Group Company prepares its future
accounts other than a change required to ensure compliance with the
law or with any Generally Accepted Accounting Practice applicable to
any Group Company at Completion;
(d) to the extent that such Tax Liability would not have arisen or would
have been reduced or eliminated but for a failure on the part of any
Group Company to make any claim, election surrender or disclaimer or
give any notice or consent or do anything after Completion the making
giving or doing of which was taken into account in preparing the Last
Accounts and of which specific notice and details was given to the
Buyer at least 10 business days before the last date on which such
claim, election, surrender, disclaimer, notice or consent could
validly be made or given;
(e) to the extent that such Tax Liability would not have arisen but for
some act, omission, transaction or arrangement whatsoever carried out
at the written request or with the written approval of the Buyer or
its authorised representative prior to Completion or which was
expressly authorised by the Agreement;
(f) to the extent that such Tax Liability arises or is increased as a
result of the withdrawal or postponement by any Group Company, after
Completion of any claim for Relief made on or before Completion;
(g) to the extent that the Buyer has already been compensated by the
Covenantors (pursuant to a claim for a breach of any of the
Warranties) in respect of the same liability;
(h) to the extent that such Tax Liability would not have arisen but for a
voluntary transaction, action or omission carried out or effected by
any Group Company at any time after Completion, other than any such
transaction, action or omission:
(i) carried out or effected pursuant to a legally binding commitment
created on or before Completion; or
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<PAGE>
(ii) carried out or effected in either the ordinary course of
business or the ordinary course of disposing of capital assets
of any Group Company; or
(iii) carried out or effected at the written request of the
Covenantors;
(i) to the extent that such Tax Liability arises in consequence of an
Event which has occurred since the Last Accounts Date and before
Completion in the ordinary course of business and for the purpose of
this Deed the following shall not be regarded as occurring in the
ordinary course of business of any Group Company (provided that this
clause 3.1(i) shall not be taken to imply that any Event not included
in the following is thereby to be regarded as occurring in the
ordinary course of business of the relevant Group Company):
(i) any payment of a dividend (including any transaction which is
deemed for any Tax purposes to constitute the payment of a
dividend) or the making of any distribution as defined in Part
VI or Section 418 of ICTA;
(ii) any acquisition, disposal or supply, or deemed acquisition or
supply, of any assets goods services or facilities of whatever
nature for a price or consideration deemed for any Tax purposes
to be different from the price or consideration (if any)
actually received or paid;
(iii) any event giving rise to a liability to Tax under any of the
provisions of Sections 126 to 129 inclusive of and Schedule 23
to the Finance Act 1995 or of Part XVII of ICTA (Tax Avoidance);
(iv) any Event which results in any Group Company becoming liable to
pay or bear any Tax which is primarily chargeable against
recoverable from or attributable to another person (other than
Tax required to be deducted or withheld by any Group Company on
making any payment);
(v) any Event giving rise to a liability under Section 419 of ICTA;
(vi) any variation in the share capital of any Group Company or any
alteration of the rights attaching to any shares in the capital
of any Group Company;
(vii) any failure to deduct, account for or pay income tax under the
PAYE regulations or national insurance contributions under
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the applicable regulations;
(viii) any failure to account for or pay any value added tax in
accordance with the Value Added Tax Act 1994 and all orders,
provisions, directions, conditions or regulations made or
imposed thereunder
4. RECOVERY FROM OTHER PERSONS
4.1 If any payment becomes due from the Covenantors pursuant to clause 2 and
any Group Company either is immediately entitled at the due date for the
making of that payment to recover from some other person (including any Tax
Authority) any sum in respect of the Tax Liability that has resulted in
that payment becoming due from the Covenantors, or at some subsequent date
becomes entitled to make such a recovery, then the Buyer shall procure that
the relevant Group Company shall promptly notify the Covenantors of its
entitlement and shall, if so required by the Covenantors, provided the
Covenantors meet all reasonable expenses thereby incurred, take all
appropriate steps to enforce that recovery (keeping the Covenantors fully
informed of the progress of any action taken) and shall account to the
Covenantors for whichever is the lesser of:-
(a) any sum so recovered (including any interest or repayment supplement
paid by the Tax Authority or other person on or in respect thereof
less any Tax chargeable on the relevant Group Company in respect of
that interest); and
(b) the amount already paid by the Covenantors pursuant to clause 2 in
respect of the Tax Liability in question.
5. RELIEFS AND CORRESPONDING SAVINGS
5.1 Where a Tax Liability in respect of which payment has been made by the
Covenantors to the Buyer under clause 2 of this Deed has resulted in any
Group Company obtaining a Relief or right to repayment of Tax ("the
Relevant Relief") which would not otherwise have arisen then:
(a) the Relevant Relief shall first be set off against any payment then
due from the Covenantors under this Deed; and
(b) to the extent there is an excess, a refund shall be made to the
Covenantors of any previous payment or payments made by the
Covenantors under this Deed and not previously refunded under this
clause up to the amount of such excess;
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(c) to the extent that the excess referred to in paragraph (b) of this
sub-clause is not exhausted under that paragraph, the remainder of
that excess shall be carried forward and set off against any future
payment or payments which become due from the Covenantors under this
Deed.
5.2 If, at the Covenantors' request and expense, the auditors for the time
being of the Buyer or relevant Group Company determine that any provision
for Tax in the Last Accounts (excluding a provision for deferred Tax) has
proved to be an overprovision then the amount of such overprovision shall
be applied in the same manner as a Relevant Relief would be applied under
paragraph (a), (b) and (c) of clause 5.1
6. CLAIMS PROCEDURE
6.1 Upon the Buyer or any Group Company becoming aware of a Demand relevant for
the purposes of this Deed, the Buyer shall or shall procure that the
relevant Group Company shall so soon as may be practicable (and in any
event at least 10 business days prior to the latest date on which an appeal
against or an application to postpone any Tax due could be made) give
written notice together with such details as are then available to the
Buyer or the relevant Group Company to the Covenantors, and the Buyer shall
or shall procure that the relevant Group Company shall (if the Covenantors
shall first indemnify and secure it against all costs and expenses,
including interest on overdue Tax which may be reasonably incurred thereby)
take such action and give such information and assistance in connection
with its affairs as the Covenantors may reasonably and promptly by written
notice request to avoid, resist, appeal or compromise the Demand; PROVIDED
THAT neither the Buyer nor the relevant Group Company shall be obliged to
appeal against any Tax Assessment raised on it if, having given the
Covenantors written notice of the receipt of that Tax Assessment, it has
not within 5 business days thereafter received preliminary instructions in
writing from the Covenantors, in accordance with the preceding provisions
of this sub-clause, to make that appeal; AND PROVIDED FURTHER THAT neither
the Buyer nor the relevant Group Company shall be obliged to take any
action under this clause which involves contesting any Tax Assessment
before any court or other appellate body (excluding the authority or body
demanding the Tax in question) unless the Covenantors furnish the Buyer or
the relevant Group Company with the written opinion of leading Tax Counsel
to the effect that an appeal against the Tax Assessment in question is a
reasonable course of action given the amounts involved and the likelihood
of success.
7. DUE DATE OF PAYMENT
7.1 Where the Covenantors becomes liable to make any payment pursuant to clause
2 the due date for the making of that payment shall be:
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(a) in a case that involves an actual payment of Tax by any Group Company
the date that is 5 business days before the last date on which the
relevant Group Company would have had to have paid to the appropriate
Tax Authority the Tax that has given rise to the Covenantors'
liability under this Deed in order to avoid incurring a liability to
interest or a charge or penalty in respect of that Tax Liability; or
(b) in a case falling within any of sub-paragraph (i) of clause 1.2(a) or
within the clause 2.1(c) or 2.1(d) the date falling 5 business days
after the date when the Covenantors have been notified by the Buyer or
the relevant Group Company that the auditors for the time being of the
Buyer or the relevant Group Company have (acting reasonably)
certified, at the request of the Buyer or the relevant Group Company,
that the Covenantors have a liability for a determinable amount under
clause 2 or the date on which repayment would have been received.
7.2 If any payment required to be made by the Covenantors under this Deed is
not made by the due date for the making thereof then, except to the extent
that the Covenantors' liability under clause 2 compensates the Buyer for
the late payment by virtue of its extending to interest and penalties, that
payment shall carry interest from that due date until the date when the
payment is actually made at the rate of 2 per cent above the base rate from
time to time of National Westminster Bank PLC.
8. DEDUCTIONS FROM PAYMENTS
8.1 All sums payable by the Covenantors under this Deed shall be paid free and
clear of all deductions or withholdings whatsoever, save only as are
required by law.
8.2 If any deductions or withholdings are required by law to be made from any
of the sums payable as mentioned in sub-clause 8.1 of this Deed, the
Covenantors shall be obliged to pay to the relevant person such sum ("Tax
Payment") as shall, after the deduction or withholding has been made, leave
that person with the same amount as it would have been entitled to receive
in the absence of any such requirement to make a deduction or withholding.
8.3 If any sum payable by the Covenantors under this Deed (other than interest
under clause 7.2 of this Deed) shall be subject to a Tax Liability in the
hands of the recipient, the Covenantors shall be under the same obligation
to make an increased payment in relation to that Tax Liability as if the
liability were a deduction or withholding required by law.
13
<PAGE>
9. BUYER'S COVENANT
9.1 The Buyer undertakes to the Covenantors to pay to the Covenantors by way of
adjustment to the price paid for the Shares under the Agreement an amount
equal to any liability of the Covenantors, or any other person falling
within Section 767A(2) or 767AA(4) ICTA by virtue of a relationship which
that person has with the Covenantors for corporation tax (and any related
interest, penalties, costs and expenses) assessed on the Covenantors or on
any such person pursuant to Sections 767A, 767AA or 767B ICTA as a result
of any Group Company failing to pay any corporation tax assessed on it;
9.2 The Covenant contained in clause 9.1 shall not apply to any Taxation in
respect of which the Buyer would have a claim under this Deed or to any
Taxation which the Covenantors have recovered from any Group Company under
any statutory right of recovery and the Covenantors shall procure that no
recovery under such statutory right is sought to the extent that payment
has been made to the Covenantors by the Buyer under clause 9.1 in respect
of that Tax.
10. MAXIMUM LIABILITY OF COVENANTORS
The total liability of the Covenantors under the Agreement and this Deed
shall not in any event exceed the aggregate consideration which all the
Sellers receive for their shares under the Agreement and the liability of
each individual Covenantor shall not exceed the following sums:
(a) Mr J.W. Clark (Pounds)1,199,980
(b) Mr C.S. Brooker (Pounds)150,010
(c) Mr D.V. Amos (Pounds)150,010
11. GENERAL
11.1 The following provisions of the Agreement shall be incorporated in this
Deed mutatis mutandis (as nearly as the circumstances permit) as if
specifically set out herein:
Clause 12 - General
Clause 13 - Notices
IN WITNESS whereof this document has been executed as a deed and is delivered on
the day and year first above written.
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<PAGE>
SCHEDULE 1
THE COVENANTORS
Name Address
John William Murray Clark North House
Pheasants Hill
Hambledon
Henley-on-Thames
Oxon RE9 6SN
Christopher Shaun Brooker 7 Gables Close
Datchet
Berkshire
SL3 9BB
David Victor Amos 4 Corby Drive
Englefield Green
Surrey
TW20 0SD
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<PAGE>
EXECUTED AND DELIVERED AS A DEED ) /s/ JOHN CLARK
BY JOHN WILLIAM MURRAY CLARK )
In the presence of: )
Witness: KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED AS A DEED ) /s/ C BROOKER
BY CHRISTOPHER SHAUN BROOKER )
In the presence of: )
Witness: KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED AS A DEED ) /s/ DV AMOS
BY DAVID VICTOR AMOS )
In the presence of: )
Witness: KEITH GORDON, SOLICITOR, MARLOW
EXECUTED AND DELIVERED AS A DEED
For and on behalf of
SKYNET HOLDINGS INC
By
/s/ VJEKOSLAV NIZIC
- -------------------
VJEKOSLAV NIZIC
Director
/s/ MARTIN G. PARAVATO
- ----------------------
MARTIN G. PARAVATO
Secretary
16
<PAGE>
EXHIBIT 10.15
DATED 12th APRIL 1999
SKY INTERNATIONAL LIMITED (1)
JOHN WILLIAM MURRAY CLARK (2)
- and -
SKYNET HOLDINGS INC. (3)
SERVICE AGREEMENT
CLYDE & CO
Beaufort House
Chertsey Street
Guildford
Surrey GU1 4HA
Tel: 01483 555555
Fax: 01483 567330
Ref: TJF/JDR/9901062
<PAGE>
<TABLE>
INDEX
<S> <C>
1. Appointment........................................................ 3
2. Term............................................................... 3
3. Duties and Powers.................................................. 4
4. Place of Work...................................................... 4
5. Remuneration....................................................... 5
6. Pension and Other Benefits......................................... 5
7. Motor Car.......................................................... 5
8. Holidays........................................................... 6
9. Sickness........................................................... 6
10. Insider Dealing.................................................... 6
11. Inventions......................................................... 7
12. Copyright.......................................................... 7
13. Secret and Confidential Information................................ 8
14. Grounds for Termination............................................ 8
15. Restrictions....................................................... 9
16. Company Property................................................... 10
17. Resignation as Director............................................ 10
18. Disciplinary and Grievance Policies................................ 11
19. Deductions......................................................... 11
20. Notices............................................................ 11
21. Miscellaneous...................................................... 11
</TABLE>
<PAGE>
THIS DEED is made on 12/th/ day of April 1999
BETWEEN
(1) SKY INTERNATIONAL LIMITED a company registered under number 01041936 whose
registered office is at 51 Eastcheap, London EC3M 1JP("the Company");
(2) JOHN WILLIAM MURRAY CLARK of North House, Pheasants Hill, Hambleden, Henley
on Thames, Oxon RG9 6SN and
(3) SKYNET HOLDINGS INC. whose principal place of business is at 344 South
Glasgow Avenue, Inglewood, California 90301, USA ("SkyNet")
1. APPOINTMENT
1.1 The Company shall employ the Executive as managing director of the Company
and Freight on Board International Limited ("FOB") with effect from the
date hereof ("the Commencement Date").
1.2 This Deed has effect in substitution for all other past or present terms or
conditions of employment between the Executive and FOB or any Group
Company, and all such terms and conditions shall be of no effect from and
after the date of this Deed.
1.3 All previous employment with FOB or any Group Company shall be deemed to be
continuous employment of the Executive with the Company.
2. TERM
2.1 Subject to the provisions of this Deed and in particular clause 14, the
Executive's appointment hereunder commences on the Commencement Date and
shall continue for three years and thereafter from year to year until
either party gives the other three months' written notice, which notice may
be given so as to expire on the last day of the said term of three years or
any succeeding anniversary of that day. The Company reserves the right to
pay the Executive in lieu of notice.
2.2 If either party gives the other notice in accordance with clause 2.1, or
the Executive evidences an intention to terminate his employment in breach
of the terms hereunder, the Company shall be entitled to exclude the
Executive from the Company's premises and to instruct him not to
communicate in any way with customers or staff of the Company or any Group
Company and to provide him with no duties or such duties as the Company
shall in its absolute discretion determine, provided always that the
Executive shall continue to receive the remuneration and benefits to which
he is entitled hereunder.
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3. DUTIES AND POWERS
3.1 The Executive will carry out such duties and exercise such powers and
functions on behalf of and for the benefit of the Company, Freight on Board
International Limited, or any Group Company as may from time to time be
assigned to the Executive by the Board or anyone authorised by it and
during the term of this Deed the Executive shall unless prevented by ill
health or accident devote a substantial part of his time, skill, ability
and attention to the business of the Company or any Group Company.
3.2 The Company shall be entitled at any time to appoint another person or
persons to act jointly with the Executive.
3.3 The Executive will, in a timely fashion, give to the Board (in writing if
so requested) all information, advice and explanations as may be required
in connection with matters relating the Executive's employment under this
Deed or with the business of the Company.
3.4 The Executive shall perform his duties in a manner consistent with any and
all applicable statutes, regulations and rules and with the professional
standards and the general customs and practice of the industry and shall
faithfully and loyally serve the Company to the best of his ability and use
his utmost endeavours to promote its interests in all respects.
3.5 The Executive shall not without the prior consent of the Board either
solely or jointly, directly or indirectly, carry on or be engaged or
interested (whether as shareholder or otherwise) in any other business save
that nothing in this clause shall prevent the Executive from holding up to
3% of the shares in any company whose shares are quoted on any recognised
stock exchange.
4. PLACE OF WORK
4.1 The Executive will perform his duties at the head office of the Company or
such other place of business of the Company as the Company requires whether
inside or outside the United Kingdom but the Company shall not without the
Executive's prior consent require him to go to or reside anywhere outside
the United Kingdom except for visits in the ordinary course of his duties.
4.2 If the Company shall relocate such that the Executive has to relocate his
residence to attend for work, then the Company shall reimburse removal
expenses in accordance with its current policy on relocation.
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5. REMUNERATION
5.1 The Executive will be paid by the Company one hundred and fifty thousand
pounds per annum, by way of remuneration for his services under this Deed,
which shall accrue from day to day and be paid in arrears no later than the
last day of each calendar month.
5.2 In addition, the Executive shall be entitled to be reimbursed such
reasonable out-of-pocket expenses properly incurred on Company business
subject to production of satisfactory receipts.
5.3 The Executive's salary shall be subject to reviews by the Board on the
anniversary of the Commencement Date in each year and increases (if any)
shall be in the absolute discretion of the Board.
6. PENSION AND OTHER BENEFITS
6.1 There is no Company pension scheme but it is intended to implement a scheme
at some time in the future.
6.2 There is no contracting-out certificate in force under the Social Security
Pensions Act 1975 in respect of the Executive's employment under this Deed.
6.3 The Executive is entitled to participate at the Company's expense in the
Company's private medical insurance scheme from time to time in force on
terms no less favourable than those presently enjoyed by the Executive.
6.4 The Executive shall be entitled to participate in SkyNet's incentive share
option scheme on the following basis:-
(a) The award of options shall be in the absolute discretion of the Board
of the Company and SkyNet.
(b) During the first year of the term, the Executive will receive options
amounting to 35,000 shares of common stock in the capital of SkyNet.
Such options shall vest in three equal portions, over a three year
period.
(c) The award of further options during the remainder of the term shall be
as the Board shall in its absolute discretion determine.
7. MOTOR CAR
7.1 The Company will provide the Executive both for business and private
purposes, with a car, of such make and model as the Board shall in its
absolute discretion determine.
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7.2 All costs of repairs maintenance, taxation and insurance and all charges
for petrol and oil shall be paid by the Company.
7.3 The Executive shall take good care of the car and shall ensure that the
provisions and conditions of any insurance company relating to it are
observed and shall return the car, its keys and all documents relating to
the vehicle to the Company's registered office immediately upon termination
of his employment.
8. HOLIDAYS
8.1 In addition to the usual statutory holidays the Executive shall be entitled
to twenty five working days holiday in any calendar year. The holiday shall
accrue on a pro rata basis throughout each calendar year. Such holidays are
to be taken at such time or times as may be agreed with the Company
Secretary.
8.2 Upon termination of employment where the Executive has taken more or less
than his holiday entitlement in that year a proportionate adjustment will
be made by way of addition to or reduction from (as appropriate) the
Executive's final gross pay calculated.
9. SICKNESS
9.1 If the Executive is prevented by ill health from properly performing his
duties hereunder he shall report this fact forthwith to the Company and as
soon as practicable provide the Board with satisfactory evidence of his
incapacity.
9.2 Provided that the Executive has complied with the condition in clause 9.1,
he shall continue to be paid salary for the first 3 months' absence whether
continuous or intermittent in any calendar year and thereafter half pay for
a further period of six months. Any sums paid to the Executive shall be
inclusive of statutory sick pay.
9.3 At the request of the Board, the Executive shall, whether absent from work
or not, co-operate in providing medical evidence or undergoing a medical
examination arranged by the Company if such evidence is not provided due to
the Executive's default then the Company may terminate this Deed by giving
three months' written notice.
9.4 The payment of sick pay in accordance with clause 9.2 is without prejudice
to the Company's right to terminate this Deed on the grounds of incapacity
prior to the expiry of the Executive right to payments.
9.5 In the event the Executive is incapable of performing his duties by reason
of injuries sustained wholly or partly as a result of a third parties
actions all payments made to the Executive by the Company of salary or sick
pay shall to the extent that compensation is recoverable from that third
party constitute loans to the Executive and shall be repaid when and to the
extent that the Executive recovers compensation for loss of earnings from
the third party by actions or otherwise.
10. INSIDER DEALING
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The Executive shall, during this Deed and for twelve months after its
termination howsoever arising, comply (and procure that his spouse and
minor children shall comply) with all applicable rules of law, the London
Stock Exchange regulations and any code of conduct of the Company for the
time being in force, in relation to dealings in shares, debentures or
other securities of the Company or any Group Company and any unpublished
price sensitive information affecting the securities of any other company.
11. INVENTIONS
11.1 During his employment by the Company hereunder, any discovery, idea,
concept, technique, invention, secret process or improvement made,
discovered, conceived, written or otherwise created by the Executive
either alone or with others, in connection with or in any way affecting or
relating to the actual or anticipated business, research or development of
the Company or any Group Company or capable of being used or adapted for
use therein or in connection therewith and whether or not suggested by or
resulting from any task assigned to the Executive or any work performed by
the Executive for and on behalf of the Company or any Group Company
("Developments"), shall forthwith be disclosed in writing to the Company
and shall belong to and be the absolute property of the Company or such
other body corporate as the Company may designate; provided however, this
Clause 11.1 shall not derogate from the statutory rights of the Executive
in such Developments.
11.2 At the request and cost of the Company and notwithstanding the termination
of his employment, the Executive shall apply or join in applying for
Letters Patent, registered design, or other similar protection in the
United Kingdom or any other part of the world for any such Developments
and execute all instruments and do all such things necessary for vesting
such Letters, Patent, registered design or other similar protection when
obtained, or the benefit of any application, and all right, title to and
interest in the same in the Company or its nominee absolute.
11.3 The Executive hereby irrevocably appoints the Company to be his attorney
in his name and on his behalf to execute and do any such instrument or
thing and generally to use his name for the purpose of giving to the
Company or its nominee the full benefit of the provisions of this Clause
11 and with respect to any third party, a certificate in writing signed by
any Director of the Company that any instrument or act falls within the
authority hereby conferred shall be conclusive evidence that such is the
case.
12. COPYRIGHT
12.1 If the Executive shall at any time during his employment hereunder,
whether during the course of his normal duties or other duties
specifically assigned to him and whether during normal working hours or in
conjunction with any other person, originate any registerable or
nonregisterable design or other work in which copyright or any other
proprietary right may subsist, he shall forthwith disclose the same to the
Company.
12.2 The Executive hereby assigns to the Company the copyright and other
proprietary rights, if any, for the full term thereof throughout the work
in respect of all copyright
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<PAGE>
works written, originated, conceived or made by him during the period of
his employment hereunder, except only those copyright works written,
originated, conceived or made by him wholly outside his normal working
hours hereunder and wholly unconnected with his service hereunder.
12.3 It is agreed that for the purposes of Section 2(1) of the Registered
Designs Act, 1949 the relationship between the Company and the Executive,
shall be treated as one between employer and employee, and the Company
shall be treated for the purpose of that Act as the original proprietor of
any design of which the Executive may be the author in the circumstances
described in this Clause 12.
12.4 The Executive agrees and undertakes that he will execute such deeds or
documents and do all such things as may be necessary or desirable to
substantiate the rights of the Company in respect of the matters referred
to in this Clause 12.
13. SECRET AND CONFIDENTIAL INFORMATION
13.1 The Executive shall not (except with the prior written consent of the
Board) and except in the proper course of his duties during the
continuance of this Deed or at any time thereafter, disclose or use for
his own purposes the private affairs, trade secrets or secret or
confidential information of the Company of any Group Company relating to
their affairs, or any customer of the Company or any Group Company which
the Executive may learn while in the employment of the Company to any
unauthorised person except as required by a court of law or any regulatory
body or that which may in or become part of the public domain other than
through any act or default of the Executive.
13.2 For the purposes of clause 13.1 confidential information shall include,
but not be limited to, information which relates to manufacturing
processes, suppliers, their identities and prices, customers, their
identity, needs and requirements, profit margins, costings, discounts and
rebates, business plans, financial information about the Company, current
and future plans relating to development, production or sales placing
information, personnel matters, technical specifications, drawings,
designs, phototypes, computer programs or databases, rates, claims
records, all claims statistics and other statistical information produced
by the Company all placing information and all information material to any
dispute or litigation involving the Company.
14. GROUNDS FOR TERMINATION
14.1 The Company may at any time terminate the employment of the Executive
hereunder without payment of any compensation by serving not less than
four weeks' written notice in any of the following circumstances, that is
to say if the Executive:
(a) is adjudicated bankrupt or makes any arrangement or composition with
creditors; or
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(b) is unfit to carry out his duties because of illness, injury or
otherwise for a period exceeding twelve months in any twenty-four
month period;
(c) is guilty of any material breach or non-observance of any of the
provisions of this Deed or the reasonable directions of the Board; or
(d) commits any kind of serious breach of this Deed in spite of written
warning to the contrary by the Board where such breach is capable of
remedy; or
(e) is convicted of any criminal offence involving dishonesty (other than
an offence under road traffic legislation in the United Kingdom or
elsewhere for which a custodial sentence is not imposed) or
(f) becomes prohibited by law from being a director of the Company; or
(g) is convicted of an offence under any statutory enactment or regulation
relating to insider dealing; or
(h) resigns as a director of the Company otherwise than at the request of
the Company; or
(i) becomes of unsound mind or becomes a patient for any purpose of any
statute relating to mental health.
14.2 Any delay or forbearance by the Company in exercising any right of
termination hereunder shall not constitute a waiver of such right.
14.3 The Executive's employment may be terminated without notice in the case of
gross misconduct which includes, but is not limited to, dishonesty, fraud,
theft, being under the influence of alcohol or drugs at work, causing
actual or threatening physical harm and causing damage to company property
15. RESTRICTIONS
15.1 Since the Executive has obtained and is likely to obtain confidential
information relating to the business of the Company or any Group Company
and personal knowledge and influence, clients and customers of the Company
or any Group Company in the course of his employment with the Company, the
Executive hereby covenants with the Company that he will not during his
employment, directly or indirectly, either on his own behalf or on behalf
of any other person firm or company:-
(a) be employed or engaged in any business which is in competition with
any Group Company in any capacity within the Prohibition Area for a
period of six months from the Termination Date; or
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(b) or in any capacity involving substantially similar duties in
competition with any Group Company without the prior written consent
of the Company for a period of six months from the Termination Date;
or
(c) have any dealings in relation to the supply of goods or services dealt
with by any Group Company with any customer of any Group Company with
whom the Executive dealt in the 12 months prior to the Termination
Date for a period of twelve months prior to the Termination Date; or
(d) in relation to the supply of goods or services dealt with by any Group
Company for whom the Executive has provided services, solicit or
endeavour to solicit or entice the custom of any customer of any Group
Company with whom he dealt in the 12 months prior to the Termination
Date for a period of twelve months prior to the Termination Date; or
(e) solicit or entice away or endeavour to solicit or entice away any
director or senior employee of any Group Company and who has had
dealings with any customer of any Group Company with whom the
Executive dealt in the 12 months prior to the Termination Date for a
period of twelve months prior to the Termination Date; or
15.2 The Executive hereby covenants with the Company that from the Date of
Termination he will not in the course of carrying away trade or business
or for the purpose of carrying on or retaining any business or custom
represent or otherwise indicate any present or past association with any
Group Company.
16. COMPANY PROPERTY
16.1 The Executive shall promptly whenever requested by the Company and in any
event upon the termination of this Deed (for whatsoever cause) deliver up
to the Company or its authorised representative, all customer lists, lists
of business contacts, diskettes and other storage media, drawings,
notebooks and reports and unless prevented by the owner thereof, any
papers belonging to others which may be in his possession or under his
control and relate in any way to the business or affairs of the Company or
Group Company or any supplier, agent, distributor or customer of the
Company or any Group Company and he shall not without written consent of
the Board retain any copies thereof.
16.2 The Executive shall send to the Company a signed statement confirming that
he has complied with Clause 16.1 hereof.
17. RESIGNATION AS DIRECTOR
17.1 The Executive shall on the termination of his employment hereunder
howsoever arising and for whatever reason upon the request of the Board
give notice resigning immediately without claim for compensation (but
without prejudice to any claim the Executive may have for damages for
breach of this Deed):-
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<PAGE>
(a) as a director of the Company or any Group Company; and
(b) all trusteeships held by the Executive of any trusts established by
the Company or any Group Company.
17.2 If notice under Clause 17.1 is not received by the Company within seven
days of the termination of the Executive's employment, the Company is
hereby irrevocably authorised to appoint a person to execute any documents
and to do all necessary things to effect such resignation or resignations
on his behalf.
17.3 Except with the prior agreement in writing of the Board (or unless
required to do so by law) the Executive will not during the continuance of
his employment resign his office as a director of the Company.
18. DISCIPLINARY AND GRIEVANCE POLICIES
18.1 The Company has a disciplinary procedure which is available from the
Company Secretary.
18.2 The Executive shall raise any grievance or seek redress for any
disciplinary decision relating to him with the Board in writing whose
majority decision shall be final.
19. DEDUCTIONS
The Executive authorises the Company to deduct from his salary or pay in
lieu of salary all debts owed by him to the Company or any Group Company.
20. NOTICES
Any Notice under this Deed shall be given in writing by either party to
the other and may be delivered or sent by first-class post addressed, in
the case of the Company, to its registered office and in the Executive's
case to his address last known to the Company. Any such notice shall, in
the case of delivery, be deemed to have been served at the time of
delivery and, in the case of posting, forty-eight hours after it has been
posted by first class mail.
21. MISCELLANEOUS
21.1 This Deed shall be governed by and interpreted in accordance with the laws
of England and Wales.
21.2 The parties to this Deed submit to the exclusive jurisdiction of the
English Courts in relation to any claim, dispute or matter arising out of
or relating to this Deed.
21.3 There are no collective agreements whose terms directly affect the
Executive's terms and conditions of employment.
21.4 In this Deed the following expressions shall, unless the context otherwise
requires have the following meanings:-
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"THE BOARD" the Board of Directors of the Company from time to
time
"THE COMMENCEMENT DATE" as specified in Clause 1
"GROUP COMPANY" the Company, a subsidiary undertaking of the
Company, and any other company which is for the
time being a holding company of the Company or
another subsidiary undertaking of any such holding
company
"PROHIBITION AREA" means (i) England, Wales, Scotland, Northern
Ireland, Eire, Channel Isles and the Isle of Man,
and (ii) any other country in the world in which
any Group Company has supplied goods or services
within the two years preceding Completion
"TERMINATION DATE" the date on which the Executive's employment
hereunder terminates either due to the Executive's
breach of the terms of this Deed or by the
Executive or the Company terminating in accordance
with the terms of this Deed
21.5 References in this Deed to statutory provisions shall include
modifications and re-enactments and all subordinate legislation made
thereunder.
IN WITNESS whereof the parties have executed this document as a Deed the day and
year first written above.
SIGNED by ) /s/ MEL SMITH
and ) Director
executed for and on behalf of )
SKY INTERNATIONAL ) /s/ CLYDE SECRETARIES LIMITED
LIMITED )
as its Deed ) Director/Secretary
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SIGNED and DELIVERED by )
JOHN WILLIAM MURRAY CLARK as )
his Deed in the presence of: ) /s/ JOHN CLARK
KEITH GORDON, SOLICITOR, MARLOW
SIGNED by )
and ) /s/ VJEKOSLAV NIZIC
executed for and on behalf of ) Director
SKYNET HOLDINGS INC. )
as its Deed ) /s/ MARTIN G. PARAVATO
Secretary
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