SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
_______________________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For Fiscal Year Ended January 31, 2000
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File 000-25453
CI4NET.com Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
32 Haymarket
London SW1Y4TP
United Kingdom
(Address of Principal Executive Offices including Zip Code)
134032991
(I.R.S. Employer Identification No.)
Registrant's telephone number, including area code:
(212) 445-6581
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if the disclosure of delinquent fliers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The approximate aggregate market value of Common Stock held by
non-affiliates of the Registrant was $352,602 as of May 1, 2000
On May 1, 2000, the Registrant had outstanding 28,345,121 shares
of voting Common Stock, $.001 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement to be filed with the
Securities and Exchange Commission relative to the election of
directors during calendar year 2000 are incorporated by reference
into Part III of this Report.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED JANUARY 31, 2000
CI4NET.COM INC.
PART I
Item Page
1. Business . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . .19
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . .19
4. Submission of Matters to Vote of Security Holders. . . .19
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . .19
6. Selected Consolidated Financial Data . . . . . . . . . .21
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . .22
7A. Quantitative and Qualitative Disclosures About
Market Risk. . . . . . . . . . . . . . . . . . . . . . .33
8. Financial Statements and Supplementary Data. . . . . . .34
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . .34
PART III
10. Directors and Executive Officers of the Registrant. . .34
11. Executive Compensation. . . . . . . . . . . . . . . . .34
12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . .34
13. Certain Relationships and Related Transactions. . . . .34
PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . .35
This Annual Report on Form 10-K contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. For this purpose, any
statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects" and similar expressions are intended to
identify forward-looking statements. The important factors
discussed under the caption "Factors That May Affect Future
Results" in Item 7 of this report, among others, could cause
actual results to differ materially from those indicated by
forward-looking statements made herein and presented elsewhere by
management. Such forward-looking statements represent
management's current expectations and are inherently uncertain.
Investors are warned that actual results may differ from
management's expectations.
This Annual Report contains sale price data relating to
completed acquisitions and other matters that are expressed in
United States dollars and have been converted from pounds
sterling at an assumed conversion note of 1.6 dollars per pound
sterling.
<PAGE>
PART I
ITEM 1. BUSINESS
Overview
CI4NET.com Inc. ("Ci4net" or the "Company") is an economic
network, or Econet, with equity interests in 39 Internet-related
companies ("partner companies"). We have a 50%-or-greater
interest in 34 of these companies and hold minority interests in
the remainder. Our partner companies include eight Internet
infrastructure companies, 18 business-to-business ("B2B")
e-commerce companies, 12 business-to-consumer ("B2C") e-commerce
companies and one incubator company. In addition, Ci4net has
executed non-binding letters of intent for the acquisition of
three Internet infrastructure companies, six B2B companies and
three European incubator companies. Thirty two of our partner
companies service the United Kingdom market. The geographic
focuses of our remaining partner companies include Italy, the
Netherlands, Europe as a whole, Australia and the United States.
The Company actively promotes collaboration among its partner
companies.
The Company was incorporated on December 29, 1995 and did not
have any operating activities until December 20, 1999, when the
Company purchased all of the issued and outstanding shares of a
Delaware corporation that was then named CI4NET.com Inc. ("Old
Ci4net"). In connection with its acquisition of Old Ci4net, the
Company effected a 1-for-15 reverse stock split, issued an
aggregate of 20,500,000 post-reverse split shares of common stock
to the former stockholders of Old Ci4net and simultaneously
changed its name from Leisure Concepts International Inc. to
CI4NET.com Inc. The preexisting stockholders of the Company held
555,446 post-reverse split shares of common stock following the
completion of our acquisition of Old Ci4net. Upon completion of
our acquisition of Old Ci4net, the Company issued 1,166,667
shares of its post-reverse split common stock to the former
shareholders of Planet Edge Limited ("Planet Edge"), a United
Kingdom information infrastructure development company, as
consideration for the prior acquisition of Planet Edge by Old
Ci4net, which occurred on December 6, 1999. We regard Planet Edge
as our accounting predecessor company.
Also upon completion of our acquisition of Old Ci4net, the
Company issued 1,200,000 shares of its post-reverse split common
stock to the former shareholders of Media Ventures Limited
("Media Ventures"), a United Kingdom magazine publisher, as
consideration for the acquisition of Media Ventures by Ci4net.com
Limited, a Jersey Channel Islands corporation ("Ci4net Limited"),
which occurred on December 17, 1999. Old Ci4net and Media
Ventures were entities under the common control of our principal
shareholder, Kevin R. Leech, and the acquisition has been
accounted for in a manner similar to a pooling of interests.
Prior to its acquisition by the Company, in addition to its
acquisition of Planet Edge, Old Ci4net had acquired all of the
outstanding capital stock of Three W Capital, a Marshall Islands
corporation ("3W"), and of Ci4net Limited, in each case on
October 1, 1999, and 61% of the outstanding capital stock of
I-Global.com Inc., a Delaware Corporation ("I-Global"), on
December 12, 1999. At the time of their respective acquisitions,
3W, Ci4net Limited and I-Global had insignificant net assets.
On December 21, 1999 we purchased all of the issued and
outstanding shares of MSK Industries, Inc., a Delaware
corporation ("MSK Industries"). We issued an aggregate of
2,238,400 post-reverse split shares of common stock to the former
stockholders of MSK Industries.
The Company is continually evaluating new acquisitions and
at any time may be involved in one or more initiatives that may
result in future acquisitions, investments or joint ventures.
None of the acquisitions with respect to which pending letters of
intent have been executed by the Company are material, either
individually or when considered together with any related
acquisitions, although the cumulative impact of such acquisitions
may be material. The transactions contemplated by such letters
of intent are subject to a variety of conditions including the
satisfactory completion of due diligence.
The following is a table summarizing certain information about
our partner companies. Percentage ownership interests are
expressed on a shares outstanding, and not a fully diluted,
basis.
Category, Name and URL Industry Description Ci4net
Ownership%
Internet Infrastructure:
Citee BV
www.citee.nl Information Technology
Provides systems integration services and develops Internet,
wireless and other information technology solutions. 51%
Systeam SpA
www.systeam.it Software Development
Provides software solutions to the telecommunications, Internet
and digital television industries. 79%
GlobalFreeway Pty Limited
www.globalfreeway.com.au Telecommunications
Provides free ISP service across Australia. 55%
Planet Edge Ltd.
www.planetedge.co.uk Database Development
and Systems Integration
Provides Internet integration services for client and
server software systems. 100%
4th Wave Technologies Ltd.
www.4thwave.co.uk Telecommunications
Provides ISP service and content to business and home
Internet users. 66%
Wireless4Europe Ltd.
www.wireless4europe.com Wireless
Technologies
Developing a research and wireless technology
unit. 100%
Ci4net Solutions Ltd.
www.ci4netsolutions.com Information Technology
Disseminates a common technology platform to
Ci4net.com's partner companies. 100%
Ci4net Advanced Research Ltd.
www.ci4netadvancedresearch.com Software Development
Seeks to enhance and commercially exploit Internet
and network platform technologies controlled by
partner companies. 90%
B2B:
ICM Resources Limited
www.eazyprint.com Printing
Provides offline printing services and is developing a
comprehensive set of online printing services. 70%
Tempz.com Limited
www.tempz.com Temporary Recruitment
Provides a Web-based temporary staffing service. 50%
BusinessPCUK.com Limited
www.businesspcuk.com Network Solutions
Being developed to supply computing equipment and
networking solutions to small and medium sized
enterprises. 100%
Easy2Ship.com Inc
www.easy2ship.com Shipping
Developing a service to facilitate transactions
between shippers and carriers. 61%
Fishexchange Inc.
www.fishexchange.net Fishing
Developing an online facility to execute and fulfill
transactions for the global fishing industry. 61%
Business Villages.Com
www.businessvillages.com Media
Developing community Web sites targeted
to professionals. 50%
The Rubber Exchange Inc.
www.therubberexchange.com Rubber
Developing an online exchange to trade natural
and synthetic rubber products. 61%
Mostra Limited
www.mostra.co.uk Public Relations & Marketing
A full service, Internet-focused creative public relations
agency, marketing agency and brand developer. 51%
Transenact Ltd.
www.transenact.com e-Commerce
Provides intelligent exchange software to permit
automated matching of purchase orders and supply
capabilities. 100%
AKAS Ltd.
www.akas.com Database Applications
Provides an Internet-based, form-driven database
application. 66%
Chorus Inc.
www.chorus-group.com Business Consulting
Assists technology and Internet companies
with expansion into Europe. 50%
Commercial Property UK Ltd.
www.commercialpropertyuk.com Commercial Real Estate
Developing a Web site featuring an extensive
commercial real estate database and related content. 100%
Aircharter Exchange.com Ltd.
www.aircharterexchange.com Air Charter
Developing an online exchange for chartering aircraft. 51%
Business Plan Exchange Inc.
www.bpex.net Venture Capital
Developing an online service to match
entrepreneurs with venture capitalists and
other financiers. 61%
Buyers Guide UK Ltd.
www.buyersguide.co.uk Government Contracting
Operates a procurement Web site for suppliers to
local and national governmental authorities in the
United Kingdom. 15%
Enteraction TV Limited
www.enteractiontv.com Interactive Television
Develops broadband and interactive television
applications. 25%
Kismet International NV Software Development
Provides casino gaming software. 5%
Perform.com LLC
www.perform.com Application Service Provider
Provides tools to businesses that can be used to plan,
communicate and measure results. 2%
Incubator:
Ismartlab Ltd.
www.ismartlab.com Internet
An incubator focusing on Internet and
Internet-related companies in the United Kingdom. 100%
B2C:
Trrravel.com Ltd.
www.trrravel.com Travel
Provides travel products such as airline flights
and vacation packages and publishes
travel-related content. 51%
Media Ventures Limited
www.activelives.co.uk Media
Publishes a portal site targeting the over-45 market. 100%
Allcars.com Ltd.
www.allcars.com Automotive
Publishes a Web site providing search capabilities
and other information for purchasing new and
pre-owned vehicles. 75%
Browsemiles Limited
www.browsemiles.com Advertising
Developing a search engine that will award
incentives to consumers for online activities. 100%
Health421.com Limited
www.health421.com Health Care
Developing a Web-based suite of services for
health care professionals. 100%
Etailor Ltd.
www.suitscape.com Apparel
Developing an online personal tailoring service. 50%
Property World UK Ltd.
www.propertyworld.co.uk Residential Real Estate
Publishes a Web site containing the largest
listing of residential property in the United Kingdom. 70%
Lifetime Memorials Inc
www.lifetimememorials.com Funeral
Developing an online service for mourners. 61%
Kids Events Ltd.
www.kids-events.com Media
Developing a Web site to provide information
on activities and services for children. 50%
PCC Care Card BV
www.personalcarecard.nl Marketing
Provides promotional products such as
discount cards and other incentives for shopping online. 100%
Femailnet.com Ltd.
www.femailnet.com Media
Developing a Web site for women's products and services. 100%
Bygone Times plc
www.bygone-times.com Memorabilia, Antiques
Operates a retail and auction Web site for
memorabilia and antiques. 10%
The Company's equity interest in each of its partner
companies is held either directly by the Company or by Ci4net
Limited, MSK Industries, or by I-Globalcom.
Business Strategy
Our objective is to become one of the leading Internet
Econets in Europe with a focus on B2B e-commerce. Our strategy
for achieving this objective is to create value by
* continuing to build our Econet aggressively
through the acquisition of B2B businesses in all
stages of development, the formation of joint
ventures with offline businesses that can
achieve rapid expansion by developing an online
business component and the entry into
barter and other cooperative arrangements with
media companies;
* seeking to identify for acquisition B2B companies
operating in markets with traditionally high
cost structures that can be made more efficient
through online processes;
* establishing our B2B partner companies as market
leaders, building brand awareness and
achieving customer loyalty;
* using the resources and expertise of our Internet
infrastructure companies to develop a
common technology platform for our other partner
companies;
* using the industry expertise, business contacts
and insights of our global advisory board and
partner company management teams to develop
informational synergies and establish
collaborative networks;
* recruiting executives at the Company and partner
company levels who have relevant
experience and have demonstrated success in an
entrepreneurial environment; and
* making minority investments in companies that
provide synergistic products, services or
technology solutions.
Business Segments
Our Internet infrastructure companies form the core of our
operations and offer or are in the process of developing products
and services that include software and database development,
network integration, Web site design, development of e-commerce
solutions, wireless technology development and complex trading
platform design. Our Internet infrastructure companies service a
variety of technology sectors in the telecommunications,
information technology, Internet and interactive television
industries. Certain of our Internet infrastructure companies are
geared toward general business and consumer populations and offer
ISP services and accompanying packaged content. Our Internet
infrastructure companies have operations in the United Kingdom,
Italy, the Netherlands and Australia. This geographic reach is
expected to enable Ci4net to establish bases quickly for existing
and future partner companies using in-house technology.
Our B2B strategy focuses on the B2B e-commerce companies
categorized as market makers. Market makers are Web sites that
bring together buyers and sellers by creating Internet-based
exchanges for goods, services and information. We believe that
strategic partnerships, a significant number of which have
already been executed by our partner companies, will be
instrumental in helping our market maker B2B companies acquire
and maintain the necessary industry presence and contacts to
develop effective distribution. We believe that we can aggregate
one of the most substantial holdings of B2B companies by
exploiting the internal synergies of our partner companies and
our strategic partnerships.
Our B2C companies seek to gain a competitive advantage over
offline businesses in their sectors by providing consumers with
an informed choice, high quality content, a user-friendly
purchasing experience and bonuses for shopping (through, for
example, loyalty programs) in order to build brand awareness.
The Company believes that Internet shoppers value these
characteristics of a shopping experience, in part as a
consequence of having become more discerning through exposure to
consumer product research available on the Internet.
We have commenced operation of a United Kingdom-oriented
incubator and will seek to develop or acquire additional
incubators in different geographic areas within Europe. The
Company's incubator strategy includes obtaining a right of first
refusal on any new technologies that are generated by incubated
companies in order to strengthen our technology platform.
Common Technology Platform
Our technology strategy is to develop a common platform for our
partner companies that is founded upon their collective
intellectual property resources. Our Econet structure is
expected to facilitate the establishment and dissemination of
such a platform. Planet Edge and Systeam SpA, two of our
Internet infrastructure companies, are already providing other
partner companies with a technology platform for Web site
development and e-commerce operations. During the first quarter
of our current fiscal year ("Fiscal 2001"), we established Ci4net
Solutions Ltd. and Ci4net Advanced Research Ltd. for the purpose
of further developing our common technology platform and more
effectively exploiting the collective intellectual property
assets of our partner companies.
Acquisitions and Strategic Relationships
The Company's acquisition strategy focuses on companies that (i)
are marketing innovative products and services or have otherwise
achieved first-mover advantage in a geographic area, (ii) are
founded upon business models that have been successfully employed
by Internet companies in the United States and (iii) are industry
leaders in their field. The Company has focused its acquisition
strategy within European markets in which Internet use is
highest: the United Kingdom, Germany, France and Italy. Once
significant market positions in each of these countries has been
established, the Company intends to expand the focus of its
acquisition activity to one or more of Spain, the Netherlands,
Switzerland, Belgium, Sweden, Austria, Denmark and Norway. As
partner companies reach critical mass, the Company intends to
seek liquidity of its interests in such partner companies through
selective sales and public offerings in order to realize a return
on investment and fund further development.
The Company is active in promoting strategic relationships
between partner companies and other businesses. The Company
believes that it is essential to use the leverage available from
strategic collaborations with third parties to achieve speed to
market and scale, particularly when entering new geographic
markets. The Company believes that potential collaborations with
offline businesses offer substantial opportunities to its B2B
partner companies. In addition, the Company works closely with
established technology companies to ensure that partner companies
have access to the latest generation protocols, applications and
solutions.
Management Structure and Philosophy
We currently have a management team with a broad base of
experience in both online and offline businesses. Our management
structure consists of an executive board that is responsible for
company-wide initiatives, significant operating decisions and
policymaking; a global advisory board whose function is to advise
the Company on acquisitions and joint ventures in their home
territories; and a partner company board whose mission is
to advise partner companies on current market conditions and
operations. This group of over forty key executives is
available to assist in implementing the Company's business plan
and those of its partner companies. We believe that by providing
our partner companies with these extensive managerial resources,
we will increase their likelihood of success and rates of growth.
Access to Additional Econet Resources
All of our partner companies have access to common resources
that are made available to them by the Company, including
assistance with financing, marketing, accounting and financial
reporting, human resources, public relations and information
technology management. We encourage partner companies to avail
themselves of these common resources and to cross-utilize their
respective individual resources.
Products and Services
All of our products and services are commercialized through our
partner companies. The following is a description of the
principal products and services that are currently being marketed
or are under development by the Company's partner companies.
Internet Infrastructure Companies:
Citee BV
Citee is a Netherlands-based technology systems integrator that
offers a broad range of products and services to its customers.
Citee has five divisions:
* Product Sales. The product sales division offers
desktop automation, enterprise computing, internet/intranet
infrastructure and Internet architecture products.
* Consulting. The consulting division offers information
technology organizational services incorporating knowledge
management and e-commerce solutions that enable customers to
maximize the value of their information technology resources in
executing their online strategies. The consulting division also
provides end-to-end integration of information technology
solutions into legacy network structures.
* Management Service. The management services division
offers outsourced system and network management. Citee also
offers installation work, repair services and post-sale support
such as help desk and logistics services.
* Systems Development. The systems development division
customizes server and Web-based applications and develops
Internet and intranet sites and e-commerce solutions.
* Education. The education division provides learning
resources for the management of information technology systems,
including company-specific professional training and modular
self-study courses.
Citee offers all of these products and services through its Web
site, which functions as a "one-stop shop" for systems
integration and technology solutions.
Systeam SpA
Systeam provides software products and services to the
telecommunications, Internet and digital television industries
and is one of the largest providers of software services in
Italy. Systeam's customers include leading global information
technology and telecommunications companies. Systeam's software
product and service lines are as follows:
* Telecommunications software and services, including
database design, anti-fraud and anti-cloning systems, traffic
measurement systems, call center and customer care services and
security systems.
* Internet software and services, including Web design,
Intranet and Internet services and development of e-commerce
applications and remote ticketing systems.
* Digital television software and services, including the
integration of DVB (digital video broadcasting) platforms and
software development for DVB subsystems, the development of
interactive applications for set top boxes (such as home
shopping), DVD authoring and digital video and audio encoding.
In addition to its software and services business, Systeam has
developed a portfolio of proprietary products that are expected
to be both integrated into the technology platform for Ci4net's
partner companies and marketed independently. These products
include (i) Netstrobe, a network and services monitoring system
for Internet-and Intranet environments targeted at ISP's,
e-commerce operators and Website publishers, (ii) WebCard, an
integrated system for remote booking and ticketing over the
Internet in which payment is made using dedicated smart cards,
(iii) Adcast, an Internet advertising delivery system
co-developed with Americom, (iv) Finger Print Security System,
a fingerprint recognition technology for controlling access to
information networks and other secure systems, (v) DVD Video
Server, a computerized server currently being developed for
real-time streaming of video in either digital or analog format,
(vi) DVD Video Store, a product for re-editing and merging stored
video content, and (vii) DVD Video Archive, a storage system that
is currently under development.
GlobalFreeway Pty Ltd.
GlobalFreeway provides free ISP service throughout Australia.
GlobalFreeway provides users with unlimited Internet access,
e-mail service and navigational tools designed to enhance the
user's online experience, all at no cost to the user.
GlobalFreeway seeks to acquire both existing Internet users and
persons who are not yet Internet users through aggressive
marketing and advertising. GlobalFreeway has achieved rapid
growth and the Company believes that it will capture significant
market share by virtue of its first-mover advantage.
GlobalFreeway currently generates most of its revenue from the
sale of banner advertising but plans to develop additional
revenue sources by leveraging its database assets. New users
provide demographic and personal information when they register
for GlobalFreeway's service, and GlobalFreeway's technology
allows it to track users' online activities. The information
gathered from user registration and tracking will permits
GlobalFreeway to provide targeted advertising and direct
marketing solutions. GlobalFreeway may also seek to generate
revenue from Web registration referrals and e-commerce
activities.
Planet Edge Limited
Planet Edge is an Internet infrastructure company specializing in
database development and systems integration. Planet Edge offers
customized solutions for database transition, virtual server
packages, ISDN and leased line integration, Internet connectivity
and firewall and other security solutions. Planet Edge is ISO
9002, Sun Microsystems and Allaire accredited. Its software
developers are competent in many languages, including Object-
Oriented Pascal, Visual Basic, Active Server Pages, Perl, Java,
JavaScript/VB/PerlScript, Cold Fusion, UNIX, UNIX C, miniSQL,
Cold Fusion C, C++, Visual C++, Visual Basic, Object Oriented
Design, Informix, Sybase, Oracle, and SQL.
Planet Edge's systems integration services are geared toward
migrating legacy client and server software systems to the
Internet. Planet Edge's integration services are designed to
permit real-time interaction among management and other personnel
and to promote operating efficiencies such as lowering labor,
technology and other resource allocations, reducing procurement
costs and improving responsiveness to customers and suppliers.
Planet Edge has servers supporting its Global Facility Management
services in prime locations around the world, including Bristol
and London in the United Kingdom, Washington, D.C., San Francisco
and Chicago in the United States, and Singapore and Sydney,
Australia in Asia.
4th Wave Technologies Ltd.
4th Wave is an ISP serving home and small business Internet users
throughout the United Kingdom. 4th Wave's service suite combines
unlimited Internet access with community-oriented content and
unique e-mail addresses for family members and employees. In
addition, 4th Wave permits users to publish their
own Web sites and provides unlimited Web space and telephone
technical support 24 hours a day. All of these services are
provided for competitive fixed fees that are payable monthly or
annually. In addition to its core local ISP service suite, 4th
Wave is developing a stand alone business ISP that will be
launched in partnership with a leading United Kingdom local
content provider.
Wireless4Europe Ltd.
Wireless4Europe is being organized by the Company to engage in
the development of wireless applications based on WAP, carrier
side technologies such as VOIP and certain "third generation"
(3G) technologies. The Company has recruited the core
technologists for Wireless4Europe and expects operations to
commence during the third quarter of Fiscal 2001.
Wireless4Europe will employ an ASP model pursuant to which it
will host and deliver telecommunications services over both fixed
and wireless networks, and will seek to implement and integrate
best-of-breed applications software using a "one to many" rental
model. The Company's main focus will be on applications that
require integration into existing and developing mobile data
networks. Wireless4Europe believes that the ASP approach will
enable outward facing applications to be accessed by remote users
and will offer such users much of the expensive application
functionality that exists today (in areas such as sales force
management and customer relationship management) at reduced cost.
In addition to its wireless applications development,
Wireless4Europe will seek investment opportunities in early-stage
wireless companies with which it can co-develop existing wireless
technology products and services. The Company has identified
several potential investments that could compliment
Wireless4Europe's mission, including middleware for providing
wireless data to wireless networks and a Web-based WAP
developers' resource community.
Ci4net Solutions
Ci4net Solutions acts as a business development and project
management interface to partner companies in order to
ensure that the Company's internal technology resources are
efficiently and consistently shared among its partner companies.
Ci4net's Internet infrastructure companies, with development
resources distributed across Europe, constitute a unique asset
that enhances the investment proposition offered by Ci4net
to its partner companies. Ci4net Solutions has been organized to
coordinate and structure development of a common technology
platform for partner companies in order to promote economies of
scale, rapid time-to-market and company interoperability. In
addition, Ci4net Solutions is responsible for ensuring that
strategic partnerships with leading technology partners are
centralized and deployed to ensure that partner companies have
access to leading products.
Ci4net Advanced Research Limited
Ci4net Advanced Research's mission is to continually enhance
the common technology platform that is provided to Ci4net's
partner companies. Ci4net Advanced Research seeks to identify
aspects of the Company's common technology platform that hold
particular promise for further development and to pursue those
opportunities independently and with strategic partners. Areas
currently being researched include yield management and edgeware
services, as a result of which an initial technology solution is
expected to be launched shortly by Transenact.com. Ci4net
Advanced Research will draw upon, and contract with, Ci4net
Solutions to obtain leading specialists within the areas of
technology that are researched. It is expected that in exchange
for the research and development resources provided by Ci4net
Advanced Research, Ci4net Solutions will receive a license
to use any resulting products and technologies in the common
technology platform provided to Ci4net partner companies by
Ci4net Solutions.
Business to Business:
ICM Resource Limited
ICM Resource is an existing print management company providing
services to blue-chip clients. It is developing Eazyprint.com,
an Internet-based interactive service that will employ
leading-edge technology to provide a wide assortment of print,
promotional and related items. It is expected that the
Eazyprint.com Web site will be launched during the third quarter
of Fiscal 2001. ICM will seek to develop through the
Eazyprint.com Web site, as well as through partnerships with
other providers, printing services that can be accessed via
individual personal computers, kiosks and interactive television.
It is expected that by accessing the Eazyprint.com Web site,
customers will be able to view online what is being created for
production.
Eazyprint.com will initially target the small office/home office,
small-to-medium sized enterprise (SME) and general public
segments of the printing market. ICM Resource believes that the
principal competitive factors for these market segments include
speed and convenience of service and the availability of a
cost-effective mechanism for customers to create and procure
commercially printed items. Customers in these market segments
typically use personalized and customized stationery items such
as business cards, letterhead, labels, pre-printed business forms
(such as checks, purchase orders, statements and invoices) and
specialty items such as pens, golf balls, T-shirts and
baseball hats for promotional purposes. ICM Resource will seek
to establish Eazyprint.com as Europe's premier branded online
print shop for providing such services. It is anticipated that
the Eazyprint.com model and brand will be easily translated to
other geographic regions.
Tempz.com Limited
Tempz.com is a Web-based e-recruitment and temporary services
agency. Tempz.com provides a wide range of on-line and direct
staffing services and is expected to do so at lower price points
than offline competitors. Tempz.com seeks to obtain competitive
advantages by re-engineering the temporary staffing process and
utilizing a low cost, highly flexible and scaleable service
delivery model.
The Company believes that through the integration of computer
technology and telephony in a call center environment, Tempz.com
will be able to better control output, improve service efficiency
and manage the training and development of its staff. Tempz.com
will give customers and registered workers real time access to
information held on its databases through its extranet, thereby
speeding up, simplifying and enhancing service delivery,
administration and management information.
BusinessPCUK.com Ltd.
BusinessPCUK.com is being developed to offer personal computer
equipment and Internet connectivity to SME's for a fixed monthly
price. BusinessPCUK.com will also offer its customers network
consulting services and packaged hardware and software solutions
for a fixed fee under a monthly contract. Penetration of
Internet usage in Europe has generally lagged 12 to 24 months
behind the United States, in significant part because of the
approximately 50% higher real costs of personal computing
equipment in Europe, and BusinessPCUK.com will seek to capitalize
upon this pent-up demand. Because Internet penetration in other
areas of Europe is substantially lower than in the United
Kingdom, the Company believes that BusinessPCUK.com's model is
capable of being successfully replicated elsewhere.
BusinessPCUK.com will be an anchor tenant on each of the
professional community sites being developed by
Businessvillage.com Limited, a Ci4net partner company.
BusinessPCUK.com anticipates launching in conjunction with
Businessvillages.com during the second quarter of Fiscal 2001.
Easy2ship.com Inc.
Easy2ship.com is being developed as a market maker for shipping
services and is expected to be launched during the second quarter
of Fiscal 2001. Easy2ship.com's Web-based service will permit
shippers to enter shipping specifications and solicit responsive
bids from carriers. In order to use the Easy2ship.com service,
shippers will be required to complete a personalized form that
will include weight, class and time-in-transit specifications,
pick up and delivery locations and insurance requirements.
Easy2ship.com will then match the shipper's requirements with
all registered carriers in its database that are interested in
responding to the shipment-specific requirements. Each
eligible carrier will respond with two bids to the shipper, one
for the stated pick up and delivery dates and one for
the carrier's "Flexmax" option, which will allow the carrier to
offer an alternative bid based on the carrier's, rather
than the shipper's, preferred pick up and delivery dates. The
carrier whose bid is selected by the shipper will be notified
online and the results of all shipping operations will be
maintained in a database that will be accessible to the carrier
and the shipper.
Easy2ship.com is expected to go speed up the process of
identifying shipper requirements and matching them with carriers
capable of executing their orders, thereby achieving cost
reductions. Cost savings will also be achieved by improving
market efficiency (with fewer ships returning to base empty); by
implementing a consolidated billing system to streamline
tracking, verification and accounts payable processes; and by
utilizing back-hauls and management of time-in-transit data. In
addition, internal management processes are expected to be
improved by virtue of Easy2ship.com's online transaction
capabilities, which will provide customizable reporting,
electronically maintained freight data and freight cost analysis.
Fishexchange Inc.
Fishexchange Inc. is developing fischexchange.net the first
complete electronic trading exchange for the buying and selling
of seafood. The exchange is expected to be launched during the
second quarter of Fiscal 2001 and will provide real time prices
on up to 3000 seafood species, automated preference matching,
last price/ask price history and trending, transaction
facilitation and credit insurance. Automatic e-bidding will allow
a seller to list inventory and a strike price which is blind to
the buyer. If a bid is at a price equal to or higher than the
seller's strike price, the price for the buyer's acceptance will
automatically be revealed. The system will also include a
mechanism for a buyer to pre-entering his requirements for any
future time or strike price so that sellers can bids to fill the
order. Orders will specify sizes, cuts, packaging and
transportation requirements, and Fishexchange.net will
incorporate the Latin names of seafood species to ensure order
accuracy. Fishexchange.net plans to charge a flat fee for each
transaction and an annual membership fee. The Company believes
that the seafood industry, which is heavily reliant on brokers,
is highly fragmented and is information and labor intensive, will
be responsive to an exchange mechanism that addresses the
globalization of the industry and introduces efficiencies that
are essential in dealing with a perishable commodity.
Businessvillages.com Limited.
Businessvillages.com Limited is developing businessvillages.com,
an online trading environment to enable business professionals to
access high quality industry information and services in
community environments organized by area of interest.
Businessvillages.com is expected to begin offering Web-based
services during the second quarter of Fiscal 2001. Each village
within the businessvillages.com site will include the following
components: a search and selection capabilities for locating
vendors, current headlines, information on relevant products and
services, business news, recruitment and job opportunities,
information on trade shows, an online bookstore, education and
training, wireless subscriptions, online access to business
travel and exhibition events. The Company believes that many
Internet users have an interest in focused content services that
eliminate the need to filter out large amounts of irrelevant
online information. The Company believes that
businessvillages.com will generate revenue through a variety of
targeted advertising and subscription services.
The Rubber Exchange Inc.
The Rubber Exchange Inc. is developing the rubberexchange.com a
transaction platform for the purchase and sale of natural rubber
products. Among other things, the exchange is intended to
facilitate contract hedging. The exchange is expected to be
launched during the second quarter of Fiscal 2001. A vertical
e-marketplace for synthetic rubber products is also planned.
The initial focus of therubberexchange.com will be on the
delivery contracts and hedging transactions used by 50 primary
market makers in order to address their requirements for
operational efficiencies and real-time pricing. The Company's
research suggests that the exchange could have a high adoption
rate because of the absence of an alternative 24-hour trading
facility. It is expected that therubberexchange.com will derive
revenue from membership fees and transaction fees on each
contract and hedging transaction executed through its facilities.
Mostra Limited
Mostra is an integrated, full service marketing agency that
develops strategic initiatives for businesses with marketing
plans that are not wholly dependent upon brand advertising.
Mostra has acquired expertise in Internet-based marketing as well
as offline customer acquisition and retention programs. Mostra
is currently developing creative capabilities in the areas of
electronic and new media solutions and a strategic planning and
research function that will enable it to provide clients with
in-depth analysis of relevant business environments. Services
provided by Mostra include above-the-line advertising (brand,
business-to-business and specialist advertising including
television, radio, posters and press), direct response
advertising, direct and relationship marketing and database
management, affinity marketing, sales promotion, and corporate
and brand identity design and development.
Transenact Ltd.
Transenact is a developer of intelligent exchange software that
facilitates matching of supply and demand specifications over the
Internet. Its software permits partially defined, multivariable
orders to be submitted and identifies a set of responsive
sourcing options for the prospective purchaser. This system
facilitates the streamlining and automation of complex
procurement processes and reduces the need for managerial
involvement in such processes, thereby reducing transaction
expenses and permitting management attention to be focused on
value-added procurement functions such as negotiating superior
pricing with preferred suppliers. Transenact is developing a
global e-commerce network for the automation of business
transactions using its technology solution.
AKAS UK Ltd.
AKAS UK Ltd. was formed to commercialize the Advanced Knowledge
Acquisition System (AKAS), a suite of software tools created by
4th Wave Technologies (also a Ci4net partner company) for the
rapid development and deployment of form-driven database
applications. These applications are delivered across intranets,
extranets and the Internet. Unlike conventional Web-based
applications, AKAS eliminates the need for systems designers and
programmers to manually code data capture forms and the
underlying database, both of which are automatically created by
AKAS without any preparation or testing requirements. This
advanced method of data collection is designed for clients that
(i) have a need for rapid deployment of data-gathering
initiatives to a geographically dispersed set of users and (ii)
can benefit from the rapid validation and storage of the
information acquired through AKAS. AKAS provides a secure
environment with multi-level membership controlled access and
update rights, and a complete audit trail for captured data that
provides provide proof of origination and change authorizations
at the individual field level. Security measures that may be
implemented include complete SSL encrypted session support and
third party authenticated digital signature for individual users.
The AKAS system is stored on a server and stored data can be
manipulated and displayed in any form desired using standard
enterprise data management tools. This system is particularly
well suited to sectors where research is conducted over many
locations such as the pharmaceutical and chemical industries and
market, environmental and other research organizations. The
system can also be applied to dispersed maintenance operations,
remote sales activities and other information management
requirements of multi-location businesses.
Chorus Inc.
Chorus is a Web-based consulting firm focusing on US
software and Internet companies that are seeking to establish
European operations. Increasingly, technology companies must
compete on a global basis, but their breadth of experience and
management expertise may not yet be optimally developed for
establishing a physical international presence. Chorus bridges
this gap by assuming a portion of the early term risk in setting
up a European subsidiary by managing the subsidiary in
conjunction with the parent for a prescribed period (generally
ranging from two to three years). Chorus has developed three
performance-related, turnkey programs to facilitate swift and
cost-effective entry into the European market.
Once a client business is sufficiently established in Europe,
management responsibility is returned to the parent. Chorus is
compensated through sign-on fees, percentage-of-revenue fees
and/or equity interests in the client company. Chorus believes
that equity interests in client companies may yield substantial
capital gains as the client companies develop.
CommercialPropertyUK.com Ltd.
CommercialPropertyUK.com, which is expected to launch its web
based service during the second quarter of Fiscal 2001, intends
to be the leading commercial property site in the United Kingdom.
The site will feature a database of all available commercial
properties throughout the United Kingdom. In addition, the site
will contain information and advice relating to real property
topics such as legal, financial and insurance issues, sourcing of
equipment and furniture and hiring of contractors and other
suppliers. Users will be able to locate and access the Web site
of each participating commercial real estate agent.
The Web site's content component will include a database of
advertisers in relevant areas, and CommercialPropertyUK expects
to generate a substantial portion of its revenues from
advertising. Display advertising is expected to be sold on the
commercial property portion of the site and, to a lesser extent,
on each participating agent's linked site. National advertising
will appear on all pages of the site and will feature a rotating
loop of banners. Regional advertising will appear within the
regional search results and local advertisers will appear
on individual pages detailing local property. Advertising on
individual agent pages may be local, regional or national in
character.
Users will be able to search for commercial properties anywhere
in the United Kingdom by inputting their criteria into a
site-specific search engine, which will produce a list of all
properties meeting such criteria from any estate agent registered
on the system. Users will also be able to register their
property requirements and thereafter be notified of properties
meeting their requirements by e-mail. This will enable direct
marketing activities such as the linking of special offers or
advertisements to e-mail messages.
Business Plan Exchange
Business Plan Exchange is being developed to present business
plans online to prospective private and institutional investors.
This service is expected to be launched during the second quarter
of Fiscal 2001. The Company intends to charge entrepreneurs a
fixed fee to download their plan onto the exchange for a minimum
of two months and a success fee if financing is raised.
Subscribers will be presented with brief executive summaries
of business plans that match their profiled preferences and will
be able to upload complete business plans without charge. A
pre-signed master confidentiality agreement executed by the
investor will automatically be referenced and become applicable
to a business plan when it is retrieved for viewing. E-mail
advice will automatically be sent to entrepreneurs when their
files are being reviewed and investors will automatically be
advised when a business plan that matches their investment
preferences becomes available.
B2C Companies:
Trrravel.com Ltd
Trrravel.com is a consumer-oriented travel Web site that provides
branded products to the leisure and small business travel markets
in the United Kingdom. Trrravel.com sells airline tickets and
vacation packages and publishes extensive travel-related content
that can be used by site visitors to research a destination or to
update their general knowledge of travel-related topics.
Trrravel.com's content includes an online magazine providing
information on destinations and resorts worldwide that is written
by one of the United Kingdom's most respected travel journalists.
The channelization of the Trrravel.com Web site permits sponsors
and merchants to execute targeted advertising and merchandising
strategies.
Features of the Trrravel.com Web site include travel assistance
tools (such as real-time access to schedule, pricing and
availability information for commercial airline travel, a mileage
calculator and a currency converter); chat rooms; vacation
picture galleries; hotel and car rental booking capabilities; and
an online brochure ordering service. Trrravel.com intends to
introduce an auction facility during Fiscal 2001. The
Trrravel.com Web site is a joint venture between Trravel.com Ltd
and Liesure Travel Group, an offline travel operator.
Media Ventures Limited
Media Ventures publishes Activelives.co, a portal for the
over-45 market. There is currently no other Web site targeting
this market in the United Kingdom. The Activelives.co Web site
includes chat-rooms, message boards, picture galleries,
newsletters and a variety of other features and content designed
to appeal to the "grey" market, such as content channels focusing
on health issues, investment advice and elder travel.
Activelives.co provides members with free email accounts,
personalized Web pages and calendar functions. Activelives.co
derives revenues principally from advertising and e-mail direct
marketing to its affluent, influential user base.
Media Ventures is an established direct marketing and publishing
company that includes among its clients the U.K. Post Office and
CGU, for which Media Ventures publishes and distributes
bi-monthly magazines read principally by the over-45 market. The
Company anticipates that Media Ventures will make its publishing
expertise and associated database assets available to other
B2C partner companies.
Allcars.com Ltd
Allcars.com is a leading United Kingdom Web site for new and
pre-owned vehicle information and purchasing services. The
Allcars.com site allows consumers to search for pre-owned or new
vehicles according to price, make, model, color, year and
location of the vehicle. Allcars.com locates and displays the
description, the location and an actual photograph of all
vehicles that satisfy a consumer's search parameters. When
consumers indicate they are ready to buy, they can be connected
to Allcars.com's network of over 2,344 participating dealers in
the United Kingdom.
Allcars.com also offers consumers a range of automotive finance
and insurance options, and other services in conjunction with
strategic partners. For example, through Allcars.com, customers
can apply for and receive automobile financing from Bank of
Scotland, automotive insurance from AXA and extended warranty
service from AXA Direct. The site also features editorial content
by Parker's Guides and Car Magazine and up-to-date automotive
news supplied through EMAP.
By connecting dealers with a large number of purchase requests,
Allcars.com enables dealers to lower their marketing,
advertising, and personnel costs while enhancing sales
production. Dealers participating in Allcars.com receive
real-time purchase request information for new and pre-owned
vehicles and the ability to track customer requests and
purchases. Allcars.com offers dealers an Allcars.com Internet
package, which includes a personal computer and accessories, to
facilitate uploading of dealer inventory onto the Allcars.com
site. Dealers can also utilize an Allcars.com auction service to
liquidate excess inventory. Allcars.com derives substantially
all of its revenue from fees paid by participating dealers.
Browsemiles.com Ltd
Browsemiles.com is developing an Internet search engine, expected
to be launched during the third quarter of Fiscal 2001, that will
award incentive credits in the form of digital "Browsemiles" to
consumers for time spent surfing the Internet using the search
engine. These awarded Browsemiles will be redeemable for awards
such as vacation packages and consumer goods. Revenues will be
generated from advertising, which will be displayed within a
frame that will surround the content being viewed by users as
long as they continue to browse using the search engine.
Browsemiles.com will integrate targeted email and Web-based
direct marketing capabilities with its online loyalty programs to
create valuable benefits for both consumer members and business
partners. The Browsemiles.com program will provide an efficient
online customer acquisition and retention tool for Web publishers
that will produce measurable results and a defined return on
marketing dollars. The Company believes that Browsemiles is
capable of becoming the most significant targeted e-mail and
Web-based direct marketing company in the United Kingdom.
Health421.com Limited
Health421.com is developing an integrated, Web-based solution
for the administrative, communications and information needs of
healthcare professionals and for the healthcare information needs
of consumers. Health421.com' objective is to become the Web's
premium brand for these healthcare-related services.
Health421.com's Web destination will consist of two linked Web
sites: a subscription-based site for healthcare professionals
and a free health and wellness center site for consumers.
Health421.com expects to launch these sites during the third
quarter of Fiscal 2001.
Health421.com will offer health care professionals
administrative, communications and research functions
integrated into a Web-based solution. Many healthcare
professionals are intensive users of administrative,
communications and information services, transcription services,
after-hours answering services, paging, voice mail
and medical reference services that are provided by multiple
vendors. The lack of integration results in users having
to become familiar with multiple devices and separate invoices,
which is time-consuming and distracts users from their
professional activities. By integrating these services,
Health421 will provide a significant opportunity for healthcare
professionals to use the Internet to increase practice
efficiency, achieve measurable cost savings and improve the
quality of patient care.
For consumers, Health421.com will provide a single point of
access to health and wellness content. Health421.com will be
capable of delivering personalized content and e-mail updates
based on a consumer's medical profile and will be able to search
and retrieve member-specific healthcare information from the Web.
Health421.com will also provide consumers with access to
content-specific online communities that will allow consumers to
participate in real-time discussions and support networks via the
Web.
Etailor Ltd.
Etailor Ltd is developing suitscape.com as a Web site offering
online custom tailoring to the United Kingdom market.
Suitscape.com is expected to be launched during the second
quarter of Fiscal 2000. Through this Web site, consumers will be
able to order high quality, custom-made garments at low cost,
with rapid delivery guaranteed.
Suitscape.com will use body measurement software to obtain
customer information needed for fitting and tailoring. Orders
will be executed using tailoring services in areas such as
Singapore and Hong Kong, where relatively low labor costs
prevail. These tailors will carry cloth that can be selected
from the Suitscape.com online catalogue so that custom
clothes can be made to order and delivered by mail within ten
days. Customers will have the opportunity to choose from classic
styles as well as those reflecting modern fashion. The clothes
will carry the Suitscape.com brand label, and will be delivered
first to a Suitscape.com depot in Singapore or Hong Kong where
they will be inspected and packed into Suitscape.com's own design
boxes for mailing directly to the customer.
Suitscape.com is expected to appeal mainly to young male
executives who have not, because of the high prices and long
delivery time, previously had custom tailored clothes. The
Suitscape.com brand name, representing custom tailoring, fast
service and low cost, will apply to both the male and female
markets. Initially, Suitscape.com will be marketed in selected
young male magazines as well as in financial journals and
magazines. Similar small ads in magazines such as Country Life
will promote the low prices available from Suitscape.com. There
are only four sites in the world currently offering online
tailoring all of which sites offer premium priced outfits.
PropertyWorldUK Ltd.
PropertyWorldUK is one of the leading residential property sites
in the United Kingdom. The site contains a searchable database of
all available residential properties throughout the United
Kingdom. Users are also able to register property requirements
with the site and receive e-mail notifications when properties
meeting their requirements come on the market. In addition, the
site contains information and advice relating to real property
topics such as legal, financial and insurance issues, sourcing of
equipment and furniture and hiring of contractors and other
suppliers. Finally, the site is linked to the Web site of each
participating real estate agent. PropertyWorldUK commenced
online operations in 1997 and receives over 1.5 million unique
visitors each month. Participating real estate agencies receive
as many as 5,000 unique visitors to their Web sites each month
that are attributable to PropertyWorldUK.
PropertyWorldUK also provides a cost-effective Internet marketing
mechanism for real estate agencies. For a low monthly
subscription fee, PropertyWorldUK designs and maintains the
agent's site. PropertyWorldUK typically designs Web sites which
feature property displays such as color photographs and site
location maps. PropertyWorldUK-registered agents can receive
their own independent Web site with personal email or a managed
site. Managed sites are updated daily with customer information
or amendments sent by fax or e-mail and do not require the agent
to purchase any software.
Lifetime Memorials Inc.
Lifetime Memorials is developing Lifetimememorials.com, a Web
site expected to be launched during the third quarter of Fiscal
2001, that will provide an on-line memorial service for family
and friends to pay tribute to and share their reflections about
their deceased loved ones. Services provided through
lifetimememorial.com will include an on-site Internet kiosk for
funeral attendees and permanent access to an on-line memorial
site. The Internet kiosk will be used at the funeral service to
display a picture of the deceased with an accompanying tribute.
Attendees will use the kiosk to electronically sign a guest book
and enter their e-mail addresses via the touch screen pad.
Lifetimememorials.com will provide a thank you message for
attending the service along an explanation of the site, charity
information, online donation ability, anniversary e-mail and
information about gifts and flowers that can be purchased online.
Lifetimememorials.com will be a fee-based service. The site will
not permit commercial advertising or marketing.
Kids Events Ltd.
Kids Events is developing kids-events.com a children's portal
that is expected to launch during the second quarter of Fiscal
2001. The site will offer resources for parents and teachers to
source events and activities that are suitable for children,
including festivals, theatre, music, sports, games, movies,
historic sites, nature parks, art shows, pet shows, aquariums,
museums, boating, riding, and a myriad of general leisure and
hobby activities taking place in the United Kingdom.
Kids-events.com will be child compatible and will maintain
careful guidelines restricting content appearing within the site.
The site will offer approved links, easy to follow directions and
specific types of categories, entertainment, and attractions
geared for the kids events target market.
PCC Care Card BV
PCC Care Card operates Personal Care Card, a loyalty card
program based in the Netherlands that rewards online and offline
consumers for shopping. The cards are targeted to specific
demographic groups and entitle their holders to an extensive
range of benefits, including discounts on items such as travel,
mortgages, insurance and healthcare, that are conferred at the
point of sale. PCC Care Card's strategy is to target
organizational users such as youth groups, elder groups,
corporations, employee benefit plans and unions. This approach
permits PCC Care Card to effectively achieve collective buying
power, the benefits of which are passed on to cardholders. PCC
Care Card is able to compile valuable purchasing and trading data
through this program. PCC Care Card generates revenues
principally through membership fees charged to cardholders.
Femailnet.com Ltd.
Femailnet.com is developing a portal for women aged 25 through
65 that is expected to launch during the fourth quarter of Fiscal
2001. Femailnet.com will aggregate a network of shopping sites
in 14 content specific channels and a shopping area. The
channels will cover topics of interest to women, such as family,
health, money, food, computers, relationships, shopping, travel,
pets and astrology. Femailnet.com will facilitate network use
across channels by providing common features, positioning and
functionality within each channel and across the network.
Aircharter Exchange.com Limited
Aircharter Exchange.com is developing a Web site to facilitate
the brokerage of air charter services over the Internet. The
site, which is expected to be launched during the second quarter
of Fiscal 2001, will enable sellers of charter services to upload
fleet data into the site's database and to register specific
charter opportunities. Potential buyers will be able to access
the data to match their own requirements and numbers of seats.
Buyers will also be able to generate bid requests online by
posting their pricing and other requirements. The site will
display news stories that are relevant to the air charter
industry. Revenues are expected to be generated from membership
subscriptions, advertising, sponsorship arrangements and
commissions on sales.
Incubator:
ismartlab Ltd.
ismartlab is an incubator that is being internally developed for
Internet and Internet-associated companies established in or
servicing primarily the United Kingdom. ismartlab's mission is to
develop individual ideas into highly focused successful Internet
businesses by providing the infrastructure and resources required
to permit entrepreneurial companies to execute their business
plans. ismartlab will seek to develop the companies it invests
in to the point at which they can realize liquidity for investors
through a public offering or disposition in a relatively short
time period. ismartlab will use its resources to actively
develop the business strategies, operations and management teams
of its incubated companies. These resources may include any
combination of
* the experience, industry relationships and specific
expertise of its and Ci4net.com's management team,
Ci4net's other partner companies; management teams and
Ci4net's global advisory boards;
* the financial resources needed to rapidly introduce
innovative products and services;
* office space and accompanying network infrastructure;
* technology consulting and services;
* graphic design, marketing, market research and advice
on corporate and product branding;
* legal and accounting services; and
* business development support and services.
ismartlab believes that companies trying to compete successfully
in the Internet marketplace, which often requires rapid
development of products and infrastructure, will be receptive to
the services, support and management sophistication that
ismartlab can offer. ismartlab will permit its incubated
companies to combine the elements of a streamlined, focused,
early-stage company with the financial strength and resources of
a much larger organization through its ownership by Ci4net.
Sales and Marketing
The Company maintains a centralized marketing department to
support the products and services of its partner companies. The
marketing department seeks to develop and differentiate each
partner company's brands so that such partner company will
succeed in retaining users of the products and services it
provides. The Company markets its products and services through
a broad array of programs and strategies, including online and
offline advertising campaigns in a variety of media (including
broadcast radio and print publications), direct mail, magazine
inserts and co-branding and co-marketing arrangements. Members
of the marketing department attend and exhibit at numerous
Internet and IT-oriented trade shows and conferences.
Ci4net's marketing department benefits its partner companies by
reducing their overhead costs and permitting them to focus on
performance goals and targets. The Company's marketing
department is able to reduce overall marketing and advertising
expense because of the increased negotiating it can achieve in
negotiating for such services on a bulk basis. In addition,
each partner company maintains its own sales and marketing
department focused on strategies particular to its geographic
market.
Competition
The Company faces competition from similar Internet holding
companies (including publicly traded Internet companies such as
CMGI Inc. and Internet Capital Group Inc.), venture capital
companies and corporations in the information technology,
Internet and telecommunications industries. Many of these
competitors have greater financial resources and brand name
recognition than the Company. In addition, the Company may
compete with its partner companies, and the Company's partner
companies may compete with each other, for Internet-related
opportunities. The Company does not have any contracts or other
understandings with any of its partner companies that would
govern the resolution of these potential conflicts. Such
competition may deter companies from affiliating with the Company
and may limit the Company's business opportunities. If the
Company cannot acquire interests in attractive companies, its
strategy to build a collaborative network of partner companies
may not succeed.
The market for Internet products and services is highly
competitive. Moreover, the market for Internet products and
services lacks significant barriers to entry, enabling new
businesses to enter this market relatively easily. Competition
in the market for Internet products and services may intensify in
the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on
developing and marketing products and services that will compete
with the Company and its partner companies' products and
services. In addition, many of our partner companies' current
and potential competitors have greater financial, technical,
operational and marketing resources than our partner companies.
The Company's partner companies may not be able to compete
successfully against these competitors in selling their goods and
services. Competitive pressures may also force prices for
Internet goods and services down and such price reductions may
reduce the Company's revenues and adversely affect the Company's
results of operations and financial condition.
Government Regulations
We are subject to laws and regulations applicable to businesses
generally in the countries in which we operate. Currently, there
are relatively few laws and regulations directly applicable to
access to and commerce on the Internet. However, due to the
increasing popularity and use of the Internet, it is possible
that a number of laws or regulations may be adopted, or that
existing laws and regulations may be applied differently, with
respect to the Internet, including laws and regulations covering
issues such as user privacy, pricing and characteristics and
quality of products and services. For example, the European
Union has adopted a Directive on Privacy which became effective
on October 24, 1998. The Directive establishes minimum standards
for the collection and use of personal identifying information in
the European Union and prohibits the transfer of this information
to countries whose privacy standards are deemed inadequate. Any
such laws and regulations could hinder growth in use of the
Internet generally, and decrease the acceptance of the Internet
as communications and commercial medium and could thereby have a
material adverse effect on our business, results of operations
and financial condition.
In addition, several telecommunications carriers have sought to
have telecommunications over the Internet regulated by agencies
such as the Federal Communications Commission in the United
States in the same manner as other telecommunications services.
The cost of communicating on the Internet could increase
substantially as a result of any such regulation in the United
States, the United Kingdom or elsewhere, potentially slowing
growth in the use of the Internet.
We may be subject to various government laws and regulations, in
the United Kingdom and elsewhere, that regulate advertising in
media, which may include the Internet. Those laws and
regulations typically require advertisers and advertising
agencies to have substantiation for advertising claims before
disseminating advertisements. Such laws and regulations can
prohibit the dissemination of false, deceptive, misleading or
unfair advertising, and may grant certain governmental agencies
enforcement powers to impose and seek civil penalties,
consumer redress, injunctive relief and/or other remedies.
Intellectual Property and Proprietary Rights
The Company does not own any intellectual property directly other
than the rights relating to its name and trademark and its Web
site address. The Company controls through its partner companies
a variety of patents, copyrights and trademarks and applications
relating thereto. The Company relies upon a combination of
patent, trade secret, copyright and trademark laws to protect its
intellectual property. It has entered into confidentiality
agreements with its management and key employees with respect to
this software, and limits access to, and distribution of this,
and other proprietary information. However, the steps the
Company takes to protect its intellectual property may not be
adequate to deter misappropriation of the Company's proprietary
information. In addition, the Company may be unable to detect
unauthorized uses of and take appropriate steps to enforce its
intellectual property rights.
Although senior management believes that the Company's services
and products do not infringe on the intellectual property rights
of others, the Company is subject to the risk that such a claim
may be asserted in the future.
Employees
As of January 31, 2000, the Company employed a total of 168
persons on a full-time basis. None of the Company's employees
are represented by a labor union. The Company believes that its
relations with its employees are good.
ITEM 2. PROPERTIES
The location and general character of the Company's principal
properties as of January 31, 2000 are as follows:
The Company leases approximately 3,000 square feet of space at
32 Haymarket, London, SW1Y 4TP, UK, where its marketing,
financial, technology, B2B, B2C and incubator divisions are
located. We have a 12-year lease expiring in April 2012. Our
subsidiary companies use this space for conducting some of their
operations on an as needed basis.
The Company leases approximately 1,000 square feet of office,
administrative, sales and marketing, operations and data center
space at One Rockefeller Plaza, Suite 1600, New York, NY 10020 on
a month-to-month basis.
In addition, our partner companies generally have independent
leased operating locations.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
On January 5, 2000, at 10:00 A.M. local time, at One Rockefeller
Plaza, Suite 1600, New York, New York 10020, the Company held a
Special Meeting of Stockholders. At the meeting the following
matter was approved:
An amendment to the Company's Certificate of Incorporation
providing for an increase in the number of authorized capital
stock to a total of 120,000,000 shares to be comprised of
100,000,000 shares of common stock and 20,000,000 shares of
preferred stock and to provide for blank check preferred stock.
20,100,000 shares of common stock voted for such amendment; no
shares of common stock voted against such amendment; and
5,385,513 shares of common stock abstained from the vote.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) The Company's common stock is traded on the OTC Bulletin
Board under the symbol "CIFN.OB." Our common stock began trading
on December 20, 1999 at $5.75 per share. The price range per
share reflected in the table below is the highest and lowest
closing sale price for the Company's stock as reported by the
OTC Bulletin Board during each quarter its common stock has been
publicly traded.
Quarter Ended January 31, 2000
Price Range Per Share:
Low $21
High $40
As of May 1, 2000, the last reported sale price for the common
stock on the OTC Bulletin Board was $38.
(b) On May 1, 2000, there were 335 holders of record of the
common stock.
(c) The Company has never declared or paid cash dividends on its
common stock. The Company currently intends to retain earnings,
if any, to support its growth strategy and does not anticipate
paying cash dividends in the foreseeable future. Payment of
future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various
factors, including the Company's financial condition, operating
results, current and anticipated cash needs and plans for
expansion.
(d) On December 20, 1999 the Company issued (i) 20,500,000
shares of common stock to the former stockholders of Old Ci4net,
(ii) 1,200,000 shares of common stock to the former shareholders
of Media Ventures and (iii) 1,166,667 shares of common stock to
the former shareholders of Planet Edge. On December 21, 1999 the
Company issued 2,238,400 shares of common stock to the former
stockholders of MSK Industries.
The issuances of securities in the transactions described above
were deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the
Securities Act as transactions by an issuer not
involving any public offering.
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data are derived from our
financial statements for our fiscal years ended January 31, 1998,
1999 and 2000 that have been audited by Ernst and Young LLP,
independent public accountants, and are included elsewhere in
this report.
(In thousands, except per share data)
Ci4net.com Planet Edge
Years Ended Period Ended
Years Ended January 31, January 31 December 6,
1998 1999 2000 1998 1999 1999
Consolidated Statement
of Operations Data:
Revenues $ 4,873 $10,617 $4,409 $ 47 $511 $1,002
Costs of revenues 5,527 10,400 5,400 - - -
Gross profit (loss) (654) 217 (991) 47 511 1,002
Operating expenses:
Sales and marketing 219 260 1,285 54 252 1,095
Research and
development - - 8,671 - - -
General and
administrative 1,555 2,283 5,994 - - -
Depreciation
and amortization 2 16 5,322 - - -
Total operating
expenses 1,776 2,559 21,274 54 252 1,095
Income/Loss
from operations (2,430) (2,343) (22,265) (7) 259 (93)
Other expense (287) (647) (553) - - -
Loss before
income taxes (2,717) (2,990) (22,818) (7) 259 (93)
Provision for
income taxes 12 - 16 - - -
Net loss ($2,706) ($2,990)($22,834) ($7) $259 ($93)
Basic and diluted
net loss per share $ (3.69) ($4.31) ($6.86)
Shares used to compute
basic and diluted net
loss per share 33,333 694,242 $3,329,062
Ci4net.com Planet Edge
(in thousands) (In thousands)
As of As of
As of January 31, January31, December 6
1998 1999 2000 1998 1999
Consolidated Balance Sheet Data:
Cash and cash
equivalents $ 93 $ - $ 254 $ - $ 32
Total assets 4,361 3,214 96,971 423 797
Total stockholders'
equity (4,166) (7,075) 65,601 263 162
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion in this report contains forward-looking statements
that involve risks and uncertainties. The Company's actual
results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below in
"Factors that May Affect Future Results".
Overview
Ci4net. is an economic network, or Econet, with equity interests
in 39 Internet-related partner companies. We have a
50%-or-greater interest in 34 of these companies and hold
minority interests in the remainder. Our partner companies
include eight Internet infrastructure companies, 18
business-to-business ("B2B") e-commerce companies, twelve
business-to-consumer ("B2C") e-commerce companies and one
incubator company. In addition, Ci4net has executed non-binding
letters of intent for the acquisition of three Internet
infrastructure companies, six B2B companies and three European
incubator companies. Thirty two of our partner companies service
the United Kingdom market. The geographic focuses of our
remaining partner companies include Italy, the Netherlands,
Europe as a whole, Australia and the United States. The company
actively promotes collaboration among its majority- and
minority-owned partners.
On December 20, 1999, the Company, which had not previously
conducted any operating activities, acquired Old Ci4net in a
reverse merger transaction that conferred control of the Company
on the former shareholders of Old Ci4net. Prior to the Company's
acquisition of Old Ci4net, Old Ci4net had completed the
acquisition of 100% of 3W, Ci4net Limited and Planet Edge and 61%
of I-Global, and Ci4net Limited had completed the acquisition of
Media Ventures. Prior to their respective acquisitions by the
Company, 3W, Ci4net Limited and I-Global had insignificant net
assets, and we regard Planet Edge as our accounting predecessor.
The consideration for the outstanding capital stock of 3W, Ci4net
Limited, Planet Edge and Media Ventures consisted of shares of
the Company's common stock that were issued to the former
stockholders of those entities upon consummation of the Company's
acquisition of Old Ci4net. The Company's financial results for
Fiscal 2000 include the results of operations of 3W, Ci4net
Limited, Planet Edge and I-Global only from the date of the
acquisition of Old Ci4net by the Company. As a consequence of
Media Ventures' prior affiliation with Kevin Leech, who became
Chairman of the Company upon completion of the Company's
acquisition of Old Ci4net, the Company's acquisition of Media
Ventures has been accounted for in a manner similar to a pooling
of interests, and the Company's financial results for Fiscal 2000
therefore include the results of operations of Media Ventures for
a ten-month period. The Company's financial results for Fiscal
2000 should not regarded as indicative of the combined full-year
results of the entities that were acquired by the Company during
Fiscal 2000. Subsequent to Fiscal 2000, the Company has
completed nine acquisitions and three minority investments,
closed a private equity placement in which in excess of $65
million in gross proceeds were received and executed letters of
intent to acquire 12 additional companies.
The acquisitions completed subsequent to January 31, 2000 are as
follows:
On February 23, 2000, Trrravel.com, an indirect majority-owned
subsidiary of Ci4net, acquired Independent Aviation Group
("IAG"). The consideration for the acquisition consisted of an
option for the purchase of shares of Trrravel.com in the event
that Trrravel.com completes a public offering.
On March 1, 2000, Ci4net acquired Systeam SpA, one of Italy's
leading e-systems integrators. The purchase price consisted of
$8.4 million in case and 630,844 shares of the Company's common
stock. The Company is also providing a loan facility to Systeam
S.p.A. of up to $500,000 that will be required to be repaid upon
the occurrence of a liquidity event.
On March 7, 2000, Ci4net acquired a majority interest in 4thWave
Technologies Ltd., a provider of local ISP services in
consideration for providing a loan facility to 4thWave
Technologies Ltd. of up to $2,400,000, which will be required to
be repaid upon the occurrence of a liquidity event.
On March 22, 2000, Ci4net acquired a 51% equity stake in Mostra,
a privately held London-bases consulting firm that has expertise
in online and offline customer acquisition and retention
strategies. The purchase price consisted of 86,244 shares the
Company's common stock. The Company is also providing a loan
facility to Mostra of up to $400,000, which will be required to
be repaid in full upon the occurrence of a liquidity event.
On March 22, 2000, Ci4net acquired a 50% equity stake in Chorus
Group International. The consideration for the acquisition
consisted of the provision by the Company to Chorus Group
International of a loan facility of up to $5,500,000, which will
be required to be repaid upon the occurrence of a liquidity
event. Chorus, a privately held, London-based firm, has
established itself as one of Europe's leading international
business development specialists and has expertise in assisting
high-growth United States-based technology companies set-up
European business operations.
On March 22, 2000, Ci4net acquired a 25% equity interest in
Enteraction TV, a privately held, United Kingdom-based developer
of broadband and interactive TV applications for $800,000.
On March 24, 2000, Ci4net acquired 50% of Business Villages Ltd,
which is developing a series of community sites targeted at
professional communities. The purchase price consisted of 20,000
shares of the Company's common stock. The Company is also
providing a loan facility to BusinessVillages Ltd of up to
$4,800,000, which will be required to be repaid in full upon the
occurrence of a liquidity event.
On March 24, 2000, Ci4net acquired 70% of ICM Resources Limited,
which operates Eazyprint.com, Europe's first online print shop.
The consideration for the acquisition was the provision by
Company to ICM Resources Limited of a loan facility of up to
$2,208,000, which will be required to be repaid in full upon the
occurrence of a liquidity event.
On March 24, 2000, Ci4net acquired approximately 2% of the equity
interests in Perform.com, an I-ASP, for $500,000. Perform.com
has developed a suite of Internet-based tools to facilitate the
effective management of people, projects, goals, communications,
training and development.
On April 1, 2000, Ci4net acquired approximately 5% of Kismet
International NV, a leading developer of online gaming systems,
for $1 million.
On April 4, 2000, Easy2ship, a majority owned subsidiary of
Ci4net, acquired E-Bidding.com Inc., a privately held, United
States-based freight and e-commerce company the assets of which
included an end-to-end transaction engine for connecting carriers
and shippers. The purchase price consisted of 7,576 shares of
the Company's common stock.
On May 1, 2000, Ci4net acquired a 51% equity stake in Citee for
620,000 shares of the Company's common stock. Citee is a leading
systems integrator in the Netherlands employing 275 technically
trained specialists. Pursuant to the terms of the acquisition,
Ci4net will name a director to Citee's supervisory board. The
Company has also supplied a loan facility to Citee of up to
$1,847,075, which will be required to be paid in full upon the
occurrence of a liquidity event.
Effect of Various Accounting Methods on Our Results of Operations
The Company's ownership interests in its partner companies are
accounted for under one of three methods: the consolidation
method, the equity method or the cost method. The applicable
accounting method is generally determined based on our voting
interest in the partner company.
Consolidation Method. Partner companies in which we directly or
indirectly own more than 50% of the outstanding voting securities
are generally accounted for under the consolidation method of
accounting. Under this method, a partner company's results of
operations are reflected within our Consolidated Statements of
Operations from the date of acquisition.
During Fiscal 2000 the following acquisitions were made by Old
Ci4net and were accounted for by Old Ci4net using the purchase
method of accounting:
3W, acquired on October 1, 1999, which is wholly owned by the
Company and holds the following percentage interests in partner
companies:
Allcars.com 75%
Health421.com 100%
Commercial Property UK Ltd. 100%
MSK Industries, acquired on December 21, 1999, which is
wholly-owned by the Company and holds the following interests in
partner companies:
Trrravel.com Ltd 51%
Browsemiles Ltd 100%
Ci4net.com Limited, acquired on October 1, 1999, which is wholly
owned by the Company and holds the following interests in partner
companies:
Planet Edge Australia Pty Ltd 55%
which holds a 100% interest in Global Freeway Pty Ltd
Tempz.com Ltd 50%
Property World UK Ltd 70%
Etailor Ltd 50%
Kids Events Ltd 50%
Femailnet.com Ltd 100%
I-Global.com Inc, acquired on December 12, 1999, which is
61%-owned by the Company and holds the following interests in
partner companies:
Easy2Ship.com Inc. 100%
FishExchange Inc. 100%
The Rubber Exchange Inc. 100%
Business Plan Exchange Inc. 100%
Lifetime Memorials Inc. 100%
Planet Edge Ltd, which is wholly-owned by the Company.
During Fiscal 2000, Old Ci4net acquired 100% of the equity
interests in Media Ventures, which was controlled by Kevin Leech,
the Company's Chairman, at the time of the acquisition and has
been accounted for in a manner similar to pooling of interests.
Many of our consolidation method partner companies are in an
early stage of development and have not generated significant
revenues. In addition, many consolidation method partner
companies incurred substantial losses during Fiscal 2000 and are
expected to continue to incur substantial losses for the
foreseeable future.
Equity Method. Partner companies whose results we do not
consolidate, but over whom we exercise significant influence,
will generally be accounted for under the equity method of
accounting. Whether or not we exercise significant influence with
respect to a partner company depends on an evaluation of several
factors including, among others, representation on the partner
company's board of directors and ownership level, which is
generally a 20% to 50% interest in the voting securities of the
partner company, including voting rights associated with our
holdings in common, preferred and other convertible instruments
in the partner company. Under the equity method of accounting, a
partner company's results of operations are not reflected within
our Consolidated Statements of Operations; however, our share of
the earnings or losses of a partner company accounted for under
the equity method would be reflected separately in our
Consolidated Statements of Operations. There were no partner
companies acquired during Fiscal 2000 which required the use of
the equity method.
Cost Method. Companies in which we have minority investments
that are not accounted for under either the consolidation or the
equity method of accounting are accounted for under the cost
method of accounting. Under this method, our share of the
earnings or losses of these companies is not included in our
Consolidated Statements of Operations. There were no partner
companies acquired during Fiscal 2000 which required the use of
the cost method.
The presentation and content of our consolidated financial
statements is largely a function of the presentation and content
of the financial statements of our partner companies. To the
extent our partner companies change the presentation or content
of their financial statements, as may be required upon review by
the Securities and Exchange Commission or changes in accounting
literature, the presentation and content of our financial
statements may also change. All of the partner companies'
financial statements have been prepared in accordance with United
States generally accepted accounting principles and applicable
SEC rules and regulations and have been consolidated into the
main Ci4net financial statements. The consolidated financial
statements for our fiscal year ended January 31, 2000 include
only 40 days of operations of Ci4net and its subsidiaries, except
for Media Ventures, whose results are included for ten months
because its acquisition byCi4net Limited, an entity under common
control with Media Ventures, has been accounted for in a manner
similar to a pooling of interests. Our results for the fiscal
years ended January 31, 1999 and 1998 also include the results of
Media Ventures. In accordance with United States generally
accepted accounting principles and applicable SEC rules and
regulations, we have also included Planet Edge's balance sheets
for the years ended January 31, 1999 and 1998 and the related
statements of operations, stockholders equity and cash flow for
such years and for the period ended December 6, 1999. Planet
Edge's financial statements have been included as a predecessor
because they represent the latest audited accounts of a material
company that forms part of the Ci4net consolidated group as at
January 31, 2000.
Results of Operations
Prior to December 10, 1999, the Company was a development stage
company and did not have any significant revenues. During Fiscal
2000, the Company completed the acquisition of Old Ci4net, MSK
Industries, Media Ventures, Planet Edge and I-Global. The results
of Fiscal 2000 are derived from the businesses acquired by the
Company pursuant to these transactions.
The following table presents certain consolidated statement of
operations data for the fiscal years indicated as a percentage of
consolidated revenues:
Fiscal year ended January 31, 2000 compared to fiscal year ended
January 31, 1999
Revenues
Publishing revenues
Publishing revenues consist of revenues from the sale of
publications and titles by Media Ventures.
Publishing revenues were $4,174,775 for Fiscal 2000 compared with
$10,616,538 for the fiscal year ended January 31, 1999. The
increase in publishing revenues was due principally to increased
revenues earned by Media Ventures from certain non-recurring
sales of magazine titles, offset by the inclusion of only 10
months of operating results of Media Ventures during Fiscal 2000
as compared to 12 months in Fiscal 1999.
Contract revenues and other
Contract revenues consist of revenues from the provision of Web
site design services and hosting arrangements. Revenues from Web
site design services are recognized upon the completion of each
contract. Revenues from the provision of hosting facilities are
recognized ratably over the term of the contract.
Contract revenues were $234,318 for the fiscal year ended January
31, 2000 and were attributable to the operations of Planet Edge
for the period from its acquisition by Old Ci4net on December 6,
1999 to January 31, 2000. No contract revenue was earned in
Fiscal 1999.
Cost of Revenues
Publishing costs
Publishing costs were $5,400,141 for Fiscal 2000 compared with
$10,400,130 for Fiscal 1999. The decrease in publishing costs
reflects the corresponding decrease in publishing revenues
attributable to the operations of Media Ventures and the effect
of including in our results for Fiscal 2000 only 10 months of
results for Media Ventures as compared with 12 months for Fiscal
1999.
Cost of contract revenues and other
There were no material contract revenue costs incurred during
Fiscal 2000 or Fiscal 1999.
Operating Expenses
Sales and marketing expenses
Sales and marketing expenses were $1,284,873 for Fiscal 2000
compared with $260,055 for Fiscal 1999. The increase was
attributable principally to a national media advertising campaign
that was undertaken by the Company following its acquisition of
Old Ci4net in December 1999 and a marketing campaign that was
commenced in January 2000 for Trrravel.com, one of the Company's
B2C partner companies.
Research and development expenses
Research and development expenses were $8,671,815 for Fiscal
2000. Research and development expenses consist of Web site
development costs for partner companies. No research and
development expenses were incurred during Fiscal 1999.
General and administrative expenses
General and administrative expenses were $5,994,010 for Fiscal
2000 compared with $2,282,582 for Fiscal 1999. The increase was
attributable to increased development costs incurred by the
Company since December 1999, particularly for early-phase
development costs relating to the establishment of Global
Freeway's ISP service and legal and compliance expenses.
Depreciation and amortization expenses
Depreciation and amortization expenses were $5,322,879 for Fiscal
2000 compared with $16,428 for Fiscal 1999. The increase was
principally attributable to a $5,101,416 charge recorded for
Fiscal 2000 for amortization of goodwill arising from recent
acquisitions.
Interest and other income/expense
Interest expense was $553,416 for Fiscal 2000 compared with
$647,464 for Fiscal 1999.
Net loss
Net loss was $22,833,559 for Fiscal 2000 compared with a net loss
of $2,990,121 for Fiscal 1999. The increase in net loss was
attributable primarily to research and development expense and
goodwill amortization incurred as a consequence of the Company's
accelerated expansion program during the latter part of Fiscal
2000.
Fiscal year ended January 31, 1999 compared to fiscal year ended
January 31, 1998
Revenues
Publishing revenues
Publishing revenues were $10,616,538 for Fiscal 1999 compared
with $4,872,643 for the fiscal year ended December 31, 1998
("Fiscal 1998"). The increase in publishing revenues was due
principally to increased revenues earned by Media Ventures from
the sale of certain magazine titles. There were no titles sold in
Fiscal 1998.
Cost of Revenues
Cost of revenues for Fiscal 1999 and 1998 consisted solely of
cost of publishing revenues since no contract revenues were
realized during those fiscal years. Publishing costs were
$10,400,130 for Fiscal 1999 compared with $5,527,150 for Fiscal
1998. The significant increase for Fiscal 1999 was principally
due to increased costs associated with increasing revenues earned
by Media Ventures from the non-recurring sale of certain magazine
titles.
Operating Expenses
Sales and marketing expenses
Sales and marketing expenses were $260,055 for Fiscal 1999
compared with $219,240 for Fiscal 1998.
General and administration expenses
General and administration expenses were $2,282,582 for Fiscal
1999 compared with $1,554,856 for Fiscal 1998. The increase
resulted from continued growth in the core operating activities
of Media Ventures.
Depreciation and amortization expenses
Depreciation and amortization expenses were $16,428 for Fiscal
1999 compared with $2,179 for Fiscal 1998. The increase arose
from a charge on additional equipment purchased during Fiscal
1999.
Interest and other income/expense
Interest expense was $647,464 for Fiscal 1999 compared with
$287,016 for Fiscal 1998. The increase in interest expense
resulted from increased short-term borrowings in Media Ventures.
Liquidity and Capital Resources
The Company's working capital deficit at January 31, 2000 was
approximately $27 million. The Company's principal sources of
cash during Fiscal 2000 were short-term loans of approximately $6
million (of which approximately $5 million was loaned to the
Company by Gala Consultancy Limited and POL Capital Limited, each
of which are affiliated with Kevin Leech) and short-term bank
borrowings totaling approximately $3 million. The Company's
principal uses of cash during Fiscal 2000 were for the funding of
operating activities of its partner companies and investment in
property and equipment of approximately $3 million relating to
the establishment of a technology infrastructure for the launch
of Global Freeway's ISP service.
On February 18, 2000, Ci4net.sold 6.6 million shares of its 8%
Series A Preferred Stock in a transaction exempt from
registration pursuant to Regulation D under the Securities Act of
1933, as amended, and received net proceeds of approximately $63
million. Existing cash and cash equivalents, proceeds from sales
of all or a portion of our investments in our partner companies
and other internal sources of cash flow are expected to be
sufficient to fund our cash requirements during the next 12
months. We will continue to evaluate acquisition opportunities
and expect to complete additional acquisitions and investments
during the next 12 months, which may make it necessary for us to
raise additional funds. If additional funds are raised through
the issuance of equity securities, our existing security holders
may experience substantial dilution. We may seek to obtain bank
financing or other sources of credit for purposes of funding
future operations, although there can be no assurance that such
funds will be available on acceptable terms.
Net cash used by operating activities was approximately $5.6
million during Fiscal 2000. The adjusted net loss of $17.6
million was partly financed by an increase in accounts payable
and accrued expenses.
Net cash used in investing activities was approximately $2.7
million during Fiscal 2000. These amounts were used primarily
for investment in property and equipment relating to the
establishment of a technology infrastructure for the launch of
Global Freeway's ISP service.
Net cash provided by financing activities was approximately $8.8
million, the principal components of which were related party
loans and long-term bank borrowings.
Reportable Business Segments
Our reportable segments determined in accordance with Statement
of Financial Accounting Standards No. 131 are B2B operations, B2C
operations, Internet infrastructure operations and general Ci4net
operations. A fifth segment, incubator operations, is likely to
emerge for reporting purposes in the future. B2B, B2C and
Internet infrastructure operations include the effect of
consolidating from their dates of acquisition and recording our
share of earnings or losses of partner companies accounted for
under the consolidation method of accounting. Because the
aggregation of our partner companies and the initiation of
coordinated operations among a large number of previously
unrelated entities occurred only recently, we do not believe that
a detailed discussion of business segment results is pertinent to
an understanding of our current business.
The Company's infrastructure partner companies derive revenues
principally from programming, consulting and maintenance. The
Company's infrastructure partner companies also derive revenue
from hosting, data management services, provision of Internet
data center sites, network services, managed services (such as
professional services), sales of equipment, licensing of software
and the provision of a variety of other products and services.
Revenues, other than revenues attributable to installation fees,
equipment sales to customers and certain professional services,
are generally billed and recognized ratably over the term of the
applicable contract, which is generally one year. Installation
fees are typically recognized at the time the installation
occurs. Equipment revenues are typically recognized when the
equipment is delivered to the customer or placed into service at
an Internet data center. We sell third-party equipment to our
customers as an accommodation to facilitate their purchase of
services.
The Company's B2B partner companies derive revenues from multiple
sources, including commissions, advertising , consulting, and
e-commerce activities. Our B2B partner companies typically earn a
commission on each transaction completed on their Web sites.
Revenues are also derived from various advertising packages and
marketing solutions provided by these partner companies.
Revenues are also derived from consulting services. E-commerce
revenues are derived from online sales and from revenue sharing
arrangements with third party operators. In such sharing
arrangements, the partner company and a third party operator
jointly create a Web site or avail themselves of one another's
Web site development resources and share the resulting revenues.
The Company's B2C partner companies derive revenues from multiple
sources, including advertising, sponsorships and e-commerce
transactions. E-commerce and advertising revenues are expected
to grow in importance as the Company's B2C partner companies
continue to leverage their growing user bases.
General Ci4net operations represent the expense of providing
strategic and operational support to our partner companies and
related administrative costs. General Ci4net operations also
include the effect of transactions and other events incidental to
our ownership interests in our partner companies and our general
operations.
Recent Accounting Pronouncements
In January 2000, the Emerging Issues Task Force ("EITF") reached
a consensus on EITF Issue 99-17, "Accounting for Advertising
Barter Transactions." The EITF agreed that advertising barter
transactions entered into subsequent to January 20, 2000 should
be accounted for at fair value only if there is verifiable
objective evidence provided by sufficient cash transactions
received by the seller of the advertising or similar advertising.
If the seller of advertising does not have verifiable objective
evidence, then the transaction is recognized at the recorded
amount of the advertising surrendered, that is, zero. The EITF
also concluded that the volume of similar cash transactions
should be at least equal to the volume of barter transactions.
Furthermore, the period of time to assess the similar
transactions should be no greater than six months preceding the
advertising barter transactions. EITF 99-17 is applicable to
transactions entered into after January 20, 2000.
Year 2000 Compliance
To date, we have not experienced significant Year 2000
disruptions to our operating or administrative systems. The
Company believes that its significant vendors and service
providers are Year 2000 compliant and we have not, to date, been
made aware that any of our significant vendors or service
providers have suffered Year 2000 disruptions in their systems.
Accordingly, we do not anticipate incurring material expenses or
experiencing any material operational disruptions as a result of
any Year 2000 problems. The Company spent an immaterial amount
on Year 2000 testing and compliance during 1999.
Factors That May Affect Future Results
The Company operates in a rapidly changing environment that
involves a number of risks, some of which are beyond the
Company's control. Forward-looking statements in this document
and those made from time to time by the Company through its
senior management are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements concerning the expected future
revenues or earnings or concerning projected plans, performance,
product development, product release or product shipment, as well
as other estimates related to future operations, are necessarily
only estimates of future results and there can be no assurance
that actual results will not materially differ from expectations.
Factors that could cause actual results to differ materially from
results anticipated in forward-looking statements include, but
are not limited to, the following:
Ci4net May Not Have Operating Income Or Net Income In The Future
During Fiscal 2000, Ci4net had an operating loss of approximately
$22 million and a net loss of approximately $23 million. Ci4net
may not have operating income or net income in the future. If
Ci4net continues to have operating losses, Ci4net may not have
enough money to grow its business in the future.
Ci4net May Have Problems Raising Money It Needs In The Future
Ci4net may not be able to obtain funding from outside
sources. In addition, even if Ci4net finds outside funding
sources, Ci4net may be required to issue to such outside sources
securities with greater rights than those currently possessed by
holders of shares of Ci4net common stock. Ci4net may also be
required to take other actions which may lessen the value of
Ci4net's common stock, including borrowing money on terms that
are not favorable to Ci4net.
Ci4net's Success Depends Greatly On Increased Use Of The Internet
By Business And Individuals
Ci4net's success depends greatly on increased use of the Internet
for advertising, marketing, providing services and conducting
business. Commercial use of the Internet is currently at an early
stage of development and the future of the Internet is not clear.
In addition, it is not clear how effective advertising on the
Internet is in generating business as compared to more
traditional types of advertising such as print, television, and
radio. Because a significant portion of Ci4net's business
depends on Ci4net's operating company subsidiaries, Ci4net's
business will suffer if commercial use of the Internet fails to
grow in the future.
Ci4net May Incur Significant Costs To Avoid Investment Company
Status And May Suffer Adverse Consequences If Deemed To Be An
Investment Company
Ci4net may incur significant costs to avoid investment company
status and may suffer other adverse consequences if deemed to be
an investment company under the Investment Company Act of 1940.
Some equity investments in other businesses made by Ci4net and
its subsidiaries may constitute investment securities under the
1940 Act. A company may be deemed to be an investment company if
it owns investment securities with a value exceeding 40% of its
total assets, subject to certain exclusions. Investment
companies are subject to registration under, and compliance with,
the 1940 Act unless a particular exclusion or SEC safe harbor
applies. If Ci4net were to be deemed an investment company, it
would become subject to the requirements of the 1940 Act. As a
consequence, Ci4net would be prohibited from engaging in business
or issuing its securities as it has in the past and might be
subject to civil and criminal penalties for noncompliance. In
addition, certain of Ci4net's contracts might be voidable, and a
court-appointed receiver could take control of Ci4net and
liquidate its business.
Although Ci4net's investment securities currently comprise
less than 40% of its assets, fluctuations in the value of these
securities or of Ci4net's other assets may cause this limit to be
exceeded. This would require Ci4net to attempt to reduce its
investment securities as a percentage of its total assets. This
reduction can be attempted in a number of ways, including the
disposition of investment securities and the acquisition of
non-investment security assets. If Ci4net sells investment
securities, it may sell them sooner than it otherwise would.
These sales may be at depressed prices and Ci4net may never
realize anticipated benefits from, or may incur losses on, these
investments. Some investments may not be sold due to contractual
or legal restrictions or the inability to locate a suitable
buyer. Moreover, Ci4net may incur tax liabilities when it sells
assets. Ci4net may also be unable to purchase additional
investment securities that may be important to its operating
strategy. If Ci4net decides to acquire non-investment security
assets, it may not be able to identify and acquire suitable
assets and businesses.
Ci4net Depends On Certain Important Employees, And The Loss Of
Any Of Those Employees May Harm Ci4net's Business
Our success depends largely on the skills of certain key
management and technical personnel as well as key management and
technical personnel of companies acquired by us. Several of our
executive officers have recently joined us and many of our key
personnel have worked together for a relatively short period.
The loss of one or more of our key management and technical
personnel may materially and adversely affect our business,
results of operations and financial condition. We cannot
guarantee that we will be able to replace any of such persons in
the event their services become unavailable.
Ci4net's Strategy Of Expanding Its Business Through Acquisitions
Of Other Businesses And Technologies Presents Special Risks
Ci4net intends to continue to expand through the acquisition
of businesses, technologies, products and services from other
businesses. Acquisitions involve a number of special problems,
including:
* difficulty integrating acquired technologies, operations and
personnel with the existing business;
* diversion of management attention in connection with both
negotiating the acquisitions and integrating the assets;
* strain on managerial and operational resources as management
tries to oversee larger operations;
* exposure to unforeseen liabilities of acquired companies;
* potential issuances of securities in connection with the
acquisition which lessen the rights of holders of Ci4net's
currently outstanding securities;
* the need to incur additional debt;
* the requirement to record additional future operating costs
for the amortization of goodwill and other intangible assets,
which amounts could be significant.
Ci4net may not be able to successfully address these
problems. Moreover, Ci4net's future operating results will
depend to a significant degree on its ability to successfully
manage growth and integrate acquisitions. In addition, many of
Ci4net's investments are in early-stage companies with limited
operating histories and limited or no revenues. Ci4net may not
be able to successfully develop these young companies.
Growing Concerns About The Use Of "Cookies" May Limit Our Ability
To Develop User Profiles
Web sites typically place small files of information commonly
known as "cookies" on a user's hard drive, generally without the
user's knowledge or consent. Cookie information is passed to the
Web site through the Internet user's browser software. Our
technology currently uses cookies to collect information about an
Internet user's movement through the Internet. Most currently
available Internet browsers allow users to modify their browser
settings to prevent cookies from being stored on their hard
drive, and a small minority of users are currently choosing to do
so. Users can also delete cookies from their hard drive at any
time. Some Internet commentators, privacy advocates and
governmental bodies have suggested limiting or eliminating the
use of cookies. The effectiveness of our technology could be
limited by any reduction or limitation in the use of cookies. If
the use or effectiveness of cookies is limited, we would likely
have to switch to other technology that allows us to gather
demographic and behavioral information. This could require
significant reengineering time and resources, might not be
completed in time to avoid negative consequences to our business,
financial condition or results of operations, and might not be
possible at all.
If Governments Regulate The Internet More Closely, Ci4net's
Business May Be Harmed
Because of the Internet's popularity and increasing use, new laws
and regulations may be adopted. These laws and regulations may
cover issues such as privacy, pricing and content. The enactment
of any additional laws or regulations may impede the growth of
the Internet and Ci4net's Internet-related business and could
place additional financial burdens on Ci4net's business.
To Succeed, Ci4net Must Respond To The Rapid Changes In
Technology And Distribution Channels Related To the Internet
The markets for Ci4net's Internet products and services are
characterized by: rapidly changing technology; evolving industry
standards; frequent new product and service introductions;
shifting distribution channels; and changing customer demands.
Ci4net's success will depend on its ability to adapt to this
rapidly evolving marketplace. Ci4net may not be able to
adequately adapt its products and services or to acquire new
products and services that can compete successfully. In
addition, Ci4net may not be able to establish and maintain
effective distribution channels.
Ci4net Is Subject To Intense Competition
The market for Internet products and services is highly
competitive. Moreover, the market for Internet products and
services lacks significant barriers to entry, enabling new
businesses to enter this market relatively easily. Competition
in the market for Internet products and services may intensify in
the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on
developing and marketing products and services that will compete
with Ci4net's products and services. In addition, many of
Ci4net's current and potential competitors have greater
financial, technical, operational, and marketing resources.
Ci4net may not be able to compete successfully against these
competitors in selling its goods and services. Competitive
pressures may also force prices for Internet goods and services
down and such price reductions may reduce Ci4net's revenues.
Ci4net's Strategy Of Selling Assets Of Or Investments In The
Companies That Ci4net Has Acquired And Developed Presents Risks
A significant element of Ci4net's business plan involves
selling, in public or private offerings, the companies, or
portions of the companies, that it has acquired and developed.
Ci4net has not conducted any such sales to date Market and other
conditions largely beyond Ci4net's control affect: Ci4net's
ability to engage in such sales; the timing of such sales; and
the amount of proceeds from such sales.
As a result, Ci4net may not be able to sell some of these assets.
In addition, even if Ci4net is able to sell, it may not be able
to sell at favorable prices. If Ci4net is unable to sell these
assets at favorable prices, its business will be harmed.
The Value Of Ci4net's Business May Fluctuate Because The Value Of
Some Of Its Assets Fluctuates
Although currently none of Ci4net's subsidiaries are public,
a portion of Ci4net's assets in the future may include the equity
securities of both publicly traded and non-publicly traded
companies. The market price and valuations of these securities
may fluctuate due to market conditions and other conditions over
which Ci4net has no control. Fluctuations in the market price
and valuations of the securities that Ci4net holds in other
companies may result in fluctuations of the market price of
Ci4net's common stock and may reduce the amount of working
capital available to Ci4net.
Ci4net's Growth Places Strains On Its Managerial, Operational And
Financial Resources
Ci4net's rapid growth has placed, and is expected to
continue to place, a significant strain on its managerial,
operational and financial resources. Further, as the number of
Ci4net's users, advertisers and other business partners grows,
Ci4net will be required to manage multiple relationships with
various customers, strategic partners and other third parties.
Further growth of Ci4net or increase in the number of its
strategic relationships will increase this strain on Ci4net's
managerial, operational and financial resources, and could
inhibit Ci4net's ability to achieve the rapid execution necessary
to successfully implement its business plan. In addition,
Ci4net's future success will also depend on its ability to expand
its sales and marketing organization and its support organization
commensurate with the growth of Ci4net's business and the
Internet.
Ci4net's Quarterly Results May Fluctuate Widely
Ci4net expects to experience significant fluctuation in future
quarterly operating results. Many factors, some of which are
beyond Ci4net's control, have contributed to quarterly
fluctuations in our and our predecessors' results in the past and
may continue to do so. Such factors include: demand for
Ci4net's products and services; payment of costs associated with
Ci4net's acquisitions, sales of assets and investments; timing
of sales of assets; market acceptance of new products and
services; specific economic conditions in the Internet and direct
marketing industries; and general economic conditions.
The emerging nature of the commercial uses of the Internet makes
predictions concerning Ci4net's future revenues difficult.
Ci4net believes that period-to-period comparisons of its results
of operations will not necessarily be meaningful and should not
be relied upon as indicative of Ci4net's future performance. It
is also possible that in some fiscal quarters Ci4net's operating
results will be below the expectations of securities analysts and
investors. In such circumstances, the price of Ci4net's common
stock may decline.
The Price Of Ci4net's Common Stock Has Been Volatile
The market price of Ci4net's common stock has been, and is
likely to continue to be, volatile, experiencing wide
fluctuations. In recent years, the stock market has experienced
significant price and volume fluctuations which have particularly
impacted the market prices of equity securities of many companies
providing Internet-related products and services. Some of these
fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. Future market movements
may adversely affect the market price of Ci4net's common stock.
Ci4net Faces Security Risks
The secure transmission of confidential information over
public telecommunications facilities is a significant barrier to
electronic commerce and communications on the Internet. Many
factors may cause compromises or breaches of the security systems
used by Ci4net or other Internet sites to protect proprietary
information, including advances in computer and software
functionality or new discoveries in the field of cryptography. A
compromise of security on the Internet would have a negative
effect on the use of the Internet for commerce and communications
and negatively impact Ci4net's business. Security breaches of the
activities of Ci4net, its customers and sponsors involving the
storage and transmission of proprietary information, such as
credit card numbers, may expose Ci4net to a risk of loss or
litigation and possible liability. Ci4net cannot assure that its
security measures will prevent security breaches.
Ownership Of Ci4net Is Concentrated
Kevin R. Leech, Ci4net's chairman, beneficially owned
approximately 43% of Ci4net's outstanding common stock as of May
1, 2000. As a result, Mr. Leech's possesses significant
influence over Ci4net on matters including the election of
directors. The concentration of Ci4net's share ownership may:
delay or prevent a change in control of Ci4net; impede a merger,
consolidation, takeover, or other business involving Ci4net; or
discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of Ci4net.
The Success Of Ci4net's Global Operations Is Subject To Special
Risks And Costs
Ci4net's operations are located primarily in Europe.
Expansion to the United States, Asia and other regions will
require significant management attention and financial resources.
Ci4net's ability to expand offerings of its products and services
internationally will be limited by the level of acceptance of the
Internet and intranets in other countries. Ci4net expects to
commit substantial time and development resources to customizing
its products and services for selected international markets and
to developing international sales and support channels.
Ci4net Could Be Subject To Infringement Claims
From time to time, Ci4net expects to be subject to third party
claims in the ordinary course of business, including claims of
alleged infringement of intellectual property rights by Ci4net.
Any such claims may damage Ci4net's business by: subjecting
Ci4net to significant liability for damages; resulting in
invalidation of Ci4net's proprietary rights; being time-consuming
and expensive to defend even if such claims are not meritorious;
and resulting in the diversion of management time and attention.
Ci4net May Have Liability For Information Retrieved From The
Internet
Because materials may be downloaded from the Internet and
subsequently distributed to others, Ci4net may be subject to
claims for defamation, negligence, copyright or trademark
infringement, personal injury, or other theories based on the
nature, content, publication and distribution of such materials.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Company does not currently hold any public securities and
therefore is not exposed to equity price risks on the marketable
portion of its equity securities. However, it is possible that
some of the Company's subsidiaries may go public in the near
future. At such time, the Company would be exposed to equity
price risks on the marketable portion of those equity
securities.
The carrying values of financial instruments including cash and
cash equivalents, accounts receivable, accounts payable and
notes payable, approximate fair value because of the short
maturity of these instruments. The carrying value of long-term
debt approximates its fair value, as estimated by using
discounted future cash flows based on the Company's current
incremental borrowing rates for similar types of borrowing
arrangements.
As the Company expands globally, the risk of foreign currency
exchange rate fluctuation may dramatically increase. Therefore,
in the future, the Company may consider utilizing derivative
instruments to mitigate such risks.
ITEM 8. FINANCIAL STATEMENTS
The Company's financial statements at January 31, 2000 and
1999, and for each of the three years in the period ended
January 31, 2000, and the Report of Ernst & Young LLP,
Independent Auditors, are included in this Report in Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On January 26, 2000, the Company changed its independent
auditors from Graf & Repetti to Ernst & Young. This change
in accountants was approved by the Company's acting directors.
Ernst & Young's report on the financial statements of Ci4net
for the fiscal year ended January 31, 2000 that is included
herein is not, and Graf & Repetti's report on the financial
statements of Ci4net for the fiscal year ended January 31, 1999
and for the period from December 29, 1995 (inception) to January
31,1999 was not, qualified or modified as to uncertainty,
audit scope, or accounting principles. During Graf & Repetti's
appointment as independent auditors, there was no disagreement
on any matter of accounting principles or practices, financial
statement disclosure or auditing scope of procedure which if
not resolved to Graf & Repetti's satisfaction would have caused
Graf & Repetti to make reference to the subject matter of
disagreement in connection with Graf & Repetti's report on the
financial statements for the periods indicated above.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated by
reference to the Company's proxy statement relating to its
election of directors during calendar year 2000, which will be
filed no later than 120 days after the end of the 2000 fiscal
year.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by
reference to the Company's proxy statement relating to its
election of directors during calendar year 2000, which will be
filed no later than 120 days after the end of the 2000 fiscal
year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is incorporated by
reference to the Company's proxy statement relating to its
election of directors during calendar year 2000, which will be
filed no later than 120 days after the end of the 2000 fiscal
year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by
reference to the Company's proxy statement relating to its
election of directors during calendar year 2000, which will be
filed no later than 120 days after the end of the 2000 fiscal
year.
PART IV
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(A) Financial Statements, Financial Statement Schedule, and
Exhibits
1. Financial Statements. The financial statements
required by Item 8 are set forth in Exhibit 13.3
of this report:
CI4NET.COM, INC.
- Report of Ernst & Young, Independent Auditors
- Consolidated Balance Sheets at of January 31, 1999
and 2000
- Consolidated Statements of Operations for the year
ended January 31, 1998, 1999 and 2000
- Consolidated Statements of Cash Flows for the year
ended January 31, 1998, 1999 and 2000
- Consolidated Statements of Stockholders' Equity for the
year ended January 31, 1998, 1999 and 2000
- Notes to the Financial Statements
PLANET EDGE LIMITED (PREDECESSOR)
- Report of Ernst & Young, Independent Auditors
- Balance Sheets at January 31, 1999 and 2000.
- Statements of Operations for the years ended
January 31,1998, 1999 and 2000.
- Statements of Cash Flows for the years ended
January 31, 1998, 1999 and 2000.
- Statement of Stockholders Equity for the
years ended January 31, 1998,1999 and 2000.
All other financial statement schedules have been omitted since
they are either not required, not applicable, or the
information is otherwise included.
2. Exhibits. The Exhibits listed in the Exhibit Index
immediately preceding such Exhibits are filed as part of
this Annual Report on Form 10-K.
(B) Reports on Form 8-K
On December 17, 1999, the Company filed a Current Report on Form
8-K to report under Item 5 (Other Events) the issuance of new
shares in a 15 for-1-post reverse stock split, and the purchase
and acquisition of Ci4net.com Inc, which closed on December 20,
1999.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CI4NET.COM INC.
Date: May 15, 2000 By: /s/ Kevin Leech
Kevin Leech
Chief Executive Officer
In accordance with the Exchange Act, this Report has been
signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Name & Title
/s/ Dale Morrison Dale Morrison
Chief Executive Officer
/s/ Ricky Weir Ricky Weir
Chief Financial Officer
(Principal Accounting Officer)
/s/ Kevin Leech Kevin Leech
Acting Director
/s/ Lee Cole Lee Cole
Acting Director
<PAGE>
EXHIBIT INDEX
Exhibit No. Title
2.1 Share Sale Agreement of CI4NET.com Limited
dated October 1, 1999, by and between
Willington Holdings Ltd (CI4NET.com Limited)
and CI4NET.com Inc.
2.2 Acquisition Agreement between CI4NET.com Inc.
(Delaware) and Three W Capital Ltd. (Marshal
Islands company) dated October 1, 1999.
2.3 Reverse Merger Agreement, dated December 2,
1999, by and between CI4NET.com Inc. and
Leisure Concepts International.
2.4 Share Sale Agreement relating to Planet Edge
Limited, Team-4 Internet Services Limited and
Net Edge Limited, dated December 6, 1999, by
and among R Kumar, M R Gittins, and T D Lloyd
and CI4NET.com Inc.
2.5 Acquisition Agreement between CI4NET.com Inc.
(Delaware) and MSK Industries Inc. (Delaware),
December 10, 1999.
2.6 Agreement For The Acquisition Of The Whole Of
The Issued Share Capital Of Media Ventures
Group plc, dated as of December 17, 1999, by
and among CI4NET.com limited, CI4NET.com
Inc. and Those People Whose Names Are Set Out
In Schedule 1.
2.7 Investment/Shareholders Agreement, by and among
Tempz.com Limited, Christopher Leonard,
Ian Thomas, and CI4NET.com Limited, dated
January 10, 2000.
2.8 Share Sale and Purchase Agreement relating to
Systeam SpA, dated February 17, 2000, by and
between Systeam SpA and CI4NET.com Inc.
2.9 Acquisition Agreement, dated March 14, 2000,
relating to the acquisition of PCC Care Card
Holdings BV. by and among Mr. J.D. KOEKKOEK,
Mr. P.R.M. van BINSBERGEN, NeSBIC
CTE Fund B.V., and CI4NET.COM Inc.
3.1 Certificate of Incorporation of CI4NET.com Inc.
and all amendments thereto.
3.2 Amended and Restated Certificate of
Incorporation of CI4NET.com Inc. to be filed on
or about May 30, 2000
3.3 By-laws CI4NET.com Inc.
4.1 Specimen Common Stock Certificate
4.2 Specimen Preferred Stock Certificate
4.3 Debenture, dated January 2000, by and between
Tempz.Com Limited and CI4NET.com Limited.
10.1 Service Agreement, by and between CI4NET.com
Limited and Kevin Leech.
10.2 Service Agreement, by and between CI4NET.com
Limited and Lee Cole.
10.3 Service Agreement, by and between CI4NET.com
Limited and Roger Holdom.
10.4 Service Agreement, by and between CI4NET.com
Inc. and Dale Morrison.
10.5 Lease relating to office at 32 Haymarket
London.
10.6 Description of lease relating to office at One
Rockefeller Plaza.
10.7 Facility Agreement, dated January 10, 2000, by
and between Tempz.Com Limited and CI4NET.com
Limited. On January 10th 2000, CI4NET.com
Limited acquired 50% of Tempz.com Limited in
consideration for supplying a loan facility.
10.8 Facility Agreement, dated February 17, 2000,
relating to Systeam SpA.
10.9 Facility Agreement, dated March 14, 2000,
relating to PCC Care Card Holdings BV.
13.1 CI4NET.com Inc. and Subsidiaries Consolidated
Financial Statements, Supplementary Data and
Independent Auditor's Report.
16.1 Letter from Graf & Repetti to the Securities
and Exchange Commission.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule for fiscal year ended
January 31, 2000.
Exhibit 21
Subsidiaries of Ci4net.com Inc.
As of May 1, 2000
Jurisdiction of
Name Organization
- ------- -----------------
Three W Capital Marshall Islands
Ci4net.com Limited Jersey, Channel Islands
MSK Industries Delaware
Health421.com Inc. UK
Netstreet21 Ltd. BVI
Comm. Property United Kingdom Ltd. UK
Allcars.com Ltd. UK
Trrravel.com Ltd. UK
Browsemiles Ltd. UK
I-globalcom Inc. Delaware
Netmedia Ltd. UK
Planet Edge Limited AUS
Global Freeway Pty Ltd. AUS
Media Ventures Group plc. AUS
Tempz.com Limited Jersey Channel Islands
Systeam SpA ITALY
Property World Ltd. UK
Femailnet.com Ltd. UK
4thWave Technologies Ltd. UK
Chorus Inc. Delaware
Citee BV NETHERLANDS
Wireless4Europe Ltd UK
Ci4net Solutions Ltd. UK
Ci4net Advanced Research Ltd UK
ICM Resources Limited UK
BusinessPCUK.com Limited UK
Easy2Ship.com Inc Delaware
Fishexchange Inc. Delaware
Businessvillages.com UK
The Rubber Exchange Inc. Delaware
Mostra Limited UK
Transenact Ltd. UK
AKAS Ltd. UK
Aircharter Exchange.com Ltd. Jersey Channel Islands
Business Plan Exchange Inc. Delaware
ismartlab Ltd. UK
Lifetime Memorials Inc. Delaware
Kids Events Ltd. UK
Personal Care Card BV NED
Bygone Times plc UK
Buyers Guide UK Ltd. UK
Enteraction TV Limited UK
Kismet International NV Netherlands Antilles
Perform.com LLC Delaware
Exhibit 27 FINANCIAL DATA SCHEDULE
Document 10K
Legend No
Restated No
Name ci4net.com
Multiplier 1
Currency USD
Fiscal Year End January 31 2000
Period Start February 1 1999
Period End None
Period Type Year
Exchange Rate 1
Cash 254,486
Securities -
Receivables 724,751
Allowances 11,440
Inventory 153,159
Current Assets 3,022,986
PP&E 4,504,204
Depreciation 1,239,196
Total Assets 96,971,056
Current Liabilities 30,706,119
Bonds -
Common 25,485
Preferred Mandatory -
Preferred -
Other SE -
Total Liability and Equity 96,971,056
Sales -
Total Revenues 4,409,094
CGS 5,400,141
Total Costs 21,273,578
Other Expenses -
Loss Provision 11,440
Interest Expense 553,416
Income Pretax (22,818,041)
Income Tax (15,518)
Income Continuing (22,833,559)
Discontinued -
Extraordinary -
Changes -
Net Income (22,833,559)
EPS Primary (6.86)
EPS Diluted (6.86)
Exhibit 2.1 Share Sale Agreement of Ci4net.com Limited dated
October 1, 1999 by and between Willington Holdings
Ltd (Ci4net.com Limited) and Ci4net.com Ltd.
ACQUISITION AGREEMENT
AGREEMENT dated 1st October 1999 ("the Agreement"), by, between
and among CI4NET.COM INC, a company incorporated under the laws
of the State of Delaware (herein referred to as CI4NET), the
persons listed on Exhibit A attached hereto and made a part
hereof, being all of the shareholders and executive officers of
CI4NET (hereinafter referred to as "MANAGEMENT"); WILLINGTON
HOLDINGS LTD, a company incorporated under the laws of Jersey,
Channel Islands (hereinafter referred to as "WHL "); and the
persons listed on Exhibit "A" attached hereto and made a part
hereof, (hereinafter referred to as the "SELLERS").
WHEREAS, the SELLERS own a total of 2 shares of common stock,
GBP1
par value, of WHL , said shares being 100% of the issued and
outstanding common stock of WHL.
WHEREAS, the SELLERS desire to sell and CI4NET desires to
purchase one hundred (100%) percent of such shares.
NOW, THEREFORE, in consideration of the mutual convenants,
agreements, representations and warranties herein contained, the
parties hereby agree as follows:
1. Purchase and Sale - The SELLERS hereby agree to sell,
transfer, assign and convey to CI4NET and CI4NET hereby agrees to
purchase and acquire from the SELLERS, a total of 2 shares of
common stock of WHL , which equates one hundred percent (100%)
percent of all of WHL 's currently issued and outstanding common
stock (the WHL Common Shares"), in a tax-free stock-for-stock
exchange.
2. Purchase Price - The aggregate purchase price to be paid by
CI4NET for the WHL Common Shares shall be 2,000,000 shares of
CI4NET $0.001 par value voting common stock (the "CI4NET Common
Shares"). The CI4NET Common Shares will be issued to the
individual SELLERS in accordance with Exhibit "A-1" attached
hereto.
3. Warranties Representations and Covenants of WHL and WHL
PRINCIPALS - In order to induce CI4NET to enter into this
Agreement and to complete the transaction contemplated hereby,
WHL and its principal executive officers (hereinafter referred
to as the "WHL PRINCIPALS", jointly and severally warrant and
represent to CI4NET that:
(a) Organization and Standing WHL is a corporation duly
organized, validly existing and in a good standing under the laws
of Jersey, is qualified to do business as a foreign corporation
in every other state or jurisdiction in which it operates to the
extent required by the laws of such states and jurisdictions, and
has full power and authority to carry on its business as now
conducted and to own and operate its assets, properties and
business. Attached hereto as Exhibit "B" are true and correct
copies of WHL 's Certificate of Incorporation, amendments thereto
and all current \by-laws of WHL . No changes thereto will be
made in any of the Exhibit "B" documents before the closing. WHL
has no subsidiaries except as listed or any investments or
ownership interests in any corporation, partnership, joint
venture or other business enterprise which is material to its
business.
(b) Capitalization As of the Closing Date of WHL 's entire
authorized equity capital consists of 10,000 shares of GBP1 par
value, of which 2 shares of Common Stock will be issued and
outstanding as of the Closing. As of the Closing Date, there
will be no other voting or equity securities authorized or
issued, nor any authorized or issued securities convertible into
voting stock, and no outstanding subscriptions, warrants, calls,
options, rights, commitments or agreements by which WHL or the
SELLERS are bound, calling for the issuance of any additional
shares of common stock or any other voting or equity security
except as set forth in the WHL's agreements with its subsidiary
companies. The 2 issued and outstanding WHL Common Shares to be
transferred by SELLERS constitutes one hundred (100%) percent of
the currently issued and outstanding shares of Common Stock of
WHL , which includes inter-claim, that same percentage of WHL 's
voting power, right to receive dividends, when, as and if
declared and paid, and the right to receive the proceeds of
liquidation attributable to common stock, if any.
(c) Ownership of WHL Shares Each SELLER warrants and
represents, severally, that as of the date hereof, such SELLER is
the sole owner of the WHL Common Shares listed by his or her
name on Exhibit "A-1", free and clear of all liens, encumbrances,
and restrictions whatsoever. By SELLERS' transfer of the WHL
Common Shares to CI4NET pursuant to this Agreement. CI4NET will
thereby acquire 100% of the outstanding capital stock of WHL ,
free and clear of all liens, encumbrances and restrictions of any
nature whatsoever
(d) Taxes WHL has filed all federal, state and local income or
other tax returns and reports that it is required to file with
all governmental agencies, wherever situate, and has paid or
accrued for payment all taxes as shown on such returns, such that
a failure to file, pay or accrue will not have a material adverse
effect on WHL . WHL 's income tax returns have never been
audited by any authority empowered to do so.
(e) Pending Actions There are no known material legal actions,
lawsuits, proceedings or investigations, either administrative or
judicial, pending or threatened, against or affecting WHL , or
against the WHL PRINCIPALS that arrive out of their operation of
WHL , except as described in Exhibit "C" attached hereto. WHL
is not knowingly in material violation of any law, material
ordinance or regulation of any kind whatever.
(f) Government and Regulation WHL holds the licenses and
registrations set forth on Exhibit "D" hereto from the
jurisdictions set forth therein, which licenses and registrations
are all of the licenses and registrations necessary to permit
WHL to conduct its current business. All of such licenses and
registrations are in full force and effect, and there are no
proceedings, hearings or other actions pending that may affect
the validity or continuation of any of them. No approval of any
other trade or professional association or agency of government
other than as set forth on Exhibit "D" is required for any of the
transactions effected by this Agreement, and the completion of
the transactions contemplated by this Agreement will not, in and
of themselves, affect or jeopardize the validity or continuation
of any of them.
(g) Ownership of Assets Except as set forth in Exhibit "E"
attached hereto, WHL has good, marketable title, without any
liens or encumbrances of any nature whatever, to all of the
following, if any; assets, properties and rights of every type
and description, including, without limitation, all cash on hand
and in banks, certificates of deposit, stocks, bonds, and other
securities, good will, customer lists, its corporate name and all
variants thereof, trademarks and trade names, copyrights and
interests thereunder, licenses and registrations, pending
licenses and permits and applications therefor, inventions,
processes, know-how, trade secrets, real estate and interests
therein and improvements thereto, machinery, equipment, vehicles,
notes and accounts receivable, fixtures, rights under agreements
and leases, franchises, all rights and claims under insurance
policies and other contracts of whatever nature, rights in funds
of whatever nature, books and records and all other property and
rights of every kind and nature owned or held by WHL as of this
date, and will continue to hold such title on and after the
completion of the transactions contemplated by this Agreement;
nor, except in the ordinary course of its business, has WHL
disposed of any such asset since the date of the most recent
balance sheet described in Section 3(0) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or
Competitors Neither the WHL PRINCIPALS nor any member of their
families have any material interest of any nature whatever in any
supplier, customer, landlord or competitor of WHL .
(i) No Debt Owed by WHL to WHL PRINCIPALS Except as set forth
in Exhibit "F" attached hereto, WHL does not owe any money,
securities, or property to either the WHL PRINCIPALS or any
member of their families or to any company controlled by such a
person, directly or indirectly. To the extent that the WHL
PRINCIPLES may have any undisclosed liability to pay any sum or
property to any such person or equity or any member of their
families such liability is hereby forever irrevocably released
and discharged.
(j) Complete Records All of WHL 's books and records, including,
without limitation, its books of account, corporate records,
minute book, stock certificate books and other records are
up-to-date, complete and reflect accurately and fairly the
conduct of its business in all material respects since its date
of incorporation.
(k) No Misleading Statements or Omissions Neither this Agreement
nor any financial statement, exhibit, schedule or document
attached hereto or presented to CI4NET in connection herewith,
contains any materially misleading statement or omits any fact or
statement necessary to make the other statements or facts therein
set forth not materially misleading.
(l) Validity of this Agreement All corporate and other
proceedings required to be taken by the SELLERS and by WHL in
order to enter into and carry out this Agreement have been duly
and properly taken. This Agreement has been duly executed by the
SELLERS and by WHL , and constitutes the valid and binding
obligation of each of them, enforceable in accordance with its
terms except to the extent Inc by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to
or effecting generally the enforcement of creditors rights. The
execution and delivery of this Agreement and the carrying out of
its purposes will not result in the breach of any of the terms
and conditions of, or constitute a default under or violate, WHL
's Certificate of Incorporation or By-Laws, or any material
agreement, lease, mortgage, bond, indenture, license or other
material document or undertaking, oral or written, to which WHL
or the SELLERS is a party or is bound or may be affected, nor
will such execution, delivery and carrying out violate any law,
rule or regulation or any order, with injunction or decree, of
any court, regulatory agency or other governmental body; and the
business now conducted by WHL can continue to be so conducted
after completion of the transaction contemplated hereby, with WHL
as a wholly owned subsidiary of CI4NET.
(m) Concepts and Approvals: Compliance with Laws Neither WHL
nor the SELLERS are required to make any filing with, or obtain
the consent or approval of, any person or entity as a condition
to the consummation of the transactions contemplated by this
Agreement. The business of WHL has been operated in material
compliance with all laws, rules, and regulations applicable to
its business, including, without limitation, those related to
securities matters, trade matters, environmental matters, public
health and safety, and labor and employment.
(n) Access to Books and Records CI4NET will have full and free
access to WHL 's books during the course of this transaction
prior to Closing, during regular business hours, on reasonable
notice.
4. Warranties, representations and Covenants of CI4NET AND
MANAGEMENT OF CI4NET ("MANAGEMENT") In order to induce the
SELLERS and WHL to enter into this Agreement and to complete the
transaction contemplated hereby, CI4NET AND MANAGEMENT jointly
and severally warrant, represent and covenant to WHL and SELLERS
that :
(a) Organization and Standing CI4NET is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, will be qualified to do business as a
foreign corporation in every other state and jurisdiction in
which it operates to the extent required by the laws of such
states or jurisdictions, and will have full power and authority
to carry on its business as now conducted and to own and operate
its assets, properties and business. CI4NET has no subsidiaries
or any other investments or ownership interests in any
corporation, partnership, joint venture or other business
enterprise.
(b) Capitalization CI4NET's entire authorized equity capital
consists of 25,000,000 shares of voting common stock, $0.001 par
value. As of the Closing, will have issued and outstanding
2,000,100 shares of voting common stock, $0.001 par value and no
shares of preferred stock issued. Upon issuance, all of the
CI4NET Common Stock will be validly issued, fully paid and
non-assessable. The relative rights and preferences of CI4NET's
equity securities are set forth on the Certificate of
Incorporation, as amended and CI4NET's By-laws (Exhibit "H"
hereto). There are no other voting or equity securities
authorized or issued, not any authorized or issued securities
convertible into voting stock, and no outstanding subscriptions,
warrants, calls, options, rights, commitments or agreements by
which CI4NET is bound, calling for the issuance of any additional
shares of common stock or any other voting or equity security.
The By-laws of CI4NET provide that a simple majority of the
shares voting at a stock holders' meeting at which a quorum is
present may elect all of the directors of CI4NET. Cumulative
voting is not provided for by the By-Laws or Certificate of
Incorporation of CI4NET. Accordingly, as of the Closing the
2,000,000 shares being issued to and acquired by the SELLERS will
constitute 99.9% of the 2,000,100 shares of CI4NET which will
then be issued and outstanding (including all consulting fees)
which includes, inter alia, that same percentage of CI4NET's
voting power (subject to the provisions regarding cumulative
rights), right to receive dividends, when, as and if declared and
paid, and the right to receive the proceeds of liquidation
attributable to common stock, if any.
(c) Ownership of Shares By CI4NET's issuance of the CI4NET
Common Shares to the SELLERS pursuant to this Agreement, the
SELLERS will thereby acquire good, absolute marketable title
thereto, free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the
fact that such CI4NET shares will not have been registered under
the 33 Act, or any applicable state securities laws.
(d)Taxes CI4NET has filed all federal, state and local income or
other tax returns and reports that it is required to file with
all governmental agencies, wherever situate, and has paid all
taxes as shown on such returns. All of such returns are true and
complete. CI4NET's income tax returns have never been audited by
say authority empowered to do so.
(e)Absence of Liabilities As of the Closing Date CI4NET will have
no liabilities of any kind or nature, fixed or contingent, except
for the costs, including legal and accounting fees and other
expenses, in connection with this transaction, for which CI4NET
agrees to be responsible and to pay in full at or before the
Closing.
(f)No Pending Actions To the best of management's knowledge,
there are no legal actions, lawsuits, proceedings or
investigations, either administrative or judicial, pending or
threatened against or affecting CI4NET, or against any of the
CI4NET MANAGEMENT and arising out of their operation of CI4NET.
CI4NET has been in compliance with, and has not received notice
of violation of any law, ordinance of any kind whatever,
including, but not Inc to, the 33 Act, the Rules and Regulations
of the SEC, or the Securities Laws and Regulations of any sale.
CI4NET is not an investment company as defined in, or otherwise
subject to regulation under, the Investment Company Act of 1940.
CI4NET is not required to file reports pursuant to either Section
13 or Section 15 (d) of the 34 Act.
(g)Corporate Records All of CI4NET's books and records,
including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other records
are up-to-date complete and reflect accurately and fairly the
conduct of its business in all respects since its date of
incorporation; all of said books and records will be made
available for inspection by WHL's authorized representatives
prior to the Closing as provided by Section 4(I) herein, and will
be delivered to CI4NET's new management at the Closing.
(h)Validity of this Agreement All corporate and other proceedings
required to be taken by CI4NET in order to enter into and to
carry out this Agreement will have been duly and properly taken
at or before the Closing. This Agreement has been duly executed
by CI4NET, constitutes a valid and binding obligation of CI4NET
enforceable in accordance with its terms. The execution and
delivery of this Agreement and the carrying out of its purposes
will not result in the breach of any of the terms or conditions
of, or constitute a default under or violate, CI4NET's
Certificate of Incorporation- or By-Laws, or any agreement,
lease, mortgage, bond, indenture, license or other document or
undertaking, oral or written, to which CI4NET is a party or is
bound or may be affected nor will such execution, delivery and
carrying out violate any law, rule or regulation or any order,
writ, injunction or decree of any court, regulatory agency or
other governmental body.
(i)Consents and Approvals, Compliance with Laws Except for the
notices to be filed as described in Section 7(a)(v) herein,
neither WHL nor MANAGEMENT is required to make any filing with,
or obtain the consent or approval of, any person or entity as a
condition to the consummation of the transactions contemplated by
this Agreement. The business of CI4NET has been operated in
compliance with all laws, rules and regulations applicable to its
business, including, without limitation, those related to
securities matters, trade matters, environmental matters, public
health and safety, and labor and employment.
(j)Access to Books and Records WHL and SELLERS will have full
and free access to WHL 's books and records during the course of
this transaction prior to and at the Closing on reasonable
notice.
(k)Directors and Shareholders Approval As of the Closing,
CI4NET's Board of Directors and Shareholders, by meeting or
consent shall have properly authorized the matters described in
section 7(a)(iv)herein.
(l)The CI4NET Shares All of the CI4NET Common Shares issued to
SELLERS shall be validly issued, fully-paid non-assessable shares
of CI4NET Common Stock, with full voting rights, dividend rights,
and right to receive the proceeds of liquidation , if any, as
set forth in CI4NET's Certificate of Incorporation.
5. Term: Indemnification All representations, warranties,
covenants and agreements made herein and in the exhibits attached
hereto shall survive the execution and delivery of this Agreement
and payment pursuant thereto. MANAGEMENT and WHL MANAGEMENT
("management") of both parties to the agreement hereby agree,
jointly and severally, to indemnify, defend, and hold harmless
CI4NET, WHL , and the SELLERS from and against any damage, loss,
liability, or expense (including without limitation, reasonable
expenses of investigation and reasonable attorney's fees) arising
out of any material breech of any representation, warranty,
covenant, or agreement made by WHL MANAGEMENT or management in
this Agreement.
6. Restricted Shares: Legend CI4NET Common Shares issued to
SELLERS hereunder will be "restricted securities" as defined in
Rule 144 under the 33 Act and each stock certificate issued to
SELLERS hereunder, will bear the usual restrictive legend to such
effect. Appropriate Stop Transfer instructions will be given to
CI4NET '' stock transfer agent.
7. Conditions Precedent to Closing (a) The obligations of WHL
and the SELLERS under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing, of each of the following
conditions:
(i) That CI4NET's and MANAGEMENT's representations and
warranties contained herein shall be true and correct at the time
of Closing as if such representations and warranties were made at
such time, and MANAGEMENT will deliver an executed certification
confirming the foregoing;
(ii) That CI4NET and MANAGEMENT shall have performed or
complied with all agreements, terms and conditions required by
this Agreement to be performed or complied with by them prior to
or at the time of the Closing;
(iii) That CI4NET's directors and shareholders, by proper and
sufficient vote taken either by consent or at a meeting duly and
properly called and held, shall have properly approved all of the
matters required to be approved by CI4NET's directors and
shareholders, respectively;
(iv) That CI4NET's Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the
transactions contemplated hereby; and
(b) The obligations of CI4NET and MANAGEMENT under this
Agreement shall be and are subject to fulfillment, prior to or at
the Closing of each of the following conditions:
(i) That WHL 's and SELLERS' representations and warranties
contained herein shall be true and correct at the time of Closing
as if such representations and warranties were made at such time
and WHL and the WHL PRINCIPALS shall deliver an executed
certification confirming the foregoing;
(ii) That WHL and WHL PRINCIPALS shall have performed or
complied with all agreements, terms and conditions required by
this Agreement to be performed or complied with by them prior to
or at the time of Closing; and
8 Termination This Agreement may be terminated at any time before
or at Closing, by;
(a)The mutual agreement of the parties;
(b)Any party if:
(iii) Any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain or prevent the
consummation of this Agreement.
Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each
said party shall bear all costs and expenses as each party has
incurred and no party shall be liable to the other.
9. Exhibits All Exhibits attached hereto are incorporated
herein by this reference as if they were set forth in their
entirety.
10. Miscellaneous Provisions This Agreement is the entire
agreement between the parties in respect of the subject matter
hereof, and there are no other agreements, written or oral, nor
may this Agreement be modified except in writing and executed by
all of the parties hereto. The failure to insist upon strict
compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such
rights or power at any other time or times.
11. Closing The Closing of the transactions contemplated by this
Agreement ("Closing") shall take place at the offices CI4NET, at
1.00 P.M. on the first business day after the letter of the
approval of SELLERS owning at least 80% of WHL 's Common Stock or
the shareholders of CI4NET approving this Agreement and the
matters referred to in section 7(a)(vi) herein, or such other
date as the parties hereto shall mutually agree upon. At the
Closing, all of the documents and items referred to herein shall
be exchanged.
12. Prohibited Actions Between the date hereof and the effective
date of the merger, neither Purchaser nor Seller will, except
with the prior written consent of the other:
(a)issue or sell any stock, bonds, or other corporate securities;
(b)incur any obligation or liability (absolute or contingent),
except current liabilities incurred, and obligations under
contracts entered into, other than in the ordinary course of
business;
(c) discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than in
the ordinary course of business;
(d) make any dividend or other payment or distribution to its
shareholders or Purchase or redeem any shares of its capital
stock other than in the ordinary course of business;
(e)mortgage, pledge, create a security interest in, or subject to
lien or other encumbrance any of its assets, tangible or
intangible other than in the ordinary course of business;
(f)sell or transfer any of its tangible assets or cancel any
debts or claims except in each case in the ordinary course of
business other than in the ordinary course of business;
(g)sell, assign, or transfer any trademark, trade name, patent,
or other intangible asset;
(h)waive any right of any substantial value other than in the
ordinary course of business; or
(i) enter into any other transaction other than in the ordinary
course of business.
13. Further Instruments From time to time, as and when requested
by the either of the parties or by its successors or assigns, the
other party will execute and deliver, or cause to be delivered,
all such deeds and other instruments; and will take or cause to
be taken such further or other action as the parties may deem
necessary or desirable in order to vest in and confirm to the
purchaser title to and possession of all its property, rights,
privileges, possessions, and franchises and otherwise to carry
out the intent and purposes of this agreement.
15. Governing Law This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
16. Counterparts This Agreement may be executed in
duplicate facsimile
counterparts, each of which shall be deemed an original and
together shall constitute one and the same binding Agreement,
with one counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals as of the date and year above first written.
CI4NET.COM INC
By: ____________________________
____________________________
WILLINGTON HOLDINGS LTD
By: ____________________________
LIST OF EXHIBITS
Exhibit "A"/"A-1" List of Sellers
Exhibit "B" True and correct copies of WHL 's
Certificate of
Incorporation,
amendments thereto and all current
By-laws.
Exhibit "C" Any material legal actions, lawsuits,
proceedings of
investigations, either administrative or
judicial,
pending or threatened, against or affecting
WHL ,
or against the Sellers that arise out of
their operation
of WHL .
Exhibit "D" Evidence of WHL 's licenses and registrations
necessary to permit WHL to conduct its current business.
Exhibit "E" Any impediments to WHL 's good,
marketable title
including liens or encumbrances of any nature
whatever.
Exhibit "F" True and correct copies of CI4NET's
Certificate
of Incorporation amendments thereto and all
current
By-laws.
Exhibit 2.2 Acquisition Agreement between Ci4net.com Inc.
(Delaware) and Three W Capital Ltd. (Marshal
Islands company) dated October 1, 1999.
ACQUISITION AGREEMENT
AGREEMENT dated 1st October 1999 ("the Agreement"), by, between
and among CI4NET.COM INC, a company incorporated under the laws
of the state of Delaware (herein referred to as CI4NET), the
persons listed on Exhibit A attached hereto and made a part
hereof, being all of the shareholders and executive officers of
CI4NET (hereinafter referred to as "MANAGEMENT"); THREE W CAPITAL
LIMITED, a company incorporated under the laws of the Marshall
Islands (hereinafter referred to as "THW "); and the persons
listed on Exhibit "A" attached hereto and made a part hereof,
(hereinafter referred to as the "SELLERS").
WHEREAS, the SELLERS own a total of 250,000 shares of common
stock, $0.001 par value, of THW, said shares being 100% of the
issued and outstanding common stock of THW .
WHEREAS, the SELLERS desire to sell and CI4NET desires to
purchase one hundred (100%) percent of such shares.
NOW, THEREFORE, in consideration of the mutual convenants,
agreements, representations and warranties herein contained, the
parties hereby agree as follows:
1. Purchase and Sale - The SELLERS hereby agree to sell,
transfer, assign and convey to CI4NET and CI4NET hereby agrees to
purchase and acquire from the SELLERS, a total of 250,000 shares
of common stock of THW , which equates one hundred percent (100%)
percent of all of THW 's currently issued and outstanding common
stock (the THW Common Shares"), in a tax-free stock-for-stock
exchange.
2. Purchase Price - The aggregate purchase price to be paid by
CI4NET for the THW Common Shares shall be 1,000,000 shares of
CI4NET $0.001 par value voting common stock (the "CI4NET Common
Shares"). The CI4NET Common Shares will be issued to the
individual SELLERS in accordance with Exhibit "A-1" attached
hereto.
3. Warranties Representations and Covenants of THW and THW
PRINCIPALS - In order to induce CI4NET to enter into this
Agreement and to complete the transaction contemplated hereby,
THW and its principal executive officers (hereinafter referred
to as the "THW PRINCIPALS", jointly and severally warrant and
represent to CI4NET that:
(a) Organization and Standing THW is a corporation duly
organized, validly existing and in a good standing under the laws
of the Marshall Islands, is qualified to do business as a foreign
corporation in every other state or jurisdiction in which it
operates to the extent required by the laws of such states and
jurisdictions, and has full power and authority to carry on its
business as now conducted and to own and operate its assets,
properties and business. Attached hereto as Exhibit "B" are true
and correct copies of THW 's Certificate of Incorporation,
amendments thereto and all current \by-laws of THW . No changes
thereto will be made in any of the Exhibit "B" documents before
the closing. THW has no subsidiaries except as listed or any
investments or ownership interests in any corporation,
partnership, joint venture or other business enterprise which is
material to its business.
(b) Capitalization As of the Closing Date of THW 's entire
authorized equity capital consists of 250,000 shares of $0.001
par value, of which 250,000 shares of Common Stock will be issued
and outstanding as of the Closing. As of the Closing Date, there
will be no other voting or equity securities authorized or
issued, nor any authorized or issued securities convertible into
voting stock, and no outstanding subscriptions, warrants, calls,
options, rights, commitments or agreements by which THW or the
SELLERS are bound, calling for the issuance of any additional
shares of common stock or any other voting or equity security,
except as set forth in the acquisition agreements of the THW
subsidiaries. The 250,000 issued and outstanding THW Common
Shares to be transferred by SELLERS constitutes one hundred
(100%) percent of the currently issued and outstanding shares of
Common Stock of THW , which includes inter-claim, that same
percentage of THW 's voting power, right to receive dividends,
when, as and if declared and paid, and the right to receive the
proceeds of liquidation attributable to common stock, if any.
(c) Ownership of THW Shares Each SELLER warrants and
represents, severally, that as of the date hereof, such SELLER is
the sole owner of the THW Common Shares listed by his or her
name on Exhibit "A-1", free and clear of all liens, encumbrances,
and restrictions whatsoever. By SELLERS' transfer of the THW
Common Shares to CI4NET pursuant to this Agreement. CI4NET will
thereby acquire 100% of the outstanding capital stock of THW ,
free and clear of all liens, encumbrances and restrictions of any
nature whatsoever
(d) Taxes THW has filed all income or other tax returns and
reports that it is required to file with all governmental
agencies, wherever situate, and has paid or accrued for payment
all taxes as shown on such returns, such that a failure to file,
pay or accrue will not have a material adverse effect on THW .
THW 's income tax returns have never been audited by any
authority empowered to do so.
(e) Pending Actions There are no known material legal actions,
lawsuits, proceedings or investigations, either administrative or
judicial, pending or threatened, against or affecting THW , or
against the THW PRINCIPALS that arrive out of their operation of
THW , except as described in Exhibit "C" attached hereto. THW
is not knowingly in material violation of any law, material
ordinance or regulation of any kind whatever.
(f) Government and Regulation THW holds the licenses and
registrations set forth on Exhibit "D" hereto from the
jurisdictions set forth therein, which licenses and registrations
are all of the licenses and registrations necessary to permit
THW to conduct its current business. All of such licenses and
registrations are in full force and effect, and there are no
proceedings, hearings or other actions pending that may affect
the validity or continuation of any of them. No approval of any
other trade or professional association or agency of government
other than as set forth on Exhibit "D" is required for any of the
transactions effected by this Agreement, and the completion of
the transactions contemplated by this Agreement will not, in and
of themselves, affect or jeopardize the validity or continuation
of any of them.
(g) Ownership of Assets Except as set forth in Exhibit "E"
attached hereto, THW has good, marketable title, without any
liens or encumbrances of any nature whatever, to all of the
following, if any; assets, properties and rights of every type
and description, including, without limitation, all cash on hand
and in banks, certificates of deposit, stocks, bonds, and other
securities, good will, customer lists, its corporate name and all
variants thereof, trademarks and trade names, copyrights and
interests thereunder, licenses and registrations, pending
licenses and permits and applications therefor, inventions,
processes, know-how, trade secrets, real estate and interests
therein and improvements thereto, machinery, equipment, vehicles,
notes and accounts receivable, fixtures, rights under agreements
and leases, franchises, all rights and claims under insurance
policies and other contracts of whatever nature, rights in funds
of whatever nature, books and records and all other property and
rights of every kind and nature owned or held by THW as of this
date, and will continue to hold such title on and after the
completion of the transactions contemplated by this Agreement;
nor, except in the ordinary course of its business, has THW
disposed of any such asset since the date of the most recent
balance sheet described in Section 3(0) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or
Competitors Neither the THW PRINCIPALS nor any member of their
families have any material interest of any nature whatever in any
supplier, customer, landlord or competitor of THW .
(i) No Debt Owed by THW to THW PRINCIPALS Except as set forth
in Exhibit "F" attached hereto, THW does not owe any money,
securities, or property to either the THW PRINCIPALS or any
member of their families or to any company controlled by such a
person, directly or indirectly. To the extent that the THW
PRINCIPLES may have any undisclosed liability to pay any sum or
property to any such person or equity or any member of their
families such liability is hereby forever irrevocably released
and discharged.
(j) Complete Records All of THW 's books and records, including,
without limitation, its books of account, corporate records,
minute book, stock certificate books and other records are
up-to-date, complete and reflect accurately and fairly the
conduct of its business in all material respects since its date
of incorporation.
(k) No Misleading Statements or Omissions Neither this Agreement
nor any financial statement, exhibit, schedule or document
attached hereto or presented to CI4NET in connection herewith,
contains any materially misleading statement or omits any fact or
statement necessary to make the other statements or facts therein
set forth not materially misleading.
(l) Validity of this Agreement All corporate and other
proceedings required to be taken by the SELLERS and by THW in
order to enter into and carry out this Agreement have been duly
and properly taken. This Agreement has been duly executed by the
SELLERS and by THW, and constitutes the valid and binding
obligation of each of them, enforceable in accordance with its
terms except to the extent Inc by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to
or effecting generally the enforcement of creditors rights. The
execution and delivery of this Agreement and the carrying out of
its purposes will not result in the breach of any of the terms
and conditions of, or constitute a default under or violate, THW
's Certificate of Incorporation or By-Laws, or any material
agreement, lease, mortgage, bond, indenture, license or other
material document or undertaking, oral or written, to which THW
or the SELLERS is a party or is bound or may be affected, nor
will such execution, delivery and carrying out violate any law,
rule or regulation or any order, with injunction or decree, of
any court, regulatory agency or other governmental body; and the
business now conducted by THW can continue to be so conducted
after completion of the transaction contemplated hereby, with THW
as a wholly owned subsidiary of CI4NET.
(m) Concepts and Approvals: Compliance with Laws Neither THW
nor the SELLERS are required to make any filing with, or obtain
the consent or approval of, any person or entity as a condition
to the consummation of the transactions contemplated by this
Agreement. The business of THW has been operated in material
compliance with all laws, rules, and regulations applicable to
its business, including, without limitation, those related to
securities matters, trade matters, environmental matters, public
health and safety, and labor and employment.
(n) Access to Books and Records CI4NET will have full and free
access to THW 's books during the course of this transaction
prior to Closing, during regular business hours, on reasonable
notice.
4. Warranties, representations and Covenants of CI4NET AND
MANAGEMENT OF CI4NET ("MANAGEMENT") In order to induce the
SELLERS and THW to enter into this Agreement and to complete the
transaction contemplated hereby, CI4NET AND MANAGEMENT jointly
and severally warrant, represent and covenant to THW and SELLERS
that :
(a) Organization and Standing CI4NET is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware, will be qualified to do business as a
foreign corporation in every other state and jurisdiction in
which it operates to the extent required by the laws of such
states or jurisdictions, and will have full power and authority
to carry on its business as now conducted and to own and operate
its assets, properties and business. CI4NET has no subsidiaries
or any other investments or ownership interests in any
corporation, partnership, joint venture or other business
enterprise.
(b) Capitalization CI4NET's entire authorized equity capital
consists of 25,000,000 shares of voting common stock, $0.001 par
value. As of the Closing, will have issued and outstanding
3,000,100 shares of voting common stock, $0.001 par value and no
shares of preferred stock issued. Upon issuance, all of the
CI4NET Common Stock will be validly issued, fully paid and
non-assessable. The relative rights and preferences of CI4NET's
equity securities are set forth on the Certificate of
Incorporation, as amended and CI4NET's By-laws. There are no
other voting or equity securities authorized or issued, not any
authorized or issued securities convertible into voting stock,
and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which CI4NET is bound,
calling for the issuance of any additional shares of common stock
or any other voting or equity security. The By-laws of CI4NET
provide that a simple majority of the shares voting at a stock
holders' meeting at which a quorum is present may elect all of
the directors of CI4NET. Cumulative voting is not provided for
by the By-Laws or Certificate of Incorporation of CI4NET.
Accordingly, as of the Closing the 1,000,000 shares being issued
to and acquired by the SELLERS will constitute 33.3% of the
3,000,100 shares of CI4NET which will then be issued and
outstanding (including all consulting fees) which includes, inter
alia, that same percentage of CI4NET's voting power (subject to
the provisions regarding cumulative rights), right to receive
dividends, when, as and if declared and paid, and the right to
receive the proceeds of liquidation attributable to common stock,
if any.
(c) Ownership of Shares By CI4NET's issuance of the CI4NET
Common Shares to the SELLERS pursuant to this Agreement, the
SELLERS will thereby acquire good, absolute marketable title
thereto, free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the
fact that such CI4NET shares will not have been registered under
the 33 Act, or any applicable state securities laws.
(d)Taxes CI4NET has filed all federal, state and local income or
other tax returns and reports that it is required to file with
all governmental agencies, wherever situate, and has paid all
taxes as shown on such returns. All of such returns are true and
complete. CI4NET's income tax returns have never been audited by
say authority empowered to do so.
(e)Absence of Liabilities As of the Closing Date CI4NET will have
no liabilities of any kind or nature, fixed or contingent, except
for the costs, including legal and accounting fees and other
expenses, in connection with this transaction, for which CI4NET
agrees to be responsible and to pay in full at or before the
Closing.
(f)No Pending Actions To the best of management's knowledge,
there are no legal actions, lawsuits, proceedings or
investigations, either administrative or judicial, pending or
threatened against or affecting CI4NET, or against any of the
CI4NET MANAGEMENT and arising out of their operation of CI4NET.
CI4NET has been in compliance with, and has not received notice
of violation of any law, ordinance of any kind whatever,
including, but not Inc to, the 33 Act, the Rules and Regulations
of the SEC, or the Securities Laws and Regulations of any sale.
CI4NET is not an investment company as defined in, or otherwise
subject to regulation under, the Investment Company Act of 1940.
CI4NET is not required to file reports pursuant to either Section
13 or Section 15 (d) of the 34 Act.
(g)Corporate Records All of CI4NET's books and records,
including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other records
are up-to-date complete and reflect accurately and fairly the
conduct of its business in all respects since its date of
incorporation; all of said books and records will be made
available for inspection by THW's authorized representatives
prior to the Closing as provided by Section 4(I) herein, and will
be delivered to CI4NET's new management at the Closing.
(h)Validity of this Agreement All corporate and other
proceedings required to be taken by CI4NET in order to enter into
and to carry out this Agreement will have been duly and properly
taken at or before the Closing. This Agreement has been duly
executed by CI4NET, constitutes a valid and binding obligation of
CI4NET enforceable in accordance with its terms. The execution
and delivery of this Agreement and the carrying out of its
purposes will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, CI4NET's
Certificate of Incorporation- or By-Laws, or any agreement,
lease, mortgage, bond, indenture, license or other document or
undertaking, oral or written, to which CI4NET is a party or is
bound or may be affected nor will such execution, delivery and
carrying out violate any law, rule or regulation or any order,
writ, injunction or decree of any court, regulatory agency or
other governmental body.
(i)Consents and Approvals, Compliance with Laws Except for the
notices to be filed as described in Section 7(a)(v) herein,
neither THW nor MANAGEMENT is required to make any filing with,
or obtain the consent or approval of, any person or entity as a
condition to the consummation of the transactions contemplated by
this Agreement. The business of CI4NET has been operated in
compliance with all laws, rules and regulations applicable to its
business, including, without limitation, those related to
securities matters, trade matters, environmental matters, public
health and safety, and labor and employment.
(j)Access to Books and Records THW and SELLERS will have full
and free access to THW 's books and records during the course of
this transaction prior to and at the Closing on reasonable
notice.
(k)Directors and Shareholders Approval As of the Closing,
CI4NET's Board of Directors and Shareholders, by meeting or
consent shall have properly authorized the matters described in
section 7(a)(iv)herein.
(l)The CI4NET Shares All of the CI4NET Common Shares issued to
SELLERS shall be validly issued, fully-paid non-assessable shares
of CI4NET Common Stock, with full voting rights, dividend rights,
and right to receive the proceeds of liquidation , if any, as
set forth in CI4NET's Certificate of Incorporation.
5. Term: Indemnification All representations, warranties,
covenants and agreements made herein and in the exhibits attached
hereto shall survive the execution and delivery of this Agreement
and payment pursuant thereto. MANAGEMENT and THW MANAGEMENT
("management") of both parties to the agreement hereby agree,
jointly and severally, to indemnify, defend, and hold harmless
CI4NET, THW , and the SELLERS from and against any damage, loss,
liability, or expense (including without limitation, reasonable
expenses of investigation and reasonable attorney's fees) arising
out of any material breech of any representation, warranty,
covenant, or agreement made by THW MANAGEMENT or management in
this Agreement.
6. Restricted Shares: Legend CI4NET Common Shares issued to
SELLERS hereunder will be "restricted securities" as defined in
Rule 144 under the 33 Act and each stock certificate issued to
SELLERS hereunder, will bear the usual restrictive legend to such
effect. Appropriate Stop Transfer instructions will be given to
CI4NET '' stock transfer agent.
7. Conditions Precedent to Closing (a) The obligations of THW
and the SELLERS under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing, of each of the following
conditions:
(i) That CI4NET's and MANAGEMENT's representations and
warranties contained herein shall be true and correct at the time
of Closing as if such representations and warranties were made at
such time, and MANAGEMENT will deliver an executed certification
confirming the foregoing;
(ii) That CI4NET and MANAGEMENT shall have performed or
complied with all agreements, terms and conditions required by
this Agreement to be performed or complied with by them prior to
or at the time of the Closing;
(iii) That CI4NET's directors and shareholders, by proper and
sufficient vote taken either by consent or at a meeting duly and
properly called and held, shall have properly approved all of the
matters required to be approved by CI4NET's directors and
shareholders, respectively;
(iv) That CI4NET's Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the
transactions contemplated hereby.; and
(b) The obligations of CI4NET and MANAGEMENT under this
Agreement shall be and are subject to fulfillment, prior to or at
the Closing of each of the following conditions:
(i) That THW 's and SELLERS' representations and warranties
contained herein shall be true and correct at the time of Closing
as if such representations and warranties were made at such time
and THW and the THW PRINCIPALS shall deliver an executed
certification confirming the foregoing;
(ii) That THW and THW PRINCIPALS shall have performed or
complied with all agreements, terms and conditions required by
this Agreement to be performed or complied with by them prior to
or at the time of Closing; and
8 Termination This Agreement may be terminated at any time before
or at Closing, by;
(a)The mutual agreement of the parties;
(b)Any party if:
(iii) Any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain or prevent the
consummation of this Agreement.
Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each
said party shall bear all costs and expenses as each party has
incurred and no party shall be liable to the other.
9. Exhibits All Exhibits attached hereto are incorporated
herein by this reference as if they were set forth in their
entirety.
10. Miscellaneous Provisions This Agreement is the entire
agreement between the parties in respect of the subject matter
hereof, and there are no other agreements, written or oral, nor
may this Agreement be modified except in writing and executed by
all of the parties hereto. The failure to insist upon strict
compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such
rights or power at any other time or times.
11. Closing The Closing of the transactions contemplated by this
Agreement ("Closing") shall take place at the offices for CI4NET,
at 1.00 P.M. on the first business day after the letter of the
approval of SELLERS owning at least 80% of THW 's Common Stock or
the shareholders of CI4NET approving this Agreement and the
matters referred to in section 7(a)(vi) herein, or such other
date as the parties hereto shall mutually agree upon. At the
Closing, all of the documents and items referred to herein shall
be exchanged.
12. Prohibited Actions Between the date hereof and the effective
date of the merger, neither Purchaser nor Seller will, except
with the prior written consent of the other:
(a)issue or sell any stock, bonds, or other corporate securities;
(b)incur any obligation or liability (absolute or contingent),
except current liabilities incurred, and obligations under
contracts entered into, other than in the ordinary course of
business;
(c) discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than in
the ordinary course of business;
(d) make any dividend or other payment or distribution to its
shareholders or Purchase or redeem any shares of its capital
stock other than in the ordinary course of business;
(e)mortgage, pledge, create a security interest in, or subject to
lien or other encumbrance any of its assets, tangible or
intangible other than in the ordinary course of business;
(f)sell or transfer any of its tangible assets or cancel any
debts or claims except in each case in the ordinary course of
business other than in the ordinary course of business;
(g)sell, assign, or transfer any trademark, trade name, patent,
or other intangible asset;
(h)waive any right of any substantial value other than in the
ordinary course of business; or
(i) enter into any other transaction other than in the ordinary
course of business.
13. Further Instruments From time to time, as and when requested
by the either of the parties or by its successors or assigns, the
other party will execute and deliver, or cause to be delivered,
all such deeds and other instruments; and will take or cause to
be taken such further or other action as the parties may deem
necessary or desirable in order to vest in and confirm to the
purchaser title to and possession of all its property, rights,
privileges, possessions, and franchises and otherwise to carry
out the intent and purposes of this agreement.
15. Governing Law This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
16. Counterparts This Agreement may be executed in duplicate
facsimile
counterparts, each of which shall be deemed an original and
together shall constitute one and the same binding Agreement,
with one counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals as of the date and year above first written.
CI4NET.COM INC
By: ____________________________
____________________________
THREE W CAPITAL LIMITED
By: ____________________________
LIST OF EXHIBITS
Exhibit "A"/"A-1" List of Sellers
Exhibit "B" True and correct copies of THW 's Certificate of
Incorporation, amendments thereto and all current
By-laws.
Exhibit "C" Any material legal actions, lawsuits, proceedings
of investigations, either administrative or
judicial, pending or threatened, against or
affecting THW, or against the Sellers that arise
out of their operation of THW .
Exhibit "D" Evidence of THW 's licenses and registrations
necessary to permit THW to conduct its current business.
Exhibit "E" Any impediments to THW 's good, marketable title
Including liens or encumbrances of any nature
whatever.
Exhibit "F" True and correct copies of CI4NET's Certificate
of Incorporation amendments thereto and all
current By-laws.
Exhibit 2.3 Reverse Merger Agreement dated December 2, 1999
By and between Ci4net.com Inc. and Leisure
Concepts International
ACQUISITION AGREEMENT
AGREEMENT dated 2nd December 1999 ("the Agreement"), by, between
and among LEISURE CONCEPTS INTERNATIONAL INC, a company
incorporated under the laws of the state of Delaware (herein
referred to as LCI), the persons listed on Exhibit A attached
hereto and made a part hereof, being all of the shareholders and
executive officers of LCI (hereinafter referred to as
"MANAGEMENT"); CI4NET.COM, INC, a company incorporated under the
laws of Delaware (hereinafter referred to as "CI4NET"); and the
persons listed on Exhibit "A" attached hereto and made a part
hereof, (hereinafter referred to as the "SELLERS").
WHEREAS, the SELLERS own a total of 3,000,100 shares of common
stock, $0.001 par value, of CI4NET, said shares being 100% of the
issued and outstanding common stock of CI4NET.
WHEREAS, the SELLERS desire to sell and LCI desires to purchase
one hundred (100%) percent of such shares.
NOW, THEREFORE, in consideration of the mutual convenants,
agreements, representations and warranties herein contained, the
parties hereby agree as follows:
1. Purchase and Sale - The SELLERS hereby agree to sell,
transfer, assign and convey to LCI and LCI hereby agrees to
purchase and acquire from the SELLERS, a total of 3,000,100
shares of common stock of CI4NET, which equates one hundred
percent (100%) percent of all of CI4NET's currently issued and
outstanding common stock (the CI4NET Common Shares"), in a
tax-free stock-for-stock acquisition.
2. Purchase Price - The aggregate purchase price to be paid
by
LCI for the CI4NET Common Shares shall be 20,500,000 post-
reverse split shares of LCI $0.001 par value voting common
stock (the "LCI Common Shares"). The LCI Common Shares will
be issued to the individual SELLERS in accordance with Exhibit
"A-1" attached hereto.
3. Warranties Representations and Covenants of CI4NET and
CI4NET
PRINCIPALS - In order to induce LCI to enter into this
Agreement and to complete the transaction contemplated hereby,
CI4NET and its principal executive officers (hereinafter
referred to as the "CI4NET PRINCIPALS", jointly and severally
warrant and represent to LCI that:
(a) Organization and Standing CI4NET is a corporation duly
organized, validly existing and in a good standing under the
laws of the state of Delaware, is qualified to do business
as a foreign corporation in every other state or
jurisdiction in which it operates to the extent required by
the laws of such states and jurisdictions, and has full
power and authority to carry on its business as now
conducted and to own and operate its assets, properties and
business. Attached hereto as Exhibit "B" are true and
correct copies of CI4NET's Certificate of Incorporation,
amendments thereto and all current \by-laws of CI4NET. No
changes thereto will be made in any of the Exhibit "B"
documents before the closing. CI4NET has no subsidiaries
except as listed or any investments or ownership interests
in any corporation, partnership, joint venture or other
business enterprise which is material to its business.
(b) Capitalization As of the Closing Date of CI4NET's entire
authorized equity capital consists of 25,000,000 shares of
$0.001 par value, of which 3,000,100 shares of Common Stock
will be issued and outstanding as of the Closing. As of the
Closing Date, there will be no other voting or equity
securities authorized or issued, nor any authorized or issued
securities convertible into voting stock, and no outstanding
subscriptions, warrants, calls, options, rights, commitments
or agreements by which CI4NET or the SELLERS are bound,
calling for the issuance of any additional shares of common
stock or any other voting or equity security, except as set
forth in Exhibit "CI4NET-S", attached hereto. The 3,000,100
issued and outstanding CI4NET Common Shares to be transferred
by SELLERS constitutes one hundred (100%) percent of the
currently issued and outstanding shares of Common Stock of
CI4NET, which includes inter-claim, that same percentage of
CI4NET's voting power, right to receive dividends, when, as
and if declared and paid, and the right to receive the
proceeds of liquidation attributable to common stock, if any.
(c) Ownership of CI4NET Shares Each SELLER warrants and
represents, severally, that as of the date hereof, such SELLER
is the sole owner of the CI4NET Common Shares listed by his or
her name on Exhibit "A-1", free and clear of all liens,
encumbrances, and restrictions whatsoever, except that the
CI4NET Common Shares so listed have not been registered under
the Securities Act of 1933, as amended (the "33 Act"), or any
applicable State Securities laws. By SELLERS' transfer of the
CI4NET Common Shares to LCI pursuant to this Agreement. LCI
will thereby acquire 100% of the outstanding capital stock of
CI4NET, free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the
fact that the CI4NET Common Shares will not have been
registered under the '33 Act, or any applicable State
securities laws.
(d) Taxes CI4NET has filed all federal, state and local
income
or other tax returns and reports that it is required to file
with all governmental agencies, wherever situate, and has paid
or accrued for payment all taxes as shown on such returns,
such that a failure to file, pay or accrue will not have a
material adverse effect on CI4NET. CI4NET's income tax
returns have never been audited by any authority empowered to
do so.
(e) Pending Actions There are no known material legal
actions,
lawsuits, proceedings or investigations, either administrative
or judicial, pending or threatened, against or affecting
CI4NET, or against the CI4NET PRINCIPALS that arrive out of
their operation of CI4NET, except as described in Exhibit "C"
attached hereto. CI4NET is not knowingly in material
violation of any law, material ordinance or regulation of any
kind whatever, including, but not Inc to laws, rules and
regulations governing the sale of its services, the 33 Act,
the Securities Exchange Act of 1934, as amended (the "34
Act"), the Rules and Regulations of the U.S. Securities and
Exchange Commission ("SEC"), or the Securities Laws and
Regulations of any state or nation.
(f) Government and Regulation CI4NET holds the licenses and
registrations set forth on Exhibit "D" hereto from the
jurisdictions set forth therein, which licenses and
registrations are all of the licenses and registrations
necessary to permit CI4NET to conduct its current business.
All of such licenses and registrations are in full force and
effect, and there are no proceedings, hearings or other
actions pending that may affect the validity or continuation
of any of them. No approval of any other trade or
professional association or agency of government other than as
set forth on Exhibit "D" is required for any of the
transactions effected by this Agreement, and the completion of
the transactions contemplated by this Agreement will not, in
and of themselves, affect or jeopardize the validity or
continuation of any of them.
(g) Ownership of Assets Except as set forth in Exhibit "E"
attached hereto, CI4NET has good, marketable title, without
any liens or encumbrances of any nature whatever, to all of
the following, if any; assets, properties and rights of every
type and description, including, without limitation, all cash
on hand and in banks, certificates of deposit, stocks, bonds,
and other securities, good will, customer lists, its corporate
name and all variants thereof, trademarks and trade names,
copyrights and interests thereunder, licenses and
registrations, pending licenses and permits and applications
therefor, inventions, processes, know-how, trade secrets, real
estate and interests therein and improvements thereto,
machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all
rights and claims under insurance policies and other contracts
of whatever nature, rights in funds of whatever nature, books
and records and all other property and rights of every kind
and nature owned or held by CI4NET as of this date, and will
continue to hold such title on and after the completion of the
transactions contemplated by this Agreement; nor, except in
the ordinary course of its business, has CI4NET disposed of
any such asset since the date of the most recent balance sheet
described in Section 3(0) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or
Competitors Neither the CI4NET PRINCIPALS nor any member of
their families have any material interest of any nature
whatever in any supplier, customer, landlord or competitor of
CI4NET.
(i) No Debt Owed by CI4NET to CI4NET PRINCIPALS Except as set
forth in Exhibit "F" attached hereto, CI4NET does not owe any
money, securities, or property to either the CI4NET PRINCIPALS
or any member of their families or to any company controlled
by such a person, directly or indirectly. To the extent that
the CI4NET PRINCIPLES may have any undisclosed liability to
pay any sum or property to any such person or equity or any
member of their families such liability is hereby forever
irrevocably released and discharged.
(j) Complete Records All of CI4NET's books and records,
including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other
records are up-to-date, complete and reflect accurately and
fairly the conduct of its business in all material respects
since its date of incorporation.
(k) No Misleading Statements or Omissions Neither this
Agreement nor any financial statement, exhibit, schedule or
document attached hereto or presented to LCI in connection
herewith, contains any materially misleading statement or
omits any fact or statement necessary to make the other
statements or facts therein set forth not materially
misleading.
(l) Validity of this Agreement All corporate and other
proceedings required to be taken by the SELLERS and by CI4NET
in order to enter into and carry out this Agreement have been
duly and properly taken. This Agreement has been duly
executed by the SELLERS and by CI4NET, and constitutes the
valid and binding obligation of each of them, enforceable in
accordance with its terms except to the extent Inc by
applicable bankruptcy, reorganization, insolvency, moratorium
or other laws relating to or effecting generally the
enforcement of creditors rights. The execution and delivery
of this Agreement and the carrying out of its purposes will
not result in the breach of any of the terms and conditions
of, or constitute a default under or violate, CI4NET's
Certificate of Incorporation or By-Laws, or any material
agreement, lease, mortgage, bond, indenture, license or other
material document or undertaking, oral or written, to which
CI4NET or the SELLERS is a party or is bound or may be
affected, nor will such execution, delivery and carrying out
violate any law, rule or regulation or any order, with
injunction or decree, of any court, regulatory agency or other
governmental body; and the business now conducted by CI4NET
can continue to be so conducted after completion of the
transaction contemplated hereby, with CI4NET as a wholly owned
subsidiary of LCI.
(m) Concepts and Approvals: Compliance with Laws Neither
CI4NET nor the SELLERS are required to make any filing with,
or obtain the consent or approval of, any person or entity as
a condition to the consummation of the transactions
contemplated by this Agreement. The business of CI4NET has
been operated in material compliance with all laws, rules, and
regulations applicable to its business, including, without
limitation, those related to securities matters, trade
matters, environmental matters, public health and safety, and
labor and employment.
(n) Access to Books and Records LCI will have full and free
access to CI4NET's books during the course of this transaction
prior to Closing, during regular business hours, on reasonable
notice.
(o) CI4NET Financial Statements Before the Closing, CI4NET's
financial statements as of and for the period from inception
to September 31, 1999, will be provided to LCI and will be
annexed hereto as Exhibit "G"; the CI4NET financial statements
will accurately describe CI4NET's financial position as of the
dates thereof. The CI4NET financial statements will have been
prepared in accordance with generally accepted accounting
principles in the United States ("GAAP") (or as permitted by
regulation S-X, S-B, and/or the rules promulgated under the 33
Act and the 34 Act) and for the period from inception to
September 31, 1999 audited by independent certified public
accountants with SEC experience.
(p) CI4NET's Corporate Summary CI4NET's Business Plan,
(attached hereto as Exhibit "L") accurately describes CI4NET's
business assets, proposed operations and management as of the
date thereof; since the date of the Corporate Plan, there has
been no material adverse change in the Business Plan and no
material adverse change in CI4NET; provided that no warranties
or representations are made as to any financial projections.
4. Warranties, representations and Covenants of LCI AND
MANAGEMENT OF LCI ("MANAGEMENT") In order to induce the SELLERS
and CI4NET to enter into this Agreement and to complete the
transaction contemplated hereby, LCI AND MANAGEMENT jointly and
severally warrant, represent and covenant to CI4NET and SELLERS
that :
(a) Organization and Standing LCI is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware, will be qualified to
do business as a foreign corporation in every other state
and jurisdiction in which it operates to the extent
required by the laws of such states or jurisdictions, and
will have full power and authority to carry on its
business as now conducted and to own and operate its
assets, properties and business. LCI has no subsidiaries
or any other investments or ownership interests in any
corporation, partnership, joint venture or other business
enterprise.
(b) Capitalization LCI's entire authorized equity capital
consists of 100,000,000 shares of voting common stock,
$0.001 par value. As of the Closing, after giving effect
to (I) the proposed one-for-15 reverse split of LCI's
8,332,000 currently outstanding shares into 555,446
shares; and (II) the issuance of 20,500,000 post-reverse
split shares to the SELLERS as described in Section 2
herein; (III) the issuance of 100,000 post-reverse split
shares to Consultants, LCI will have authorized
100,000,000 shares of Common Stock, par value $0.001; and
will have issued and outstanding 21,155,446 shares of
voting common stock, $0.001 par value and no shares of
preferred stock issued. Upon issuance, all of the LCI
Common Stock will be validly issued, fully paid and non-
assessable. The relative rights and preferences of LCI's
equity securities are set forth on the Certificate of
Incorporation, as amended and LCI's By-laws (Exhibit "H"
hereto). There are no other voting or equity securities
authorized or issued, not any authorized or issued
securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which LCI is bound,
calling for the issuance of any additional shares of
common stock or any other voting or equity security. The
By-laws of LCI provide that a simple majority of the
shares voting at a stock holders' meeting at which a
quorum is present may elect all of the directors of LCI.
Cumulative voting is not provided for by the By-Laws or
Certificate of Incorporation of LCI. Accordingly, as of
the Closing the 20,500,000 shares being issued to and
acquired by the SELLERS will constitute 97% of the
21,155,446 shares of LCI which will then be issued and
outstanding (including all consulting fees) which
includes, inter alia, that same percentage of LCI's
voting power (subject to the provisions regarding
cumulative rights), right to receive dividends, when, as
and if declared and paid, and the right to receive the
proceeds of liquidation attributable to common stock, if
any.
(c)Ownership of Shares By LCI's issuance of the LCI Common
Shares to the SELLERS pursuant to this Agreement, the
SELLERS will thereby acquire good, absolute marketable
title thereto, free and clear of all liens, encumbrances
and restrictions of any nature whatsoever, except by
reason of the fact that such LCI shares will not have
been registered under the 33 Act, or any applicable state
securities laws.
(d) Significant Agreements LCI is not and will not at
Closing be bound by any of the following:
(i) Employment, advisory or consulting contract
(except as described in Section 12 herein).
(ii) Plan providing for employee benefits of any
nature.
(iii)Lease with respect to any property or equipment.
(iv) Contract of commitments for any current
expanditure.
(v) Contract or commitment pursuant to which it has
assumed, guaranteed, endorsed or otherwise become
liable for any obligation of any other person, firm
or organization.
(vi) Contract, agreement, understanding, commitment
or arrangement either than in the normal course of
business, not set forth in the Agreement or an
Exhibit hereto.
(vii) Agreement with any person relating to the
dividend, purchase or sale of securities, that has
not been settled by the delivery of payment of
securities when due, and which remains unsettled
upon the date of this Agreement.
(e)Taxes LCI has filed all federal, state and local income
or other tax returns and reports that it is required to
file with all governmental agencies, wherever situate,
and has paid all taxes as shown on such returns. All of
such returns are true and complete. LCI's income tax
returns have never been audited by say authority
empowered to do so.
(f)Absence of Liabilities As of the Closing Date LCI will
have no liabilities of any kind or nature, fixed or
contingent, except for the costs, including legal and
accounting fees and other expenses, in connection with
this transaction, for which LCI agrees to be responsible
and to pay in full at or before the Closing.
(g)No Pending Actions To the best of management's
knowledge, there are no legal actions, lawsuits,
proceedings or investigations, either administrative or
judicial, pending or threatened against or affecting LCI,
or against any of the LCI MANAGEMENT and arising out of
their operation of LCI. LCI has been in compliance with,
and has not received notice of violation of any law,
ordinance of any kind whatever, including, but not Inc
to, the 33 Act, the Rules and Regulations of the SEC, or
the Securities Laws and Regulations of any sale. LCI is
not an investment company as defined in, or otherwise
subject to regulation under, the Investment Company Act
of 1940. LCI is not required to file reports pursuant to
either Section 13 or Section 15 (d) of the 34 Act.
(h)Corporate Records All of LCI's books and records,
including, without limitation, its books of account,
corporate records, minute book, stock certificate books
and other records are up-to-date complete and reflect
accurately and fairly the conduct of its business in all
respects since its date of incorporation; all of said
books and records will be made available for inspection
by CI4NET's authorized representatives prior to the
Closing as provided by Section 4(I) herein, and will be
delivered to LCI's new management at the Closing.
(i)No Misleading Statements or Omissions Neither this
agreement nor any financial statement, exhibit, schedule
or document attached hereto or presented to CI4NET in
connection herewith contains any materially misleading
statement, or omits any fact or statement necessary to
make the other statements or facts therein set forth not
materially misleading.
(j)Validity of this Agreement All corporate and other
proceedings required to be taken by LCI in order to enter
into and to carry out this Agreement will have been duly
and properly taken at or before the Closing. This
Agreement has been duly executed by LCI, constitutes a
valid and binding obligation of LCI enforceable in
accordance with its terms. The execution and delivery of
this Agreement and the carrying out of its purposes will
not result in the breach of any of the terms or
conditions of, or constitute a default under or violate,
LCI's Certificate of Incorporation- or By-Laws, or any
agreement, lease, mortgage, bond, indenture, license or
other document or undertaking, oral or written, to which
LCI is a party or is bound or may be affected nor will
such execution, delivery and carrying out violate any
law, rule or regulation or any order, writ, injunction or
decree of any court, regulatory agency or other
governmental body.
(k)Consents and Approvals, Compliance with Laws Except for
the notices to be filed as described in Section 7(a)(v)
herein, neither CI4NET nor MANAGEMENT is required to make
any filing with, or obtain the consent or approval of,
any person or entity as a condition to the consummation
of the transactions contemplated by this Agreement. The
business of LCI has been operated in compliance with all
laws, rules and regulations applicable to its business,
including, without limitation, those related to
securities matters, trade matters, environmental matters,
public health and safety, and labor and employment.
(l)Access to Books and Records CI4NET and SELLERS will
have
full and free access to CI4NET's books and records during
the course of this transaction prior to and at the
Closing on reasonable notice.
(m) LCI Financial Statements At or before the Closing, LCI
and MANAGEMENT will provide CI4NET with LCI's audited
financial statements for the fiscal year ended January
31, 1999 which will be audited in accordance with GAAP by
independent certified public accountants with SEC
experience, and which comply with applicable Federal
securities laws and regulations including Regulation S-X.
There will have been no material change in the business,
assets or condition (financial or otherwise) of LCI since
the date of such financial statements to the Closing.
(n) LCI Financial Condition As of the Closing, LCI will
have
no assets or liabilities, except as disclosed in
financial statements.
(o)Directors and Shareholders Approval As of the Closing,
LCI's Board of Directors and Shareholders, by meeting or
consent shall have properly authorized the matters
described in section 7(a)(iv)herein.
(p)The LCI Shares All of the LCI Common Shares issued to
SELLERS shall be validly issued, fully-paid non-
assessable shares of LCI Common Stock, with full voting
rights, dividend rights, and right to receive the
proceeds of liquidation , if any, as set forth in LCI's
Certificate of Incorporation.
5. Term: Indemnification All representations, warranties,
covenants and agreements made herein and in the exhibits
attached hereto shall survive the execution and delivery of
this Agreement and payment pursuant thereto. MANAGEMENT and
CI4NET MANAGEMENT ("management") of both parties to the
agreement hereby agree, jointly and severally, to indemnify,
defend, and hold harmless LCI, CI4NET, and the SELLERS from
and against any damage, loss, liability, or expense (including
without limitation, reasonable expenses of investigation and
reasonable attorney's fees) arising out of any material breech
of any representation, warranty, covenant, or agreement made
by CI4NET MANAGEMENT or management in this Agreement.
6. Restricted Shares: Legend All of the LCI Common Shares
issued
to SELLERS hereunder will be "restricted securities" as
defined in Rule 144 under the 33 Act and each stock
certificate issued to SELLERS hereunder, will bear the usual
restrictive legend to such effect. Appropriate Stop Transfer
instructions will be given to LCI '' stock transfer agent.
7. Conditions Precedent to Closing (a) The obligations of
CI4NET
and the SELLERS under this Agreement shall be and are subject
to fulfillment, prior to or at the Closing, of each of the
following conditions:
(i) That LCI's and MANAGEMENT's representations and
warranties contained herein shall be true and correct at
the time of Closing as if such representations and
warranties were made at such time, and MANAGEMENT will
deliver an executed certification confirming the
foregoing;
(ii) That LCI and MANAGEMENT shall have performed or
complied with all agreements, terms and conditions
required by this Agreement to be performed or complied
with by them prior to or at the time of the Closing;
(iii) That LCI's directors and shareholders, by proper
and sufficient vote taken either by consent or at a
meeting duly and properly called and held, shall have
properly approved all of the matters required to be
approved by LCI's directors and shareholders,
respectively;
(iv) That LCI shall have filed the notice of the
reverse
split required by Rule 10b-17 under that Act, and shall
have sent notice to its stockholders of the transactions
contemplated herein; and
(v) That LCI's Board of Directors, by proper and
sufficient
vote, shall have approved this Agreement and the
transactions contemplated hereby; approved the
contemplated reverse split of LCI's outstanding Common
Stock without changing either the authorized shares or
the par value; approved the change of LCI's corporate
name to a name selected by CI4NET; approved the
resignation of all of LCI's current directors and the
election of up to three designees of CI4NET to serve as
directors in place of LCI's current directors; and will
have approved such other changes as are consistent with
this Agreement and approved by CI4NET and LCI; and
(b) The obligations of LCI and MANAGEMENT under this Agreement
shall be and are subject to fulfillment, prior to or at the
Closing of each of the following conditions:
(i) That CI4NET's and SELLERS' representations and
warranties contained herein shall be true and correct at
the time of Closing as if such representations and
warranties were made at such time and CI4NET and the
CI4NET PRINCIPALS shall deliver an executed certification
confirming the foregoing;
(ii) That CI4NET and CI4NET PRINCIPALS shall have
performed or complied with all agreements, terms and
conditions required by this Agreement to be performed or
complied with by them prior to or at the time of Closing;
and
(iii) That CI4NET's officers will have signed non-compete
clauses in the form attached hereto as Exhibit "J".
8 Termination This Agreement may be terminated at any time
before or at Closing, by;
(a)The mutual agreement of the parties;
(b)Any party if:
(iv) Any legal proceeding shall have been instituted
or shall be imminently threatening to delay,
restrain or prevent the consummation of this
Agreement.
Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each
said party shall bear all costs and expenses as each party has
incurred and no party shall be liable to the other.
9. Exhibits All Exhibits attached hereto are incorporated
herein by this reference as if they were set forth in their
entirety.
10. Miscellaneous Provisions This Agreement is the entire
agreement between the parties in respect of the subject matter
hereof, and there are no other agreements, written or oral,
nor may this Agreement be modified except in writing and
executed by all of the parties hereto. The failure to insist
upon strict compliance with any of the terms, covenants or
conditions of this Agreement shall not be deemed a waiver or
relinquishment of such rights or power at any other time or
times.
11. Closing The Closing of the transactions contemplated by
this Agreement ("Closing") shall take place at the offices of
Shane H Sutton, P.C. attorneys for LCI, at 1.00 P.M. on the
first business day after the letter of the approval of SELLERS
owning at least 80% of CI4NET's Common Stock or the
shareholders of LCI approving this Agreement and the matters
referred to in section 7(a)(vi) herein, or such other date as
the parties hereto shall mutually agree upon. At the Closing,
all of the documents and items referred to herein shall be
exchanged. Upon signing LCI will carry out a corporate name
change to Ci4net.com Inc and upon approval by the NASD shall
carry out the aforementioned 15 for 1 reverse split and the
issuance of the shares to the SELLERS.
12. Prohibited Actions Between the date hereof and the
effective date of the merger, neither Purchaser nor Seller
will, except with the prior written consent of the other:
(a)issue or sell any stock, bonds, or other corporate
securities;
(b)incur any obligation or liability (absolute or contingent),
except current liabilities incurred, and obligations under
contracts entered into, other than in the ordinary course of
business;
(c) discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than in
the ordinary course of business;
(d) make any dividend or other payment or distribution to its
shareholders or Purchase or redeem any shares of its capital
stock other than in the ordinary course of business;
(e)mortgage, pledge, create a security interest in, or subject
to
lien or other encumbrance any of its assets, tangible or
intangible other than in the ordinary course of business;
(f)sell or transfer any of its tangible assets or cancel any
debts or claims except in each case in the ordinary course of
business other than in the ordinary course of business;
(g)sell, assign, or transfer any trademark, trade name, patent,
or other intangible asset;
(h)waive any right of any substantial value other than in the
ordinary course of business; or
(i) enter into any other transaction other than in the ordinary
course of business.
13. Further Instruments From time to time, as and when
requested by the either of the parties or by its successors or
assigns, the other party will execute and deliver, or cause to
be delivered, all such deeds and other instruments; and will
take or cause to be taken such further or other action as the
parties may deem necessary or desirable in order to vest in
and confirm to the purchaser title to and possession of all
its property, rights, privileges, possessions, and franchises
and otherwise to carry out the intent and purposes of this
agreement.
(b) Fees and Commissions: (a) Except as described in this
Section 12, no broker, finder, or other person or entity is
entitled to any fee or commission from LCI or CI4NET for
services rendered on behalf of LCI or CI4NET in connection
with the transactions contemplated by this Agreement.
15. Governing Law This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
16. Counterparts This Agreement may be executed in duplicate
facsimile counterparts, each of which shall be deemed an
original and together shall constitute one and the same
binding Agreement, with one counterpart being delivered to
each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals as of the date and year above first written.
LEISURE CONCEPTS INTERNATIONAL INC
By: ____________________________
____________________________
CI4NET.COM INC
By: ____________________________
EXHIBIT A
Bellingwood Limited
Melchrisea Holdings Ltd
DCI Limited
RLI Limited
SMC Internet Ltd
LDA Holdings Ltd
WWW Capital Holdings Ltd
Velvet Capital Ltd
JWB Consolidated Ltd
EXHIBIT CI4NET-S
Bellingwood Limited 9,500,000 Shares
Melchrisea Holdings Ltd 1,000,000 Shares
DCI Limited 1,000,000 Shares
RLI Limited 500,000 Shares
SMC Internet Ltd 3,000,000 Shares
LDA Holdings Ltd 2,500,000 Shares
WWW Capital Holdings Ltd 1,500,000 Shares
Velvet Capital Ltd 900,000 Shares
JWB Consolidated Ltd 600,000 Shares
Exhibit 2.5 Acquisition Agreement between Ci4net.com Inc.
(Delaware) and MSK Industries Inc. (Delaware) December 10, 1999
ACQUISITION AGREEMENT
AGREEMENT dated 10th December 1999 ("the Agreement"), by, between
and among CI4NET.COM INC, a company incorporated under the laws
of the state of Delaware (herein referred to as CI4NET), the
persons listed on Exhibit A attached hereto and made a part
hereof, being all of the shareholders and executive officers of
CI4NET (hereinafter referred to as "MANAGEMENT"); MSK INDUSTRIES
INC, a company incorporated under the laws of Delaware
(hereinafter referred to as "MSK "); and the persons listed on
Exhibit "A" attached hereto and made a part hereof, (hereinafter
referred to as the "SELLERS").
WHEREAS, the SELLERS own a total of 2,238,400 shares of common
stock, $0.001 par value, of MSK , said shares being 100% of the
issued and outstanding common stock of MSK .
WHEREAS, the SELLERS desire to sell and CI4NET desires to
purchase one hundred (100%) percent of such shares.
NOW, THEREFORE, in consideration of the mutual convenants,
agreements, representations and warranties herein contained, the
parties hereby agree as follows:
1. Purchase and Sale - The SELLERS hereby agree to sell,
transfer, assign and convey to CI4NET and CI4NET hereby agrees
to purchase and acquire from the SELLERS, a total of 2,238,400
shares of common stock of MSK , which equates to one hundred
percent (100%) percent of all of MSK 's currently issued and
outstanding common stock (the MSK Common Shares"), in a tax-
free stock-for-stock acquisition.
2. Purchase Price - The aggregate purchase price to be paid
by
CI4NET for the MSK Common Shares shall be 2,238,400 post-
reverse split shares of CI4NET $0.001 par value voting common
stock (the "CI4NET Common Shares"). The CI4NET Common Shares
will be issued to the individual SELLERS in accordance with
Exhibit "A-1" attached hereto.
3. Warranties Representations and Covenants of MSK and MSK
PRINCIPALS - In order to induce CI4NET to enter into this
Agreement and to complete the transaction contemplated hereby,
MSK and its principal executive officers (hereinafter
referred to as the "MSK PRINCIPALS", jointly and severally
warrant and represent to CI4NET that:
(a) Organization and Standing MSK is a corporation duly
organized, validly existing and in a good standing under the
laws of the State of Delaware, is qualified to do business
as a foreign corporation in every other state or
jurisdiction in which it operates to the extent required by
the laws of such states and jurisdictions, and has full
power and authority to carry on its business as now
conducted and to own and operate its assets, properties and
business. Attached hereto as Exhibit "B" are true and
correct copies of MSK 's Certificate of Incorporation,
amendments thereto and all current \by-laws of MSK . No
changes thereto will be made in any of the Exhibit "B"
documents before the closing. MSK has no subsidiaries
except as listed or any investments or ownership interests
in any corporation, partnership, joint venture or other
business enterprise which is material to its business.
(b) Capitalization As of the Closing Date of MSK 's entire
authorized equity capital consists of 25,000,000 shares of
$0.001 par value, of which 2,238,400 shares of Common Stock
will be outstanding as of the Closing. As of the Closing
Date, there will be no other voting or equity securities
authorized or issued, nor any authorized or issued securities
convertible into voting stock, and no outstanding
subscriptions, warrants, calls, options, rights, commitments
or agreements by which MSK or the SELLERS are bound, calling
for the issuance of any additional shares of common stock or
any other voting or equity security. The 2,238,400 issued and
outstanding MSK Common Shares to be transferred by SELLERS
constitutes one hundred (100%) percent of the currently issued
and outstanding shares of Common Stock of MSK , which includes
inter-claim, that same percentage of MSK 's voting power,
right to receive dividends, when, as and if declared and paid,
and the right to receive the proceeds of liquidation
attributable to common stock, if any.
(c) Ownership of MSK Shares Each SELLER warrants and
represents, severally, that as of the date hereof, such SELLER
is the sole owner of the MSK Common Shares listed by his or
her name on Exhibit "A-1", free and clear of all liens,
encumbrances, and restrictions whatsoever, except that the MSK
Common Shares so listed have not been registered under the
Securities Act of 1933, as amended (the "33 Act"), or any
applicable State Securities laws. By SELLERS' transfer of the
MSK Common Shares to CI4NET pursuant to this Agreement.
CI4NET will thereby acquire 100% of the outstanding capital
stock of MSK , free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the
fact that the MSK Common Shares will not have been registered
under the '33 Act, or any applicable State securities laws.
(d) Taxes MSK has filed all federal, state and local income
or other tax returns and reports that it is required to file
with all governmental agencies, wherever situate, and has paid
or accrued for payment all taxes as shown on such returns,
such that a failure to file, pay or accrue will not have a
material adverse effect on MSK . MSK 's income tax returns
have never been audited by any authority empowered to do so.
(e) Pending Actions There are no known material legal
actions,
lawsuits, proceedings or investigations, either administrative
or judicial, pending or threatened, against or affecting MSK ,
or against the MSK PRINCIPALS that arrive out of their
operation of MSK , except as described in Exhibit "C" attached
hereto. MSK is not knowingly in material violation of any
law, material ordinance or regulation of any kind whatever,
including, but not Inc to laws, rules and regulations
governing the sale of its services, the 33 Act, the Securities
Exchange Act of 1934, as amended (the "34 Act"), the Rules and
Regulations of the U.S. Securities and Exchange Commission
("SEC"), or the Securities Laws and Regulations of any state
or nation.
(f) Government and Regulation MSK holds the licenses and
registrations set forth on Exhibit "D" hereto from the
jurisdictions set forth therein, which licenses and
registrations are all of the licenses and registrations
necessary to permit MSK to conduct its current business.
All of such licenses and registrations are in full force and
effect, and there are no proceedings, hearings or other
actions pending that may affect the validity or continuation
of any of them. No approval of any other trade or
professional association or agency of government other than as
set forth on Exhibit "D" is required for any of the
transactions effected by this Agreement, and the completion of
the transactions contemplated by this Agreement will not, in
and of themselves, affect or jeopardize the validity or
continuation of any of them.
(g) Ownership of Assets Except as set forth in Exhibit "E"
attached hereto, MSK has good, marketable title, without any
liens or encumbrances of any nature whatever, to all of the
following, if any; assets, properties and rights of every type
and description, including, without limitation, all cash on
hand and in banks, certificates of deposit, stocks, bonds, and
other securities, good will, customer lists, its corporate
name and all variants thereof, trademarks and trade names,
copyrights and interests thereunder, licenses and
registrations, pending licenses and permits and applications
therefor, inventions, processes, know-how, trade secrets, real
estate and interests therein and improvements thereto,
machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all
rights and claims under insurance policies and other contracts
of whatever nature, rights in funds of whatever nature, books
and records and all other property and rights of every kind
and nature owned or held by MSK as of this date, and will
continue to hold such title on and after the completion of the
transactions contemplated by this Agreement; nor, except in
the ordinary course of its business, has MSK disposed of any
such asset since the date of the most recent balance sheet
described in Section 3(0) of this Agreement.
(h) No Debt Owed by MSK to MSK PRINCIPALS Except as set
forth in Exhibit "F" attached hereto, MSK does not owe any
money, securities, or property to either the MSK PRINCIPALS
or any member of their families or to any company controlled
by such a person, directly or indirectly. To the extent that
the MSK PRINCIPLES may have any undisclosed liability to pay
any sum or property to any such person or equity or any member
of their families such liability is hereby forever irrevocably
released and discharged.
(i) Complete Records All of MSK 's books and records,
including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other
records are up-to-date, complete and reflect accurately and
fairly the conduct of its business in all material respects
since its date of incorporation.
(j) No Misleading Statements or Omissions Neither this
Agreement nor any financial statement, exhibit, schedule or
document attached hereto or presented to CI4NET in connection
herewith, contains any materially misleading statement or
omits any fact or statement necessary to make the other
statements or facts therein set forth not materially
misleading.
(k) Validity of this Agreement All corporate and other
proceedings required to be taken by the SELLERS and by MSK
in order to enter into and carry out this Agreement have been
duly and properly taken. This Agreement has been duly
executed by the SELLERS and by MSK , and constitutes the valid
and binding obligation of each of them, enforceable in
accordance with its terms except to the extent Inc by
applicable bankruptcy, reorganization, insolvency, moratorium
or other laws relating to or effecting generally the
enforcement of creditors rights. The execution and delivery
of this Agreement and the carrying out of its purposes will
not result in the breach of any of the terms and conditions
of, or constitute a default under or violate, MSK 's
Certificate of Incorporation or By-Laws, or any material
agreement, lease, mortgage, bond, indenture, license or other
material document or undertaking, oral or written, to which
MSK or the SELLERS is a party or is bound or may be affected,
nor will such execution, delivery and carrying out violate any
law, rule or regulation or any order, with injunction or
decree, of any court, regulatory agency or other governmental
body; and the business now conducted by MSK can continue to
be so conducted after completion of the transaction
contemplated hereby, with MSK as a wholly owned subsidiary of
CI4NET.
(l) Concepts and Approvals: Compliance with Laws Neither MSK
nor the SELLERS are required to make any filing with, or
obtain the consent or approval of, any person or entity as a
condition to the consummation of the transactions contemplated
by this Agreement. The business of MSK has been operated in
material compliance with all laws, rules, and regulations
applicable to its business, including, without limitation,
those related to securities matters, trade matters,
environmental matters, public health and safety, and labor and
employment.
(m) Access to Books and Records CI4NET will have full and
free
access to MSK 's books during the course of this transaction
prior to Closing, during regular business hours, on reasonable
notice.
4. Warranties, representations and Covenants of CI4NET AND
MANAGEMENT OF CI4NET ("MANAGEMENT") In order to induce the
SELLERS and MSK to enter into this Agreement and to complete the
transaction contemplated hereby, CI4NET AND MANAGEMENT jointly
and severally warrant, represent and covenant to MSK and SELLERS
that :
(a) Organization and Standing CI4NET is a corporation
duly
organized, validly existing and in good standing under
the laws of the State of Delaware, will be qualified to
do business as a foreign corporation in every other state
and jurisdiction in which it operates to the extent
required by the laws of such states or jurisdictions, and
will have full power and authority to carry on its
business as now conducted and to own and operate its
assets, properties and business. CI4NET has no
subsidiaries or any other investments or ownership
interests in any corporation, partnership, joint venture
or other business enterprise.
(b) Capitalization CI4NET's entire authorized equity
capital consists of 100,000,000 shares of voting common
stock, $0.001 par value. As of the Closing, will have
issued and outstanding 24,560,513 shares of voting common
stock, $0.001 par value and no shares of preferred stock
issued. Upon issuance, all of the CI4NET Common Stock
will be validly issued, fully paid and non-assessable.
The relative rights and preferences of CI4NET's equity
securities are set forth on the Certificate of
Incorporation, as amended and CI4NET's By-laws (Exhibit
"H" hereto). There are no other voting or equity
securities authorized or issued, not any authorized or
issued securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which CI4NET is
bound, calling for the issuance of any additional shares
of common stock or any other voting or equity security.
The By-laws of CI4NET provide that a simple majority of
the shares voting at a stock holders' meeting at which a
quorum is present may elect all of the directors of
CI4NET. Cumulative voting is not provided for by the By-
Laws or Certificate of Incorporation of CI4NET.
Accordingly, as of the Closing the 2,238,400 shares being
issued to and acquired by the SELLERS will constitute
9.1% of the 24,560,513 shares of CI4NET which will then
be issued and outstanding (including all consulting fees)
which includes, inter alia, that same percentage of
CI4NET's voting power (subject to the provisions
regarding cumulative rights), right to receive dividends,
when, as and if declared and paid, and the right to
receive the proceeds of liquidation attributable to
common stock, if any.
(c) Ownership of Shares By CI4NET's issuance of the
CI4NET
Common Shares to the SELLERS pursuant to this Agreement,
the SELLERS will thereby acquire good, absolute
marketable title thereto, free and clear of all liens,
encumbrances and restrictions of any nature whatsoever,
except by reason of the fact that such CI4NET shares will
not have been registered under the 33 Act, or any
applicable state securities laws.
(d) Significant Agreements CI4NET is not and will not at
Closing be bound by any of the following:
(i) Employment, advisory or consulting contract
(except as described in Section 12 herein).
(ii) Plan providing for employee benefits of any
nature.
(iii) Lease with respect to any property or
equipment.
(iv) Contract of commitments for any current
expanditure.
(v) Contract or commitment pursuant to which it
has
assumed, guaranteed, endorsed or otherwise become
liable for any obligation of any other person, firm
or organization.
(vi) Contract, agreement, understanding, commitment
or arrangement either than in the normal course of
business, not set forth in the Agreement or an
Exhibit hereto.
(vii) Agreement with any person relating to the
dividend, purchase or sale of securities, that has
not been settled by the delivery of payment of
securities when due, and which remains unsettled
upon the date of this Agreement.
(e)Taxes CI4NET has filed all federal, state and local
income or other tax returns and reports that it is
required to file with all governmental agencies, wherever
situate, and has paid all taxes as shown on such returns.
All of such returns are true and complete. CI4NET's
income tax returns have never been audited by say
authority empowered to do so.
(f)No Pending Actions To the best of management's
knowledge, there are no legal actions, lawsuits,
proceedings or investigations, either administrative or
judicial, pending or threatened against or affecting
CI4NET, or against any of the CI4NET MANAGEMENT and
arising out of their operation of CI4NET. CI4NET has been
in compliance with, and has not received notice of
violation of any law, ordinance of any kind whatever,
including, but not Inc to, the 33 Act, the Rules and
Regulations of the SEC, or the Securities Laws and
Regulations of any sale. CI4NET is not an investment
company as defined in, or otherwise subject to regulation
under, the Investment Company Act of 1940. CI4NET is not
required to file reports pursuant to either Section 13 or
Section 15 (d) of the 34 Act.
(g)Corporate Records All of CI4NET's books and records,
including, without limitation, its books of account,
corporate records, minute book, stock certificate books
and other records are up-to-date complete and reflect
accurately and fairly the conduct of its business in all
respects since its date of incorporation; all of said
books and records will be made available for inspection
by MSK's authorized representatives prior to the Closing
as provided by Section 4(I) herein, and will be delivered
to CI4NET's new management at the Closing.
(h)No Misleading Statements or Omissions Neither this
agreement nor any financial statement, exhibit, schedule
or document attached hereto or presented to MSK in
connection herewith contains any materially misleading
statement, or omits any fact or statement necessary to
make the other statements or facts therein set forth not
materially misleading.
(i)Validity of this Agreement All corporate and other
proceedings required to be taken by CI4NET in order to
enter into and to carry out this Agreement will have been
duly and properly taken at or before the Closing. This
Agreement has been duly executed by CI4NET, constitutes a
valid and binding obligation of CI4NET enforceable in
accordance with its terms. The execution and delivery of
this Agreement and the carrying out of its purposes will
not result in the breach of any of the terms or
conditions of, or constitute a default under or violate,
CI4NET's Certificate of Incorporation- or By-Laws, or any
agreement, lease, mortgage, bond, indenture, license or
other document or undertaking, oral or written, to which
CI4NET is a party or is bound or may be affected nor will
such execution, delivery and carrying out violate any
law, rule or regulation or any order, writ, injunction or
decree of any court, regulatory agency or other
governmental body.
(j)Consents and Approvals, Compliance with Laws Except for
the notices to be filed as described in Section 7(a)(v)
herein, neither MSK nor MANAGEMENT is required to make
any filing with, or obtain the consent or approval of,
any person or entity as a condition to the consummation
of the transactions contemplated by this Agreement. The
business of CI4NET has been operated in compliance with
all laws, rules and regulations applicable to its
business, including, without limitation, those related to
securities matters, trade matters, environmental matters,
public health and safety, and labor and employment.
(k)Access to Books and Records MSK and SELLERS will have
full and free access to MSK 's books and records during
the course of this transaction prior to and at the
Closing on reasonable notice.
(l)Directors and Shareholders Approval As of the Closing,
CI4NET's Board of Directors and Shareholders, by meeting
or consent shall have properly authorized the matters
described in section 7(a)(iv)herein.
(m)The CI4NET Shares All of the CI4NET Common Shares
issued
to SELLERS shall be validly issued, fully-paid non-
assessable shares of CI4NET Common Stock, with full
voting rights, dividend rights, and right to receive the
proceeds of liquidation , if any, as set forth in
CI4NET's Certificate of Incorporation.
5. Term: Indemnification All representations, warranties,
covenants and agreements made herein and in the exhibits
attached hereto shall survive the execution and delivery of
this Agreement and payment pursuant thereto. MANAGEMENT and
MSK MANAGEMENT ("management") of both parties to the
agreement hereby agree, jointly and severally, to indemnify,
defend, and hold harmless CI4NET, MSK , and the SELLERS from
and against any damage, loss, liability, or expense (including
without limitation, reasonable expenses of investigation and
reasonable attorney's fees) arising out of any material breech
of any representation, warranty, covenant, or agreement made
by MSK MANAGEMENT or management in this Agreement.
6. Restricted Shares: Legend 1,200,000 of the CI4NET shares
to
be issued are freetrading shares as per the tax free stock for
stock consideration, the remainder of 1,038,400 CI4NET Common
Shares issued to SELLERS hereunder will be "restricted
securities" as defined in Rule 144 under the 33 Act and each
stock certificate issued to SELLERS hereunder, will bear the
usual restrictive legend to such effect. Appropriate Stop
Transfer instructions will be given to CI4NET '' stock
transfer agent.
7. Conditions Precedent to Closing (a) The obligations of
MSK
and the SELLERS under this Agreement shall be and are subject
to fulfillment, prior to or at the Closing, of each of the
following conditions:
(i) That CI4NET's and MANAGEMENT's representations and
warranties contained herein shall be true and correct at
the time of Closing as if such representations and
warranties were made at such time, and MANAGEMENT will
deliver an executed certification confirming the
foregoing;
(ii) That CI4NET and MANAGEMENT shall have performed or
complied with all agreements, terms and conditions
required by this Agreement to be performed or complied
with by them prior to or at the time of the Closing;
(iii) That CI4NET's directors and shareholders, by
proper
and sufficient vote taken either by consent or at a
meeting duly and properly called and held, shall have
properly approved all of the matters required to be
approved by CI4NET's directors and shareholders,
respectively;
(iv) That CI4NET shall have filed the notice of the
reverse split required by Rule 10b-17 under that Act, and
shall have sent notice to its stockholders of the
transactions contemplated herein; and
(v) That CI4NET's Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and
the transactions contemplated hereby; approved the
contemplated reverse split of CI4NET's outstanding Common
Stock without changing either the authorized shares or
the par value; approved the change of CI4NET's corporate
name to a name selected by MSK ; approved the resignation
of all of CI4NET's current directors and the election of
up to three designees of MSK to serve as directors in
place of CI4NET's current directors; and will have
approved such other changes as are consistent with this
Agreement and approved by MSK and CI4NET; and
(b) The obligations of CI4NET and MANAGEMENT under this
Agreement shall be and are subject to fulfillment, prior to or
at the Closing of each of the following conditions:
(i) That MSK 's and SELLERS' representations and
warranties
contained herein shall be true and correct at the time of
Closing as if such representations and warranties were
made at such time and MSK and the MSK PRINCIPALS shall
deliver an executed certification confirming the
foregoing;
(ii) That MSK and MSK PRINCIPALS shall have performed
or complied with all agreements, terms and conditions
required by this Agreement to be performed or complied
with by them prior to or at the time of Closing; and
8 Termination This Agreement may be terminated at any time
before
or at Closing, by;
(a)The mutual agreement of the parties;
(b)Any party if:
(iii) Any legal proceeding shall have been
instituted
or shall be imminently threatening to delay,
restrain or prevent the consummation of this
Agreement.
Upon termination of this Agreement for any reason, in accordance
with the terms and conditions set forth in this paragraph, each
said party shall bear all costs and expenses as each party has
incurred and no party shall be liable to the other.
9. Exhibits All Exhibits attached hereto are incorporated
herein
by this reference as if they were set forth in their entirety.
10. Miscellaneous Provisions This Agreement is the entire
agreement between the parties in respect of the subject matter
hereof, and there are no other agreements, written or oral,
nor may this Agreement be modified except in writing and
executed by all of the parties hereto. The failure to insist
upon strict compliance with any of the terms, covenants or
conditions of this Agreement shall not be deemed a waiver or
relinquishment of such rights or power at any other time or
times.
11. Closing The Closing of the transactions contemplated by
this Agreement ("Closing") shall take place at the offices of
CI4NET, at 1.00 P.M. on the first business day after the
letter of the approval of SELLERS owning at least 80% of MSK
's Common Stock or the shareholders of CI4NET approving this
Agreement and the matters referred to in section 7(a)(vi)
herein, or such other date as the parties hereto shall
mutually agree upon. At the Closing, all of the documents and
items referred to herein shall be exchanged.
12. Prohibited Actions Between the date hereof and the
effective date of the merger, neither Purchaser nor Seller
will, except with the prior written consent of the other:
(a)issue or sell any stock, bonds, or other corporate
securities;
(b)incur any obligation or liability (absolute or contingent),
except current liabilities incurred, and obligations under
contracts entered into, other than in the ordinary course of
business;
(c) discharge or satisfy any lien or encumbrance or pay any
obligation or liability (absolute or contingent) other than in
the ordinary course of business;
(d) make any dividend or other payment or distribution to its
shareholders or Purchase or redeem any shares of its capital
stock other than in the ordinary course of business;
(e)mortgage, pledge, create a security interest in, or subject
to
lien or other encumbrance any of its assets, tangible or
intangible other than in the ordinary course of business;
(f)sell or transfer any of its tangible assets or cancel any
debts or claims except in each case in the ordinary course of
business other than in the ordinary course of business;
(g)sell, assign, or transfer any trademark, trade name, patent,
or other intangible asset;
(h)waive any right of any substantial value other than in the
ordinary course of business; or
(i) enter into any other transaction other than in the ordinary
course of business.
13. Further Instruments From time to time, as and when
requested by the either of the parties or by its successors or
assigns, the other party will execute and deliver, or cause to
be delivered, all such deeds and other instruments; and will
take or cause to be taken such further or other action as the
parties may deem necessary or desirable in order to vest in
and confirm to the purchaser title to and possession of all
its property, rights, privileges, possessions, and franchises
and otherwise to carry out the intent and purposes of this
agreement.
15. Governing Law This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
16. Counterparts This Agreement may be executed in duplicate
facsimile
counterparts, each of which shall be deemed an original and
together shall constitute one and the same binding Agreement,
with one counterpart being delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and
seals as of the date and year above first written.
CI4NET.COM INC
By: ____________________________
____________________________
MSK Industries INC
By: ____________________________
LIST OF EXHIBITS
Exhibit "A" True and correct copies of MSK 's Certificate of
Incorporation, amendments thereto and all current
By-laws.
Exhibit "B" Any material legal actions, lawsuits, proceedings
of investigations, either administrative or
judicial, pending or threatened, against or
affecting MSK, or against the Sellers that arise out
of their operation of MSK .
Exhibit "C" Evidence of MSK 's licenses and
registrations
necessary to permit MSK to conduct its
current business.
Exhibit "D" Any impediments to MSK 's good, marketable title
including liens or encumbrances of any nature
whatever.
Exhibit "E" Any money, securities, or property owed by MSK
to either the Principals of MSK or any member of
their families or to any company controlled by such
a person, directly or indirectly.
Exhibit "F" True and correct copies of CI4NET's Certificate
of Incorporation amendments thereto and all current
By-laws.
Exhibit 2.6 Agreement for the Acquisition of The Whole of the
Issued Share Capital of Media Ventures Group plc,
dated as of December 17, 1999 by and among
Ci4net.com Limited, Ci4net.com Inc., and Those
People Whose Names are set out in Schedule 1.
THIS AGREEMENT is dated the 17th day of December 1999 and
made BETWEEN:
(1) Those Several people whose names and addresses are set out
in Schedule 1 (the `Vendors'); and
(2) Ci4net.com Inc of One Rockefeller Plaza, Suite 1600 New York
New York 10020 a corporation incorporated with limited liability
in the state of Delaware USA (the `Parent')
(3) CI4NET.comlimited of The Old Chapel, Sacre Coeur, Rouge
Bouillon Jersey JE2 **a company incorporated under the law of
Jersey (the "Purchaser").
Whereas
The Vendors wish to sell and the Purchaser wishes to acquire the
entire issued share capital of Media Ventures Group plc on and
subject to the terms of this Agreement.
NOW IT IS HEREBY AGREED as follows:
1 Interpretation
1.1 Definitions
In this Agreement where the context admits:
`Business Day' means a day (other than a Saturday or Sunday)
on which banks are open for ordinary banking business in London;
`Company' means Media Ventures Group plc a company
registered in England under number 1493434 and incorporated on
25th April 1980 as a private company limited by shares under the
Companies Act 1948
`Companies Acts' means statutes from time to time in force
concerning companies including (without limitation) the Companies
Act 1985, the Companies Act 1989, Part V of the Criminal Justice
Act 1993 and the Companies Consolidation (Consequential
Provisions) Act 1985;
`Completion' means completion of the sale and purchase of
the Sale Shares in accordance with Clause 5 (Completion);
`Completion Date' means the date hereof
`Consideration Shares' means ordinary shares of 1,200,000
shares of common stock of each in the Parent credited as fully
paid;
`Directors' means the persons named in Part II of Schedule 1
(The Vendors and the Company) and in Schedule 2 (The
Subsidiaries) as directors of the Company and the Subsidiaries
and `The Continuing Directors' means the persons named in those
Schedules as continuing directors following Completion;
`Properties' means those properties details of which are set
out in Schedule 3
`Purchaser's Solicitors means McFadden Pilkington & Ward of
City Tower 40 Basinghall Street London EC2V 5DE
`Restricted Business' has the meaning given in Sub-Clause
7.1 (Restricted Business);
`Sale Shares' means the shares to be bought and sold
pursuant to Clause 2.1 (Sale of Shares) being all the issued
shares in the capital of the Company;
`Subsidiaries' means the bodies corporate, details of which
are set out in Schedule 2 (The Subsidiaries);
` Vendor's Group' means the Vendor and each of its
Affiliates other than the Company and the Subsidiaries; and
`Vendors' Solicitors' Richard Saleh & Co of
1.2 Construction of Certain References
In this Agreement, where the context admits:
(A) words and phrases the definitions of which are contained or
referred to in Part XXVI of the Companies Act 1985 shall be
construed as having the meanings thereby attributed to them;
(B) references to statutory provisions shall be construed as
references to those provisions as amended or re-enacted or as
their application is modified by other provisions from time to
time and shall include references to any provisions of which they
are re-enactments (whether with or without modification);
(C) references to Clauses and Schedules are references to
Clauses and schedules of and to this Agreement, references to
Sub-Clauses or Paragraphs are, unless otherwise stated,
references to Sub-Clauses of the Clause or paragraphs of the
Schedule in which the reference appears, and references to this
Agreement include the Schedules;
(E) references to any document being in `agreed terms' or in
`agreed form' are to that document in the form signed or
initialled by or on behalf of the parties for identification; and
(F) references to the Vendors include a reference to each of
them.
1.3 Joint and Several Liabilities
All covenants, agreements and obligations given or entered into
by more than one person in this Agreement are given or entered
into jointly and severally.
1.4 Headings
The headings and sub-headings are inserted for convenience only
and shall not affect the construction of this Agreement.
1.5 Schedules
Each of the Schedules shall have effect as if set out herein.
2 Sale of Shares
2.1 Sale and Purchase
Subject to the terms of this Agreement, the Vendors with full
title guarantee shall sell and the Purchaser shall purchase, free
from all encumbrances and together with all rights now or
hereafter attaching thereto the entire issued share capital of
the Company comprising 50,000 ordinary shares of GBP1 each and in
respect of each individual Vendor the number of Sale Shares set
opposite his name in the second column of Part I of Schedule 1.
2.2 No Sale of Part Only
Neither the Purchaser nor the Vendors shall be obliged to
complete the purchase of any of the Sale Shares unless the
purchase of all the Sale Shares is completed simultaneously.
2.3 Waiver of Pre-emption Rights
Each of the Vendors hereby waives any pre-emption rights he may
have relating to the Sale Shares, whether conferred by the
Company's Articles of Association or otherwise.
3 Consideration
3.1 Amount Consideration Shares
The total consideration for the Sale Shares shall be the
allotment to the Vendors of the Consideration Shares.
4. Completion
4.1 Completion shall take place on the Completion Date at the
offices of the Purchaser's Solicitors.
4.2 Vendor's Obligations
On Completion the Vendors shall:
(A) deliver to the Purchaser:
(1) duly executed transfers of the Sale Shares by the registered
holders thereof in favour of the Purchaser or its nominees
together with the relative share certificates;
(2) such waivers or consents as the Purchaser may require to
enable the Purchaser or its nominees to be registered as holders
of the Sale Shares; and
(3) powers of attorney in an agreed form;
(B) procure that the Directors (other than the Continuing
Directors) and the secretary or secretaries of the Company and
the Subsidiaries retire from all their offices and employments
with the Company and the Subsidiaries, each delivering to the
Purchaser a deed (in the agreed terms) made out in favour of the
Company and/or the Subsidiaries acknowledging that he has no
claim outstanding for compensation or otherwise and without any
payment under the Employment Rights Act 1996;
(C) procure the resignation of the auditors of the Company and
the Subsidiaries in accordance with s 293 of the Companies Act
1985, accompanied by a written statement pursuant to s 394 of
that Act that there are no circumstances connected with their
resignation which should be brought to the notice of the members
or creditors of each such company and that no fees are due to
them and deliver such resignation and statement to the Purchaser;
(D) deliver to the Purchaser as agent for the Company and the
Subsidiaries:
(1) all the statutory and other books (duly written up to date)
of the Company and each of the Subsidiaries and its/their
certificate(s) of incorporation, any certificates of
incorporation on change of name and common seal(s);
(2) certificates in respect of all issued shares in the capital
of each of the Subsidiaries and transfers of all shares in any
Subsidiary not held by the Company in favour of such persons as
the Purchaser shall direct;
(3) the title deeds to the Properties
(4) (or procure the delivery of) service agreements, in the
agreed terms, between [ ] and the Company, [each] executed
by [ ];
(E) procure a board meeting of the Company and of each of the
Subsidiaries to be held at which there shall be:
(1) passed a resolution to register, in the case of the Company,
the transfers of the Sale Shares and, in the case of the
Subsidiaries, the share transfers referred to in Sub-Clause
(D)(2) and (subject only to due stamping) to register, in the
register of members, each transferee as the holder of the shares
concerned;
(2) appointed as directors and/or secretary such persons as the
Purchaser may nominate
(3) tendered and accepted the resignations and acknowledgements
of the directors and secretary referred to in Sub-Clause (B) each
such acceptance to take effect at the close of the meeting;
(4) revoked all existing authorities to banks and new
authorities shall be given to such banks and on such terms as the
Purchaser may direct;
(5) changed the situation of the registered office and (subject
to the Companies Acts) the accounting reference date, each as the
Purchaser may direct; and
(6) tendered and accepted the resignation of the auditors and
appointing [ ] as new auditors of each of the Company and
the Subsidiaries; and
(7) [approved and entered into service agreements, in the agreed
terms, between [ ] and the Company];
(G) deliver to the Purchaser, certified as correct by the
secretary of the relevant company, the minutes of each such board
meeting;
(H) procure the discharge of all guarantees and like obligations
given by the Company or any of the Subsidiaries in respect of the
obligations of [any other person]
4.3 Purchaser's Obligations
On Completion the Parent shall issue the Consideration
Shares to the Vendors
5. Post Completion Obligations
5.1 Price Adjustment
In the event of that the average closing mid market price of the
ordinary shares of common stock of the Parent on the date hereof
US$10 per share, the Parent shall forthwith issue such additional
ordinary shares of common stock of the Parent so that the total
mid market value of the shares of common stock of the Parent
issued by the Parent to the Vendors pursuant hereto shall be
US$12,000,000.
5.3 Compliance by Parent
The Parent shall comply with its obligation under clause 5.1
forthwith within 14 days of today.
6. Restriction of Vendors [this may need to be varied depending
upon D Moran's existing service agreement
6.1 Restricted Business
In this Clause, `Restricted Business' means the business
activities within [country or area] and which directly or
indirectly competes with the business of the Company or any of
the Subsidiaries carried on at the date of this Agreement.
6.2 Covenants
The Vendor undertakes with the Purchaser (as trustee for itself
and the Company) and its successors in title that it will not and
that it will procure that none of its Affiliates will:
(A) for the period of [ ] after the date of this Agreement,
either on its own account or in conjunction with or on behalf of
any person, firm or company, carry on or be engaged, concerned or
interested (directly or indirectly and whether as principal,
shareholder, director, employee, agent, consultant, partner or
otherwise) in carrying on any Restricted Business (other than as
a holder of less than 5 per cent of any class of shares or
debentures listed on the London Stock Exchange or any other
recognised stock exchange);
(B) for the period of ] after the date of this Agreement,
either on its own account or in conjunction with or on behalf of
any person, firm or company, solicit or endeavour to entice away
from the Company or any of the Subsidiaries any person who at the
date of this Agreement is (or who within a period of one year
prior to the date of this Agreement has been) a director,
officer, manager, employee or servant of the Company or any of
the Subsidiaries whether or not such person would commit a breach
of contract by reason of leaving service or office;
(C) for the period of [ ] after the date of this Agreement,
either on its own account or in conjunction with or on behalf of
any person, firm or company, in connection with any Restricted
Business deal with, solicit the custom of or endeavour to entice
away from the Company or any of the Subsidiaries any person who
at the date of this Agreement is (or who within a period of one
year prior to the date of this Agreement has been) a customer of
the Company or any of the Subsidiaries whether or not such person
would commit a breach of contract by reason of transferring
business;
(D) for the period of [ ] after the date of this Agreement,
either on its own account or in conjunction with or on behalf of
any person, firm or company, in connection with any Restricted
Business endeavour to entice away from the Company or any of the
Subsidiaries any person who at the date of this Agreement is (or
who within a period of one year prior to the date of this
Agreement has been) a supplier of the Company or any of the
Subsidiaries whether or not such person would commit a breach of
contract by reason of transferring business; and
(E) at any time after the date of this Agreement, directly or
indirectly use or attempt to use in the course of any business on
its own account or in conjunction with or on behalf of any
person, firm or company, any trade or service mark, trade name,
design or logo used in the business of the Company or any of the
Subsidiaries or any other name, logo, trade or service mark or
design which is or might be confusingly similar thereto
6.3 Vendors to Procure Compliance
The Vendors undertakes to take all such steps as shall from time
to time be necessary to ensure compliance with the terms of
Sub-Clause 6.2 above by employees and agents of the Vendors or
any of its Affiliates.
6.4 Separate Covenants
Each of the undertakings in Sub-Clauses 6.2 and 6.3 shall be
construed as a separate and independent undertaking and if one or
more of the undertakings is held to be void or unenforceable, the
validity of the remaining undertakings shall not be affected.
6.5 Reasonableness
The Vendors agree that the restrictions and undertakings
contained in Sub-Clauses 6.2 and 6.3 are reasonable and necessary
for the protection of the Purchaser's legitimate interests in the
goodwill of the Company and the Subsidiaries, but if any such
restriction or undertaking shall be found to be void or voidable
but would be valid and enforceable if some part or parts of the
restriction or undertaking were deleted, such restriction or
undertaking shall apply with such modification as may be
necessary to make it valid and enforceable.
6.6 Void or Unenforceable Restrictions
Without prejudice to Sub-Clause 6.5, if any restriction or
undertaking is found by any court or other competent authority to
be void or unenforceable the parties shall negotiate in good
faith to replace such void or unenforceable restriction or
undertaking with a valid provision which, as far as possible, has
the same legal and commercial effect as that which it replaces.
6.7 Registration
Any provision of this Agreement, or of any agreement or
arrangement of which it forms part, by virtue of which such
agreement or arrangement is subject to registration under the
Restrictive Trade Practices Act 1976 shall take effect only the
day after particulars of such agreement or arrangement have been
duly furnished to the Director General of Fair Trading pursuant
to s 24 of that Act.
6.8 Confidential Information Concerning the Company
The Vendors shall not and shall procure that no other member of
the Vendor's Group nor any officer or employee of any of the
Vendors or any member of the Vendor's Group shall make use of or
divulge to any third party (other than to the Vendors'
professional advisers for the purpose of this Agreement in which
case the Vendors shall use all reasonable endeavours to procure
that such advisers keep such information confidential on terms
equivalent to this Clause) any confidential information relating
to the Company and the Subsidiaries save only:
(A) insofar as the same has become public knowledge otherwise
than, directly or indirectly, through the Vendor's breach of this
Sub-Clause 6.8 or the failure of the officers, employees or
professional advisers referred to above to keep the same
confidential; or
(B) to the extent required by law or by any supervisory or
regulatory body.
7 Confidentiality
7.1 Confidentiality
Subject to Sub-Clause 7.2 (Permitted Disclosures) and to Clause
10 (Announcements) and without prejudice to Sub-Clause 6.8
(Confidential Information Concerning the Company), each party:
(A) shall treat as strictly confidential information obtained or
received by it as a result of entering into or performing its
obligations under this Agreement and relating to the negotiations
concerning, or the provisions or subject matter of, this
Agreement or the other party (`confidential information'); and
(B) shall not, except with the prior written consent of the
other party (which shall not be unreasonably withheld or
delayed), publish or otherwise disclose to any person any
confidential information.
7.2-Clause 7.1 (Confidentiality) shall not apply if and to the
extent that [the party proposing to make such disclosure can
demonstrate that:
(A) such disclosure is required by law or by any securities
exchange or regulatory or governmental body having jurisdiction
over it and whether or not the requirement has the force of law;
(B) the confidential information was lawfully in its possession
prior to its disclosure by the other party (as evidenced by
written records) and had not been obtained from that other party;
or
(C) the confidential information has come into the public domain
other than through its fault or the fault of any person to whom
the confidential information has been disclosed.
8. Continuance of Restrictions
The restrictions contained in this Clause on the part of the
Vendors shall survive Completion.
9 Announcements
9.1 Restriction
Subject to Sub-Clause 9.2 (Permitted Announcements), neither the
Vendors nor the Purchaser shall make any announcement, whether to
the public, to the customers or suppliers of the Company, or to
all or any of the employees of the Company, concerning the
subject matter of this Agreement without the prior written
approval of the other (which shall not be unreasonably withheld
or delayed)
9.2 Permitted Announcements
Sub-Clause 9.1 (Restriction) shall not apply if and to the extent
that such announcement is required by law or by any securities
exchange or regulatory or governmental body having jurisdiction
over it and whether or not the requirement has the force of law
and provided that any such announcement shall be made only after
consultation with the other party.
9.3Continuance of Restrictions
The restrictions contained in this Clause on the part of the
Vendors shall survive Completion.
10 Provisions Relating to this Agreement
10.1 Assignment
This Agreement shall be binding upon and inure for the benefit of
the successors of the parties but shall not be assignable, save
that the Parent and /or the Purchaser may at any time assign all
or any part of its rights and benefits under this Agreement, to
any transferee of the share capital of the Company or of any of
the Subsidiaries, or to any Affiliate of the Purchaser who may
enforce them as if he had also been named in this Agreement as
the Purchaser.
10.2 Whole Agreement
(A) This Agreement, together with any documents referred to in
it, constitutes the whole agreement between the parties relating
to its subject matter and supersedes and extinguishes any prior
drafts, agreements, undertakings, representations, warranties,
assurances and arrangements of any nature, whether in writing or
oral, relating to such subject matter.
(B) No variation of this Agreement shall be effective unless
made in writing and signed by each of the parties.
10.3 Agreement Survives Completion
The provisions of this Agreement in so far as the same shall not
have been performed at Completion, shall remain in full force and
effect notwithstanding Completion.
10.4 Rights etc Cumulative and Other Matters
(A) The rights, powers, privileges and remedies provided in this
Agreement are cumulative and are not exclusive of any rights,
powers, privileges or remedies provided by law or otherwise.
(B) No failure to exercise nor any delay in exercising any
right, power, privilege or remedy under this Agreement shall in
any way impair or affect the exercise thereof or operate as a
waiver thereof in whole or in part.
(C) No single or partial exercise of any right, power, privilege
or remedy under this Agreement shall prevent any further or other
exercise thereof or the exercise of any other right, power,
privilege or remedy.
10.5 Release of One Vendor
The Purchaser may release or compromise the liability of any of
the Vendors hereunder without affecting the liability of the
other Vendor.
10.6 Further Assurance
At any time after the date hereof the Vendors shall, at the
request and cost of the Purchaser, execute or procure the
execution of such documents and do or procure the doing of such
acts and things as the Purchaser may reasonably require for the
purpose of vesting the Sale Shares in the Purchaser or its
nominees and giving to the Purchaser the full benefit of all the
provisions of this Agreement.
10.7 Invalidity
If any provision of this Agreement shall be held to be illegal,
void, invalid or unenforceable under the laws of any
jurisdiction, the legality, validity and enforceability of the
remainder of this Agreement in that jurisdiction shall not be
affected, and the legality, validity and enforceability of the
whole of this Agreement in any other jurisdiction shall not be
affected.
10.8 Payment to the Vendors
Any payment falling to be made to the Vendors under any provision
of this Agreement may be made to the Vendors solicitors, Richard
Saleh & Co, whose receipt shall be an absolute discharge.
10.9 Counterparts
This Agreement may be executed in any number of counterparts,
which shall together constitute one Agreement. Any party may
enter into this Agreement by signing any such counterpart.
10.10 Costs
Each party shall bear its own costs arising out of or in
connection with the preparation, negotiation and implementation
of this Agreement
10.11 Notices
(A) Any notice or other communication required to be given under
this Agreement or in connection with the matters contemplated by
it shall, except where otherwise specifically provided, be in
writing in the English language and shall be addressed as
provided in Sub-Clause (B) and may be:
(1) personally delivered, in which case it shall be deemed to
have been given upon delivery at the relevant address; or
(2) if within the United Kingdom, sent by first class pre-paid
post, in which case it shall be deemed to have been given two
Business Days after the date of posting; or
(3) if from or to any place outside the United Kingdom, sent by
pre-paid priority airmail, in which case it shall be deemed to
have been given seven Business Days after the date of posting; or
(4) sent by fax, in which case it shall be deemed to have been
given when despatched, subject to confirmation of uninterrupted
transmission by a transmission report in which case it shall be
deemed to have been given when despatched, provided that any
notice despatched by fax after 17.00 hours (at the place where
such fax is to be received) on any day shall be deemed to have
been received at 08.00 on the next Business Day.
(B) The addresses and other details of the parties referred to
in Sub-Clause (A) are, subject to Sub-Clause (C):
Name: The Vendors care of the Vendors' Solicitors
For the Attention of Richard Saleh
Address:
Fax Number 0161 434 9212
Name:CI4NET.comlimited
For the attention of: The Managing Director
Address: as above
Fax number:
Name: CI4NET.com Inc
For the attention of the Chief Executive officer
Address: as above
Fax number:
Copies in the case of each of the Purchaser and the Parent to
McFadden Pilkington & Ward
City Tower
40 Basinghall Street
London EC2 5DE
Fax number 020-7638 8799
Attention: CJW Stenning
(C)Any party to this Agreement may notify the other parties of
any change to its address or other details specified in
Sub-Clause (B), provided that such notification shall be
effective only on the date specified in such notice or five
Business Days after the notice is given, whichever is later, and
provided also that any new address shall be in the United
Kingdom.
11 Law and Jurisdiction
11.1 English Law
This Agreement shall be governed by, and construed in accordance
with, English law.
11.2 Jurisdiction
In relation to any legal action or proceedings to enforce this
Agreement or arising out of or in connection with this Agreement
(`proceedings') each of the parties irrevocably submits to the
jurisdiction of the English courts and waives any objection to
proceedings in such courts on the grounds of venue or on the
grounds that the proceedings have been brought in an inconvenient
forum.
AS WITNESS the hands of the duly authorised representatives of
the parties on the date first before written.
SCHEDULE 1
THE VENDORS AND THE COMPANY
PART I:
Vendor No Sale Shares
GLEN UK HOLDINGS LIMITED 37,501
737a Wilmslow Road
Didsbury
Manchester M20 6WF
STEVEN MYATT 7,500
The Old Vicarage
Underbarrow
Kendal
Cumbria LA8 8HB
DAVID JOHN MORAN 4,999
19 Crescent Road
Hale, Altringham
Cheshire WA15 9NH
PART II:
The Company
Name: Media Ventures Group plc
Number:1493434
Registered Office: Derbyshire House,737a Wilmslow Road, Didsbury
ManchesterM206WF
Authorised Capital:GBP50,000
Issued Capital: GBP50,000
Directors: David John Moran
Richard John Smith
Simon Malcom
Secretary: Richard Saleh
Accounting Reference Date: 31 March
Auditors: Baker Tilly
Continuing Directors:
SIGNED by )
For and on behalf of Glen UK )
Holdings Limited )
SIGNED by Stephen Myatt )
SIGNED by David John Moran )
Signed by )
For and on behalf of CI4Net.com)
limited )
Signed by )
For and on behalf of CI4NET.com)
Inc )
Exhibit 2.7 Investment/Shareholders Agreement, by and among
Tempz.com Limited, Christopher Leonard, Ian
Thomas, and Ci4net.com Limited, dated January 10,
2000.
THIS AGREEMENT is made on the 10th January 2000
BETWEEN: -
(1) TEMPZ.COM LIMITED (registered number 75919) whose registered
office is at Elizabeth House, Castle Street, St Helier, Jersey
JE4 8PN, Channel Islands ("the Company");
(2) CHRISTOPHER LEONARD of Pucks Croft, Horsham Road, Rusper,
West Sussex RH12 4PR ("Mr Leonard")
(3) IAN THOMAS of Perry Farm Cottage, La Rue de Maistre, St Mary
Jersey ("Mr Thomas"); and
(4) CI4NET.COM LIMITED whose registered office is at The Old
Chapel, Sacre Coeur, Rouge Bouillon, St Helier, Jersey, Channel
Islands ("the Investor")
WHEREAS:
(A) The Company, details of which are set out in Schedule 1, is
private company limited by shares, duly incorporated according to
the laws of Jersey, and has an authorised share capital of
GBP10,000 consisting of 10,000 ordinary shares of GBP1 each;
(B) Mr Leonard and Mr Thomas are each (through nominees) the
beneficial owner of 1 ordinary share of GBP1 in the capital of
the
Company;
(C) It is intended that the Company shall be a joint venture
vehicle between the Investor and Mr Leonard;
(D) The Investor wishes to subscribe for 5,000 Ordinary Shares
of GBP1 in the capital of the Company, being 50% of the issued
share capital of the Company;
(E) Mr Leonard wishes to subscribe for 2,999 Ordinary Shares of
GBP1 in the capital of the Company, so that he will in total hold
30% of the issued share capital of the Company;
(F) Mr Thomas wishes to subscribe for 499 Ordinary Shares of
GBP1
in the capital of the Company, so that he will in total hold 5%
of the issued share capital of the Company;
(G) The parties wish to establish the Trust principally for the
benefit of the employees of the Company, and wish to procure that
the trustees thereof shall subscribe for 1,500 Ordinary Shares
of GBP1 in the capital of the Company, so that the Trust will in
total hold 15% of the fully diluted issued share capital of the
Company;
(H) The parties are willing to enter into this Agreement to
provide for their ongoing relationships and activities.
THE PARTIES AGREE as follows: -
1 DEFINITIONS
(A) In this Agreement and in the Schedules each of the following
words and expressions shall, unless the context otherwise
requires, have the meaning set opposite the relevant word or
expression: -
"Annual Business Plan" the annual business plan of the Group in
respect of each financial year of the Group to be prepared
pursuant to Clause 6.6 which shall include a budget, projected
cash flows and a statement of business objectives;
"Articles" the articles of association of the Company in the
Agreed Terms to be adopted at Completion and as amended from time
to time;
"Board" the board of Directors of the Company for the time
being;
"Business Plan" the business plan in the Agreed Terms
prepared by or on behalf of Mr Leonard and the documents annexed
to such plan;
"Completion" completion of the matters set out in Clause 2;
"Debenture" the debenture in the Agreed Terms embodying fixed
and floating charges over the assets and undertaking of the
Company to secure the undertakings of the Company under the
Facility Agreement;
"Directors" the directors for the time being of the Company
(and the expression "Director" shall be construed accordingly);
"the Facility Agreement" the facility agreement in the Agreed
Terms to be entered into between the Investor and the Company;
"Founders" means the Investor, Mr Leonard and Mr Thomas;
"Group" means at any relevant time the Company and any
subsidiaries for the time being of the Company;
"Intellectual Property Rights" any patent, patent
application, know-how, trade mark, trade mark application, trade
name, registered design, copyright or other similar intellectual,
industrial or commercial right;
"Investor Director" a director appointed by the Investor to the
Board or such director's duly appointed alternate;
"Leonard Director" a director appointed by Mr Leonard to the
Board or such director's duly appointed alternate;
"Recognised Investment a recognised investment exchange as
Exchange" defined by section 207 of the Financial Services Act
1986;
"Service Agreements" the service agreements in the Agreed
Terms to be entered into on Completion by the Company and Mr
Leonard, and the Company and Mr Thomas as set out in clause
2.1.3;
"Shareholders" means the holders of Shares from time to time (and
the expression "Shareholder" shall be construed accordingly);
"the Shares" the ordinary shares of GBP1 each in the capital of
the Company for the time being in issue and in the event of any
sub-division, consolidation or reclassification of such Shares,
such ordinary shares of a different nominal value resulting
therefrom (and the expression "Share" shall be construed
accordingly);
"the Trust" the trust established under the Trust Deed;
"the Trust Deed" the deed in the Agreed Terms for the
establishment of the Trust;
(B) Wherever a document is referred to as being `in the Agreed
Terms' it shall be in the form agreed by the parties hereto which
agreement may be evidenced by being initialled by Mr Leonard on
behalf of the Company, by Mr Leonard, by Mr Thomas and by any
person(s) nominated by or on behalf of the Investor.
2 COMPLETION
2.1 Unless otherwise agreed, Completion shall take place at the
office of Mr Leonard's solicitors forthwith upon execution of
this Agreement, provided that the conditions set out in Clause
2.2 have been fulfilled.
2.2 On Completion:-
2.2.1 Each of the Founders shall deliver to the Company
letters of application for the allotment and issue of the Shares
set out in the Recitals to this Agreement at GBP1 per Share, and
the Company shall, against payment of the sums due, accept such
applications;
2.2.2 the Investor shall deliver to the Company the duly
signed Facility Agreement ;
2.2.3 Mr Leonard and Mr Thomas shall procure that a meeting
of the Board shall be held at which the Board shall appoint:
(a) Lee Cole and [ ] as the first Investor Directors of the
Company; and
(b) Jersey Trust Company as secretary of the Company;
2.2.4 the Founders shall procure that:
(a) a meeting of the Board shall be held at which the Board
shall pass resolutions:
(i) authorising the execution of this Agreement, the Service
Agreements, the Facility Agreement and the Debenture, and
(ii) authorising the execution of the Trust Deed and the funding
of the Trust to enable it to subscribe for the shares to be held
by it as set out in the Recitals to this Agreement;
(b) the Company and each of Messrs Leonard and Thomas shall
enter into the Service Agreements;
(c) there shall be delivered to the Company any documentation
needed to perfect the registration of the Investor, Mr Leonard
and Mr Thomas as shareholders in the Company as set out in the
Recitals to this Agreement;
(d) there shall be delivered to the Company in due course such
applications and any documentation needed to perfect the
registration of the Trust as a Shareholder in the Company as set
out in the Recitals to this Agreement, and the Company shall,
against payment of the sums due, accept such application;
(e) an extraordinary general meeting of the Company shall be
held on short notice at which the Articles shall be adopted.
3 WAIVER BY PARTIES
Each of the Founders unconditionally and irrevocably waives its
rights (if any) under the Articles or the Companies Act 1985 or
otherwise to be allotted in respect of any of the Shares to be
allotted to any other party pursuant to this Agreement.
4 THE BOARD OF DIRECTORS
4.1 Notwithstanding anything provided herein or in the Articles
(as amended from time to time) the Investor and Mr Leonard shall
each be entitled, for so long as each is the holder of 15% or
more of the issued share capital of the Company, to appoint,
remove and replace two Directors on the Board.
4.2 No resolution of the Board shall be passed save (for so long
as each is the holder of 15% or more of the issued share capital
of the Company) with the approval of an Investor Director and
either Mr Leonard or such Leonard Director as is specifically
authorised in writing by Mr Leonard for that purpose.
4.3 The provisions of clause 4.2 shall not apply in respect of
matters arising relating to the Trust including (but not limited
to) the amendment of the Trust Deed and/or for the appointment of
trustees to the Trust and the transfer from the Trust of shares
to selected individuals, and in regard to such matters Mr Leonard
(or such Leonard Director as is specifically authorised in
writing by Mr Leonard for that purpose) shall (solely in relation
to such matters) have and may cast such number of votes as shall
exceed by one the number of votes cast by all other Directors
5 BUSINESS CONDUCT OBLIGATIONS OF THE COMPANY
5.1 The Shareholders shall exercise their powers in relation to
the Company so as to ensure that:-
5.1.1 any expansion, development or evolution of the Group's
business or that of its subsidiaries will only be effected
through the Company or a wholly owned subsidiary of the Company;
5.1.2 the Company shall enforce or procure the enforcement of
to as full an extent as possible the obligations of Mr Leonard
and Mr Thomas under their respective Service Agreements;
5.1.3 the Company shall not enter into, terminate, vary or
fail to exercise its rights under any other agreement or
arrangement with any Director or Shareholder or any person
connected with any of them otherwise than in good faith and on
arms length terms;
5.1.4 the Company shall take all reasonable steps within its
powers to protect its Intellectual Property Rights and shall make
such patent, registered design, trademark and other such
applications and effect such renewals or extensions thereof as
are required to keep the same in force;
5.1.5 the Company shall take all reasonable steps within its
powers to protect information which is confidential to it; and
5.1.6 all decisions which can reasonably be considered to be
material to the Company as a whole are approved either at a
properly convened meeting of the Board or by a resolution in
writing signed by or otherwise approved in writing by all the
Directors of the Company.
6 INFORMATION OBLIGATIONS OF THE COMPANY
6.1 The Company undertakes to the Investor that the Company
shall:
6.1.1 keep the Investor informed of material matters relating
to the progress of its business to such extent and in such form
and detail as the Investor may from time to time require; and
6.1.2 supply such written particulars of any matters
concerned with and arising out of the activities of the Company
and any of its subsidiaries as the Investor may from time to time
require.
6.2 Without limiting the generality of Sub-clause 6.1 of this
Clause, the Company shall deliver within 28 days of the end of
each calendar month to the Investor, an information pack
comprising:-
6.2.1 monthly management accounts including:-
(a) profit and loss account for month and year to date with
comparison to budget;
(b) cash flow for month and year to date with comparison to
budget; and
(c) balance sheet with comparison to budget;
6.2.1 a report by the managing director which shall include
appropriate forecasts for the Company;
6.2.2 projected cash-flows for the next quarter;
6.2.3 projected profit and loss account for the remainder of
the then current financial period; and
6.2.4 copies of any management letters to the Company which
may have been issued by its auditors (in the case of the first
information pack) since Completion and (in the case of subsequent
information packs) since the delivery of the previous information
pack.
6.3 Without limiting the generality of Sub-clauses 6.1 or 6.2 of
this Clause the Company shall deliver to the Investor forthwith
upon the same becoming available and not in any event later than
4 months after the end of each relevant financial year, copies of
the audited profit and loss accounts and audited balance sheets
of the Group and the audited consolidated profit and loss account
and the audited consolidated balance sheet of the Group all in
respect of each financial year of the Company and each of its
subsidiaries.
6.4 Meetings of the Board shall be held at least monthly (or
such lesser frequency as the Investor shall agree in writing) and
shall be convened by giving to the Board not less than 14 days
written notice (or such shorter period with the consent of an
Investor director and a Leonard Director) of the time and place
of the Board meeting and enclosing an agenda and copies of any
appropriate supporting papers.
6.5 The Company shall make available to the Investor copies of
minutes of meetings of the Board and of the boards of directors
of each member of the Group and of all committees of the said
boards not later than the earliest of:
6.5.1 the same time that the minutes are made available to
any of the Directors; or
6.5.2 the business day before the next meeting of the
relevant board or committee; or
6.5.3 14 days after the relevant meeting.
6.6 The Company shall:
6.6.1 prepare and deliver to the Investor at least 30 days
before (but not sooner than 60 days before) the commencement of
each of its financial years the Annual Business Plan in respect
of the forthcoming financial year; and
6.6.2 endeavour to agree the content of the Annual Business
Plan with the Investor prior to so delivering it; and
6.6.3 shall in any event procure that the budget included in
each such Annual Business Plan shall be in such form and detail
as the Investor shall reasonably require from time to time.
6.7 If the Company fails to comply with its obligations under
Sub-clauses 6.1, 6.2, 6.3 or 6.6 of this Clause, the Investor
shall be entitled to instruct a firm of chartered accountants to
prepare and submit to the Investor and the Company at the cost of
the Company such information as should have been supplied
pursuant to Sub-Clauses 6.1, 6.2, 6.3 or 6.6 of this Clause and
such other financial information concerning the Group as the
Investor shall reasonably require. The Company shall (and shall
procure that its subsidiaries shall) give such accountants all
reasonable access to its financial records and premises and all
reasonable assistance which such accountants may request for this
purpose.
7 CONSENT MATTERS & CONSENT PROCEDURES
7.1 The Company and the Shareholders shall not without the prior
written consent of the Investor and Mr Leonard (for so long as
each is the holder of 15% or more of the issued share capital of
the Company) effect or propose any of the matters referred to in
Schedule 2.
7.2 Any notice or information to be given by the Company to the
Investor hereunder may be given to an Investor Director on behalf
of the Investor and any Investor Director shall be authorised to
communicate the consent or approval of the Investor to any
matters under this Agreement.
7.3 Any consent or approval to be given by the Investor
hereunder may be given upon such terms and subject to such
conditions (if any) as the Investor may in its absolute
discretion determine and may be given retrospectively and any
breach of or failure to comply with any such terms and conditions
shall constitute a breach of this Agreement by the party
committing such breach or failure to comply.
8 SUBSIDIARIES
The Company undertakes to the Investor that it shall procure
that each member of the Group shall observe and perform the
provisions and conditions contained in this Agreement to be
observed and performed by them.
9 OTHER INVESTMENTS
Mr Leonard and Mr Thomas each agree that save with the prior
written consent of the Investor they will not make any further
investment in any other company that is in competition with the
Company save for investments not exceeding 3% in total of any
class of security dealt with on any Recognised Investment
Exchange.
10 WARRANTIES
10.1 Mr Leonard warrants to the Investor that the statements of
intention, expectation and opinion contained in the Business Plan
10.1.1 are honestly made and held by him;
10.1.2 are honestly believed to be based upon fair and
reasonable assumptions;
10.1.3 are believed by him to be reasonable; and
10.1.4 that to the best of his knowledge and belief no event
has occurred which potentially adversely alters such beliefs.
10.2 Mr Leonard acknowledges to the Investor pursuant to the
terms of this Agreement that Mr Leonard has agreed to give the
warranties set out in Sub-clause 10.1 in consideration of the
Investor entering into this Agreement and that the Investor has
entered into this Agreement in reliance on such warranties.
11 DISCLOSURE OF INFORMATION
11.1 The Company authorises the Investor to disclose such
information relating to each member of the Group to the extent
that the Investor is required to do so by law, by a Recognised
Investment Exchange or any regulatory authority to which the
Investor may be subject but not otherwise.
11.2 The Investor Directors shall be entitled to report to the
Investor upon the affairs of each member of the Group and in such
report to disclose such information as they shall reasonably
consider appropriate.
12 PUBLICITY
12.1 Unless it complies with the provisions of Sub-clause 12.2 of
this Clause no party hereto shall, whether before or after
Completion, issue any press release or make any public statement
or other communication in respect of any of the matters contained
in this Agreement or any document referred to herein unless
required by law or by the regulations of a Recognised Investment
Exchange or other competent regulatory authority.
12.2 The contents of and the manner of presentation and
publication of any press release, public statement or other
communication to be issued or made by any party shall be subject
to the prior approval of the Investor and Mr Leonard such
approval not to be unreasonably withheld or delayed.
12.3 The Company, Mr Leonard and Mr Thomas each undertakes with
the Investor that they shall not use the name of the Investor in
any context whatsoever (except as required by law) or hold
itself, himself or themselves (as the case may be) out as being
connected or associated with the Investor (other than as regards
the Investor being a shareholder in the Company) in any manner
whatsoever without the prior written consent of the Investor.
13 SHARE TRANSFERS
13.1 No Shareholder shall be entitled to sell, transfer, charge,
encumber, grant options over or otherwise dispose of any of the
Shares or any beneficial interest therein except on the terms set
out in this Agreement and in accordance with the Articles.
13.2 Should:
13.2.1 either Mr Leonard or the Investor propose disposing of
any interest in any of their Shares, the right to do so be
subject to such restrictions as may be contained in the Articles;
13.2.2 any Shareholder (save for the Investor and Mr Leonard)
and any person entitled to Shares by transmission propose
disposing of any interest in any Shares, he ("the proposing
transferor") shall not be entitled to do so without first
offering them to Mr Leonard. The other Shareholders shall not
have any pre-emption rights in respect of any such transfer, and
any restrictions as may be contained in the Articles shall not
apply, unless and until the priority pre-emption rights of Mr
Leonard set out in this Sub-clause and in Sub-clause 13.2.3 are
waived, declined or exhausted.
13.2.3 The priority pre-emption rights of Mr Leonard shall
take effect as follows:
(a) The proposing transferor shall serve a transfer notice on Mr
Leonard and on the Company specifying the number of Shares in
question ("the Transfer Notice"), and the Transfer Notice shall
constitute the Company his agent for the sale of the Shares
specified in it. The price per Share shall be the price which the
auditors of the Company (at the request of the Directors) state
in writing to be in their opinion the fair value of the shares on
a sale as at the date on which the Transfer Notice is received
between a willing seller and a willing purchaser (taking no
account of whether the shares do or do not carry control of the
Company) and, if the Company is then carrying on business as a
going concern, on the assumption that it will continue to do so
("the Prescribed Price").
(b) On receipt of the auditor's statement of the Prescribed
Price, the Company shall offer the Shares in question to Mr
Leonard. Mr Leonard shall have 30 days within which such offer
must be accepted or, in default, the offer will be deemed to have
been declined.
(c) Should Mr Leonard waive his priority pre-emption rights or
decline the offer or should the offer be deemed to have been
declined, the right thereafter of the proposing transferor to
transfer shares or any interest therein shall be subject such
restrictions as may be contained in the Articles.
13.3 The parties shall procure that before any person (other than
a person who is already a Shareholder) is registered as a holder
of any Share in the Company such person shall enter into a deed
of adherence agreeing to be bound by the provisions of this
Agreement in such form as may be agreed amongst the Shareholders
from time to time (such agreement not to be unreasonably
withheld, refused or delayed).
13.4 In the event of a third party (either alone or in concert
(as such expression is defined in the City Code) with any other
person(s)) not connected with any Shareholder ("the Purchaser")
offering ("the Offer") on any date ("the Offer Date") to purchase
all the Shares then in issue any member or members together
holding at least 75% by nominal value of the issued Shares ("the
Accepting Member") shall be entitled to require (by notice in
writing served no later than 21 days following the Offer Date
("the Notice Date")) that all the remaining Shareholders accept
the Offer within 14 days following the Notice Date PROVIDED THAT
the Offer:
13.4.1 is bona fide and made on an arms length basis; and
13.4.2 is on the same terms and at the same price per Share as
between the remaining Shareholders and the Purchaser as contained
in the offer by the Purchaser to the Accepting Members.
13.5 If the remaining Shareholders, having become bound to accept
an Offer to purchase all their Shares in accordance with the
provisions of Sub-clause 13.4 above, default in transferring the
same the Chairman of the Company or failing him one of the
Directors duly nominated by resolution of the Board for that
purpose shall be deemed to be the duly appointed attorney of such
Shareholders with full power to execute, complete and deliver in
the name and on behalf of such Shareholders a transfer of the
relevant Shares to the Purchaser and so that the Board may
receive and give a good discharge for the purchase money on
behalf of such Shareholders and (subject to the transfer being
duly stamped) enter the name of the Purchaser in the register of
members as the holder by transfer of the relevant Shares.
14 COMPLIANCE AND FURTHER ASSURANCE
14.1 Each of the parties shall take all actions necessary
(including convening meetings, proposing resolutions and
exercising voting rights and executing such further deeds,
documents and assurances as may be reasonably required) insofar
as it is in its power so to do and in so far as is permitted by
law to ensure that the obligations in and other commitments under
this Agreement or any of the documents referred to herein are
observed and performed by the relevant party.
14.2 If and to the extent that any provision of this Agreement
shall purport unlawfully to fetter the Company's statutory powers
the parties to this Agreement (other than the Company) agree that
the same shall be read and construed as though the Company were
not referred to in such provision, but shall continue to the full
extent possible to be binding upon the parties other than the
Company.
15 INTERACTION WITH THE ARTICLES
As between the parties (other than the Company) in the event
of any ambiguity or conflict arising between the terms of this
Agreement and those of the Articles, to the extent of any such
ambiguity or conflict the terms of this Agreement shall prevail.
16 ASSIGNMENT
16.1 Save as herein provided this Agreement shall be binding upon
and enure for the benefit of the successors of the parties.
16.2 Except as specifically provided in this Agreement or in the
Articles any rights, obligations or liabilities hereunder shall
not at any time be assigned by any Shareholder without the
express prior written consent of the Investor and Mr Leonard (for
so long as each is the holder of 15% or more of the issued share
capital of the Company).
17 CONFIDENTIAL INFORMATION
Each Shareholder undertakes that he will not, except as
permitted by this Agreement, at any time hereafter divulge or
communicate to any person (other than to officers or employees of
any member of the Group (as the case may be) whose province it is
to know the same) any confidential information relating any
member of the Group which may come to his or its knowledge as a
shareholder or director of any member of the Group (as the case
may be) and he shall use his best endeavours to prevent the
publication or disclosure of any such confidential information.
18 COSTS
Every party shall bear its own costs and expenses in
connection with this Agreement and, in particular, the Company
shall bear any disbursements it incurs in connection with this
Agreement including stamp duties, and registration fees.
19 PERIOD OF THIS AGREEMENT
This Agreement shall remain in force and effect for so long
as any two parties hold Shares in the Company but shall cease in
relation to any party in the event that such party ceases to hold
any Shares in the Company save that the termination of the
Agreement in such circumstances shall not affect such of its
provisions as are expressed to operate or have effect after such
termination and shall also not affect any rights of action
already accrued to any party in respect of any antecedent breach
of this Agreement by any of the other parties.
20 COUNTERPARTS
This Agreement may be entered into by each of the parties
signing one or more counterparts, which taken together shall
constitute a complete agreement.
21 WAIVER
Failure by any party hereto at any time or times to require
performance of any provisions of this Agreement shall in no
manner affect his right to enforce such provisions at a later
time. No waiver by any party hereto of any condition or the
breach of any term, covenant, representation or warranty
contained in the Agreement whether by conduct or otherwise in any
one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a
waiver of any other condition or be deemed to be or construed as
the breach of or a waiver of any other term, covenant,
representation or warranty contained in this Agreement.
22 INVALIDITY
If any of the provisions of this Agreement are or become
invalid, illegal or unenforceable in any respect under any law,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.
23 NOTICES
A notice may be given by any party hereto to any other party
hereto either personally or by sending it by prepaid first class
post or airmail to his address stated in this Agreement or to any
other address supplied by him in writing to the other parties
hereto for the giving of notice to him. A properly addressed and
prepaid notice sent by post shall be deemed to have been served
at an address with the United Kingdom and Jersey at the expiry of
48 hours after the notice is posted and to have been served at an
address outside the United Kingdom and Jersey at the expiry of 72
hours after the notice is posted.
24 APPLICABLE LAW
This Agreement shall be governed by and construed in
accordance with English law and all the parties hereto
irrevocably submit to the non-exclusive jurisdiction of the
Jersey courts as regards any claim, dispute or matter arising out
of or relating to this Agreement or any of the documents to be
executed pursuant to it.
25 ENTIRE AGREEMENT
25.1 This Agreement represents the entire agreement between the
parties in relation to the matters the subject hereof. It is
agreed that: -
25.1 no party has entered into this Agreement in reliance upon
any representation, warranty or undertaking of any other party
which is not expressly set out in this Agreement;
25.2 no party shall have any remedy in respect of
misrepresentation or untrue statements made by any party unless
and to the extent that a claim lies for breach of warranties
under Sub-clause 10.1 of this Agreement;
25.2 This clause shall not exclude any liability for fraudulent
misrepresentation.
26 INTERPRETATION
26.1 References in this Agreement to any statute or statutory
provision shall be deemed to include references to any statute or
statutory provision which amends, extends, consolidates or
replaces the same (other than any such statute or statutory
provision with retrospective effect to the extent that it is
retrospective) and except to the extent that any amendments or
modification enacted after the date of this Agreement would
extend or increase the liability of any party to any other party
under this Agreement and, save as aforesaid, to any order,
regulation, instrument or other subordinate legislation made
thereunder.
26.2 References to "Clauses", "Sub-clauses" and "Schedules" are
to clauses and sub-clauses of the schedules of this Agreement.
26.3 The headings in this Agreement and the index to this
Agreement are for convenience and shall not affect its
construction or interpretation.
26.4 Where the expressions "directors", "financial year" and
"subsidiary" are used in this Agreement they shall have the
meanings attached to them respectively by the Companies Act 1985.
Where the word "emoluments" is used in this Agreement it shall be
construed in accordance with sub-paragraph 1(4) of schedule 6 of
the Companies Act 1985.
26.5 Where the expressions "Connected Persons" and "person
connected" are used in this Agreement they shall mean any person
or persons connected with another person within the definition of
connected persons contained in Section 839 of Income Tax and
Corporation 1988.
26.6 Unless the context otherwise requires: -
26.6.1 words denoting the singular shall include the plural
and vice versa;
26.6.2 words denoting a gender shall include all genders;
26.6.3 references to persons shall include corporations and
firms;
25.6.4 covenants, warranties and undertakings given by an
individual shall be binding on his personal representatives and
executors.
IN WITNESS WHEREOF this Agreement has been entered into on the
date set out above
SCHEDULE 1
Part 1
Information concerning the Company
Date of Incorporation: 23 December 1999
Registered Number: 75919
Registered Office: Elizabeth House, Castle Street, St Helier,
Jersey JE4 8PN, Channel Islands
Authorised Share Capital GBP10,000
divided into: 10,000 Ordinary Shares of GBP1 each
Issued Share Capital: 2 Ordinary Shares of GBP1 each
Secretary: Jersey Trust Company
Shareholders and shareholding prior to Completion:
Name Number
Mr Leonard 1 Ordinary Share of GBP1 each
Mr Thomas 1 Ordinary Share of GBP1 each
Shareholders and shareholding following Completion:
Name Number
CI4 Net Limited 5,000 Ordinary Shares of GBP1 each
Mr Leonard 3,000 Ordinary Shares of GBP1 each
Mr Thomas 500 Ordinary Shares of GBP1 each
The Trust 1,500 Ordinary Shares of GBP1 each
Accounting Reference Date: 1 January
Bankers: HSBC
SCHEDULE 2
Consent Matters
The Company and the Shareholders shall not without the prior
written consent of the Investor and Mr Leonard (for so long as
each is the holder of 15% or more of the issued share capital of
the Company) effect or propose that the Company:
(a) enter into or give or permit or suffer to subsist any
guarantee of or indemnity or contract of suretyship for or
otherwise commit itself in respect of the due payment of money or
the performance of any contract, engagement or obligation of any
other person or body other than a subsidiary or otherwise than in
the ordinary course of business;
(b) make any material change to the nature of the business or
the jurisdiction where it is managed and controlled;
(c) do any act or thing outside the ordinary course of the
business carried on by it;
(d) make any change to
(i) its accounting policies, bases or methods (other than as
recommended by the auditors of the Company);
(ii) any Annual Business Plan;
(e) instruct such bank with which the Company holds an
account(s) to make payment of the amounts from time to time as
follows save with the signatures of the Directors as follows :
(i) payment of an amount up to GBP5,000 - one Director;
(ii) payment of an amount from GBP5,001 to GBP100,000 - two
Directors, one of whom must be either Mr Leonard or such Director
as is specifically authorised in writing by Mr Leonard for that
purpose;
(iii) payment of amounts over GBP100,000 - two Directors, one
of whom must be an Investor Director.
(f) engage any employee to perform services on terms that
either:
(i) his contract cannot be terminated by six months' notice or
less or
(iii) his emoluments and/or commissions or bonuses are or are
likely to be at the rate of GBP100,000 per annum or more;
(g) increase the emoluments and/or commissions or bonuses of any
employee to more than GBP50,000 per annum or vary the terms of
employment of any employee earning (or so that after such
variation he will, or is likely to earn) more than GBP50,000 per
annum;
(h) vary the terms of employment and service of any director or
company secretary of the Company to a material degree, or
increase or vary the salary or other benefits of any such
officer;
(i) mortgage or charge or permit the creation of or suffer to
subsist any mortgage or fixed or floating charge, lien (other
than a lien arising by operation of law) or other encumbrance
over the whole or any part of its undertaking, property or
assets;
(j) conduct any litigation material to the Company (material
being construed as reasonably likely to incur costs including any
award of damages, fees or third party costs in excess of
GBP500,000), save for the collection of debts arising in the
ordinary course of the business carried on by the Company or any
application for an interim injunction or other application or act
which is urgently required in the best interests of the Company
in circumstances in which it is not reasonably practicable to
obtain prior consent as aforesaid;
(k) save as provided for in the Annual Business Plan take or
agree to take any leasehold interest in or licence over any real
property;
(l) dispose (other than in accordance with any relevant capital
disposal forecast in the Annual Business Plan) of any asset of a
capital nature;
(m) propose or pay any dividend or propose or make any other
distribution (as defined under sections 209, 418 and 419 of ICTA)
exceeding in any one financial year an aggregate of one-third of
the distributable profit and/or reserves in that financial year;
(n) permit or cause to be proposed any alteration to the rights
attaching to the Shares;
(o) create, allot, issue or redeem any share or loan capital
(whether convertible into any class of shares in the Company or
not) unless such shares are offered on a pre-emptive basis to the
existing members of the Company;
(p) grant or agree to grant any options or other right to
subscribe for or convert into Shares;
(q) permit or cause to be proposed any amendment to its
memorandum of association or the Articles;
(r) cease or propose to cease to carry on the business or be
wound up save where it is insolvent;
(r) apply or permit the Directors of the Company to apply to
petition a Court for an administration order to be made in
respect of the Company; or
(s) enter into or vary any transaction or arrangement with, or
for the benefit of any of the Directors of or Shareholder in the
Company or any other person who is a Connected Person with any
such Director or Shareholder.
SIGNED BY ) C Leonard
CHRISTOPHER LEONARD )
duly authorised for and on behalf of )
TEMPZ.COM LIMITED )
R Charlton
Solicitor
SIGNED BY )
CHRISTOPHER LEONARD ) C Leonard
in the presence of: - )
R Charlton
Solicitor
SIGNED BY )
IAN THOMAS ) I Thomas
in the presence of: - )
R Charlton
Solicitor
SIGNED BY
LEE COLE )
duly authorised for and on behalf of ) L J Cole
C14 NET.COM LIMITED )
in the presence of: - )
A. MacLaren
Solicitor
London EC2V 5DE
Exhibit 2.8 Share Sale and Purchase Agreement relating to
Systeam SpA, dated February 17, 2000, by and
between Systeam SpA and Ci4net.com, Inc.
Dated 17 February 2000
$US1,000,000
FACILITY AGREEMENT
SYSTEAM SpA
as borrower
CI4Net.com Inc
as lender
McFadden Pilkington & Ward
City Tower - Level Four
40 Basinghall Street
London EC2V 5DE
THIS AGREEMENT is made on the 17' of February 2000
BETWEEN
(1) SYSTEAM SPA whose registered office is at Viale Eroi di
Cefalonia n. 37, 00128 Rome (the "Borrower"); and
(2) C14NET.C0M INC whose registered office is at One
Rockfeller
Plaza, Suite 1600, New York 10020 (the "Lender").
NOW IT IS HEREBY AGREED as follows:
1.1 In this Agreement:
"Acquisition Agreement" means the Agreement executed by
way of exchange of a contract proposal dated 18' of
January 2000 and the subsequent acceptance dated 24' of
January 2000 made between the Lender and certain other
parties concerning acquisition by the Lender of shares in
the Borrower;
"Prime Rate" means the Prime rate from time to time
published by Chase Manhattan Bank NA;
"Closing" means the day on which the transfer of the
shares of Systeam S.p.A. to CI4Net.com Inc. will be
executed"Event of Default" means any of those events
specified in Clause 14;
"Exit Event" means either (i) the sale of the issued
share capital of the Borrower to a third party or parties
acting in concert or (ii) the listing of any shares in
the Borrower on a recognised stock
"Facility" means the dollar loan facility granted to the Borrower
in this Agreement, as defined in Clause 2;
"Group" means the Borrower and its subsidiaries;
"Interest Period" means, save as otherwise provided
herein, any of those periods mentioned in Clause 5;
I
"Loan" means the aggregate principal amount for the time
being outstanding hereunder;
"Margin" means 3 per cent. per annum;
"Potential Event of Default" means any event which may
become (with the passage of time, the giving of notice,
the making of any determination hereunder or any
combination thereof) an Event of
- - Default; and
"Repayment Date" means the earlier of the fourth
anniversary of this Agreement or the occurrence of
an Exit Event.
LOANSNG.06
1.2 Any reference in this Agreement to:
the "Lender" shall be construed so as to include its and
any subsequent successors and assigns in
accordance with their respective interests;
a "business day" shall be construed as a reference to a
day (other than a Saturday or Sunday) on which Lenders
are generally open for business in New York and Rome; a
"Clause" shall, subject to any contrary indication, be
construed as a reference to a clause hereof;
an "encumbrance" shall be construed as a reference to a
mortgage, charge, pledge, lien or other encumbrance
securing any obligation of any person or any other type
of preferential arrangement (including, without
limitation, title transfer and retention arrangements)
having a similar effect;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation
of which the first-mentioned company or corporation is a
subsidiary;
"indebtedness" shall be construed so as to include any
obligation (whether incurred as principal or as surety)
for the payment or repayment of money, whether present
or future, actual or contingent;
a "month" is a reference to a period starting on one day
in a calendar month and ending on the numerically
corresponding day in the next succeeding calendar month
save that, where any such
- - period would otherwise end on a day which is not a
business day, it shall end on the next succeeding
business day, unless that day falls in the calendar month
succeeding that in which it would otherwise
have ended, in which case it shall end on the immediately
preceding business day Provided that, if a
period starts on the last business day in a calendar
month or if there is no numerically corresponding
day in the month in which that period ends, that period
shall end on the last business day in that later
month (and references to "months" shall be construed
accordingly);
a "person" shall be construed as a reference to any
person, firm, company, corporation, government, state or
agency of a state or any association or partnership
(whether or not having separate legal personality) of two
or more of the foregoing;
"repay'' (or any derivative form thereof) shall, subject
to any contrary indication, be construed to include
"prepay" (or, as the case may be, the corresponding
derivative form thereof);
a "Schedule" shall, subject to any contrary indication,
be construed as a reference to a schedule hereto;
a "subsidiary" of a company or corporation shall be
construed as a reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more' than half the issued share capital of which is
beneficially owned, directly or indirectly, by the first-
mentioned company or corporation; or
LOA,NSNG.06
(iii) which is a subsidiary of another subsidiary of the
first-mentioned
company or
corporation
and, for these purposes, a company or corporation shall be
treated as being controlled by another if that other company or
corporation is able to direct its affairs and/or to control the
composition of its board of directors or equivalent body;
"tax" shall be construed so as to include any tax, levy, impost,
duty or other charge of a similar nature (including, without
limitation, any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place thereof
from time to time;
a "wholly=owned subsidiary' of a company or corporation globally
construed
as a reference to any company or corporation which has no other
members except
that other company or corporation and that other company's or
corporation's
wholly-owned subsidiaries or persons acting on behalf of that
other company or corporation or its wholly-owned subsidiaries;
and
the "winding-up", "dissolution" or "administration" of a company
or corporation
shall be construed so as to include any equivalent or analogous
proceedings
under the law of the jurisdiction
in which such company or corporation is incorporated or any
jurisdiction in
which such company or corporation carries on business including
the seeking of
liquidation, winding-up, reorganisation, dissolution,
administration,
arrangement, adjustment, protection or relief of debtors.
1.3 "$" and "dollar" denote lawful currency of the United
States of America.
1.4 Save where the contrary is indicated, any reference in
this Agreement to:
this Agreement or-any-other--agreement-or document shall be
construed-as-a
reference to this Agreement or, as the case may be, such other
agreement or
document as the same may have been, or may from time to time be,
amended,
varied, novated or supplemented;
a statute shall be construed as a reference to such statute as
:he same may have
been, or may from time to time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to New
York time.
1.5 Clause and Schedule headings are for ease of reference
only.
2. The Facility
The Lender grants to the Borrower, upon the terms and subject to
the conditions
hereof, a loan facility in an aggregate amount of up to
$1,000,000.
3. Purpose
3.1 The Facility is intended for general corporate and working
capital purpose
of the Borrower and the Borrower shall apply all amounts raised
by it hereunder
in or towards satisfaction of the general corporate financing
requirements set out in the Schedules to the Business Plan .
3.2 Without prejudice to the obligations of the Borrower
hereunder,
the Lender shall not be obliged to concern itself with the
application
of amounts raised by the Borrower hereunder.
4. Availability of the Facility
The Lender will, subject to Clause 4, remit the Facility to the
Borrower no
later than seven days from the Closing (or if such day is not a
business
day, on the next following business day).
5. Interest Periods
The period for which the Loan is outstanding shall be divided
into successive
Interest Periods each with a duration of three months.
The first Interest Period shall start from the date on which the
Facility has
been made available to the Borrower
6. Interest
6.1 On the last day of each Interest Period the Borrower shall
pay the
interest accrued on the Loan for the relevant Interest Period.
6.2 The rate of interest applicable to the Loan from time to
time during an
Interest Period relating thereto shall be the rate per annum
which is the
sum of the Margin and the Prime Rate applied on a daily basis
during such
Interest Period.
7. Repayment
The Borrower shall repay the Loan on the Repayment Date.
8. Prepayment
8.1 The Borrower may, if it has given to the Lender not less than
thirty days
prior notice to that effect, prepay without penalty the whole or
any part
of the Loan (being an amount or integral multiple of $100,000) on
the last
day of any Interest Period.
8.2 Any notice of cancellation or prepayment given by the
Borrower pursuant
to Clause 8.1 shall be irrevocable, shall specify the date upon
which such
cancellation or prepayment is to be made and the amount of such
cancellation
or prepayment and, in the case of a notice of prepayment, shall
oblige the
Borrower to make such prepayment on such date.
8.3 The Borrower shall not repay all or any part of the Loan
except at
the times and in the manner expressly provided for in this
Agreement and shall
not be entitled to re-borrow any amount repaid.
9. Taxes
9.1 All payments to be made by the Borrower to the Lender
hereunder shall
be made free and clear of and without deduction for or on account
of tax unless
the Borrower is required to make such a payment subject to the
deduction or
withholding of tax, in which case the sum payable by the
Borrower in respect of which such deduction or withholding is
required to be
made shall be increased to the extent necessary to ensure that,
after the making
of the required deduction or withholding, the Lender receives and
retains
(free from any liability in respect of any such deduction or
withholding)
a net sum equal to the sum which it would have received and so
retained had
no such deduction or withholding been made or required to be
made.
9.2 Without prejudice to the provisions of. Clause 10.1, if
the Lender is
required to make any payment on account of tax (not being a tax
imposed on
the income of the Lender by the jurisdiction in which it is
incorporated) or
otherwise on or in relation to any sum received or receivable by
it hereunder
(including, without limitation, any sum received or receivable
under this
Clause 10) or any liability in respect of any such payment is
asserted, imposed
levied or assessed against the Lender, the Borrower shall, upon
demand of the
Lender, promptly indemnify the Lender against such payment or
liability,
together with any interest, penalties and expenses payable or
incurred in
connection therewith.
9.3 If the Lender intends to make a claim pursuant to Clause
10, it shall
notify the Borrower of the event by reason of which it is
entitled to make such claim Provided that nothing herein shall
require the Lender to disclose any confidential
information relating to the organisation of its
affairs.
10. Tax Receipts
-------10.1---If,- at any time; the Borrower-is-
required-by-law-to-make-any deduction- or
withholding from any
sum payable by it hereunder (or if thereafter there is
any change in the rates at which or the
manner
in which such deductions or withholdings are calculated),
the Borrower shall promptly
notify the
Lender.
i0 .2 If the Borrower makes any payment hereunder in
respect of which it is required to make
any
deduction or withholding, it shall pay the full amount
required to be deducted or withheld to
the
relevant taxation or other authority within the time
allowed for such payment under
applicable law
and
shall deliver to the Lender, promptly upon receipt of the
same, an original receipt (or a
certified
copy
thereof) issued by such authority evidencing the payment
to such authority of all amounts so
required
to be deducted or withheld in respect of such payment.
11. Increased Costs
11.1 If, by reason of any change in law or in its
interpretation or administration:
(a) there is any increase in the cost to the
Lender of funding or maintaining all or any
of
II
the advances comprised in a class of advances
formed by or including the
Advances;
or "
i
LOANSNG.06 t
(b) the Lender becomes liable to make any payment
on account of tax or otherwise
(not
being a tax imposed on the net income of the
Lender by the jurisdiction in which
it is
incorporated) on or calculated by reference to
the amount of the Advances
and/or to
any sum received or receivable by it hereunder,
then the Borrower shall, from time to time on demand of
the Lender, promptly pay to the
Lender
amounts sufficient to indemnify it or any such holding
company against, as the case may be,
(1) such
increased cost (or such proportion of such increased cost
as is, in the opinion of the Lender,
attributable to its funding or maintaining Advances) or
(2) such liability.
11.2 If the Lender intends to make a claim pursuant to
Clause 11.1, it shall notify the
Borrower of the
event by reason of which it is entitled to do so Provided
that nothing herein shall require the
Lender
to disclose any confidential information relating to the
organisation of its affairs.
12. Representations
The Borrower represents that:
(i) it is a corporation duly organised under
the laws of Italy with power to
enter
into this Agreement and to exercise its
rights and perform its obligations
hereunder and all corporate and other
action required to authorise its
- - execution of this Agreement and its performance of its
obligations
hereunder
has been duly taken;
(ii) under the laws of Italy in force at the
date hereof, the claims of the
Lender
against the Borrower under this Agreement will rank at least
pari passu
with
the claims of all its other unsecured creditors save those
whose claims are
- -_--_------------------------------preferred solely
by-any-bankruptcy-;-insolvency; liquidation
or-other--similar---
' laws of general application;
(iii) in any proceedings taken in its jurisdiction
of incorporation in relation to
this
Agreement, it will not be entitled to claim
for itself or any of its assets
immunity from suit, execution, attachment
or other legal process;
(iv) all acts, conditions and things required
to be done, fulfilled and
performed in
order (a) to enable it lawfully to enter
into, exercise its rights under and
perform and comply with the obligations
expressed to be assumed by it in
this
Agreement and (b) to ensure that the
obligations expressed to be assumed
by
it in this Agreement are legal, valid and
binding;
(v) it has not taken any corporate action
nor have any other steps been taken
or
legal proceedings been started or (to the
best its knowledge and belief)
. threatened against the Borrower for its winding-up,
dissolution,
administration or re-organisation or for
the appointment of a receiver,
administrator, administrative receiver,
trustee or similar officer of it or of
any
' or all of its assets or revenues;
LOANSNG.06
(vi) it is not in breach of or in default
under any agreement to which it is a
party
or which is binding on it or any of its
assets to an extent or in a manner
which might have a material adverse effect
on the business or financial
condition of the Group;
(vii) no action or administrative proceeding
of or before any court or agency
which might have a material adverse effect
on the business or financial
condition of the Borrower has been started
or threatened;
(viii) all of the written information supplied
by the Borrower to the Lender in
connection herewith is true, complete and
accurate in all material respects
and
it is not aware of any material facts or
circumstances that have not been
disclosed to the Lender and which might, if
disclosed, adversely affect the
decision of a person considering whether or
not to provide finance to the
_CN_\--_________-__-_ -
Borrower;
(ix) save as permitted hereunder, no encumbrance
exists over all or any of the
present or future revenues or assets of the
Borrower;
(x) the execution by the Borrower of this
Agreement and the Borrower's
exercise
of its rights and performance of its
obligations hereunder or thereunder
will
not result in the existence of nor oblige
the Borrower to create any
encumbrance over all or any of its present
or future revenues or assets;
(xi) the execution by the Borrower of this
Agreement and the Debenture and
the
Borrower's exercise of its rights and
performance of its obligations
hereunder
or thereunder do not and will not:
(a) conflict with any agreement, mortgage,
bond or other instrument or
- ----- ---------- ----------------------
treaty to- which such party-is
- -a-party-or-which-is--binding-upon-it-
or--------
(,y~' any of its assets;
(b) conflict with the such party's
constitutional documents and rules and
regulations; or
(c) conflict with any applicable law,
regulation or official or judicial
order.
13. Covenants
13.1 The Borrower shall:
(i) obtain, comply with the terms of and do all
that is necessary to maintain in
. full force and effect all authorisations,
approvals, licences and consents
required in or by the laws and regulations of
its jurisdiction of
incorporation
to enable it lawfully to enter into and
perform its obligations under this
' Agreement or to ensure the legality, validity,
enforceability or admissibility
LOANSNG.06 in evidence in its jurisdiction of
incorporation of this Agreement;
(ii) maintain insurances on and in relation to its
business and assets with
- - reputable underwriters or insurance companies against such
risks and to such
extent as is usual for companies carrying
on a business such as that carried
on
by the Group;
(iii) after the delivery of any Notice of
Drawdown and before the proposed
making of the Advance requested therein,
notify the Lender of the
occurrence
of any event which results in or may
reasonably be expected to result in
any
of the representations contained in Clause
12 being untrue in any material
respect at or before the time of the
proposed making of such Advance;
(iv) promptly inform the Lender of the
occurrence of any Event of Default or
Potential Event of Default and, upon
receipt of a written request to that
effect
- - from the Lender, confii=iri to the Lender-
that, save as previously
notified to --------
the Lender or as notified in such
confirmation, no Event of Default or
Potential Event of Default has occurred;
and
(v) ensure that at all times the claims of
the Lender against it under this
Agreement rank at least pari passu with the
claims of all its other
unsecured
creditors save those whose claims are
preferred by any bankruptcy,
insolvency, liquidation or other similar
laws of general application.
13.2 No member of the Group shall , without the prior
written consent of the Lender:
pay, make or declare any dividend or other
distribution in respect of any
financial year;
(ii) create or permit to subsist any
encumbrance over all or any of its present
or
- - ---------------- - -----------future revenues or--assets other-
than an
encumbrance-which-has-been-disclosed--
- -
in writing to the Lender prior to the
execution hereof and secures only
indebtedness outstanding at the date
hereof;
(iii) make any loans, grant any credit (save in
the ordinary course of business)
or
give any guarantee or indemnity (except as
required heir eby) to or for the
benefit of any person or otherwise
voluntarily assume any liability, whether
actual or contingent, in respect of any
obligation of any other person;
(iv) (other than pursuant to the Option
Scheme (as defined in the Acquisition
Agreement) issue any further shares or
alter any rights attaching to its issued
shares in existence at the date hereof; or
(v) (disregarding sales of stock in trade in
the ordinary course of business) sell,
lease, transfer or otherwise dispose of, by
one or more transactions or
series
of transactions (whether related or not),
the whole or any part of its
revenues
or its assets.
LOANSNG.06
0
14. Events of Default
. 14.1 If:
(i) the Borrower shall fail to pay, within three
business days of the due date,
any
sum due from it hereunder at the time, in
the currency and in the manner
specified herein; or
(ii) any representation or statement made by
the Borrower in this Agreement
or
in any notice or other document,
certificate or statement delivered by it
pursuant hereto or in connection herewith
is or proves to have been
misleading or materially incorrect when
made; or
(iii) the Borrower fails duly to perform or
comply with any other obligation
expressed to be assumed by it in this
Agreement and such failure, if
capable
of remedy, is not remedied within fourteen
days after the Lender has
given
notice thereof to such party; or
(iv) any material indebtedness of any member
of the Group is not paid when
due
or is declared to be or otherwise becomes
due and payable prior to its
specified maturity or any creditor or
creditors of the any member of the
- - Group become entitled to declare any indebtedness of the such
party due
and
payable prior to its specified maturity; or
(v) any member of the Group is unable to pay
its debts as they fall due,
commences negotiations with any one or more
of its creditors with a
view to
the general readjustment or rescheduling of
its indebtedness or makes a
- -- -- -----------------------general assignment- for- the benefit
of or a composition
with-its-creditors;-or -
--
(vi) any member of the Group takes any
corporate action or other steps are
taken
or legal proceedings are started for its
winding-up, dissolution,
administration
or re-organisation or for the appointment
of a receiver, administrator,
administrative receiver, trustee or similar
officer of it or of any or all of its
revenues and assets; or
(iiiii) any execution or distress is levied
against, or an encumbrancer takes
possession of the whole or any part of, the
property, undertaking or assets
of
any member of the Group; or
(viii) by or under the authority of any
government, (a) the management of any
member of the Group is wholly or partially
displaced or the authority of
any
member of the Group in the conduct of its
business is wholly or partially
curtailed or (b) all or a majority of the
issued shares of the Borrower or
the
whole or any part (the book value of which
is twenty per cent. or more of
the
book value of the whole) of the revenues or
assets of the Group is seized,
' nationalised, expropriated or compulsorily acquired; or
LOANSNG.06
(ix) (except as may result from a sale or
sales by the Lender) at least 66`0 of
the
issued share capital of the Borrower shall
cease to be beneficially owned
by
the Lender; or
. (x) any member of the Group ceases to carry on the
business it carries on at
the
date hereof or enters into any new
business; or
(xi) the Borrower repudiates this Agreement
or does or causes to be done any
act
or thing evidencing an intention to
repudiate this Agreement; or
(xii) at any time any act, condition or thing
required to be done, fulfilled or
performed in order (a) to enable the
Borrower lawfully to enter into,
exercise
its rights under and perform the
obligations expressed to be assumed by it
in
this Agreement, (b) to ensure that the
obligations expressed to be
assumed by
_ the Borrower in this ~gr:eerrient ate
legal-valid-aiid binding-or (c) to make
---
,_ this Agreement admissible in evidence in Italy is not done,
fulfilled or
performed; or
(xiii) at any time it is or becomes unlawful
for the Borrower to perform or
comply
with any or all of its obligations
hereunder or any of the obligations of the
Borrower hereunder or thereunder are not or
cease to be legal, valid and
binding; or
(xiv) any circumstances arise which in the
reasonable opinion of the Lender
constitute a material adverse change in the
business, assets or financial
condition of the Borrower;
then, and in any such case and at any time thereafter, the
Lender, in accordance with art.
1186 of the
Italian Civil Code, may by written notice to the Borrower
declare the Loan to be immediately
due
- ----- --and payable (whereupon the same shall become so
payable together-with accrued
interest thereon
and--any other sums then owed by the Borrower hereunder)
14.2 If, pursuant to Clause 14.1, the Lender declares the
Loan to be due and payable on
demand of the
Lender, then, and at any time thereafter, the Lender may
by written notice to the Borrower:
call for
repayment of the Loan on such date as it may specify in
such notice (whereupon the same
shall become
due and payable on such date together with accrued
interest thereon and any other sums then
owed by
the Borrower hereunder) or withdraw its declaration with
effect from such date as it may
specify in such
notice.
15. Default Interest and Indemnity
15.1 If any sum due and payable by the Borrower hereunder
is not paid on the due date or if
any sum
due and payable by the Borrower under any judgement of any
court in connection herewith is
not paid
on the date of such judgement, (the balance thereof for
the time being unpaid being herein
referred to
as an "unpaid sum") the unpaid sum shall bear interest at
the rate per annum which is the
sum from
time to time of two per cent, the Margin and the Prime
Rate from time to time applicable
thereto.
LOANSNG.06 .
15.2 The Borrower undertakes to indemnify the Lender
against any cost, claim, loss, expense
(including
legal fees) or liability together with any VAT thereon,
which it may sustain or incur as a
consequence
of the occurrence of any Event of Default or any default
by the Borrower in the performance
of any
of the obligations expressed to be assumed by it in this
Agreement.
16. Payments
16.1 On each date on which this Agreement requires an
amount denominated in dollars to
be paid by
the Borrower, the Borrower shall make the same available
to the Lender by payment in
dollars and in
immediately available, freely transferable, cleared funds
to the Lender's account number to
be advised
by the lender, New York (or such other account or bank as
the Lender may have specified
for this
purpose).
16.2 - ---All payments required to be iriade by the
Borrower heieunder shall be calculated
without
reference to any set-off or counterclaim and shall be
made free and clear of and without any
deduction
for or on account of any set-off or counterclaim.
17. Set-Off
The Borrower authorises the Lender to apply any credit
balance to which the Borrower is
entitled on
any account of the Borrower with the Lender in
satisfaction of any sum due and payable
from the
Borrower to the Lender hereunder but unpaid; for this
purpose, the Lender is authorised to
purchase
with the moneys standing to the credit of any such account
such other currencies as may be
necessary
to effect such application. The Lender shall not be
obliged to exercise any right given to it by
this
Clause 17
18. Costs and
18.1 The Borrower shall, from time to time on demand of
the Lender, reimburse the Lender for all costs and expenses
(including legal fees) together with any IVA thereon incurred in
or in
connection with the preservation and/or enforcement of any of its
rights under this Agreement.
18.2 The Borrower shall pay all stamp, registration and
other taxes to which this Agreement
or any
judgement given in connection herewith is or at any time
may be subject and shall, from time
to time
on demand, indemnify the Lender against any liabilities,
costs, claims and expenses resulting
from any
failure to pay or any delay in paying any such tax.
19. Benefit of Agreement
This Agreement shall be binding upon and enure to the
benefit of each party hereto and its or
any subsequent successors and assigns.
20. Assignments
20.1 The Borrower shall not be entitled to assign or
transfer all or any of its rights, benefits and obligations
hereunder.
20.2 The Lender may at any time assign all or any of its
rights and benefits hereunder.
21. Calculations and Evidence of Debt
21.1 Interest and commitment commission shall accrue from
day to day and shall be calculated on the basis of a year of 360
days consisting of 12 months of 30 days.
21.2 The Lender shall maintain in accordance with its
usual practice accounts evidencing
the amounts from time to time lent by and owing to it hereunder.
22. Remedies and Waivers
No failure by the Lender to exercise, nor any delay by the
Lender in exercising, any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right or remedy prevent any further or other exercise thereof
or the
exercise of any other right or remedy. The rights and remedies
herein
provided are cumulative and not exclusive of any rights or
remedies provided by law.
I
23. Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the
law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions hereof nor
the legality, validity or enforceability of such provision
under the law of any other jurisdiction shall- in any way be
affected- or
impaired thereby:
24. Notices
24.1 Each communication to be made hereunder shall be
made in writing but; unless otherwise stated, may be made by
telex or letter.
24.2 Any communication or document to be made or delivered
by one person to another pursuant to this Agreement shall
(unless that other person has by fifteen days' written notice to
the one
specified another address) be made or delivered to that other
person at the
address identified with its signature below and shall
be deemed to have been made or delivered at the opening of
business on the business day following the date of despatch
(in the case of any communication made by telefax) or (in the
case of any
communication made by letter) when left at that address or (as
the case may be)
ten days after being deposited in the post postage prepaid in an
envelope
addressed to it at that address Provided that any communication
or document
to be made or delivered by the Borrower to the Lender shall be
effective
only when received by the Lender and then only if the same is
expressly
marked for the attention of the department or officer identified
with the
Lender's signature below (or such other department or officer as
the Lender
shall from time to time specify for this purpose).
THE FIRST SCHEDULE
Condition Precedent Documents
a copy, certified a true copy by a duly authorised of its
[constitutional documents];
(ii) a copy, certified a true copy by a duly authorised of
a Board Resolution of the Borrower approving the
performance of this Agreement and the Debentl
conditions hereof and thereof and authorising a nan
sign this Agreement and any documents to be del
pursuant hereto;
(iii) a certificate of a duly authorised officer of the
BorroN and signatures of the persons authorised to sign, on this
Agreement, the Debenture and any documents Borrower
pursuant hereto or thereto; and
(iv) the Debenture to be executed by the Borrower.
The Borrower
SYSTEAM Sp,
By:
Address: Via de
The Lender
THE SECOND SCHEDULE
Notice of Drawdown
From: Systeam SpA
To: [ ]
Dated:
Dear Sirs,
1. We refer to the agreement (the "Facility
Agreement") dated [], 199[ ] and made between ourselves as
borrower,
[ ] as guarantor and yourselves as lender. Terms defined in
the -Facility Agreement shall have the sairie irieanirig-in this
notice.
2. We hereby give you notice that, pursuant to the
Facility Agreement and on [date of proposed Advance], we wish to
borrow an Advance in the amount of GBP[ ]
upon the terms and subject to the conditions contained therein.
3. We confirm that, at the date hereof, the
representations set out in Clause 14 of the
Facility Agreement are true and no Event of Default or
Potential Event of Default has occurred.
4. We confirm that the Advance is to provide working
capital for the month of [ ] in
excess of that set out in the Business Plan.
5. The proceeds of this drawdown should be credited to
[insert account details].
Yours faithfully
for and on behalf of
Systeam SpA
* Insert only if there are no outstanding Advances.
I
LOANSNG.06
Exhibit 2.9 Acquisition Agreement, dated March 14, 2000, by
and among Mr. J.D. KOEKKOEK, Mr. P.R.M. van
BINSBERGEN, NeSBIC CTE Fund B.V., and CI4NET.COM
Inc.
Dated March 14, 2000
(1) Mr J. D. KOEKKOEK, Mr P.R.M. van BINSBERGEN and
NeSBIC CTE Fund B.V.
(2) CI4NET.COM Inc
ACQUISITION AGREEMENT
relating to
Personal Care Card Nederland Holding BV
McFadden, Pilkington & Ward
City Tower- Level Four
40 Basinghall Street
London EC2V SDE
Tel: 0171638 8788
Fax: 0171638 8799
ACQUISITION AGREEMENT
Date: March 14, 2000
Parties:
1. "The Vendors" The persons or companies whose names and
addresses are set in Schedule 1
2. "The Purchaser" CI4NET.COM Inc. a corporation organized
under the laws of Delaware and having its principal office at One
Rockefeller Plaza, Suite 1600, New York, NY 10020, USA;
Operative provisions:
1 Interpretation
1.1 In this Agreement the following words and expressions have
the following meanings:
"Accounts Date" means December 31,1999;
"Agreement" means this acquisition agreement;
"Business Day" means a day (other than a Saturday or a Sunday) on
which banks generally are open far business in London and
Amsterdam;
"Civil Law Notary" means the civil law notary mentioned in
article 4.2;
"Company" means Personal Care Card Nederland Holding BV;
"Completion Date" means March 27, 2000 or such earlier date as
may be agreed by Parties;
"Consideration Shares" means the shares, credited as fully paid,
in Purchaser to be allotted to the Vendors pursuant to clause
3.1;
"Facility Agreement" means the facility agreement to be entered
into on the Completion Date providing for a medium term loan of
US$2,000,000 to be made by the Purchaser to the Company;
"Group Company" means any company (a) in which a Party has
directly or indirectly (i) a majority shareholding or (ii) has
the control over or (b) that has directly or indirectly (i) the
majority shareholding in or (ii) the control over any Party;
"Intellectual Property" means any patent, patent application,
know-how, trade mark, trade mark application, trade name,
registered design, copyright or other similar industrial or
commercial right;
"Last Accounts" means the non-audited balance sheet, as at the
Accounts Date, and audited profit and loss account for the period
ended on the Last Accounts Date of the Company and the
Subsidiaries,;
"Management Agreements" mean the agreements between each of Mr
Koekkoek and Mr Walraven and the Company to be entered into on
Completion Date;
"Party and Parties" mean the Purchaser and/or the Vendors as the
case may be
"Purchaser's Warranties" mean the warranties and representations
by the Purchaser in clause 7 and Schedule 4;
"Shares" means the issued share capital of the Company as the
same is set out in Schedule 2;
"Subsidiaries" shall mean F'teara Facilities B.V., Family care
Facilities B.V. and Funcare B.V.;
"Taxation" means all forms of taxation, duties, imposts,
withholdings and levies whatsoever, and wherever or whenever
imposed including social security duties, withholdings and
premiums;
"Warranties" means the warranties and representations by the
Vendors in clause 5 and Schedule 3.
1.2 All references in this Agreement to a statutory
provision shall be construed as including references to:
a any statutory modification, consolidation or
re-enactment (whether before or after the date of this Agreement)
for the time being in force;
b all statutory instruments or orders made pursuant to a
statutory provision; and
c any statutory provisions of which a statutory provision
is a consolidation, re-enactment or modification;
1.3 A reference in this Agreement to Dutch GAAP shall be a
reference to the standard accounting practice adopted by the Raad
voor de Jaarverslaglegging.
1.4 Clause headings in this Agreement are for ease of reference
only and do not affect the construction of any provision.
2. Agreement for sale
Subject to the terms and conditions of this Agreement the Vendors
shall sell and the Purchaser shall purchase the Shares, free from
all liens, charges and encumbrances and with all rights attaching
to them, with effect from the date of this Agreement.
3. Purchase consideration
3.1 As purchase consideration parties agreed in December 1999
that the price would be fixed at the than current private
offering price of US$5.- a Share, and that for the sale and
transfer of the Shares by Vendors to Purchaser, Purchaser shall
transfer 2,000,000 Consideration Shares to the Vendors at
Completion. The Consideration Shares shall be allotted as
follows:
Mr J. D. KOEKKOEK: 65,18 % = 1.303.612 Consideration
Shares;
Mr P.R.M. van BINSBERGEN: 0,99 % = 19.765 Consideration
Shares;
NeSBIC CTE Fund B.V.: 33,83 % = 676.623 Consideration
Shares.
3.2 The Consideration Shares shall be issued on terms that they
will rank pari passu in all respects with the common stock of the
CI4NET.COM INC in issue at the date of allotment save as regards
any dividend declared or paid by reference to a record date which
is prior to Completion.
3.3 Each of the Vendors agrees with the Purchaser that he will
not dispose of any of his Consideration Shares other than in
accordance with SEC Regulations and any other laws and
regulations applicable to the trading of the Consideration
Shares.
4. Completion
4.1 Completion of the purchase of the Shares shall take place at
the offices of the Civil Law Notary on the Completion Date.
4.2 The notarial deed of transfer of the Shares will be executed
before Mr. Michel Dick van Waateringe, Civil Law Notary in
Amsterdam, The Netherlands, or a deputy of Mr. Van Waateringe,
Mr. Van Waateringe, is a civil law notary of Holland Van Gijzen
Advocaten en Notarissen, the firm of the external legal advisors
of Purchaser. Vendors acknowledge that they are aware of the
provisions 9 and 10 of the guidelines concerning the association
between civil law notaries and banisters/solicitors as
established by the Royal Professional Association of civil Law
Notaries (Koninklijke Notariele Beroepsorganisatie). Vendors
agree that Holland Van Gijzen Advocaten en Notarissen might in
the future advise and act on behalf of Purchaser with respect to
this Agreement and the execution thereof, including any dispute.
4.3 On the Completion Date the Vendors shall deliver to the
Purchaser:
4.3.1 Relevant authorisations and powers of
attorney (if necessary), and
4.3.2 the resignation letters of the members of the
supervisory board of the Company, each resignation including a
waiver of any non-paid consideration and/or (rights to) damages,
which resignations will be accepted by Purchaser under the
discharge of each member of the supervisory board for its
liability arising out of the performance of its duties fulfilled
in its capacity as member of the supervisory board,
4.4 A shareholders' meeting of the Company and of each of
the Subsidiaries shall be held on the Completion Date at which:
4.4.1 such persons as the Purchaser may nominate
shall be appointed directors of the Company and each of the
Subsidiaries with immediate effect;
4.4.2 such persons as the Purchaser may nominate
shall be appointed members of the supervisory board of the
Company with immediate effect;
4.4.3 the Facility Agreement shall be approved;
4.4.4 each member of the board of directors of each
of the Company and each of the Subsidiaries will be instructed
and granted powers of attorney to represent the Company and the
Subsidiaries with respect to the (entering into the) Facility.
4.5 There shall be delivered to the Purchaser on the
Completion Date:
4.5.1 the Management Agreements duly signed by Mr
Walraven and Mr Koekkoek;
4.5.2 the completed and signed shareholders'
registers of the Company and each of the Subsidiaries.
4.6 The Vendors shall have repaid on the Completion Date all
monies then owing by them to the Company, whether due for payment
or not, if any.
4.7 Upon completion of the matters referred to in clauses 4.2 to
4.6 the Purchaser will deliver to the Vendors the Consideration
Shares.
5. Warranties by the Vendors
5.1 NeSBIC and Mr Koekkoek warrant to the Purchaser that the
Warranties set out in Schedule 3 are true and accurate in all
respects regarding the Company and the Subsidiaries when signing
this Agreement and on the Completion Date and that the contents
of any documents previously provided to the Purchaser are true
and accurate in all respects and fully, clearly and accurately
disclose every matter to which they relate. Mr Binsbergen
warrants to the Purchaser that the Warranty number 1.6 regarding
the title to the Shares, set out in Schedule 3 is true and
accurate in all respects when signing this Agreement and on the
Completion Date.
Each of NeSBIC's and Mr Koekkoek's liability vis a vis Purchaser
is limited to a pro rata part of the damages equal to their
shareholding in the Company. For the purpose of this clause Mr
Koekoek shall be deemed to hold the Shares of Mr Binsbergen in
addition to his own Shares, except with respect to any liability
based on Warranty number 1.6 regarding the title to the Shares,
as set out in Schedule 3, for which Mr Binsbergen shall bear
liability to a pro rata part of his shareholdings in the Company.
5.2 Each of the Warranties is without prejudice to any other
warranty or undertaking and, except where expressly stated, no
clause contained in this Agreement governs or limits the extent
or application of any other clause.
5.3 The rights and remedies of the Purchaser in respect of any
breach of the Warranties shall not be affected by completion of
the purchase of the Shares, by any investigation made by or on
behalf of the Purchaser into the affairs of the Company and/or
the Subsidiaries, by any failure to exercise or delay in
exercising any right or remedy with regard to each and/or any of
the Vendors or by any other event or matter whatsoever, except a
specific and duly authorised written waiver or release.
5.4 No claim shall be made by the Purchaser in respect of the
warranties unless the aggregate damages exceeds DFL 100,000, in
which case the full amount of the damages will due, and in
computing such aggregate individual claims of less than DFL
10,000 shall be ignored, unless multiple claims of less than DFL
10,000 have the same basis and the aggregate of these claims is
more than DFL 10,000 in which case the full aggregate amount will
count for the calculation of the loss of DFL 100,000 as mentioned
above. The maximum total liability ofVendors together is DFL
20,000,000.-.
5.5 No claim shall be made by the Purchaser in respect of the
warranties more than twenty-four months after the Completion
Date, except where there shall be prima facie evidence of fraud
("bedrog") and with the exception of the warranties set out in
Schedule 3 under 1 for which the statue of limitation will be
indefinite and under 4 for which the statue of limitation will be
the statutory period under which the Taxation Authorities will be
able to levy any Taxation and/or costs and interests regarding
the period before the Completion Date.
5.6 In the event of breach of any of the Warranties, each of the
Vendors in the manner as set out in article 5.1 will indemnify
Purchaser for the damages it has suffered and/or will suffer
because of that breach or, to the sole option of Purchaser will
bring the Company and or the Subsidiaries in a situation as if
the relevant Warranty had not been breached. Damages will include
any reasonable legal costs incurred by Purchaser including all
legal fees arising from any legal proceedings.
6. Restrictive Agreement
6.1 For the purpose of assuring to the Purchaser the full
benefit of the business and goodwill of the Company and the
Subsidiaries each of the Vendors undertakes by way of further
consideration for the obligations of the Purchaser under this
Agreement as separate and independent agreements that he will
not:
6.1.1 at any time after the Completion Date disclose to any
person or himself use for any purpose and shall use his best
endeavours to prevent the publication or disclosure of, any
information concerning the business, accounts or finances of the
Company or any of its clients' or customers' transactions or
affairs which may, or may have, come to his knowledge unless
required to do so by law, rules and/or any relevant public
authorities, in which event the Vendor concerned will inform
Purchaser prior to publication or disclosure what information is
to be published or disclosed;
6.1.2 for a period of two years after the Completion Date
either on his own account or for any other person directly or
indirectly solicit, interfere with or endeavour to entice away
from the Company any person who to his knowledge is now or has
during the two years preceding the date of this Agreement been a
client, customer or employee of, or in the habit of dealing with,
any such Company;
6.1.3 The Vendors and/or their Group Companies, with the
exception of NeSBIC and its Group Companies, shall not directly
or indirectly work for or offer services to competitors of the
Company and/or the Subsidiaries and shall not, either during or
within 2 (two) years after the Completion Date, directly or
indirectly, engage in activities competing with the business of
the Company and/or its Subsidiaries, either on its own account or
for others, all over the world (taking into consideration the
global nature of the activities and that they can be performed
anywhere) except on behalf of and for the Company or as an
investment only in a listed company.
6.2 In the event Vendors and/or their Group Companies breach
article 6.1 of the Agreement the Vendor concerned will forfeit a
penalty not open to judicial moderation of DF'L one million for
each breach and of DFL 250,000 for each day, part of a day to be
calculated as a complete day, the breach continues, without any
notice of default being necessary and notwithstanding the rights
of Purchaser, the Company or the Subsidiaries to demand full
damages.
7. Purchaser's Warranties
7.1 Purchaser warrants to the Vendors that the Purchaser's
Warranties set out in Schedule 4 are true and accurate and not
misleading in all respects regarding the Purchaser and the
Consideration Shares when signing this Agreement and on the
Completion Date.
7.2 Purchaser shall indemnify the Vendors for any damages,
including but not limited to, any expenses (including but not
limited to reasonable attorney's fees) incurred in respect of any
misrepresentation, breach of warranty contained in this
Agreement, (including Schedule 4), failure to perform or
violation of any agreement or covenant on the part of the
Purchaser, under the Agreement.
7.3 The representations, warranties and undertakings of
Purchaser and the indemnification herein shall survive Completion
for a period of two years, unless:
(a) within such period a demand pursuant to this article has
been made by Vendors against Purchaser and proceedings have been
instituted within six month upon making such demand in which case
the indemnification therefor shall survive beyond the period of
two years until a final agreement is reached or full payment has
been made in accordance with a final judgement, as the case may
be; or
(b) Purchaser has settled the claims of the Vendors in
accordance with the provisions of this clause.
8. General
8.1 No announcement of any kind shall be made in respect of the
subject matter of this Agreement unless specifically agreed
between the Parties. Any announcement by either Party shall in
any event be issued only after prior consultation with the other
Parties.
8.2 If any of the Shares shall at any time be sold or
transferred to Group Companies of Purchaser, the benefit of each
of the Warranties may be assigned to the purchaser or transferee
of those Shares who shall accordingly be entitled to enforce each
of the Warranties against the Vendors as if he were named in this
Agreement as the Purchaser, but not otherwise.
8.3 This Agreement shall be non-assignable, without the prior
written agreement of the other Parties with the exception that
Purchaser is allowed to assign and transfer its rights and
obligations hereunder to a Group Company, without the consent of
the Vendors, prior thereto or otherwise.
8.4 Save where expressly otherwise provided, all expenses
incurred by or on behalf of the Parties, including all fees or
agents, representatives, solicitors, accountants and actuaries
employed by any of them in connection with the negotiation,
preparation or execution of this Agreement shall be borne solely
by the Party who incurred the liability and the Company shall not
have any liability in respect of them. The costs of the Civil Law
Notary will be equally split between Purchaser and Vendors.
8.6 Any notice required to be given by any of the Parties under
this Agreement may be sent by fax or post to the address of the
addressee as set out in Schedule 1 to this Agreement or to such
other address as the addressee may from time to time have
notified for the purpose of this clause: Communications sent by
post shall be deemed to have been received two Business Days
after posting. In proving service by post it shall only be
necessary to prove that the communication was contained in an
envelope which was duly addressed and posted in accordance with
this clause.
8.7 The failure of either Party to enforce at any time the
provisions of this Agreement, or the failure to require at any
time performance by the other Party of any of the provisions of
this Agreement, shall in no way be constituted to be a present or
future waiver of such provisions, nor in any way affect the
validity of either Party to enforce each and every such
provision.
8.8 Any amendment of this Agreement is valid only, if the
amendment is in writing and signed on behalf of each Party.
8.9 If any paragraph, provision or clause of this Agreement is
found or held to be invalid or unenforceable, the Parties agree
that the remainder of this Agreement shall be valid and
enforceable.
8.10 Parties waive their rights to seek dissolution of this
Agreement.
8.11 This Agreement can be executed in two (2) or more
counterparts, all of which taken together, shall be as effective
as if all signatures on the counterparts were on a single copy of
this Agreement.
8.12 The considerations in, and all Schedules to the Agreement
form an integral part of the Agreement. References to this
Agreement include references to the Schedules.
8.13 This Agreement including all Schedules and Annexes,
supersedes any and all other agreements, oral or written, between
the Parties hereto, and contains the entire Agreement with
respect to the subject matter hereof.
8.14 If any provision of this Agreement is or becomes, at any
time and under any laws, rules or regulations, unenforceable or
invalid in any jurisdiction in which the Parties are located or
in which this Agreement is being performed, the remainder of this
Agreement shall be valid and enforceable. Parties shall negotiate
in good faith in order to come to a mutual agreement on a
substitute, valid and enforceable provision which most nearly
effects the Parties' intent in entering into this Agreement.
9 Jurisdiction, Competent court
The operative law relating to this Agreement shall be that of the
Netherlands and the Parties hereby submit to the exclusive
jurisdiction of the District Court of Amsterdam, the Netherlands.
AS WITNESS the hands of the Parties hereto or their duly
authorised representatives on the date set out above
Signed by Mr. J.D. Koekkoek
Signed by Mr. Van Vark for and
on behalf of NESBIC CONVERGING
TECHNOLOGIES EUROPE (CTE) FUND B.V.
Signed by Mr. J.D. Koekkoek for and on behalf of Mr. P.R.M. van
Binsbergen
Signed by Mr. L.J. Cole
for and on behalf of CI4NET.COM INC
SCHEDULE I
Vendors' holdings
Vendor's Name Vendor's Address
J.D. Koekkoek ("Koekkoek") "Sonnehardt" Hertog Hendriklaan 8
1217 CT Hilversum Nesbic Converging Technologies Savannahwe8 17,
Utrecht, Europe (CTE) Fund B.V. ("Nesbic") Attention: Frank
Verschuur P.R.M. van Binsbergen ("Binsbergen") Eikenlaan 28,
5263 GN Vught
Notices Addresses as meant Article 8.6:
Vendor's Addresses as above
copy of any correspondence to:
Mr H. Vreeman
P.O. Box 74600, 1070 DE Amsterdam
Purchaser's Address 34 Haymarket London
attention: Lee Cole
SW17 4TP Coay 10
copy of any correspondence to:
Mr Andrew Mac Laren
City Tower, Level four, 40 Basinghall Street
London EC 2V SDE
Vendor's Name Vendor's shareholdings
A B C
Koekkoek: 28,801 484
Nesbic: 10,755 4,445
Binsbergen: 444 +
Total 40,000 4,445 484
SCHEDULE 2
Details of Personal Care Card Nederland Holding BV
Chamber of Commerce number: 32066578
Date of incorporation: 29-01-1996
Share capital:
Authorised: NLG 200,000
Issued: 40,000 A Shares, 4,445 B Shares and 484
C Shares
Registered office: Noordse Bosje 43, le etage
1211 BE Hilversum
Directors: Mr W.A. Walraven
SCHEDULE 3
Warranties
1. Corporate Matters
1.1 The information relating to the Company contained in
Schedules 1 and 2 are true and complete in all respects.
1.2 The Shares constitute the whole of the issued and allotted
share capital of the Company.
1.3 There are no agreements or arrangements in force, other than
this Agreement, which grant to any person the right to call for
the issue, allotment or transfer of any share or loan capital of
the Company and or the Subsidiaries. This warranty specifically
includes and is also valid with respect to the disclosed option
schemes of Mr Walraven and Mr Eek, with whom adequate and
satisfactory arrangements have been made by Vendors and who have
discharged the Company and/or Subsidiaries.
1.4 The register of shareholders and other statutory books of
the Company and the Subsidiaries have been properly kept and
contain an accurate and complete record of the matters with which
they should deal; and no notice or allegation, that any of them
is incorrect or. should be rectified, has been received. The
current and valid articles of association of the Company and the
Subsidiaries have been presented in the due diligence
investigation.
1.5 All returns, particulars, resolutions and documents required
by any legislation to be filed with the Chamber of Commerce or
other registration offices in respect of the Company and the
Subsidiaries have been duly filed and were correct.
1.6 The Vendors are the full and unencumbered owners of the
Shares, the Shares are free of any usufruct, lien, attachment,
charge or other restriction and or limitation and Purchaser will
receive full, unencumbered and complete title.
1.7 The Company is the only shareholder in each of the
Subsidiaries and the shares in the Subsidiaries are free of any
usufruct, lien, attachment, charge or other restriction and/or
limitation.
1.8 The Company and the Subsidiaries are fully incorporated
companies with limited liability (besloten vennootschap met
beperkte aansprakelijkheid), validly existing under the laws of
The Netherlands.
1.9 No order has been made, petition presented or resolution
passed for the bankruptcy (f'aillissement), dissolution
(ontbinding en vereffening), moratorium of payments (surs9ance
van betaling) of the Company and/or a Subsidiary.
1.10 No resolutions to merge with an other company, to amend the
articles of association, to legally split the Company or the
Subsidiaries or to dissolve the Company or the Subsidiaries were
taken by their general meetings of shareholders nor is any action
being taken by any Chamber of Commerce in the Netherlands to
dissolve the Company or the Subsidiaries.
1.11 The Company and the Vendors have the right, power and
authority and have taken all action necessary to execute and
deliver this Agreement and each document to be executed by them
at or before the Completion Date.
1.12 Vendors warrant (i) each for itself that the entering into
this Agreement by it and its performance of its obligations in
this Agreement does not and will not breach or conflict with any
obligation to which it is subjected, and (ii) that this Agreement
does not and will not breach or conflict with any obligation to
which the Company or the Subsidiaries are subjected.
1.13 Since the date of incorporation of each the Company and the
Subsidiaries all annual general meetings of shareholders have
been held in accordance with the relevant provisions in law and
its articles of association and all other shareholders' and
corporate action required by law or by its articles of
association have been taken when necessary or required to be
taken. Since its date of incorporation, each of the Company and
the Subsidiaries have materially complied with all the provisions
of its deed of incorporation and articles of association, and
have not entered into or performed any ultra vires
transaction(s).
2. Accounting Matters
2.1 The Last Accounts have been prepared in accordance with
the historical cost convention; and the bases and policies of
accounts, adopted for the purpose of preparing the Last Accounts,
are the same as those adopted in preparing the audited accounts
of the Company and the Subsidiaries in respect of the three last
preceding accounting periods.
2.2 The Last Accounts:
2.2.1 give a true and fair view of the assets, liabilities
(including contingent unquantified or disputed liabilities) and
commitments of the Company and the Subsidiaries at the Last
Accounts Date and its profits and losses for the financial period
ended on the date;
2.2.2 comply with all current Dutch GAAP applicable to a
Netherlands company;
2.2.3 properly reflect the financial position of the Company
and the Subsidiaries as at their date.
2.3 All the accounts, books, ledgers, financial and other
records, of whatsoever kind,of each the Company and the
Subsidiaries are in its possession and give a true and fair view
of its financial position.
2.4 The annual accounts of the Company and the Subsidiaries
have been timely deposited with the Chamber of Commerce in
accordance with articles 2:394 and 2:395 of the Dutch civil code.
2.5 Since November 30, 1999 no material adverse changes in
the financial revenue of the Company and subsidiaries have
occurred.
3. Financial Matters
3.1 Except as disclosed to the Purchaser in the attached
Annex 1 ("Disclosure Letter"), the Company and the Subsidiaries
have no capital commitments outstanding at the Last Accounts Date
and has not since then, incurred or agreed to incur any capital
expenditure or commitments or disposed of any capital assets.
3.2 Except as disclosed to the Purchaser in the Disclosure
Letter, since the Last Accounts Date the Company has not paid or
declared any dividend or made any other payment which is, or can
be considered as a distribution as meant m article 2:216 of the
Dutch civil code.
3.3 Except as disclosed to the Purchaser in the Attached
Letter, the Company and the subsidiaries have not since the Last
Accounts Date, repaid, or become liable to repay, any
indebtedness in advance of its stated maturity.
3.4 There are no liabilities (including contingent
liabilities) which are outstanding on the part of the Company
and/or the Subsidiaries other than those liabilities disclosed in
the Last Accounts or incurred in the ordinary and proper course
of trading since the Last Accounts Date.
3.5 None of the facilities available to the Company or the
Subsidiaries are dependent on the guarantee or indemnity of, or
any security provided by, a third party, with the exception of a
guarantee in the amount of US$150,000.- to the financing bank of
the Company.
3.6 The amounts now due from debtors will be recoverable in
full in the ordinary course of business, and in any event not
later than twelve weeks from the date of this Agreement, unless
provided for in the Last Accounts.
3.7 Other than in the normal course of business, there is not
now outstanding in respect of the Company any guarantee, or
agreement for indemnity or for suretyship, given by, or for the
accommodation of, the Company.
4. Taxation Matters
4.1 Except as disclosed to the Purchaser in the attached
Disclosure Letter, the Last Accounts make full provision or
reserve for all Taxation (including deferred Taxation) which is
liable to be or could be assessed on the Company and/or each of
the Subsidiaries, or for which it may be accountable, in respect
of the period ended on the Last Accounts Date.
4.2 All returns, computations, withholdings and payments which
should be, or should have been, made by the Company and each
Subsidiary for any Taxation purpose have been made within the
requisite periods and are up-to-date, correct and on a proper
basis and none of them is, or is likely to be, the subject of any
dispute with the relevant Taxation authorities.
4.3 The Company and each of the Subsidiaries have duly deducted
and accounted for all amounts which it has been obliged to deduct
in respect of Taxation and, in particular, have properly deducted
tax and social security premiums, as required by law, from all
payments made, or treated as made, to its employees, officials or
former employees, and accounted to relevant Taxation authorities
for all tax and social security premiums so deducted and for all
tax and social security premiums chargeable on benefits provided
for its employees or former employees, including but not limited
to any payments made under any management agreement or similar
understanding.
4.4 Except as disclosed in the Disclosure Letter, the Company
and the Subsidiaries are not, nor will become, liable to pay, or
make reimbursement or indemnity in respect of, any Taxation (or
amounts corresponding thereto) in consequence of the failure by
any other person (not being a group company) to discharge that
Taxation within any specified period or otherwise, where such
Taxation relates to a profit, income or gain, transaction, event,
omission or circumstance arising, occurring or deemed to arise or
occur (whether wholly or partly) on or prior to the date of this
Agreement.
4.5 The Company and each Subsidiary have not, since the Last
Accounts Date, incurred or are, or have become, liable to incur
after that date expenditure which will not be wholly deductible
in computing its taxable profits except for expenditure on the
acquisition of an asset to be held otherwise than as
stock-in-trade.
4.6 The Company has not entered into any transaction that could
trigger the application of the Sixteenth Standard condition for
Fiscal Unity under the Dutch Corporate Income Tax Act (as
published in the Staatscourant no 189 of 1991) or the equivalent
of this article under the predecessors of these Standard
Conditions.
5.6 The Company has conducted and is conducting its business in
all respects in accordance with all applicable laws and
regulations, whether of the Netherlands or elsewhere, including
any privacy laws.
5.7 No power of attorney given by the Company is in force,
except as disclosed in the attached letter Disclosure Letter or
registered at the Chamber of Commerce.
5.8 There are no outstanding authorities (express or implied) by
which any person may enter into any contract or commitment to do
anything on behalf of the Company.
5.9 The Company is not, nor will with the lapse of time become
in default in respect of any obligation or restriction binding
upon it, unless provided for.
5.10 The Company is not a party to, not have its profits or
financial position during the three years prior to the date
hereof been affected by, any contract or arrangement which is not
of an entirely arm's length nature, with the possible exeption of
the financing by the Vendors.
5.11 The Company and the Subsidiaries have in total at least 5400
cardholders.
5.12 The supplier agreements with Cendant BRC and HS B are valid>
have not been terminated, nor is any termination expected or
foreseeable.
5.13 The Company and Subsidiaries have the full and unencumbered
legal ownership of the databases) kept by HSB.
6 Employment Matters
6.1 A list containing the full particulars of the identities,
dates of commencement of employment, or appointment to office,
and terms and conditions of employment of all the employees and
officers of the Company and the Subsidiaries, including without
limitation profit sharing, commission or discretionary bonus
arrangement as disclosed in the Disclosure Letter.
6.2 The rate of remuneration, emoluments, pension benefits and
all (other) commitments whether accepted or not of any personnel
including officers of the Company and Subsidiaries as per
February 25, 2000 are as disclosed in an attachment to the
Disclosure Letter and no personnel and /or officers are omitted
from this Letter and no material change has occurred since
February 25, 2000.
6.3 The Company or the Subsidiaries are not bound or accustomed
to pay any monies other than in respect of remuneration, or
emoluments of employment, or pension benefits, to, or for the
benefit of, any of its officers or employees.
6.4 The Company or each of the Subsidiaries are not 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, to or for any of its
past or present officers or employees or their dependants in the
attached Disclosure Letter; and there are no retirement benefit,
or pension or death benefit, or similar schemes or arrangements
in relation to, or binding on, the Company or to which the
Company contributes.
6.5 There are no back service obligations with regard to
pensions.
7. Asset Matters
7.1 The Company and Subsidiaries owned at the Last Accounts
Date, and had good and marketable title to, all the assets
included in the Last Accounts, and (except for current assets
subsequently sold or realised in the ordinary course of business)
still owns and has good and marketable title to them and to all
assets acquired since the Last Accounts Date.
7.2 To the best of Vendors' knowledge, the Company and the
Subsidiaries are now, and have at all material times been,
adequately covered against accident, damage, injury, third party
loss (including product liability) loss of profits and other
risks normally insured against by persons carrying on the same
business as that carried on by the Company and the Subsidiaries.
7.3 All insurances are currently in full force and effect,
and to the best of Vendors' knowledge nothing has been done or
omitted to be done which could make any policy or insurance void
or voidable, or which is likely to result in an increase in
premium. The Company or the Subsidiaries have never been refused
an insurance.
7.4 No claim is outstanding, or may be made, under any of
the insurance policies and to the best knowledge of Vendors no
circumstances exist which are likely to give rise to a claim.
8. Property Matters
8.1 Except for the lease agreements disclosed in the
Disclosure Letter, the Company and the Subsidiaries are not party
to any other agreement concerning the rent, the acquisition, the
ownership or otherwise in connection with real estate(onroerende
taken)
8.2 The Company and Subsidiaries have duly and punctually
performed and observed all covenants, conditions, agreements,
statutory requirements, planning consents, by-laws, orders and
regulations with regard to the leased property to the best of
Vendors' knowledge, and no notice of any breach of any such
matter has been received.
8.3 The use the leased property is the permitted use under
the lease agreement and in accordance with any planing acts.
8.4 There are no compulsory purchase notices, orders and
resolutions affecting the leased property.
9. Intellectual Property Rights and Trade Secrets
9.1 All intellectual property rights set forth in the Disclosure
Letter are in full force and effect and are vested in and
beneficially owned by the Company and the Subsidiaries. The
Company and the Subsidiaries are registered as proprietor of the
intellectual property rights specified on the Disclosure Letter
and each of those rights is valid and enforceable, and none of
them is being used, claimed, opposed or attached by any other
person, except as disclosed in the Disclosure Letter.
9.2 No right or licence has been granted to any person by the
Company and the Subsidiaries to use in any manner or to do
anything which would or might otherwise infringe any of the
intellectual property rights referred to above; and no act has
been done or omission permitted by the Company or the
Subsidiaries whereby they or any of them have ceased or might
cease to be valid and enforceable.
9.3 The business of the Company and the Subsidiaries (and of any
licensee under a licence granted by the Company) as now carried
on does not and is to the best of Vendors' knowledge not likely
to infringe any intellectual property right of any other person
(or would not do so if the same were valid) or give rise to a
liability to pay compensation and all licences to the Company in
respect of any such Right are in full force and effect.
9.4 The Company and the Subsidiaries have not (otherwise than in
the ordinary and normal course of business) disclosed or
permitted to be disclosed or undertaken or arranged to disclose
to any person other than the Purchaser any of its know how, trade
secrets, confidential information, price lists except as
necessary in the ordinary cause of bussiness or lists of
customers or suppliers.
9.5 The Company and/or each of the Subsidiaries are not a party
to any secrecy agreement or agreement which may restrict the use
of disclosure of information except as disclosed in the attached
Disclosure Letter (Schedule [ ]).
9.6 Nothing has been done or omitted by the Company and/or each
of the Subsidiaries which would enable any licensee under a
licence granted by the Company and/or the Subsidiaries to be
terminated or which in any way constitutes a breach of terms of
any licence.
10. General Matters
10.1 All information given by any of the Vendors, or the Vendors'
advisors to the Purchaser, or the Purchaser's advisors relating
to the business, activities, affairs, or assets or liabilities of
the Company was, when given, accurate and comprehensive in all
respects.
10.2 There are no material facts or circumstances, in relation to
the assets, business or financial condition of the Company and/or
each of the Subsidiaries, which have not been fully and fairly
disclosed in writing to the Purchaser and which, if disclosed,
might reasonably have been expected to affect the decision of the
Purchaser to enter into this Agreement.
SCHEDULE4
All definitions used in this Schedule shall have the same meaning
as ascribed to them in the Acquisition Agreement to which it is
attached.
Purchaser
Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
Purchaser has the requisite power and authority to create, issue,
offer and use the the Consideration Shares as consideration for
the Shares.
Consideration Shares
The Consideration Shares will be validly issued and outstanding,
fully paid and non-assessable and will not be subject to any
pre-emptive or similar right, or exercise thereof, free and clear
of any lien, except as may have been created by the holder
thereof and such restrictions on transfer as may be imposed under
federal securities laws or state securities laws.
Required authorization
All authorizations, consents and approvals required by Purchaser
for or in connection with the creation and issue of the
Consideration Shares, the execution of the Acquisition Agreement,
the performance by Purchaser of the obligations undertaken by it
herein have been obtained and are in full force and effect.
Neither the nature of Purchaser, nor of any of its respective
businesses, nor any relationship between Purchaser and any other
person nor any circumstance in connection with the execution and
delivery of the Consideration Shares is such as to require a
consent, approval or authorization of, any governmental authority
on part of Purchaser as a condition to the execution and delivery
of this or the offer, issue, sale or delivery of any of the
Consideration Shares.
Confidential Offering Memorandum
To the best of the knowledge and belief of the Purchaser, the
Confidential Offering Memorandum dated January, 2000, is true and
accurate in all material respects and is not misleading in any
material respect in light of the circumstances under which the
statements contained therein were made; any opinions, predictions
or intentions expressed in the Offering Memorandum are true and
honestly held or made and are not misleading in any material
respect and have been made after due and careful consideration of
all relevant factors known to CI4Net; the Offering Memorandum
does not contain any untrue statement of a material fact and does
not omit to state any material fact necessary to make such
information not misleading in any material respect in light of
the circumstances under which such statements were made.
Parties understand and agree that the reference to the
Confidential Offering Memorandum does not and will not create any
liability under and/or in connection with laws other than Dutch
law.
Dividends, distribution of profits
Purchaser did not declare any dividend or other distribution
which has not been fully paid, nor do any rights to distribution
from reserves or from profits, including but not limited to
bonuses, exist.
Shareholders decisions
There are no decisions of the general meeting of shareholders of
Purchaser, or of any other body of Purchaser, which have not been
fully carried out.
No misrepresentation
To the best of Purchaser's knowledge, no representation or
warranty by Purchaser in the Acquisition Agreement, or in any
Exhibit or other document furnished relating to the transaction
contemplated hereby, contains or will as of Closing Date contain,
any untrue statement of any material fact or omits or will, as of
Closing Date, omits to state a material fact or event necessary
to make the statements contained therein not misleading.
Breach of Schedule 3
To the best knowledge of Purchaser, Vendors are not in breach of
any of the representations and Warranties contained in Schedule
3.
Exhibit 3.1 Certificate of Incorporation of Ci4net.com Inc.,
and all amendments thereto.
State of Delaware
Office of the Secretary of State
I, EDWARD J.FREEL, SECRETARY OF STATE OF THE DELAWARE, DO HEREBY
CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS
ON FILE OF "CI4NET.COM INC." AS RECEIVED AND FILED IN THIS
OFFICE.
THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:
CERTIFICATE OF INCORPORATION, FILED THE TWENTY-NINTH DAY OF
DECEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE NINTH DAY OF SEPTEMBER,
A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "OVERSTREET
BUSINESS SYSTEMS INC." TO "DISNET INC.", FILED THE SIXTH DAY OF
NOVEMBER, A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF RESIGNATION OF REGISTERED AGENT WITHOUT
APPOINTMENT, FILED THE TENTH DAY OF DECEMBER, A.D. 1997 AT 9
O'CLOCK A.M.
CERTIFICATE OF RENEWAL, FILED THE FOURTH DAY OF DECEMBER,
A.D. 1998, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "DISENT INC." TO
"LEISURE CONCEPTS INTERNATIONAL INC.", FILED THE FIFTEENTH DAY OF
DECEMBER, A.D. 1998, AT 9 O'CLOCK A.D.
_______Signed________________
Edward J. Freel, Secretary of state
AUTHENTICATION: 0298002
DATE: 03-06-00
2577480 8100H
001112171
State of Delaware
Office of the Secretary of State
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "LEISURE
CONCEPTS INTERNATIONAL INC." TO "CI4NET.COM INC.", FILED THE
SECOND DAY OF DECEMBER, A.D. 1999, AT 9'OCLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE TENTH DAY OF DECEMBER,
A.D. 1999, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE SEVENTH DAY OF JANUARY,
A.D. 2000, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE ELEVENTH DAY OF
FEBRUARY, A.D. 2000, AT 3:15 O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE TWENTY-FIFTH DAY OF
FEBRUARY, A.D. 2000, AT 1 O'CLOCK P.M.
_______Signed________________
Edward J. Freel, Secretary of state
AUTHENTICATION: 0298002
DATE: 03-06-00
2577480 8100H
001112171
Exhibit 3.1 Certificate of Incorporation of Ci4net.com Inc.,
and all amendments thereto.
State of Delaware
Office of the Secretary of State
I, EDWARD J.FREEL, SECRETARY OF STATE OF THE DELAWARE, DO HEREBY
CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS
ON FILE OF "CI4NET.COM INC." AS RECEIVED AND FILED IN THIS
OFFICE.
THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:
CERTIFICATE OF INCORPORATION, FILED THE TWENTY-NINTH DAY OF
DECEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE NINTH DAY OF SEPTEMBER,
A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "OVERSTREET
BUSINESS SYSTEMS INC." TO "DISNET INC.", FILED THE SIXTH DAY OF
NOVEMBER, A.D. 1996, AT 9 O'CLOCK A.M.
CERTIFICATE OF RESIGNATION OF REGISTERED AGENT WITHOUT
APPOINTMENT, FILED THE TENTH DAY OF DECEMBER, A.D. 1997 AT 9
O'CLOCK A.M.
CERTIFICATE OF RENEWAL, FILED THE FOURTH DAY OF DECEMBER,
A.D. 1998, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "DISENT INC." TO
"LEISURE CONCEPTS INTERNATIONAL INC.", FILED THE FIFTEENTH DAY OF
DECEMBER, A.D. 1998, AT 9 O'CLOCK A.D.
_______Signed________________
Edward J. Freel, Secretary of state
AUTHENTICATION: 0298002
DATE: 03-06-00
2577480 8100H
001112171
State of Delaware
Office of the Secretary of State
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "LEISURE
CONCEPTS INTERNATIONAL INC." TO "CI4NET.COM INC.", FILED THE
SECOND DAY OF DECEMBER, A.D. 1999, AT 9'OCLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE TENTH DAY OF DECEMBER,
A.D. 1999, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE SEVENTH DAY OF JANUARY,
A.D. 2000, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE ELEVENTH DAY OF
FEBRUARY, A.D. 2000, AT 3:15 O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE TWENTY-FIFTH DAY OF
FEBRUARY, A.D. 2000, AT 1 O'CLOCK P.M.
_______Signed________________
Edward J. Freel, Secretary of state
AUTHENTICATION: 0298002
DATE: 03-06-00
2577480 8100H
001112171
Exhibit 3.2 - By-Laws Ci4net.com, Inc.
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in the
State of Delaware shall be at 30 Old Rudnick Lane, Dover,
Delaware 19901. The registered agent in charge thereof shall be
Corp. America Inc.
Section 2. The corporation may also have offices at such
other places as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders shall be held at the
registered office of the corporation in this state or at such
place, either within or without this state, as may be selected
from time to time by the Board of Directors.
Section 2. ANNUAL MEETINGS: The annual meeting of the
stockholders shall be held on the 30th day of December in each
year if not a legal holiday, and if a legal holiday, then on the
next secular day following at 11 o'clock a.m.., when they shall
elect a Board of Directors and transact such other business as
may properly be brought before the meeting. If the annual
meeting for election of directors is not held on the date
designated therefor, the directors shall cause the meeting to be
held as soon thereafter as convenient.
Section 3. ELECTION OF DIRECTORS: Elections of the directors of
the corporation will be by written ballot.
Section 4. SPECIAL MEETINGS: Special meetings of the stock-
holders may be called at any time by the President, or the Board
of Directors, or stockholders entitled to cast votes at the
particular meeting. At any time, upon written request of any
person or persons who have duly called a special meeting, it
shall be the duty of the Secretary to fix the date of the
meeting, to be held not more than sixty days after receipt of
the request, and to give due notice thereof. If the Secretary
shall neglect or refuse to fix the date of the meeting and give
notice thereof, the person or persons calling the meeting may do
so.
Business transacted at all special meetings shall be confined to
the objects stated in the call and matters germane thereto,
unless all stockholders entitled to vote are present and
consent.
Written notice of a special meeting of stockholders stating the
time and place and object thereof, shall be given to each
stockholder entitled to vote thereat at least 14 days before
such meeting, unless a greater period of notice is required by
statute in a particular case.
Section 5. QUORUM: A majority of the outstanding shares of
the corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders.
If less than a majority of the outstanding shares entitled to
vote is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
noticed. The stockholders present at a duly organized meeting
may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
Section 6. PROXIES: Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize
another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable proxy
regardless of whether the interest with which it is coupled is
an interest in the stock itself or an interest in the
corporation generally. All proxies shall be filed with the
Secretary of the meeting before being voted upon.
Section 7. NOTICE OF MEETINGS: Whenever stockholders are
required or permitted to take any action at a meeting, a written
notice of the meeting shall be given which shall state the
place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting
is called.
Unless otherwise provided by law, written notice of any meeting
shall be given not less than ten nor more than sixty days before
the date of the meeting to each stockholder entitled to vote at
such meeting.
Section 8. CONSENT IN LIEU OF MEETINGS: Any action required to
be taken at any annual or special meeting of stockholders of a
corporation, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed
by the holders of outstanding stock having not less that the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders
who have not consented in writing.
Section 9. LIST OF STOCKHOLDERS: The officer who has charge of
the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of
each stockholder. No share of stock upon which any installment
is due and unpaid shall be voted at any meeting. The list shall
be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
ARTICLE IV - DIRECTORS
Section 1. The business and affairs of this corporation
shall be managed by its Board of Directors, three in number.
The directors need not be residents of this state or
stockholders in the corporation. They shall be elected by the
stockholders at the annual meeting of stockholders of the
corporation, and each director shall be elected for the term of
one year, and until his successor shall be elected and shall
qualify or until his earlier resignation or removal.
Section 2. REGULAR MEETINGS: Regular meetings of the Board
shall be held without notice at the registered office of the
corporation, or at such other time and place as shall be
determined by the Board.
Section 3. SPECIAL MEETINGS: Special Meetings of the Board
may be called by the President on 14 days notice to each
director, either personally or by mail or by telegram; special
meetings shall be called by the President or Secretary in like
manner and on like notice on the written request of a majority
of the directors.
Section 4. QUORUM: A majority of the total number of
directors shall constitute a quorum for the transaction of
business.
Section 5. CONSENT IN LIEU OF MEETING: Any action required
or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a
meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or
committee. The Board of Directors may hold its meetings, and
have an office or offices, outside of this state.
Section 6. CONFERENCE TELEPHONE: One or more directors may
participate in a meeting of the Board, of a committee of the
Board or of the stockholders, by means of conference telephone
or similar communications equipment by means of which all
persons participating in the meeting can hear each other;
participation in this manner shall constitute presence in person
at such meeting.
Section 7. COMPENSATION: Directors, as such, shall not receive
any stated salary for their services, but by resolution of the
Board, a fixed sum and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the
Board PROVIDED, that nothing herein contained shall be construed
to preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Section 8. REMOVAL: Any director or the entire Board of
Directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election
of directors, except that when cumulative voting is permitted,
if less than the entire Board is to be removed, no director may
be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at
an election of the entire Board of Directors, or, if there be
classes of directors, at an election of the class of directors
of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall
be chosen by the directors and shall be a President, Secretary
and Treasurer. The Board of Directors may also choose a
Chairman, one or more Vice Presidents and such other officers as
it shall deem necessary. Any number of offices may be held by
the same person.
Section 2. SALARIES: Salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
Section 3. TERM OF OFFICE: The officers of the corporation
shall hold office for one year and until their successors are
chosen and have qualified. Any officer or agent elected or
appointed by the Board may be removed by the Board of Directors
whenever, in its judgment, the best interest of the corporation
will be served thereby.
Section 4. PRESIDENT: The President shall be the chief
executive officer of the corporation; he shall preside at all
meetings of the stockholders and directors; he shall have
general and active management of the business of the
corporation, shall see that all orders and resolutions of the
Board are carried into effect, subject, however, to the right of
the directors to delegate any specific powers, except such as
may be by statute exclusively conferred on the President, to any
other officer or officers of the corporation. He shall execute
bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation. He shall be EX-OFFICIO a member of all
committees, and shall have the general power and duties of
supervision and management usually vested in the office of
President of a corporation.
Section 5. SECRETARY: The Secretary shall attend all sessions of
the Board and all meetings of the stockholders and act as clerk
thereof, and record all the votes of the corporation and the
minutes of all its transactions in a book to be kept for that
purpose, and shall perform like duties for all committees of the
Board of Directors when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and of the
Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or President, and under
whose supervision he shall be. He shall keep in safe custody
the corporate seal of the corporation, and when authorized by
the Board, affix the same to any instrument requiring it.
Section 6. TREASURER: The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation, and shall keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall
disburse the funds of the corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall
render to the President and directors, at the regular meetings
of the Board, or whenever they may require it, an account of all
his transactions as Treasurer and of the financial condition of
the corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall
be filled by the Board of Directors. Vacancies and newly
created directorships resulting from an increase in the
authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by
a sole remaining director. If at any time, by reason of death
or resignation or other cause, the corporation should have no
directors in office, then any officer or any stockholder or an
executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of
stockholders in accordance with the provisions of these By-
law's.
Section 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one
or more directors shall resign from the Board, effective at a
future date, a majority of the directors then in office,
including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by
attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual
hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its
other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a stockholder. In every
instance where an attorney or other agent shall be the person
who seeks the right to inspection, the demand under oath shall
be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf
of the stockholder. The demand under oath shall be directed to
the corporation at its registered office in this state or at its
principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDEND, ETC.
Section 1. The stock certificates of the corporation shall
be numbered and registered in the share ledger and transfer
books of the corporation as they are issued. They shall bear
the corporate seal and shall be signed by the President and
Secretary.
Section 2. TRANSFERS: Transfers of shares shall be made on the
he books of the corporation upon surrender of the certificates
therefor, endorsed by the person named in the certificate or by
attorney, lawfully constituted in writing. No transfer shall be
made which inconsistent with law.
Section 3. LOST CERTIFICATE: The corporation may issue a new
certificate of stock in the place of any certificate signed by
it, alleged to have been lost, stolen or destroyed, and the
corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of
such new certificate.
Section 4. RECORD DATE: In order that the corporation may
determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board
of Directors may fix, in advance, a record date, which shall not
be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other
action.
If no record date is fixed-.
(a) The record date for determining stockholders
entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day
next preceding the day on which notice is given, if
notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(b) The record date for determining stockholders
entitled to express consent to corporate action in
writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on
which the first written consent is expressed.
(c) The record date for determining stockholders for
any other purpose shall be at the close of business on
the day on which the Board of Directors adopts the
resolution relating thereto.
(d) A determination of stockholders of record
entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 5. DIVIDENDS: The Board of Directors may declare
and pay dividends upon the outstanding shares of the
corporation, from time to time and to such extent as they deem
advisable, in the manner and upon the terms and conditions
provided by statute and the Certificate of Incorporation.
Section 6. RESERVES: Before payment of any dividend there may
be set aside out of the net profits of the corporation such sum
or sums as the directors, from time to time, in their absolute
discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests
of the corporation, and the directors may abolish any such
reserve in the manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. CHECKS: All checks or demands for money and notes of
the corporation shall be signed by such officer or officers as
the Board of Directors may from time to time designate.
Section 2. FISCAL YEAR: The fiscal year shall begin on the first
day of January.
Section 3. NOTICE: Whenever written notice is required to
be given to any person, it may be given to such person, either
personally or by sending a copy thereof through the mail, or by
telegram, charge prepaid, to his address appearing on the books
of the corporation, or supplied by him to the corporation for
the purpose of notice. If the notice is sent by mail or by
telegraph, it shall be deemed to have been given to the person
entitled thereto when deposited in the United States mail or
with a telegraph office for transmission to such person. Such
notice shall specify the place, day and hour of the meeting and,
in the case of a special meeting of stockholders, the general
nature of the business to be transacted.
Section 4. WAIVER OF NOTICE: Whenever any written notice is
required by statute, or by the Certificate or the By-law's of
this corporation, a waiver thereof in writing, signed by the
person or persons entitle to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the
giving of such notice. Except in the case of a special meeting
of stockholders, neither the business to be transacted at nor
the purpose of the meeting need be specified in the waiver of
notice of such meeting. Attendance of a person either in person
or by proxy, at any meeting shall constitute a wavier of notice
of such meeting, except where a person attends a meeting for the
express purpose of objecting to the transaction of any business
because the meeting was not lawfully called or convened.
Section 5. DISALLOWED COMPENSATION Any payments made to an
officer or employee of the corporation such as a salary,
commission, bonus, interest, rent, travel or entertainment
expense incurred by him, which shall be disallowed in whole or
in part as a deductible expense by the Internal Revenue Service,
shall be reimbursed by such officer or employee to the
corporation to the full extent of such disallowance. It shall
be the duty of the directors, as a Board, to enforce payment of
each such amount disallowed. In lieu of payment by the officer
or employee, subject to the determination of the directors,
proportionate amounts may be withheld from his future
compensation payments until the amount owed to the corporation
has been recovered.
Section 6. RESIGNATIONS: Any director or other officer may
resign at any time, such resignation to be in writing and to
take effect from the time of its receipt by the corporation,
unless some time be fixed in the resignation and then from that
date. The acceptance of a resignation shall not be required to
make it effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and the Board of Directors shall
present at each annual meeting a full and complete statement of
the business and affairs of the corporation for the preceding
year. Such statement shall be prepared and presented in
whatever manner the Board of Directors shall deem advisable and
need not be verified by a Certified Public Accountant.
ARTICLE XI - INDEMNIFICATION AND INSURANCE:
Section 1. (a) RIGHT TO INDEMNIFICATION. Each person who
was or is made a party or is threatened to be made a party or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigation (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a
director or officer, of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a
director, officer, employee or agent, shall be indemnified and
held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment), against all
expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to
be paid by the Corporation the expenses incurred in defending
any such proceeding in advance of its disposition: provided,
however, that, if the Delaware General Corporation Law requires,
the payment of such expenses incurred by a director or officer
in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such
person while a director or officer), to repay all amounts so
advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section
or otherwise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT: If a written claim
under
paragraph (a) of this Section has been received by the
Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the
Delaware Corporation law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior
to the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard or conduct, shall be a defense to the action
or create a presumption that the claimant has not met the
applicable standard or conduct.
(c) Notwithstanding any limitation to the contrary contained
in
sub-paragraphs (a) and (b) of this section, the corporation
shall, to the fullest extent permitted by Section 145 of the
General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons
whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other
matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled under any By-law, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such a person.
(d) INSURANCE: The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE XII - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the vote
of stockholders entitled to cast at least a majority of the
votes which all stockholders are entitled to cast thereon, at
any regular or special meeting of the stockholders, duly
convened after notice to the stockholders of that purpose.
THIS AGREEMENT is made on the January 2000
BETWEEN
(1) TEMPZ.COM LIMITED whose registered office is at
Elizabeth
House, Castle Street, St Helier, Jersey, Channel Islands
(the
"Borrower"); and
(3) CI4NET.COM LIMITED whose registered office is at The
Old Chapel, Sacre Coeur, Rouge Bouillon, St Helier, Jersey,
Channel Islands (the "Lender").
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 In this Agreement:
"Advance" means, save as otherwise provided herein, an
advance
(as from time to time reduced by repayment) made or to be
made
by the Lender hereunder. For the avoidance of doubt
"Advance"
shall include amounts remitted to the Borrower by the Lender
pursuant to Clause 5.1;
"Available Facility" means, at any time and save as
otherwise
provided herein, GBP10,000,000 (ten million pounds sterling)
less the amount of each Advance which has then been made
hereunder;
"Business Plan" means the Business Plan as defined in the
Investment Agreement as revised from time to time by the
Borrower (with the approval of the Lender) and such other
annual business plan as adopted and revised by the Borrower
from time to time;
"Debenture" means the debenture in the agreed form executed
by
the Borrower in favour of the Lender;
"Designated Account" means such bank account of the Borrower
as the Borrower may from time to time notify the Lender;
"Event of Default" means any of those events specified in
Clause 18;
"Exit Event" means either (i) the sale of the issued share
capital of the Borrower to a third party or parties acting
in
concert or (ii) the listing of any shares in the Borrower on
a recognised stock exchange;
"Facility" means the sterling loan facility granted to the
Borrower in this Agreement;
"Group" means the Borrower and its subsidiaries;
"Interest Period" means, save as otherwise provided herein,
any of those periods mentioned in Clause 6;
"Investment Agreement" means the agreement of even date
herewith described as such and made inter alia between the
parties hereto;
"Loan" means the aggregate principal amount for the time
being
outstanding hereunder;
"Notice of Drawdown" means a notice substantially in the
form
set out in the Second Schedule;
"Potential Event of Default" means any event which could
reasonably be expected to become (with the passage of time,
the giving of notice, the making of any determination
hereunder or any combination thereof) an Event of Default;
and
"Repayment Date" means the earlier of the tenth anniversary
of
this Agreement or the occurrence of an Exit Event.
1.2 Any reference in this Agreement to:
the "Lender" shall be construed so as to include its and any
subsequent successors and assigns in accordance with their
respective interests;
a "business day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which Lenders are
generally open for business in London;
a "Clause" shall, subject to any contrary indication, be
construed as a reference to a clause hereof;
an "encumbrance" shall be construed as a reference to a
mortgage, hypothec, contract mortgage, security interest,
charge, pledge, lien or other encumbrance securing any
obligation of any person or any other type of preferential
arrangement (including, without limitation, title transfer
and
retention arrangements) having a similar effect;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation of
which the first-mentioned company or corporation is a
subsidiary;
"indebtedness" shall be construed so as to include any
obligation (whether incurred as principal or as surety) for
the payment or repayment of money, whether present or
future,
actual or contingent;
a "month" is a reference to a period starting on one day in
a
calendar month and ending on the numerically corresponding
day
in the next succeeding calendar month save that, where any
such period would otherwise end on a day which is not a
business day, it shall end on the next succeeding business
day, unless that day falls in the calendar month succeeding
that in which it would otherwise have ended, in which case
it
shall end on the immediately preceding business day Provided
that, if a period starts on the last business day in a
calendar month or if there is no numerically corresponding
day
in the month in which that period ends, that period shall
end
on the last business day in that later month (and references
to "months" shall be construed accordingly);
a "person" shall be construed as a reference to any person,
firm, company, corporation, government, state or agency of a
state or any association or partnership (whether or not
having
separate legal personality) of two or more of the foregoing;
"repay" (or any derivative form thereof) shall, subject to
any
contrary indication, be construed to include "prepay" (or,
as
the case may be, the corresponding derivative form thereof);
a "Schedule" shall, subject to any contrary indication, be
construed as a reference to a schedule hereto;
a "subsidiary" of a company or corporation shall be
construed
as a reference to any company or corporation:
(i) which is controlled, directly or
indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of
which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another
subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be
treated as being controlled by another if that other company
or corporation is able to direct its affairs and/or to
control
the composition of its board of directors or equivalent
body;
"tax" shall be construed so as to include any tax, levy,
impost, duty or other charge of a similar nature (including,
without limitation, any penalty or interest payable in
connection with any failure to pay or any delay in paying
any
of the same);
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place
thereof from time to time;
a "wholly-owned subsidiary" of a company or corporation
shall
be construed as a reference to any company or corporation
which has no other members except that other company or
corporation and that other company's or corporation's
wholly-
owned subsidiaries or persons acting on behalf of that other
company or corporation or its wholly-owned subsidiaries; and
the "winding-up", "dissolution" or "administration" of a
company or corporation shall be construed so as to include
any
equivalent or analogous proceedings under the law of the
jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or
corporation carries on business including the seeking of
liquidation, winding-up, desastre, reorganisation,
dissolution, administration, arrangement, adjustment,
protection or relief of debtors.
1.3 "GPB" and "sterling" denote lawful currency of the United
Kingdom.
1.4 Save where the contrary is indicated, any reference in
this Agreement to:
(i) this Agreement or any other agreement or
document shall
be construed as a reference to this Agreement or, as
the
case may be, such other agreement or document as the
same
may have been, or may from time to time be, amended,
varied, novated or supplemented;
(ii) a statute shall be construed as a reference
to such
statute as the same may have been, or may from time to
time be, amended or re-enacted; and
(iii) a time of day shall be construed as a
reference
to London time.
1.5 Clause and Schedule headings are for ease of reference
only.
2. The Facility
The Lender grants to the Borrower, upon the terms and subject to
the conditions hereof, a loan facility in an aggregate amount of
up to GBP10,000,000 (ten million pounds sterling).
3. Purpose
3.1 The Facility is intended for general corporate and
working capital purposes of the Borrower and the Borrower shall
apply all amounts raised by it hereunder in or towards
satisfaction of the general corporate financing requirements set
out in
the Schedules to the Business Plan.
3.2 Without prejudice to the obligations of the Borrower
hereunder, the Lender shall not be obliged to concern itself
with the application of amounts raised by the Borrower
hereunder.
4. Conditions Precedent
Save as the Lender may otherwise agree, the Borrower may not
deliver any Notice of Drawdown hereunder and no drawings will
take
place under Clause 5.1 unless the Lender has confirmed to the
Borrower that it has received all of the documents listed in the
First Schedule and that each is, in form and substance,
satisfactory to the Lender.
5. Availability of the Facility
5.1 Upon completion of this Agreement not more than three
business
days after receipt of a Notice of Drawdown from the
Borrower, the Lender will, subject to clause 4, remit to the
Designated Account an Advance in the sum of GBP1,540,000 (one
million
five hundred and forty thousand pounds sterling).
5.2 The Lender will, subject to Clause 4, remit to the
Designated Account on the 23rd day of March 2000 and
thereafter on the
23rd day of the last month in each quarter (or if such day
is
not a business day, on the next following business day) the
amount (as rounded up to the nearest GBP100,000) of
negative
cash flow set against the following quarter in the Business
Plan, provided that no remittance may be made under Clause 5
which would cause the amount drawn under Clause 5 to exceed
the Available Facility.
5.3 Save as otherwise provided herein, an Advance will be
made by the Lender to the Borrower in respect of amounts in
excess
of those provided for in Clause 5.2 if:
(i) not less than three business days before
the proposed
date for the making of such Advance, the Lender has
received from the Borrower a Notice of Drawdown
therefor, receipt of which shall oblige the Borrower to
borrow
the amount therein requested on the date therein stated
upon the terms and subject to the conditions contained
herein;
(ii) the proposed date for the making of such
Advance is a business day;
(iii) the proposed date for the making of such
Advance is not less than five business days after the
date upon which the previous Advance (if any) was made
hereunder;
(iv) the proposed amount of such Advance is no
greater than GBP50,000 in any month and shall not cause the
aggregate
of Advances under Clause 5.2 made in any consecutive
period of twelve months to exceed GBP250,000 provided that if
such amount is greater than the Available Facility, the
amount of the Advance shall be limited to the Available Facility;
and
(v) either:
(a) no Event of Default or Potential Event of
Default has occurred; and
(b) the representations set out in Clause 14
are in all material respects true on and as of the proposed
date for the making of such Advance.
6. Interest Periods
6.1 The period for which an Advance is outstanding shall be
divided into successive periods each of which (other than
the
first) shall start on the last day of the preceding such
period provided that the first Interest period shall
commence
on the date falling six months after the date of this
Agreement and shall apply to all Advances then outstanding.
6.2 The duration of each Interest Period shall, save as
otherwise
provided herein, be one month.
6.3 The first Interest Period in respect of any Advance
other than
the first will terminate on the last day of the then current
Interest Period applicable to the first Advance.
7. Interest
7.1 During the first six (6) months from date of
signature of this Agreement no interest shall accrue on
amounts Advanced
during such first six (6) months. Thereafter, on the last
day of
each Interest Period, the Borrower shall pay accrued
interest on
the outstanding amount of the Facility, provided that no
such
payment shall be made until the earlier of the Repayment
Date
and the first Positive Cashflow Day.
7.2 For the purposes of this Clause a "Positive Cashflow
Day" shall be the last day of an Interest Period:
(i) falling on or after the second anniversary of this
Agreement and
(ii) in respect of which the Borrower's business
shall have shown a positive cash flow.
7.3 Accrued interest shall be payable on each Positive
Cashflow Day in an amount equal to the lower of:
(i) one half of the amount of positive cash flow of
the business of the Borrower during the Interest Period
ending on such Positive Cashflow Day; and
(ii) the amount of accrued interest unpaid.
7.4 For the avoidance of doubt unpaid interest shall
accrue and remain payable.
7.5 The rate of interest applicable to an Advance from
time to time shall be eight per cent per annum.
8. Repayment
Subject to any requirement to make early repayment in accordance
with clauses 13 and 18.1 the Loan together with accrued interest
shall be repayable by the Borrower on the Repayment Date.
9. Cancellation and Prepayment
9.1 The Borrower may, by giving to the Lender not less than
thirty days' prior notice to that effect, cancel the whole or any
part (being an amount or integral multiple of GBP100,000) of
the Available Facility.
9.2 The Borrower may, if it has given to the Lender not
less than thirty days' prior notice to that effect, prepay
without
penalty the whole of any Advance or any part of any Advance
(being an amount or integral multiple of GBP100,000) on the last
day of any Interest Period.
9.3 Any notice of cancellation or prepayment given by the
Borrower pursuant to Clause 9.1 or 9.2 shall be irrevocable,
shall
specify the date upon which such cancellation or prepayment is
to be made and the amount of such cancellation or prepayment
and, in the case of a notice of prepayment, shall oblige the
Borrower to make such prepayment on such date.
9.4 No principal shall be repaid until all outstanding
amounts
of interest have been paid.
9.5 The Borrower shall not repay all or any part of the
Loan except at the times and in the manner expressly provided for
in this Agreement and shall not be entitled to reborrow any
amount repaid.
10. Taxes
10.1 All payments to be made by the Borrower to the Lender
hereunder shall be made free and clear of and without
deduction for or on account of tax unless the Borrower is
required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by the
Borrower in respect of which such deduction or withholding
is
required to be made shall be increased to the extent
necessary
to ensure that, after the making of the required deduction
or
withholding, the Lender receives and retains (free from any
liability in respect of any such deduction or withholding) a
net sum equal to the sum which it would have received and so
retained had no such deduction or withholding been made or
required to be made.
10.2 Without prejudice to the provisions of Clause 10.1,
if the
Lender is required to make any payment on account of tax
(not
being a tax imposed on the net income of the Lender by the
jurisdiction in which it is incorporated) or otherwise on or
in relation to any sum received or receivable by it
hereunder
(including, without limitation, any sum received or
receivable
under this Clause 10) or any liability in respect of any
such
payment is asserted, imposed, levied or assessed against the
Lender, the Borrower shall, upon demand of the Lender,
promptly indemnify the Lender against such payment or
liability, together with any interest, penalties and
expenses
payable or incurred in connection therewith.
10.3 If the Lender intends to make a claim pursuant to
Clause 10,
it shall notify the Borrower of the event by reason of which
it is entitled to make such claim Provided that nothing
herein
shall require the Lender to disclose any confidential
information relating to the organisation of its affairs.
11. Tax Receipts
11.1 If, at any time, the Borrower is required by law to
make any
deduction or withholding from any sum payable by it
hereunder
(or if thereafter there is any change in the rates at which
or
the manner in which such deductions or withholdings are
calculated), the Borrower shall promptly notify the Lender.
11.2 If the Borrower makes any payment hereunder in
respect of
which it is required to make any deduction or withholding,
it
shall pay the full amount required to be deducted or
withheld
to the relevant taxation or other authority within the time
allowed for such payment under applicable law and shall
deliver to the Lender, promptly upon receipt of the same, an
original receipt (or a certified copy thereof) issued by
such
authority evidencing the payment to such authority of all
amounts so required to be deducted or withheld in respect of
such payment.
12. Increased Costs
12.1 If, by reason of any change in law or in its
interpretation or
administration:
(a) there is any increase in the cost to the Lender
of
funding or maintaining all or any of the advances
comprised in a class of advances formed by or including
the Advances; or
(b) the Lender becomes liable to make any payment on
account
of tax or otherwise (not being a tax imposed on the net
income of the Lender by the jurisdiction in which it is
incorporated) on or calculated by reference to the
amount
of the Advances and/or to any sum received or
receivable
by it hereunder,
then the Borrower shall, from time to time on demand of
the
Lender, promptly pay to the Lender amounts sufficient to
indemnify it or any such holding company against, as the
case
may be, (1) such increased cost (or such proportion of such
increased cost as is, in the opinion of the Lender,
attributable to its funding or maintaining Advances) or (2)
such liability.
12.2 If the Lender intends to make a claim pursuant to
Clause 12.1,
it shall notify the Borrower of the event by reason of which
it is entitled to do so Provided that nothing herein shall
require the Lender to disclose any confidential information
relating to the organisation of its affairs.
13. Illegality
If, at any time, it is unlawful for the Lender to make, fund or
allow to remain outstanding all or any of the Advances, then the
Lender shall, promptly after becoming aware of the same, deliver
to
the Borrower a certificate to that effect and:
(i) the Lender shall not thereafter be obliged
to make any
Advances and the amount of the Available Facility shall
be immediately reduced to zero; and
(ii) if the Lender so requires, the Borrower
shall on such
date as the Lender shall have specified repay each
outstanding Advance together with accrued interest
thereon and all other amounts owing to the Lender
hereunder.
14. Representations
The Borrower represents that:
(i) it is a corporation duly organised under the
laws of
Jersey with power to enter into this Agreement and to
exercise its rights and perform its obligations
hereunder
and all corporate and other action required to
authorise
its execution of this Agreement and its performance of
its obligations hereunder has been duly taken;
(ii) under the laws of Jersey in force at the date
hereof, it
will not be required to make any deduction or
withholding
from any payment it may make hereunder;
(iii) under the laws of Jersey in force at the date
hereof,
the claims of the Lender against the Borrower under
this
Agreement will rank at least pari passu with the claims
of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy,
desastre,
insolvency, liquidation or other similar laws of
general
application;
(iv) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement, it will
not
be entitled to claim for itself or any of its assets
immunity from suit, execution, attachment or other
legal
process;
(v) all acts, conditions and things required to be
done,
fulfilled and performed in order (a) to enable it
lawfully to enter into, exercise its rights under and
perform and comply with the obligations expressed to be
assumed by it in this Agreement and the Debenture and
(b) to ensure that the obligations expressed to be
assumed by
it in this Agreement and the Debenture are legal, valid
and binding;
(vi) it has not taken any corporate action nor have
any other
steps been taken or legal proceedings been started or
(to
the best its knowledge and belief) threatened against
the
Borrower for its winding-up, dissolution,
administration
or re-organisation or for the appointment of a
liquidator, viscount, receiver, administrator,
administrative receiver, trustee or similar officer of
it
or of any or all of its assets or revenues;
(vii) it is not in breach of or in default under any
agreement to which it is a party or which is binding on
it or any of its assets to an extent or in a manner
which
might have a material adverse effect on the business or
financial condition of the Group;
(viii) no action or administrative proceeding of or
before
any court or agency which might have a material adverse
effect on the business or financial condition of the
Borrower has been started or threatened;
(ix) all of the written information supplied by the
Borrower
to the Lender in connection herewith is true, complete
and accurate in all material respects and it is not
aware
of any material facts or circumstances that have not
been
disclosed to the Lender and which might, if disclosed,
adversely affect the decision of a person considering
whether or not to provide finance to the Borrower;
(x) save as permitted hereunder, no encumbrance
exists over
all or any of the present or future revenues or assets
of
the Borrower;
(xi) the execution by the Borrower of this Agreement
or the
Debenture and the Borrower's exercise of its rights and
performance of its obligations hereunder or thereunder
will not result in the existence of nor oblige the
Borrower to create any encumbrance over all or any of
its
present or future revenues or assets (other than as
created by the Debenture);
(xii) the execution by the Borrower of this Agreement
and
the Debenture and the Borrower's exercise of its rights
and performance of its obligations hereunder or
thereunder do not and will not:
(a) conflict with any agreement, mortgage, hypothec,
contract mortgage, security interest, bond or
other
instrument or treaty to which such party is a
party
or which is binding upon it or any of its assets;
(b) conflict with the such party's constitutional
documents and rules and regulations; or
(c) conflict with any applicable law, regulation or
official or judicial order.
15. Financial Information
15.1 The Borrower shall:
(i) as soon as the same become available,
but in any event
within 120 days after the end of each of its financial
years, deliver to the Lender its consolidated financial
statements for such financial year;
(ii) as soon as the same become available,
but in any event
within 90 days after the end of each half of each of
its
financial years, deliver to the Lender its consolidated
financial statements for such period; and
(iii) from time to time on the request of the
Lender, furnish the Lender with such information about
the business and financial condition of the Group as
the
Lender may reasonably require.
15.2 The Lender shall ensure that:
(i) each set of financial statements delivered by it
pursuant
to Clause 15.1 is prepared on the same basis as was
used
in the preparation of any financial statements
previously
prepared and in accordance with accounting principles
generally accepted in England and consistently applied;
and
(ii) each set of financial statements delivered by it
pursuant
to paragraph (i) of Clause 15.2 is audited by auditors
reasonably acceptable to the Lender as soon as
reasonably
practicable following preparation of such accounts.
16. Financial Covenant
The Borrower undertakes that it shall conduct its business in
accordance with the provisions of the Business Plan. The
Borrower further undertakes to use its reasonable endeavours to
ensure
that sales levels achieved on a monthly basis shall be at least
as
favourable as those shown in the Schedules to the Business Plan,
provided that during any consecutive period of twelve months such
sales levels may fall by 25% below the levels shown in the
Schedules to the Business Plan (as the same may from time to time
be revised with the approval of the Lender).
17. Covenants
17.1 The Borrower shall:
(i) obtain, comply with the terms of and do all that
is
necessary to maintain in full force and effect all
material authorisations, approvals, licences and
consents
required in or by the laws and regulations of its
jurisdiction of incorporation to enable it lawfully to
enter into and perform its obligations under this
Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its
jurisdiction of incorporation of this Agreement;
(ii) maintain insurances on and in relation to its
business
and material assets with reputable underwriters or
insurance companies against such risks and to such
extent
as is usual for companies carrying on a business such
as
that carried on by the Group;
(iii) after the delivery of any Notice of Drawdown and
before the proposed making of the Advance requested
therein, notify the Lender of the occurrence of any
event
which results in or may reasonably be expected to
result
in any of the representations contained in Clause 14
being untrue in any material respect at or before the
time of the proposed making of such Advance;
(iv) promptly inform the Lender of the occurrence of
any Event
of Default or Potential Event of Default and, upon
receipt of a written request to that effect from the
Lender, confirm to the Lender that, save as previously
notified to the Lender or as notified in such
confirmation, no Event of Default or Potential Event of
Default has occurred; and
(v) ensure that at all times the claims of the
Lender against
it under this Agreement rank at least pari passu with
the
claims of all its other unsecured creditors save those
whose claims are preferred by any bankruptcy, desastre,
insolvency, liquidation or other similar laws of
general
application.
17.2 No member of the Group shall, without the prior
written
consent of the Lender (which shall not unreasonably be
withheld):
(i) pay, make or declare any dividend or other
distribution
in respect of any financial year;
(ii) create or permit to subsist any encumbrance
over all or
any of its present or future revenues or assets other
than (1) the Debenture or (2) an encumbrance which has
been disclosed in writing to the Lender prior to the
execution hereof and secures only indebtedness
outstanding at the date hereof or (3) such encumbrance
necessary to obtain the invoice discounting facility,
details of which have been disclosed to the Lender;
(iii) make any loans, grant any credit (save in the
ordinary course of business) or give any guarantee or
indemnity (except as required hereby) to or for the
benefit of any person or otherwise voluntarily assume
any
liability, whether actual or contingent, in respect of
any obligation of any other person;
(iv) issue any further shares (save to the trust
for the
benefit of the Borrower's employees, details of which
have been disclosed to the Lender) or alter any rights
attaching to its issued shares in existence at the
date hereof; or
(v) (disregarding sales of stock in trade in the
ordinary
course of business) sell, lease, transfer or otherwise
dispose of, by one or more transactions or series of
transactions (whether related or not), the whole or any
part of its revenues or its assets.
18. Events of Default
18.1 If:
(i) the Borrower shall fail to pay, within three
business
days (or twenty business days in the case of interest
payments due under Clause 7) of the due date, any sum
due
from it hereunder at the time, in the currency and in
the
manner specified herein; or
(ii) any representation or statement made by the
Borrower in
this Agreement or in any notice or other document,
certificate or statement delivered by it pursuant
hereto
or in connection herewith is or proves to have been
misleading or materially incorrect when made; or
(iii) the Borrower fails duly to perform or comply
with any
of the obligations expressed to be assumed by it in
Clause 15 or 16; or
(iv) the Borrower fails duly to perform or comply
with any
other obligation expressed to be assumed by it in this
Agreement or the Debenture and such failure, if capable
of remedy, is not remedied within fourteen days after
the
Lender has given notice thereof to such party; or
(v) any indebtedness of any member of the Group
being in
aggregate in excess of GBP25,000 is declared to be or
otherwise becomes due and payable prior to its
specified
maturity or any creditor or creditors of the any member
of the Group become entitled to declare any
indebtedness
of such party due and payable prior to its specified
maturity; or
(vi) any member of the Group is unable to pay its
debts as
they fall due, commences negotiations with any one or
more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or
makes
a general assignment for the benefit of or a
composition
with its creditors; or
(vii) any member of the Group takes any corporate
action or
other steps are taken or legal proceedings are started
for its winding-up, desastre, dissolution,
administration
or re-organisation or for the appointment of a
liquidator, viscount, receiver, administrator,
administrative receiver, trustee or similar officer of
it
or of any or all of its revenues and assets save that
this clause will not apply in respect of any action
taken
vexatiously or without cause; or
(viii) any execution or distress is levied against,
or an
encumbrancer takes possession of the whole or any
material part of, the property, undertaking or assets
of
any member of the Group; or
(ix) by or under the authority of any government,
(a) the
management of any member of the Group is wholly or
partially displaced or the authority of any member of
the
Group in the conduct of its business is wholly or
partially curtailed or (b) all or a majority of the
issued
shares of the Borrower or the whole or any part
(the book value of which is twenty per cent. or moreof
the book value of the whole) of the revenues or assets
of
the Group is seized, nationalised, expropriated or
compulsorily acquired; or
(x) the Borrower repudiates this Agreement or the
Debenture
or does or causes to be done any act or thing
evidencing
an intention to repudiate this Agreement or the
Debenture; or
(xiii) at any time any act, condition or thing
required to
be done, fulfilled or performed in order (a) to enable
the Borrower lawfully to enter into, exercise its
rights
under and perform the obligations expressed to be
assumed
by it in this Agreement or the Debenture, (b) to ensure
that the obligations expressed to be assumed by the
Borrower in this Agreement or the Debenture are legal,
valid and binding or (c) to make this Agreement or the
Debenture admissible in evidence in Jersey is not done,
fulfilled or performed; or
(xi) at any time it is or becomes unlawful for the
Borrower to
perform or comply with any or all of its obligations
hereunder or the Debenture or any of the obligations of
the Borrower hereunder or thereunder are not or cease
to
be legal, valid and binding which would have a material
adverse effect on the lender; or
(xii) any circumstances arise which in the
reasonable
opinion of the Lender constitute a material adverse
change in the business, assets or financial condition
of
the Borrower;
then, and in any such case and at any time thereafter, the
Lender may by written notice to the Borrower:
(a) declare the Advances to be immediately due and
payable
(whereupon the same shall become so payable together
with
accrued interest thereon and any other sums then owed
by
the Borrower hereunder) or declare the Advances to be
due
and payable on demand of the Lender; and/or
(b) declare that any undrawn portion of the Facility
shall be
cancelled, whereupon the same shall be cancelled and
the
Available Facility shall be reduced to zero.
18.2 If, pursuant to Clause 18.1, the Lender declares the
Advances
to be due and payable on demand of the Lender, then, and at
any time thereafter, the Lender may by written notice to the
Borrower:
(i) call for repayment of the Advances on such
date as it may
specify in such notice (whereupon the same shall become
due and payable on such date together with accrued
interest thereon and any other sums then owed by the
Borrower hereunder) or withdraw its declaration with
effect from such date as it may specify in such notice;
and/or
(ii) select as the duration of any Interest Period
which
begins whilst such declaration remains in effect a
period
of one month or less.
19. Default Interest and Indemnity
19.1 If any sum due and payable by the Borrower hereunder
is not
paid on the due date or if any sum due and payable by the
Borrower under any judgement of any court in connection
herewith is not paid on the date of such judgement, the
period
beginning on such due date or, as the case may be, the date
of
such judgement and ending on the date upon which the
obligation of the Borrower to pay such sum (the balance
thereof for the time being unpaid being herein referred to
as
an "unpaid sum") is discharged shall be divided into
successive periods, each of which (other than the first)
shall
start on the last day of the preceding such period and the
duration of each of which be selected by the Lender.
19.2 During each such period relating thereto as is
mentioned in
Clause 19.1 an unpaid sum shall bear interest at the rate
per
annum which is the sum from time to time of two per cent,
the
Margin and the Base Rate from time to time applicable
thereto.
19.3 Any interest which shall have accrued under Clause 19
in
respect of an unpaid sum shall be due and payable and shall
be
paid by the Borrower at the end of the period by reference
to
which it is calculated or on such other date or dates as the
Lender may specify by written notice to the Borrower.
19.4 The Borrower undertakes to indemnify the Lender against:
(i) any cost, claim, loss, expense (including legal
fees) or
liability together with any VAT thereon, which it may
sustain or incur as a consequence of the occurrence of
any Event of Default or any default by the Borrower in
the performance of any of the obligations expressed to
be
assumed by it in this Agreement; and
(ii) any loss it may suffer as a result of its
funding an
Advance requested by the Borrower hereunder but not
made
by reason of the operation of any one or more of the
provisions hereof.
20. Payments
20.1 On each date on which this Agreement requires an
amount
denominated in sterling to be paid by the Borrower, the
Borrower shall make the same available to the Lender by
payment in sterling and in immediately available, freely
transferable, cleared funds to such account or bank as the
Lender may have specified for this purpose).
20.2 On each date on which this Agreement requires an
amount
denominated in sterling to be paid by the Lender to the
Borrower hereunder, the Lender shall make the same available
to the Borrower by payment in sterling and in immediately
available, freely transferable, cleared funds to the
Borrower's Designated Account.
20.3 All payments required to be made by the Borrower
hereunder
shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without
any deduction for or on account of any set-off or
counterclaim.
21. Set-Off
The Borrower authorises the Lender to apply any credit balance to
which the Borrower is entitled on any account of the Borrower
with the Lender in satisfaction of any sum due and payable from
the
Borrower to the Lender hereunder but unpaid; for this purpose,
the Lender is authorised to purchase with the moneys standing to
the
credit of any such account such other currencies as may be
necessary to effect such application. The Lender shall not be
obliged to exercise any right given to it by this Clause 21.
22. Costs and Expenses
22.1 The Borrower shall, from time to time on demand of
the
Lender, reimburse the Lender for all costs and expenses
(including legal fees) together with any VAT thereon
incurred
in or in connection with the preservation and/or enforcement
of any of its rights under this Agreement.
22.2 The Borrower shall pay all stamp, registration and
other taxes
to which this Agreement or any judgement given in connection
herewith is or at any time may be subject and shall, from
time
to time on demand, indemnify the Lender against any
liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
23. Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and
assigns.
24. Assignments
24.1 The Borrower shall not be entitled to assign or
transfer all
or any of its rights, benefits and obligations hereunder.
24.2 The Lender shall be entitled to assign the benefit of
this
Agreement, but not its obligations hereunder, to a member of
the Lender Group Provided That if an assignee ceases to be a
member of the Lender Group, the Lender shall without delay
notify the Borrower that such event has occurred and shall
procure the assignment of the benefit of this Agreement back
to the Lender or another member of the Lender Group. In
this
Sub-clause, "Lender Group" shall mean any holding company or
subsidiary of the Lender or any subsidiary of any holding
company of the Lender, and "subsidiary" and "holding
company"
shall have the respective meanings ascribed thereto by
Section
736 of the Companies Act 1985
25. Calculations and Evidence of Debt
25.1 Interest shall accrue from day to day and shall be
calculated
on the basis of a year of 365 days and the actual number of
days elapsed.
25.2 The Lender shall maintain in accordance with its
usual
practice accounts evidencing the amounts from time to time
lent by and owing to it (including interest) hereunder.
26. Remedies and Waivers
No failure by the Lender to exercise, nor any delay by the Lender
in exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or
the exercise of any other right or remedy. The rights and
remedies herein provided are cumulative and not exclusive of any
rights or
remedies provided by law.
27. Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of
the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
28. Notices
28.1 Each communication to be made hereunder shall be made
in
writing but, unless otherwise stated, may be made by telex
or
letter.
28.2 Any communication or document to be made or delivered
by one
person to another pursuant to this Agreement shall (unless
that other person has by fifteen days' written notice to the
one specified another address) be made or delivered to that
other person at the address identified with its signature
below and shall be deemed to have been made or delivered at
the opening of business on the business day following the
date
of despatch (in the case of any communication made by
telefax)
or (in the case of any communication made by delivery of
letter) when left at that address or (as the case of any
communication made by postage of letter) ten days after
being
deposited in the post postage prepaid in an envelope
addressed
to it at that address.
29. Law
This Agreement shall be governed by, and shall be construed in
accordance with, English law.
30. Jurisdiction
Each of the parties hereto irrevocably agrees that the courts of
Jersey shall have non-exclusive jurisdiction to hear and
determine
any suit, action or proceeding, and to settle any disputes, which
may arise out of or in connection with this Agreement and, for
such purposes, irrevocably submits to the non-exclusive
jurisdiction
of such courts.
AS WITNESS the hands of the duly authorised representatives of
the parties hereto on the date set out above.
The Borrower
TEMPZ.COM LIMITED
By: Christopher Leonard Chris Leonard
Address: Elizabeth House, Castle Street, St Helier,
Jersey,
Channel Islands
The Lender
CI4NET.COM LIMITED
By: Lee John Cole L.J.Cole
Address: The Old Chapel, Sacre Coeur, Rouge Bouillon, St
Helier, Jersey, Channel Islands
<PAGE>
THE FIRST SCHEDULE
Condition Precedent Documents
(i) a copy, certified a true copy by a duly authorised
officer of
the Borrower, of its Memorandum and Articles of Association;
(ii) a copy, certified a true copy by a duly authorised
officer of
the Borrower, of a Board Resolution of the Borrower
approving
the execution, delivery and performance of this Agreement
and
the Debenture and the terms and conditions hereof and
thereof
and authorising a named person or persons to sign this
Agreement and any documents to be delivered by the Borrower
pursuant hereto;
(iii) a certificate of a duly authorised officer of the
Borrower
setting out the names and signatures of the persons
authorised
to sign, on behalf of the Borrower, this Agreement, the
Debenture and any documents to be delivered by the Borrower
pursuant hereto or thereto; and
(iv) the Debenture to be executed by the Borrower.
<PAGE>
THE SECOND SCHEDULE
Notice of Drawdown
From: Tempz.com Limited
To: CI4Net.com Limited
Dated:
Dear Sirs,
1. We refer to the agreement (the "Facility Agreement")
dated January, 2000 and made between ourselves as Borrower,and
yourselves as Lender. Terms defined in the Facility Agreement
shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the
Facility Agreement and on [date of proposed Advance], we wish to
borrow an Advance in the amount of GBP[ ] upon the terms and
subject
to the conditions contained therein.
3. We confirm that, at the date hereof, the
representations set
out in Clause 14 of the Facility Agreement are true and no
Event of Default or Potential Event of Default has occurred.
4. We confirm that the Advance is to provide working
capital for the month of [ ] in excess of that set out
in the
Business Plan.
5. The proceeds of this drawdown should be credited to
[insert
account details].
Yours faithfully
.............................
for and on behalf of
Tempz.com Limited
___________________________________________________________.
EXHIBIT 10.1 Service agreement by and between Ci4net.com
Limited and Kevin Leech
AGREEMENT
BETWEEN
(1) Ci4net.com Ltd whose registered office is at Trafalgar
House, 11 Waterloo Place, London SW1Y 4AU (the "Company") and
(2) Kevin Leech of La Vignette, Rue De La Vignette, St Saviour,
Jersey CI (the "Executive")
WHEREBY IT IS AGREED as follows:
Meaning of words used
1.1 In this Agreement and the Schedule the following expressions
have the following meanings:-
"Board" the Board of Directors of the Company from time to time
"Group Company" any holding company for the time being
of the Company or any subsidiary for the time being of the
Company or of any such holding company (for which purpose
"holding company" and "subsidiary" have the meanings ascribed to
them by Section 736 of the Companies Act 1985 as amended by the
Companies Act 1989);
"Group" the Company and all those Group Companies wherever
registered or incorporated for which the Executive performs
duties and/or functions pursuant to Clause 4;
"Commencement Date" the date of this Agreement
"Financial Period" an accounting reference period of the
Company determined in accordance with the provisions of Sections
224 and 226 of the Companies Act 1985.
"the 1996 Act" the Employment Rights Act 1996;
"The London Stock Exchange" London Stock Exchange Limited;
"PAYE deductions" deductions made to comply with
regulations made under Section 203 Income and Corporation Taxes
Act 1988 and with any obligations to deduct national insurance
contributions;
"recognised investment exchange" has the meaning
ascribed to it in Section 207 of the Financial Services Act 1986.
1.2 References herein to "Clauses", "sub-clauses" and "the
Schedule" are to clauses and sub-clauses of and the Schedule to
this Agreement unless otherwise specified.
1.3 Unless otherwise required words denoting the singular
include the plural and vice versa.
1.4 References in this Agreement to statutory provisions include
all modifications and re-enactments of them and all subordinate
legislation made under them.
1.5 Clause headings are included in this Agreement for
convenience only and do not affect its construction.
Previous agreements
2.1 This Agreement contains the entire and only agreement and
will govern the relationship between the Company and the
Executive from the Commencement Date in substitution for all
previous agreements and arrangements whether written, oral or
implied between the Company or any Group Company and the
Executive relating to the services of the Executive all of which
will be deemed to have terminated by consent with effect from the
Commencement Date. The Executive and the Company acknowledge
that in entering into this Agreement neither has relied on any
representation or undertaking by the other whether oral or in
writing except as expressly incorporated in this Agreement.
2.2 The Executive hereby acknowledges that he has no outstanding
claim of any kind against any Group Company.
2.3 The Executive warrants and represents to the Company that he
will not be in breach of any existing or any former terms of
employment applicable to him whether express or implied or of any
other obligation binding on him by reason of him entering into
this Agreement or performing all or any of his duties and
obligations under it.
Appointment, term and notice
3.1 The Company will employ the Executive and the Executive will
serve the Company as a Director.
3.2 Subject as hereinafter provided the said appointment will
commence on the Commencement Date and will continue thereafter
unless and until the employment is terminated by either party
giving to the other not less than 12 calendar months written
notice.
3.3 The Executive agrees that at its absolute discretion the
Company may terminate the Executive's employment under this
Agreement with immediate effect by paying to the Executive in
full and final settlement of all claims which he has or may have
against the Company or any director, employee or agent of the
Company or any Group Company under or arising out of his
employment with the Company or any such Group Company, the
termination of his employment or otherwise salary (less PAYE
deductions) in lieu of the balance of the notice period or
remainder of the notice period if at the Company's request the
Executive has worked during part of the notice period.
3.4 Notwithstanding the provisions of Clause 3.2, the
Executive's employment under this Agreement will automatically
terminate on his 60th birthday.
3.5 The Executive's continuous employment with the Company for
the purpose of the 1996 Act commenced on the Commencement Date.
Duties
4.1 The Executive will carry out such duties and functions,
exercise such powers and comply with such instructions in
connection with the business of the Company and the Group
Companies as the Board reasonably determines from time to time.
Except when prevented by illness, accident or holiday as provided
below the Executive will devote his time, attention and skill to
the affairs of the Company and where appropriate the Group
Companies and use his best endeavours to promote their interests
provided that without prejudice to any other rights of the
Company, the Board may at any time require the Executive to cease
performing and exercising all or any of such duties, functions or
powers.
4.2 The Executive will if and so long as he is so required by
the Company carry out duties on for and/or act as director,
officer or employee of any other Group Company. The duties
attendant on any such appointment will be carried out by the
Executive as if they were duties to be performed by him on behalf
of the Company under this Agreement.
4.3 The Executive will at all times promptly give to the Board
(in writing if requested) all information, explanations and
assistance that the Board may require in connection with the
business or affairs of the Company and the Group and his
employment under this Agreement.
Place of work
5.1 The Executive will perform his duties at the head office of
the Company or such other place of business of the Company or of
any Group Company as the Company requires or as may be agreed
with the Executive (from time to time) whether inside or outside
the United Kingdom but the Company will not require him without
his prior consent to go to or reside anywhere outside the United
Kingdom except for occasional visits in the ordinary course of
his duties.
5.2 If the Company relocates its head office/changes the
Executive's place of work so that the Executive has to relocate
his residence, the Company will reimburse him for his reasonable
removal and other incidental expenses in accordance therewith
within a month of the Executive incurring such expenditure.
Hours of Work
6. The Company's normal office hours are from 9.00 am to 5.30pm
Monday to Friday but the Executive may be required to work
outside these hours without additional remuneration in order to
meet the requirements of the business if so required for the
proper performance of his duties.
Remuneration
7.1 The Company will pay the Executive a salary at the rate of
GBP125,000 per annum with effect from the Commencement Date which
salary will accrue from day to day and be payable in arrears by
equal monthly instalments on the last day of each month.
7.2 The Executive's salary will be subject to review by the
Board which will be effective on and from 1st January in each
year during the Executive's employment under this Agreement
commencing 1st January 2001 provided that the increase (if any)
of such salary together with such additional emoluments will be a
matter to be decided at the Board's absolute discretion
7.3 The salary referred to in Clause 7.1 will be inclusive of
any director's fees to which the Executive may be entitled as a
director of the Company or of any Group Company.
7.4 The Executive will be entitled to participate in any bonus
scheme for executive directors implemented by the Board from time
to time.
7.5 The Executive will receive 500,000 options @ the price of
the Company's next registered offering.
Expenses
8. The Executive will be reimbursed on a monthly basis all out
of pocket expenses reasonably and properly incurred by him in the
performance of his duties under this Agreement on hotel,
travelling, entertainment and other similar items provided that
he complies with the Company's then current guidelines relating
to expenses and if and when required by the Company produces to
the Company all relevant vouchers in respect of such expenses.
Holidays
9.1 In addition to normal public holidays the Executive will be
entitled to 20 working days' paid holiday in each calendar year,
such holiday to be taken at such time or times as may be approved
by the Board.
9.2 Any holiday entitlement which is not taken by the end of the
calendar year to which it relates will be lost and may not be
carried forward.
9.3 The Executive's entitlement to paid holiday in the calendar
year in which his employment terminates will be 2 days for each
completed calendar month in that year provided that no such
entitlement to paid holiday will arise if the Executive
terminates his employment without the Company's consent before
the expiry of notice given by him pursuant to Clause 3.2 or
without giving notice or before the expiry of the fixed term
referred to in Clause 3.2 or if the Company terminates the
Executive's employment pursuant to Clause 16.1.
9.4 Where the Executive has taken more or less than his holiday
entitlement in the year his employment terminates, a
proportionate adjustment will be made by way of addition to or
deduction from (as appropriate) his final gross pay calculated on
a pro-rata basis.
Conflict of interests
10.1 The Executive will disclose promptly to the Board in writing
all his interests in any business other than that of the Company
and the Group and will notify the Board immediately of any change
in his external interests. Except with the written consent of
the Board the Executive will not during his employment under
this Agreement be directly or indirectly engaged, concerned or
interested whether as principal, servant or agent (on his own
behalf or on behalf of or in association with any other person)
in any other trade, business or occupation other than the
business of the Company or any Group Company provided that the
Executive will not be precluded from being interested for
investment purposes only as a member, debenture holder or
beneficial owner of any stock, shares or debentures which are
listed or dealt in on a recognised investment exchange and which
do not represent more than one per cent. of the total share or
loan capital from time to time in issue in such company.
10.2 The Executive will not during his employment introduce to
any other person, firm, company or organisation business of any
kind with which the Company or any other Group Company for which
he has performed services under this Agreement is able to deal
and he will not have any financial interest in, or derive any
financial or other benefit from, contracts or transactions
entered into by the Company or any other Group Company for which
he has performed services under this Agreement with any third
party without first disclosing such interest or benefit to the
Board and obtaining its written approval.
Restrictive covenants
11.1 In this Clause 12 the following expressions have the
following meanings:
"Critical Person" any person who was an employee, agent,
director, consultant or independent contractor employed,
appointed or engaged by the Company or any Relevant Group Company
at any time within the Relevant Period who by reason of such
employment, appointment or engagement and in particular his/her
seniority and expertise or knowledge of trade secrets or
confidential information of the Company or any Group Company or
knowledge of or influence over the clients, customers or
suppliers of the Company or any Group Company is likely to be
able to assist or benefit a business in or proposing to be in
competition with the Company or any Relevant Group Company;
"Relevant Customer" any person, firm company or organisation
who or which at any time during the Relevant Period is or was:-
(i) negotiating with the Company or a Relevant Group Company for
the sale or supply of Relevant Products or Services; or
(ii) a client or customer of the Company or any Relevant Group
Company for the sale or supply of Relevant Products or Services.
and in each case with whom or which the Executive was directly
concerned or connected or of whom or which the Executive had
personal knowledge during the Relevant Period in the course of
his employment hereunder;
"Relevant Group Company" any Group Company (other than the
Company) for which the Executive has performed services under
this Agreement or for which he has had operational/management
responsibility at any time during the Relevant Period;
"Relevant Period" the period of 12 months immediately
before the Termination Date;
"Relevant Products or products or services which are of the
same kind as or of a "Services" materially similar kind to or
competitive with any products or services sold or supplied by the
Company or any Relevant Group Company within the Relevant Period
and with which sale or supply the Executive was directly
concerned or connected or of which he had personal knowledge
during the Relevant Period in the course of his employment
hereunder;
"Termination Date" the date on which the Executive's
employment under this Agreement terminates and references to
"from the Termination Date" mean from and including the date of
termination.
"Restricted Territory" United Kingdom
11.2 The Executive will not without the prior written consent of
the Company directly or indirectly and whether alone or in
conjunction with or on behalf of any other person and whether as
a principal, shareholder, director, employee, agent, consultant,
partner or otherwise:-
11.2.1 within the Restricted Territory for a period of
twelve months from the Termination Date be engaged, concerned or
interested in, or provide technical, commercial or professional
advice to, any other business which supplies Relevant Products or
Services in competition with the Company or any Relevant Group
Company provided that this restriction does not apply to prevent
the Executive from holding shares or other securities in any
company which is quoted, listed or otherwise dealt in on a
recognised investment exchange or other securities market and
which confer not more than 1% of the votes which could be cast at
a general meeting of such company; or
11.2.2 within the Restricted Territory for a period of twelve
months from the Termination Date be engaged, concerned or
interested in any business which at any time during the Relevant
Period has supplied Relevant Products or Services to the Company
or any Relevant Group Company or is or was at any time during the
Relevant Period a Relevant Customer of the Company or any
Relevant Group Company if such engagement, concern or interest
causes or would cause the supplier to cease or materially reduce
its supplies to the Company (or any Relevant Group Company as the
case may be) or the Relevant Customer to cease or materially to
reduce its orders or contracts with the Company or any Relevant
Group Company; or
11.2.3 for a period of twelve months from the Termination Date
so as to compete with the Company or any Relevant Group Company
canvass, solicit or approach or cause to be canvassed, solicited
or approached any Relevant Customer for the sale or supply of
Relevant Products or Services or endeavour to do so; or
11.2.4 for a period of twelve months from the Termination Date
so as to compete with the Company or any Relevant Group Company
deal or contract with any Relevant Customer in relation to the
sale or supply of any Relevant Products or Services, or endeavour
to do so; or
11.2.5 for a period of twelve months from the Termination Date
solicit, induce or entice away from the Company or any Relevant
Group Company or, in connection with any business in or proposing
to be in competition with the Company or any Relevant Group
Company, employ, engage or appoint or in any way cause to be
employed, engaged or appointed a Critical Person whether or not
such person would commit any breach of his or her contract of
employment or engagement by leaving the service of the Company or
any Relevant Group Company;
11.2.6 use in connection with any business any name which
includes the name of any Group Company or any colourable
imitation of it.
11.3 Whilst the restrictions in this Clause 12 (on which the
Executive has had an opportunity to take independent advice as
the Executive hereby acknowledges) are regarded by the parties as
fair and reasonable, it is hereby declared that each of the
restrictions in this Clause 12 is intended to be separate and
severable. If any restriction is held to be unreasonably wide
but would be valid if part of the wording (including in
particular but without limitation the defined expressions
referred to in Clause 12.1) were deleted, such restriction will
apply with so much of the wording deleted as may be necessary to
make it valid.
11.4 If the Executive breaches any of the provisions in this
Clause 12 the Company will be entitled by written notice to the
Executive to extend the period during which the provisions of
Clause 12 which have been breached apply by an equivalent period
to that during which the breach or breaches have continued, such
additional period to commence on the date on which the said
period would have otherwise expired. The Executive hereby agrees
that if the Company so extends the period of any such
restriction, this will not prejudice the right of the Company to
apply to the Courts for injunctive relief in order to compel the
Executive to comply with the provisions of this Clause 12 and/or
damages, as the case may be.
11.5 For the purposes of Clauses 12 and 13 the Company has
entered into this Agreement as agent for and trustee of all
Relevant Group Companies.
11.6 If the Executive applies for or is offered a new employment,
appointment or engagement, before entering into any related
contract the Executive will bring the terms of this Clause 12 and
Clauses 3, 4, 13, 14, 15 and 17.2 to the attention of a third
party proposing directly or indirectly to employ, appoint or
engage him.
Confidentiality
12.1 The Executive acknowledges that in the ordinary course of
his employment he will be exposed to information about the
Company's business and the business of other Group Companies and
that of the Company's and the Group Companies' suppliers and
customers which amounts to a trade secret, is confidential or is
commercially sensitive and which may not be readily available to
others engaged in a similar business to that of the Company or
any of the Group Companies or to the general public and which if
disclosed will be liable to cause significant harm to the Company
or such Group Companies. The Executive has therefore agreed to
accept the restrictions in this Clause 13.
12.2 Without prejudice to Clause 12.3 or 12.4 and subject to
Clause 12.3 the Executive will not during the period of his
employment with the Company:-
12.1.1 sell or seek to sell to anyone information acquired by
him in the course of his employment with the Company;
12.1.2 obtain or seek to obtain any financial advantage
(direct or indirect) from disclosure of such information.
12.3 The Executive will not either during his employment or after
its termination without limit in time for his own purposes or for
any purposes other than those of the Company or any Group Company
(for any reason and in any manner) use or divulge or communicate
to any person, firm, company or organisation except to those
officials of any Group Company whose province it is to know the
same any secret or confidential information or information
constituting a trade secret acquired or discovered by him in the
course of his employment with the Company relating to the private
affairs or business of the Company or any Group Company or
its/their suppliers, customers, management or shareholders.
12.4 The restrictions contained in this Clause do not apply to:-
(i) any disclosure authorised by the Board or required in the
ordinary and proper course of the Executive's employment or as
required by the order of a court of competent jurisdiction or an
appropriate regulatory authority or otherwise required by law; or
(ii) any information which the Executive can demonstrate was
known to the Executive prior to the commencement of the
Executive's employment by the Company or by a Group Company or is
in the public domain otherwise than as a result of a breach by
him of this Clause; or
(iii) any information disclosed to the Executive by a third
party who is not bound by any duty of confidence to the Company
or any Group Company.
12.5 The provisions of this Clause 14 are without prejudice to
the duties and obligations of the Executive to be implied into
this Agreement at common law.
Patents
13.1 The Executive must disclose immediately to the Company any
discovery or invention or secret process or improvement in
procedure made or discovered by the Executive during his
employment in connection with or in any way affecting or relating
to the business of the Company or any Group Company or capable of
being used or adapted for use in or in connection with any such
company ("Inventions") which Inventions will belong to and be the
absolute property of the Company or such other person, firm,
company or organisation as the Company may require.
13.2 If requested by the Board (whether during or after the
termination of his employment) the Executive will at the expense
of the Company apply or join in applying for letters patent or
other similar protection in the United Kingdom or any other part
of the world for all Inventions and will do everything necessary
(including executing documents) for vesting letters patent or
other similar protection when obtained and all right and title to
and interest in all Inventions in the Company absolutely and as
sole beneficial owner or in such other person, firm, company or
organisation as the Company may require.
13.3 The Executive will (both during and after the termination of
his employment) at the Company's expense anywhere in the world
and at any time promptly do everything (including executing
documents) that may be required by the Board to defend or protect
for the benefit of the Company all Inventions and the right and
title of the Company to them.
13.4 The Executive hereby irrevocably authorises the Company to
appoint a person to execute any documents and to do everything
necessary to effect his obligations under this Clause 14 on his
behalf.
13.5 The provisions of Clause 14.1 to 14.3 (inclusive) are
without prejudice to the provisions of the Patents Act 1977.
Copyright
14.1 The entire copyright and all similar rights (including
future copyright, the right to register trade marks or service
marks and the right to register designs and design rights)
throughout the world in works of any description produced by the
Executive in the course of or in connection with his employment
("Works") will vest in and belong to the Company absolutely
throughout the world for the full periods of protection available
in law including all renewals and extensions.
14.2 The Executive will (both during and after the termination of
his employment) at the Company's request and expense anywhere in
the world and at any time promptly do everything (including
executing documents) that may be required by the Board to assure,
defend or protect the rights of the Company in all Works.
14.3 The Executive hereby irrevocably authorises the Company to
appoint a person to 4execute any documents and to do everything
necessary to effect the obligations of the Executive under this
Clause 15 on the Executive's behalf.
14.4 For the purposes of Clause 15 and Clause 16, the Executive
hereby irrevocably and unconditionally waives in favour of the
Company the moral rights conferred on him by Chapter IV Part 1 of
the Copyright Designs and Patents Act 1988 in respect of any
Inventions or Works in which the copyright is vested in the
Company under Clause 14, this Clause 15 or otherwise.
Incapacity
15.1 If the Executive is absent from his duties as a result of
illness or injury he will notify another member of the Board as
soon as possible and complete any self-certification forms which
are required by the Company. If the incapacity continues for a
period of seven days or more he will produce to the Company a
medical certificate to cover the duration of such absence.
15.2 Subject to the rest of Clause 15 and to 16.1.7 and
subject to the receipt of the appropriate certificates in
accordance with Clause 16, if the Executive is absent from his
duties as a result of illness or injury he will be entitled to
payment of his salary at the full rate in respect of such illness
or injury for a period (in total) of no more than three months in
any period of 12 months (whether the absence is intermittent or
continuous). Thereafter, for a further period of three months
in any period of 12 months (whether the absence is intermittent
or continuous) the Executive shall receive half of his salary
otherwise payable to him during such further period(s) of absence
and thereafter the Executive will not be entitled to any further
payment from the Company until the resumption of his duties
15.3 If the Executive is absent from work because of any injury
or condition (physical or mental and whether or not sustained in
the course of his duties) caused wholly or partly by any act or
omission of any person, firm, company or organisation (other than
the Company or any Group Company) from whom the Executive may be
or become entitled to recover damages or compensation, any sum
paid by the Company to the Executive in respect of the said
absence will be an interest free loan (subject to any limit
imposed under the Companies Act 1985 or other relevant
legislation) to the Executive repayable immediately by the
Executive to the Company on recovery by him of any such damages
or compensation.
15.4 If the Executive has been absent from work because of any
injury or condition caused wholly or partly by the Company or any
Group Company or any person for whom the Company or any Group
Company is vicariously liable and for which the Executive may be
or become entitled to recover damages or compensation, any such
damages or compensation payable will be reduced by the amount of
any sick pay (statutory or otherwise) paid to him and by the
pension received or receivable by him in the period in respect of
which such damages or compensation are calculated.
15.5 The remuneration paid under Clause 16.2 will include any
Statutory Sick Pay payable and when this is exhausted will be
reduced by the amount of any Social Security Sickness Benefit or
other benefits recoverable by the Executive (whether or not
recovered). For the avoidance of doubt the provisions of this
Clause 16 and any right or prospective right the Executive has or
may have to receive any benefits under any permanent heath
insurance scheme of which the Executive becomes in any way the
Company's right to terminate this Agreement pursuant to Clauses
3.2 to 3.5 or otherwise pursuant to its terms.
15.6 Whether or not the Executive is absent by reason of
sickness, injury or other incapacity the Executive will at the
request of the Board agree to have a medical examination
performed by a doctor appointed and paid for by the Company and
the Executive hereby authorises the Board to have unconditional
access to any report or reports (including copies) produced as a
result of any such examination as the Board may from time to time
require and entitlements to salary pursuant to Clause 17.2 will
be conditional on the Executive complying with the terms of this
Clause 17.6.
Termination
16.1 The Company may terminate the Executive's employment
immediately by summary notice in writing (notwithstanding that
the Company may have allowed any time to elapse or on a former
occasion may have waived its rights under this Clause) if he:-
16.1.1 commits, repeats or continues any serious breach of any
part of this Agreement or his obligations under it;
16.1.2 in the performance of his duties under this Agreement
or otherwise commits any act of gross misconduct or serious
incompetence or does or omits to do any thing else which is
seriously prejudicial to the interests of the Company or any
Group Company;
16.1.3 adversely prejudices or because of his behaviour is
likely in the reasonable opinion of the Board to prejudice
adversely the interests or reputation of the Executive, the
Company or any Group Company;
16.1.4 is convicted of any criminal offence other than an
offence which does not in the opinion of the Board affect his
position under this Agreement;
16.1.5 becomes bankrupt or enters into or make any arrangement
or composition with or for the benefit of his creditors
generally;
16.1.6 becomes of unsound mind;
16.1.7 becomes incapacitated from performing all or any of his
duties under this Agreement by illness, injury or otherwise for a
period exceeding (in total) 26 weeks (or such longer period as
the Company may agree) in any period of 12 months from performing
all or any of his duties under this Agreement (save where he is
being paid under the provisions of any permanent health insurance
scheme maintained by the Company); or
16.1.8 becomes prohibited by law from being a director of a
company or if the Executive ceases to be a director of the
Company without the consent or concurrence of the Company.
16.2 Without prejudice to Clause 3.1 after notice of termination
has been given by either party pursuant to Clause 3 or if the
Executive seeks to or indicates an intention to resign as a
director of the Company or any Group Company or terminate his
employment, provided that the Executive continues to be paid and
enjoys his full contractual benefits until his employment
terminates in accordance with the terms of this Agreement, the
Board may in its absolute discretion without breaking the terms
of this Agreement or giving rise to any claim against the Company
or any Group Company for all or part of the notice period or
fixed term (as the case may be):-
16.2.1 exclude the Executive from the premises of the Company
and/or any Group company;
16.2.2 require him to carry out specified duties (consistent
with the Executive's status, role and experience for the Company)
other than those referred to in Clause 4 or to carry out no
duties;
16.2.3 announce to employees, suppliers and customers that he
has been given notice of termination or has resigned (as the case
may be);
16.2.4 instruct the Executive not to communicate orally or in
writing with suppliers, customers, employees, agents or
representatives of the Company or any Group Company until his
employment hereunder has terminated.
16.3 Before and after termination of the Executive's employment,
the Executive will provide the Company and/or any Group Company
with assistance regarding matters of which he has knowledge
and/or experience in any proceedings or possible proceedings in
which the Company and/or Group Company is or may be a party.
16.4 The Executive agrees that at the expense and request of the
Company and in any event on termination of his employment he will
transfer or procure the transfer of all shares held by him in
trust or as a nominee by virtue of his employment with the
Company to such person or persons as the Company may direct. If
the Executive fails to do so within seven days of any such
request or the termination of his employment (as the case may be)
the Company is irrevocably authorised to appoint a person or
person to execute all necessary transfer forms and other
documentation on his behalf.
Deductions
17 The Executive hereby authorises the Company to deduct
from his remuneration (which for this purpose includes salary,
pay in lieu of notice, commission, bonus, holiday pay and sick
pay) all debts owed by the Executive to the Company or any Group
Company, including but without limitation the balance outstanding
of any loans (and interest where appropriate) advanced by the
Company to the Executive.
Sale or reconstruction of the Company
18 The Executive will have no claim against the Company or
any Group Company in respect of the termination (by operation of
law or otherwise) of his employment under this Agreement on or in
connection with the sale of the whole or a substantial part of
the business or undertaking of the Company or on or in connection
with the sale by the Company of any Group Company or on or by
reason of the liquidation of the Company for the purposes of
amalgamation or reconstruction (whether or not by reason of
insolvency) if within 28 days of such an event he is offered
employment on no less favourable terms than those contained in
this Agreement (apart from the identity of the employer) with any
person, firm, company or organisation which acquires such Group
Company or which acquires the whole or a substantial part of the
undertaking or business of the Company as a result of such sale
or of such amalgamation or reconstruction.
Delivery of documents and property
19. On termination of his employment for any reason (or earlier
if requested) the Executive will immediately deliver up to the
Company all property (including but not limited to documents and
software, credit cards, keys and security passes) belonging to it
or any Group Company in the Executive's possession or under his
control. Documents and software include (but are not limited to)
correspondence, diaries, address books, databases, files,
reports, minutes, plans, records, documentation or any other
medium for storing information. The Executive's obligations
under this Clause include the return of all copies, drafts,
reproductions, notes, extracts or summaries (however stored or
made) of all documents and software.
Resignation as director
20.1 The Executive will on termination of his employment for any
reason at the request of the Board give notice resigning
immediately without claim for compensation (but without prejudice
to any claim he may have for damages for breach of this
Agreement):-
20.1.1 as a director of the Company and all such Group
Companies of which he is a director; and
20.1.2 all trusteeships held by him of any pension scheme or
other trusts established by the Company or any Group Company or
any other company with which the Executive has had dealings as a
consequence of his employment with the Company.
20.2 If notice pursuant to Clause 21.1 is not received by the
relevant company within seven days of a request by the Company,
the Company is irrevocably authorised to appoint a person to
execute any documents and to do everything necessary to effect
such resignation or resignations on the Executive's behalf.
20.3 Except with the prior written agreement of the Board, the
Executive will not during his employment under this Agreement
resign his office as a director of the Company or any Group
Company and if he does so without the consent or concurrence of
the Company, the Company will be entitled to terminate his
employment pursuant to Clause 18.1.8 or at the Company's absolute
discretion, to treat such resignation as notice of termination
given by the Executive to the Company pursuant to Clause 3.2 and
to suspend the Executive pursuant to Clause 18.2.
20.4 The Executive's appointment as a director of the
Company or any other Group Company will be subject to the
Articles of Association from time to time of the relevant
company.
Rights following termination
21 The termination of the Executive's employment under this
Agreement will not affect any of the provisions of this Agreement
which expressly operate or lawfully have effect after termination
and will not prejudice any right of action already accrued to
either party in respect of any breach of any terms of this
Agreement by the other party.
Disciplinary and grievance procedures
22 The Company does not have a formal disciplinary procedure
which is applicable to the Executive.
Notices
23. Notice under this Agreement by the Executive to the Company
should be addressed to the Company and left at its registered
office or is sent by first class post to its registered office
and notices given by the Company to the Executive should be
served personally or sent by first class or sent by facsimile
transmission to his usual or last known place of residence in
England and in case of service by post the day of service will be
48 hours after posting.
Miscellaneous
24.1 This Agreement shall be governed by and interpreted in
accordance with the law of England and Wales.
24.2 The parties to this Agreement submit to the exclusive
jurisdiction of the English Courts in relation to any claim,
dispute or matter arising out of or relating to this Agreement.
24.3 Any delay by the Company in exercising any of its rights
under this Agreement will not constitute a waiver of such rights.
IN WITNESS WHEREOF THIS AGREEMENT has been signed on behalf of
the Company by a Director and executed and delivered as a deed by
the Executive on the date set out at the beginning.
SIGNED by
for and on behalf of THE COMPANY
.....................................
Director
EXECUTED AND DELIVERED )
by THE EXECUTIVE in the )
presence of:-
)....................................
Witness:
Signature: .............................................
Name: .............................................
Address: .............................................
Exhibit 10.2 Service Agreement by and between Ci4net.com
Limited and Lee Cole
THIS AGREEMENT is made on the 1999
BETWEEN
(1) Ci4net.com Ltd whose registered office is at Trafalgar
House, 11 Waterloo Place, London SW1Y 4AU (the "Company") and
(2) Lee Cole C/o Turnbulls Lane, Gibraltar (the "Executive")
WHEREBY IT IS AGREED as follows:
Meaning of words used
1.1 In this Agreement and the Schedule the following expressions
have the following meanings:-
"Board" the Board of Directors of the Company from time to time
"Group Company" any holding company for the time being
of the Company or any subsidiary for the time being of the
Company or of any such holding company (for which purpose
"holding company" and "subsidiary" have the meanings ascribed to
them by Section 736 of the Companies Act 1985 as amended by the
Companies Act 1989);
"Group" the Company and all those Group
Companies wherever registered or incorporated for which the
Executive performs duties and/or functions pursuant to Clause 4;
"Commencement Date" the date of this Agreement
"Financial Period" an accounting reference period of the
Company determined in accordance with the provisions of Sections
224 and 226 of the Companies Act 1985.
"the 1996 Act" the Employment Rights Act 1996;
"The London Stock
Exchange" London Stock Exchange Limited;
"PAYE deductions" deductions made to comply with
regulations made under Section 203 Income and Corporation Taxes
Act 1988 and with any obligations to deduct national insurance
contributions;
"recognised investment
exchange" has the meaning ascribed to it in
Section 207 of the Financial Services Act 1986.
1.2 References herein to "Clauses", "sub-clauses" and "the
Schedule" are to clauses and sub-clauses of and the Schedule to
this Agreement unless otherwise specified.
1.3 Unless otherwise required words denoting the singular
include the plural and vice versa.
1.4 References in this Agreement to statutory provisions include
all modifications and re-enactments of them and all subordinate
legislation made under them.
1.5 Clause headings are included in this Agreement for
convenience only and do not affect its construction.
Previous agreements
2.1 This Agreement contains the entire and only agreement and
will govern the relationship between the Company and the
Executive from the Commencement Date in substitution for all
previous agreements and arrangements whether written, oral or
implied between the Company or any Group Company and the
Executive relating to the services of the Executive all of which
will be deemed to have terminated by consent with effect from the
Commencement Date. The Executive and the Company acknowledge
that in entering into this Agreement neither has relied on any
representation or undertaking by the other whether oral or in
writing except as expressly incorporated in this Agreement.
2.2 The Executive hereby acknowledges that he has no outstanding
claim of any kind against any Group Company.
2.3 The Executive warrants and represents to the Company that he
will not be in breach of any existing or any former terms of
employment applicable to him whether express or implied or of any
other obligation binding on him by reason of him entering into
this Agreement or performing all or any of his duties and
obligations under it.
Appointment, term and notice
3.1 The Company will employ the Executive and the Executive will
serve the Company as a Director.
3.2 Subject as hereinafter provided the said appointment will
commence on the Commencement Date and will continue thereafter
unless and until the employment is terminated by either party
giving to the other not less than 12 calendar months written
notice.
3.3 The Executive agrees that at its absolute discretion the
Company may terminate the Executive's employment under this
Agreement with immediate effect by paying to the Executive in
full and final settlement of all claims which he has or may have
against the Company or any director, employee or agent of the
Company or any Group Company under or arising out of his
employment with the Company or any such Group Company, the
termination of his employment or otherwise salary (less PAYE
deductions) in lieu of the balance of the notice period or
remainder of the notice period if at the Company's request the
Executive has worked during part of the notice period.
3.4 Notwithstanding the provisions of Clause 3.2, the
Executive's employment under this Agreement will automatically
terminate on his 60th birthday.
3.5 The Executive's continuous employment with the Company for
the purpose of the 1996 Act commenced on the Commencement Date.
Duties
4.1 The Executive will carry out such duties and functions,
exercise such powers and comply with such instructions in
connection with the business of the Company and the Group
Companies as the Board reasonably determines from time to time.
Except when prevented by illness, accident or holiday as provided
below the Executive will devote his time, attention and skill to
the affairs of the Company and where appropriate the Group
Companies and use his best endeavours to promote their interests
provided that without prejudice to any other rights of the
Company, the Board may at any time require the Executive to cease
performing and exercising all or any of such duties, functions or
powers.
4.2 The Executive will if and so long as he is so required by
the Company carry out duties on for and/or act as director,
officer or employee of any other Group Company. The duties
attendant on any such appointment will be carried out by the
Executive as if they were duties to be performed by him on behalf
of the Company under this Agreement.
4.3 The Executive will at all times promptly give to the Board
(in writing if requested) all information, explanations and
assistance that the Board may require in connection with the
business or affairs of the Company and the Group and his
employment under this Agreement.
Place of work
5.1 The Executive will perform his duties at the head office of
the Company or such other place of business of the Company or of
any Group Company as the Company requires or as may be agreed
with the Executive (from time to time) whether inside or outside
the United Kingdom but the Company will not require him without
his prior consent to go to or reside anywhere outside the United
Kingdom except for occasional visits in the ordinary course of
his duties.
5.2 If the Company relocates its head office/changes the
Executive's place of work so that the Executive has to relocate
his residence, the Company will reimburse him for his reasonable
removal and other incidental expenses in accordance therewith
within a month of the Executive incurring such expenditure.
Hours of Work
6. The Company's normal office hours are from 9.00 am to 5.30pm
Monday to Friday but the Executive may be required to work
outside these hours without additional remuneration in order to
meet the requirements of the business if so required for the
proper performance of his duties.
Remuneration
7.1 The Company will pay the Executive a salary at the rate of
GBP125,000 per annum with effect from the Commencement Date which
salary will accrue from day to day and be payable in arrears by
equal monthly instalments on the last day of each month.
7.2 The Executive's salary will be subject to review by the
Board which will be effective on and from 1st January in each
year during the Executive's employment under this Agreement
commencing 1st January 2001 provided that the increase (if any)
of such salary together with such additional emoluments will be a
matter to be decided at the Board's absolute discretion
7.3 The salary referred to in Clause 7.1 will be inclusive of
any director's fees to which the Executive may be entitled as a
director of the Company or of any Group Company.
7.4 The Executive will be entitled to participate in any bonus
scheme for executive directors implemented by the Board from time
to time.
7.5 The Executive will receive 500,000 options @ the price of
the Company's next registered offering.
Expenses
8. The Executive will be reimbursed on a monthly basis all out
of pocket expenses reasonably and properly incurred by him in the
performance of his duties under this Agreement on hotel,
travelling, entertainment and other similar items provided that
he complies with the Company's then current guidelines relating
to expenses and if and when required by the Company produces to
the Company all relevant vouchers in respect of such expenses.
Holidays
9.1 In addition to normal public holidays the Executive will be
entitled to 20 working days' paid holiday in each calendar year,
such holiday to be taken at such time or times as may be approved
by the Board.
9.2 Any holiday entitlement which is not taken by the end of the
calendar year to which it relates will be lost and may not be
carried forward.
9.3 The Executive's entitlement to paid holiday in the calendar
year in which his employment terminates will be 2 days for each
completed calendar month in that year provided that no such
entitlement to paid holiday will arise if the Executive
terminates his employment without the Company's consent before
the expiry of notice given by him pursuant to Clause 3.2 or
without giving notice or before the expiry of the fixed term
referred to in Clause 3.2 or if the Company terminates the
Executive's employment pursuant to Clause 16.1.
9.4 Where the Executive has taken more or less than his holiday
entitlement in the year his employment terminates, a
proportionate adjustment will be made by way of addition to or
deduction from (as appropriate) his final gross pay calculated on
a pro-rata basis.
Conflict of interests
10.1 The Executive will disclose promptly to the Board in writing
all his interests in any business other than that of the Company
and the Group and will notify the Board immediately of any change
in his external interests. Except with the written consent of
the Board the Executive will not during his employment under
this Agreement be directly or indirectly engaged, concerned or
interested whether as principal, servant or agent (on his own
behalf or on behalf of or in association with any other person)
in any other trade, business or occupation other than the
business of the Company or any Group Company provided that the
Executive will not be precluded from being interested for
investment purposes only as a member, debenture holder or
beneficial owner of any stock, shares or debentures which are
listed or dealt in on a recognised investment exchange and which
do not represent more than one per cent. of the total share or
loan capital from time to time in issue in such company.
10.2 The Executive will not during his employment introduce to
any other person, firm, company or organisation business of any
kind with which the Company or any other Group Company for which
he has performed services under this Agreement is able to deal
and he will not have any financial interest in, or derive any
financial or other benefit from, contracts or transactions
entered into by the Company or any other Group Company for which
he has performed services under this Agreement with any third
party without first disclosing such interest or benefit to the
Board and obtaining its written approval.
Restrictive covenants
11.1 In this Clause 12 the following expressions have the
following meanings:
"Critical Person" any person who was an employee, agent,
director, consultant or independent contractor employed,
appointed or engaged by the Company or any Relevant Group Company
at any time within the Relevant Period who by reason of such
employment, appointment or engagement and in particular his/her
seniority and expertise or knowledge of trade secrets or
confidential information of the Company or any Group Company or
knowledge of or influence over the clients, customers or
suppliers of the Company or any Group Company is likely to be
able to assist or benefit a business in or proposing to be in
competition with the Company or any Relevant Group Company;
"Relevant Customer" any person, firm company or organisation
who or which at any time during the Relevant Period is or was:-
(i) negotiating with the Company or a Relevant Group Company for
the sale or supply of Relevant Products or Services; or
(ii) a client or customer of the Company or any Relevant Group
Company for the sale or supply of Relevant Products or Services.
and in each case with whom or which the Executive was directly
concerned or connected or of whom or which the Executive had
personal knowledge during the Relevant Period in the course of
his employment hereunder;
"Relevant Group Company" any Group Company (other than the
Company) for which the Executive has performed services under
this Agreement or for which he has had operational/management
responsibility at any time during the Relevant Period;
"Relevant Period" the period of 12 months immediately
before the Termination Date;
"Relevant Products or products or services which are of the
same kind as or of a "Services" materially similar kind to or
competitive with any products or services sold or supplied by the
Company or any Relevant Group Company within the Relevant Period
and with which sale or supply the Executive was directly
concerned or connected or of which he had personal knowledge
during the Relevant Period in the course of his employment
hereunder;
"Termination Date" the date on which the Executive's
employment under this Agreement terminates and references to
"from the Termination Date" mean from and including the date of
termination.
"Restricted Territory" United Kingdom
11.2 The Executive will not without the prior written consent of
the Company directly or indirectly and whether alone or in
conjunction with or on behalf of any other person and whether as
a principal, shareholder, director, employee, agent, consultant,
partner or otherwise:-
11.2.1 within the Restricted Territory for a period of
twelve months from the Termination Date be engaged, concerned or
interested in, or provide technical, commercial or professional
advice to, any other business which supplies Relevant Products or
Services in competition with the Company or any Relevant Group
Company provided that this restriction does not apply to prevent
the Executive from holding shares or other securities in any
company which is quoted, listed or otherwise dealt in on a
recognised investment exchange or other securities market and
which confer not more than 1% of the votes which could be cast at
a general meeting of such company; or
11.2.2 within the Restricted Territory for a period of twelve
months from the Termination Date be engaged, concerned or
interested in any business which at any time during the Relevant
Period has supplied Relevant Products or Services to the Company
or any Relevant Group Company or is or was at any time during the
Relevant Period a Relevant Customer of the Company or any
Relevant Group Company if such engagement, concern or interest
causes or would cause the supplier to cease or materially reduce
its supplies to the Company (or any Relevant Group Company as the
case may be) or the Relevant Customer to cease or materially to
reduce its orders or contracts with the Company or any Relevant
Group Company; or
11.2.3 for a period of twelve months from the Termination Date
so as to compete with the Company or any Relevant Group Company
canvass, solicit or approach or cause to be canvassed, solicited
or approached any Relevant Customer for the sale or supply of
Relevant Products or Services or endeavour to do so; or
11.2.4 for a period of twelve months from the Termination Date
so as to compete with the Company or any Relevant Group Company
deal or contract with any Relevant Customer in relation to the
sale or supply of any Relevant Products or Services, or endeavour
to do so; or
11.2.5 for a period of twelve months from the Termination Date
solicit, induce or entice away from the Company or any Relevant
Group Company or, in connection with any business in or proposing
to be in competition with the Company or any Relevant Group
Company, employ, engage or appoint or in any way cause to be
employed, engaged or appointed a Critical Person whether or not
such person would commit any breach of his or her contract of
employment or engagement by leaving the service of the Company or
any Relevant Group Company;
11.2.6 use in connection with any business any name which
includes the name of any Group Company or any colourable
imitation of it.
11.3 Whilst the restrictions in this Clause 12 (on which the
Executive has had an opportunity to take independent advice as
the Executive hereby acknowledges) are regarded by the parties as
fair and reasonable, it is hereby declared that each of the
restrictions in this Clause 12 is intended to be separate and
severable. If any restriction is held to be unreasonably wide
but would be valid if part of the wording (including in
particular but without limitation the defined expressions
referred to in Clause 12.1) were deleted, such restriction will
apply with so much of the wording deleted as may be necessary to
make it valid.
11.4 If the Executive breaches any of the provisions in this
Clause 12 the Company will be entitled by written notice to the
Executive to extend the period during which the provisions of
Clause 12 which have been breached apply by an equivalent period
to that during which the breach or breaches have continued, such
additional period to commence on the date on which the said
period would have otherwise expired. The Executive hereby agrees
that if the Company so extends the period of any such
restriction, this will not prejudice the right of the Company to
apply to the Courts for injunctive relief in order to compel the
Executive to comply with the provisions of this Clause 12 and/or
damages, as the case may be.
11.5 For the purposes of Clauses 12 and 13 the Company has
entered into this Agreement as agent for and trustee of all
Relevant Group Companies.
11.6 If the Executive applies for or is offered a new employment,
appointment or engagement, before entering into any related
contract the Executive will bring the terms of this Clause 12 and
Clauses 3, 4, 13, 14, 15 and 17.2 to the attention of a third
party proposing directly or indirectly to employ, appoint or
engage him.
Confidentiality
12.1 The Executive acknowledges that in the ordinary course of
his employment he will be exposed to information about the
Company's business and the business of other Group Companies and
that of the Company's and the Group Companies' suppliers and
customers which amounts to a trade secret, is confidential or is
commercially sensitive and which may not be readily available to
others engaged in a similar business to that of the Company or
any of the Group Companies or to the general public and which if
disclosed will be liable to cause significant harm to the Company
or such Group Companies. The Executive has therefore agreed to
accept the restrictions in this Clause 13.
12.2 Without prejudice to Clause 12.3 or 12.4 and subject to
Clause 12.3 the Executive will not during the period of his
employment with the Company:-
12.1.1 sell or seek to sell to anyone information acquired by
him in the course of his employment with the Company;
12.1.2 obtain or seek to obtain any financial advantage
(direct or indirect) from disclosure of such information.
12.3 The Executive will not either during his employment or after
its termination without limit in time for his own purposes or for
any purposes other than those of the Company or any Group Company
(for any reason and in any manner) use or divulge or communicate
to any person, firm, company or organisation except to those
officials of any Group Company whose province it is to know the
same any secret or confidential information or information
constituting a trade secret acquired or discovered by him in the
course of his employment with the Company relating to the private
affairs or business of the Company or any Group Company or
its/their suppliers, customers, management or shareholders.
12.4 The restrictions contained in this Clause do not apply to:-
(i) any disclosure authorised by the Board or required in the
ordinary and proper course of the Executive's employment or as
required by the order of a court of competent jurisdiction or an
appropriate regulatory authority or otherwise required by law; or
(ii) any information which the Executive can demonstrate was
known to the Executive prior to the commencement of the
Executive's employment by the Company or by a Group Company or is
in the public domain otherwise than as a result of a breach by
him of this Clause; or
(iii) any information disclosed to the Executive by a third
party who is not bound by any duty of confidence to the Company
or any Group Company.
12.5 The provisions of this Clause 14 are without prejudice to
the duties and obligations of the Executive to be implied into
this Agreement at common law.
Patents
13.1 The Executive must disclose immediately to the Company any
discovery or invention or secret process or improvement in
procedure made or discovered by the Executive during his
employment in connection with or in any way affecting or relating
to the business of the Company or any Group Company or capable of
being used or adapted for use in or in connection with any such
company ("Inventions") which Inventions will belong to and be the
absolute property of the Company or such other person, firm,
company or organisation as the Company may require.
13.2 If requested by the Board (whether during or after the
termination of his employment) the Executive will at the expense
of the Company apply or join in applying for letters patent or
other similar protection in the United Kingdom or any other part
of the world for all Inventions and will do everything necessary
(including executing documents) for vesting letters patent or
other similar protection when obtained and all right and title to
and interest in all Inventions in the Company absolutely and as
sole beneficial owner or in such other person, firm, company or
organisation as the Company may require.
13.3 The Executive will (both during and after the termination of
his employment) at the Company's expense anywhere in the world
and at any time promptly do everything (including executing
documents) that may be required by the Board to defend or protect
for the benefit of the Company all Inventions and the right and
title of the Company to them.
13.4 The Executive hereby irrevocably authorises the Company to
appoint a person to execute any documents and to do everything
necessary to effect his obligations under this Clause 14 on his
behalf.
13.5 The provisions of Clause 14.1 to 14.3 (inclusive) are
without prejudice to the provisions of the Patents Act 1977.
Copyright
14.1 The entire copyright and all similar rights (including
future copyright, the right to register trade marks or service
marks and the right to register designs and design rights)
throughout the world in works of any description produced by the
Executive in the course of or in connection with his employment
("Works") will vest in and belong to the Company absolutely
throughout the world for the full periods of protection available
in law including all renewals and extensions.
14.2 The Executive will (both during and after the termination of
his employment) at the Company's request and expense anywhere in
the world and at any time promptly do everything (including
executing documents) that may be required by the Board to assure,
defend or protect the rights of the Company in all Works.
14.3 The Executive hereby irrevocably authorises the Company to
appoint a person to 4execute any documents and to do everything
necessary to effect the obligations of the Executive under this
Clause 15 on the Executive's behalf.
14.4 For the purposes of Clause 15 and Clause 16, the Executive
hereby irrevocably and unconditionally waives in favour of the
Company the moral rights conferred on him by Chapter IV Part 1 of
the Copyright Designs and Patents Act 1988 in respect of any
Inventions or Works in which the copyright is vested in the
Company under Clause 14, this Clause 15 or otherwise.
Incapacity
15.1 If the Executive is absent from his duties as a result of
illness or injury he will notify another member of the Board as
soon as possible and complete any self-certification forms which
are required by the Company. If the incapacity continues for a
period of seven days or more he will produce to the Company a
medical certificate to cover the duration of such absence.
15.2 Subject to the rest of Clause 15 and to 16.1.7 and
subject to the receipt of the appropriate certificates in
accordance with Clause 16, if the Executive is absent from his
duties as a result of illness or injury he will be entitled to
payment of his salary at the full rate in respect of such illness
or injury for a period (in total) of no more than three months in
any period of 12 months (whether the absence is intermittent or
continuous). Thereafter, for a further period of three months
in any period of 12 months (whether the absence is intermittent
or continuous) the Executive shall receive half of his salary
otherwise payable to him during such further period(s) of absence
and thereafter the Executive will not be entitled to any further
payment from the Company until the resumption of his duties
15.3 If the Executive is absent from work because of any injury
or condition (physical or mental and whether or not sustained in
the course of his duties) caused wholly or partly by any act or
omission of any person, firm, company or organisation (other than
the Company or any Group Company) from whom the Executive may be
or become entitled to recover damages or compensation, any sum
paid by the Company to the Executive in respect of the said
absence will be an interest free loan (subject to any limit
imposed under the Companies Act 1985 or other relevant
legislation) to the Executive repayable immediately by the
Executive to the Company on recovery by him of any such damages
or compensation.
15.4 If the Executive has been absent from work because of any
injury or condition caused wholly or partly by the Company or any
Group Company or any person for whom the Company or any Group
Company is vicariously liable and for which the Executive may be
or become entitled to recover damages or compensation, any such
damages or compensation payable will be reduced by the amount of
any sick pay (statutory or otherwise) paid to him and by the
pension received or receivable by him in the period in respect of
which such damages or compensation are calculated.
15.5 The remuneration paid under Clause 16.2 will include any
Statutory Sick Pay payable and when this is exhausted will be
reduced by the amount of any Social Security Sickness Benefit or
other benefits recoverable by the Executive (whether or not
recovered). For the avoidance of doubt the provisions of this
Clause 16 and any right or prospective right the Executive has or
may have to receive any benefits under any permanent heath
insurance scheme of which the Executive becomes in any way the
Company's right to terminate this Agreement pursuant to Clauses
3.2 to 3.5 or otherwise pursuant to its terms.
15.6 Whether or not the Executive is absent by reason of
sickness, injury or other incapacity the Executive will at the
request of the Board agree to have a medical examination
performed by a doctor appointed and paid for by the Company and
the Executive hereby authorises the Board to have unconditional
access to any report or reports (including copies) produced as a
result of any such examination as the Board may from time to time
require and entitlements to salary pursuant to Clause 17.2 will
be conditional on the Executive complying with the terms of this
Clause 17.6.
Termination
16.1 The Company may terminate the Executive's employment
immediately by summary notice in writing (notwithstanding that
the Company may have allowed any time to elapse or on a former
occasion may have waived its rights under this Clause) if he:-
16.1.1 commits, repeats or continues any serious breach of any
part of this Agreement or his obligations under it;
16.1.2 in the performance of his duties under this Agreement
or otherwise commits any act of gross misconduct or serious
incompetence or does or omits to do any thing else which is
seriously prejudicial to the interests of the Company or any
Group Company;
16.1.3 adversely prejudices or because of his behaviour is
likely in the reasonable opinion of the Board to prejudice
adversely the interests or reputation of the Executive, the
Company or any Group Company;
16.1.4 is convicted of any criminal offence other than an
offence which does not in the opinion of the Board affect his
position under this Agreement;
16.1.5 becomes bankrupt or enters into or make any arrangement
or composition with or for the benefit of his creditors
generally;
16.1.6 becomes of unsound mind;
16.1.7 becomes incapacitated from performing all or any of his
duties under this Agreement by illness, injury or otherwise for a
period exceeding (in total) 26 weeks (or such longer period as
the Company may agree) in any period of 12 months from performing
all or any of his duties under this Agreement (save where he is
being paid under the provisions of any permanent health insurance
scheme maintained by the Company); or
16.1.8 becomes prohibited by law from being a director of a
company or if the Executive ceases to be a director of the
Company without the consent or concurrence of the Company.
16.2 Without prejudice to Clause 3.1 after notice of termination
has been given by either party pursuant to Clause 3 or if the
Executive seeks to or indicates an intention to resign as a
director of the Company or any Group Company or terminate his
employment, provided that the Executive continues to be paid and
enjoys his full contractual benefits until his employment
terminates in accordance with the terms of this Agreement, the
Board may in its absolute discretion without breaking the terms
of this Agreement or giving rise to any claim against the Company
or any Group Company for all or part of the notice period or
fixed term (as the case may be):-
16.2.1 exclude the Executive from the premises of the Company
and/or any Group company;
16.2.2 require him to carry out specified duties (consistent
with the Executive's status, role and experience for the Company)
other than those referred to in Clause 4 or to carry out no
duties;
16.2.3 announce to employees, suppliers and customers that he
has been given notice of termination or has resigned (as the case
may be);
16.2.4 instruct the Executive not to communicate orally or in
writing with suppliers, customers, employees, agents or
representatives of the Company or any Group Company until his
employment hereunder has terminated.
16.3 Before and after termination of the Executive's employment,
the Executive will provide the Company and/or any Group Company
with assistance regarding matters of which he has knowledge
and/or experience in any proceedings or possible proceedings in
which the Company and/or Group Company is or may be a party.
16.4 The Executive agrees that at the expense and request of the
Company and in any event on termination of his employment he will
transfer or procure the transfer of all shares held by him in
trust or as a nominee by virtue of his employment with the
Company to such person or persons as the Company may direct. If
the Executive fails to do so within seven days of any such
request or the termination of his employment (as the case may be)
the Company is irrevocably authorised to appoint a person or
person to execute all necessary transfer forms and other
documentation on his behalf.
Deductions
17 The Executive hereby authorises the Company to deduct
from his remuneration (which for this purpose includes salary,
pay in lieu of notice, commission, bonus, holiday pay and sick
pay) all debts owed by the Executive to the Company or any Group
Company, including but without limitation the balance outstanding
of any loans (and interest where appropriate) advanced by the
Company to the Executive.
Sale or reconstruction of the Company
18 The Executive will have no claim against the Company or
any Group Company in respect of the termination (by operation of
law or otherwise) of his employment under this Agreement on or in
connection with the sale of the whole or a substantial part of
the business or undertaking of the Company or on or in connection
with the sale by the Company of any Group Company or on or by
reason of the liquidation of the Company for the purposes of
amalgamation or reconstruction (whether or not by reason of
insolvency) if within 28 days of such an event he is offered
employment on no less favourable terms than those contained in
this Agreement (apart from the identity of the employer) with any
person, firm, company or organisation which acquires such Group
Company or which acquires the whole or a substantial part of the
undertaking or business of the Company as a result of such sale
or of such amalgamation or reconstruction.
Delivery of documents and property
19. On termination of his employment for any reason (or earlier
if requested) the Executive will immediately deliver up to the
Company all property (including but not limited to documents and
software, credit cards, keys and security passes) belonging to it
or any Group Company in the Executive's possession or under his
control. Documents and software include (but are not limited to)
correspondence, diaries, address books, databases, files,
reports, minutes, plans, records, documentation or any other
medium for storing information. The Executive's obligations
under this Clause include the return of all copies, drafts,
reproductions, notes, extracts or summaries (however stored or
made) of all documents and software.
Resignation as director
20.1 The Executive will on termination of his employment for any
reason at the request of the Board give notice resigning
immediately without claim for compensation (but without prejudice
to any claim he may have for damages for breach of this
Agreement):-
20.1.1 as a director of the Company and all such Group
Companies of which he is a director; and
20.1.2 all trusteeships held by him of any pension scheme or
other trusts established by the Company or any Group Company or
any other company with which the Executive has had dealings as a
consequence of his employment with the Company.
20.2 If notice pursuant to Clause 21.1 is not received by the
relevant company within seven days of a request by the Company,
the Company is irrevocably authorised to appoint a person to
execute any documents and to do everything necessary to effect
such resignation or resignations on the Executive's behalf.
20.3 Except with the prior written agreement of the Board, the
Executive will not during his employment under this Agreement
resign his office as a director of the Company or any Group
Company and if he does so without the consent or concurrence of
the Company, the Company will be entitled to terminate his
employment pursuant to Clause 18.1.8 or at the Company's absolute
discretion, to treat such resignation as notice of termination
given by the Executive to the Company pursuant to Clause 3.2 and
to suspend the Executive pursuant to Clause 18.2.
20.4 The Executive's appointment as a director of the
Company or any other Group Company will be subject to the
Articles of Association from time to time of the relevant
company.
Rights following termination
21 The termination of the Executive's employment under this
Agreement will not affect any of the provisions of this Agreement
which expressly operate or lawfully have effect after termination
and will not prejudice any right of action already accrued to
either party in respect of any breach of any terms of this
Agreement by the other party.
Disciplinary and grievance procedures
22 The Company does not have a formal disciplinary procedure
which is applicable to the Executive.
Notices
23. Notice under this Agreement by the Executive to the Company
should be addressed to the Company and left at its registered
office or is sent by first class post to its registered office
and notices given by the Company to the Executive should be
served personally or sent by first class or sent by facsimile
transmission to his usual or last known place of residence in
England and in case of service by post the day of service will be
48 hours after posting.
Miscellaneous
24.1 This Agreement shall be governed by and interpreted in
accordance with the law of England and Wales.
24.2 The parties to this Agreement submit to the exclusive
jurisdiction of the English Courts in relation to any claim,
dispute or matter arising out of or relating to this Agreement.
24.3 Any delay by the Company in exercising any of its rights
under this Agreement will not constitute a waiver of such rights.
IN WITNESS WHEREOF THIS AGREEMENT has been signed on behalf of
the Company by a Director and executed and delivered as a deed by
the Executive on the date set out at the beginning.
SIGNED by
for and on behalf of THE COMPANY
.....................................
Director
EXECUTED AND DELIVERED )
by THE EXECUTIVE in the )
presence of:-
)....................................
Witness:
Signature: .............................................
Name: .............................................
Address: .............................................
Exhibit 10.4 Service Agreement by and between Ci4net.com
Limited and Roger Holdom
BETWEEN
(1) Ci4net Limited (Company number 3714112) whose
registered office is at Trafalgar House, 11 Waterloo
Place, London SW1Y 4AU (the "Company")
and
(2) Roger Holdom of 6 Phoenix Road, London, SE20-7BT (the
"Executive")
WHEREBY IT IS AGREED as follows:
Meaning of words used
1.1 In this Agreement and the Schedule the following
expressions have the following meanings:-
"Board" the Board of Directors of the Company
from time to time
"Commencement Date" 6th December 1999
"Financial Period" an accounting reference period of the
Company determined in accordance with
the provisions of Sections 224 and 226
of the Companies Act 1985.
"Group" the Company and all those Group
Companies wherever registered or
incorporated for which the Executive
performs duties and/or functions
pursuant to Clause 4;
"Group Company" any holding company for the time being
of the Company or any subsidiary for the
time being of the Company or of any such
holding company (for which purpose
"holding company" and "subsidiary" have
the meanings ascribed to them by Section
736 of the Companies Act 1985 as amended
by the Companies Act 1989);
"Head Office" Trafalgar House, 11 Waterloo Place,
London, SW1Y 4AU
"the 1996 Act" the Trade Union Reform and Employment
Rights Act 1996;
"The London Stock
Exchange" London Stock Exchange Limited;
"PAYE deductions" deductions made to comply with
regulations made under Section 203
Income and Corporation Taxes Act 1988
and with any obligations to deduct
national insurance contributions;
"recognised investment
exchange" has the meaning ascribed to it in
Section 207 of the Financial Services
Act 1986.
1.2 References herein to "Clauses", "sub-clauses" and
"the Schedule" are to clauses and sub-clauses of and the Schedule
to this Agreement unless otherwise specified.
1.3 Unless otherwise required words denoting the
singular include the plural and vice versa.
1.4 References in this Agreement to statutory provisions
include all modifications and re-enactments of them and all
subordinate legislation made under them.
1.5 Clause headings are included in this Agreement for
convenience only and do not affect its construction.
Previous agreements
2.1 This Agreement contains the entire and only
agreement and
will govern the relationship between the Company and the
Executive from the Commencement Date in substitution for all
previous agreements and arrangements whether written, oral
or implied between the Company or any Group Company and the
Executive relating to the services of the Executive all of
which will be deemed to have terminated by consent with
effect from the Commencement Date. The Executive and the
Company acknowledge that in entering into this Agreement
neither has relied on any representation or undertaking by
the other whether oral or in writing except as expressly
incorporated in this Agreement.
2.2 The Executive hereby acknowledges that he has no
outstanding claim of any kind against any Group Company.
2.3 The Executive warrants and represents to the Company
that he will not be in breach of any existing or any former
terms of employment applicable to him whether express or
implied or
of any other obligation binding on him by reason of him
entering into this Agreement or performing all or any of his
duties and obligations under it.
Appointment, term and notice
3.1 The Company will employ the Executive and the
Executive will serve the Company as a Business Development Director
and be treated in a similar manner in regards to authority,
benefits and share options as other directors at the same
level in the Company or within a Group Company.
3.2 Subject as hereinafter provided the said appointment
will commence on the Commencement Date and will continue
thereafter unless and until the employment is terminated by
either party giving to the other not less than 12 calendar
months written notice PROVIDED that the first 3 months of
the employment shall be considered as a mutual trial period
at the end of which either party may terminate this
agreement in writing.
3.3 The Executive agrees that at its absolute discretion
the Company may terminate the Executive's employment under
this Agreement with immediate effect by paying to the
Executive in full and final settlement of all claims which
he has or may have against the Company or any director,
employee or agent of the Company or any Group Company under
or arising out of his employment with the Company or any
such Group Company, on the termination of his employment or
otherwise salary (less PAYE deductions) in lieu of the
balance of the notice period or remainder of the notice
period if at the Company's request the Executive has worked
during part of the notice period.
3.4 Notwithstanding the provisions of Clause 3.2, the
Executive's employment under this Agreement will
automatically terminate on his 60th birthday.
3.5 The Executive's continuous employment with the
Company for the purpose of the 1996 Act commenced on the
Commencement Date.
Duties
4.1 The Executive will carry out such duties and
functions, exercise such powers and comply with such
instructions in
connection with the business of the Company and the Group
Companies as the Board reasonably determines from time to
time. Except when prevented by illness, accident or holiday
as provided below the Executive will devote the whole of his
time (save for time spent on the affairs or such other
projects as maybe agreed between the parties, consent to
such projects not to be unreasonably withheld by the
Company), attention and skill to the affairs of the Company
and where appropriate the Group Companies and use his best
endeavours to promote their interests provided that without
prejudice to any other rights of the Company, the Board may
at any time require the Executive to cease performing and
exercising all or any of such duties, functions or powers.
4.2 The Executive will if and so long as he is so
Required by the Company carry out duties which fall within
his
experience in the media and marketing industry as director,
officer or employee of any other Group Company. The duties
attendant on any such appointment will be carried out by the
Executive as if they were duties to be performed by him on
behalf of the Company under this Agreement.
4.3 The Executive will at all times promptly give to the
Board (in writing if requested) all information, explanations and
assistance that the Board may require in connection with the
business or affairs of the Company and the Group and his
employment under this Agreement.
4.4 The Company will provide the Executive with an assistant
to help him perform his duties to the Company immediately. The
Executive will be involved in the recruitment of any such
assistant. Provided the Company has used reasonable
endeavours so to do, no failure by the Company to provide an
assistant will amount to a breach by the Company of its
obligations herein.
Place of work
5.1 The Executive will perform his duties at the Head Office
of the Company or such other place of business of the Company
or of any Group Company as the Company requires or as may be
agreed with the Executive (from time to time) whether inside
or outside the United Kingdom but the Company will not
require him without his prior consent to go to or reside
anywhere outside the United Kingdom except for occasional
visits in the ordinary course of his duties comprising in
aggregate no more than 90 days in any 6 month period.
5.2 If the Company relocates its head office/changes the
Executive's place of work so that the Executive has to
relocate his residence, the Company will reimburse him for
his reasonable removal and other incidental expenses in
accordance therewith within a month of the Executive
incurring such expenditure.
5.3 If the Company relocates its Head Office from its present
position to more than 25 miles from the Executive present
home, the Executive will have the option to work from home
or any other location to be agreed with the Company for a
period of not less than 2 days per week. The cost of
providing facilities at the Executives home or other
location shall be met by the Company. If the Executive
incurs additional travelling expenses due to the Head Office
move, these additional expenses will also be met by the
Company.
Hours of Work
6. The Company's normal office hours are from 9.00 am to
5.30pm Monday to Friday but the Executive may be required to work
outside these hours without additional remuneration in order
to meet the requirements of the business if so required for
the proper performance of his duties. If the Executive works
beyond 9.00p.m. on any day, he will not be required to
attend the office punctually at 9.00am the following day.
Remuneration
7.1 The Company will pay the Executive a salary at the rate
of GBP80,000 per annum with effect from the Commencement Date
which will accrue from day to day and be payable in arrears
by equal monthly instalments on the last day of each month.
7.2 The Executive's salary will be subject to upward review
only by the Board which will be effective on and from 1st January
in each year during the Executive's employment under this
Agreement commencing 1st January 2001 provided that the
increase (if any) of such salary together with such
additional emoluments will be a matter to be decided at the
Board's absolute discretion
7.3 The salary referred to in Clause 7.1 will be inclusive of
any director's fees to which the Executive may be entitled
as a director of the Company or of any Group Company.
7.4 The Executive will be entitled to participate in any
bonus scheme for executive directors implemented by the Board
from time to time.
7.5 The Executive will receive 300,000 options @ $3 in the
Company's option scheme on joining the company. In addition
a separate incentive and bonus share option scheme will be
entered into between the Executive and the Company and will
be annexed to this Agreement with 60 days of signing this
agreement.
Expenses
8. The Executive shall be entitled to be reimbursed:
8.1 all out of pocket expenses (including hotel, travelling and
entertaining expenses) reasonably incurred by him in the
proper performance of his duties, subject to the production
of such receipts or other evidence as the Company may
reasonably require.
8.2 all expenses (including, without limitation, all legal and
other costs of sale and purchase, the cost of any temporary
accommodation, removal charges and an allowance for the
provision or replacement of fittings such as carpets and
curtains) reasonably incurred by or on behalf of the
Executive in moving from his present residential address to
another if required to do so by the Company.
8.3 the cost of subscription to all professional bodies towhich
the Executive is obliged to belong in order to maintain his
professional qualification.
Motor Car
9. The Company shall provide the Executive with a car allowance
of GBP750.00 per calendar month and reimburse the Executive
for the use of his personal car at the standard AA or RAC
rate of mileage.
Holidays
10.1 In addition to normal public holidays the Executive will be
entitled to 20 working days' paid holiday in each calendar
year, such holiday to be taken at such time or times as may
be approved by the Board.
10.2 Any holiday entitlement which is not taken by the end of the
calendar year to which it relates will be lost and may not
be carried forward.
10.3 The Executive's entitlement to paid holiday in the calendar
year in which his employment terminates will be 2 days for
each completed calendar month in that year provided that no
such entitlement to paid holiday will arise if the Executive
terminates his employment without the Company's consent
before the expiry of notice given by him pursuant to Clause
3.2 or without giving notice or before the expiry of the
fixed term referred to in Clause 3.2 or if the Company
terminates the Executive's employment pursuant to Clause
18.1.
10.4 Where the Executive has taken more or less than his holiday
entitlement in the year his employment terminates, a
proportionate adjustment will be made by way of addition to
or deduction from (as appropriate) his final gross pay
calculated on a pro-rata basis.
Conflict of interests
11.1 The Executive will disclose promptly to the Board in writing
his interests of more than 5% in any business other than
that of the Company and the Group and will notify the Board
immediately of any change in his external interests. Except
with the written consent of the Board the Executive will not
during his employment under this Agreement be directly or
indirectly engaged, concerned or interested whether as
principal, servant or agent (on his own behalf or on behalf
of or in association with any other person) of more than 5%
in any other trade, business or occupation other than the
business of the Company or any Group Company provided that
the Executive will not be precluded from being interested
for investment purposes only as a member, debenture holder
or beneficial owner of any stock, shares or debentures
which are listed or dealt in on a recognised investment
exchange and which do not represent more than five per cent.
of the total share or loan capital from time to time in
issue in such company.
11.2 The Executive will not during his employment introduce to
any other person, firm, company or organisation business of
any kind with which the Company or any other Group Company
for which he has performed services under this Agreement is
able to deal and he will not have any financial interest in,
or derive any financial or other benefit from, contracts or
transactions entered into by the Company or any other Group
Company for which he has performed services under this
Agreement with any third party without first disclosing such
interest or benefit to the Board and obtaining its written
approval.
Pension and Other Benefits
12.1 The Executive is eligible for membership of the Permanent
Health Scheme at its most senior level subject to the
provisions governing such Scheme. A copy of those
provisions will be supplied by the Company on request.
12.2 The Company shall make contributions to the Executive's
Personal Pension Scheme at the rate of 15 per cent of the
Executive's annual remuneration for the time being. The
Executive's pension contribution will be subject to upward
review only by the Board which will be effective on and from
1st January in each year during the Executive's employment
under this Agreement commencing 1st January 2001
12.3 During the Term the Company shall provide the Executive, his
spouse and children under the age of 18 years or in full
time education, with membership of a private medical
insurance scheme, subject to the Company being able to
obtain such membership at normal rates and in accordance
with the information describing the Company's medical
insurance arrangements which has already been supplied to
the Executive.
12.4 Provided the same is available at normal rates, The Company
will procure for the Executive life assurance cover with a
reputable insurer, which, in the event of the Executive's
death during the Employment, will realise for the
Executive's chosen dependants a lump sum equal to four times
the Executive's basic annual remuneration for the time being
payable under this Agreement.
12.5 During the Executive's employment under the terms of this
Agreement the Executive shall be invited to apply for
options to be granted to him under the terms of any option
schemes in place from time to time as the Board determines
from time to time.
Restrictive covenants
13.1 In this Clause 13 the following expressions have the
following meanings:
"Critical Person" any person who was an employee,
agent, director, consultant or
independent contractor employed,
appointed or engaged by the Company or
any Relevant Group Company at any time
within the Relevant Period who by reason
of such employment, appointment or
engagement and in particular his/her
seniority and expertise or knowledge of
trade secrets or confidential
information of the Company or any Group
Company or knowledge of or influence
over the clients, customers or suppliers
of the Company or any Group Company is
likely to be able to assist or benefit a
business in or proposing to be in
competition with the Company or any
Relevant Group Company;
"Relevant Customer" any person, firm company or
organisation who or which at any time
during the Relevant Period is or was:-
(i) negotiating with the Company or a
Relevant Group Company for the sale
or supply of Relevant Products or
Services; or
(ii) a client or customer of the
Company
or any Relevant Group Company for
the sale or supply of Relevant
Products or Services.
and in each case with whom or which the
Executive was directly concerned or
connected or of whom or which the
Executive had personal knowledge during
the Relevant Period in the course of his
employment hereunder;
"Relevant Group Company" any Group Company (other than the
Company) for which the Executive has
performed services under this Agreement
or for which he has had
operational/management responsibility at
any time during the Relevant Period;
"Relevant Period" the period of 12 months immediately
before the Termination Date;
"Relevant Products" products or services which are of
the same kind as or of a Services"
materially similar kind to or
competitive with any products or
services sold or supplied by the Company
or any Relevant Group Company within the
Relevant Period and with which sale or
supply the Executive was directly
concerned or connected or of which he
had personal knowledge during the
Relevant Period in the course of his
employment hereunder;
"Termination Date" the date on which the
Executive's employment under this
Agreement terminates and references to
"from the Termination Date" mean from
and including the date of termination.
"Restricted Territory" United Kingdom
13.2 The Executive will not without the prior written consent
of the Company directly or indirectly and whether alone or
in conjunction with or on behalf of any other person and
whether as a principal, shareholder, director, employee,
agent, consultant, partner or otherwise:-
13.2.1 within the Restricted Territory for a period of
twelve months from the Termination Date be
engaged, concerned or interested in, or provide
technical, commercial or professional advice to,
any other business which supplies Relevant
Products or Services in competition with the
Company or any Relevant Group Company provided
that this restriction does not apply to prevent
the Executive from holding shares or other
securities in any company which is quoted, listed
or otherwise dealt in on a recognised investment
exchange or other securities market and which
confer not more than 1% of the votes which could
be cast at a general meeting of such company; or
13.2.2 within the Restricted Territory for a period of
twelve months from the Termination Date be engaged,
concerned or interested in any business which at
any time during the Relevant Period has supplied
Relevant Products or Services to the Company or any
Relevant Group Company or is or was at any time
during the Relevant Period a Relevant Customer of
the Company or any Relevant Group Company if such
engagement, concern or interest causes or would
cause the supplier to cease or materially reduce
its supplies to the Company (or any Relevant Group
Company as the case may be) or the Relevant
Customer to cease or materially to reduce its
orders or contracts with the Company or any
Relevant Group Company; or
13.2.3 for a period of twelve months from the
Termination dte so as to compete with the Company or any
Relevant Group Company canvass, solicit or approach
or cause to be canvassed, solicited or approached
any Relevant Customer for the sale or supply of
Relevant Products or Services or endeavour to do
so; or
13.2.4 for a period of twelve months from the
Termination
Date so as to compete with the Company or any
Relevant Group Company deal or contract with any
Relevant Customer in relation to the sale or supply
of any Relevant Products or Services, or endeavour
to do so; or
13.2.5 for a period of twelve months from the
Termination
Date solicit, induce or entice away from the
Company or any Relevant Group Company or, in
connection with any business in or proposing to be
in competition with the Company or any Relevant
Group Company, employ, engage or appoint or in any
way cause to be employed, engaged or appointed a
Critical Person whether or not such person would
commit any breach of his or her contract of
employment or engagement by leaving the service of
the Company or any Relevant Group Company;
13.2.6 use in connection with any business any name
which includes the name of any Group Company or any
colourable imitation of it.
13.3 Whilst the restrictions in this Clause 13 (on which the
Executive has had an opportunity to take independent
advice as the Executive hereby acknowledges) are regarded
by the parties as fair and reasonable, it is hereby
declared that each of the restrictions in this Clause 13
is intended to be separate and severable. If any
restriction is held to be unreasonably wide but would be
valid if part of the wording (including in particular but
without limitation the defined expressions referred to in
Clause 13.1) were deleted, such restriction will apply
with so much of the wording deleted as may be necessary to
make it valid.
13.4 If the Executive breaches any of the provisions in this
Clause 13 the Company will be entitled by written notice
to the Executive to extend the period during which the
provisions of Clause 13 which have been breached apply by
an equivalent period to that during which the breach or
breaches have continued, such additional period to
commence on the date on which the said period would have
otherwise expired. The Executive hereby agrees that if
the Company so extends the period of any such restriction,
this will not prejudice the right of the Company to apply
to the Courts for injunctive relief in order to compel the
Executive to comply with the provisions of this Clause 13
and/or damages, as the case may be.
13.5 For the purposes of Clauses 13 and 14 the Company has
entered into this Agreement as agent for and trustee of
all Relevant Group Companies.
13.6 If the Executive applies for or is offered a new
employment, appointment or engagement, before entering
into any related contract the Executive will bring the
terms of this Clause 13 and Clauses 3, 4, 14, 15, 16 and
18.2 to the attention of a third party proposing directly
or indirectly to employ, appoint or engage him.
Confidentiality
14.1 The Executive acknowledges that in the ordinary course of
his employment he will be exposed to information about the
Company's business and the business of other Group
Companies and that of the Company's and the Group
Companies' suppliers and customers which amounts to a
trade secret, is confidential or is commercially sensitive
and which may not be readily available to others engaged
in a similar business to that of the Company or any of the
Group Companies or to the general public and which if
disclosed will be liable to cause significant harm to the
Company or such Group Companies. The Executive has
therefore agreed to accept the restrictions in this Clause
14.
14.2 Without prejudice to Clause 14.3 or 14.4 and subject to
Clause 14.3 the Executive will not during the period of
his employment with the Company:-
14.1.1 sell or seek to sell to anyone information
acquired by him in the course of his employment with the
Company;
14.1.2 obtain or seek to obtain any financial
advantage (direct or indirect) from disclosure of such
information.
14.3 The Executive will not either during his employment or
after its termination without limit in time for his own
purposes or for any purposes other than those of the
Company or any Group Company (for any reason and in any
manner) use or divulge or communicate to any person, firm,
company or organisation except to those officials of any
Group Company whose province it is to know the same any
secret or confidential information or information
constituting a trade secret acquired or discovered by him
in the course of his employment with the Company relating
to the private affairs or business of the Company or any
Group Company or its/their suppliers, customers,
management or shareholders.
14.4 The restrictions contained in this Clause do not apply
to:-
(i) any disclosure authorised by the Board or required
in the ordinary and proper course of the
Executive's employment or as required by the order
of a court of competent jurisdiction or an
appropriate regulatory authority or otherwise
required by law; or
(ii)any information which the Executive can demonstrate
was known to the Executive prior to the
commencement of the Executive's employment by the
Company or by a Group Company or is in the public
domain otherwise than as a result of a breach by
him of this Clause; or
(iii) any information disclosed to the Executive by a
third party who is not bound by any duty of
confidence to the Company or any Group Company.
14.5 The provisions of this Clause 14 are without prejudice to
the duties and obligations of the Executive to be implied
into this Agreement at common law.
Patents
15.1 The Executive must disclose immediately to the Company any
discovery or invention or secret process or improvement in
procedure made or discovered by the Executive during his
employment in connection with or in any way affecting or
relating to the business of the Company or any Group
Company or capable of being used or adapted for use in or
in connection with any such company ("Inventions") which
Inventions will belong to and be the absolute property of
the Company or such other person, firm, company or
organisation as the Company may require.
15.2 If requested by the Board (whether during or after the
termination of his employment) the Executive will at the
expense of the Company apply or join in applying for
letters patent or other similar protection in the United
Kingdom or any other part of the world for all Inventions
and will do everything necessary (including executing
documents) for vesting letters patent or other similar
protection when obtained and all right and title to and
interest in all Inventions in the Company absolutely and
as sole beneficial owner or in such other person, firm,
company or organisation as the Company may require.
15.3 The Executive will (both during and after the termination
of his employment) at the Company's expense anywhere in
the world and at any time promptly do everything
(including executing documents) that may be required by
the Board to defend or protect for the benefit of the
Company all Inventions and the right and title of the
Company to them.
15.4 The Executive hereby irrevocably authorises the Company to
appoint a person to execute any documents and to do
everything necessary to effect his obligations under this
Clause 15 on his behalf.
15.5 The provisions of Clause 15.1 to 15.3 (inclusive) are
without prejudice to the provisions of the Patents Act
1977.
Copyright
16.1 The entire copyright and all similar rights (including
future copyright, the right to register trade marks or
service marks and the right to register designs and design
rights) throughout the world in works of any description
produced by the Executive in the course of or in
connection with his employment ("Works") will vest in and
belong to the Company absolutely throughout the world for
the full periods of protection available in law including
all renewals and extensions.
16.2 The Executive will (both during and after the termination
of his employment) at the Company's request and expense
anywhere in the world and at any time promptly do
everything (including executing documents) that may be
required by the Board to assure, defend or protect the
rights of the Company in all Works.
16.3 The Executive hereby irrevocably authorises the Company to
appoint a person to execute any documents and to do
everything necessary to effect the obligations of the
Executive under this Clause 16 on the Executive's behalf.
16.4 For the purposes of Clause 15 and Clause 16, the Executive
hereby irrevocably and unconditionally waives in favour of
the Company the moral rights conferred on him by Chapter
IV Part 1 of the Copyright Designs and Patents Act 1988 in
respect of any Inventions or Works in which the copyright
is vested in the Company under Clause 15, this Clause 16
or otherwise.
Incapacity
17.1 If the Executive is absent from his duties as a result of
illness or injury he will notify another member of the
Board as soon as possible and complete any self-
certification forms which are required by the Company.
If the incapacity continues for a period of seven days or
more he will produce to the Company a medical certificate
to cover the duration of such absence.
17.2 Subject to the rest of Clause 17 and to 18.1.7 and subject
to the receipt of the appropriate certificates in
accordance with Clause 18, if the Executive is absent from
his duties as a result of illness or injury he will be
entitled to payment of his salary at the full rate in
respect of such illness or injury for a period (in total)
of no more than three months in any period of 12 months
(whether the absence is intermittent or continuous).
Thereafter, for a further period of three months in any
period of 12 months (whether the absence is intermittent
or continuous) the Executive shall receive half of his
salary otherwise payable to him during such further
period(s) of absence and thereafter the Executive will not
be entitled to any further payment from the Company until
the resumption of his duties
17.3 If the Executive is absent from work because of any injury
or condition (physical or mental and whether or not
sustained in the course of his duties) caused wholly or
partly by any act or omission of any person, firm, company
or organisation (other than the Company or any Group
Company) from whom the Executive may be or become entitled
to recover damages or compensation, any sum paid by the
Company to the Executive in respect of the said absence
will be an interest free loan (subject to any limit
imposed under the Companies Act 1985 or other relevant
legislation) to the Executive repayable immediately by the
Executive to the Company on recovery by him of any such
damages or compensation.
17.4 If the Executive has been absent from work because of any
injury or condition caused wholly or partly by the Company
or any Group Company or any person for whom the Company or
any Group Company is vicariously liable and for which the
Executive may be or become entitled to recover damages or
compensation, any such damages or compensation payable
will be reduced by the amount of any sick pay (statutory
or otherwise) paid to him and by the pension received or
receivable by him in the period in respect of which such
damages or compensation are calculated.
17.5 The remuneration paid under Clause 17.2 will include any
Statutory Sick Pay payable and when this is exhausted will
be reduced by the amount of any Social Security Sickness
Benefit or other benefits recoverable by the Executive
(whether or not recovered). For the avoidance of doubt
the provisions of this Clause 17 and any right or
prospective right the Executive has or may have to receive
any benefits under any permanent heath insurance scheme of
which the Executive becomes in any way the Company's right
to terminate this Agreement pursuant to Clauses 3.2 to 3.5
or otherwise pursuant to its terms.
17.6 Whether or not the Executive is absent by reason of
sickness, injury or other incapacity the Executive will at
the request of the Board agree to have a medical
examination performed by a doctor appointed and paid for
by the Company and the Executive hereby authorises the
Board to have unconditional access to any report or
reports (including copies) produced as a result of any
such examination as the Board may from time to time
require and entitlements to salary pursuant to Clause 17.2
will be conditional on the Executive complying with the
terms of this Clause 17.6.
Termination
18.1 The Company may terminate the Executive's
employment
immediately by summary notice in writing and without
making any further payment beyond the amount of any
remuneration actually accrued to the date of such
termination subject to rights of set-off (notwithstanding
that the Company may have allowed any time to elapse or on
a former occasion may have waived its rights under this
Clause) if he:-
18.1.1 commits, repeats or continues any serious breach of
any part of this Agreement or his obligations under
it or without reasonable cause neglects, refuses or
fails to discharge his duties herein or to obey
after prior written warning any reasonable
directions of the Company or otherwise fails to
observe and perform the provisions of this
Agreement and his duties hereunder
18.1.2 in the performance of his duties under this
Agreement or otherwise commits any act of gross
misconduct or serious incompetence or does or omits
to do any thing else which is seriously prejudicial
to the interests of the Company or any Group
Company;
18.1.3 adversely prejudices or because of his behaviour is
likely in the reasonable opinion of the Board to
prejudice adversely the interests or reputation of
the Executive, the Company or any Group Company;
18.1.4 is convicted of any criminal offence other than an
offence which does not in the opinion of the Board
affect his position under this Agreement;
18.1.5 becomes bankrupt or enters into or make any
arrangement or composition with or for the benefit
of his creditors generally;
18.1.6 becomes of unsound mind;
18.1.7 becomes incapacitated from performing all or any of
his duties under this Agreement by illness, injury
or otherwise for a period exceeding (in total) 13
weeks (or such longer period as the Company may
agree) in any period of 12 months from performing
all or any of his duties under this Agreement (save
where he is being paid under the provisions of any
permanent health insurance scheme maintained by the
Company); or
18.1.8 becomes prohibited by law from being a director of
a company or if the Executive ceases to be a
director of the Company without the consent or
concurrence of the Company.
18.2 Without prejudice to Clause 3.1 after notice of
termination has been given by either party pursuant to
Clause 3 or if the Executive seeks to or indicates an
intention to resign as a director of the Company or any
Group Company or terminate his employment, provided that
the Executive continues to be paid and enjoys his full
contractual benefits until his employment terminates in
accordance with the terms of this Agreement, the Board may
in its absolute discretion without breaking the terms of
this Agreement or giving rise to any claim against the
Company or any Group Company for all or part of the notice
period or fixed term (as the case may be):-
18.2.1 exclude the Executive from the premises of the
Company and/or any Group Company;
18.2.2 require him to carry out specified duties
(consistent with the Executive's status, role and
experience for the Company) other than those
referred to in Clause 4 or to carry out no duties;
18.2.3 announce to employees, suppliers and customers that
he has been given notice of termination or has
resigned (as the case may be);
18.2.4 instruct the Executive not to communicate orally or
in writing with suppliers, customers, employees,
agents or representatives of the Company or any
Group Company until his employment hereunder has
terminated.
18.3 Before and after termination of the Executive's
employment, the Executive will provide the Company and/or
any Group Company with assistance regarding matters of
which he has knowledge and/or experience in any
proceedings or possible proceedings in which the Company
and/or Group Company is or may be a party.
Deductions
19 The Executive hereby authorises the Company to deduct from
his remuneration (which for this purpose includes salary,
pay in lieu of notice, commission, bonus, holiday pay and
sick pay) all debts owed by the Executive to the Company
or any Group Company, including but without limitation the
balance outstanding of any loans (and interest where
appropriate) advanced by the Company to the Executive.
Sale or reconstruction of the Company
20 The Executive will have no claim against the Company or
any Group Company in respect of the termination (by
operation of law or otherwise) of his employment under
this Agreement on or in connection with the sale of the
whole or a substantial part of the business or undertaking
of the Company or on or in connection with the sale by the
Company of any Group Company or on or by reason of the
liquidation of the Company for the purposes of
amalgamation or reconstruction (whether or not by reason
of insolvency) if within 28 days of such an event he is
offered employment on no less favourable terms than those
contained in this Agreement (apart from the identity of
the employer) with any person, firm, company or
organisation which acquires such Group Company or which
acquires the whole or a substantial part of the
undertaking or business of the Company as a result of such
sale or of such amalgamation or reconstruction.
Delivery of documents and property
21. On termination of his employment for any reason (or
earlier if requested) the Executive will immediately
deliver up to the Company all property (including but not
limited to documents and software, credit cards, keys and
security passes) belonging to it or any Group Company in
the Executive's possession or under his control.
Documents and software include (but are not limited to)
correspondence, diaries, address books, databases,
files, reports, minutes, plans, records, documentation or
any other medium for storing information. The Executive's
obligations under this Clause include the return of all
copies, drafts, reproductions, notes, extracts or
summaries (however stored or made) of all documents and
software.
Resignation as director
22.1 The Executive will on termination of his employmentfor
any reason at the request of the Board give notice
resigning immediately without claim for compensation (but
without prejudice to any claim he may have for damages for
breach of this Agreement):-
22.1.1 as a director of the Company and all such Group
Companies of which he is a director; and
22.1.2 all trusteeships held by him of any pension scheme
or other trusts established by the Company or any
Group Company or any other company with which the
Executive has had dealings as a consequence of his
employment with the Company.
22.2 If notice pursuant to Clause 22.1 is not received by the
relevant company within seven days of a request by the
Company, the Company is irrevocably authorised to appoint
a person to execute any documents and to do everything
necessary to effect such resignation or resignations on
the Executive's behalf.
22.3 Except with the prior written agreement of the Board, the
Executive will not during his employment under this
Agreement resign his office as a director of the Company
or any Group Company and if he does so without the consent
or concurrence of the Company, the Company will be
entitled to terminate his employment pursuant to Clause
18.1.8 or at the Company's absolute discretion, to treat
such resignation as notice of termination given by the
Executive to the Company pursuant to Clause 3.2 and to
suspend the Executive pursuant to Clause 18.2.
22.4 The Executive's appointment as a director of the Company
or any other Group Company will be subject to the Articles
of Association from time to time of the relevant company.
Rights following termination
23 The termination of the Executive's employment under this
Agreement will not affect any of the provisions of this
Agreement which expressly operate or lawfully have effect
after termination and will not prejudice any right of
action already accrued to either party in respect of any
breach of any terms of this Agreement by the other party.
Disciplinary and grievance procedures
24 The Company does not have a formal disciplinary procedure
which is applicable to the Executive.
Notices
25. Notice under this Agreement by the Executive to the
Company should be addressed to the Company and left at its
registered office or is sent by first class post to its
registered office and notices given by the Company to the
Executive should be served personally or sent by first
class or sent by facsimile transmission to his usual or
last known place of residence in England and in case of
service by post the day of service will be 48 hours after
posting.
Miscellaneous
26.1 This Agreement shall be governed by and interpreted in
accordance with the law of England and Wales.
26.2 The parties to this Agreement submit to the exclusive
jurisdiction of the English Courts in relation to any
claim, dispute or matter arising out of or relating to
this Agreement.
26.3 Any delay by the Company in exercising any of its rights
under this Agreement will not constitute a waiver of such
rights.
26.4 This Agreement contains the particulars required to be
given under section 1 of the Employment Protection
(Consolidation) Act 1978 as amended by the 1996 Act
("EPA") and comprises the note referred to in section 1
(4) of the EPA to the intent that, as at the date of this
Agreement, the Company shall not be required to deliver to
the Executive a separate written statement pursuant to
section 1 of the EPA
IN WITNESS WHEREOF THIS AGREEMENT has been signed on behalf of
the Company by a Director and executed and delivered as a
deed by the Executive on the date set out at the
beginning.
SIGNED by
for and on behalf of THE COMPANY
.....................................
Director
EXECUTED AND DELIVERED )
by THE EXECUTIVE in the )
presence of:-
)....................................
Witness:
Signature:
.............................................
Name:
.............................................
Address:
.............................................
Exhibit 10.4 Service Agreement, by and between Ci4net.com and
Dale Morrison
Mr. Dale F. Morrison
130 Hodge Road
Princeton, New Jersey 08540
Dear Mr. Morrison:
Ci4Net.com, Inc. (the "Company") agrees to employ you and you
agree to accept employment upon the terms and conditions set
forth in this agreement (the "Agreement").
1. Term. The term of this Agreement will commence on the date
hereof (the "Effective Date") and continue until December 31,
2003 unless earlier terminated pursuant to the provisions of
Paragraph 4 (the "Term").
You and the Company agree and acknowledge that the Company has no
obligation to extend the Term or to continue your employment
after expiration of the Term, and you and the Company expressly
acknowledge that no promises or understandings to the contrary
have been made or reached. You and the Company also agree and
acknowledge that should you and the Company choose to continue
your employment for any period of time following the expiration
of the Term (including any extensions thereof) without a written
agreement that the provisions of Paragraphs 5, 9 and 10 shall
continue to apply during any such "at will" employment.
2. Duties. You agree to be employed and perform your exclusive
full-time services for the Company upon the terms and conditions
of this Agreement; provided, however, that nothing herein shall
prevent or preclude your involvement or participation, so long as
it does not materially interfere with the performance of your
duties hereunder, in (i) the management of your personal
investments; (ii) your service on the boards of three charitable
organizations on which you currently serve and (iii) subject to
the prior written approval of the Board, which shall not be
unreasonably withheld, and your compliance with the provisions of
Paragraph 5(c) hereof, your service on the board of directors of
any charitable, civic or business organization. You will perform
your services hereunder as Chief Executive Officer of the
Company, reporting directly to, and performing the services
commensurate with your position as requested from time to time
by, the Board of Directors of the Company (the "Board") or its
duly authorized officers. It is anticipated that, subject to
shareholder approval, you will be appointed as a member of the
Board. Your services hereunder shall be substantially consistent
with, and you shall have the duties, authorities and
responsibilities substantially commensurate with, those of a
chief executive officer of a company of similar size and nature
as the Company. You shall render your services hereunder in
metropolitan areas of London, England and New York, New York,
provided that you agree to such travel as is reasonably necessary
or desirable for the performance of your duties hereunder.
3. Compensation and Related Matters.
(a) Base Salary. For all services rendered under this
Agreement, commencing May 1, 2000, the Company or its affiliates
will pay you base salary at an annual rate of Three Hundred Fifty
Thousand and 00/100 Dollars ($350,000.00), payable in accordance
with the Company's applicable payroll practices ("Base Salary").
Your Base Salary will be reviewed at least once during each full
year during the Term and may be increased (but not decreased) at
the sole and absolute discretion (without any obligation to do
so) of the Board, with such new amount constituting "Base Salary"
for all purposes hereunder.
(b) Bonus Compensation. You will be eligible to receive an
annual bonus as determined by the Board based on the achievement
of certain reasonable performance objectives with respect to the
Company as adopted by the Board after discussion with you. Your
target annual bonus (the "Target Bonus") will be One Hundred
Fifty Thousand and 00/100 Dollars ($150,000.00), pro rated for
any partial year of your employment, and will be paid at the same
time as other executives are paid bonuses for each fiscal year of
the Company. Your Target Bonus is not a guaranteed bonus. Your
Target Bonus shall be increased proportionately with any increase
in your Base Salary so as to consitute at least 42.8% of your
Base Salary, with such new amount constituting "Target Bonus" for
all purposes hereunder (it being understood and agreed for the
avoidance of doubt that the Board is under no obligation to
increase your Base Salary).
(d) Options.
(i) Initial Option Grant. The Company will grant to you an
option (the "Initial Grant") to purchase 1,225,000 common shares,
$0.001 par value, of the Company ("Common Shares") at an exercise
price per share equal to the offering price per share in the
proposed underwritten secondary offering of the Company's
securities (the "Secondary Offering"). Except as otherwise
provided herein the Initial Grant will vest as follows: (i) one
quarter of the Initial Grant (with respect to 306,250 Common
Shares) will vest on the date of grant; and (ii) the remaining
three quarters of the Initial Grant will vest in equal
one-sixteenths (with respect to 76,562.5 Common Shares) of the
entire Initial Grant at the end of each calendar quarter during
your continuous employment by the Company commencing March 31,
2001; provided that if you remain continuously employed by the
Company on the first anniversary following a Change of Control
(as defined below), any unvested portion of the Initial Grant
will vest in an amount equal to one quarter thereof (i.e., with
respect to 306,250 Common Shares or such lesser unvested amount),
with the remaining unvested portion continuing to vest in equal
one-sixteenths of the entire Initial Grant at the end of each
calendar quarter during your continuous employment by the Company
following such one-year anniversary of a Change of Control
(together with the other provisions relating to vesting set forth
in this Agreement, the "Vesting Schedule"). For purposes hereof,
the term "Change of Control" shall mean (A) any "person" as
defined in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and as used in Section
13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding the Company and
any affiliate thereof (including, without limitation, Kevin Leech
and Lee Cole and any of their affiliates) and any employee
benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), of securities of the Company
representing more than 110% of the percentage ownership of
combined voting power in the Company held or controlled
collectively by Kevin Leech and Lee Cole, or their affiliates;
(B) any merger, combination, consolidation, sale of substantially
all of the assets of the Company, liquidation, dissolution or
similar transaction (other than in connection with ordinary sales
to the public, or repurchases by the Company, of the Company's
securities) involving the Company following which the holders of
the capital stock of the Company immediately prior to such
transaction will not own in substantially the same percentages as
prior to such transaction more than 50% of the Company's capital
stock entitled to vote for directors of the resulting entity
other than by a merger, combination, consolidation or similar
transaction by an affiliate of the Company; or (C) if within any
12-month period commencing after the election of the Board in the
year 2000, the persons who were directors of the Company
immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to
constitute at least a majority of the Board or the board of
directors of a successor to the Company; provided that for this
purpose, any director who was not a director at the beginning of
such period shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the nomination or
recommendation of, or with the approval of, at least 51% of the
directors who then qualified as Incumbent Directors (so long as
such director was not nominated by a person who commenced or
threatened to commence an election contest or proxy solicitation
by or on behalf of a person or entity (other than the Board) or
who has entered into an agreement to effect a Change of Control
or expressed an intention to cause such a Change of Control).
(ii) Subsequent Grants. For each subsequent fiscal year of
the Term after the fiscal year in which the Initial Grant is
made, the Board may (but shall not be obligated to) grant to you
additional options to purchase Common Shares in amounts and
exercise prices determined by the Board in its sole discretion
("Subsequent Grants").
The Initial Grant and any Subsequent Grants will become
exercisable and be granted pursuant to the Company's Option Plan
(the "Option Plan") and will in all respects be subject to the
terms and conditions of the Option Plan and any applicable option
agreement; provided that to the extent of any inconsistency
between this Agreement and the Option Plan or any applicable
option agreement, the terms of this Agreement shall control.
(e) Restricted Share Awards. The Company will issue you shares
of Common Stock having a value of $500,000 (based on the offering
price of the Secondary Offering) as a sign-on bonus (the
"Restricted Shares"), which shares will vest on the same terms as
the Vesting Schedule as the Initial Grant above, and will lend
you up to $250,000 pursuant to a full-recourse promissory note
(which note will have a term that runs 120 days beyond the Term,
bear interest at the lowest applicable Federal rate, and be
secured by such shares pursuant to a pledge agreement in form and
substance reasonably satisfactory to the Company executed and
delivered by you together with the certificates for such shares
accompanied by stock powers endorsed in blank) in order to enable
you to pay income taxes on such sign-on bonus (the "Tax Note").
In addition, you will be allowed to purchase up to $2,000,000 of
Common Stock at the offering price of the Secondary Offering,
which will be fully vested when purchased, and the Company will
lend you funds sufficient to make such purchase pursuant to a
promissory note (the "Stock Note") having substantially the same
terms as the Tax Note other than its being only 20% recourse to
you and otherwise secured only by such shares. You hereby
covenant not to sell more than 5% of the shares acquired pursuant
to this paragraph until the earliest of (i) one year from the
date of issuance or acquisition, (ii) the termination of your
employment with the Company or (iii) the occurrence of a Change
in Control.
(f) Benefits. You will be entitled to participate at a level not
less favorable than that afforded other executives of the Company
in the Company employee benefit plans, policies and programs (the
"Company Benefits"), in accordance with and subject to the terms
and conditions thereof. You will be entitled to vacation with
pay during the Term in accordance with the Company's vacation
policy in effect from time to time; provided, however, that you
shall be entitled to not less than four (4) weeks of paid
vacation in each calendar year. The Company will also provide
round trip business class airfare between London and New York for
you and your spouse (i) twice monthly until May 1, 2001 and (ii)
once monthly thereafter during the Term. In addition, the
Company will provide you with a term life insurance policy in the
amount of $3,000,000, and you hereby agree to submit to medical
examinations as requested by the Company in order to obtain such
insurance policy.
(g) Expense Reimbursements. During your employment, the Company
will reimburse you for your reasonable and necessary business
expenses in accordance with its then prevailing policy for senior
executives at your level (which will include appropriate
itemization and substantiation of expenses incurred). The
Company agrees to reimburse you for your reasonable legal fees in
connection with the negotiation, execution and delivery of this
Agreement in an amount not to exceed $25,000.
(h) Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes
as will be required to be withheld pursuant to any applicable
laws or regulations.
(i) Expatriation Package. The Company will provide you with a
relocation package, which will include reimbursement of your
reasonable moving-related expenses, tax equalization, expatriate
cost of living adjustment based on standard recognized
differential for US employees in UK, apartment and automobile,
and the details of which will be mutually agreed upon between you
and the Company.
4. Compensation Upon Certain Termination Events.
(a) Compensation Payable. Should your employment with the
Company terminate, you will be entitled to the amounts and
benefits shown on the following table, subject to Paragraphs 4(b)
through 4(h) and Paragraph 5(g). In the event of such
termination, and except for payments noted in this Paragraph 4
and expense reimbursements in accordance with Paragraph 3(f) and
Paragraphs 9(d) and 10, the Company will have no further
obligations to you under this Agreement.
Termination For Cause/Voluntary Termination without Good Reason
Involuntary Termination/ Good Reason Disability Death
Payment of (1) any accrued but unpaid Base Salary and, if earned
and announced by the Board with respect to the prior fiscal year
and not previously paid, any bonus owing to you for such prior
fiscal year, (2) any accrued but unpaid vacation due you at the
end of the Term, (3) other unpaid amounts then due you under
Company benefit plans or programs, and (4) termination and
cancellation of all unvested Restricted Shares and options, with
30 days to exercise vested options. Same as for termination
for Cause except that (1) your Base Salary, Target Bonuses will
continue through the expiration of the Term, (2) benefits (other
than benefits provided under (a) any plan qualified under Section
401(a) of the Internal Revenue Code and (b) any stock or
incentive based plan) will continue through the earlier of the
first anniversary of the termination of your employment or the
end of the otherwise applicable Term, provided you meet the
requirements in Paragraph 5 and subject to the terms and
conditions of each benefit plan (other than the requirement of
continued employment) and provided further that such benefits
shall terminate upon your securing other employment with
substantially similar benefits, (3) all of the Restricted Shares
and Initial Grant shall vest (and be exercisable for one year
from termination of your employment), and (4) the reasonable
repatriation expenses for you, your spouse, your children and
your possessions ("Repatriation Expenses") will be paid. Your
Base Salary will continue until the earliest of (1) the 180th day
following the start of your disability absence, or (2) your death
and will be reduced by other Company-provided disability benefits
available to you. Payment of (1) any accrued but unpaid Base
Salary, bonus due you for the prior year, if any, and pro rata
Target Bonus through the date of termination, (2) any accrued but
unpaid vacation to due you at the end of the Term, (3) other
unpaid amounts then due you under Company benefit plans or
programs, (4) vesting of Restricted Shares and Options that would
otherwise have vested within one year of the termination of your
employment (which shall be exercisable for one year from
termination of your employment), and (5) Repatriation Expenses
will be paid. Payment of (1) any accrued but unpaid Base Salary,
bonus due you for the prior year, if any, and pro rata Target
Bonus through your date of death, (2) any accrued but unpaid
vacation due you at the end of the Term, and (3) other unpaid
amounts then due you under Company benefit plans or programs,
except that those payments will be made to your estate or legal
representative, and your death benefits payable due to your death
under Company employee benefit plans or programs will also be
paid, (4) vesting of Restricted Shares and Options that would
otherwise have vested within one year of your death (which shall
be exercisable for one year from termination of your death), and
(5) Repatriation Expenses will be paid.
Within 120 days after any termination you shall repay each of the
Tax Note and the Stock Note in full, except that prior to such
time the Company shall be entitled pursuant to Paragraph 4(g)
hereof to offset as a prepayment of the Tax Note and the Stock
Note any amounts payable to you hereunder by any outstanding
amounts thereunder.
(b) Termination for Cause. The Company may terminate your
employment for Cause at any time. "Cause" will mean: (i) your
willful misconduct or gross negligence, or your material failure
to comply with the written policies of the Company, that involves
fraud against the Company or has a material adverse effect on
Company; (ii) your willful failure to follow the lawful and
reasonable direction of the Board; (iii) your willful failure to
perform the duties required hereunder (other than a result of
your Disability) after delivery of a written demand for
substantial performance by the Board; or (iv) your conviction of
or plea of guilty or nolo contendere to a misdemeanor involving
moral turpitude or any felony. No act or failure to act will be
"willful" unless done or omitted to be done, not in good faith
and without reasonable belief that action or omission was in the
best interests of the Company. No termination for Cause (other
than a termination for Cause arising from clause (iv) of the
immediately preceding sentence) shall be effected without
providing you a reasonable opportunity (but not more than 2 days'
notice) to appear before Board.
(c) Involuntary Termination. The Company may terminate your
employment other than for Cause or other than on account of your
death or Disability, as defined in Paragraph 4(d). Any such
termination of your employment shall be deemed to be an
"Involuntary Termination" for all purposes of this Agreement. In
such case you will receive Base Salary, Target Bonuses and
benefits as specified in Paragraph 4(a); provided the Company
will retain a right of offset as set forth in Paragraph 4(g)
against the amounts payable to you under this Paragraph with
respect to the period following the date of your termination.
You agree that you will have no rights or remedies in the event
of your Involuntary Termination other than those set forth in
this Agreement.
(d) Termination for Disability. The Company may terminate your
employment on account of a Disability, in which case you will
receive the payments and benefits specified in Paragraph 4(a).
You will be deemed to have a "Disability" if you are
incapacitated by a physical or mental condition, illness or
injury which has prevented you from being able to perform
substantially the duties of your position under this Agreement in
a satisfactory fashion for all of a consecutive 180-day period or
for 180 non-consecutive days in any 12-month period.
(e) Death. If you die while employed under this Agreement the
Term shall automatically terminate and your estate or legal
representative will receive the payments and benefits specified
in Paragraph 4(a).
(f) "Good Reason" Termination. You may terminate your
employment voluntarily for Good Reason and will be entitled to
receive the same payments and benefits which would be payable
upon Involuntary Termination pursuant to Paragraph 4(c), subject
to the same limitations and conditions set forth therein. "Good
Reason" means the occurrence of any of the events in the
immediately succeeding sentence, which is not remedied within 30
days after receipt of written notice from you specifically
delineating each such event which you claim is a breach of this
Agreement and setting forth your intention to terminate your
employment if such breach is not duly remedied. "Good Reason"
will mean only: (i) any material diminution of your position,
duties or responsibilities (except for Disability or temporarily
illness or other absence) or assignment of duties or
responsibilities that are inconsistent with your position; (ii)
relocation of your place of employment more than 50 miles from
the metropolitan areas of London, England or New York, New
without your consent; or (iii) any other willful and material
uncured breach by the Company of the material terms of this
Agreement (including failure of a successor to assume its
obligations in accordance with Paragraph 8); provided that no act
or failure to act will be "willful" unless done, or omitted to be
done, in bad faith.
(g) Offset. If your employment terminates for any reason, the
Company will retain a right of offset against any liability to
you, and will be entitled to reduce the amount of any
compensation and benefits payable to you under this Agreement by
the outstanding principal and interest on the Tax Note and the
Stock Note, any applicable withholding or other tax liabilities
owed by you which the Company is required to withhold, and any
other monetary obligations owed by you to the Company.
(h) Notice of Voluntary Termination Without Good Reason. You
hereby agree that any voluntary termination by you without Good
Reason shall be made only after 60 days' prior written notice of
such intention to the Company.
(i) Excise Tax Gross Up. If you become entitled to the payments
and benefits (collectively, "Severance Benefits") described in
this Agreement or otherwise as a result of a change in ownership
or control of the Company (as such terms are defined in Section
280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and such payments are determined by the Company (or its
accountants) or the Internal Revenue Service (the "IRS") to be
subject to any excise tax (the "Excise Tax") imposed under
Section 4999 of the Code, the Company shall pay to you, or to the
IRS on your behalf, an additional amount (the "Gross-up Payment")
such that the net amount retained by you after deduction of any
Excise Tax and any federal, state and local income and employment
tax and Excise Tax imposed upon the Excise Tax and the Gross-up
Payment shall be equal to the Severance Benefits (which amount
shall remain subject to withholding by the Company or payment by
you of all otherwise applicable taxes other than the Excise Tax
and resultant taxes thereon as aforesaid). The Company and you
shall each cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence
or amount of liability for Excise Tax with respect to the
Severance Benefits; provided that the Company shall control and
provide legal counsel with respect to all proceedings taken in
connection with a contest of the determination of the existence
and amount of any Excise Tax; and provided further that you shall
promptly reimburse the Company for any refunded payments (and the
Company will pay to you or to the IRS on your behalf any
deficiencies) in respect of any purported Excise Tax and other
taxes hereunder.
5. Covenants.
(a) Acknowledgment. You acknowledge that you currently possess
or will acquire secret, confidential, or proprietary information
or trade secrets concerning the operations, future plans, or
business methods of the Company or its affiliates. You agree
that the Company would be severely damaged if you misused or
disclosed this information. To prevent this harm, you are making
the promises set forth in this Paragraph. You acknowledge that
the provisions of this Paragraph are reasonable and necessary to
protect the legitimate interests of the Company and that any
violation of such provisions would result in irreparable injury
to the Company. In the event of a violation of the provisions of
this Paragraph, you further agree that the Company will, in
addition to all other remedies available to it, be entitled to
seek equitable relief by way of injunction and any other legal or
equitable remedies.
(b) Promise Not to Disclose. You will hold in a fiduciary
capacity, for the benefit of the Company, all confidential or
proprietary information, knowledge and data of the Company which
you may acquire, learn, obtain or develop during your employment
by the Company. Further, you will not, during the Term or at any
time thereafter, directly or indirectly use, communicate or
divulge for your own benefit or for the benefit of another any
such information, knowledge or data. You make the same
commitments with respect to the secret, confidential or
proprietary information, knowledge and data of affiliates,
customers, contractors and others with whom the Company has a
business relationship or to whom the Company or its affiliates
owe a duty of confidentiality. The confidential or proprietary
information covered by this protection includes, but is not
limited to, matters of a business or strategic nature, such as
information about costs and profits, projections, personnel
information, reengineering, records, customer lists, contact
persons, customer data, software, sales data, possible new
business ventures and/or expansion plans, or matters of a
creative nature, including without limitation, matters regarding
ideas of a literary, creative, musical or dramatic nature, or
regarding any form of product produced, distributed or acquired
by the Company ("Company Information"). Anything contained
herein to the contrary notwithstanding, for purposes of this
Agreement, "Company Information" and "confidential or proprietary
information, knowledge and data" shall not include information
which is generally known in the industry or is in the public
domain, prior to any unauthorized disclosure of such information
by you. Company Information will be considered and kept as the
private, proprietary and confidential information of the Company
except in furtherance of the Company's business or within the
Company as required to perform services, and may not otherwise be
divulged (A) without the express written authorization of the
Company or (B) unless required by law or ordered by a court or
(C) unless the Company Information is generally known in the
industry or to the public, provided that you provide the Company
with prior written notice of such disclosure.
(c) Promise Not to Engage In Certain Activities. You will not
at any time during your employment by the Company and until the
first anniversary of the termination of your employment be or
become (i) interested or engaged in any manner, directly or
indirectly, either alone or with any person, firm or corporation
now existing or hereafter created, in any business which is
competitive with the business of the Company and its affiliates,
or which the Company and its affiliates has made material
preparations to enter, at the time of your termination or (ii)
directly or indirectly a stockholder or officer, director, agent,
consultant or employee of, or in any manner associated with, or
aid or abet, or give information or financial assistance to, any
such business. The provisions of this Paragraph will not be
deemed to prohibit your purchase or ownership, as a passive
investment, of not more than five percent (5%) of the outstanding
capital stock of any corporation whose stock is publicly traded.
(d) Promise to Return Property. All records, files, lists,
drawings, documents, models, equipment, property, computer,
software or intellectual property relating to the Company's
business in whatever form (including electronic) which you
possess will be returned to the Company upon the termination of
your employment, whether such termination is at your or the
Company's request.
(e) Promise Not to Solicit. You will not during the period of
your employment by the Company and until the first anniversary of
the termination of your employment induce or attempt to induce
any employees, consultants, contractors or representatives of the
Company (or those of any of its affiliates) to stop working for,
contracting with or representing the Company or any of its
affiliates or, with respect to any of the foregoing under an
exclusive contractual arrangement with the Company, to work for,
contract with or represent any of the Company's (or its
affiliates') competitors.
(f) Company Ownership. The results and proceeds of your
services hereunder, including, without limitation, any works of
authorship resulting from your services during your employment
with the Company and/or any of the Company's affiliates and any
works in progress, will be works-made-for hire and the Company
will be deemed the sole owner throughout the universe of any and
all rights of whatsoever nature therein, whether or not now or
hereafter known, existing, contemplated, recognized or developed,
with the right to use the same in perpetuity in any manner the
Company determines in its sole discretion without any further
payment to you whatsoever. If, for any reason, any of such
results and proceeds will not legally be a work-for-hire and/or
there are any rights which do not accrue to the Company under the
preceding sentence, then you hereby irrevocably assign and agree
to assign any and all of your right, title and interest thereto,
including, without limitation, any and all copyrights, patents,
trade secrets, trademarks and/or other rights of whatsoever
nature therein, whether or not now or hereafter known, existing,
contemplated, recognized or developed, to the Company, and the
Company will have the right to use the same in perpetuity
throughout the universe in any manner the Company determines
without any further payment to you whatsoever. You will, from
time to time, as may be requested by the Company, do any and all
things which the Company may reasonably deem useful or desirable
to establish or document the Company's exclusive ownership of any
and all rights in any such results and proceeds, including,
without limitation, the execution of appropriate copyright and/or
patent applications or assignments. To the extent you have any
rights in the results and proceeds of your services that cannot
be assigned in the manner described above, you unconditionally
and irrevocably waive the enforcement of such rights. This
Paragraph is subject to and will not be deemed to limit,
restrict, or constitute any waiver by the Company of any rights
of ownership to which the Company may be entitled by operation of
law by virtue of the Company being your employer.
(g) Prior Restrictions. You represent that you are free to
enter into this Agreement and are not restricted in any manner
from performing under this Agreement by any prior agreement,
commitment, or understanding with any third party, including,
without limitation and to the best of your knowledge, your
agreements with Campbell Soup Company ("CSC"). In the event any
lawsuit or injunction is brought by CSC in connection with any
non-compete agreement between you and CSC, you hereby agree that
the Company shall have the right to void this Agreement without
any of the termination consequences set forth in Paragraph 4
(provided that the nature of such termination shall be referred
to by both parties as a mutual voluntary termination not for
Cause) and that you shall automatically forfeit any options and
Common Stock granted to, or purchased by, you hereunder (and the
Stock Loan shall be cancelled and forgiven to the extent used to
purchase, and upon your returning to the Company, any Common
Stock purchased therewith); provided that if this Agreement is
voided as aforesaid after the one-month anniversary of the
Effective Date, you shall be entitled to retain that portion of
the Initial Grant and the Restricted Shares on a pro rata basis
determined on the basis of the number of full months you have
been actively employed by the Company over the total number of
months it would otherwise have taken for the Initial Grant and
the Restricted Shares to vest in full. If you have acquired
confidential or proprietary information in the course of your
prior employment or as a consultant, you will fully comply with
any duties not to disclose such information then applicable to
you during the Term.
6. Services Unique. You recognize that your services hereunder
are of a special, unique, unusual, extraordinary and intellectual
character, giving them a peculiar value, the loss of which the
Company cannot be reasonably or adequately compensated for in
damages. In the event of a breach of this Agreement by you
(particularly, but without limitation, with respect to the
provisions hereof relating to the exclusivity of your services),
the Company will, in addition to all other remedies available to
it, be entitled to seek equitable relief by way of injunction and
any other legal or equitable remedies. This provision will not
be construed as a waiver of the rights which the Company may have
for damages under this Agreement or otherwise, and all of the
Company's rights and remedies will be unrestricted.
7. Notices. All notices and other communications hereunder
will be in writing and will be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, or by next-day delivery service with
confirmation of receipt, addressed as follows:
If to Employee:
At the address indicated on the first page hereof, with a copy
to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attn: Alvin H. Brown
If to the Company:
Ci4net.com, Inc.
One Rockefeller Plaza
Suite 1600
New York, NY 10020
Attention: Human Resources
with a copy to:
Wollmuth Maher & Deutsch LLP
500 Fifth Avenue, Suite 1200
New York, NY 10110
Attention: David H. Wollmuth and Mason H. Drake
or to such other address as either party will have furnished to
the other in writing. All notices and communications shall be
deemed to have been duly given and received: (a) on the date of
receipt, if delivered by hand or by telecopier confirmed
electronically; (b) three (3) business days after being sent by
first class certified mail return receipt requested postage
prepaid; or (c) one (1) business day after sending by next-day
delivery service with confirmation of receipt. As used herein,
the term "business day" means any day that is not Saturday,
Sunday or a legal holiday in the State of New York.
8. Assignment/Affiliated Corporations. This Agreement shall be
binding on and shall inure to the benefit of the parties to it
and their respective heirs, legal representatives, successors and
permitted assigns (including, without limitation your estate and
heirs in the case of any payments due to you hereunder). The
Company may only (and, with respect to clause (b) below, must)
assign this Agreement and its liabilities, rights and obligations
hereunder (a) to any entity controlled by, controlling or under
common control with the Company, or (b) to any entity which, by
way of merger, consolidation or sale of substantially all of the
assets of the Company, becomes a successor to the Company, so
long as in the case of either clause (a) or (b) such successor
assumes in writing the Company's obligations hereunder and,
unless you consent in writing, the Company remains fully liable
for any such liabilities, rights and obligations. You
acknowledge and agree that all of your covenants and obligations
to the Company, as well as the rights of the Company hereunder,
will run in favor of and will be enforceable by the Company, its
affiliates and assigns and their successors, as permitted
consistent with the provisions of this Paragraph 8.
9. Arbitration of Disputes.
(a) Arbitrable Disputes. You agree to use final and binding
arbitration to resolve any dispute (an "Arbitrable Dispute")
between you and the Company and/or any affiliate. This
arbitration agreement applies to all matters relating to this
Agreement, your employment with and/or termination from the
Company, including disputes about the validity, interpretation,
or effect of this Agreement, or alleged violations of it, any
payments due to your hereunder, and further including all claims
arising out of any alleged discrimination, harassment,
retaliation, including, but not limited to, those covered by the
New York Human Rights Law, N.Y. Exec. Law Section 296, the 1964
Civil Rights Act, 42 U.S.C. Section 2000e et seq., the federal
Age Discrimination in Employment Act, the Americans With
Disabilities Act, and the Family and Medical Leave Act.
(b) Injunctive Relief. Notwithstanding Paragraph 9(a), due to
the irreparable harm that would result from an actual or
threatened violation of Paragraph 5 that involves disclosure or
use of confidential information, trade secrets, or competition
with the Company and Paragraphs 2 and 6 that involve exclusivity
of your services with the Company, you agree that the Company may
seek an injunction prohibiting you from committing such a
violation.
(c) The Arbitration. Arbitration will take place in New York,
New York before a single experienced employment arbitrator
licensed to practice law in New York and selected in accordance
with the Employment Dispute Resolution Rules of the American
Arbitration Association. The arbitrator may not modify or change
this Agreement in any way.
(d) Fees and Expenses. In connection with any dispute hereunder
(unless such dispute is caused, created or prosecuted by you in
bad faith without a reasonable basis in law or fact), you shall
be entitled to recover the reasonable fees and expenses of your
attorneys from the Company whether or not you prevail. In any
arbitration the fees and expenses of the arbitrator shall be paid
by the non-prevailing party. The arbitrator shall determine the
prevailing party and whether or not you have acted in bad faith
without a reasonable basis in law or fact.
(e) Exclusive Forum. Arbitration in this manner will be the
exclusive forum for any Arbitrable Dispute. Should you or the
Company attempt to resolve an Arbitrable Dispute by any method
other than arbitration pursuant to this Paragraph, the responding
party will be entitled to recover from the initiating party all
damages, expenses, and attorneys' fees incurred as a result of
that breach. The provisions of this Paragraph 9 and Paragraphs
4, 5 and 10 shall survive any termination of the Term of this
Agreement.
10. Indemnification. The Company agrees that you will be
entitled to indemnification and payment or reimbursement of
expenses (including attorney's fees and expenses) to the fullest
extent permitted by applicable law and provided for in the
Certificate of Incorporation and By-laws of the Company for all
damages, losses and expenses incurred by you in connection with
any claim, action, suit or proceeding which arises from your
services and/or activities as an officer and/or employee of the
Company or any affiliate thereof. The Company shall maintain
Directors and Officers liability insurance in such amounts as
determined by the Board after discussion with you.
11. Miscellaneous. No provisions of this Agreement may be
amended, modified, waived, or discharged except by a written
document signed by you and a duly authorized officer of the
Company. A waiver of any conditions or provisions of this
Agreement in a given instance will not be deemed a waiver of such
conditions or provisions at any other time. The validity,
interpretation, construction, and performance of this Agreement
will be governed by the laws of the State of New York without
regard to its conflicts of law principles. This Agreement will
be binding upon, and will inure to the benefit of, you and your
estate and the Company and any successor thereto, but neither
this Agreement nor any rights arising under it may be assigned or
pledged by you.
12. Validity. The invalidity or unenforceability of any
provisions of this Agreement will not affect the validity or
enforceability of any other provisions of this Agreement, which
will remain in full force and effect.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but
all of which together will constitute the same instrument.
14. Entire Agreement. This Agreement, together with any
applicable option agreement, sets forth the entire understanding
between us; all oral or written agreements or representations,
express or implied, with respect to the subject matter of this
Agreement are set forth in this Agreement. All prior employment
agreements, understandings and obligations (whether written,
oral, express or implied) between us, if any, are terminated as
of the commencement date of the Term and are superseded by this
Agreement.
Very truly yours,
CI4NET.COM, INC.
By:_______________________
Name :
Title:
ACCEPTED AND AGREED:
___________________
DALE F. MORRISON
Exhibit 10.5 Lease relating to office at 32 Haymarket London
UNDERLEASE
of
Second Floor office premises
32 Haymarket
London SW1
PARTIES:
ARCADIA GROUP PLC
(1)
C14NET LIMITED
(2)
Lawrence Graham
190 Strand
London
WC2R 1 JN
BETWEEN:
(1) the Lessor and
(2) the Lessee
1. DEFINITIONS
1.1 The following terms used herein (with necessary
variations) mean and include:-
1.1.1 the Lessor":ARCADIA GROUP PLC (Company Reg. No.
237511) whose registered office is at Colegrave
House 70 Berners Street London W1 including
where the context so admits the reversioner for
the time being hereunder
1.1.2 "the Lessee":C14NET LIMITED (Company Reg. No.
3714112) whose registered office is at Trafalgar
House 11 Waterloo Place London SW1Y 4AU
including where the context so admits the
Lessee's successors in title
1.1.3 "the Building":means the Building known as 32
Haymarket London SW1 and where the context so
admits or requires includes the whole and any part
or parts of the same (including the Premises)
1.1.4 "the Premises":means ALL THOSE office premises
forming part of the Building and for the purpose
of identification only shown edged red on the
annexed plan and situated on the second floor of
the Building all which said premises include inter
alia any alterations additions improvements and
landlords fixtures and fittings (including without
prejudice to the generality of the foregoing all
light fittings ceiling tiles suspended ceilings
wall coverings and fitted carpets (if any) window
frames and glass window furniture and door
furniture and frames sanitary apparatus and gas
and electrical and water and heating air
conditioning and ventilating (if any) and other
installations boilers (if any) plant machinery
fire fighting or prevention equipment) plaster and
other internal covering of the main walls
enclosing the demise all internal walls ceilings
(excluding the structure) and floor boards and
screed of the floors and such parts of the
Building as exclusively serve the Premises and
include where the context so admits or requires
the whole and any part or parts of the same
1.1.5 "Conducting Media": means pipes wires drains
cables watercourses sewers ducts flues conduits or
other conducting media and includes fixtures
connected to any Conducting Media for enabling use
to be made of the Conducting Media or of any
water gas electricity telephone drainage soil air
smoke heating and other services supplies and
effluvia (collectively hereinafter called
"Services") through Conducting Media
1.1.6 "the Common Parts": means the whole and any part
or parts of any amenity areas entrance ways
Passages staircases lifts common refuse disposal
facilities and the Conducting Media therein
the Service Chattels (hereinafter defined) and
all other areas and facilities provided within the
Building for the use of tenants and occupiers
thereof in common
1.1.7 "Group Company": means any company which
is a subsidiary of the Lessee or the Lessee's
holding company (the expressions "subsidiary" and
"holding company" having the meanings ascribed to
them by Section 736 of the Companies Act 1985)
1.1.8 "the Insured Risks": means damage by fire storm
tempest flood lightning explosion aircraft and
articles dropped therefrom riot civil commotion
malicious damage impact bursting or overflowing
of pipes and such other risks or perils as the
Superior Lessor shall from time to time in the
reasonable exercise of its discretion think
desirable
1.1.9 "Interest": means interest at the
rate of four
per centum
above the base rate of
HSBC
Bank plc from time
to time (or of such other
London
Clearing Bank
as the Lessor may by
notice in
writing to the
Lessee nominate from time
to
time) during the
period from the date on
which the
interest is to
run to the date of
payment as well
before as
after any judgment
1.1.10 "the Lessor's Surveyor":
means any person or firm
appointed by or acting
for the Lessor being a
Chartered
Surveyor
(including a suitably
qualified
employee of the
_i
Lessor) to perform the
function of a
surveyor for any of the
purposes of
this Underlease
1.1.11 "Lettable Unit": means any unit of
accommodation forming part
of the Building which has
been or
is intended or
designed at any relevant
time to
be the subject
matter of a separate
letting
1.1.12 "Lessor's Accountant":
means any person or firm
appointed by or acting
for the Lessor being
either a
chartered or a
certified accountant
(including a
suitably
qualified employee of the
Lessor)
to perform the
function of an accountant
for any
of the purposes
of this Underlease
1.1.13 "the Term": means a term from and
including
the date of this
Underlease to and
including the
17th day of
November 2012 and
includes any
statutory or
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other continuation of the Term and
where the
context admits any period after
the expiry of the
Term during which the Lessee or
any sub-tenant
remains in occupation of the
Premises or any
part thereof and the obligations
of the Lessee
shall be construed accordingly
1.1.14 "the Rent": means until
the Rent
Commencement Date
(hereinafter defined) a peppercorn
(if
demanded)
and from and including
the Rent
Commencement Date the rent of One
Hundred
and Twenty One Thousand Five
Hundred
Pounds (GBP121,500) per annum or
such other
amount as is payable as rent from
time to time
hereunder
1.1.15 "Rent Commencement Date":means the
1.1.16 "Service Charge means the
1.1.17 "Review Date": means 17th
November 2002 and 17th November 2007
1.1.18 "the Painting Years":means the
years of the Term ending 17th
November 2002 and 17th November
2007 and in each case in any event during the
last three months of the Term (however
determined)
1.1.19 "the Specified Use":means in
respect of the
Offices within the
meaning of paragraph (a) of Class
131 of the
Town and Country Planning (Use
Classes)
Order 1987 as the same is in force
at the date
hereof
1.1.20 "the Service Charge Year":means
any year of the Term
ending on 31 st
March subject to variation as
hereinafter
provided
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1.1.21 "the Superior Lease": means
the superior
lease under which the
Lessor holds the Premises together
with other
property made the 25th day of
November 1987
between Northdale Investments
Limited ("the
Superior Lessor)" and the Lessor
(then known
as The Burton Group Plc)
1.1.22 "the Superior Lessor's means
any person or
firm appointed by or
Surveyor": acting for the Superior Lessor
being a
chartered
surveyor (including a suitably
qualified
employee of the Superior Lessor to
perform the
function of a surveyor for any of
the purposes
of
the Superior Lease)
1.1.23 "the Superior Lessor's means
any person or
firm appointed by or
Accountant": acting for the Superior Lessee
being either a
chartered surveyor or a certified
accountant
(including a suitably qualified
employee of the
Superior Lessor to perform the
function of an
accountant for any of the purposes
of the
Superior Lease)
1.1.24 "the Supplemental Deed":means any
deed agreement
licence
memorandum letter or other
document which in
any way varies this Underlease or
which is or
becomes supplemental to this
Underlease
whether or not expressed to be so
.1.125 "Court Order" an Order
of the a~
yore and City of London
County Court (No. A ) dated the
t $"''
day
of Mctrt~ 2000 in relation to the
Premises
pursuant to Section 38(4) of the
Landlord and
Tenant Act 1954
1.2 Any covenant by the Lessee not to do any act or thing
shall be deemed to include
an obligation not to permit such act or thing to be done
and any acts omissions of
the Lessee's servants or agents or of any persons within
the Lessee's control or of
the Lessee's sub-tenants or of such sub-tenants servants
or agents or of any
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persons within the control of such sub-tenants shall for
the
purposes of this Underlease be deemed acts or omissions
of the
Lessee and references to the covenants or obligations of
the Lessee
or of any Guarantor shall be deemed to include those
implied as well
as those expressed herein
1.3 References to the Superior Lessor shall include its
successors in
title and shall
include all superior lessors however remote
1.4 Where under the terms of this Underlease the consent of
the
Lessor is required
for any act or matter the consent of the Superior Lessor
under the
terms of the
Superior Lease shall also be required wherever requisite
PROVIDED that nothing
in this Underlease shall be construed as imposing on the
Superior
Lessor any
obligation (or indicating that such obligation is
imposed on the
Superior Lessor by
virtue of the terms of the Superior Lease) not
unreasonably to
refuse such
consent
1.5 Reference to any right exercisable by the Lessor or any
right
exercisable by the
Lessee in common with the Lessor shall be construed as
including (where
appropriate) the exercise of such right
1.5.1 by the Superior Lessor and all persons
authorised by the
Superior Lessor and
1.5.2 in common with all other persons having a like
right
1.6 Unless expressed to the contrary all rights of entry
granted to the
Lessee or
reserved to the Lessor hereunder shall be exercisable
only upon
reasonable prior
written notice except in case of emergency when no
notice need
be given
1.7 Where the context so admits or requires the singular
shall include
the plural and
vice versa the masculine gender shall include the
feminine and
neuter genders
and vice versa and where the Lessor the Lessee or the
Guarantor
(if any) shall be
two or more individuals all obligations expressed or
implied to be
made by or with
any such individuals shall be deemed to be made by or
with them
jointly and
severally
1.8 Any reference to a statute shall include any statutory
extension
modification or re-
enactment thereof and all regulations bye-laws or orders
made
thereunder
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3.5 Statutory requirements
So far as is consistent with the other covenants on the
part of the Lessee herein
contained at the Lessee's expense to comply with the
requirements of and execute
all works which are at any time during the Term by
virtue of any present or future
Acts of Parliament and any regulations orders or
bye-laws made thereunder or by
any competent authority relating to or required to be
executed upon or in respect of
the Premises or the user thereof whether by the owner or
occupier thereof and not
to do or omit on or about the Premises any act or thing
by reason of which the Lessor
may under any such Acts regulations order or bye-laws or
the requirements of any
such authority incur or have imposed upon it or become
liable to pay any levy penalty
damages compensation costs charges or expenses and to
keep the Lessor
indemnified against all breaches of the provisions of
such Acts regulations orders
bye-laws or requirements and all costs damages and
expenses incurred thereunder
and to produce to the Lessor such licences consents and
other documents and
evidence as the Lessor may reasonably require in order
to satisfy itself that the
provisions of this Clause 3.5 have been complied with in
all respects
3.6 Alterations
3.6.1 Not to erect any addition to the exterior of the
Premises or erect any
new building upon the site of the Premises nor to
make any other
alteration or addition to the external appearance
of the Premises nor to
unite the Premises with any other premises or
create any internal
doorway or other opening between the Premises and
any adjoining
premises
3.6.2 Not to cut into the foundations or any main beams
structural floors or
walls of the Premises
3.6.3 Subject to the other provisions of this Clause
3.6 not without the
previous consent in writing of the Lessor such
consent not to be
unreasonably withheld to make any alteration or
addition structural or
otherwise to the Premises PROVIDED HOWEVER that
no consent
shall be required for the erection alteration or
removal within the
Premises of demountable partitioning PROVIDED
that such
partitioning
shall be erected in a good and workmanlike manner
with good quality
materials and that if so required by the Lessor
or the Superior Lessor
such partitioning shall be removed at the end of
the Term (howsoever
determined) and the Premises reinstated to the
reasonable satisfaction
of the Lessor's Surveyor and the Superior
Lessor's Surveyor
3.6.4 Before connecting the electricity supply to any
proposed major electrical
installation in the Premises to notify the Lessor
and the electricity
supply
authority and to permit inspection and testing of
the same and to
comply with the conditions of supply of the
authority and the
requirements of such authority and in any event
not to alter add to or in
any way interfere with any electric cables
switches junctions or points
or
pipes taps or other apparatus installed in the
Premises in connection
with the supply or use of electricity hot or cold
water or gas or any
telephone installation save in accordance with
the requirements and
standards of the relevant authority and in the
case of any electrical
installation the standards of the Institution of
Electrical Engineers
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_8_
3.6.5 Not to make any material alteration or
connection to any
of the
Conducting Media serving the Premises or
to any other
mechanical
service without the prior written consent
of the Lessor
(such consent not
to be unreasonably withheld in respect of
Conducting
Media solely
serving the Premises)
_ 3.6.6 Any alteration or addition in respect of
which consent may
be granted
under this Clause 3.6 shall be carried
out in accordance
with drawings
and specifications previously approved by
and to the
reasonable
satisfaction of the Lessor's Surveyor and
in all such cases
such consent
or approval shall not be unreasonably
withheld
3.6.7 Any application for consent made under
this Clause 3.6
shall be
supported by drawings and (where
appropriate)
specifications in
triplicate and the Lessee shall pay the
reasonable fees of
the Lessor
and the Superior Lessor and their
respective professional
advisers in
respect of such application and the
inspection of the
relevant works and
shall comply with such reasonable
requirements and enter
into such
covenants as the Lessor may reasonably
require as to the
execution of
the alterations and additions and
reinstatement of the
Premises
3.6.8 The Lessee will upon written notice from
the Lessor
forthwith pull down
and remove any alteration or addition
erected or made in
breach of the
foregoing covenants and make good to the
reasonable
satisfaction of
the Lessor's Surveyor all damage thereby
caused
3.7 Avoidance of Insurance
3.7.1 Not by act or omission or otherwise to
allow anything to be
done on or
to be brought onto the Premises which may
cause any
insurance policy
-' for the Premises to become void or voidable nor anything
whereby any
additional or loaded insurance premiums
may become
payable
(whether in respect of the Premises or of
any other
premises)
3.7.2 To notify the Lessor promptly in writing
of the nature and
value of any
alterations additions or improvements
made and landlords
fixtures
attached by the Lessee to the Premises
during the Term
3.7.3 To comply with all reasonable
requirements of the
insurers as to fire
security or other precautions in respect
of the Premises
3.7.4 If and so often as reasonably required by
the Lessor or as
reasonably
required by its insurers to permit the
insurers to inspect
the Premises
and the Lessee's user thereof and subject
as hereinbefore
provided the
Lessor to inspect and value the same for
the purpose of
assessing the
sum for which the Premises or the
Building should be
insured
3.7.5 If the Premises or any other premises
within the Building
shall be
destroyed or damaged by any of the
Insured Risks and if
the amount of
the insurance monies shall be wholly or
partly
irrecoverable by reason
of any act neglect default or omission of
the Lessee its
tenants agents
servants licensees or invitees or anyone
deriving title
through under or
in trust for or acting on behalf of them
or any of them the
Lessee will
forthwith on demand pay and make good to
the Lessor all
costs claims
losses and other expenses whatsoever
(including
professional and
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other fees) incurred paid or payable by the
Lessor or the Superior Lessor
in connection with or consequent upon such
destruction or damage and
the reinstatement and making good thereof to the
extent that such costs
claims losses and other expenses shall be
irrecoverable as aforesaid
3.8 Repairs
3.8.1 Damage by Insured Risk excepted (save and to the
extent that the
insurance policy in respect thereof shall have
been vitiated or the
insurance monies rendered irrecoverable by reason
of any act default
or neglect of the Lessee or its tenants servants
agents or others within
the Lessee's control) at all times during the
Term well and substantially
to repair maintain cleanse and amend in every
respect the Premises
and all appurtenances thereto to the reasonable
satisfaction of the
Lessor the Superior Lessor and their respective
Surveyors and to keep
the same so repaired maintained cleansed and
amended and when
requisite as part of the process of repair only
rebuild or renew the
same
or any part thereof and to renew and replace from
time to time with
articles of a similar kind and quality to the
reasonable satisfaction of
the
Lessor and the Superior Lessor and their
respective Surveyors all
landlords fixtures fittings and appurtenances in
the Premises which
may
become or be beyond reasonable repair at any time
during or at the
expiration or sooner determination of the Term
and at such expiration
or
sooner determination to replace and renew any
fitted carpets in the
Premises with carpets of a similar kind and
quality to the reasonable
satisfaction of the Lessor and the Superior
Lessor and their respective
Surveyors
3.8.2 To be responsible for any damage caused to the
Lessor or the
Superior
Lessor their other tenants or the owners or
occupiers of any adjoining
or
neighbouring premises by the bursting or overflow
or obstruction of
any
part of the water sanitary or heating
installation in the Premises arising
as a result of any act or omission of the Lessee
or its sub-tenants
servants or agents
3.8.3 To keep the windows (and metal frames if any) in
the Premises clean
inside and outside
3.8.4 From time to time and at all times during the
Term to procure that the
Premises are reasonably fit and suitable for use
for the Specified Use
3.9 Decoration
3.9.1 To maintain an adequate protective coating or
preservative of a type
approved by the Lessor to all parts of the
Premises and to the fixtures
and fittings therein as are normally so treated
3.9.2 Without prejudice to sub-clause 3.9.1 of this
Clause 3.9 to paint with
two coats of good quality paint or such other
treatment as the Lessor
may from time to time approve (such approval not
to be unreasonably
withheld) in a good and workmanlike manner all
parts of the Premises
and all appurtenances thereto usually painted in
each of the Painting
Years (unless carried out within the preceding
twelve months) and at
the same time with every painting or other
treatment throughout the
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Term to varnish colour or treat such parts of the
Premises as are usually
so treated
3.9.3 The Lessor shall have the option (in lieu of
carrying out any painting or
other treatment during the last three months of
the Term) of requiring
the Lessee to pay to the Lessor a sum (together
with any Value Added
Tax which may be chargeable thereon) properly
certified by the
Lessor's Surveyor as being equal to the cost of
carrying out such
painting or other treatment and if the Lessee
shall pay to the Lessor
such sum not less than one month before the
expiration or sooner
determination of the Term the Lessor shall accept
the same in full
satisfaction of the Lessee's liability hereunder
in respect of such
painting or other treatment
3.10 Items of common use
Save insofar as the same are contained in the service
charge provisions hereinafter
contained to pay to the Lessor on demand a fair
proportion of any reasonable and
proper sums (including fees) which the Lessor may expend
or incur for the repair
painting lighting cleaning (including stone cleaning)
replacing renewal rebuilding
(where necessary as part of the process of repair)
maintenance and preservation of
the Building or the Common Parts or any other part or
parts of the Building and in
complying with any statutory requirement or any
requirement of a competent
authority relating to the Premises or the Building or
any part or parts thereof and for
the repair painting lighting cleaning replacing renewal
rebuilding (where necessary
as part of the process of repair) maintenance and
preservation of all passage ways
pavements roads areas Conducting Media party walls party
structures or other
conveniences belonging to or used or enjoyed in common
between the Building and
adjoining or neighbouring land or premises
3.11 Entry to Inspect
To permit the Lessor with all necessary materials and
equipment at reasonable times
to enter the Premises to view the condition thereof and
thereupon the Lessor may
serve upon the Lessee notice specifying any breach of
covenant for which the
Lessee is liable under this Underlease and if the Lessee
shall not have commenced
and diligently proceeded to rectify such breach within
two calendar months after
service of such notice the Lessor may without further
notice enter the Premises to
execute the works required to rectify such breach (and
the Lessee shall give the
Lessor all necessary facilities so to do) and the cost
incurred by the Lessor in so
doing together with Interest thereon from the date such
cost shall have been incurred
to the date of payment shall be paid by the Lessee to
the Lessor upon demand and
shall be recoverable from the Lessee as a debt or (at
the Lessor's option) as rent in
arrear
3.12 Entry for repairs etc
To permit the Lessor at reasonable times to enter and
remain upon the Premises
with all necessary equipment and materials
3.12.1 to execute works to any other premises
within the Building where such
works cannot reasonably be executed without entry
upon the Premises
1164030.01
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3.12.2 for the purpose of laying constructing
re-laying inspecting renewing
connecting repairing cleansing or emptying any
Conducting Media in
under or over the Premises in connection with or
for the accommodation
of the Premises or any other premises within the
Building
3.12.3 for the purpose of taking inventories
of the Lessor's fixtures and fittings
to be yielded up at the expiration of the Term
3.12.4 in connection with the services herein
mentioned
3.12.5 for the purpose of complying with any
requirements of any competent
authority
the persons entering causing as little damage and
inconvenience as reasonably
practicable and making good any damage caused to the
Premises and the Lessee's
fixtures and fittings by such entry without unreasonable
delay
3.13 User restrictions
3.13.1 Not to use or allow to be used the Premises or
any part thereof for the
sale manufacture supply distribution or public
consumption of
intoxicating liquors or any similar business nor
as a place of public
entertainment nor as a club betting office or for
the purpose of gaming
or as a bingo billiards snooker or similar hall
fun fair amusement
arcade
leisure centre nor as an advertising station nor
as a restaurant or snack
bar or for the sale of hot or cold food for
consumption off the premises
(commonly known as a 'take-away' food shop) or
for catering of any
other description nor to keep any animals fish
reptiles or birds in the
Premises nor to use the Premises as a brothel or
disorderly house or
as
a sex establishment within the meaning of the
Local Government
(Miscellaneous Provisions) Act 1982 nor for the
sale of live animals or
pet food or for the sale hire distribution
viewing or display of any books
magazines films video or other recordings or
other material which are
unsuitable for sale or showing to persons of any
age nor for any illegal
or immoral purpose nor for any noisome noisy or
offensive trade or
business nor for the purposes of any political or
religious organisation
nor for anything which may become a nuisance or
damage to the
owners or occupiers of property in the
neighbourhood or may in the
opinion of the Lessor be detrimental to the
nature and character of the
Building
3.13.2 Not to permit any person to reside or sleep in
the Premises
3.13.3 Not to discharge any trade wastes into
the sewers nor discharge anything
but storm water and surface water into the
surface water drains nor
discharge into the drains or sewers serving the
Building anything which
will be corrosive or harmful or which may cause
any obstruction or deposit
therein and to take all reasonable precautions to
prevent any leakage or
escape of water or electricity from the Premises
or any accident in
connection therewith or with the use thereof
3.13.4 Not to allow on the Premises anything
which is or may be dangerous
offensive radioactive or explosive or specially
combustible or inflammable
1164030.01
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3.13.5 Not to trade or display goods outside
the Premises nor to cause any
obstruction outside the Premises nor to trade
from or obstruct any window
thereof or to hang anything from the windows of
the Premises nor to place
or store anything on or sit out on any roof which
may be comprised in the
Premises
3.13.6 Not to use on the Premises any machine
(other than normal office or
shop machines or such other machines as shall be
reasonably necessary
for the Specified Use) or scientific apparatus
without the prior written
consent of the Lessor (such consent not to be
unreasonably withheld)
and in particular (but without prejudice to the
generality of the foregoing)
not to use on the Premises any coin or token
operated machines or
games (whether with or without prizes) other than
for the dispensation of
beverages and other light refreshments for
consumption on the Premises
nor any equipment machinery or other thing which
shall cause dangerous
vibrations or overloading of the electrical
circuits serving the Premises or
other premises
3.13.7 Not to use or permit or suffer to be
used except in case of fire or other
emergency any doors or special exits which may be
provided exclusively
for escape in the event of fire or other
emergency
3.13.8 Not at any time at such a volume as to
be audible outside the Premises
to play or cause to be played in or on the
Premises any kind of musical
instrument sound reproducing amplifying or
receiving apparatus or to sing
or cause any singing to take place therein
And if required by the Lessor so to do forthwith to take
all steps to remedy any
breach of this covenant and to indemnify the Lessor
against all claims costs and
demands arising in consequence of a breach hereof
3.14 Specified use
Not to use or allow to be used the Premises except for
the Specified Use
3.15 Easements etc
To use all reasonable endeavours to prevent any easement
or right belonging to or
used with the Premises from being obstructed or lost and
not knowingly to allow any
encroachment to be made or attempted to be made on or
easement or right to be
acquired or attempted to be acquired over the Premises
nor without the Lessor's
consent (such consent not to be unreasonably withheld)
to permanently obstruct any
window light or way belonging to the Premises nor to
acknowledge that any right
appurtenant to the Premises is enjoyed by consent of any
other person and to give
immediate notice to the Lessor if any easement right or
encroachment affecting or
likely to affect the Premises shall be made or attempted
to the Lessee's knowledge
and at the Lessor's request and cost to adopt such means
as may be reasonably
required to prevent or license the same and if the
Lessee shall omit or neglect to do
any such things as aforesaid as soon as may be
reasonable in the circumstances the
Lessor and others authorised by it may enter the
Premises and do the same
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3.16 Signs etc
3.16.1 Not to install outside the Premises or inside the
Premises so as to be
seen from the outside any intermittent or
flashing signs or
advertisement
3.16.2 Subject to the provisions of Clause 3.17 hereof
not to exhibit or suffer to
be exhibited any other signs notices or
advertisements visible from
outside the Premises without the prior consent in
writing of the Lessor
which the Lessor may grant or withhold at its
absolute discretion or
grant subject to such conditions and covenants as
the Lessor may
require PROVIDED that the Lessee may with the
prior written consent
of the Lessor (which shall not be unreasonably
withheld) install a sign
in
such form and position as the Lessor may approve
(such approval not
to be unreasonably withheld) displaying the name
and business of the
Lessee and of other lawful occupants of the
Premises or any part
thereof on the tenant's signboard at the ground
floor entrance of the
Building and in the second floor lift lobby
(which such sign if so
required
by the Lessor shall be removed at the
determination of the Term the
Lessee making good any damage caused by such
removal)
3.17 Letting notices
To permit the Lessor or the Superior Lessor during the
twelve months immediately
preceding the expiration of the Term to affix and retain
without interference to any
part of the Premises (but not so as to obscure the
windows or interfere with the
Lessee's permitted use of the Premises) a letting notice
which shall not be moved
removed or obscured and during the said twelve months to
permit persons with
written authority from the Lessor or its agents at
reasonable times of the day on prior
written notice to view the Premises
3.18 Expenses
To pay all expenses (including professional fees and
costs) properly incurred by the
Lessor or the Superior Lessor and . any of their
respective professional advisers
incidental to:-
3.18.1 the preparation and service of notices under
Sections 146 and/or 147 of
the Law of Property Act 1925 or under the
Leasehold Property
(Repairs) Act 1938 notwithstanding that
forfeiture is avoided otherwise
than by relief granted by the Court
3.18.2 the enforcement whether during the
Term or after the expiration or sooner
determination thereof of any of the Lessee's
covenants and the
preparation and service of all notices and
schedules relating to breaches
of the Lessee's covenants hereunder occurring
before the expiration of
the Term (including all inspections properly made
in contemplation of or
consequent upon the preparation and/or service of
such notices or
schedules)
3.18.3 all applications by the Lessee for any
consent required under this
Underlease and whether or not such consent is
refused or such
application withdrawn except where such consent
approval or licence is
unreasonably withheld or is proffered subject to
unreasonable
qualification or condition
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3.19 Yielding up
3.19.1 To yield up the Premises at the expiration or
sooner determination of
the Term in repair and decorated and otherwise in
all respects in
accordance with the Lessee's covenants herein
contained and with
vacant possession and clean having first replaced
any Lessor's fixtures
and fittings which may be missing or damaged with
others of a similar
kind and quality to the reasonable satisfaction
of the Lessor and the
Superior Lessor and their respective Surveyors
and having removed
every sign writing or painting of the name and/or
business of the
Lessee
or other occupiers of the Premises and (unless
relieved of such
obligation by the Lessor) having removed all
partitioning installed in the
Premises and having made good to the Lessor's
reasonable
satisfaction and at the Lessee's expense any
damage resulting from
such removal and from the removal of any tenants
and trade fixtures
and fittings
3.19.2 If the Lessee shall fail to yield up
the Premises in such state of repair and
decoration as aforesaid the Lessor may if it
thinks fit effect such repairs
decorations and other works which ought to have
been carried out by the
Lessee pursuant to the covenants on the part of
the Lessee herein
contained and the Lessee shall pay to the Lessor
on written demand the
cost of such repairs decorations and other works
effected by the Lessor
3.20 Alienation
3.20.1 In this Clause 3.20 the
following
expressions have the following
meanings:-
"the 1927 Act" the Landlord and Tenant Act
1927 as
amended
"the 1995 Act" the Landlord and Tenant
(Covenants)
Act 1995
"Authorised Guarantee has the meaning defined in
and for the
Agreement" purposes of Section 16 of
the 1995 Act
which shall be made by
separate deed
"Application" the application made by the
Lessee for
the Lessor's consent to the
proposed
assignment of the Underlease
to the
Proposed Assignee
"the Current Lessee " the person in whom the Term
is vested
at the date of the
Application
"the Proposed Assignee" the
person to whom the Current
Lessee
wishes to assign this
Underlease as
stated in the Application
"Proposed Guarantor" the person who will
guarantee to the
Lessor the obligations of
the Proposed
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Assignee but this expression
shall not
include the Current Lessee
3.20.2 Save as permitted by Clauses 3.20.3 3.20.4 3.20.5
and 3.20.6 not to
hold on trust assign underlet permit
underlettings nor part with or share
the possession or occupation of the whole or any
part or parts of the
Premises nor grant licences or franchises to use
or occupy the whole
or
any part or parts of the Premises nor mortgage or
charge part of the
Premises
3.20.3
Assignment
3.20.3.1 Not to assign the whole of the
Premises without the prior
consent of the Lessor (such consent not to
be unreasonably
withheld or delayed) provided that the
Lessor shall be entitled
(for the purposes of Section 19(1A) of the
Landlord and
Tenant Act 1927):-
3.20.3.1.1 to withhold its consent
to any of the
circumstances set out in Clause
3.20.3.2;
3.20.3.1.2 to impose all or any of
the matters set out in
Clause 3.20.3.3 as a condition of
its consent
3.20.3.2 The
circumstances referred to in Clause
3.20.3.1.1 above
are as follows:-
3.20.3.2.1
Where the Proposed Assignee is an associated
company of the Lessee
3.20.3.2.2
Where in the reasonable opinion of the Lessor
the Proposed Assignee is not of
sufficient
financial standing to enable it to
comply with
the
tenant's covenants in this
Underlease
3.20.3.2.3
Where the Proposed Assignee enjoys diplomatic
or state immunity
3.20.3.2.4
Where the Proposed Assignee is not resident in
a jurisdiction where reciprocal
enforcement of
judgement exists
3.20.3.3 The
conditions referred to in Clause 3.20.3.1.2
are as
follows:-
3.20.3.3.1
the current Lessee and any guarantor of the
Current Lessee (except a guarantor
by virtue of
a deed entered into pursuant to
the provisions
of
this Clause) shall on or prior to
such
assignment
being completed execute and
deliver an
Authorised Guarantee Agreement
which shall
be
in such form as the Lessor may
reasonably
require and be prepared by or on
behalf of the
Lessor and at the cost of the
Current Lessee
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3.20.3.3.2 the Proposed
Assignee shall on or
before being allowed into
occupation enter into a
direct
covenant with the Lessor
to
perform and observe the
Lessee's
covenants and conditions
contained in this
Underlease
3.20.3.3.3 the payment
to the Landlord of all
rent and other sums which
have
fallen due under the
Underlease
prior to the date of the
assignment
3.20.3.3.4 if the Lessor
reasonably requires
the Lessee shall obtain
one or
more guarantors (other
than the
Current Lessee )
reasonably
acceptable to the Lessor
for the
Proposed Assignee and
such
guarantor shall execute
and deliver
to the Lessor a deed
containing
covenants by that
guarantor (or if
more than one joint and
several
covenants) with the
Lessor as a
primary obligation in the
terms set
out in Schedule 4 (with
any
necessary changes or in
such
other terms as the Lessor
may
reasonably require)
3.20.3.4 The Lessor may at any
time during the Term
abandon any of the circumstances
mentioned in
Clause 3.20.3.2 or any of the
conditions
mentioned in Clause 3.20.3.3 by
serving written
notice to that effect on the
Lessee and upon the
service of such notice the
circumstances or
condition specified shall be
deemed to be
deleted from this Underlease and
of no further
effect
3.20.4 Underletting
3.20.4.1 The Lessee may subject
to the provisions of this
Clause 3.20.4 with the prior
written consent of
the Lessor such consent not to be
unreasonably
withheld or delayed underlet the
whole of the
Premises
3.20.4.2 The Lessee shall
procure that any proposed
underlease of the Premises shall
before being
allowed into occupation enter
into a direct
covenant with the Superior Lessor
and the
Lessor to perform and observe all
the Lessees
covenants (other than the
covenant to pay rent)
and the conditions contained in
this Underlease
throughout the term to be created
by the
underlease and if the Superior
Lessor or the
Lessor shall reasonably so
require that a
satisfactory guarantor for such
underlease shall
enter into a covenant under seal
in favour of the
Superior Lessor and the Lessor
. in the form (mutatis mutandis)
set out in
Schedule 4 hereto
with such modifications as the
Superior
Lessor or the
Lessor may reasonably require
3.20.4.3 The Lessee shall
procure that any permitted
underlease is at the full open
market rental
without the payment of a fine or
premium with
no provision in any way commuting
rent
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(other than a reasonable initial
rent free period)
and contains lawful and
enforceable
provisions:-
3.20.4.3.1 prohibiting
the undertenant from
underletting or parting
with or
sharing occupation or
possession
_ of the whole of the
underlet
premises or any part
or parts thereof
3.20.4.3.2 prohibiting
the undertenant from
assigning or charging the
whole of
the underlet premises
without the
prior written consent of
the Lessee
and of the Lessor under
this
Underlease
3.20.4.3.3 providing
that for the purposes of
Section 19(1 A) of the
1927 Act
and Section 16 of the
1995 Act any
consents to an assignment
of the
underlease shall be
subject to a
condition that the
undertenant of
the underlease shall on
or prior to
such assignment being
completed
execute and deliver to
the Lessee
and the Lessor of this
Underlease
a deed containing
covenants on
the part of the then
undertenant
with the Lessee and as
separate
covenants with the Lessor
in the
form of an Authorised
Guarantee
Agreement which will be
in such
terms as the Lessor may
reasonably require and be
prepared by or on behalf
of the
Lessor and at the cost of
the
Lessee
3.20.4.3.4 other
obligations on the part of the
undertenant no less
onerous than
the obligations of the
Lessee under
this Underlease
3.20.4.3.5 that the
undertenant shall observe
and perform covenants
agreements and conditions
in
similar form to the
covenants
agreements and conditions
on the
part of the Lessee
contained in this
Underlease (other than as
to the
amount of Rent but with
provision
for the payment of rents
equivalent
to the Insurance Rent and
Service
Charge)
3.20.4.3.6 for review of
rent (in an upwards
direction only) reserved
by the
underlease corresponding
as to
terms and dates with the
provisos
set out in Clause 6
3.20.4.3.7 for re-entry
on breach of any
covenant on the part of
the
undertenant on any ground
specified in Clause 5.2
3.20.4.3.8 that the
underlease shall be validly
contracted out of
Sections 24 to 28
(inclusive) of the
Landlord and
Tenant Act 1954 by order
of a
competent court
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3.20.4.3.9 that every
underlease and sub-
underlease whether mediate
or
immediate shall contain
the same
restriction on assignment
underletting or parting
with
possession sharing
occupation and
granting of licences and
the same
provisions for direct
covenants and
registration as are
contained in this
Underlease
3.20.4.4 On or prior to the
assignment of any permitted
underlease the Lessee shall
procure that there
is delivered:
3.20.4.4.1 to the Lessor
a deed containing
covenants by the assignee
with the
Lessor in such form as the
Lessor
may reasonably require to
perform
and observe all the
tenant's
covenants in and all other
provisions of the
underlease during
the residue of the term of
the
underlease (including any
continuation thereof)
3.20.4.4.2 to the Lessor
and separately to, the
Lessee a deed containing
covenants by the assignor
with the
Lessor as contemplated by
Clause
3.20.3.1.1
3.20.4.5 The Lessee shall
procure in any underletting of
the Premises that the rent is
reviewed in
accordance with the terms of the
underlease but
not to agree the reviewed rent
under such
underlease with the undertenant
without the prior
written consent of the Lessor
(such consent not
to be unreasonably withheld or
delayed) and to
procure that if the
' rent under any underlease is to be
determined
by an
independent person not to
determine whether
such person
is to act as an expert or as an
arbitrator without
the Lessor's
prior written consent (such
consent not to be
unreasonably
withheld or delayed) and to
procure that the
Lessor's
representations as to the rent
payable
thereunder are made
to such independent person to the
reasonable
satisfaction
of the Lessor
3.20.4.6 Not to vary the terms
of or accept any surrender
of any underlease permitted under
this Clause
3.20.4 (or agree so to do) and not
commute
reduce or waive any rents payable
by any such
underlease
3.20.4.7 Not to waive expressly
or impliedly any of the
covenants imposed in any
underlease but upon
any breach thereof forthwith to
enforce the same
3.20.4.8 At the request of the
Lessor to take such action
as may be necessary to determine
any
underlease which is not permitted
by the Lessor
or Superior Lessor
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3.20.5 Group Company
Notwithstanding anything contained in this Clause
3.20 the Lessee may
share occupation of the Premises or any part
thereof with a Group
Company PROVIDED THAT
3.20.5.1
no tenancy is created by such occupation
3.20.5.2 the right of the Group
Company shall immediately
determine on it ceasing to fall within
the definition of Group
Company
3.20.5.3 the Lessee will give notice
to the Lessor within fourteen days
of the commencement and termination of
each sharing of
occupation of the Premises
3.20.6 Charge
Not to charge by way of fixed charge the whole of
the Premises without
the prior written consent of the Lessor (which
shall not be unreasonably
withheld or delayed)
3.21 Registration
3.21.1 Within fourteen days after any
assignment to give written notice to the
Lessor of the name and address of the party to
whom all future demands
for rent and other monies payable under this
Underlease are to be
addressed and within twenty one days after any
assignment charge by
way of fixed charge (save as hereinbefore
provided) underlease or
devolution of the Premises or any part thereof or
any interest therein
(including the surrender or forfeiture of any
underlease) to give notice
thereof in writing to the solicitors for the time
being of the Lessor and to
provide them with two certified photocopies of
the document effecting
such transaction and to pay to such solicitors a
registration fee of Twenty-
five pounds (GBP25) or such larger sum as such
solicitors shall reasonably
require together with the Superior Lessor's
registration fees
3.21.2 Within twenty one days after the rent
payable upon a review of rent in any
underlease of the Premises or any part thereof
shall have been
ascertained (whether by agreement arbitration or
otherwise) to notify the
Lessor in writing of the rent so ascertained and
the premises in respect
of which and the underlease pursuant to which
such rent shall have been
reviewed together with a certified copy of the
award of any arbitrator or
expert engaged in connection with such review and
within twenty eight
days of a memorandum recording the revised rent
being signed by or on
behalf of the parties to such review to forward a
copy thereof to the
Lessor
3.21.3 To give the Lessor notice of the death
during the Term of any person who
has or shall have guaranteed to the Lessor the
payment of the rent and
observance and performance of the Lessee's
covenants under this
Underlease or of such person committing an act of
bankruptcy or having
a receiving order made against him or of such
person (being a company)
suffering a receiver to be appointed or passing a
resolution to
1164030.01
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wind up or entering into liquidation upon the
Lessee becoming aware of
the same
3.22 Notices
Upon receipt in any manner whatever of any notice order
proposal requisition
direction or other thing from a competent authority
affecting the Premises or the user
thereof or the owner or occupier thereof or the Lessor's
interest therein to comply
therewith at the Lessee's expense so far as is required
thereby or by the Act or other
instrument under which it is issued or by the provisions
hereof And forthwith to
deliver to the Lessor three copies of such notice order
proposal requisition direction
or other thing And at the request and cost of the Lessor
to make or join with the
Lessor in making such objections and representations
against or in respect of any
such matters as the Lessor acting reasonably and
properly shall deem expedient
3.23 Not to overload etc
Not to permit to be erected or suspended upon the
Premises anything which will
overload any floor wall roof or any other part of the
structure or structural frame
thereof not knowingly to do anything or suffer anything
to be done on the Premises
which would remove support from any part of the Building
or any adjoining land
buildings or structures or endanger such land buildings
or structures in any way
whatsoever
3.24 Compliance with statute
3.24.1 So far as consistent with the other covenants on
the part of the Lessee
herein contained without prejudice to the
generality of Clause 3.5
hereof
at all times during the Term to comply at the
Lessee's expense with the
provisions of any relevant legislation for the
time being in force and in
particular (but without prejudice to the
generality of the foregoing) the
Town and Country Planning Act 1971 the Health and
Safety at Work
etc
Act 1974 the Factories Act 1961 the Offices.
Shops and Railway
Premises Act 1963 the Fire Precautions Act 1971'
and the Public
Health
Acts the Clean Air Acts and with any regulations
or orders made under
such legislation and all licences consents and
conditions granted or
imposed thereunder so far as the same relate to
or affect the Premises
or the user thereof or the owner or occupier
thereof or the Lessor's
interest therein and as often as occasion shall
require to obtain at the
Lessee's expense all such licences and consents
as may be necessary
under such legislation for any use of or
permitted improvements
alterations or additions to be carried out by the
Lessee to the Premises
and not knowingly to do or omit or suffer to be
done or omitted on or
about the Premises any act or thing by reason of
which the Lessor may
under any such legislation incur or have imposed
upon it or become
liable to pay any levy penalty damages
compensation costs charges or
expenses and to keep the Lessor fully indemnified
against all
proceedings costs expenses and demands in
relation to any such
matters and to produce to the Lessor such
licences consents and other
documents and evidence as the Lessor may
reasonably require in
order
to satisfy itself that the provisions of this
Clause 3.24.1 have been
complied with in all respects
1164030.01
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3.24.2 If the Lessee any sub-tenant or other
lawful occupier carries
out any construction work within the meaning of and to which
the Construction (Design and
Management) Regulations 1994 ("CDM Regulations") apply the
Tenant shall:
3.24.2.1 prepare or procure the preparation of
the Health and Safety
file ("Health and Safety File") in accordance with the CDM
Regulations and
3.24.2.2 grant or procure the grant of a royalty
free irrecoverable and
non exclusive licence or licences to the Lessor to use and copy
any design as built and
maintenance and operational information and documentation and
any other information comprised
in the Health and Safety File for any purpose connected with
the Premises and any such licence
shall grant the Lessor the right to grant such licence and the
right to freely transfer the same to third
parties
1 3.24.3 the Lessee shall maintain and update the
Health and Safety
File as
necessary or procure that the same is so
maintained and
updated and
within seven days of being requested so
to do the Lessee
shall supply
copies thereof and any other evidence as
the Lessor may
reasonably
require to satisfy itself that the CDM
Regulations have and
are being
complied with
3.24.4 upon any assignment of this Underlease
the Lessee shall
deliver to the
assignee the Health and Safety File and
upon the
expiration or sooner
determination of the Term the Lessee
shall deliver to the
Lessor the
Health and Safety File
' 3.25 Planning
3.25.1 Not to apply for nor procure the
application by any third party
for any planning consent (which expression shall include any
outline or detailed consent or any
approval of reserved matters or any appeal to the Secretary of
State for the Environment Transport
and the Regions) relating to the Premises (whether or not in
conjunction with other premises)
without the prior written approval of the Lessor (which shall
not be unreasonably withheld)
3.25.2 To give full particulars to the Lessor
within seven days of any
planning notice or proposal or application received by the
Lessee and at the Lessor's request and
cost to make or join in making any such objection or
representation in respect of any such notice
or proposal as the Lessor shall reasonably deem expedient and
to which the Lessee shall agree
(such agreement not to be unreasonably withheld)
3.25.3 To join with the Lessor but at the cost
of the Lessor in applying
for any government or local authority or other permissions
licences or consents necessary to permit
rebuilding after destruction of the Premises or damage thereto
3.25.4 Whenever reasonably required to permit
the Lessor to enter
upon the Premises to comply with any requirements lawfully made
on it under the Town and Country
Planning Acts by any competent authority
1164030.01
_22_
PROVIDED that there is no material interference
with the Lessee's
enjoyment of the Premises and the Lessor makes
good any damage
caused to the Premises and the Lessee's fixtures
and fittings in the
exercise of such rights
3.26 Value Added Tax
To pay to the Lessor any Value Added Tax for which the
Lessor is liable in respect
of any taxable supplies under this Underlease save
insofar as the Lessor or a third
party is able to recover the same
3.27 Indemnity
To indemnify the Lessor against all liability claims and
costs (including any increase
in insurance premium) arising directly or indirectly out
of any defect or alleged defect
in the Premises or any fixture or appurtenance thereto
or any service or facility
supplied in or about the Premises or out of the state or
condition of the Premises
arising from a breach of the Lessee's obligations herein
contained or out of any
breach of covenant on the part of the Lessee or out of
the use or occupation of the
Premises by the Lessee or any works carried out at any
time during the Term to the
Premises by the Lessee or out of anything now or during
the Term attached to or
projecting from the Premises and installed by the Lessee
or out of any act neglect
or omission by the Lessee or any underlessee or by their
respective servants or
agents or by any persons in the Premises with the actual
or implied authority of any
of them (other than the Lessor or those authorised by
the Lessor) or out of
infringement disturbance or destruction during the Term
by the Lessee of any right
or easement
3.28 Trespass etc
At all times to use all reasonable endeavours to prevent
trespass disturbance or
nuisance to the Lessor or the occupiers of nearby
premises by the Lessee's tenants
(if any) employees agents and visitors
3.29 Information
To provide within fourteen days of receipt of a written
request from the Lessor such
information as the Lessor may reasonably require as to
the occupation of the
Premises including (but without prejudice to the
generality of the foregoing) details
of all underlettings and licences granted by the Lessee
and the full names and
addresses of all persons in actual or deemed possession
of the Premises and each
and every part thereof
3.30 Aerials etc
Not to erect any poles or aerials on the exterior of the
Premises or the Building
PROVIDED however that if and so long as at any time
during the Term the permitted
use of the Premises under this Underlease shall include
the sale or renting or
necessarily require the installation of any television
or radio equipment the Lessor
will not unreasonably withhold its consent to the
installation by the Lessee on the
exterior of the Premises of a suitable external aerial
to be installed in accordance in
all respects with a specification and plans first
approved by the Lessor (such
agreement not to be unreasonably withheld) and in a
position to be reasonably
specified by the Lessor's Surveyor
1164030.01
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3.31 Notify damage
Immediately upon becoming aware of the same to give
written notice to the Lessor
of any damage to the Premises caused by any of the
Insured Risks and at all times
to display and maintain on the Premises all notices
which any competent authority
may require to be displayed but which shall not be
required to be displayed in such
a position as to interfere with the Lessee's business
3.32 Refuse fire fighting equipment and security
3.32.1 To provide and use a refuse receptacle of a type
or kind as may be
stipulated by the local authority or private
contractor responsible for
refuse collection and to keep the same within the
Premises and not to
store any goods packing cases containers waste or
materials
otherwise
than in suitably enclosed accommodation within
the Premises and not
by persons within the Lessee's control knowingly
to allow any open
area in the curtilage of the Building to become
unclean or untidy as a
result of use thereof by the Lessee and to
prevent accumulations of
waste or refuse which are excessive or constitute
a nuisance or danger
to health
3.32.2 To pay to the local authority any
charge imposed for the collection of
refuse from the Premises
3.32.3 To keep the Premises supplied and
equipped with all fire fighting and
extinguishing appliances from time to time
required by law or reasonably
required by the insurers of the Premises or
reasonably recommended by
them such appliances being kept open to
inspection and properly
maintained and not to obstruct the access to or
means of working such
appliances or the means of escape from the
Premises in case of fire
3.32.4 To take expeditiously all requisite
steps to obtain any necessary fire
certificate for the Premises
3.32.5 To ensure that at all times the Lessor
has written notice of the name
address and telephone number of at least one
keyholder of the Premises
3.32.6 At any time that the Premises or any
part thereof is unoccupied to take all
reasonable precautions to prevent vandalism theft
and unlawful
occupation
3.33 Common Parts
Not by persons within the Lessee's control to allow the
Common Parts to be
obstructed at any time
3.34 Regulations
Duly to observe and perform such written regulations
notified to the Lessee as the
Lessor or the Superior Lessor may from time to time
reasonably deem necessary for
the orderly safe or more convenient management of the
Premises or the Building
and to use all reasonable endeavours to ensure that such
regulations are
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shall be calculated and assessed separately from
that of the other
services and so paid for by the Lessee either
direct to the statutory
undertaking concerned or through the Lessor if
direct payment is not
possible or if reasonably so required by the
Lessor in which event such
payment shall be made by the Lessee upon demand
from the Lessor and
the Lessee shall indemnify and keep indemnified
the Lessor against all
charges for such supplies
3.36 Observe covenants in Superior Lease
3.36.1 To observe and perform the covenants and
conditions on the part of the
lessee contained in the Superior Lease other than
those for the
payment of rents and so far as they relate to the
Premises but except
in
so far as the Lessor expressly covenants in this
Underlease to observe
and perform the same and to indemnify the Lessor
from and against
any actions proceedings claims damages costs
expenses or losses
arising from any breach non-observance or
non-performance of such
covenants and conditions
3.36.2 Not to do omit suffer or permit in
relation to the Premises any act or thing
which would or might cause the Lessor to be in
breach of the Superior
Lease or which if done omitted or suffered or
permitted by the Lessee
would or might constitute a breach of the
covenants on the part of the
Lessor and the conditions contained in the
Superior Lease
3.37 Entry for compliance with Superior Lease
To permit the Lessor and all persons authorised by the
Lessor (including agents
professional advisers contractors workmen and others)
upon reasonable written
notice (except in the case of emergency) to enter upon
the Premises for any purpose
that is in the reasonable opinion of the Lessor
necessary to enable it to comply with
the covenants on its part or on the part of the lessee
and the conditions contained
in the Superior Lease
3.38 New guarantor
3.38.1 To procure that any person who has
guaranteed to the Lessor the
Lessee's obligations contained in this Underlease
joins with the Lessee
and becomes a party to any Supplemental Document
to consent to the
Lessee entering into such Supplemental Document
and to confirm that its
covenants remain in full force and effect in
respect of this Underlease as
varied or amended by such Supplemental Document
3.38.2 Within fourteen days of the death
during the Term of any person who has
guaranteed to the Lessor the Lessee's obligations
contained in this
Underlease or such person becoming bankrupt or
having a receiving
order made against him or being a company passing
a resolution or
amalgamation whilst solvent) then to give notice
thereof to the Lessor and
if so required by the Lessor at the expense of
the Lessee within two
months to procure some other person reasonably
acceptable to the
Lessor to execute a guarantee in respect of the
Lessee's obligations
contained in this Lease in the form set out in
Schedule 4
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duly observed and performed by its tenants and licensees
(if any) and employees
agents and visitors
3.35 Service charge
3.35.1 To pay to the Lessor a service charge
being the fair proportion attributable
to the Premises of all amounts costs and expenses
which may at any time
during each Service Charge Year of the Term
become payable by the
Lessor pursuant to the Superior Lease
3.35.2 The manner in which the Service Charge
shall be paid shall be as
follows:-
3.35.2.1 the Lessor shall as soon as
reasonably practicable after the
end of each Service Charge Year use all
reasonable
endeavours to procure that the Superior
Lessor prepares an
account ("the Superior Lessor's Account")
showing the
service charge for that year and upon such
account being
reasonably and properly certified by the
Superior Lessor's
Accountant the same shall in the absence
of manifest error
be final and binding on the Lessee
3.35.2.2 the Lessee shall pay for each
Service Charge Year of the
Term a provisional service charge being a
proportionate part
of the Lessor's Surveyor's estimate
(acting reasonably) of the
likely aggregate amount of the service
charge for the
forthcoming Service Charge Year
3.35.2.3 the Lessor or the Lessor's
Surveyor shall as soon as
reasonably practicable upon receipt of the
Superior Lessor's
Account prepare a statement which shall
set out details of the
provisional service charge payments made
by the Lessee for
the relevant Service Charge Year and if
the service charge
for that year shall exceed the payments
made by way of
provisional service charge the amount of
the excess shall be
paid forthwith by the Lessee to the Lessor
but if it shall be
less the amount of the overpayment shall
be credited to the
Lessee against the next payment of rent
and service charge
3.35.2.4 the Lessor shall be entitled to
change the annual date for the
purpose of computing the service charge
whenever it shall
reasonably think fit and to make such
apportionment as the
Lessor acting reasonably shall consider to
be fair and
necessary upon any change of such date
(and the expression
"Service Charge Year" shall be construed
accordingly) or in
the proportions. attributable to the
Premises
3.35.2.5 the provisional service charge
shall be payable by four equal
instalments in advance of the same in like
manner as the
Rent is payable
PROVIDED ALWAYS that while the supply of any of
the services to the
Premises or any part thereof is separately
metered the cost thereof
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4. LESSOR'S COVENANTS
The Lessor hereby covenants with the Lessee as follows:-
4.1 Quiet enjoyment
That the Lessee paying the rent and other monies payable
hereunder and observing
and performing the Lessee's covenants and stipulations
herein contained shall
peaceably hold and enjoy the Premises during the Term
without any interruption by
the Lessor hereunder or any person rightfully claiming
under or in trust for it
4.2 Insurance
4.2.1 To use all reasonable endeavours to procure that
the Superior Lessor
keeps or procures to be kept insured at all times
throughout the Term
the Building in such sum as shall be its full
reinstatement value (with
such allowance (if any) for inflation of building
costs as the Superior
Lessor shall reasonably deem necessary) including
compliance with
the building regulations and planning control and
demolition and site
clearance expenses and three years rent of the
Premises (including
rent potentially payable upon a rent review under
this Underlease)
and
professional fees on demolition and rebuilding)
against loss or
damage
by the Insured Risks with reputable insurers and
to produce to the
Lessee upon demand (but no more often than twice
in any year of the
Term) a certified copy of the insurance policy or
other evidence of
such insurance and evidence of payment of the
last premium and to
notify the Lessee in writing upon the Lessor
being notified of the same
by the Superior Lessor of any material changes in
the Insured Risks
and subject to the Superior Lessor being able to
obtain all necessary
planning approvals and other licences approvals.
and consents to use
its reasonable endeavours to require the Superior
Lessor to cause all
monies (save monies payable for loss of rent)
received by virtue of
such insurance to be laid out as soon as
practicable in making good
the damage or destruction for which the monies
have been received
the Superior Lessor making up any deficiency out
of its own monies
PROVIDED however that the Superior Lessor's
liability to insure
against loss or damage by any of the Insured
Risks shall be subject at
all times to cover being normally available at a
reasonable cost with
reputable insurance offices in the United Kingdom
or through
underwriters at Lloyds and shall be limited to
effecting such cover as
is
normally available upon the terms and conditions
available in such
insurance market from time to time and subject to
such exclusions
conditions or provisions for excess from time to
time reasonably
agreed between the Superior Lessor and the
insurers
4.2.2 The Lessor's obligations under the foregoing
provisions of this Clause
shall cease if and to the extent that the
insurance be invalidated or
payment of the insurance monies withheld or
refused as a result of
any
act neglect or default of the Lessee or any
agent servant tenant or
licensee of the Lessee or any person within the
Lessee's control or if
and to the extent that the Lessee shall fail to
pay any sums due
pursuant to the provisions of Clause 3.7.5
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4.3 Provide services
4.3.1 To use all reasonable endeavours to procure that
the Superior Lessor
shall provide and carry out or procure the
provision or carrying out of
the services ("the Services") specified in
Schedule 3 hereto
PROVIDED
THAT neither the Lessor nor the Superior Lessor
shall be liable for any
interruption breakdown stoppage defect or failure
to provide supply or
procure any of the Services to be supplied by
virtue of weather
conditions inevitable accident emergency act of
God necessary repairs
maintenance or replacement or by any cause
whatever not within the
control of the Lessor or the Superior Lessor
provided that the Lessor
shall use all reasonably endeavours to procure
that the Superior
Lessor
ensures the services in question are restored as
soon as practicable
and PROVIDED THAT the Lessee shall not be
entitled to object to the
service charge or any item comprised in it or
otherwise on any of the
following grounds:-
4.3.1.1 the inclusion in a subsequent Service
Charge Year of any
item of expenditure or liability omitted
from the service
charge for any preceding Service Charge
Year
4.3.1.2 that any item of service charge included
at a reasonable
and proper cost might have been provided
or performed at
a
lower cost
4.3.1.3 disagreement with any estimate of future
expenditure for
which the Superior Lessor requires to
make provision so
long as the Superior Lessor has acted
reasonably and in
good faith and in the absence of manifest
error
4.3.1.4 the manner in which the Superior Lessor
exercises its
discretion in providing Services so long
as the Superior
Lessor has acted reasonably and in good
faith and in
accordance with the principles of good
estate management
4.3.1.5 the employment of respectable and
responsible agents
contractors or other persons as the
Superior Lessor may
from time to time think fit for the
carrying out and provision
on the Superior Lessor's behalf of the
Services so long as
the Superior Lessor has acted reasonably
and in good faith
and in accordance with the principles of
good estate
management
AND PROVIDED THAT the Superior Lessor may in its
absolute discretion
vary replace withdraw extend alter or add to such
Services if it reasonably
considers that by doing so the amenities in the
Building may be improved
and/or the management thereof more efficiently
conducted so long
however as the Superior Lessor shall at all times
provide such of the
Services as are necessary for the proper
maintenance and use and
enjoyment of the Building
AND PROVIDED THAT in the event that the Lessor or
the Superior
Lessor shall be required during any Service
Charge Year to incur heavy
or exceptional expenditure which forms part of
the service charge the
Lessor shall be entitled to recover from the
Lessee a proportionate part
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of that expenditure on the next date for payment
of rent and service
charge following such expenditure
4.3.2 To use all reasonable endeavours to procure that
the Superior Lessor
shall at all times keep or cause to be kept
detailed accounts (which
shall be open to inspection by,the Lessee at
reasonable times upon
prior appointment) of all expenditure in respect
of the Services
4.4 To pay Superior Lease rents
To pay the rents reserved by the Superior Lease and to
perform so far as the Lessee
is not liable for such performance under the terms of
this Underlease the covenants
and conditions on the part of the lessee contained in
the Superior Lease and to
indemnify and to keep indemnified the Lessee against all
actions claims proceedings
costs expenses and demands in any way relating to the
Superior Lease and in
relation to any service charge payments due but not
demanded or paid as at the date
hereof in relation to the Premises
4.5 Obtain consents under the Superior Lease
To take all reasonable steps at the Lessee's expense to
obtain the consent of the
Superior Lessor whenever the Lessee makes application
for any consent required
under this Underlease where the consent of both the
Lessor and the Superior Lessor
is needed by virtue of this Underlease and the Superior
Lease
5. PROVISOS
PROVIDED ALWAYS and it is hereby agreed as follows:-
5.1 Interest
That if the Rent or any part thereof or any other monies
due by the Lessee to the
Lessor shall at any time be unpaid on the due date
(whether in respect of rent any
formal demand shall have been made or not) then the
Lessee shall pay to the Lessor
in addition Interest on such sum for the period from the
date when such sum became
due to the date of payment to the Lessor
5.2 Re-entry
5.2.1 That
5.2.1.1 if the Rent or any part thereof or
any interest
payable
thereon or any other monies due by the
Lessee to the
Lessor shall at any time be unpaid for
twenty one days
(whether any formal demand shall have
been made or not)
or
5.2.1.2 if the Lessee shall fail to
perform or observe
any of its
covenants or stipulations herein or
5.2.1.3 if the Lessee or the Guarantor for
the time
being (being a
company)
5.2.1.3.1
enters into liquidation whether compulsory or
voluntary (save for the purpose of
demonstrated
1164030.01
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to the Lessees'
satisfaction
reconstruction or
amalgamation
whilst solvent) or
5.2.1.4 passes a resolution for winding
up (save as
aforesaid) or
5.2.1.4.1 is unable to
pay or has no
reasonable prospect of
being able
to pay its debts within
the meaning
of Sections 122 and 123
of the
Insolvency Act 1986 ("the
1986
Act") or
5.2.1.4.2 summons a
meeting of its
creditors or any of them
under
Part I of the 1986 Act or
5.2.1.4.3 suffers a
petition for an
Administration Order in
respect of
it to be filed at Court
or
5.2.1.4.4 suffers a
receiver or
administrative receiver
to be
appointed or
5.2.1.5 if the Lessee for the time being
(being an
individual or being
more than one individual any one
of them)
5.2.1.5.1 shall have a
receiving order made
against him or
5.2.1.5.2
become bankrupt or
5.2.1.5.3 is unable to
pay or has no
reasonable prospect of
being able
to pay his debts within
the meaning
of Sections 267 and 268
of the
1986
_' Act or
5.2.1.5.4 if the Lessee
(or if there shall be
more than one Lessee any
of them)
enters into composition
with his or
their creditors or
5.2.1.5.5 if an interim
order is made under
Part VIII of the 1986 Act
5.2.1.5.6 suffers any
distress or execution
to be levied on his or
their goods
at the Premises
then and in any such case it will
be lawful for
the Lessor at any time after any
such event to
re-enter upon the Premises or any
part of the
Premises in the name of the whole
and
thereupon this demise will
absolutely determine
but without prejudice to any
right of action or
remedy of the Lessor in respect
of any beach
non-observance or non-performance
of any of
the Lessee's or the Guarantor's
covenants or
any conditions contained in this
Underlease
5.3 Distress
That all monies payable by the Lessee under this
Underlease shall be
a charge on the Premises and recoverable by
distress as for rent in
arrear
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5.4 Exclusion of warranty
Nothing in this Underlease or in any consent granted by
the Lessor under this
Underlease shall imply or warrant that the Premises may
be used for the purpose
herein authorised so far as concerns any statutes
relating to town and country
planning or that any alterations or additions or other
works to the Premises which the
Lessor may permit under the provisions of this
Underlease will not require planning
permission and it is hereby agreed that in entering into
this Underlease the Lessee
does not rely on any such warranty given by the Lessor
or by any person on its behalf
5.5 Damage from Services
The Lessor shall not be liable to the Lessee or any
other person claiming through the
Lessee for any damage which may be caused by stoppage
breakage or defect of
any plant equipment or machinery in or service to the
Premises or any neighbouring
premises PROVIDED that the Lessor shall use all
reasonable endeavours to procure
that the Superior Lessor shall restore the plant
equipment machinery or service in
question as soon as practicable and PROVIDED that such
damage shall not arise
from the Lessor's negligence
5.6 Lessor's liability
In any case where the facts are known to the Lessee (but
not known to the Lessor)
the Lessor shall not in any event be liable to the
Lessee in respect of any failure of
the Lessor to perform any of its obligations to the
Lessee hereunder whether express
or implied unless and until the Lessee has notified the
Lessor of the facts giving rise
to the failure and the Lessor has failed within a
reasonable time to remedy the same
5.7 Walls
Any wall dividing the Premises from any adjoining
premises shall be treated as a
party wall and used and repaired as such
5.8 Lessee's effects
The Lessee hereby irrevocably appoints the Lessor to be
its agent to store or dispose
of any effects left by the Lessee on the Premises for
more than fourteen days after
the end of the Term on such terms as the Lessor thinks
fit and without the Lessor
being liable to the Lessee save to account for the net
proceeds of sale less the cost
of storage (if any) and any other expenses reasonably
incurred by the Lessor
PROVIDED THAT the Lessee will indemnify the Lessor
against any liability incurred
to it by any third part whose property shall have been
sold by the Lessor in mistaken
(but bona fide) belief that such property belonged to
the Lessee and was liable to be
dealt with as such pursuant to the provisions of this
Clause 5.8
5.9 Notices
Any notice required to be served on any party shall be
sufficiently served if it is sent
by post in a stamped envelope addressed to the Lessee or
to the Guarantor at the
last known place of abode or business or registered
office or address for service in
the United Kingdom of such Lessee or Guarantor or to the
Lessee's
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Solicitors or to the Lessor at its registered
office and proof of posting
shall be proof of service
5.10 Rent cesser
In the event of the Premises or any part thereof
or the access leading
thereto at any time during the Term being
damaged or destroyed by any
of the Insured
' Risks so as to render the Premises incapable of
occupation and the
Specified Use
then (save to the extent that the policy monies
become irrecoverable
in whole or
part through any act or default of the Lessee or
any person under its
control) the
Rent or a fair proportion thereof according to
the nature and extent of
the damage
sustained shall be suspended until either the
Premises or the
damaged portion
thereof shall again be capable of use or
occupation or for a period
equal to the
number of years for which insurance against loss
of rent has been
effected under
the Superior Lessor's insuring covenant
(whichever is the shorter
period) and any
dispute between the parties as to the amount of
any cesser of rent as
aforesaid
shall be determined by arbitration pursuant to
the Arbitration Act 1996
> 5.11 Indemnities
All indemnities given by the Lessee hereunder to
the Lessor in
respect of claims
from third parties shall be subject to the
condition that the parties
hereto shall
jointly negotiate and deal with any claims
against the Lessor and any
actions and
proceedings resulting therefrom in close
consultation with one
another and the
. Lessor will not settle or compromise any such
claim without the prior
written
consent of the Lessee (such consent not to be
unreasonably
withheld) subject to
the rights and powers of any insurers
5.12 Option to determine on non-reinstatement
If by damage by an Insured Risk the Premises or
a substantial part
thereof shall at any time be rendered unfit for
occupation or use for the
Specified Use or inaccessible and the Premises
shall not have been
reinstated and rendered capable of occupation
for the Specified Use by
three months before the end of the period of
three years referred to in
Clause 5.10 ("the rent insurance period") then
either the Lessor or the
Lessee may thereafter determine the Term and
this Underlease by not
less than three calendar months' notice in
writing to that effect served
upon the other and upon the expiration of such
notice this Underlease
and the Term shall cease and determine PROVIDED
that no such
notice shall be valid if served more than five
weeks after the expiration
of the rent insurance period or if at the date
of service or of expiration of
such notice the Premises shall in fact have been
so reinstated and
rendered capable of occupation and use for the
Specified Use
5.13 S.62 Law of Property Act 1925
The operation of Section 62 of the Law of
Property Act 1925 shall be
excluded from this Underlease and the only
rights granted to the Lessee
are those expressly set out in this Underlease
and the Lessee shall not
by virtue of this Underlease be deemed to have
acquired or be entitled
to by any means whatever any easement from or
over or (except such
as may be specifically granted in this
Underlease) in through over and
upon any land or premises adjoining or near to
the Premises
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5.14 Contracts (Rights of Third Parties) Act 1999
For the purposes of the Contracts (Rights of Third
Parties) Act 1999 the parties
hereto hereby agree that they do not intend any terms of
this Lease to be
enforceable by any third party who but for that Act
would not have been entitled to
enforce such terms
5.15 Statutory compensation
Except where any statutory provision prohibits the
Lessee's right to compensation
being reduced or excluded by agreement the Lessee shall
not be entitled to claim
from the Lessor on quitting the Premises or any part
thereof any compensation
under the Landlord and Tenant Act 1954
5.16 Waiver of Right to Forfeit
That no demand for or acceptance or receipt of any part
of the Rent or other monies
payable under this Underlease or any payment on account
thereof shall operate as
a waiver by the Lessor of any right which the Lessor may
have to forfeit this
Underlease by reason of any breach of covenant by the
Lessee notwithstanding that
the Lessor may know or be deemed to know of such breach
at the date of such
demand acceptance or receipt
5.17 Jurisdiction
This Underlease shall be governed by and construed in
all respects in accordance
with the law of England and the English courts shall
have exclusive jurisdiction in
relation to any disputes arising under or connected with
this Underlease and the
Lessee agrees that any process may be served on it by
leaving a copy of the
relevant document at the Premises
5.18 Severance
Each of the Clauses of this Underlease is distinct and
several from the others and
if at any time one or more of such provisions is or
becomes illegal invalid or
unenforceable the validity legality and enforceability
of the remaining provisions will
not in any way be affected or impaired
5.19 Exclusion Order
Having been authorised to do so by the Court Order the
parties hereto agree that the
provisions of Sections 24 to 28 (inclusive) of the
Landlord and Tenant Act 1954 shall
be excluded in relation to the Tenancy hereby created
6. RENT REVIEW
6.1 From each Review Date until as the case may be either
the next Review Date or
the end of the Term the Lessee shall pay to the Lessor
in each year rent ("the
New Rent") being whichever is the greater of a sum equal
to the rent payable
immediately prior to the relevant Review Date or a sum
equal to the open market
yearly rent payable for the Premises at the relevant
Review Date determined in
accordance with this Clause 6
6.2 The New Rent may be agreed in writing between the Lessor
and the Lessee at
any time but if the Lessor and the Lessee shall not by a
date four months before
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the relevant Review Date have agreed in writing the said
open market yearly rent
then the question may be referred for determination by
an independent surveyor
("the Surveyor") acting as an arbitrator and appointed
either by agreement between
the Lessor and the Lessee or (upon the application of
the Lessor or the Lessee) by
the President for the time being of the Royal
Institution of Chartered Surveyors (or
failing him by such officer of such other professional
body of surveyors as the Lessor
shall designate)
6.3 The arbitration shall be conducted in accordance with
the Arbitration Act 1996
6.4 The open market yearly rent shall be ascertained having
regard to open market
rental values current at the relevant Review Date and on
the assumption of the
Premises being let with vacant possession (but that all
landlord's fixtures and
fittings in the Premises are left intact) by a willing
lessor to a willing lessee on the
open market without payment of a premium upon the terms
of this Underlease
(other than the rent reserved but including these
provisions for review of rent) and
subject to and including the benefit of any deed of
variation consent licence or
approval or other instrument relating thereto and
requested by or agreed with the
Lessee and on the assumption:-
6.4.1 that the covenants and conditions
contained in this
Underlease on the
part of the Lessee to be observed and performed
have been fully
complied with and
6.4.2 of a term equal to the length of the
original term of this
Underlease
remaining unexpired on the relevant Review Date
or ten years
(whichever shall be longer) with rent reviews at
intervals similar to the
reviews in this Underlease and
6.4.3 that at the relevant Review Date the
Premises are fully
constructed
fitted out and equipped fit ready carpeted and
available for and capable
of immediate occupancy and use without the need
for any expenditure
on the part of the Lessee and
6.4.4 that no work has been carried out to or in
the Premises by
the Lessee
which has diminished the rental value of the
Premises and
6.4.5 that in case the Premises or any part
thereof or the means
of access
thereto or any essential services therefor have
been destroyed or
damaged they have been fully restored and that
the rent suspension
provisions contained in Clause 5.10 hereof shall
if in operation at the
relevant Review Date not be in operation
6.4.6 that the Premises may be used for the
Specified Use and
for any other
use permitted by any consent licence or approval
given by the Lessor
before the relevant Review Date at the request of
the Lessee or with
the
Lessee's agreement but not so as to assume that
such use is a
permitted use under the provisions of the Town
and Country Planning
Acts but disregarding
6.4.6.1
any effect on rental value of the Lessee's or any permitted
sub-tenant's occupation or that of any
predecessor in title
of
the Lessee or any permitted sub-tenant and
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6.4.6.2 any goodwill attached to the
Premises by
reason of the
business carried on there by the
Lessee or
any permitted
sub-tenant or that of any of
their predecessors
in title in their
respective business and
6.4.6.3 any effect on rental value of the
Premises
attributable to the
existence at the relevant Review
Date of any
alterations or
improvements to the Premises made
during to
the Term by
the Lessee or any permitted
sub-tenant or any
of their
respective predecessors in title
(otherwise
than pursuant to
any obligation on the part of the
Lessee such
permitted sub-
tenant or such predecessor in
title to carry out
such work)
and at the sole expense of the
Lessee or such
permitted
sub-tenant or their respective
predecessors in
title and
without any obligation on the
part of the
Lessor to reimburse
such expense and with the prior
written
consent of the
Lessor where such consent is
otherwise
required by this
Underlease and
6.4.6.4 any statute order instrument
regulation or
direction which
has the effect of regulating or
restricting the
amount of rent
which may be payable in respect
of the
Premises and
6.4.6.5 save in respect of improvements
in respect of
which an
undertaking to reinstate is
precluded by
Section 19(2) of the
Landlord and Tenant Act 1927 any
effect on
rent of any
obligation of the Lessee arising
under this
Underlease or
any deed licence consent or other
instrument
made by the
Lessor at the request of the
Lessee to remove
alterations or
additions or to reinstate the
Premises to the
condition or
design of the Premises before the
carrying out
of any works
to the Premises and
6.4.6.6 any value attributable to the
existence at the
Premises of
any equipment or property of the
Lessee at
the Premises
and
6.4.6.7 any rent free period or reduced
rent period
which may have
been allowed to the Lessee under
the terms of
this
Underlease
6.4.6.8 If for any reason whatever the
New Rent shall
be
ascertained after the relevant
Review Date
then the Lessee
shall pay rent at the rate
payable immediately
prior to the
relevant Review Date on account
of the New
Rent and upon
the date ("the Due Date") ten
days after the
ascertainment
of the New Rent or the next
quarter day
(whichever shall be
the earlier) the Lessee shall
notwithstanding
that the
provisions of Clause 6.8 hereof
shall remain to
be complied
with pay as rent in arrear any
difference
between the rent
paid and the New Rent in respect
of the
period from the
relevant Review Date until the
Due Date
together with
interest thereon at the normal
deposit rate of
HSBC Bank
' plc in respect of seven day money
from the
relevant Review
Date to the date of payment and
together with
the New Rent
1164030.01
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(c) the same rights of support shelter and
protection for the Premises
from all
adjoining premises of the Lessor or the Superior
Lessor as are at
present enjoyed
(d) the right to have the Lessee's name displayed on
any notice board
from time to
time maintained by the Superior Lessor at the
entrance to or
elsewhere within the
Building and for avoidance of doubt this shall
include the second
floor lift lobbies
(e) the right by prior arrangement with the Lessor
and the Superior
Lessor to place
refuse in such refuse skips and/or compacting
plant as the Lessor or
the Superior
Lessor may from time to time specify or in such
other refuse disposal
facilities
which may from time to time be provided for that
purpose by the
Lessor or the
Superior Lessor
(f) the right to use such of the Common Parts of the
Building as are
necessary for the
purpose of access to and egress from the
Premises on foot only and
without
causing any obstruction to the same
(g) the right in an emergency only to use any fire
escape facilities from
time to time
available from the Premises
(h) the right to use such male and female toilets
and washing facilities
within the
Building as the Lessor or the Superior Lessor
may from time to time
by notice in
writing stipulate
SCHEDULE2
Exceptions and Reservations and Adverse Easements which
where the context so
admits or requires are excepted and reserved to the
Lessor in common with the
other tenants of the Building and their tenants
servants agents and workmen and
all others authorised by them and with or without
materials and equipment
(a) the right at all times without obtaining
any consent from the Lessee but
not so that the access of light or air to the
Premises may be materially
affected to build upon or heighten or extend any
building or which the
Premises may form part or any other buildings
standing on any land
near to the Premises or otherwise to deal
0
with such land at it may think fit
the right of passage of Services from and to
other land and the buildings
of the Superior Lessor now or hereafter during
the Term to be erected
thereon through such Conducting Media as may at
any time during the
Term run through in upon or under the Premises
and at reasonable
times to enter upon the Premises to make
connections with such
Conducting Media for the purpose of exercising
such right making good
all damage caused to the Premises and the
Lessees fixtures and fittings
(c) the right of support shelter and protection for
all adjoining premises
as are at
present enjoyed from the Premises
(d) all rights of entry upon the Premises contained
or referred to
throughout Clause 3
of this Underlease
(e) the right to erect scaffolding for the purposes
of repairing or cleaning
the exterior
of the Building provided that any such
scaffolding does not materially
interfere with
the access to or egress from or the enjoyment
and use of the
Premises
1164030.01 '
-35-
for the period from the Due Date
to the next
quarter day thereafter and for the
avoidance of
doubt the New Rent shall be deemed
to have
been ascertained on the date when
it has been
agreed between the Lessor and the
Lessee or
(as the case may be) on the date
of the award or
determination of the Surveyor
' 6.4.6.9 If
by virtue of any government legislation the
rent payable
under this Underlease as from any
Review
Date is restricted
or any restriction is imposed upon
the Lessor's
right to
review the rent then forthwith
upon such
restriction coming
to an end the Lessor may by
written notice
served on the
Lessee bring about a further rent
review as if
the day after
the restriction had ended were a
Review Date
and the other
provisions of this Clause 6 shall
apply (mutatis
mutandis)
6.5 The right of re-entry hereby reserved shall be
exercisable by the
Lessor as well in
the case of non-payment of the New Rent as in the
case of non-
payment of any
rent previously payable under this Underlease and
the Premises shall
stand
charged with the payment of the New Rent as with
any rent previously
payable
6.6 When the amount of the New Rent shall have been
so ascertained
memoranda
thereof shall thereupon be signed by or on behalf
of the Lessor and
the Lessee
and annexed to this Underlease and the
counterpart thereof and the
parties shall
bear their own costs in respect thereof
IN WITNESS whereof the parties have executed this
Underlease as a
deed which
is intended to be and is delivered on the date first
above written
SCHEDULE 1
Easements and Rights granted which where the context so
admits or requires are
granted in common with the Lessor and other tenants and
occupiers of the Building
and their tenants servants agents and workmen and all
others authorised by them
and with or without equipment and materials
(a) the right of passage of Services from and to the
Premises through
such
Conducting Media as may now or during the Term
run through under
or over other
parts of the Building with the right if necessary
and proper to enter
upon such
other parts of the Building at reasonable times
for the purpose of
repairing so far
as may be necessary such Conducting Media and
making
connections thereto the
persons exercising such rights causing as little
damage
inconvenience and
nuisance as practicable and the Lessee forthwith
at the Lessee's
expense and to
the reasonable satisfaction of the Lessor's
Surveyor and the Superior
Lessor
making good any damage done to the Building
the right at reasonable times and where such
works cannot otherwise
reasonably be carried out to enter upon such
other parts of the Building
as may be reasonably necessary for the purpose of
repairing decorating
or maintaining the Premises the persons
exercising such rights causing
as little damage inconvenience and nuisance as
practicable and the
Lessee forthwith at the Lessee's expense and to
the reasonable
satisfaction of the Lessor's Surveyor and the
Superior Lessor making
good any damage done to the Building
1164030.01
-37-
the right to attach to and maintain on the
exterior of the Premises in
accordance with the requirements from time to
time of the fire officer
any lighting cables fire escape facilities
(including staircases) and other
equipment to serve such lighting cables or
staircases and barriers for
the purposes of any fire escape facilities and
all necessary facilities for
inspection repair maintenance and replacement
of the same
PROVIDED that there is no material interference
with the Lessee's
permitted use and enjoyment of the Premises
(g) all rights of light and air and all other
easements or rights (if any) now
enjoyed by other lands buildings and properties
over the Premises and
any exceptions and reservations to which the
Lessor's and any
superior title is subject
PROVIDED that (a) none of the above mentioned rights
herein excepted and
reserved permitting entry into the Premises or the
erection of scaffolding shall be
exercised unless such works and other matters cannot
be reasonably effected
without entry onto or into the Premises or
scaffolding, being erected and then only
after there has been prior consultation with the
Lessee (except in emergency) and
(b) all the rights herein excepted and reserved shall
be exercised only in such a
manner as to cause as little interference
inconvenience or damage as reasonably
practicable to the Lessee the Premises and the
business carried on thereat and
the Lessee's fixtures and fittings and stock and any
damage occasioned to the
Premises and the Lessee's fixtures and fittings shall
be made good by the person
exercising such rights as soon as practicable
SCHEDULE 3
The Services
1. Cleaning (including stone cleaning) lighting
repairing maintaining
furnishing
decorating refurbishing altering renewing or
rebuilding (where
necessary as part
of the process of repair) and complying with
and/or making
representations
against or otherwise contesting the incidence of
any statutory
requirements and
the provision hire and maintenance of any
equipment necessary
therefor
2. Cleaning windows glass screens and glass doors
inside and outside
other than
those for which a tenant is responsible
3. Providing maintaining cleaning running
repairing overhauling
replacing or
-' renewing (where necessary as part of the process of repair)
and inspecting the
Service Chattels namely (but not limited to) all
lifts lift shafts and lift
machinery
boilers electrical mechanical and other
equipment plant machinery
apparatus and
services air conditioning ventilating and
circulation equipment
sanitary apparatus
amenity furniture and equipment architectural or
artistic features
planting areas
boxes or tubs and all services provided for the
use of the tenants
and occupiers of
the Building including all conduits and fire
escapes fire warning and
fighting
equipment sprinkler systems security alarms
telephones
communications closed
circuit television and cleaning equipment
facilities and apparatus not
comprised in
and used for the benefit of a single Lettable
Unit
_. 4. Gas electricity water fuel and other power
consumed for or in
connection with the
provision of any of the Services and/or the
Service Chattels
5. Supplying to all Lettable Units hot and cold
water to toilets toilet
hygiene and towel
service
6. Supplying to all Lettable Units air
conditioning and ventilation
extraction
1164030.01
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7. Refuse disposal and pest control including the provision
and replacement from
time to time of any skips compactors or other refuse
disposal facilities which may
at any time be reasonably deemed necessary by the
Superior Lessor or stipulated
by the local authority or private contractor responsible
for the collection of refuse
from the Building (provided that the Superior Lessor may
acting reasonably and
properly require trade waste arising from any particular
tenants' or occupiers'
trade or business to be disposed of by such tenant or
occupier and not by the
Superior Lessor)
8. Paying all rates taxes assessments and outgoings whether
of a recurring nature
or not and paying any special costs or expenses which
maybe imposed by the
local authority and not recoverable from any other
person
9. Planting cultivating tending stocking and restocking any
planting boxes or tubs
10. Employing caretakers porters receptionists security
personnel lift attendants
boiler
men supervisors maintenance men and all other staff
(including independent
contractors) as the Superior Lessor may reasonably
consider necessary and the
payment of reasonable and proper wages salaries social
security pension and
insurance contributions and other outgoings and benefits
occasioned by the
employment of such persons and the provision of uniforms
overalls and protective
clothing for such persons
11. The provision of reasonable and proper security
arrangements for the Building
12. Maintaining notice boards indicating the name business
and location of the
tenants and other occupiers of the Building
13. In the case of management by the Superior Lessor's own
staff a management
charge of ten per centum of the total cost to the
Superior Lessor of the provision
of the other services referred to in this Schedule
14. The engagement or provision of managing agents and such
other management
staff and such professional advisers and contractors as
the Superior Lessor shall
acting reasonably and properly deem necessary for the
efficient provision of the
services including fees for computing and auditing the
service charge and
collection of rents insurance premiums and services
charges PROVIDED that
such management charge as is referred to in paragraph 13
hereof shall not in
total
exceed ten per centum of the service charge (excluding
all costs relating to the
insurance of the Building or any parts thereof and any
reserve or sinking fund)
and
such management charge and the fees payable under this
paragraph 14 shall not
include any costs or fees relating to the review of
rents and the letting and re-
letting of the Building or any parts thereof
15. The insurance against loss or damage by fire and such
other risks as the Superior
Lessor shall acting reasonably and properly deem
necessary together with such
fees and expenses (including professional fees and
demolition and site clearance
expenses) as the Superior Lessor acting as aforesaid
shall deem necessary of the
Common Parts and service chattels and insurance against
theft third party liability
public liability and employer's liability and such other
insurances as the lessor
shall acting as aforesaid consider to be necessary
16. The valuation for insurance purposes of the Building and
each and every part
thereof (but not a single Lettable Unit) including (but
not limited to) the service
1164030.01
-39-
chattels as often as the Superior Lessor shall
reasonably determine but
not more often than once in every three years
17. The reading of meters or other assessments of
the cost of supplying
any services
which are subject to a metered supply SUBJECT
however to the
proviso
contained in Clause 3(36)(c) of the Superior
Lease
18. A sinking fund or other provision to provide for
the replacement of
the Service
Chattels and to provide for periodic items
including (but not limited
to) repairs
maintenance decoration and renewals compliance
with legislation
regulations of
local authorities and reasonable requirements of
insurers such
reserve of sinking
fund to be held by the Superior Lessor on trust
for the tenants of the
Building in a
specially designated deposit account all
interest earned thereon
being credited to
such account at regular intervals and held on
trust as aforesaid
19. Without limiting the aforesaid all other
expenses reasonably incurred
by the
Superior Lessor in or incidental to or for the
purpose of providing or
maintaining
services facilities or amenities to for or of
the Building
PROVIDED ALWAYS that there shall be excluded from the
service charge any
expenses outgoings or other expenditure relating to
the review of rents and the letting and
re-letting of the Building or any
parts thereof
> (ii) the making good of any inherent or latent
defects in the design or
construction of
the Building including the Premises or in the
installation by or on
behalf of the
Superior Lessor of anything in or on the
Premises or the Building
_ _ any costs and expenses incurred relating to the
rebuilding
reinstatement and
renewal (save insofar as necessary as part of
the process of repair)
of the
Building
(iv) the making good of damage by any of the risks
insured or
covenanted to be
insured by the Superior Lessor save insofar as
the Superior Lessor
reasonably
chooses not to claim under any such insurance in
respect of such
damage
PROVIDED FURTHER that in no event shall the Lessee's
proportion of the service
charge or that part of the service charge payable by
the Lessee be increased or
altered by reason that at any relevant time any part of
the Building may be vacant
or be occupied by the Superior Lessor or any firm
person or company associated
with the Superior Lessor or that any tenant or other
occupier of another part of the
Building may default in payment of his due proportion
of the service charge or that
at any relevant time any part of the Building may be
damaged or destroyed
SCHEDULE 4
Guarantee
The Guarantor guarantees to and covenants with and for
the benefit of the Lessor
(which expression shall for the purpose of these
guarantees and covenants include
the Lessor's successors in title to the reversion
without the need for express
assignment):-
(a) that the Lessee will during the period that the
Lessee shall be bound
by the
tenants covenants in this Underlease pay the
rent (including the New
Rent agreed
. or ascertained pursuant to the provisions of the
Underlease) and all
other sums
agreed to be paid by the Lessee when due and
will also duly perform
and observe
1164030.01
-40-
its covenants and the stipulations in the Underlease and
that the Guarantor will if the
Lessee shall make any default in payment of such rent
(including the New Rent as
aforesaid) or any other sums or in the performance and
observance of such
covenants and stipulations pay the rent and monies and
observe or perform the
covenants or stipulations in respect of which the Lessee
shall be in default and will
make good to the Lessor all losses costs and expenses
sustained by the Lessor
through the default of the Lessee PROVIDED ALWAYS that
any neglect or
forbearance of the Lessor in endeavouring to obtain
payment of the rent or other
monies when the same become due or its delay in taking
any steps to enforce
performance or observance of the said covenants or
stipulations and any time or
indulgence which may be given by the Lessor to the
Lessee or the fact that this
Underlease may have been assigned or that the Lessee may
have ceased to exist
or any other act or thing whereby but for this provision
the Guarantor would have
been released shall not release or in any way lessen or
affect the liability of the
Guarantor under this guarantee
(b) that if the Lessee shall enter into liquidation (save
for the purpose of
demonstrating to the Lessees satisfaction)
reconstruction or amalgamation whilst
solvent) or become bankrupt and the liquidator or
trustee shall disclaim the
Underlease then the Guarantor will if required by the
Lessor in writing within six
months after such disclaimer accept from the Lessor a
lease of the Premises for a
term equal to the residue of the Term unexpired at the
date of such disclaimer
and
containing the same rent covenants provisos and other
terms as the Underlease
and shall execute and deliver to the Lessor a
counterpart thereof and shall pay
the
reasonable and proper costs of such new lease
- - that if this Underlease shall be so disclaimed and for
any reason the Lessor does
not require the Guarantor to accept a new lease of the
Premises as aforesaid
then
the Guarantor shall pay to the Lessor on written demand
an amount equal to the
rent reserved by the Underlease at the date of such
disclaimer for the period
commencing with such date and ending on the date six
months after such
disclaimer or the date on which the Premises are relet
by the Lessor whichever
is_
the sooner
EXECUTED (but not delivered until the )
date inserted in this Deed) as a Deed by )
the affixing of the COMMON SEAL of )
ARCADIA GROUP PLC in the presence of:-
Director
f
Director
Secretary/9iFee~e~-
1164030.01
Exhibit 10.7 Facility Agreement dated January 10, 2000 by and
between Tempz.com limited and Ci4net.com Limited.
THIS AGREEMENT is made on the January 2000
BETWEEN
(1) TEMPZ.COM LIMITED whose registered office is at Elizabeth
House, Castle Street, St Helier, Jersey, Channel Islands (the
"Borrower"); and
(3) CI4NET.COM LIMITED whose registered office is at The Old
Chapel, Sacre Coeur, Rouge Bouillon, St Helier, Jersey, Channel
Islands (the "Lender").
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 In this Agreement:
"Advance" means, save as otherwise provided herein, an advance
(as from time to time reduced by repayment) made or to be made by
the Lender hereunder. For the avoidance of doubt "Advance" shall
include amounts remitted to the Borrower by the Lender pursuant
to Clause 5.1;
"Available Facility" means, at any time and save as otherwise
provided herein, GBP10,000,000 (ten million pounds sterling) less
the amount of each Advance which has then been made hereunder;
"Business Plan" means the Business Plan as defined in the
Investment Agreement as revised from time to time by the Borrower
(with the approval of the Lender) and such other annual business
plan as adopted and revised by the Borrower from time to time;
"Debenture" means the debenture in the agreed form executed by
the Borrower in favour of the Lender;
"Designated Account" means such bank account of the Borrower as
the Borrower may from time to time notify the Lender;
"Event of Default" means any of those events specified in Clause
18;
"Exit Event" means either (i) the sale of the issued share
capital of the Borrower to a third party or parties acting in
concert or (ii) the listing of any shares in the Borrower on a
recognised stock exchange;
"Facility" means the sterling loan facility granted to the
Borrower in this Agreement;
"Group" means the Borrower and its subsidiaries;
"Interest Period" means, save as otherwise provided herein, any
of those periods mentioned in Clause 6;
"Investment Agreement" means the agreement of even date herewith
described as such and made inter alia between the parties hereto;
"Loan" means the aggregate principal amount for the time being
outstanding hereunder;
"Notice of Drawdown" means a notice substantially in the form set
out in the Second Schedule;
"Potential Event of Default" means any event which could
reasonably be expected to become (with the passage of time, the
giving of notice, the making of any determination hereunder or
any combination thereof) an Event of Default; and
"Repayment Date" means the earlier of the tenth anniversary of
this Agreement or the occurrence of an Exit Event.
1.2 Any reference in this Agreement to:
the "Lender" shall be construed so as to include its and any
subsequent successors and assigns in accordance with their
respective interests;
a "business day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which Lenders are generally
open for business in London;
a "Clause" shall, subject to any contrary indication, be
construed as a reference to a clause hereof;
an "encumbrance" shall be construed as a reference to a mortgage,
hypothec, contract mortgage, security interest, charge, pledge,
lien or other encumbrance securing any obligation of any person
or any other type of preferential arrangement (including, without
limitation, title transfer and retention arrangements) having a
similar effect;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation of which
the first-mentioned company or corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or
contingent;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next succeeding calendar month save that, where any such
period would otherwise end on a day which is not a business day,
it shall end on the next succeeding business day, unless that day
falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the
immediately preceding business day Provided that, if a period
starts on the last business day in a calendar month or if there
is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in
that later month (and references to "months" shall be construed
accordingly);
a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or
any association or partnership (whether or not having separate
legal personality) of two or more of the foregoing;
"repay" (or any derivative form thereof) shall, subject to any
contrary indication, be construed to include "prepay" (or, as the
case may be, the corresponding derivative form thereof);
a "Schedule" shall, subject to any contrary indication, be
construed as a reference to a schedule hereto;
a "subsidiary" of a company or corporation shall be construed as
a reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be
treated as being controlled by another if that other company or
corporation is able to direct its affairs and/or to control the
composition of its board of directors or equivalent body;
"tax" shall be construed so as to include any tax, levy, impost,
duty or other charge of a similar nature (including, without
limitation, any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place thereof
from time to time;
a "wholly-owned subsidiary" of a company or corporation shall be
construed as a reference to any company or corporation which has
no other members except that other company or corporation and
that other company's or corporation's wholly-owned subsidiaries
or persons acting on behalf of that other company or corporation
or its wholly-owned subsidiaries; and
the "winding-up", "dissolution" or "administration" of a company
or corporation shall be construed so as to include any equivalent
or analogous proceedings under the law of the jurisdiction in
which such company or corporation is incorporated or any
jurisdiction in which such company or corporation carries on
business including the seeking of liquidation, winding-up,
desastre, reorganisation, dissolution, administration,
arrangement, adjustment, protection or relief of debtors.
1.3 "GBP" and "sterling" denote lawful currency of the United
Kingdom.
1.4 Save where the contrary is indicated, any reference in this
Agreement to:
(i) this Agreement or any other agreement or document shall
be construed as a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
(ii) a statute shall be construed as a reference to such
statute as the same may have been, or may from time to time be,
amended or re-enacted; and
(iii) a time of day shall be construed as a reference to
London time.
1.5 Clause and Schedule headings are for ease of reference only.
2. The Facility
The Lender grants to the Borrower, upon the terms and subject to
the conditions hereof, a loan facility in an aggregate amount of
up to GBP10,000,000 (ten million pounds sterling).
3. Purpose
3.1 The Facility is intended for general corporate and working
capital purposes of the Borrower and the Borrower shall apply all
amounts raised by it hereunder in or towards satisfaction of the
general corporate financing requirements set out in the Schedules
to the Business Plan.
3.2 Without prejudice to the obligations of the Borrower
hereunder, the Lender shall not be obliged to concern itself with
the application of amounts raised by the Borrower hereunder.
4. Conditions Precedent
Save as the Lender may otherwise agree, the Borrower may not
deliver any Notice of Drawdown hereunder and no drawings will
take place under Clause 5.1 unless the Lender has confirmed to
the Borrower that it has received all of the documents listed in
the First Schedule and that each is, in form and substance,
satisfactory to the Lender.
5. Availability of the Facility
5.1 Upon completion of this Agreement not more than three
business days after receipt of a Notice of Drawdown from the
Borrower, the Lender will, subject to clause 4, remit to the
Designated Account an Advance in the sum of GBP1,540,000 (one
million five hundred and forty thousand pounds sterling).
5.2 The Lender will, subject to Clause 4, remit to the
Designated Account on the 23rd day of March 2000 and thereafter
on the 23rd day of the last month in each quarter (or if such day
is not a business day, on the next following business day) the
amount (as rounded up to the nearest GBP100,000) of negative
cash
flow set against the following quarter in the Business Plan,
provided that no remittance may be made under Clause 5 which
would cause the amount drawn under Clause 5 to exceed the
Available Facility.
5.3 Save as otherwise provided herein, an Advance will be made
by the Lender to the Borrower in respect of amounts in excess of
those provided for in Clause 5.2 if:
(i) not less than three business days before the proposed
date for the making of such Advance, the Lender has received from
the Borrower a Notice of Drawdown therefor, receipt of which
shall oblige the Borrower to borrow the amount therein requested
on the date therein stated upon the terms and subject to the
conditions contained herein;
(ii) the proposed date for the making of such Advance is a
business day;
(iii) the proposed date for the making of such Advance
is not less than five business days after the date upon which the
previous Advance (if any) was made hereunder;
(iv) the proposed amount of such Advance is no greater than
GBP50,000 in any month and shall not cause the aggregate of
Advances under Clause 5.2 made in any consecutive period of
twelve months to exceed GBP250,000 provided that if such amount
is
greater than the Available Facility, the amount of the Advance
shall be limited to the Available Facility; and
(v) either:
(a) no Event of Default or Potential Event of Default has
occurred; and
(b) the representations set out in Clause 14 are in all
material respects true on and as of the proposed date for the
making of such Advance.
6. Interest Periods
6.1 The period for which an Advance is outstanding shall be
divided into successive periods each of which (other than the
first) shall start on the last day of the preceding such period
provided that the first Interest period shall commence on the
date falling six months after the date of this Agreement and
shall apply to all Advances then outstanding.
6.2 The duration of each Interest Period shall, save as
otherwise provided herein, be one month.
6.3 The first Interest Period in respect of any Advance other
than the first will terminate on the last day of the then current
Interest Period applicable to the first Advance.
7. Interest
7.1 During the first six (6) months from date of signature of
this Agreement no interest shall accrue on amounts Advanced
during such first six (6) months. Thereafter, on the last day of
each Interest Period, the Borrower shall pay accrued interest on
the outstanding amount of the Facility, provided that no such
payment shall be made until the earlier of the Repayment Date and
the first Positive Cashflow Day.
7.2 For the purposes of this Clause a "Positive Cashflow Day"
shall be the last day of an Interest Period:
(i) falling on or after the second anniversary of this Agreement
and
(ii) in respect of which the Borrower's business shall have shown
a positive cash flow.
7.3 Accrued interest shall be payable on each Positive Cashflow
Day in an amount equal to the lower of:
(i) one half of the amount of positive cash flow of the business
of the Borrower during the Interest Period ending on such
Positive Cashflow Day; and
(ii) the amount of accrued interest unpaid.
7.4 For the avoidance of doubt unpaid interest shall accrue and
remain payable.
7.5 The rate of interest applicable to an Advance from time to
time shall be eight per cent per annum.
8. Repayment
Subject to any requirement to make early repayment in accordance
with clauses 13 and 18.1 the Loan together with accrued interest
shall be repayable by the Borrower on the Repayment Date.
9. Cancellation and Prepayment
9.1 The Borrower may, by giving to the Lender not less than
thirty days' prior notice to that effect, cancel the whole or any
part (being an amount or integral multiple of GBP100,000) of the
Available Facility.
9.2 The Borrower may, if it has given to the Lender not less
than thirty days' prior notice to that effect, prepay without
penalty the whole of any Advance or any part of any Advance
(being an amount or integral multiple of GBP100,000) on the last
day of any Interest Period.
9.3 Any notice of cancellation or prepayment given by the
Borrower pursuant to Clause 9.1 or 9.2 shall be irrevocable,
shall specify the date upon which such cancellation or prepayment
is to be made and the amount of such cancellation or prepayment
and, in the case of a notice of prepayment, shall oblige the
Borrower to make such prepayment on such date.
9.4 No principal shall be repaid until all outstanding amounts
of interest have been paid.
9.4 The Borrower shall not repay all or any part of the Loan
except at the times and in the manner expressly provided for in
this Agreement and shall not be entitled to reborrow any amount
repaid.
10. Taxes
10.1 All payments to be made by the Borrower to the Lender
hereunder shall be made free and clear of and without deduction
for or on account of tax unless the Borrower is required to make
such a payment subject to the deduction or withholding of tax, in
which case the sum payable by the Borrower in respect of which
such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the
making of the required deduction or withholding, the Lender
receives and retains (free from any liability in respect of any
such deduction or withholding) a net sum equal to the sum which
it would have received and so retained had no such deduction or
withholding been made or required to be made.
10.2 Without prejudice to the provisions of Clause 10.1, if the
Lender is required to make any payment on account of tax (not
being a tax imposed on the net income of the Lender by the
jurisdiction in which it is incorporated) or otherwise on or in
relation to any sum received or receivable by it hereunder
(including, without limitation, any sum received or receivable
under this Clause 10) or any liability in respect of any such
payment is asserted, imposed, levied or assessed against the
Lender, the Borrower shall, upon demand of the Lender, promptly
indemnify the Lender against such payment or liability, together
with any interest, penalties and expenses payable or incurred in
connection therewith.
10.3 If the Lender intends to make a claim pursuant to Clause 10,
it shall notify the Borrower of the event by reason of which it
is entitled to make such claim Provided that nothing herein shall
require the Lender to disclose any confidential information
relating to the organisation of its affairs.
11. Tax Receipts
11.1 If, at any time, the Borrower is required by law to make any
deduction or withholding from any sum payable by it hereunder (or
if thereafter there is any change in the rates at which or the
manner in which such deductions or withholdings are calculated),
the Borrower shall promptly notify the Lender.
11.2 If the Borrower makes any payment hereunder in respect of
which it is required to make any deduction or withholding, it
shall pay the full amount required to be deducted or withheld to
the relevant taxation or other authority within the time allowed
for such payment under applicable law and shall deliver to the
Lender, promptly upon receipt of the same, an original receipt
(or a certified copy thereof) issued by such authority evidencing
the payment to such authority of all amounts so required to be
deducted or withheld in respect of such payment.
12. Increased Costs
12.1 If, by reason of any change in law or in its interpretation
or administration:
(a) there is any increase in the cost to the Lender of
funding or maintaining all or any of the advances comprised in a
class of advances formed by or including the Advances; or
(b) the Lender becomes liable to make any payment on
account of tax or otherwise (not being a tax imposed on the net
income of the Lender by the jurisdiction in which it is
incorporated) on or calculated by reference to the amount of the
Advances and/or to any sum received or receivable by it
hereunder,
then the Borrower shall, from time to time on demand of the
Lender, promptly pay to the Lender amounts sufficient to
indemnify it or any such holding company against, as the case may
be, (1) such increased cost (or such proportion of such increased
cost as is, in the opinion of the Lender, attributable to its
funding or maintaining Advances) or (2) such liability.
12.2 If the Lender intends to make a claim pursuant to Clause
12.1, it shall notify the Borrower of the event by reason of
which it is entitled to do so Provided that nothing herein shall
require the Lender to disclose any confidential information
relating to the organisation of its affairs.
13. Illegality
If, at any time, it is unlawful for the Lender to make, fund or
allow to remain outstanding all or any of the Advances, then the
Lender shall, promptly after becoming aware of the same, deliver
to the Borrower a certificate to that effect and:
(i) the Lender shall not thereafter be obliged to make any
Advances and the amount of the Available Facility shall be
immediately reduced to zero; and
(ii) if the Lender so requires, the Borrower shall on such
date as the Lender shall have specified repay each outstanding
Advance together with accrued interest thereon and all other
amounts owing to the Lender hereunder.
14. Representations
The Borrower represents that:
(i) it is a corporation duly organised under the laws of
Jersey with power to enter into this Agreement and to exercise
its rights and perform its obligations hereunder and all
corporate and other action required to authorise its execution of
this Agreement and its performance of its obligations hereunder
has been duly taken;
(ii) under the laws of Jersey in force at the date hereof,
it will not be required to make any deduction or withholding from
any payment it may make hereunder;
(iii) under the laws of Jersey in force at the date
hereof, the claims of the Lender against the Borrower under this
Agreement will rank at least pari passu with the claims of all
its other unsecured creditors save those whose claims are
preferred solely by any bankruptcy, desastre, insolvency,
liquidation or other similar laws of general application;
(iv) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement, it will not be
entitled to claim for itself or any of its assets immunity from
suit, execution, attachment or other legal process;
(v) all acts, conditions and things required to be done,
fulfilled and performed in order (a) to enable it lawfully to
enter into, exercise its rights under and perform and comply with
the obligations expressed to be assumed by it in this Agreement
and the Debenture and (b) to ensure that the obligations
expressed to be assumed by it in this Agreement and the Debenture
are legal, valid and binding;
(vi) it has not taken any corporate action nor have any
other steps been taken or legal proceedings been started or (to
the best its knowledge and belief) threatened against the
Borrower for its winding-up, dissolution, administration or
re-organisation or for the appointment of a liquidator, viscount,
receiver, administrator, administrative receiver, trustee or
similar officer of it or of any or all of its assets or revenues;
(vii) it is not in breach of or in default under any
agreement to which it is a party or which is binding on it or any
of its assets to an extent or in a manner which might have a
material adverse effect on the business or financial condition of
the Group;
(viii) no action or administrative proceeding of or
before any court or agency which might have a material adverse
effect on the business or financial condition of the Borrower has
been started or threatened;
(ix) all of the written information supplied by the Borrower
to the Lender in connection herewith is true, complete and
accurate in all material respects and it is not aware of any
material facts or circumstances that have not been disclosed to
the Lender and which might, if disclosed, adversely affect the
decision of a person considering whether or not to provide
finance to the Borrower;
(x) save as permitted hereunder, no encumbrance exists over
all or any of the present or future revenues or assets of the
Borrower;
(xi) the execution by the Borrower of this Agreement or the
Debenture and the Borrower's exercise of its rights and
performance of its obligations hereunder or thereunder will not
result in the existence of nor oblige the Borrower to create any
encumbrance over all or any of its present or future revenues or
assets (other than as created by the Debenture);
(xii) the execution by the Borrower of this Agreement
and the Debenture and the Borrower's exercise of its rights and
performance of its obligations hereunder or thereunder do not and
will not:
(a) conflict with any agreement, mortgage, hypothec,
contract mortgage, security interest, bond or other instrument or
treaty to which such party is a party or which is binding upon it
or any of its assets;
(b) conflict with the such party's constitutional documents
and rules and regulations; or
(c) conflict with any applicable law, regulation or
official or judicial order.
15. Financial Information
15.1 The Borrower shall:
(i) as soon as the same become available, but in any event
within 120 days after the end of each of its financial years,
deliver to the Lender its consolidated financial statements for
such financial year;
(ii) as soon as the same become available, but in any event
within 90 days after the end of each half of each of its
financial years, deliver to the Lender its consolidated financial
statements for such period; and
(iii) from time to time on the request of the Lender,
furnish the Lender with such information about the business and
financial condition of the Group as the Lender may reasonably
require.
15.2 The Lender shall ensure that:
(i) each set of financial statements delivered by it
pursuant to Clause 15.1 is prepared on the same basis as was used
in the preparation of any financial statements previously
prepared and in accordance with accounting principles generally
accepted in England and consistently applied; and
(ii) each set of financial statements delivered by it
pursuant to paragraph (i) of Clause 15.2 is audited by auditors
reasonably acceptable to the Lender as soon as reasonably
practicable following preparation of such accounts.
16. Financial Covenant
The Borrower undertakes that it shall conduct its business in
accordance with the provisions of the Business Plan. The
Borrower further undertakes to use its reasonable endeavours to
ensure that sales levels achieved on a monthly basis shall be at
least as favourable as those shown in the Schedules to the
Business Plan, provided that during any consecutive period of
twelve months such sales levels may fall by 25% below the levels
shown in the Schedules to the Business Plan (as the same may from
time to time be revised with the approval of the Lender).
17. Covenants
17.1 The Borrower shall:
(i) obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all material
authorisations, approvals, licences and consents required in or
by the laws and regulations of its jurisdiction of incorporation
to enable it lawfully to enter into and perform its obligations
under this Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction
of incorporation of this Agreement;
(ii) maintain insurances on and in relation to its business
and material assets with reputable underwriters or insurance
companies against such risks and to such extent as is usual for
companies carrying on a business such as that carried on by the
Group;
(iii) after the delivery of any Notice of Drawdown and
before the proposed making of the Advance requested therein,
notify the Lender of the occurrence of any event which results in
or may reasonably be expected to result in any of the
representations contained in Clause 14 being untrue in any
material respect at or before the time of the proposed making of
such Advance;
(iv) promptly inform the Lender of the occurrence of any
Event of Default or Potential Event of Default and, upon receipt
of a written request to that effect from the Lender, confirm to
the Lender that, save as previously notified to the Lender or as
notified in such confirmation, no Event of Default or Potential
Event of Default has occurred; and
(v) ensure that at all times the claims of the Lender
against it under this Agreement rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred by any bankruptcy, desastre, insolvency,
liquidation or other similar laws of general application.
17.2 No member of the Group shall, without the prior written
consent of the Lender (which shall not unreasonably be withheld):
(i) pay, make or declare any dividend or other distribution
in respect of any financial year;
(ii) create or permit to subsist any encumbrance over all or
any of its present or future revenues or assets other than (1)
the Debenture or (2) an encumbrance which has been disclosed in
writing to the Lender prior to the execution hereof and secures
only indebtedness outstanding at the date hereof or (3) such
encumbrance necessary to obtain the invoice discounting facility,
details of which have been disclosed to the Lender;
(iii) make any loans, grant any credit (save in the
ordinary course of business) or give any guarantee or indemnity
(except as required hereby) to or for the benefit of any person
or otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person;
(iv) issue any further shares (save to the trust for the
benefit of the Borrower's employees, details of which have been
disclosed to the Lender) or alter any rights attaching to its
issued shares in existence at the date hereof; or
(v) (disregarding sales of stock in trade in the ordinary
course of business) sell, lease, transfer or otherwise dispose
of, by one or more transactions or series of transactions
(whether related or not), the whole or any part of its revenues
or its assets.
18. Events of Default
18.1 If:
(i) the Borrower shall fail to pay, within three business
days (or twenty business days in the case of interest payments
due under Clause 7) of the due date, any sum due from it
hereunder at the time, in the currency and in the manner
specified herein; or
(ii) any representation or statement made by the Borrower in
this Agreement or in any notice or other document, certificate or
statement delivered by it pursuant hereto or in connection
herewith is or proves to have been misleading or materially
incorrect when made; or
(iii) the Borrower fails duly to perform or comply with
any of the obligations expressed to be assumed by it in Clause 15
or 16; or
(iv) the Borrower fails duly to perform or comply with any
other obligation expressed to be assumed by it in this Agreement
or the Debenture and such failure, if capable of remedy, is not
remedied within fourteen days after the Lender has given notice
thereof to such party; or
(v) any indebtedness of any member of the Group being in
aggregate in excess of GBP25,000 is declared to be or otherwise
becomes due and payable prior to its specified maturity or any
creditor or creditors of the any member of the Group become
entitled to declare any indebtedness of such party due and
payable prior to its specified maturity; or
(vi) any member of the Group is unable to pay its debts as
they fall due, commences negotiations with any one or more of its
creditors with a view to the general readjustment or rescheduling
of its indebtedness or makes a general assignment for the benefit
of or a composition with its creditors; or
(vii) any member of the Group takes any corporate action
or other steps are taken or legal proceedings are started for its
winding-up, desastre, dissolution, administration or
re-organisation or for the appointment of a liquidator, viscount,
receiver, administrator, administrative receiver, trustee or
similar officer of it or of any or all of its revenues and assets
save that this clause will not apply in respect of any action
taken vexatiously or without cause; or
(viii) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any material part
of, the property, undertaking or assets of any member of the
Group; or
(ix) by or under the authority of any government, (a) the
management of any member of the Group is wholly or partially
displaced or the authority of any member of the Group in the
conduct of its business is wholly or partially curtailed or (b)
all or a majority of the issued shares of the Borrower or the
whole or any part (the book value of which is twenty per cent. or
more of the book value of the whole) of the revenues or assets of
the Group is seized, nationalised, expropriated or compulsorily
acquired; or
(x) the Borrower repudiates this Agreement or the Debenture
or does or causes to be done any act or thing evidencing an
intention to repudiate this Agreement or the Debenture; or
(xiii) at any time any act, condition or thing required
to be done, fulfilled or performed in order (a) to enable the
Borrower lawfully to enter into, exercise its rights under and
perform the obligations expressed to be assumed by it in this
Agreement or the Debenture, (b) to ensure that the obligations
expressed to be assumed by the Borrower in this Agreement or the
Debenture are legal, valid and binding or (c) to make this
Agreement or the Debenture admissible in evidence in Jersey is
not done, fulfilled or performed; or
(xi) at any time it is or becomes unlawful for the Borrower
to perform or comply with any or all of its obligations hereunder
or the Debenture or any of the obligations of the Borrower
hereunder or thereunder are not or cease to be legal, valid and
binding which would have a material adverse effect on the lender;
or
(xii) any circumstances arise which in the reasonable
opinion of the Lender constitute a material adverse change in the
business, assets or financial condition of the Borrower;
then, and in any such case and at any time thereafter, the
Lender may by written notice to the Borrower:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with accrued
interest thereon and any other sums then owed by the Borrower
hereunder) or declare the Advances to be due and payable on
demand of the Lender; and/or
(b) declare that any undrawn portion of the Facility shall
be cancelled, whereupon the same shall be cancelled and the
Available Facility shall be reduced to zero.
18.2 If, pursuant to Clause 18.1, the Lender declares the
Advances to be due and payable on demand of the Lender, then, and
at any time thereafter, the Lender may by written notice to the
Borrower:
(i) call for repayment of the Advances on such date as it
may specify in such notice (whereupon the same shall become due
and payable on such date together with accrued interest thereon
and any other sums then owed by the Borrower hereunder) or
withdraw its declaration with effect from such date as it may
specify in such notice; and/or
(ii) select as the duration of any Interest Period which
begins whilst such declaration remains in effect a period of one
month or less.
19. Default Interest and Indemnity
19.1 If any sum due and payable by the Borrower hereunder is not
paid on the due date or if any sum due and payable by the
Borrower under any judgement of any court in connection herewith
is not paid on the date of such judgement, the period beginning
on such due date or, as the case may be, the date of such
judgement and ending on the date upon which the obligation of the
Borrower to pay such sum (the balance thereof for the time being
unpaid being herein referred to as an "unpaid sum") is discharged
shall be divided into successive periods, each of which (other
than the first) shall start on the last day of the preceding such
period and the duration of each of which be selected by the
Lender.
19.2 During each such period relating thereto as is mentioned in
Clause 19.1 an unpaid sum shall bear interest at the rate per
annum which is the sum from time to time of two per cent, the
Margin and the Base Rate from time to time applicable thereto.
19.3 Any interest which shall have accrued under Clause 19 in
respect of an unpaid sum shall be due and payable and shall be
paid by the Borrower at the end of the period by reference to
which it is calculated or on such other date or dates as the
Lender may specify by written notice to the Borrower.
19.4 The Borrower undertakes to indemnify the Lender against:
(i) any cost, claim, loss, expense (including legal fees)
or liability together with any VAT thereon, which it may sustain
or incur as a consequence of the occurrence of any Event of
Default or any default by the Borrower in the performance of any
of the obligations expressed to be assumed by it in this
Agreement; and
(ii) any loss it may suffer as a result of its funding an
Advance requested by the Borrower hereunder but not made by
reason of the operation of any one or more of the provisions
hereof.
20. Payments
20.1 On each date on which this Agreement requires an amount
denominated in sterling to be paid by the Borrower, the Borrower
shall make the same available to the Lender by payment in
sterling and in immediately available, freely transferable,
cleared funds to such account or bank as the Lender may have
specified for this purpose).
20.2 On each date on which this Agreement requires an amount
denominated in sterling to be paid by the Lender to the Borrower
hereunder, the Lender shall make the same available to the
Borrower by payment in sterling and in immediately available,
freely transferable, cleared funds to the Borrower's Designated
Account.
20.3 All payments required to be made by the Borrower hereunder
shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without any
deduction for or on account of any set-off or counterclaim.
21. Set-Off
The Borrower authorises the Lender to apply any credit balance to
which the Borrower is entitled on any account of the Borrower
with the Lender in satisfaction of any sum due and payable from
the Borrower to the Lender hereunder but unpaid; for this
purpose, the Lender is authorised to purchase with the moneys
standing to the credit of any such account such other currencies
as may be necessary to effect such application. The Lender shall
not be obliged to exercise any right given to it by this Clause
21.
22. Costs and Expenses
22.1 The Borrower shall, from time to time on demand of the
Lender, reimburse the Lender for all costs and expenses
(including legal fees) together with any VAT thereon incurred in
or in connection with the preservation and/or enforcement of any
of its rights under this Agreement.
22.2 The Borrower shall pay all stamp, registration and other
taxes to which this Agreement or any judgement given in
connection herewith is or at any time may be subject and shall,
from time to time on demand, indemnify the Lender against any
liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
23. Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and
assigns.
24. Assignments
24.1 The Borrower shall not be entitled to assign or transfer all
or any of its rights, benefits and obligations hereunder.
24.2 The Lender shall be entitled to assign the benefit of this
Agreement, but not its obligations hereunder, to a member of the
Lender Group Provided That if an assignee ceases to be a member
of the Lender Group, the Lender shall without delay notify the
Borrower that such event has occurred and shall procure the
assignment of the benefit of this Agreement back to the Lender or
another member of the Lender Group. In this Sub-clause, "Lender
Group" shall mean any holding company or subsidiary of the Lender
or any subsidiary of any holding company of the Lender, and
"subsidiary" and "holding company" shall have the respective
meanings ascribed thereto by Section 736 of the Companies Act
1985
25. Calculations and Evidence of Debt
25.1 Interest shall accrue from day to day and shall be
calculated on the basis of a year of 365 days and the actual
number of days elapsed.
25.2 The Lender shall maintain in accordance with its usual
practice accounts evidencing the amounts from time to time lent
by and owing to it (including interest) hereunder.
26. Remedies and Waivers
No failure by the Lender to exercise, nor any delay by the Lender
in exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or
the exercise of any other right or remedy. The rights and
remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
27. Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of
the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
28. Notices
28.1 Each communication to be made hereunder shall be made in
writing but, unless otherwise stated, may be made by telex or
letter.
28.2 Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall (unless that
other person has by fifteen days' written notice to the one
specified another address) be made or delivered to that other
person at the address identified with its signature below and
shall be deemed to have been made or delivered at the opening of
business on the business day following the date of despatch (in
the case of any communication made by telefax) or (in the case of
any communication made by delivery of letter) when left at that
address or (as the case of any communication made by postage of
letter) ten days after being deposited in the post postage
prepaid in an envelope addressed to it at that address.
29. Law
This Agreement shall be governed by, and shall be construed in
accordance with, English law.
30. Jurisdiction
Each of the parties hereto irrevocably agrees that the courts of
Jersey shall have non-exclusive jurisdiction to hear and
determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this
Agreement and, for such purposes, irrevocably submits to the
non-exclusive jurisdiction of such courts.
AS WITNESS the hands of the duly authorised representatives of
the parties hereto on the date set out above.
The Borrower
TEMPZ.COM LIMITED
By: Christopher Leonard Chris Leonard
Address: Elizabeth House, Castle Street, St Helier, Jersey,
Channel Islands
The Lender
CI4NET.COM LIMITED
By: Lee John Cole L.J.Cole
Address: The Old Chapel, Sacre Coeur, Rouge Bouillon, St Helier,
Jersey, Channel Islands
THE FIRST SCHEDULE
Condition Precedent Documents
(i) a copy, certified a true copy by a duly authorised officer
of the Borrower, of its Memorandum and Articles of Association;
(ii) a copy, certified a true copy by a duly authorised officer
of the Borrower, of a Board Resolution of the Borrower approving
the execution, delivery and performance of this Agreement and the
Debenture and the terms and conditions hereof and thereof and
authorising a named person or persons to sign this Agreement and
any documents to be delivered by the Borrower pursuant hereto;
(iii) a certificate of a duly authorised officer of the
Borrower setting out the names and signatures of the persons
authorised to sign, on behalf of the Borrower, this Agreement,
the Debenture and any documents to be delivered by the Borrower
pursuant hereto or thereto; and
(iv) the Debenture to be executed by the Borrower.
THE SECOND SCHEDULE
Notice of Drawdown
From: Tempz.com Limited
To: CI4Net.com Limited
Dated:
Dear Sirs,
1. We refer to the agreement (the "Facility Agreement") dated
January, 2000 and made between ourselves as Borrower, and
yourselves as Lender. Terms defined in the Facility Agreement
shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility
Agreement and on [date of proposed Advance], we wish to borrow an
Advance in the amount of GBP[ ] upon the terms and subject to the
conditions contained therein.
3. We confirm that, at the date hereof, the representations set
out in Clause 14 of the Facility Agreement are true and no Event
of Default or Potential Event of Default has occurred.
4. We confirm that the Advance is to provide working capital
for the month of [ ] in excess of that set out in the
Business Plan.
5. The proceeds of this drawdown should be credited to [insert
account details].
Yours faithfully
.............................
for and on behalf of
Tempz.com Limited
Exhibit 10.8 Facility Agreement dated February 17, 2000
relating to Systeam SpA
Dated 17 February 2000
$US1,000,000
i
FACILITY AGREEMENT
SYSTEAM SpA
as borrower
CI4Net.com Inc
as lender
McFadden Pilkington & Ward
City Tower - Level Four
40 Basinghall Street
London EC2V 5DE
THIS AGREEMENT is made on the 17' of February 2000 BETWEEN
(1) SYSTEAM SPA whose registered office is at Viale Eroi di
Cefalonia n. 37, 00128 Rome (the "Borrower"); and
(3) C14NET.C0M INC whose registered office is at One Rockfeller
Plaza, Suite 1600, New York 10020 (the "Lender").
NOW IT IS HEREBY AGREED as follows:
1.1 In this Agreement:
"Acquisition Agreement" means the Agreement executed by way of
exchange of a contract proposal dated 18' of January 2000 and the
subsequent acceptance dated 24' of January 2000 made between the
Lender and certain other parties concerning acquisition by the
Lender of shares in the Borrower;
"Prime Rate" means the Prime rate from time to time published by
Chase Manhattan Bank NA;
"Closing" means the day on which the transfer of the shares of
Systeam S.p.A. to CI4Net.com Inc. will be executed"Event of
Default" means any of those events specified in Clause 14;
"Exit Event" means either (i) the sale of the issued share
capital of the Borrower to a third party or parties acting in
concert or (ii) the listing of any shares in the Borrower on a
recognised stock exchange;
"Facility" means the dollar loan facility granted to the Borrower
in this Agreement, as defined in Clause 2;
"Group" means the Borrower and its subsidiaries;
"Interest Period" means, save as otherwise provided herein, any
of those periods mentioned in Clause 5;
I
"Loan" means the aggregate principal amount for the time being
outstanding hereunder;
"Margin" means 3 per cent. per annum;
"Potential Event of Default" means any event which may become
(with the passage of time, the giving of notice, the making of
any determination hereunder or any combination thereof) an Event
of Default; and
"Repayment Date" means the earlier of the fourth anniversary of
this Agreement or the occurrence of
an Exit Event.
LOANSNG.06
1.2 Any reference in this Agreement to:
the "Lender" shall be construed so as to include its and any
subsequent successors and assigns in accordance with their
respective interests;
a "business day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which Lenders are generally
open for business in New York and Rome; a "Clause" shall, subject
to any contrary indication, be construed as a reference to a
clause hereof;
an "encumbrance" shall be construed as a reference to a mortgage,
charge, pledge, lien or other encumbrance securing any obligation
of any person or any other type of preferential arrangement
(including, without limitation, title transfer and retention
arrangements) having a similar effect;
a "holding company" of a company or corporation shall be
construed as a reference to any company or corporation of which
the first-mentioned company or corporation is a subsidiary;
"indebtedness" shall be construed so as to include any obligation
(whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or
contingent;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next succeeding calendar month save that, where any such
period would otherwise end on a day which is not a business day,
it shall end on the next succeeding business day, unless that day
falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the
immediately preceding business day Provided that, if a
period starts on the last business day in a calendar month or if
there is no numerically corresponding day in the month in which
that period ends, that period shall end on the last business day
in that later month (and references to "months" shall be
construed accordingly);
a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or
any association or partnership (whether or not having separate
legal personality) of two or more of the foregoing;
"repay" (or any derivative form thereof) shall, subject to any
contrary indication, be construed to include "prepay" (or, as the
case may be, the corresponding derivative form thereof);
a "Schedule" shall, subject to any contrary indication, be
construed as a reference to a schedule hereto;
a "subsidiary" of a company or corporation shall be construed as
a reference to any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation and, for these purposes, a
company or corporation shall be treated as being controlled by
another if that other company or corporation is able to direct
its affairs and/or to control the composition of its board of
directors or equivalent body;
"tax" shall be construed so as to include any tax, levy, impost,
duty or other charge of a similar nature (including, without
limitation, any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same);
"VAT" shall be construed as a reference to value added tax
including any similar tax which may be imposed in place thereof
from time to time;
a "wholly=owned subsidiary' of a company or corporation glialFbe
construed as a reference to any company or corporation which has
no other members except that other company or corporation and
that other company's or corporation's wholly-owned subsidiaries
or persons acting on behalf of that other company or corporation
or its wholly-owned subsidiaries; and
the "winding-up", "dissolution" or "administration" of a company
or corporation shall be construed so as to include any equivalent
or analogous proceedings under the law of the jurisdiction in
which such company or corporation is incorporated or any
jurisdiction in which such company or corporation carries on
business including the seeking of liquidation, winding-up,
reorganisation, dissolution, administration, arrangement,
adjustment, protection or relief of debtors.
1.3 "$" and "dollar" denote lawful currency of the United
States of America.
1.4 Save where the contrary is indicated, any reference in
this Agreement to:
this Agreement or-any-other--agreement-or document shall be
construed-as-a reference to this Agreement or, as the case may
be, such other agreement or document as the same may have been,
or may from time to time be, amended, varied, novated or
supplemented;
a statute shall be construed as a reference to such statute as
:he same may have been, or may from time to time be, amended or
re-enacted; and
(iii) a time of day shall be construed as a reference to New
York time.
1.5 Clause and Schedule headings are for ease of reference
only.
2. The Facility
The Lender grants to the Borrower, upon the terms and subject to
the conditions hereof, a loan facility in an aggregate amount of
up to $1,000,000.
3. Purpose
3.1 The Facility is intended for general corporate and working
capital purposes of the Borrower and the Borrower shall apply all
amounts raised by it hereunder in or towards satisfaction of the
general corporate financing requirements set out in the Schedules
to the Business Plan .
3.2 Without prejudice to the obligations of the Borrower
hereunder, the Lender shall not be obliged to concern itself with
the application of amounts raised by the Borrower hereunder.
4. Availability of the Facility
The Lender will, subject to Clause 4, remit the Facility to the
Borrower no later than seven days from the Closing (or if such
day is not a business day, on the next following business day).
5. Interest Periods
The period for which the Loan is outstanding shall be divided
into successive Interest Periods each with a duration of three
months. The first Interest Period shall start from the date on
which the Facility has been made available to the Borrower
6 Interest
6.1 On the last day of each Interest Period the Borrower
shall pay the interest accrued on the Loan for the relevant
Interest Period.
6.2 The rate of interest applicable to the Loan from time
to time during an Interest Period relating thereto shall be the
rate per annum which is the sum of the Margin and the Prime Rate
applied on a daily basis during such Interest Period.
7. Repayment
The Borrower shall repay the Loan on the Repayment Date.
8. Prepayment
8.1 The Borrower may, if it has given to the Lender not less than
thirty days' prior notice to that effect, prepay without penalty
the whole or any part of the Loan (being an amount or integral
multiple of $100,000) on the last day of any Interest Period.
8.2 Any notice of cancellation or prepayment given by the
Borrower pursuant to Clause 8.1 shall be irrevocable, shall
specify the date upon which such cancellation or prepayment is to
be made and the amount of such cancellation or prepayment and, in
the case of a notice of prepayment, shall oblige the Borrower to
make such prepayment on such date.
8.3 The Borrower shall not repay all or any part of the
Loan except at the times and in the manner expressly provided for
in this Agreement and shall not be entitled to re-borrow any
amount repaid.
9. Taxes
9.1 All payments to be made by the Borrower to the Lender
hereunder shall be made free and clear of and without deduction
for or on account of tax unless the Borrower is required to make
such a payment subject to the deduction or withholding of tax, in
which case the sum payable by the Borrower in respect of which
such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the
making of the required deduction or withholding, the Lender
receives and retains (free from any liability in respect of any
such deduction or withholding) a net sum equal to the sum which
it would have received and so retained had no such deduction or
withholding been made or required to be made.
9.2 Without prejudice to the provisions of. Clause 10.1, if the
Lender is required to make any payment on account of tax (not
being a tax imposed on the income of the Lender by the
urisdiction in which it is incorporated) or otherwise on or in
relation to any sum received or receivable by it hereunder
(including, without limitation, any sum received or receivable
under this Clause 10) or any liability in respect of any such
payment is asserted, imposed, levied or assessed against the
Lender, the Borrower shall, upon demand of the Lender, promptly
indemnify the Lender against such payment or liability, together
with any interest, penalties and expenses payable or incurred in
connection therewith.
9.3 If the Lender intends to make a claim pursuant to Clause 10,
it shall notify the Borrower of the event by reason of which it
is entitled to make such claim Provided that nothing herein shall
require the Lender to disclose any confidential information
relating to the organisation of its affairs.
10. Tax Receipts
10.1 If, at any time; the Borrower is required by law to make
any deduction or withholding from any sum payable by it hereunder
(or if thereafter there is any change in the rates at which or
the manner in which such deductions or withholdings are
calculated), the Borrower shall promptly notify the Lender.
10.2 If the Borrower makes any payment hereunder in respect of
which it is required to make any deduction or withholding, it
shall pay the full amount required to be deducted or withheld to
the relevant taxation or other authority within the time allowed
for such payment under applicable law and shall deliver to the
Lender, promptly upon receipt of the same, an original receipt
(or a certified copy thereof) issued by such authority evidencing
the payment to such authority of all amounts so required
to be deducted or withheld in respect of such payment.
11. Increased Costs
11.1 If, by reason of any change in law or in its interpretation
or administration:
(a) there is any increase in the cost to the Lender of funding
or maintaining all or any of the advances comprised in a class of
advances formed by or including the Advances;
(b) the Lender becomes liable to make any payment on account of
tax or otherwise (not being a tax imposed on the net income of
the Lender by the jurisdiction in which it is incorporated) on or
calculated by reference to the amount of the Advances and/or to
any sum received or receivable by it hereunder then the Borrower
shall, from time to time on demand of the Lender, promptly pay to
the Lender amounts sufficient to indemnify it or any such holding
company against, as the case may be, (1) such increased cost (or
such proportion of such increased cost as is, in the opinion of
the Lender, attributable to its funding or maintaining Advances)
or (2) such liability.
11.2 If the Lender intends to make a claim pursuant to Clause
11.1, it shall notify the Borrower of the event by reason of
which it is entitled to do so Provided that nothing herein shall
require the Lender to disclose any confidential information
relating to the organisation of its affairs.
12. Representations
The Borrower represents that:
(i) it is a corporation duly organised under the laws of Italy
with power to enter into this Agreement and to exercise its
rights and perform its obligations hereunder and all corporate
and other action required to authorise its execution of this
Agreement and its performance of its obligations hereunder
has been duly taken;
(ii) under the laws of Italy in force at the date hereof, the
claims of the Lender against the Borrower under this Agreement
will rank at least pari passu with the claims of all its other
unsecured creditors save those whose claims are preferred solely
by any bankruptcy ; insolvency; liquidation or other similar
laws of general application;
(iii) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement, it will not be
entitled to claim for itself or any of its assets immunity from
suit, execution, attachment or other legal process;
(iv) all acts, conditions and things required to be done,
fulfilled and performed in order (a) to enable it lawfully to
enter into, exercise its rights under and perform and comply with
the obligations expressed to be assumed by it in this Agreement
and (b) to ensure that the obligations expressed to be assumed by
it in this Agreement are legal, valid and binding;
(v) it has not taken any corporate action nor have any other
steps been taken or legal proceedings been started or (to the
best its knowledge and belief) threatened against the Borrower
for its winding-up, dissolution, administration or
re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar
officer of it or of any or all of its assets or revenues;
(vi) it is not in breach of or in default under any agreement to
which it is a party or which is binding on it or any of its
assets to an extent or in a manner which might have a material
adverse effect on the business or financial condition of the
Group;
(vii) no action or administrative proceeding of or before any
court or agency which might have a material adverse effect on the
business or financial condition of the Borrower has been started
or threatened;
(viii) all of the written information supplied by the Borrower
to the Lender in connection herewith is true, complete and
accurate in all material respects and it is not aware of any
material facts or circumstances that have not been disclosed to
the Lender and which might, if disclosed, adversely affect the
decision of a person considering whether or not to provide
finance to the Borrower;
(ix) save as permitted hereunder, no encumbrance exists over all
or any of the present or future revenues or assets of the
Borrower;
(x) the execution by the Borrower of this Agreement and the
Borrower's exercise of its rights and performance of its
obligations hereunder or thereunder will not result in the
existence of nor oblige the Borrower to create any encumbrance
over all or any of its present or future revenues or assets;
(xi) the execution by the Borrower of this Agreement and the
Debenture and the Borrower's exercise of its rights and
performance of its obligations hereunder or thereunder do not and
will not:
(a) conflict with any agreement, mortgage, bond or
other instrument or treaty to which such party is a party or
which is binding upon it or any of its assets;
(b) conflict with the such party's constitutional
documents and rules and regulations; or
(c) conflict with any applicable law, regulation or
official or judicial order.
13. Covenants
13.1 The Borrower shall:
(i) obtain, comply with the terms of and do all that
is necessary to maintain in full force and effect all
authorisations, approvals, licences and consents required in or
by the laws and regulations of its jurisdiction of incorporation
to enable it lawfully to enter into and perform its obligations
under this Agreement or to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction
of incorporation of this Agreement;
(ii) maintain insurances on and in relation to its
business and assets with reputable underwriters or insurance
companies against such risks and to such extent as is usual for
companies carrying on a business such as that carried on
by the Group;
(iii) after the delivery of any Notice of Drawdown and before
the proposed making of the Advance requested therein, notify the
Lender of the occurrence of any event which results in or may
reasonably be expected to result in any of the representations
contained in Clause 12 being untrue in any material respect at or
before the time of the proposed making of such Advance;
(iv) promptly inform the Lender of the occurrence of any Event of
Default or Potential Event of Default and, upon receipt of a
written request to that effect from the Lender, confii=iri to the
Lender- that, save as previously notified to the Lender or as
notified in such confirmation, no Event of Default or Potential
Event of Default has occurred; and
(v) ensure that at all times the claims of the Lender against it
under this Agreement rank at least pari passu with the claims of
all its other unsecured creditors save those whose claims are
preferred by any bankruptcy, insolvency, liquidation or other
similar laws of general application.
13.2 No member of the Group shall , without the prior written
consent of the Lender:
pay, make or declare any dividend or other distribution in
respect of any financial year;
(ii) create or permit to subsist any encumbrance over all or any
of its present or future revenues or assets other than an
encumbrance which has been disclosed in writing to the Lender
prior to the execution hereof and secures only indebtedness
outstanding at the date hereof;
(iii) make any loans, grant any credit (save in the ordinary
course of business) or give any guarantee or indemnity (except as
required heir eby) to or for the benefit of any person or
otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person;
(iv) (other than pursuant to the Option Scheme (as defined in the
Acquisition Agreement) issue any further shares or alter any
rights attaching to its issued shares in existence at the date
hereof; or
(v) (disregarding sales of stock in trade in the ordinary course
of business) sell, lease, transfer or otherwise dispose of, by
one or more transactions or series of transactions (whether
related or not), the whole or any part of its revenues or its
assets.
14. Events of Default
14.1 If: (i) the Borrower shall fail to pay, within three
business days of the due date, any sum due from it hereunder at
the time, in the currency and in the manner specified herein; or
(ii) any representation or statement made by the Borrower in this
Agreement or in any notice or other document, certificate or
statement delivered by it pursuant hereto or in connection
herewith is or proves to have been misleading or materially
incorrect when made; or
(iii) the Borrower fails duly to perform or comply with any
other obligation expressed to be assumed by it in this Agreement
and such failure, if capable of remedy, is not remedied within
fourteen days after the Lender has given notice thereof to such
party; or
(iv) any material indebtedness of any member of the Group is not
paid when due or is declared to be or otherwise becomes due and
payable prior to its specified maturity or any creditor or
creditors of the any member of the Group become entitled to
declare any indebtedness of the such party due and payable prior
to its specified maturity; or
(v) any member of the Group is unable to pay its debts as they
fall due, commences negotiations with any one or more of its
creditors with a view to the general readjustment or rescheduling
of its indebtedness or makes a general assignment for the benefit
of or a composition with its creditors; or
(vi) any member of the Group takes any corporate action or other
steps are taken or legal proceedings are started for its
winding-up, dissolution, administration or re-organisation or for
the appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its revenues and assets; or
(iiiii) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any part of, the
property, undertaking or assets of any member of the Group; or
(viii) by or under the authority of any government, (a) the
management of any member of the Group is wholly or partially
displaced or the authority of any member of the Group in the
conduct of its business is wholly or partially curtailed or (b)
all or a majority of the issued shares of the Borrower or the
whole or any part (the book value of which is twenty per cent. or
more of the book value of the whole) of the revenues or assets of
the Group is seized, nationalised, expropriated or compulsorily
acquired; or
(ix) (except as may result from a sale or sales by the Lender) at
least 660 of the issued share capital of the Borrower shall cease
to be beneficially owned by the Lender; or
(x) any member of the Group ceases to carry on the business it
carries on at the date hereof or enters into any new business; or
(xi) the Borrower repudiates this Agreement or does or causes to
be done any act or thing evidencing an intention to repudiate
this Agreement; or
(xii) at any time any act, condition or thing required to be
done, fulfilled or performed in order (a) to enable the Borrower
lawfully to enter into, exercise its rights under and perform the
obligations expressed to be assumed by it in this Agreement, (b)
to ensure that the obligations expressed to be assumed by the
Borrower in this agreement legal valid binding or (c) to make,
this Agreement admissible in evidence in Italy is not done,
fulfilled or performed; or
(xiii) at any time it is or becomes unlawful for the Borrower
to perform or comply with any or all of its obligations hereunder
or any of the obligations of the Borrower hereunder or thereunder
are not or cease to be legal, valid and binding; or
(xiv) any circumstances arise which in the reasonable opinion
of the Lender constitute a material adverse change in the
business, assets or financial condition of the Borrower;
then, and in any such case and at any time thereafter, the
Lender, in accordance with art. 1186 of the Italian Civil Code,
may by written notice to the Borrower declare the Loan to be
immediately due and payable (whereupon the same shall become so
payable together-with accrued interest thereon and--any other
sums then owed by the Borrower hereunder)
14.2 If, pursuant to Clause 14.1, the Lender declares the Loan to
be due and payable on demand of the Lender, then, and at any time
thereafter, the Lender may by written notice to the Borrower:
call for repayment of the Loan on such date as it may specify in
such notice (whereupon the same shall become due and payable on
such date together with accrued interest thereon and any other
sums then owed by the Borrower hereunder) or withdraw its
declaration with effect from such date as it may specify in such
notice.
15. Default Interest and Indemnity
15.1 If any sum due and payable by the Borrower hereunder is not
paid on the due date or if any sum due and payable by the
Borrower under any judgement of any court in connection herewith
is not paid on the date of such judgement, (the balance thereof
for the time being unpaid being herein referred to as an "unpaid
sum") the unpaid sum shall bear interest at the rate per annum
which is the sum from time to time of two per cent, the Margin
and the Prime Rate from time to time applicable thereto.
15.2 The Borrower undertakes to indemnify the Lender against any
cost, claim, loss, expense (including legal fees) or liability
together with any VAT thereon, which it may sustain or incur as a
consequence of the occurrence of any Event of Default or any
default by the Borrower in the performance of any of the
obligations expressed to be assumed by it in this Agreement.
16. Payments
16.1 On each date on which this Agreement requires an amount
denominated in dollars to be paid by the Borrower, the Borrower
shall make the same available to the Lender by payment in dollars
and in immediately available, freely transferable, cleared funds
to the Lender's account number to be advised by the lender, New
York (or such other account or bank as the Lender may have
specified for this purpose).
16.2 All payments required to be iriade by the Borrower
heieunder shall be calculated without reference to any set-off or
counterclaim and shall be made free and clear of and without any
deduction for or on account of any set-off or counterclaim.
17. Set-Off
The Borrower authorises the Lender to apply any credit balance to
which the Borrower is entitled on any account of the Borrower
with the Lender in satisfaction of any sum due and payable from
the Borrower to the Lender hereunder but unpaid; for this
purpose, the Lender is authorised to purchase with the moneys
standing to the credit of any such account such other currencies
as may be necessary to effect such application. The Lender shall
not be obliged to exercise any right given to it by this Clause.
18.1 The Borrower shall, from time to time on demand of the
Lender, reimburse the Lender for all costs and expenses
(including legal fees) together with any IVA thereon incurred in
or in connection with the preservation and/or enforcement of any
of its rights under this Agreement.
18.2 The Borrower shall pay all stamp, registration and other
taxes to which this Agreement or any judgement given in
connection herewith is or at any time may be subject and shall,
from time to time on demand, indemnify the Lender against any
liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
19. Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of
each party hereto and its or any subsequent successors and
assigns.
20. Assignments
20.1 The Borrower shall not be entitled to assign or transfer all
or any of its rights, benefits and obligations hereunder.
20.2 The Lender may at any time assign all or any of its rights
and benefits hereunder.
21. Calculations and Evidence of Debt
21.1 Interest and commitment commission shall accrue from day to
day and shall be calculated on the basis of a year of 360 days
consisting of 12 months of 30 days.
21.2 The Lender shall maintain in accordance with its usual
practice accounts evidencing the amounts from time to time lent
by and owing to it hereunder.
22. Remedies and Waivers
No failure by the Lender to exercise, nor any delay by the Lender
in exercising, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or
the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
23. Partial Invalidity
If, at any time, any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of
the remaining provisions hereof nor the legality, validity or
enforceability of such provision under the law of any
other jurisdiction shall- in any way be affected- or impaired
thereby:
24. Notices
24.1 Each communication to be made hereunder shall be made in
writing but; unless otherwise stated, may be made by telex or
letter.
24.2 Any communication or document to be made or delivered by one
person to another pursuant to this Agreement shall (unless that
other person has by fifteen days' written notice to the one
specified another address) be made or delivered to that other
person at the address identified with its signature below and
shall be deemed to have been made or delivered at the opening of
business on the business day following the date of despatch (in
the case of any communication made by telefax) or (in the case of
any communication made by letter) when left at that address or
(as the case may be) ten days after being deposited in the post
postage prepaid in an envelope addressed to it at that address
Provided that any communication or document to be made or
delivered by the Borrower to the Lender shall be effective only
when received by the Lender and then only if the same is
expressly marked for the attention of the department or officer
identified with the Lender's signature below (or such other
department or officer as the Lender shall from time to time
specify for this purpose).
THE FIRST SCHEDULE
Condition Precedent Documents
a copy, certified a true copy by a duly authorised of its
[constitutional documents];
(ii) a copy, certified a true copy by a duly authorised of
a Board Resolution of the Borrower approving the
performance of this Agreement and the Debentl
conditions hereof and thereof and authorising a nan
sign this Agreement and any documents to be del
pursuant hereto;
(iii) a certificate of a duly authorised officer of the
BorroN and signatures of the persons authorised to sign, on this
Agreement, the Debenture and any documents Borrower pursuant
hereto or thereto; and
(iv) the Debenture to be executed by the Borrower.
LOANSNG.06
25. Law
This Agreement shall
26. Jurisdiction
Each of the p; hear and determine an or in connection with i such
courts.
AS WITNESS the h
- -out above
The Borrower
SYSTEAM Sp,
By:
Address: Via de
The Lender
THE SECOND SCHEDULE
Notice of Drawdown
From: Systeam SpA
To: [ ]
Dated:
Dear Sirs,
I
1. We refer to the agreement (the "Facility Agreement") dated [
], 199[ ] and made between ourselves as borrower, [ ] as
guarantor and yourselves as lender.
2. We hereby give you notice that, pursuant to the Facility
Agreement and on [date of proposed Advance], we wish to borrow an
Advance in the amount of GBP[ ] upon the terms and subject to the
conditions contained therein.
3. We confirm that, at the date hereof, the representations set
out in Clause 14 of the Facility Agreement are true and no Event
of Default or Potential Event of Default has occurred.
4. We confirm that the Advance is to provide working capital
for the month of [ ] in excess of that set out in the Business
Plan.
5. The proceeds of this drawdown should be credited to [insert
account details].
Yours faithfully
for and on behalf of
Systeam SpA
* Insert only if there are no outstanding Advances.
Exhibit 10.9 Facility Agreement dated March 14, 2000 relating
to PCC Care Card Holdings BV
FACILITY AGREEMENT
The undersigned,
I CI4Net.com Inc, a corporation organized under the laws of
Delaware and having its
principal office at One Rockefeller Plaza, Suite 1600, New York ,
NY 10020, USA,
hereinafter to be referred to as the "Lender", and
II Personal Care Card Nederland Holding B.V., which has its
registered office in 1211
BF Hilversum, Noordse Bosje 43, The Netherlands, hereinafter to
be referred to as the "Borrower".
And
Mr. J.D. Koekkoek, who is resident of the Netherlands with the
address Hertog Hendriklaan 8, 1217 CT Hilversum (hereinafter to
be referred to as "Koekkoek") and Nesbic Converging Technologies
Europe (CTE) Fund B.V. Savannahweg 17, Utrecht, (hereinafter to
be referred to as "Nesbic"), both parties jointly hereinafter to
be referred to as the "Creditors"
parties hereinafter collectively also referred to as "Parties"
whereas
Borrower has entered into an acquisition agreement with the
Creditors concerning the purchase of all the shares in Borrower
dated March 14, 2000; Lender has agreed with Borrower to provide
Borrower a loan in the amount of USD 2,000,000 (the "Loan") for
the purpose of (a) repayment of a credit facility and loans
provided by the Creditors to Borrower and (b) working capital;
Parties have agreed in a Loan Term Sheet of March 14, 2000 the
outlines of their agreement; Parties wish to set out their
understandings.
Hereby declare that they have agreed as follows:
1. Loan amount
The Lender shall lend to the Borrower and the Borrower shall
borrow from the Lender an amount of USD 2,000,000 (in words: USD
two million)
2. Drawdown
NLG 500.000 of the Loan shall be made available by Lender for
draw down by the Borrower. as from 27 March, 2000 and the balance
of, the Loan in the amount of NLG 1.500.000, shall be made
available by Lender for draw down by Borrower in the period
between 27 March and 27 June, but ultimately on 27 June, 2000.
3. Interest
The Borrower shall pay to the Lender interest on the Loan or the
balance thereof for the time being outstanding calculated at the
rate of Chase Manhattan Base plus 3% (three per cent) per annum,
payable on December 31 of each year any balance of the Loan is
outstanding. Interest shall be calculated on the basis of actual
days elapsed and a year of 360 days.
4. Purpose of Loan
1 The part of the Loan in the amount of NLG 500.000 shall be
used by Borrower to finance its activities and the balance of NLG
1.500.000 must be used to repay its debts to the Creditors in the
amount of USD 1,500,000 ultimately on June 27, 2000.
2 In the event that the Borrower has not (completely) repaid
its debts of USD 1,500,000 to the Creditors within 30 days after
June 27, 2000, the Creditors are hereby granted the right to
demand from Lender as repayment an amount of fully paid up and
unencumbered S-8 shares in Lender, to be issued and delivered by
the Lender to Creditors, equal to the balance of the debts to the
Creditors divided by the actual market value on June 27, 2000 of
a fully paid up and unencumbered S-8 share in Lender plus 20%.
The amount of S-8 shares to be delivered to Creditors will be
rounded off to the nearest amount of full S-8 shares.
3 Creditors will each give Borrower timely payment
instructions by registered mail with regard to the amount due to
each of them.
5. Repayment/Prepayment
1 The outstanding balance of the Loan shall be repaid by the
Borrower on demand by Lender.
2 Borrower will repay the full balance of the Loan on the
tenth anniversary of the Loan, unless Lender has instructed
Borrower in writing that the repayment is extended to later
date.
3 The Borrower may prepay without penalty the whole or any
part of the Loan on interest payment dates with at least ten days
prior written notice to the Lender. Such notice shall be
irrevocable to the Borrower.
6. Payments
1 On each date on which an amount is due from the Borrower
hereunder, the Borrower shall make the same available to the
Lender on such account as Lender will notify.
2 Whenever any payment hereunder shall be due on a day
which is not a Business Day, such payment shall be made on the
next succeeding Business Day, unless this is in a new calendar
month, in which case the previous Business Day shall be
considered as due date. ("Business Day" shall mean any day on
which banks in London, New York, Amsterdam and the place where
any sum is due to be paid pursuant to the terms of this
Agreement, are open for business).
3 Payments received from the Borrower shall be applied to
discharge the indebtness of the Borrower to the Lender under this
Agreement in the following order:
a. unpaid costs and expenses of the Lender;
b. interest for late payment;
c. interest amounts, including the additional amounts that
should be due pursuant to Article 10 hereof;
d. any other amounts due pursuant to this Agreement with the
exception of principal;
e. principal to be repaid.
7. Representations and warranties
The Borrower declares:
a. that Mr. W.A. Walraven has full power and authorisation to
represent the Borrower and to enter into this Agreement for and
on behalf of the Borrower;
b. that it is a company with limited liability duly incorporated
and validly existing under the laws of The Netherlands;
c. that all necessary permits and authorisations to enter into
this Agreement and to make payments thereunder, have been
obtained;
d. to have taken all required actions to execute, deliver and
perform its obligations under this Agreement, and such execution,
delivery and performance shall not violate its articles of
association, by-laws or other governing documents;
e. that there have occurred and are continuing no facts or
circumstances which constitute an Event of Default referred to in
Article 11 hereof;
f. that it has all requisite power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder
and this Agreement constitutes the legal, valid and binding
obligation of the Borrower enforceable against it in accordance
with its terms and conditions;
g. The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby by the
Borrower and the Lender will not violate any applicable law, rule
or regulation in The Netherlands.
8. Conditions precedent
The obligation of the Lender to make any payment under the Loan
is subject to the fulfilment of the following conditions
precedent that all the shares in Borrower are transferred to
Lender by the Creditors in accordance with the acquisition
agreement between Lender and Creditors dated March 14, 2000.
9. Late payment
In the event of any amount owed by the Borrower to the Lender
under the Loan not being paid on time, the Borrower shall pay the
Lender interest on such amount at a rate of 2% per annum over
EURIBOR. Such interest shall be due by the Borrower as from the
day following the due date and shall be calculated up to and
including the date of actual payment, whereby part of a month
shall be counted as a full month and shall be payable together
with the overdue amount.
10. Change of Circumstances
1 To the extent that any change in future requirements of
applicable law or of governmental or regulatory authorities shall
increase the cost to the Lender of maintaining the Loan by an
amount which the Lender deems material then the Lender
shall immediately inform the Borrower of such event and the
Borrower shall pay to the Lender such amounts as the Lender may
duly certify to be necessary to compensate for such increased
cost;
2 If at any time it becomes unlawful for the Lender to make or
fund the Loan or to allow the same to remain outstanding, the
Borrower shall on such date as the Lender shall specify by not
less than 10 Business Days' prior notice repay the principal
amount outstanding under the Loan together with accrued interest
thereon;
3 As long as the circumstances giving rise to the events
specified in above clauses continue, the Lender shall use its
reasonable efforts to assign its rights under this Agreement to
any bank or financial institution acceptable to the Borrower with
a view to avoid the above circumstances.
11. Events of Default
1 Any advance under the Loan or any part thereof together with
interest, penalties and charges will become immediately due and
payable, without any notice of default being necessary:
a. if the Borrower fails promptly to pay interest and/or
to repay the outstanding amounts of the fixed advances and/or to
comply with any other undertaking made in this Agreement;
b. if any representation or warranty made by the Borrower
hereunder is incorrect;
c. if the Borrower ceases to exist, makes an order or passes a
resolution or takes other proceedings or action for the winding
up or dissolution of its business or for the transfer of its
business to another company;
d. if the Borrower materially changes the nature of its business
and/or ceases trading or announces its intention of changing
materially the nature of its business, or if the Borrower's
business is brought under the control of a trustee;
e. if the Borrower sells all or part of its business or
transfers it to another company or a new company or disposes of
it in any other way or if, in the opinion of the Lender, a
material proportion of the shares in the Borrower changes hands
as a result of a merger or acquisition, unless and insofar as
expressly approved by the Lender;
f. if the Borrower files a petition for bankruptcy, has such a
petition filed against it, is declared bankrupt, applies for a
moratorium, or seeks a composition with one or more of its
creditors;
g. if a material part of the Borrower's assets is attached and
if such attachment remains in effect and is not discharged within
14 days after such attachment;
h. if the Borrower relinquishes control over its property,
including as a result of nationalisation and the requisition
thereof by public authorities;
i. if the Borrower fails to meet a payment obligation to a
third party, for an amount exceeding USD 200.000 or the
equivalent thereof;
j. if any other circumstance should occur which affects the
validity or enforceability of the Lender's rights under this
Agreement or the security documents referred to in Article 14
hereof.
2 The Borrower undertakes to inform the Lender forthwith of
the occurrence of any of the above mentioned events, or of the
likelihood of any of these events occurring.
3 Without prejudice to Article 9 hereof, the Borrower shall
indemnify the Lender against any loss or expenses which the
Lender may sustain or incur as a consequence of any event of
default by the Borrower in payment of the principal of the Loan
or interest accrued thereon and against any costs incidental to
the Loan and those resulting from its collection, provided that
such loss or expenses shall include - but not limited to - any
f interest or fee paid or payable on account of any funds
borrowed in order to carry the amount of the Loan.
12. Taxes
1 All payments by the Borrower hereunder shall be made
without set-off, counterclaim, withholding, tax or any other
deduction whatsoever, except to the extent, if any, required by
law.
2 In the event that the Borrower is compelled by law to
withhold amounts of tax on any payments to the Lender, the
Borrower shall pay to the Lender such additional amounts as may
be necessary to ensure that the Lender receives a net amount in
US Dollars equal to the full amount which the Lender would have
received if payment had not been made subject to such tax.
3 The term "tax" includes all present and future taxes,
levies, imposts, duties, withholdings and any restrictions on
conditions imposed, assessed or collected by any jurisdiction.
13. Negative pledge; Pari passu
1 It is understood that the Borrower has not provided
security of any kind as collateral for monies owed to other
creditors. The Borrower undertakes not to secure, without the
written consent of the Lender, any loan, debt, guarantee or other
obligation. If any security is provided with the Lender's consent
(which will not be withheld unreasonably), the Borrower shall
provide the same security to the Lender.
2 The Borrower represents and warrants to the Lender that
the obligations under this Agreement of the Borrower will at all
times rank at least pari passu with all other present and future
outstandings, unsecured obligations, issued, created or assumed
by the Borrower.
3 The Lender will at all times rank pari passu with any
other of the Borrower's creditors with respect to all terms and
conditions of prepayment or cancellation other than normal
maturity schedules which the Borrower may have agreed with other
creditors. Such terms and conditions shall not result in
prepayments that would adversely affect the Lender's position.
14. Information
The Borrower shall provide the Lender with:
a. The Borrower's balance sheets and profit and loss
accounts, together with the a accompanying notes, certified by an
independent chartered accountant acceptable to the Lender, within
180 calendar days of the end of Borrower's financial year.
b. The Borrower's other financial statements insofar as
they have been published.
15. Charges; Proof of payment
Any expenses arising from the Loan and from the collection
of all amounts owed by the Borrower, including all extrajudicial
and other expenses incurred by the Lender in protecting and
exercising its rights, shall be borne by the Borrower.
16. Notices
Unless otherwise specified herein, all notices and
communications to the parties hereto shall be addressed as
follows:
in the case of the Borrower to:
Personal Care Card Nederland Holding B.V
Noordse Bosje 43
1211 BE Hilversum
The Netherlands
in the case of the Lender to: Ci4Net.com Inc.
One Rockefeller Plaza
Suite 1600
New York
NY 10020
USA
or at such other address the parties hereto may designate to each
other by registered mail.
17. Pledge
As additional security for the payment or repayment of whatever
the Borrower now or at any time in the future may owe the Lender
for any reason whatsoever, whether contingent or not, the
Borrower hereby pledges, as far as necessary in advance, to the
Lender, which accepts this pledge, all claims which the Borrower
now or at any time in the future may have against the Lender for
any reason whatsoever. Where necessary the Lender declares that
the pledge has been communicated to the Lender as debtor of the
claims.
18. Law and Jurisdiction
1 This Agreement shall be governed by Dutch law. Any
disputes arising from this Agreement shall be submitted to the
Court of Amsterdam, unless the Lender should prefer to submit
such a dispute to a different Court.
2 In respect of the performance of this Agreement as well
as of its judicial enforcement, parties hereby elect domicile in
Amsterdam.
[signature page follows]
Compiled in duplicate and executed on this 27 day of March 2000,
at Amsterdam
The Lender
The Boyo~ver
The Creditors
Mr. Lee Cole Mr. W.A. Walraven Mr. J.D. Koekkoek
Exhibit 13.1 Ci4net.com Inc., and Subsidiaries Consolidated
financial Statements, Supplementary Data and Independent
Auditor's Report.
CI4NET.com, Inc.
Report of Independent Auditors
Consolidated Balance Sheets at January 31, 1999 and 2000
Consolidated Statements of Operations for the years
ended January 31, 1998, 1999 and 2000
Consolidated Statements of Cash Flows for the years
ended January 31, 1998, 1999 and 2000
Consolidated Statement of Stockholders' Equity for the years
ended January 31, 1998, 1999 and 2000
Notes to the Financial Statements
Planet Edge Limited
Report of Independent Auditors
Balance Sheets at January 31, 1998 and 1999
Statements of Operations for the years ended
January 31, 1998 and 1999 and the period ended
December 6, 1999
Statements of Cash Flows for the years ended January 31, 1998,
and 1999 and the period ended December 6, 1999
Statement of Stockholders' Equity for the years ended
January 31, 1998, and 1999 and the period
ended December 6, 1999
CI4NET.com, Inc.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
CI4NET.com, Inc.
We have audited the accompanying consolidated balance sheets of
CI4NET.com, Inc. as of January 31, 1999 and 2000 and the related
consolidated statements of operations, stockholders' equity (net
capital deficiency) and cash flows for each of the three years in
the period ended January 31, 2000. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of CI4NET.com, Inc. at January 31, 1999 and
2000 and the consolidated results of its operations and its
consolidated cash flows for each of the three years in the period ended
January 31, 2000 in conformity with accounting principles generally accepted
in the United States.
Ernst & Young
Reading, England
May 15, 2000
<PAGE>
<PAGE>
CI4NET.com, Inc.
Consolidated Balance Sheets at January 31, 1999 and 2000
<TABLE>
January 31
1999 2000
------------------------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ - $ 254,486
Accounts receivable - net of allowance
for doubtful accounts of none and $11,440
at January 31, 1999 and 2000,
respectively 1,376,332 724,751
Inventories 120,543 153,159
Other current assets 828,933 1,890,590
------------------------------
Total Current Assets 2,325,808 3,022,986
Property, equipment and fixtures
Land and buildings 759,358 65,334
Motor vehicles 31,591 135,311
Computer equipment - 3,119,508
Furniture and fixtures 1,004,350 1,105,473
Office equipment - 78,578
------------------------------
1,795,299 4,504,204
Less accumulated depreciation 1,051,109 1,239,196
------------------------------
744,190 3,265,008
Intagible assets, net of accumulated
amortization of $52,266 and $5,101,406
as at January 31, 1999 and 2000,
respectively 143,721 90,683,062
------------------------------
3,213,719 96,971,056
LIABILITIES AND STOCKHOLDERS' EQUITY
(NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable 1,748,693 12,984,737
Accrued expenses and other liabilities 1,235,080 2,359,808
Short-term bank borrowings 7,191,799 10,122,612
Related part loan - 5,140,851
Accrued interest - 98,111
Capital leases obligation
- current portion 18,511 -
------------------------------
Total current liabilities 10,194,083 30,706,119
Other non-current liabilities 95,071 879,929
Minority interests - (216,737)
Stockholders' equity (net capital deficiency)
Preferred stock: $0.001 par value; none
authorized or outstanding at January 31, 1999,
20,000,000 shares authorized, none
outstanding at January 31, 2000 - -
Common stock: $0.001 par value; 25,000,000
shares authorized, 694,242 issued and
outstanding at January 31, 1999, $0.001
par value; 100,000,000 shares authorized,
25,485,513 issued and outstanding at
January 31, 2000. 694 25,485
Additional paid in capital 80,351 104,186,653
Deferred Compensation - (8,669,589)
Accumulated other comprehensive income (59,549) (10,314)
Accumulated deficit (7,096,931) (29,930,490)
------------------------------
Total Stockholders equity (7,075,435) 65,601,744
------------------------------
$3,213,719 $96,971,056
==============================
</TABLE>
See accompanying notes to the financial statements
<PAGE>
<PAGE>
CI4NET.com, Inc.
Consolidated Statements of Operations
<TABLE>
Years ended January 31
1998 1999 2000
<S> <C> <C> <C>
REVENUES:
Publishing Revenues $4,872,643 $10,616,538 $ 4,174,775
Contract Revenues and other - - 234,318
----------------------------------------
Total Revenues 4,872,643 10,616,538 4,409,093
Cost of Revenues
Publishing Costs 5,527,150 10,400,130 5,400,141
----------------------------------------
Total cost of revenues 5,527,150 10,400,130 5,400,141
----------------------------------------
Gross Profit (loss) (654,507) 216,408 ( 991,048)
OPERATING EXPENSES:
Sales and marketing 219,240 260,055 1,284,873
Research and development - - 8,671,815
General and administration 1,432,178 1,855,962 6,079,662
Depreciation and amortization 124,857 443,048 5,237,227
----------------------------------------
Total operating expenses 1,776,275 2,559,065 21,273,577
Operating Loss (2,430,782) (2,342,657) (22,264,625)
Interest expense (287,016) (647,464) (553,416)
----------------------------------------
Loss before income taxes (2,717,798) (2,990,121) (22,818,041)
Income tax expense 12,146 - (15,518)
----------------------------------------
Net Loss (2,705,652) (2,990,121) (22,833,559)
========================================
Basic and diluted net loss per share $(3.69) $(4.31) $(6.86)
========================================
Shares used in computing basic and
diluted net loss per share 733,333 694,242 3,329,062
========================================
</TABLE>
See accompanying notes to the financial statements
<PAGE>
CI4NET.com, Inc.
Consolidated Statements of Cash Flows for the years
ended January 31, 1998, 1999 and 2000
<TABLE>
For the Years ended January 31
1998 1999 2000
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss (2,705,652) (2,990,121)(22,833,559)
Adjustments to reconcile net loss to
Net cash provided by (used in)
operating activities:
Depreciation and amortization 124,857 443,048 5,237,227
Changes in operating assets and
Liabilities:
Accounts receivable (717,047) 55,262 651,581
Inventories (181,649) 188,533 (32,616)
Other current assets (361,605) (60,649) (1,061,657)
Gain(loss) on sale of fixed assets 23,925 (3,309,851) -
Accounts payable 4,151,487 251,263 11,236,044
Accrued expenses and other
liabilities (12,719) 1,999,431 1,124,728
Accrued interest - - 98,111
----------------------------------------
Net cash provided by (used in)
operating activities 321,598 (3,423,084) ( 5,580,141)
Cash flows from investing activities
Purchases of equipment and fixtures (172,667) (79,304) (3,421,779)
Proceeds from disposal of assets 6,260 62,016 712,874
Purchase of trademarks, etc. (250,188) (65,712) -
Proceeds from sale of trademarks, etc. 321,291 3,670,865 -
----------------------------------------
Net cash provided by (used in)
investing activities (95,304) 3,587,864 (2,708,905)
========================================
Cash flows from financing activities
Loan repayments (139,591) (129,581) ( 95,071)
Related party loan - - 5,140,851
Finance lease payments (51,035) (58,050) (18,511)
Proceeds of long term debt - - 879,929
Proceeds from bank borrowing - - 2,930,814
----------------------------------------
Net cash provided by (used in)
financing activities (190,626) (187,631) 8,838,013
Effect of exchange rates on cash 443 (70,409) (294,481)
----------------------------------------
Net increase(decrease) in cash and
cash equivalents 36,111 (93,260) 254,486
Cash and cash equivalents at
beginning of year 57,150 93,260 -
----------------------------------------
Cash and cash equivalents at
end of year 93,260 - 254,486
========================================
Supplemental disclosure of cash flow
information:
Interest paid 287,016 647,464 455,305
========================================
</TABLE>
See accompanying notes to financial statements
<PAGE>
<PAGE>
CI4NET.com, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the years ending January 31, 2000, 1999 and 1998
<TABLE>
Other
Common Deferred Additional Accumulated Comprehensive
Stock Compensation paid in cap. Deficit Income Total
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
February 1,
1997 $ 733 $ 0 $ 80,351 $(1,401,158) ($ 2,863)(1,322,937)
Currency
translation
adjustment (56,686) (56,686)
Net Loss (2,705,652) (2,705,652)
------------
Comprehensive Inc. (2,762,338)
-------------------------------------------------------------
January 31,
1998 733 0 80,351 (4,106,810) (59,549)(4,085,275)
Net Loss (2,990,121) (2,990,121)
------------
Comprehensive Inc. (2,990,121)
Retirement of
Stock ( 39) (39)
-------------------------------------------------------------
January 31,
1999 694 0 80,351 (7,096,931) (59,549)(7,075,435)
Currency
translation
adjustment 49,235 49,235
Net Loss (22,833,559) (22,833,559)
------------
Comprehensive Inc. (22,784,324)
Issuance
of new
Shares 19,561 519,549 539,110
Issuance
of shares
In respect
of
Acquisitions 5,230 94,786,753 94,791,983
Deferred
Compensation (8,800,000) 8,800,000
Amortization of
Deferred
Compensation 130,411 130,411
-----------------------------------------------------------------
January 31,
2000 $25,485 (8,669,589)104,186,653 (29,930,490)(10,314) 65,601,745
=================================================================
</TABLE>
See Accompanying notes to the financial statements.
CI4NET.com, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business
CI4NET.com Inc. ("Ci4net" or the "Company") is an economic
network, or Econet, with equity interests in 39 Internet-related
companies ("partner companies"). Ci4net has a 50%-or-greater
interest in 34 of these companies and hold minority interests in
the remainder. The Company's partner companies include eight
Internet infrastructure companies, 18 business-to-business
("B2B") e-commerce companies, 12 business-to-consumer ("B2C") e-
commerce companies and one incubator company. In addition,
Ci4net has executed non-binding letters of intent for the
acquisition of three Internet infrastructure companies, six B2B
companies and three European incubator companies. Thirty two of
our partner companies service the United Kingdom market. The
geographic focuses of our remaining partner companies include
Italy, the Netherlands, Europe as a whole, Australia and the
United States. The Company actively promotes collaboration among
its partner companies.
The Company was incorporated on December 29, 1995 as Leisure
Concepts International Inc. and had minimal activity until
December 20, 1999, when it purchased all of the issued and
outstanding shares of a Delaware corporation that was then named
CI4NET.com Inc. ("Old Ci4net"). In connection with its
acquisition of Old Ci4net, the Company effected a 1-for-15 reverse
stock split and issued an aggregate of 20,500,000 post-reverse
split shares of common stock to the former stockholders of Old
Ci4net and simultaneously changed its name to CI4NET.com Inc. The
preexisting stockholders of the Company held 555,446 post-reverse
split shares of common stock following the completion of the
acquisition of Old Ci4net.
Upon completion of the acquisition of Old Ci4net, the Company
issued 1,166,667 shares of its post-reverse split common stock to
the former shareholders of Planet Edge Limited ("Planet Edge"), a
United Kingdom information infrastructure development company, as
consideration for the prior acquisition of Planet Edge by Old
Ci4net which occurred on December 6, 1999. Planet Edge is
regarded as an accounting predecessor company.
Also upon completion of the acquisition of Old Ci4net, the
Company issued 1,200,000 shares of its post-reverse split common
stock to the former shareholders of Media Ventures Group plc
("Media Ventures"), a United Kingdom magazine publisher,
which occurred on December 17, 1999. Old Ci4net and Media
Ventures were entities under the common control of our
principal shareholder, Kevin R Leach, and the acquisition
has been accounted for in a manner similar to a pooling of
interests.
Prior to its acquisition by the Company, Old Ci4net had
acquired the whole of the issued share capital of 3W Capital, a
Marshall Islands corporation, and of Ci4net.com Limited, each on
October 1, 1999 and 61% of the outstanding capital stock of I-
Global .com Inc. on December 12, 1999. At the time of the
respective acquisitions of these entities, the net assets of the
companies were insignificant.
On December 21, 1999 Ci4net purchased all of the issued and
outstanding shares of MSK Industries, Inc., a Delaware corporation
("MSK Industries"). Ci4net issued an aggregate of 2,238,400 post-
reverse split shares of common stock to the former stockholders of
MSK Industries.
At January 31, 2000, Ci4net and its subsidiaries had
incurred recurring net losses and, as of that date, had a
consolidated accumulated deficit of approximately $29,930,490.
Substantially all of the losses have been financed by loan
facilities advanced by a related party. On February 18, 2000,
the company successfully completed a private placement of series
A preferred stock pursuant to which it raised in excess of $65
million.
Basis of presentation
The consolidated financial statements of Ci4net have been
prepared under U.S. generally accepted accounting principles.
The consolidated financial statements have been prepared to
show the combined performance of ci4net and Media Ventures Group
Plc as of January 31, 1999 and 2000 and the related consolidated
statements of operations, stockholders' equity (net capital
deficiency) and cash flows for of the three year period ended
January 31, 2000.
The trading activity of Planet Edge Ltd from the date of
acquisition, being December 6, 1999 has been reflected in the
consolidated financial statements of ci4net.
Principles of consolidation
Majority-owned ventures where Ci4net has the ability to
exercise significant influence and directly or indirectly owns
more than 50% of the outstanding voting securities are accounted
for under the consolidation method of accounting. Those ventures
where the Company exercises significant influence, and owns
20-50% of the outstanding voting securities are accounted for by
the equity method. If the Company has little ability to exercise
significant influence over a venture or has a ownership of less
than 20%, the venture is accounted for by the cost method. All
significant inter-company accounts and transactions are
eliminated upon consolidation.
Results of subsidiaries acquired and accounted for by the
consolidation method have been included in the operations from
the relevant date of acquisition.
Property and equipment
Property and equipment is stated at cost. Depreciation is
provided so as to write down the cost of property and equipment
to their estimated residual value over their expected useful
lives, as follows:
Land and buildings 50 years straight line
Motor vehicles 3 to 5 years straight line
Computer equipment 3 to 5 years straight line
Furniture and fixtures 3 to 5 years straight line
Office equipment 3 to 5 years straight line
Assets held under capital leases are capitalized and are
amortized over the lesser of the useful life of the asset or the
lease term. Amortization of these assets is included with the
depreciation of owned assets. There were no assets held under
capital leases at January 31, 2000.
Long-lived assets
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long Lived Assets to be Disposed",
long-lived assets to be held and used by the Company are reviewed
to determine whether an event or change in circumstances
indicates that the carrying amount of the asset may not be
recoverable.
Stock-based compensation
Stock-based awards to employees are accounted for in
accordance with Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees", and the
disclosure-only alternative of SFAS No.123, "Accounting for
Stock-Based Compensation" has been adopted.
Income taxes
Income taxes are accounted for in accordance with SFAS 109,
"Accounting for Income Taxes." Under the asset and liability
method of Statement No. 109, deferred income tax assets and
liabilities are recognized for the future tax consequences
attributable to carryforward losses and differences between the
financial statement carrying amounts of existing assets and
liabilities, and their respective tax bases. Deferred income tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Deferred income tax assets are recorded at their likely
realizable amount.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Certain estimates used by management are particularly
susceptible to significant changes, such as the recoverability
and amortization periods of intangible assets. Management
believes that as of January 31, 2000 the estimates used are
adequate based on the information currently available.
Fair value of financial instruments
The carrying amounts for the Company's financial
instruments, including cash, accounts receivable, accounts
payable, accrued expenses and long-term debt approximate fair
values.
However, considerable judgment is required in interpreting
market data to develop estimates of fair value. Therefore, the
estimates are not necessarily indicative of the amounts, which
could be realized or would be paid in a current market exchange.
The effect of using different market assumptions and/or
estimation methodologies may be material to the estimated fair
value amount.
Cash and cash equivalents
The Company considers investments in highly liquid
instruments purchased with an original maturity of 90 days or
less to be cash equivalents.
Concentration of credit risk
The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, does not require
collateral on accounts receivable. When required, the Company
maintains allowances for credit losses and such losses have been
within management's expectations. The Company's services are
provided to customers in the United Kingdom. There was an
allowance for doubtful accounts established for the periods
presented. For the periods ended January 31, 1999 and 2000, write
offs of accounts receivable have not been significant.
There were no significant customers for any of the periods
presented.
Revenue recognition
In December 1999, the staff of the Securities and Exchange
Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition", which provides guidance on the
recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic
criteria that must be met in order to recognize revenue and
provides guidance for disclosures related to revenue recognition
policies. Although we have not fully assessed the impact of
adopting SAB101 on our financial position and results of
operations in 2000 and thereafter, we do not expect the effect,
if any, to be material.
The Company's contract revenues are derived principally from
the provision of web site design services and hosting
arrangements. Revenues from the web site design services are
recognized on the completion of each contract. Revenues from the
provision of hosting facilities are recognized ratably over the
term of the contract.
The Company's publishing revenues are derived from the sale
of publications and titles. Revenues from this source are
recognized at the point of sales and are stated net of returns.
Research and development
Research and development costs are charged to expense as
incurred.
Advertising costs
Costs related to advertising are expensed as incurred.
Advertising expense was $218,464 for the year ended January 31,
2000. There was no advertising expense for the years ended
January 31, 1998 and 1999.
Inventories
Inventories are stated at the lower of cost or market value,
determined on a weighted cost average.
Goodwill
The Company amortizes goodwill from the acquisitions of its
subsidiaries on a straight line basis over its estimated economic
useful life of three years.
The Company operates in a highly technological industry with
relatively low entry market barriers. Due to the fast moving
nature of the Internet market, the Company does not believe that
goodwill will have a useful economic life of more than three
years. The carrying amount of goodwill is reviewed on a regular
basis for indicators of impairment. Indicators of impairment
include reduced levels of revenue in the businesses and a
reduction in the utilization of the current web network. Should
indicators of impairment exist, such impairment will be reviewed
through the examination of discounted cash flows.
Pension Plan
One of the Company's subsidiaries, Media Ventures Group plc,
sponsors defined contribution pension plans for the benefit of
directors and employees. The pension charge represents the
amounts payable by Media Ventures Group plc to the plans. All
employees are eligible to join the plan and can make
contributions into the plan. Media Ventures Group plc contributes
into the plans per the discretion of the board of directors.
Contributions for all plans for the years ended January 31, 1998,
1999 and 2000 were $35,772, $63,553, and $32,979, respectively.
Per share amounts
Net loss per share is computed using the weighted average
number of common shares outstanding. Since the Company has a net
loss for all periods presented, net loss per share on a diluted
basis is equivalent to basic net loss per share because the
effect of converting outstanding stock options, warrants, common
stock subject to repurchase, convertible debt, preferred stock
and other common stock equivalents would be anti-dilutive.
The computation of basic and diluted net loss per share is
as follows:
<TABLE>
Years Ended January 31
1998 1999 2000
-------------------------------------
<S> <C> <C> <C>
Net Loss (2,705,652) (2,990,121) (22,833,559)
Weighted average shares outstanding -
Basic and dilued 733,333 694,242 3,329,062
Effect of diluted securities -
employee stock option - - -
Weighted average shares outstanding -
Basic and diluted shares used to
compute basic and diluted
net loss per shares 733,333 694,242 3,329,062
======================================
Basic and dilutive net loss per shares $ (3.69) $(4.31) $ (6.86)
======================================
</TABLE>
New accounting pronouncements
The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standards 133, which has not
yet been adopted by the Company. SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities" is effective for
fiscal years beginning after June 15, 2000. This standard
requires all derivatives to be recognized as either assets or
liabilities on the balance sheet at their fair values. It also
prescribes the accounting to be followed for the changes in the
fair values of derivatives depending upon their intended use and
resulting designation. It supersedes or amends the existing
standards, which deal with hedge accounting and derivatives. The
Company does not expect the effect of adopting this standard will
have a material impact on the U.S. GAAP amounts reported in its
financial statements.
2. BUSINESS COMBINATIONS AND ACQUISITIONS
The acquisition of Media Ventures Group plc by Ci4net was
completed on December 17, 1999, and that of MSK Industries by
Ci4net was completed on December 21, 1999. At the time of the
acquisition of Old Ci4net by Leisure Concepts International, Inc,
Old Ci4net has the following subsidiaries: Ci4net.com Limited, 3W
Capital Limited, I-Global.com Inc. and Planet Edge Limited. At
the time of the respective acquisitions of these companies by Old
Ci4net, they had no trading activity, and their net assets were
insignificant except for Planet Edge Limited ("Planet Edge").
Planet Edge is regarded as an accounting predecessor company.
The total purchase consideration for each acquisition was
allocated to the assets acquired and liabilities assumed based on
their estimated fair values as of the date of each acquisition.
Goodwill represents the excess of purchase consideration over the
fair value of assets acquired, including identifiable intangible
assets, net of the fair value of liabilities assumed. The
consolidated financial statements of Ci4net include the results
of operations of acquired companies commencing on the date of
acquisition.
* Media Ventures Group plc is an established direct marketing
and publishing company. The consideration was the issuance
of 2,000,000 shares of Common Stock of the Company at
$10.00 in return for 100% ownership. Media Ventures Group
plc and Old Ci4net were entities under common control and
the acquisition has been accounted for in a manner similar
to a pooling of interests.
* MSK Industries is a holding company for Internet-related
companies. The consideration was the issuance of 2,238,400
shares of Common Stock of the Company at $22.75 in return
for 100% ownership. The acquisition was accounted for using
purchase accounting and the Company's results of operations
include those of MSK Industries from the date of
acquisition.
* Planet Edge Limited is an information infrastructure
development company providing Internet and e-commerce
solutions. The consideration was the issuance of 1,166,667
shares of Common Stock of the Company at $6.00 in return
for 100% ownership. The acquisition was accounted for
using purchase accounting and the Company's results of
operations include those of Planet edge Limited from the
date of the Company's acquisition of Old Ci4net.com on
December 17, 1999.
An analysis of the allocation of the purchase prices of the
above acquisitions is as follows:
Old Ci4net Planet Edge MSK Industries
Fair value of the
assets (liabilities)
acquired ($21,001,515) $138,407 ($10,997,762)
Goodwill 27,001,515 6,861,593 61,921,362
----------------------------------------------------
Total purchase
price $6,000,000 $7,000,000 $50,923,600
====================================================
The unaudited pro forma effect of the acquisitions set forth above,
assuming each of the acquisitions was consummated at the beginning of
the year, and the preceding year, is as follows:
Unaudited pro forma effect of acquisitions
January 31
1999 2000
----------------------------
Revenues $10,979,244 $ 5,123,681
Net loss $(2,870,142) $(23,582,297)
Net loss per share $ (4.13) $ (7.08)
3. BORROWING ARRANGEMENTS
The Company and its subsidiaries finance working capital in part
through an uncommitted bank facility with a United Kingdom bank
of GBP7.5 million (approximately $12.2 million). The facility
bears interest at a rate of 1% over the prevailing banks base
rate which was 5.75% as at January 31,2000 and is collateralized
on specific assets of ci4net.com. The facility is repayable on
demand. The amount drawn on January 31, 2000 was GBP6,245,057
(US$10,122,612).
4. RELATED PARTY LOAN
To date, Ci4net has financed its operations primarily
through loans, at a notional interest rate of 8%, from Gala
Consultancy Limited and POL Capital Limited, in which Kevin R.
Leech, our Chairman, has a controlling interest. The amount
outstanding at January 31, 2000 was $5,140,851.
Upon the closing of a private placement memorandum, the
Company on February 18, 2000 completed the final closing of its
private placement of its series A preferred stock, resulting in
net proceeds to the Company of approximately $62,800,000. These
proceeds will allow short-term debt to be paid off and provide
working capital to the Company and its subsidiaries.
5. INCOME TAXES
Due to operating losses and the inability to recognise an
income tax benefit there from, there is no provision for income
taxes for 1998, 1999 and 2000.
Deferred income taxes reflect the net tax effects of
temporary difference between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used
for income tax purposes.
Significant components of the Company's deferred tax assets are
as follows (in thousands):
Years ended January 31
1998 1999 2000
---------------------------------
Net operating loss
carry forwards $ 682 $ 852 $ 7037
Total deferred tax assets 682 852 7037
---------------------------------
Valuation allowance for
deferred tax assets (682) (852) (7037)
---------------------------------
Net deferred tax asset $ - $ - $ -
=================================
Because of the company's lack of an earnings history, the
deferred tax assets have been fully offset by a valuation
allowance. The valuation allowance increased by $170,000 and
$6,185,0000 during the year ended January 31, 1999 and 2000
respectively. As of January 31, 2000, the company had net
operating loss carry forwards of approximately $21,710,000.
6. Commitments
Operating leases
The company leases facilities and equipment under
non-cancelable operating leases, which expire at various times.
Following is a schedule of future minimum lease payments for
operating and leases as of January 31, 2000:
Year Ending January 31
2001 $119,109
2002 106,662
2003 106,662
2004 106,662
2005 and thereafter 67,235
--------------
$506,330
Rent expense, net of rental income, was $50,063, $51,506 and
$88,994 for the years ending January 31, 1998, 1999 and 2000,
respectively.
7. RELATED PARTY TRANSACTIONS
On December 10, 1999, the Company signed an agreement to
acquire Old Ci4net, which was closed on December 17, 1999.
The Company's chairman Kevin Leech had a majority interest
in Ci4net.com, Limited a wholly owned subsidiary of Ci4net.com,
Inc. On December 17, 1999, the Company acquired Media Ventures
Group plc, in which Kevin Leech also had a controlling interest.
Refer to note 2 above for the accounting treatment of these
acquisitions.
Certain of the Company's subsidiaries have development and
exclusive service contracts with TownPagesNet.com plc.
TownPagesNet.com plc is a public company traded on AMEX whose
largest shareholder is Kevin R. Leech. The Company purchased
services totalling $8,672,000 during fiscal year ended January
31, 2000 from TownPagesNet.com plc. As at January 31, 2000, the
total outstanding balance was $7,043,722 which is included in
accounts payable. The amount currently due for payment was
$1,209,000. The remaining balance, $5,834,722, is due on the
achievement of agreed milestones.
To date, ci4net has financed its operations primarily through
loans, at a notional interest rate of 8%, from Gala Consultancy
Limited and POL Capital Limited, related parties which Kevin
Leech, our Chairman, has a controlling interest in. The amount
outstanding at January 31, 2000 was $5,140,851.
Planet Edge, Limited, a subsidiary of Ci4net, is a major
supplier of Web site development services to TownPagesNet.com
plc, a company in which our chairman, Kevin R. Leech, is a
majority shareholder. TownPagesNet.com plc purchased goods and
services from Planet Edge totaling $142,205 for the period from
the date of acquisition, being December 6, 1999, to January 31,
2000. At January 31, 2000, the outstanding balance payable was
$427,533.
8. SEGMENTAL INFORMATION
The company's businesses are organized, managed and
internally reported as separate business units which are
reportable under SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information".
We have four principal businesses: (1) business to business
companies ("B2B"), (2) business to consumer companies ("B2C"),
(3) internet infrastructure companies ("ITF"), and (4) the
Holding company ("Holding"). A fifth principal business,
incubator companies, is likely to emerge for reporting purposes
in the future.
The accounting policies of the segments are the same as
those described in the summary of significant accounting
policies. We evaluate performance and allocate resources based on
segmental operating income (loss).
Segmental Reporting
B2C B2B ITF Holding Total
Year ending January 31 (in thousands)
Net Sales
2000 4,175 - 234 - 4,409
1999 10,617 - - - 10,617
1998 4,873 - - - 4,873
Intersegment sales
2000 - - - - -
1999 - - - - -
1998 - - - - -
Operating income (loss)
2000 (5,288) (26) (1,469) (16,051)
(22,834)
1999 (2,990) - - -
(2,990)
1998 (2,706) - - -
(2,706)
Long-lived assets
2000 239 3,026 90,683 93,948
1999 744 - - - 744
1998 1,230 - - 1,230
Depreciation and amortization
2000 39 - 182 - 221
1999 423 - - 423
1998 149 - - - 149
Additions to long-lived assets
2000 170 - 3,080 91,156 94,406
1999 80 - - -
80
1998 159 - - 159
GEOGRAPHICAL INFORMATION
Sales, operating loss before depreciation and amortization
and operating loss by geographical area were as follows:
At and years ended January 31,
2000 1999 1998
($000's)
Revenues from customers
United Kingdom $ 4,409 $10,617 $ 4,873
Total $ 4,409 $10,617 $ 4,873
Long-lived assets
United Kingdom $91,143 $ 744 $ 1,230
Australia $ 2,805
Total $94,593 $ 744 $ 1,230
10. STOCKHOLDERS EQUITY
Common Stock
Holders of the common stock are entitled to one vote per share
and, subject to the rights of the holders of the Preferred Stock,
to receive dividends when and as declared by the Board of
Directors, and to share ratably in the assets of the Company
legally available for distribution in the event of the
liquidation, dissolution or winding up of the Company. Holders of
the Common Stock do not have subscription, redemption or
conversion rights.
Preferred Stock
The Company is authorized by its Certificate of Incorporation to
issue a maximum of 20,000,000 shares of preferred stock, in one
or more series and containing such rights, privileges and/or
redemption rights as may, from time to time, be determined by the
Board of Directors.
Series a Cumulative Convertible Preferred Stock
On February 18, 2000, the Company completed the closing of its
private placement of its series A preferred stock, par value
$0.001 per share, at a price of $10 per share. Holders of the
preferred stock will be entitled to receive annual cumulative per
share dividends of 8% in cash or, at the Company's option in kind
with additional preferred stock valued at $10 per share. Such
dividends are payable annually on the last business day of
December of each year, commencing December 31, 2000. Dividends
will accrue whether or not the Company has earnings, whether or
not there are funds legally available for the payment of such
dividends and whether or not such dividends are declared.
Accumulated unpaid dividends will not bear interest. At the
election of the holder, each share of preferred stock will be
convertible into common stock at a conversion rate of two shares
of common stock for each share of preferred stock. The holders
shall have the right to vote, together with holders of common
stock as a single class, on all matters upon which the holders of
the common stock are entitled to vote. The holders of the
preferred stock shall be entitled to cast one vote per share of
common stock into which such holder's shares of preferred stock
are then convertible. In the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the
Company, holders of the preferred stock will be entitled to
receive, out of distributable assets, a liquidating distribution
of $10 per share plus all accrued and unpaid dividends. The
Company may, at its option, redeem the preferred stock, in whole
or in part, at any time commencing 36 months after issuance at a
redemption price of $10 per share plus accrued and unpaid
dividends, if the market price of the common stock equals or
exceeds $10 per share for 20 consecutive trading days prior to
the date of notice of redemption.
11. STOCK BASED BENEFIT PLAN
Stock Option Plan
In December 1999, the board of directors approved that a stock
option plan in the Company be put in place, whereby the directors
and employees may acquire ordinary shares. The plan has not been
finalized and is to be adopted during our fiscal year. Non plan
options have been granted to certain employees of the Company.
These options are exercisable on the second anniversary of the
date of grant and expire ten years from the date of grant. The
Company recognizes a compensation expense for the difference
between the issuance price and the fair market value over the
exercise period of the option.
The following is a summary of stock option activity and
related information:
$10.00 $5.00 $3.00 Total Weighted
average
exercise price
---------------------------------------------------
Outstanding January 31, 1999
Granted......... 200,000 100,000 300,000 600,000 $5.67
Exercised......... - - - - -
Canceled.......... - - - - -
Outstanding January 31, 2000
200,000 100,000 300,000 600,000 $5.67
Weighted Average
Remaining Contractual
l Life (Years) 9.98 9.95 9.82 9.90
No options were exercisable at January 31, 2000.
Stock-based Compensation
As permitted under SFAS No. 123, we have elected to follow
APB Opinion No. 25 and related interpretations in accounting for
stock-based awards to employees. Pro forma information regarding
net loss and net loss per share is required by SFAS No. 123 for
awards granted after December 31, 1994, as if we had accounted
for our stock-based awards to employees under the fair value
method of SFAS No. 123. We estimated the fair value of our
stock-based awards to employees using a Black-Scholes option
pricing model. The Black-Scholes model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, the
Black-Scholes model requires the input of highly subjective
assumptions including the expected stock price volatility.
Because our stock-based awards to employees have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of
the fair value of our stock-based awards to employees. The fair
value of our stock- based awards to employees was estimated
assuming no expected dividends and the following weighted-average
assumptions:
Expected life (years) ............... 3
Expected stock price volatility...... 85%
Risk-free interest rate ............. 5.5%
For pro forma purposes, the estimated fair value of our
stock-based awards to employees is amortized over the options'
vesting period.
January 31,
2000
----------------
Net loss - as reported $ (22,833,559)
================
Net loss - pro forma (22,982,760)
================
Basic and diluted net loss per share -
As reported (6.86)
================
Basic and net loss per share -
Pro forma (6.90)
================
12. SUBSEQUENT EVENTS
Private Placement Memorandum
On February 18, 2000, the Company completed the final
closing of its private placement of its Series A preferred stock,
par value $0.001 per share, at a price of $10.00 per share of
preferred stock in a strategic private placement, resulting in
net proceeds to the Company of approximately $62,800,000. Each
preferred share is initially convertible into two shares of
common stock. The conversion price is subject to adjustment in
certain circumstances. The price at which the Series A Preferred
Stock was sold was determined in December 1999 before the reverse
merger with Leisure Concepts International Inc. The Private
Placement was sold only to a limited number of accredited
investors in a transaction pursuant to an exemption from the
registration requirements of the Securities Act under 4 (2)
thereof, including Rule 506 of Regulation D promulgated
thereunder.
Business Combinations
Subsequent to January 31, 2000 the Company consummated the
following acquisitions:
On May 1, 2000, Ci4net acquired a 51% equity stake in
Citee for 620,000 shares of common stock of Ci4net at $30.00
per share. Citee is a leading systems integrator in the
Netherlands employing 275 technically trained specialists.
As part of the Acquisition, ci4net will name a director to
Citee's Supervisory Board. The Company is also supplying a
loan facility of up to $1,847,000 to Citee to be repaid upon
a liquidity event taking place. The acquisition will be
accounted for under the purchase method of accounting.
On April 4, 2000, Easy2ship, a majority owned subsidiary of
ci4net, acquired E-Bidding.com Inc., a privately held, United
States based freight and e-commerce company, whose assets include
an end-to-end transaction engine connecting carriers and
shippers, 24 hours a day, 7 days a week. E-Bidding.com was
acquired for 7,576 shares of common stock of ci4net at $30.00
per share. The acquisition will be accounted for under the
purchase method of accounting.
On March 24, 2000, Ci4net acquired 50% of
Businessvillages.com Limited which targets B2B professionals who
rely on the Internet to operate businesses. Businessvillages.com
Limited was acquired for 20,000 shares of common stock of
Ci4net at $30.00 per share, and for supplying a loan facility
of up to $4,800,000, which will be repaid upon a liquidity
event taking place. The acquisition will be accounted for
under the equity method of accounting.
On March 24, 2000, ci4net acquired 70% of ICM Resources
Limited, which operates Eazyprint.com, a European online print
shop. The Company received 70% of ICM Resources Limited in
exchange for the supply of a loan facility of up to $2,208,000,
which will be repaid upon a liquidity event. The acquisition
will be accounted for under the purchase method of accounting.
On March 22, 2000, ci4net.com acquired a 51% equity stake in
Mostra, a privately held London-based firm which specializes in
Internet based marketing and offline marketing aimed at helping
make companies more competitive by more effectively acquiring and
retaining customers. Mostra was acquired in exchange for 86,244
shares of common stock in ci4net at $30.00 per share. The
Company is also supplying Mostra with a loan facility of
up to $400,000, which will be repaid upon a liquidity event
taking place. The acquisition will be accounted for under
the purchase method of accounting.
On March 22, 2000, ci4net acquired a 50% equity stake in
Chorus Inc, in consideration for the supply of a loan facility
of up to $5,500,000, which will be repaid upon a liquidity event
taking place. Chorus Inc, a privately held London based firm,
is a leading international business development specialist
in Europe. Chorus helps high-growth United States based
technology companies set-up European business and sales
operations. The acquisition will be accounted for under
the equity method of accounting.
On March 22, 2000, ci4net acquired a 25% equity stake in
Enteraction TV, a privately held United Kingdom based developer
of broadband and interactive TV applications for $800,000.
On March 7, 2000, ci4net acquired a 66% equity stake in
4thWave Technologies Ltd., a provider of local ISP services and
an ASP developer of Internet-based clinical trial systems
designed to accelerate completion of clinical testing of new
drugs, in consideration for supplying a loan facility of up to
$2,400,000, which will be repaid upon a liquidity event taking
place. The acquisition will be accounted for under the purchase
method of accounting.
On March 1, 2000, ci4net acquired Systeam SpA, an Italian
company that specializes in e-systems integration for $8.4
million and the issuance of 630,844 common stock of Ci4net at
$6.00 per share. The Company has also supplied a loan facility
of up to $500,000 to the company and will be repaid upon a
liquidity event taking place.
On February 23, 2000, trrravel.com, an indirect majority
owned subsidiary of ci4net, announced the acquisition of the
trading business of the Independent Aviation Group ("IAG") for an
option to buy shares in trrravel.com upon trrravel.com carrying
out a public offering.
On March 24, 2000, ci4net made a $500,000 equity investment
in Perform.com, an I-ASP (an "Internet Application Service
Provider") and acquired approximately 2% of Perform.com.
Perform.com has developed a suite of Internet-based tools to help
businesses achieve better results and greater profitability
through the effective management of people, projects, goals,
communications, training and development.
On April 1, 2000, ci4net made a $1 million investment in
Kismet International NV, a leading developer of online gaming
systems and acquired approximately 5% of Kismet.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Planet Edge Limited
We have audited the accompanying balance sheets of Planet Edge
Limited as of January 31, 1998 and 1999 and the related statements
of operations, stockholders' equity and cash flows for the two
years in the period ended January 31, 1999 and the period ended
December 6, 1999. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Planet Edge Limited, as at January 31, 1998 and 1999 and
its results of operations, and the cash flows for the two years
in the period ended January 31, 1999 and the period ended
December 6, 1999, in conformity with accounting principles
generally accepted in the United States.
Ernst & Young
Reading, England
May 15, 2000
<PAGE>
<PAGE>
PLANET EDGE LIMITED
Balance Sheet
<TABLE>
January 31
1998 1999
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ - $ -
Accounts receivable - 411,697
Other current assets - 6,318
------------------------------
Total Current Assets 0 418,015
Fixtures and Fittings 3,637 6,355
Less accumulated depreciation - 871
------------------------------
3,637 5,484
Total Assets 3,637 423,499
==============================
LIABILITIES AND INVESTED CAPITAL
Current Liabilities:
Accounts payable - 27,684
Accrued expenses and other liabilities - 87,799
Notes payable - 44,898
------------------------------
Total current liabilities - 160,381
Invested capital 3,637 263,118
------------------------------
Total Invested Capital 3,637 263,118
------------------------------
$ 3,637 $423,499
==============================
</TABLE>
See accompanying notes to the financial statements
<PAGE>
<PAGE>
PLANET EDGE LIMITED
STATEMENT OF OPERATIONS
<TABLE>
For the period
Years ended
January 31 December 6,
1998 1999 1999
<S> <C> <C> <C>
REVENUES:
Contract revenues and other $ 47,095 $ 511,390 $1,002,042
----------------------------------------
Total revenues $ 47,095 $ 511,390 1,002,042
OPERATING EXPENSES:
Sales and marketing 53,821 251,044 1,024,533
Depreciation and amortization - 871 70,303
----------------------------------------
Total operating expenses 53,821 251,915 1,094,836
Operating Loss ( 6,726) 259,475 ( 92,794)
Interest expense ( 9) (13) (519)
----------------------------------------
Net Loss ( 6,735) 259,462 ( 93,313)
========================================
</TABLE>
See accompanying notes to the financial statements
<PAGE>
<PAGE>
PLANET EDGE LIMITED
STATEMENT OF CASH FLOWS
For the years ending January 31, 1998 and 1999
And for the period ended December 6, 1999
<TABLE>
For the period
Years Ended ended
January 31 December 6,
1998 1999 1999
--------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income(Loss) $ ( 6,736) $ 259,462 $(93,313)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization - 871 70,303
Changes in operating assets and
liabilities:
Accounts receivable (411,696) (38,530)
Other current assets 6,736 (2,665) (148,156)
Accounts payable - 27,686 147,380
Accrued expenses and other
liabilities - 86,649 173,454
Accrued compensation - 1,150 -
Notes payable - 44,898 (44,898)
----------------------------------------
Net cash used in operating activities - 6,355 66,240
Cash flows from investing activities
Purchase of short term investments - (6,355) (224,949)
----------------------------------------
Net cash provided/used in investing
activities - (6,355) (224,949)
Cash flows from financing activities
Loan - 0 199,088
----------------------------------------
Net Cash provided by financing activities - 0 199,088
Effect of exchange rates on cash - 0 (8,026)
----------------------------------------
Net increase(decrease) in cash and
cash equivalents - 0 32,353
Cash and cash equivalents at
beginning of year - - -
Cash and cash equivalents at
end of year - 0 32,353
========================================
Supplemental disclosure of cash flow
information:
Interest paid (8) (13) (519)
========================================
</TABLE>
See accompanying notes to the financial statements
<PAGE>
PLANET EDGE LIMITED
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
Invested
Capital
-----------
<S> <C>
February 1, 1997 $ 10,373
Net Loss ( 6,736)
------------
January 31, 1998 3,637
Currency translation adjustment 19
Net loss 259,462
------------
Comprehensive Income 259,481
January 31, 1999 263,118
Currency translation adjustment (8,026)
Net loss (93,313)
------------
Comprehensive Income (101,339)
December 6, 1999 $ 161,779
============
</TABLE>
See accompanying notes to the financial statements
<PAGE>
PLANET EDGE LIMITED
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business
Planet Edge Ltd ("Planet Edge") is an Information
Infrastructure Development company incorporated in England and
in Wales with a focus on making information more efficient
in the work place. Planet Edge offers a full and detailed
solution to many modern computing issues such as making
information more accessible, spreading information securely
and introducing new people to information - via the Internet
for example. Planet Edge has comprehensive areas of
speciality, which can be divided into four principal headings;
the Internet, Data Communications, Programming and Development
and Software products.
Planet Edge specializes in integrating existing client /
server software with the Internet. By integrating existing
ordering and stock control systems with the Internet, not only
can Planet Edge increase productivity, lower overheads and
generate further business through a clearer and more open
product control system, but scalability and upgradability
ensures through the use of modern and open protocols.
Basis of presentation
The financial statements of Planet Edge have been prepared
under United States generally accepted accounting principles.
The financial statements of Planet Edge, which was acquired
by Ci4net.co Inc., ("Ci4net") on December 6, 1999, have been
prepared as of January 31, 1998 and 1999 and the related
statements of operations, stockholders equity and cash
flows for the two year period ended January 31, 1999 and the
period ended December 6, 1999.
The trading activity of Planet Edge Ltd from the date of
acquisition, being December 6, 1999, has been reflected in the
consolidated financial statements of ci4net.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Certain estimates used by management are particularly
susceptible to significant changes, such as the recoverability
and amortization periods of intangible assets. Management
believes that as of January 31, 1998 and 1999 the estimates used
are adequate.
Revenue recognition
In December 1999, the Staff of the Securities and Exchange
Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition", which provides guidance on the
recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB 101 outlines the basic
criteria that must be met in order to recognize revenue and
provides guidance for disclosures related to revenue recognition
policies. Although we have not fully assessed the impact of
adopting SAB101 on our financial position and results of
operations in 2000 and thereafter, we do not expect the effect,
if any, to be material.
Planet Edge's contract revenues are derived principally from
the provision of web site design services and hosting
arrangements. Revenues from the web site design services are
recognized on the completion of each contract. Revenues from the
provision of hosting facilities are recognized ratably over the
term of the contract.
Fixtures and fittings
Fixtures and fittings are stated at cost. Depreciation is
provided so as to write down the cost of fixtures and fittings
to their estimated residual value over their expected useful
lives, as follows:
Fixtures and Fittings 3 to 5 years straight line.
Cash and cash equivalents
Planet Edge considers investments in highly liquid
instruments purchased with an original maturity of 90 days or
less to be cash equivalents. Such amounts are stated at cost,
which approximates market value.
Concentration of credit risk
Planet Edge performs ongoing credit evaluations of its
customers' financial condition and, generally, does not require
collateral on accounts receivable. When required, Planet Edge
maintains allowances for credit losses and such losses have been
within management's expectations. Planet Edge's services are
provided to customers in the United Kingdom. There were no
allowances for doubtful accounts at January 31, 1998 and 1999.
Planet Edges' operations were performed solely in the United
Kingdom.
Long-lived Assets
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long Lived Assets to be Disposed",
long-lived assets to be held and used by Planet Edge are reviewed
to determine whether an event or change in circumstances
indicates that the carrying amount of the asset may not be
recoverable.
Advertising Costs
There was no advertising expense for the years ended
January 31, 1998 and 1999 and period ended December 6, 1999.
Income taxes
Income taxes are accounted for in accordance with SFAS 109,
"Accounting for Income Taxes." Under the asset and liability
method of Statement No. 109, deferred income tax assets and
liabilities are recognized for the future tax consequences
attributable to carryforward losses and differences between the
financial statement carrying amounts of existing assets and
liabilities, and their respective tax bases. Deferred income tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Deferred income tax assets are recorded at their likely
realizable amount.
Fair value of financial instruments
The carrying amounts for Planet Edge's financial instruments,
including cash, accounts receivable, accounts payable, accrued
expenses and long-term debt approximate fair values.
However, considerable judgment is required in interpreting
market data to develop estimates of fair value. Therefore, the
estimates are not necessarily indicative of the amounts, which
could be realized or would be paid in a current market exchange.
The effect of using different market assumptions and/or
estimation methodologies may be material to the estimated fair
value amount.
New accounting pronouncements
The Financial Accounting Standards Board ("FASB") has issued
SFAStandards No. 133, which has not yet been adopted by Planet
Edge. SFAS 133, "Accounting for derivative Instruments and
Hedging Activities" is effective for fiscal years beginning after
June 15, 2000. This standard requires all derivatives to be
recognized as either assets or liabilities on the balance sheet
at their fair values. It also prescribes the accounting to be
followed for the changes in the fair values of derivatives
depending upon their intended use and resulting designation. It
supersedes or amends the existing standards, which deal with
hedge accounting and derivatives. Planet Edge does not expect
the effect of adopting this standard will have a material impact
on the U.S. GAAP amounts reported in its financial statements.
2. INCOME TAXES
Due to operating losses and the inability to recognise an
income tax benefit therefrom, there is no provision for income
taxes for 1998 and 1999.
Deferred income taxes reflect the net tax effects of
temporary difference between the carrying amounts of assets and
liabilities for financial reporting purposes and the amount used
for income tax purposes.
Significant components of Planet Edge's deferred tax assets
are as follows (in thousands):
Year ended January 31
1998 1999
----------------------------
Net operating loss carry forwards $1,402 $ -
----------------------------
Total deferred tax assets $1,402 $ -
Valuation allowance for deferred
tax assets (1,402) -
----------------------------
Net deferred tax asset $ - $ -
Because of the company's lack of earnings history, the deferred
tax assets have been fully offset by a valuation allowance. The
valuation allowance increased by 1,402,000 during the year
ended January 31, 1998 and decreased by 1,402,000 during the year
ended January 31, 1999. As of January 31, 1999, Planet Edge had
no net operating loss carry forwards.
3. COMMITMENTS
Operating leases
Planet Edge does not lease any fixtures or fittings.
Planet Edge does currently occupy leased premises, however the
agreement is short term only.
Rent expense was none for the years ending January 31, 1998
and 1999.
4. RELATED PARTY TRANSACTIONS
Planet Edge have a loan facility with Net Edge Limited, a
company controlled by R Kumar, director of Planet Edge Limited.
Balances outstanding on this account for the years ending January
31, 1998 and 1999 were none and $3,193, respectively.
5. SEGMENTAL INFORMATION
Planet Edge views the business as one segment therefore they
do not analyze reportable segments under SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information".
6. LOANS & LONG TERM DEBT
Planet Edge received a loan from Ci4net just prior to CI4net
acquiring Planet Edge. The total amount of loan was $199,088 and
repayment terms were to be negotiated once the acquisition was
completed.
7. SUBSEQUENT EVENTS
Acquisition by Ci4net.com, Inc.
On December 6, 1999 Planet Edge Limited was wholly acquired
by Ci4net.com, Inc. The existing directors retained their
employment for Planet Edge Limited, within the Ci4net.com, Inc.
group. The consideration for the acquisition consisted of 1,166,667
shares of Ci4net.com, Inc., common stock.
