<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 26, 1999
PHONE.COM, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-25687 94-3219054
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
800 Chesapeake Dr.
Redwood City, CA 94063
(Address of principal executive offices) (Zip code)
(650) 562-0200
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
(a) On October 26, 1999, Phone.com, Inc., a Delaware corporation (the
"Company"), completed the acquisition of the outstanding shares of capital stock
-------
of ApiON Telecoms Ltd, a telecommunications software company registered in
Belfast, Northern Ireland ("APiON"). The purchase of assets was accomplished
-----
pursuant to the Agreement dated as of October 11, 1999, by and among the
Company, APiON and each of APiON's shareholders (the "Purchase Agreement").
------------------
Pursuant to the Purchase Agreement, the Company purchased all of the
outstanding shares of capital stock of APiON in exchange for the issuance of an
aggregate of approximately 1,196,513 shares of the Company's Common Stock. Under
the terms of the Purchase Agreement, ten percent of the shares of the Company's
Common Stock to be issued to the former shareholders of APiON will be held in
escrow for the purpose of indemnifying the Company against certain liabilities
of APiON and the stockholders of APiON. Such escrow will expire on the first
anniversary of the closing of the transaction.
In addition, the Company also has agreed to issue cash and common
stock to current and former employees of APiON. Current employees of APiON will
receive cash in the aggregate amount of approximately $2.5 million, less
applicable withholdings for taxes and insurance, upon the closing of the
Company's proposed public offering pursuant to a registration statement on Form
S-1 filed by the Company on October 28, 1999, and will receive shares of Common
Stock equal in value to approximately $2.5 million, less applicable withholdings
for taxes and insurance, on each of the first two anniversaries of the closing
of the APiON acquisition, subject to their continued employment. Former
employees of APiON who where engaged in APiON's services business, which was not
acquired by Phone.com in the transaction, will receive cash in the aggregate
amount of approximately $2.2 million, less applicable withholdings for taxes and
insurance, upon the closing of the Company's proposed public offering, and will
receive shares of Common Stock equal in value to approximately $4.3 million,
less applicable withholdings for taxes and insurance, on the first anniversary
of the closing of the APiON acquisition, subject to forfeiture upon the
occurrence of certain events.
(b) APiON is primarily engaged in the business of providing
telecommunications software products and services. Prior to the closing of the
transaction, APiON disposed of certain assets related to its services business.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
-----------------------------------------
Audited financial statements of of the WAP Business of APiON are
attached hereto and filed herewith.
(b) Pro Forma Financial Information.
-------------------------------
The following unaudited pro forma combined condensed financial
statements are presented for illustrative purposes only and are not necessarily
indicative of the combined financial position or results of operations for
future periods or the results of operations or financial position that actually
would have been realized had Phone.com and the WAP Business of APiON been a
combined company during the specified periods. The unaudited pro forma combined
condensed financial statements, including the related notes, are qualified in
their entirety by reference to, and should be read in conjunction with, the
historical financial statements and related notes thereto of Phone.com and the
WAP Business of APiON, included elsewhere in this filing. The following
unaudited pro forma combined condensed financial statements give effect to the
acquisition of APiON by Phone.com using the purchase method of accounting. The
pro forma combined condensed financial statements are based on the respective
historical audited financial statements and related notes of Phone.com and the
WAP Business of APiON.
The pro forma adjustments are preliminary and based on management's
estimates of the value of the tangible and intangible assets acquired. The
actual adjustments may differ materially from those presented in these pro forma
financial statements. A change in the pro forma adjustments would result in a
reallocation of the purchase price affecting the value assigned to the long-term
tangible and intangible assets or, in some circumstances, resulting a charge to
the statement of operations. The effect of these changes on the statement of
operations will depend on the nature and amounts of the assets and liabilities
adjusted. See note 1(b) to the pro forma combined condensed financial
statements.
The unaudited pro forma combined condensed balance sheet assumes that
the acquisition took place on June 30, 1999, and combines Phone.com's audited
June 30, 1999 consolidated balance sheet with the WAP Business of APiON's
audited March 31, 1999 statement of assets acquired and liabilities assumed. The
pro forma combined condensed statement of operations assumes the acquisition
took place on July 1, 1998, and combines Phone.com's audited consolidated
statement of operations for the year ended June 30, 1999, with the WAP Business
of APiON's audited statement of operations for the year ended March 31, 1999.
(c) Exhibits.
<PAGE>
2.1 Agreement dated October 11, 1999, between the Company and each of
the shareholders of APiON.
2.2 Supplemental Agreement dated October 26, 1999, between the
Company and each of the shareholders of APiON.
2.3 Registration Rights Agreement dated October 26, 1999, between the
Company and each of the shareholders of APiON.
23.2 Consent of PricewaterhouseCoopers.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PHONE.COM, INC.
(Registrant)
Date: November 3, 1999 By: /s/ Alan Black
---------------- ----------------------------------------
Vice President,
Finance and Administration, Chief
Chief Financial Officer and Treasurer
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of
Phone.com, Inc.
In our opinion, the accompanying statement of assets acquired and
liabilities assumed and the related statement of operations and of cash flows
present fairly, in all material respects, the financial position of the WAP
business of APiON at March 31, 1999 and the results of its operations and cash
flows for the period from May 1, 1998 (inception) through March 31, 1999 in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of APiON's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United Kingdom, which are
substantially consistent with auditing standards generally accepted in the
United States, which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers
Belfast, United Kingdom
26 October 1999
F-1
<PAGE>
WAP BUSINESS OF APiON
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
May 1, 1998
(inception)
to
March 31,
1999
-----------
$000's
<S> <C>
Operating expenses:
Salaries.......................................................... 370
Depreciation...................................................... 143
Government grants................................................. (124)
Other identifiable overhead costs................................. 260
Allocated overhead costs.......................................... 435
------
Total operating expenses........................................ 1,084
Tax expenses........................................................ 147
------
Net operating expenses.............................................. 1,231
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
WAP BUSINESS OF APiON
STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
<TABLE>
<CAPTION>
As at
March 31,
1999
---------
$000's
<S> <C>
ASSETS
Cash.................................................................. 1,414
Accounts receivable................................................... 3,062
Capitalised software development costs................................ 180
Plant and equipment, net.............................................. 321
-----
4,977
=====
LIABILITIES
Current liabilities:
Accounts payable.................................................... 1,431
Amounts due under capital leases.................................... 31
Bank loans.......................................................... 53
-----
Total current liabilities......................................... 1,515
-----
Non current liabilities:
Amounts due under capital leases.................................... 3
Bank loans.......................................................... 78
Deferred government grants.......................................... 96
Deferred taxation................................................... 147
-----
Total non current liabilities..................................... 324
-----
Total liabilities................................................. 1,839
-----
Net assets acquired............................................... 3,138
=====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
WAP BUSINESS OF APiON
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
May 1, 1998
(inception) to
March 31,
1999
---------------
$000's
<S> <C>
Operating activities:
Net operating expenses....................................... (1,231)
Depreciation................................................. 143
Amortization of government grants............................ (35)
Changes in WAP operating assets and liabilities:
Increase in accounts payable............................... 197
Increase in deferred tax liabilities....................... 147
------
Net cash outflow from operating activities............... (779)
------
Investing activities:
Capitalised software development costs....................... (180)
Purchase of plant and equipment.............................. (401)
Government grants received................................... 131
------
Net cash outflow from investing activities............... (450)
------
Financing activities:
Cash proceeds from bank loans................................ 220
Cash repaid against bank loans............................... (89)
Cash repaid against capital leases........................... (29)
Contribution of cash from the Services business.............. 2,541
------
Net cash provided by financing activities................ 2,643
------
Net increase in cash........................................... 1,414
Balance at May 1, 1998......................................... --
------
Balance at March 31, 1999...................................... 1,414
======
Supplemental cash flow disclosures:
Contribution of accounts receivable by the Services business
to WAP...................................................... 3,062
Accounts payable transferred to WAP.......................... (1,234)
Fixed assets acquired under capital leases................... (63)
Interest paid................................................ 8
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
WAP BUSINESS OF APiON
NOTES TO THE FINANCIAL STATEMENTS
1. Description of business
APiON was incorporated in the United Kingdom in May 1995 to provide computer
software consulting services. Its WAP business was established in May 1998 to
develop wireless Internet products for sale to world wide telecommunications
service providers.
2. Accounting policies
Basis of Presentation
The activities referred to above were carried out jointly by APiON Limited
and by its related company, incorporated in the Republic of Ireland, APiON
Telecoms Limited (jointly referred to as "APiON").
The operations of APiON consisted of the WAP business ("WAP"), and other
trading activities (the "Services business"). In conjunction with the
acquisition of WAP the trading activities associated with the Services business
have been spun off to the common shareholders of APiON. Please refer to the
Subsequent Events note for a discussion of the impact of this on WAP.
Although APiON began research and development on WAP in 1998 it did not
commence commercial marketing of it until after March 31, 1999. As a result
there were no WAP revenues in the period to that date.
The Statement of Operations reflects the direct operating expenses for WAP,
for which APiON maintained separate accounting information. Of APiON's total
operating costs of $8,852,000, $6,688,000 can be specifically identified with
the respective businesses. Of the residual total overhead costs, mainly
consisting of management and administration salaries, and property and
recruitment costs, $435,000 has been allocated to the WAP business on the basis
of the respective head counts of each business. Management believes that the
allocations described above provide a reasonable basis of allocating corporate
overhead costs.
The Statement of Assets Acquired and Liabilities Assumed of WAP as at March
31, 1999 reflects the assets acquired and liabilities acquired assumed by
Phone.com in the transaction discussed in note 8. Since WAP had no revenue-
generating activities prior to March 31, 1999, the accounts receivable and
certain trade payables shown in the Statement of Assets Acquired and
Liabilities Assumed relate to the Services business, but have been included
since they were acquired by Phone.com in conjunction with its acquisition of
WAP.
Development Stage Enterprise
Since WAP has not commenced commercial operations, WAP is considered a
development stage enterprise as defined by Financial Accounting Standards Board
Opinion No. 7, Accounting and Reporting by Development Stage Enterprises. The
deficit accumulated in the development stage from May 1998 to March 31, 1999 is
$1,231,000.
Financial Instruments and Concentration of Credit Risk
The carrying value of WAP's financial instruments, including cash, accounts
receivable, bank loans and amounts due under capital leases, approximates fair
value. Financial instruments that subject WAP to concentrations of credit risk
consist primarily of trade accounts receivable.
The receivables relate to the sale of services by the Services business,
principally to leading mobile telephone operators and manufacturers. Credit
risk is concentrated in the United Kingdom. As part of the ordinary course of
its business, the management of APiON performed credit evaluations of its
customers' financial condition and did not require collateral from its
customers. APiON has had no write-offs of accounts receivable and, based on its
evaluation of its accounts receivable collectibility and customer
creditworthiness, has recorded no allowance for doubtful accounts receivable.
F-5
<PAGE>
WAP BUSINESS OF APiON
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
Research and Development
Research and development costs are expensed as incurred until technological
feasibility has been established. Until January 1999, WAP's software was under
development and had not yet achieved technological feasibility and,
accordingly, only development costs incurred subsequent to that date have been
capitalised.
Income taxes
Income taxes are accounted for under the asset and liability method as if
WAP was filing a separate return. Deferred tax assets and liabilities are
recognised for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred 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. The effect on deferred tax
assets and liabilities of a change in tax rates is recognised in income in the
period that includes the enactment date. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
recovered.
Tangible fixed assets
The cost of tangible fixed assets is their purchase cost, together with any
incidental costs of acquisition. Depreciation is calculated so as to write off
the cost of tangible fixed assets, less their estimated residual values, on a
straight-line basis over the expected useful economic lives of the assets
concerned. The annual rate used for this purpose is 33% per annum.
Capital leases
Leasing agreements, which transfer to WAP substantially all the benefits and
risks of ownership of an asset are treated as if the asset had been purchased
outright. The assets are included in fixed assets and the capital element of
the leasing commitments is shown as obligations under capital leases. Assets
held under capital leases are depreciated over the shorter of the lease terms
and the useful lives of equivalent owned assets.
Government grants
Revenue grants against revenue expenditure are credited to profit and loss
in the same period as the related expenditure is incurred.
Grants against capital expenditure are taken to deferred income and credited
to profit and loss on the same basis as depreciation is charged on the related
assets. These grants are repayable to the government agency concerned in the
event that the relevant assets are disposed of, or cease to be used for the
purpose of the trade, within four years of the receipt of the grant. In light
of the carve-out of certain fixed assets as described in the Subsequent Event
note, management of APiON and Phone.com have met with the government agency
concerned. Agreement has been reached that the related grants will not be
repayable, and that the shareholders of APiON rather than WAP will assume the
liability to repay the grants relating to the carve-out fixed assets in the
circumstances of any subsequent disposal or failure to use them for the purpose
intended.
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.
F-6
<PAGE>
WAP BUSINESS OF APiON
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
Comprehensive income
WAP has no material components of other comprehensive income (loss) for all
periods presented.
3. Related party transactions
During the period presented WAP purchased services from companies with
common shareholders and directors. WAP paid $38,455 during the period for
services rendered, at what the directors considered to be commercial market
prices.
4. Capitalised Software Development Costs
<TABLE>
<CAPTION>
$000's
------
<S> <C>
Cost:
At May 1, 1998...................................................... --
Additions........................................................... 180
---
At March 31, 1999................................................... 180
===
</TABLE>
There was no amortisation of the capitalised software development costs in
the period from May 1, 1998 to March 31, 1999 as no sales of WAP were made
before March 31, 1999.
5. Plant and Equipment
<TABLE>
<CAPTION>
Fixtures &
Computers Fittings Total
--------- ---------- ------
$000's $000's $000's
<S> <C> <C> <C>
Cost:
At May 1, 1998................................. -- -- --
Additions...................................... 392 72 464
Disposals...................................... -- (13) (13)
--- --- ---
At March 31, 1999.............................. 392 59 451
=== === ===
Depreciation:
At May 1, 1998................................. -- -- --
Disposals...................................... -- (13) (13)
Charge for the period.......................... 112 31 143
--- --- ---
At March 31, 1999.............................. 112 18 130
--- --- ---
Net book value at March 31, 1999................. 280 41 321
=== === ===
</TABLE>
F-7
<PAGE>
WAP BUSINESS OF APiON
NOTES TO THE FINANCIAL STATEMENTS--(Continued)
6. Bank Loans and Capital Leases
WAP has a series of bank loan facilities to finance the purchase of fixed
assets, each repayable in monthly installments over a three-year period at a
rate of interest of UK bank base rate plus 1.5% (currently 6.75% per annum). In
addition it has capital lease facilities, the final repayment on which falls
due in the year to March 2001. The repayment schedule for the total bank loan
and capital lease balances due at March 31,1999, was:
<TABLE>
<CAPTION>
Bank Capital
Loans leases
------ -------
$000's $000's
<S> <C> <C>
Repayable in the year to March, 31:
2000 53 34
2001 49 3
2003 29 --
--- ---
Total minimum payments........................................ 131 37
Less amounts representing interest............................ -- 3
--- ---
131 34
=== ===
</TABLE>
7. Deferred taxation
<TABLE>
<CAPTION>
As at
March 31,
1999
---------
$000's
<S> <C>
Fixed asset temporary differences.................................. 147
Net operating loss carry forwards.................................. 373
Less: Valuation allowance.......................................... (373)
----
Total deferred tax liabilities, net................................ 147
====
</TABLE>
Management has evaluated the positive and negative evidence impacting the
realizability of the deferred tax assets that consist principally of net
operating losses carried forward in the UK. Management has considered the short
operating history of WAP as well as the uncertainty associated with the
Company's future profitability and has concluded that as of March 31, 1999,
such deferred tax assets are less likely than not to be realized in the
foreseeable future. Therefore management has recorded a full valuation
allowance against deferred tax assets. Management evaluates the positive and
negative evidence on a quarterly basis.
8. Subsequent events
Subsequent to March 31, 1999, ownership of APiON Limited and APiON Telecoms
Limited was consolidated under a new United Kingdom company, also called APiON
Telecoms Limited, which was the statutory entity to be acquired by Phone.com.
On October 26, 1999, all of the outstanding capital stock of APiON Telecoms
Limited was acquired by Phone.com, Inc. in exchange for 1,196,513 shares of
Phone.com common stock.
Immediately prior to the acquisition, APiON spun off its Services business
to the vendor shareholders. The transfer involved certain employees, and fixed
assets employed in the Services business that had a net book value of $937,000
at March, 31 1999, and related asset finance liabilities of $573,000. The
Services business was transferred to the vendor shareholders for a cash payment
of $3,254,000, made in addition to the payment made for its book value of net
assets acquired.
F-8
<PAGE>
PHONE.COM, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
are presented for illustrative purposes only and are not necessarily indicative
of the combined financial position or results of operations for future periods
or the results of operations or financial position that actually would have
been realized had Phone.com and the WAP Business of APiON been a combined
company during the specified periods. The unaudited pro forma combined
condensed financial statements, including the related notes, are qualified in
their entirety by reference to, and should be read in conjunction with, the
historical financial statements and related notes thereto of Phone.com and the
WAP Business of APiON, included elsewhere in this filing. The following
unaudited pro forma combined condensed financial statements give effect to the
acquisition of APiON by Phone.com using the purchase method of accounting. The
pro forma combined condensed financial statements are based on the respective
historical audited financial statements and related notes of Phone.com and the
WAP Business of APiON.
The pro forma adjustments are preliminary and based on management's
estimates of the value of the tangible and intangible assets acquired. The
actual adjustments may differ materially from those presented in these pro
forma financial statements. A change in the pro forma adjustments would result
in a reallocation of the purchase price affecting the value assigned to the
long-term tangible and intangible assets or, in some circumstances, resulting a
charge to the statement of operations. The effect of these changes on the
statement of operations will depend on the nature and amounts of the assets and
liabilities adjusted. See note 1(b) to the pro forma combined condensed
financial statements.
The unaudited pro forma combined condensed balance sheet assumes that the
acquisition took place on June 30, 1999, and combines Phone.com's audited June
30, 1999 consolidated balance sheet with the WAP Business of APiON's audited
March 31, 1999 statement of assets acquired and liabilities assumed. The pro
forma combined condensed statement of operations assumes the acquisition took
place on July 1, 1998, and combines Phone.com's audited consolidated statement
of operations for the year ended June 30, 1999, with the WAP Business of
APiON's audited statement of operations for the year ended March 31, 1999.
F-9
<PAGE>
PHONE.COM, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
June 30, 1999
-----------------------------------------
Historical Pro forma
----------------- -----------------------
Phone.com APiON Adjustments Combined
--------- ------ ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........ $ 79,803 $1,414 $(11,711)(b) $ 69,506
Short-term investments........... 33,283 -- 33,283
Accounts receivable.............. 20,474 3,062 23,536
Prepaid expenses and other
current assets.................. 865 180 1,045
-------- ------ -------- --------
Total current assets........... 134,425 4,656 (11,711) 127,370
Property and equipment, net........ 3,014 321 3,335
Deposits and other assets.......... 1,494 -- 1,494
Goodwill and other intangible
assets, net....................... -- -- 244,537 (b) 244,537
-------- ------ -------- --------
$138,933 $4,977 $232,826 $376,736
======== ====== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of equipment loan
and capital lease obligations... $ 424 $ 84 $ $ 508
Accounts payable................. 1,749 1,431 3,180
Accrued expenses................. 7,173 243 7,416
Deferred revenue................. 36,797 -- 36,797
-------- ------ -------- --------
Total current liabilities...... 46,143 1,758 -- 47,901
Equipment loans and capital lease
obligations, less current
portion........................... 498 81 579
-------- ------ -------- --------
Total liabilities.............. 46,641 1,839 -- 48,480
-------- ------ -------- --------
Stockholders' equity:
Common stock..................... 31 1 (b) 32
Additional paid-in capital....... 136,209 -- 5,095 (a)
235,963 (b) 377,267
Deferred stock compensation...... (1,318) -- (5,095)(a) (6,413)
Treasury stock................... (196) -- (196)
Notes receivable from
stockholders.................... (484) -- (484)
Accumulated (deficit)/net assets
acquired........................ (41,950) 3,138 (3,138)(b) (41,950)
-------- ------ -------- --------
Total stockholders' equity
(deficit)..................... 92,292 3,138 232,826 328,256
-------- ------ -------- --------
$138,933 $4,977 $232,826 $376,736
======== ====== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements
F-10
<PAGE>
PHONE.COM, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Year ended June 30, 1999
--------------------------------------------
Historical Pro forma
------------------ ------------------------
Phone.com APiON Adjustments Combined
--------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
License....................... $ 5,229 $ -- $ $ 5,229
Maintenance and support
services..................... 5,921 -- 5,921
Consulting services........... 2,292 -- 2,292
-------- ------- -------- ---------
Total revenues.............. 13,442 -- -- 13,442
-------- ------- -------- ---------
Cost of revenues:
License....................... 371 -- 371
Maintenance and support
services..................... 3,022 -- 3,022
Consulting services........... 1,146 -- 1,146
-------- ------- -------- ---------
Total cost of revenues...... 4,539 -- -- 4,539
-------- ------- -------- ---------
Gross profit................ 8,903 -- -- 8,903
-------- ------- -------- ---------
Operating expenses:
Research and development...... 13,082 432 13,514
Sales and marketing........... 10,840 227 11,067
General and administrative.... 4,432 425 4,857
Stock-based compensation...... 1,011 -- 3,821 (c) 4,832
Amortization of goodwill and
other intangible assets...... -- -- 81,512 (d) 81,512
-------- ------- -------- ---------
Total operating costs....... 29,365 1,084 85,333 115,782
-------- ------- -------- ---------
Operating loss.............. (20,462) (1,084) (85,333) (106,879)
Interest income, net............ 1,803 -- 1,803
-------- ------- -------- ---------
Loss before taxes........... (18,659) (1,084) (85,333) (105,076)
Income taxes.................... 2,104 147 2,251
-------- ------- -------- ---------
Net loss.................... $(20,763) $(1,231) $(85,333) $(107,327)
======== ======= ======== =========
Basic and diluted net loss per
share.......................... $ (2.98) $ (13.15)
======== =========
Shares used to compute basic and
diluted net loss per share..... 6,966 1,196 (e) 8,162
======== =========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements
F-11
<PAGE>
PHONE.COM, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Unaudited Pro Forma Combined Condensed Balance Sheet
On October 26, 1999, Phone.com acquired all of the outstanding capital stock
of APiON in exchange for 1,196,513 shares of common stock of Phone.com. In
addition, the Company agreed to issue cash and common stock to current and
former employees of APiON. Former employees of APiON will receive consideration
totaling up to approximately $6.5 million of which one third is payable in cash
(approximately $2.2 million) upon the closing of this offering and two thirds
is payable in common stock of the Company on the one year anniversary of the
closing of the acquisition of APiON and is subject to forfeiture upon the
occurrence of certain events. Current employees of APiON will receive
consideration totaling up to approximately $7.6 million of which one third is
payable in cash upon the closing of this offering and one third is payable in
common stock of the Company on each of the first two anniversaries of the
closing of the acquisition of APiON contingent upon continued employment. The
actual number of Phone.com shares to be issued to current and former employees
of APiON will depend upon the fair value of Phone.com common stock on the
distribution date.
Common stock issued to former shareholders and cash paid to current and
former employees of APiON at the closing of the acquisition is included in the
purchase price. Contingent common stock issuable in the future to former
employees of APiON will be treated as contingent consideration. The then fair
value of the common stock that is issued to the former employees of APiON upon
the satisfaction of certain future events will be added to goodwill and
amortized over the remaining useful life. Common stock issuable in the future
to current employees of APiON is recorded as deferred stock-based compensation.
The pro forma combined condensed balance sheet as of June 30, 1999 gives
effect to the merger as if it had occurred on June 30, 1999.
The following adjustment has been reflected in the unaudited pro forma
combined condensed balance sheet:
(a) To record deferred stock compensation related to common stock of the
Company to be issued to current employees of APiON as follows (in
thousands):
<TABLE>
<S> <C>
Total consideration................................................. $ 7,642
Less: cash payable at closing....................................... (2,547)
-------
Deferred stock-based compensation................................. $ 5,095
=======
</TABLE>
The common stock payable to current employees of APiON is payable in
equal installments on each of the first two anniversaries of the closing,
contingent upon continued employment.
(b) To record common stock issued to stockholders of APiON and record
applicable purchase accounting entries.
Under purchase accounting, the total purchase price will be allocated to
APiON's assets and liabilities based on their relative fair values.
Allocations are subject to valuations as of the date of the consummation of
the acquisition. The amounts and components of the estimated purchase price
along with the preliminary allocation of the estimated purchase price to
assets purchased are as follows (in thousands):
<TABLE>
<S> <C>
Cash (including $2,547 payable to current employees of APiON)..... $ 4,711
Common stock...................................................... 235,964
Estimated transaction costs....................................... 7,000
--------
Total purchase price............................................ $247,675
========
Cash and cash equivalents......................................... $ 1,414
Other current assets.............................................. 3,242
Property and equipment............................................ 321
Liabilities assumed............................................... (1,839)
--------
Book value of net tangible assets of APiON...................... 3,138
Goodwill and other intangible assets.............................. 244,537
--------
Net assets acquired............................................. $247,675
========
</TABLE>
F-12
<PAGE>
PHONE.COM, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS--(Continued)
The actual allocation of the purchase price will depend upon the
composition of APiON's net assets on the closing date and Phone.com's
evaluation of the fair value of the net assets as of the date indicated.
Consequently, the actual allocation of the purchase price could differ from
that presented above.
(2) Unaudited Pro Forma Combined Condensed Statements of Operations
The pro forma combined condensed statements of operations give effect to the
acquisition as if it had occurred at the beginning of the period presented.
The following adjustments have been reflected in the unaudited pro forma
combined condensed statement of operations:
(c) To reflect the accelerated amortization of deferred stock-based
compensation associated with common stock of the Company to be issued to
current employees of APiON in a manner consistent with Financial Accounting
Standards Board Interpretation No. 28. The accelerated amortization results
in 75% of the deferred stock-based compensation being amortized in the
first year after the closing of the acquisition of APiON.
(d) Adjustment to record the amortization of goodwill and intangible
assets resulting from the preliminary allocation of the APiON purchase
price. The pro forma adjustment assumes goodwill and other intangible
assets will be amortized on a straight-line basis over an estimated life of
three years resulting in one-third of the total goodwill and intangible
assets of $244.5 million being amortized in the first year after the
closing of the acquisition of APiON. The ultimate lives assigned will be
determined at the date of acquisition based on the facts and circumstances
existing at that date.
(e) To reflect the shares to be issued as consideration for the
acquisition.
F-13
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- --------- ----------- ------------
<S> <C> <C>
2.1 Agreement dated October 11, 1999, between the Company and
each of the shareholders of APiON. ____
2.2 Supplemental Agreement dated October 26, 1999, between the
Company and each of the shareholders of APiON. ____
2.3 Registration Rights Agreement dated October 26, 1999,
between the Company and each of the shareholders of APiON. ____
23. Consent of PricewaterhouseCoopers.
</TABLE>
<PAGE>
EXHIBIT 2.1
THIS AGREEMENT is made on 11 October 1999
BETWEEN:
(1) THE SEVERAL PERSONS whose respective names and addresses are set out in
column (1) of Schedule 1 (the "Vendors"); and
(2) PHONE.COM, INC (a Delaware corporation) whose address is 800 Chesapeake
Drive, Redwood City, California 94063 USA (the "Purchaser").
WHEREAS:
(A) Apion Telecoms Limited (the "Company"), a company registered in Northern
Ireland with number NI 36497, has at the date of this Agreement an
authorised share capital of (Pounds)1,000,000 divided into 990,000 `A'
Ordinary Shares of (Pounds)1 each, 5,000 `B' Ordinary Shares of (Pounds)1
each and 5,000 `C' Ordinary Shares of (Pounds)1 each of which 10,000 of the
said `A' Ordinary Shares, and 526 of the said `B' Ordinary Shares and none
of the said `C' Ordinary Shares are issued and fully paid or credited as
fully paid and are owned by the Vendors in the proportions shown opposite
their respective names in column (2) of Schedule 1.
(B) The Vendors have agreed to sell the Shares to the Purchaser and the
Purchaser has agreed to purchase the Shares in reliance (inter alia) upon
the representations, warranties and undertakings in this Agreement, for the
consideration and otherwise upon and subject to the terms and conditions of
this Agreement.
WHEREBY IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement the following words. and expressions have the meanings
set opposite them:
"A Participants" the Participants listed in Part A of Schedule 2;
"Accounts" the audited balance sheet as at the Balance Sheet
Date and the audited profit and loss account for
each of the last three accounting reference
periods ended on the Balance Sheet Date of the
Company and of each of the Subsidiaries, or since
incorporation if the relevant Subsidiary has not
been in existence for three accounting reference
periods and the notes, reports, statements and
other documents which are or would be required by
law to be annexed to the Accounts of the company
concerned and to be sent or made available to
members for such Financial Year, a copy of each of
which has been initialled by or on behalf of each
of the parties for the purpose of identification;
"Accounting relevant statements of standard accounting
practice
<PAGE>
Standards" (including financial reporting standards) issued
pursuant to section 256, CA 85 by the ASB;
"ASB" Accounting Standards Board Limited (no.2526824) or
such other body prescribed by the Secretary of
State from time to time pursuant to section 256,
CA 85;
"Affiliate" in relation to any body corporate, any Holding
Company or subsidiary undertaking of such body
corporate or any subsidiary undertaking of a
Holding Company of such body corporate;
"Agreement" this Agreement including its recitals and the
schedules but not the Tax Deed;
"AL" Apion Limited, a wholly-owned subsidiary of the
Company incorporated and operating in Northern
Ireland with registered number NI29518;
"Associated Company" a company in which the Company or any Subsidiary
holds shares conferring the right to exercise 20%
or more of the votes which could be cast on a poll
at a general meeting of such company and which is
not a subsidiary of any of the companies in the
Group and which is more particularly listed in
Part 2 of Schedule 5;
"ATL" Apion Telecoms Limited, a subsidiary of the
Company incorporated and operating in Ireland with
registered number (IR) 278047;
"B Participants" the Participants listed in Part B of Schedule 2;
"Balance Sheet Date" 31 March 1999;
"Business" collectively the products developed, under
development, and undertaken, by the Company and
each of the Subsidiaries at the date hereof,
including without limitation, (i) the business of
providing gateway and access server type products
that read to the WAP or WTA standard, (ii)
products constituting WAP-related over the air
provisioning of cellular communication devices,
email and push; and (iii) any other WAP-related
products developed or under development by the
Company and each of its Subsidiaries;
"Business Day" a day (other than a Saturday or Sunday) when banks
are open for business in London;
"CA 85" Companies Act 1985;
2
<PAGE>
"CAA" Capital Allowances Act 1990;
"Claim" any claim by the Purchaser in connection with this
Agreement, the Tax Deed or the Shared Services
Agreement;
"Companies Order" Companies (Northern Ireland) Order 1986, as
amended by subsequent legislation including (but
not by way of limitation) the Companies (Northern
Ireland) Orders 1989, 1990 and 1990 (No 2), the
Insolvency (Northern Ireland) Order 1989 and the
Deregulation and Contracting Out
(Northern Ireland) Order 1996;
"Companies Law" (in relation to the NI Companies) the Companies
Order and (in relation to the Irish Companies) the
Companies Acts 1963 to 1999;
"Company's Auditors" PricewaterhouseCoopers of Fanum House, 108 Great
Victoria Street, Belfast BT2 7AX;
"Completion" Completion of the sale and purchase of the Shares
pursuant to this Agreement;
"Confidential all information received or obtained as a result
Information" of entering into or performing, or supplied by or
on behalf of a party in the negotiations leading
to, this Agreement and which relates to:
(i) the Company and the Subsidiaries and their
respective Affiliates;
(ii) any aspect of the Business;
(iii) the provisions of this Agreement;
(iv) the negotiations relating to this Agreement;
(v) the subject matter of this Agreement;
(vi) the Purchaser; or
(vii) the Vendors;
"Connected Person" a person connected with any of the Vendors or the
Directors (or any former director of the Company
or any of the Subsidiaries) within the meaning of
section 839, ICTA 1988;
3
<PAGE>
"Consideration" the Provisional Consideration, as adjusted
pursuant to the terms of this Agreement;
"Consideration Stock" the 1,322,118 shares of unregistered common stock
in the Purchaser to be issued to the Vendors
pursuant to clause 4.1;
"Contract" any contract, agreement, obligation, commitment,
understanding, arrangement or liability;
"Copyright" copyright, design rights, moral rights, topography
rights and database rights whether registered or
unregistered (including any applications for
registration of any such thing) and any similar or
analogous rights to any of the foregoing whether
arising or granted under the law of England or of
any other jurisdiction;
"Customer" any person who within the 24 months prior to the
date of this Agreement has been a client or
customer of the Business, or has been canvassed,
solicited or approached to become a client or
customer of the Business;
"Data Protection Act" in relation to the United Kingdom, the Data
Protection Act 1984, the Data Protection Act 1998
and, in relation to Ireland, the Data Protection
Act 1988.
"Diligence Files" the two identical sets of files numbered 1 through
7 collated by the Vendors, the outside covers of
each of which have been signed for identification
by or on behalf of the Warrantors and the
Purchaser;
"Directors" the directors of the Company and the Subsidiaries
named in Schedule 3;
"Disclosed" accurately and fairly disclosed by the Disclosure
Documents and by the disclosures specifically
referred to in the Disclosure Letter and
"Disclosure" shall be construed accordingly;
"Disclosure the Disclosure Letter and the two identical
Documents" bundles of documents collated by or on behalf of
the Warrantors, the outside covers of each of
which have been signed for identification by or on
behalf of the Warrantors and the Purchaser;
"Disclosure Letter" the letter described as such of even date herewith
addressed by the Warrantors to the Purchaser;
"Encumbrance" any interest or equity of any person (including
any right to acquire, option or right of pre-
emption) or any mortgage,
4
<PAGE>
charge, pledge, lien, assignment, hypothecation,
security interest, title retention or any other
security agreement or arrangement;
"Enterprise Ireland" Enterprise Ireland having its principal office at
Wilton House, Wilton Place, Dublin;
"ERA" Employment Rights (Northern Ireland) Order 1996;
"Escrow Stock" means that part of the Consideration Stock to be
retained by the Purchaser at Completion in
accordance with Schedule 15;
"Event" any payment, transaction, act, omission or
occurrence of whatever nature whether or not the
Company or the Purchaser is a party thereto and
including:
(a) the execution of this Agreement and
completion of the sale of the Shares to the
Purchaser; and
(b) the death of any person;
and references to an Event occurring on or before
Completion shall include an Event deemed, pursuant
to any Taxation Statute, to occur or be treated or
regarded as occurring on or before Completion;
"FA" Finance Act;
"Financial Year" a financial year within the meaning ascribed to
such expression by Article 231, Companies Order;
"Group" together the Company and the Subsidiaries, and
prior to incorporation of the Company and
formation of the Group, the combination of the
Subsidiaries;
"Hardware" any and all computer, telecommunications and
network equipment;
"Hive-Down" the hive-down of the Services Business to Balmore
Limited and Rowarth Limited and the sale of the
shares of Balmore Limited and Rowarth Limited to
the Vendors pursuant to the Hive-Down Agreements;
"Hive-Down
Agreements" the hive-down agreements in the agreed form;
"Holding Company" a holding company within the meaning ascribed to
such expression by Articles 4 and 4A Companies
Order;
5
<PAGE>
"ICTA 1988" Income and Corporation Taxes Act 1988;
"Indemnities" the indemnities given by the Vendors in clause 11;
"Intellectual Property" Patent Rights, Know-How, Copyright (including
rights in Software), Trade Marks and IP Materials;
"Interpoint Licence" The licences for the Interpoint Building in the
agreed form;
"Intellectual Property agreements or arrangements relating to the
Agreements" Relevant IP;
"Irish Companies" ATL and, to the extent applicable, the Company;
"IT Contracts" any agreements or arrangements with third parties
relating to IT Systems or IT Services, including
all hire purchase contracts or leases of Hardware
owned or used by the Company or any of the
Subsidiaries, licences of Software owned or used
by the Company or any of the Subsidiaries, and
other IT procurement;
"IP Materials" all documents, records, tapes, discs, diskettes
and any other materials whatsoever containing
Copyright works, Know-How or Software;
"IT Services" any services relating to the IT Systems or to any
other aspect of the Company's or any of the
Subsidiaries' data processing or data transfer
requirements, including facilities management,
bureau services, hardware maintenance, software
development or support, consultancy, source code
deposit, recovery and network services;
"IT Systems" Hardware, firmware and/or Software owned or used
by the Company or any of the Subsidiaries;
"ITA" Inheritance Tax Act 1984;
"Know-How" trade secrets and confidential business
information including details of supply
arrangements, customer lists and pricing policy;
sales targets, sales statistics, market share
statistics, marketing surveys and reports;
marketing research; unpatented technical and other
information including inventions. discoveries,
processes and procedures, ideas, concepts,
formulae, specifications, procedures for
experiments and tests and results of
experimentation and testing; information comprised
in Software; together with all common law or
statutory rights protecting the same including by
any action for
6
<PAGE>
breach of confidence and any similar or analogous
rights to any of the foregoing whether arising or
granted under the law of England or any other
jurisdiction;
"Legal and Beneficial full and unrestricted title with the benefit of
Title" quiet possession and free from lawful interruption
and disturbance;
"Losses" actions, proceedings, losses, damages,
liabilities, claims, costs and expenses including
fines, penalties, clean-up costs, legal and other
professional fees and any VAT payable in relation
to any such matter, circumstance or item except to
the extent that the Purchaser obtains credit for
such VAT as input tax;
"NI Companies" the Company and AL;
"Ordinary Shares" the 10,000 issued "A" Ordinary Shares of (Pounds)1
each in the capital of the Company;
"Participants" the persons listed in Schedule 2;
"Patent Rights" patent applications or patents, author
certificates, inventor certificates, utility
certificates, improvement patents and models and
certificates of addition including any divisions,
renewals, continuations, refilings, confirmations-
in-part, substitutions, registrations,
confirmations, additions, extensions or reissues
thereof and any similar or analogous rights to any
of the foregoing whether arising or granted under
the law of England or any other jurisdiction;
"Pension Schemes" agreements or arrangements (whether legally
enforceable or not) for the payment of any
pensions, allowances, lump sums or other like
benefits on retirement or on death or during
periods of sickness or disablement for the benefit
of any present or former director, officer or
employee of the Company or of any of the
Subsidiaries or for the benefit of the dependants
of any such persons;
"Proceedings" any proceeding, suit or action arising out of or
in connection with this Agreement;
"Properties" the properties of which short particulars are set
out in Schedule 4 and the expression "Property"
shall mean, where the context so admits, any one
or more of such
7
<PAGE>
properties and any part or parts thereof;
"Provisional the consideration payable for the Shares as
Consideration" specified in clause 4.1;
"Purchaser's KPMG of Stokes House, 17-23 College Square East,
Accountants" Belfast BT1 7DH and KPMG LLP of 500 East
Middlefield Road, Mountain View, California 94043;
"Purchaser's Group" the Purchaser and its Affiliates;
"Purchaser's Latham & Watkins of 99 Bishopsgate, London and
Solicitors" Venture Law Group of Menlo Park, California, USA;
"Registered Intellectual the Intellectual Property owned, licensed, used or
Property" exploited by the Company or any of the
Subsidiaries and listed in Part 1 of Schedule 11;
"Registration Rights the Registration Rights Agreement in the agreed
Agreement" form;
"Release Agreements" the release agreements to be entered into by the
Partcipants in the agreed form;
"Relevant IP" all Registered Intellectual Property and
Unregistered Intellectual Property;
"RTPA" Restrictive Trade Practices Act 1976;
"Services Business" as defined in the Hive-Down Agreements;
"Shared Services
Agreement" the Shared Services Agreement in the agreed form;
"Shareholders the shareholder agreements both dated 2nd
Agreements" September 1999 relating to the Company included in
the Disclosure Documents;
"Shares" together, the `A' Ordinary Shares, the `B'
Ordinary Shares and the `C' Ordinary Shares;
"Software" any and all computer programs in both source and
object code form, including all modules, routines
and sub-routines thereof and all source and other
preparatory materials relating thereto, including
user requirements, functional specifications and
programming specifications, ideas, principles,
programming languages, algorithms, flow charts,
logic, logic diagrams, orthographic
8
<PAGE>
representations, file structures, coding sheets,
coding and including any manuals or other
documentation relating thereto and computer
generated works and any and all third party
software and MIS software;
"SSAP" a statement of standard accounting practice or
financial reporting standard in force at the date
hereof as issued by the Institute of Chartered
Accountants adopted by the ASB as an Accounting
Standard;
"subsidiary" a subsidiary within the meaning ascribed to such
expression by Articles 4 and 4A, Companies Order;
"subsidiary a subsidiary undertaking within the meaning
undertaking" ascribed to such expression by Article 266,
Companies Order;
"Subsidiaries" the subsidiaries of the Company named in Schedule
5;
"Substance" includes (without limitation) any solid, fibre,
dust, liquid, gas, noise or electro-magnetic or
other radiation;
"Taxation" or "Tax" (a) all forms of taxation including any charge,
tax, duty, levy, impost, withholding or liability
wherever chargeable imposed for support of
national, state, federal, municipal or local
government or any other person and whether of the
UK or any other jurisdiction; and (b) any penalty,
fine, surcharge, interest, charges or costs
payable in connection with any taxation within (a)
above;
"Taxation Authority" the Inland Revenue, Customs & Excise, Department
of Social Security and any other governmental or
other authority whatsoever competent to impose any
Taxation whether in the United Kingdom or
elsewhere;
"Tax Deed" the deed in the agreed terms containing certain
taxation covenants;
"Taxation Statute" any directive, statute, enactment, law or
regulation, wheresoever enacted or issued, coming
into force or entered into providing for or
imposing any Taxation and shall include orders,
regulations, instruments, bye-laws or other
subordinate legislation made under the relevant
statute or statutory provision and any directive,
statute, enactment, law, order, regulation or
provision which amends, extends, consolidates or
replaces the same or which has been amended,
extended, consolidated or replaced by the same;
"Tax Warranties" the warranties set out in Part 2 of Schedule 6;
9
<PAGE>
"TCGA" Taxation of Chargeable Gains Act 1992;
"TMA" Taxes Management Act 1970;
"Trade Marks" Trade or service mark applications or registered
trade or service marks, registered protected
designations of origin, registered protected
geographic origins, refilings, renewals or
reissues thereof, unregistered trade or service
marks, domain names, get-up and company names and
business names in each case with any and all
associated goodwill and all rights or forms of
protection of a similar or analogous nature
including rights which protect goodwill whether
arising or granted under the law of England or of
any other jurisdiction;
"Trade Union" as defined in Article 3(1) of the Industrial
Relations (Northern Ireland) Order 1992;
"TULRCA" Trade Union and Labour Relations (Northern
Ireland) Order 1995;
"TUPE" Transfer of Undertakings (Protection of
Employment) Regulations 1981 (as amended) and, in
relation to Ireland, the European Communities
(Safeguarding of Employees' Rights on Transfer of
Undertakings) Regulations 1980 (as amended);
"Unregistered Intellectual Property owned, licensed, used or
Intellectual Property" exploited by the Company or any of the
Subsidiaries other than Registered Intellectual
Property;
"VAT" Value Added Tax;
"VATA" Value Added Tax Act 1994;
"Vendors' Solicitors" Gore & Grimes of Cavendish House, Smithfield,
Dublin 7;
"WAP Products" The products of the Company described in Schedule
13 and all other products, proposed or potential
products, services, equipment and deliverables of
the Business;
"Warranties" the warranties set out in clause 9 (except clause
9.8) and Schedule 6;
"Warrantors" the Vendors provided that Enterprise Ireland shall
only warrant the matters set out in paragraphs
1.2, 2.1, 2.4.1, and 2.4.2 of Schedule 6;
10
<PAGE>
"in the agreed terms" in the form agreed between the Vendors and
the Purchaser and signed for the purposes of
identification by or on behalf of each party.
1.2 The table of contents and headings in this Agreement are inserted for
convenience only and shall not affect its construction.
1.3 Unless the context otherwise requires words denoting the singular shall
include the plural and vice versa, references to any gender shall include
all other genders and references to persons shall include bodies corporate,
unincorporated associations and partnerships, in each case whether or not
having a separate legal personality. References to the word "include" or
"including" are to be construed without limitation.
1.4 References to recitals, schedules and clauses are to recitals and schedules
to and clauses of this Agreement unless otherwise specified and references
within a schedule to paragraphs are to paragraphs of that schedule unless
otherwise specified.
1.5 References in this Agreement to any statute, statutory provision or EC
Directive include a reference to that statute, statutory provision or EC
Directive as amended, extended, consolidated or replaced from time to time
(whether before or after the date of this Agreement) and include any order,
regulation, instrument or other subordinate legislation made under the
relevant statute, statutory provision or EC Directive.
1.6 Words and expressions defined in the Tax Deed shall to the extent not
inconsistent bear the same meanings in this Agreement.
1.7 References to any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any
legal concept, state of affairs or thing shall in respect of any
jurisdiction other than England be deemed to include that which most
approximates in that jurisdiction to the English legal term.
1.8 References to legislation in relation to the Irish Companies are (unless
the context otherwise requires) to legislation of Ireland.
1.9 Any reference to "writing" or "written" includes faxes and any non-
transitory form of visible reproduction of words.
1.10 Any agreement, covenant, representation, warranty, undertaking or liability
arising under this Agreement on the part of two or more persons shall be
deemed to be made or given by such persons severally and (save in respect
of any Claim for (Pounds)100,000 or less or for his individual default)
each Vendor's liability shall be limited to such proportion of the Claim as
the Consideration to which he is entitled bears to the aggregate
Consideration.
1.11 References to the Vendors or to the Warrantors shall include each of them
severally.
11
<PAGE>
1.12 In Schedule 6, references to the Company shall be deemed to include a
corresponding reference to the Subsidiaries and each of them severally and
references to the Accounts are to those of the Company or the relevant
Subsidiary, as the case may be.
1.13 References to times of the day are to London time and references to a day
are to a period of 24 hours running from midnight.
1.14 References to `(Pounds)' or `pounds sterling' are to the lawful currency of
the United Kingdom. References to "$" or US Dollars are to United States
Dollars.
2. CONDITIONS
2.1 Conditions precedent
Subject to clause 2.4, this Agreement is subject to and conditional upon:
2.1.1 the Hive-Down having been completed in accordance with the terms
of the Hive-Down Agreements, including, without limitation, the
novation of all Contracts with any Group Company relating to the
Services Business having occurred;
2.1.2 each of the Participants having executed and delivered to the
Purchaser a Release Agreement;
2.1.3 the granting in terms satisfactory to the Purchaser of any
consents, approvals, authorisations or clearances which are
required from any government, governmental or regulatory bodies,
agencies or authorities in the United Kingdom or in Ireland or
from any supranational agency or authority which, in the opinion
of the Purchaser, is necessary or desirable for Completion;
2.1.4 no government or governmental, quasi-governmental, supranational
or state agency or regulatory body or trade union or court or any
other person or organisation in any jurisdiction having, by the
date on which all the other conditions set out in this clause 2.1
have either been satisfied or waived in accordance with clause
2.2;
(a) instituted or threatened any action, suit or investigation to
restrain, prohibit or otherwise challenge or interfere with the
transactions proposed under this Agreement or any part thereof;
(b) threatened to take any action as a result or in anticipation of
the implementation of such transactions or any part thereof; or
(c) proposed or enacted any statute or regulation which would
prohibit, materially restrict or materially delay implementation
of such transactions or any part thereof or the operations of the
Company or of any of the Subsidiaries;
2.1.5 Apion Investments Limited shall have passed all necessary
resolutions of its Directors and members and made all filings
(and paid all fees) with the relevant bodies to change its name
to Altion Investments Limited;
12
<PAGE>
2.1.6 there having been no material adverse change in the financial or
trading position of the Group since the Balance Sheet Date (for
which purpose the loss of (Pounds)50,000 in the period to 31
August 1999 shall not be regarded as material);
2.1.7 there having been no material adverse change in the financial or
trading position of the Purchaser since June 30, 1999; and
2.1.8 certain holders of preferred stock of the Purchaser having waived
their registration rights to the extent contemplated by Section
2.11 of the Registration Rights Agreement (unless compliance with
such Section 2.11 is waived by the Vendors).
2.2 Waiver of conditions precedent
Notwithstanding clause 2.1:
2.2.1 the Purchaser shall be entitled by notice in writing given to the
Vendors to waive (to such extent as it may think fit) compliance
with the conditions stated in clauses 2.1.1, 2.1.2, 2.1.5 and
2.1.6;
2.2.2 the Vendors shall be entitled by notice in writing given to the
Purchaser to waive (to such extent as they may think fit)
compliance with the conditions stated in clause 2.1.7.
2.3 Time limit for satisfaction of conditions
The parties shall respectively use all reasonable endeavours to procure
that the conditions stated in clause 2.1 are fulfilled as soon as
practicable and in any event on or before 11 November 1999 but if the
conditions in clause 2.1 have not been fulfilled or waived by that date (or
by such later date as may be agreed in writing between the Vendors and the
Purchaser), then, save for accrued rights arising in respect of the
operative provisions specified in clause 2.4, clauses 2 (except this clause
2.3) to 14 (inclusive) of this Agreement shall thereupon become null and
void ab initio and none of the parties shall have any rights against any
other party hereunder except for failure to use all such reasonable
endeavours.
2.4 Operative provisions
Notwithstanding clause 2.1, other than clauses 11 and 12 inclusive, this
Agreement shall come into force on the execution and exchange of this
Agreement and the remainder of this Agreement shall come into force on the
fulfilment and/or waiver of all conditions stated in clause 2. 1.
3. SALE AND PURCHASE
3.1 Obligation to sell and purchase
Subject to the terms of this Agreement, each of the Vendors shall sell or
procure to be sold legal and beneficial title to, with full title guarantee
that number of Shares set opposite his name in column (2) of Schedule 1
together with two (2) ordinary shares
13
<PAGE>
of (Pounds)1 each in ATL and the Purchaser shall purchase such interests in
the same together with all rights attaching thereto at the date of this
Agreement.
3.2 Dividends and distributions
The Purchaser shall be entitled to receive all dividends and distributions
declared, paid or made by the Company on or after the date of this
Agreement.
3.3 Sale of all Shares
The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all the Shares is completed simultaneously.
4. CONSIDERATION
4.1 Provisional Consideration
The Shares shall be sold for the sum of US Dollars $193,803,609 and by the
payment of the sum of (Pounds)3,000,000 by way of cheque payable to the
Vendors' Solicitors (a) on Completion for the consideration paid under the
Hive-Down Agreements and (b) for the balance, 60 days thereafter, but
subject to adjustment (if any) as provided in clause 7.2. The sum of
$193,803,609 shall be satisfied by the issue (subject to clause 4.4) to the
Vendors of the Consideration Stock in proportion to their respective
entitlements to the Consideration set out in Schedule 1.
4.2 Consideration Stock
When issued, the Consideration Stock shall be fully paid and non-
assessable.
4.3 Reduction in consideration
Any payment made by the Vendors or the Warrantors in respect of a breach of
any Warranties or payment made under the Indemnities or the Tax Deed, or
any other payment made pursuant to this Agreement, shall be and shall be
deemed to be pro tanto a reduction in the price paid for the Shares under
this Agreement.
4.4 Escrow
At Completion, the Escrow Stock shall be issued but retained by the Company
and the provisions of Schedule 15 (Escrow) shall have effect from
Completion.
14
<PAGE>
5. WAIVERS OF PRE-EMPTION
Each of the Vendors hereby waives all rights of pre-emption or other rights
over any of the Shares conferred on him by the articles of association of
the Company, under the Shareholders' Agreements or in any other way.
6. COMPLETION
6.1 Time and location
Subject as provided in clause 6.4, Completion shall take place at the
offices of the Vendors' Solicitors on the second Business Day after all the
conditions in clause 2.1 have been fulfilled or waived or at such other
place and/or on such other date as may be agreed in writing between the
Purchaser and the Vendors.
6.2 Vendors' obligations
At Completion:
6.2.1 the Vendors shall produce evidence of the fulfilment of the
conditions stated in clauses 2.1.1, 2.1.2, 2.1.3and 2.1.5;
6.2.2 the Vendors shall deliver to the Purchaser each of the documents
listed in Part 1 of Schedule 10; and
6.2.3 the Vendors shall procure that all necessary steps are taken
properly to effect the matters listed in Part 2 of Schedule 10 at
board meetings of the Company and each of the Subsidiaries and
shall deliver to the Purchaser duly signed minutes of all such
board meetings.
6.3 Purchaser's obligations
Subject to the Vendors complying with their obligations under clause 6.2
the Purchaser shall at Completion:
6.3.1 issue the Consideration Stock for delivery as soon as practicable
following Completion to the Vendors' Solicitors (other than the
Escrow Stock) who are irrevocably authorised to receive the same
and whose receipt shall be an effective discharge of the
Purchaser's obligations under this clause 6.3.1;
6.3.2 deliver a facsimile letter from the transfer agent of the
Purchaser confirming issuance of the Consideration Stock; and
6.3.3 deliver to the Vendors the Registration Rights Agreement and a
counterpart Tax Deed duly executed by the Purchaser.
6.4 Vendors' failure to comply
If in any respect material to the Purchaser the provisions of clause 6.2
and Schedule 10 are not complied with on the date of Completion applicable
under clause 6. 1, the Purchaser shall not be obliged to complete this
Agreement and may:
15
<PAGE>
6.4.1 defer Completion to a date not more than twenty-eight days after
the date set by clause 6.1 (and so that the provisions of this
clause 6.4 shall apply to Completion as so deferred);
6.4.2 proceed to Completion so far as practicable and without prejudice
to its rights under this Agreement;
6.4.3 rescind this Agreement without prejudice to its rights and
remedies under this Agreement; or
6.4.4 waive all or any of the requirements contained in clause 6.2 at
its discretion.
6.5 Company records
Upon Completion the Vendors shall, and shall procure that any other person
shall, without delay send to such address as the Purchaser may direct, all
records, correspondence, documents, files, memoranda and other papers
relating to the Company and each of the Subsidiaries or the Business not
kept at any of the Properties.
7. COMPLETION STATEMENT
7.1 Preparation of Completion Statement
7.1.1 Forthwith after Completion, the Purchaser shall prepare a
Completion Statement for the Group as at the close of business on
the date of Completion but assuming that the Hive-Down has
occurred and the Purchaser shall submit them to the Company's
Auditors for review within 45 days after Completion. The Vendors
shall pay the charges, if any, of the Company's Auditors and the
Purchaser shall pay the charges, if any, of the Purchaser's
Accountants.
7.1.2 If the Purchaser shall fail to procure the preparation of
accounts in accordance with clause 7.1.1, the Vendor may procure
the same at the Purchaser's expense.
7.1.3 The Completion Statement shall consist of a consolidated balance
sheet for the Group as at the close of business on the date of
Completion. The Completion Statement shall be prepared in
accordance with the principles set out in Schedule 7.
7.1.4 Unless within 30 days after receipt of the Completion Statement
pursuant to clause 7.1.1 the Company's Auditors notify the
Purchaser's Accountants in writing of any disagreement or
difference of opinion relating to the Completion Statement,
including full particulars of the amount of any disagreement and
the reasons for it, the parties shall be deemed to have accepted
such Completion Statement as final and binding.
7.1.5 If within the period of 30 days referred to in clause 7.1.4 the
Company's Auditors notify the Purchaser's Accountants of such
disagreement or difference of opinion relating to the Completion
Statement ("Notice of
16
<PAGE>
Disagreement") and if they are able to resolve such disagreement
or difference of opinion within 30 days of the Notice of
Disagreement, the parties shall be deemed to have accepted such
accounts as final and binding.
7.1.6 If the Purchaser's Accountants and the Company's Auditors are
unable to reach agreement within 30 days of the Notice of
Disagreement, the remaining matters in dispute therein shall be
jointly referred at the option of either party to the decision of
a "big 5" firm of independent chartered accountants (the
"Independent Accountant") to be appointed (in default of
nomination by agreement between the Purchaser and the Vendors) by
the President for the time being of the Institute of Chartered
Accountants in England and Wales.
7.1.7 The Independent Accountant shall act as an expert and not as an
arbitrator, the Arbitration Act 1996 shall not apply and his
decision shall (in the absence of manifest error) be final and
binding on the Purchaser and the Vendors for the purposes of
Completion Statement. The costs of the Independent Accountant
shall be apportioned between the Purchaser and the Vendors as the
Independent Accountant shall decide but each party shall be
responsible for its own costs of presenting its case to the
Independent Accountant.
7.1.8 The Purchaser shall procure that the Purchaser's Accountants
shall give the Company's Auditors reasonable access to all their
working papers relating to the Completion Statement (with the
right to take copies) subject to the signature of an appropriate
hold harmless letter during their review of the Completion
Statement at every location at which work on them is done and the
Purchaser agrees that the Company's Auditors shall be at liberty
to disclose to the Vendor any information and copies of any
documents which they receive by virtue of this clause.
7.2 Adjustment of Provisional Consideration
The Provisional Consideration shall be adjusted after Completion in
accordance with the following provisions of this clause 7.2.
7.2.1 If the net assets as shown by the Completion Statement are more
than $1,000,000 less than the net assets of (Pounds)1,869,479 as
at 31 March 1999 the Vendors shall pay to the Purchaser the
amount of the deficiency in excess of $1,000,000.
7.2.2 Any amounts to be paid under clause 7.2.1 shall:
(a) firstly be satisfied by the cancellation of Escrow Stock in
accordance with Schedule 15 and thereafter be paid in cash by the
Vendors and the A Participants within 14 days after the date on
which the Completion Accounts have been agreed or settled
(whether under clause 7.1.5, 7.1.6 or by virtue of a decision of
the Independent Accountant or otherwise) together with simple
interest on the amount to be paid calculated at the rate of two %
above the base rate from time to time of Barclays Bank plc from
Completion until the date of actual payment; and
17
<PAGE>
(b) be paid in accordance with clause 21.
8. CONDUCT OF BUSINESS PENDING COMPLETION
8.1 Each of the Vendors hereby undertakes to the Purchaser (acting for itself
and as trustee for the Company and the Subsidiaries) that in the period
prior to Completion:
8.1.1 the Business will be carried on as a going concern in the normal
course;
8.1.2 no physical assets of the Company or of any of the Subsidiaries
shall be removed from any of the Properties save in the ordinary
course of normal day to day trading;
8.1.3 it will use its best endeavours to maintain the trade and trade
connections of the Group;
8.1.4 all debts which the Company or any of the Subsidiaries incurs in
the normal course of the business will be settled within the
applicable periods of credit;
8.1.5 it shall promptly give to the Purchaser full details of any
material changes in the Business, financial position and/or
assets of the Group;
8.1.6 the Company and each of the Subsidiaries shall maintain in force
policies of insurance with limits of indemnity at least equal to,
and otherwise on terms no less favourable than, those policies of
insurance currently maintained by the Company and the
Subsidiaries;
8.1.7 no amendment shall be made to any of the Pension Schemes (except
an amendment made solely to comply with legislative
requirements); and
8.1.8 neither the Company nor any of the Subsidiaries shall:
(a) enter into, modify or agree to terminate any Contract or incur
any capital expenditure;
(b) appoint or employ any new employees or consultants;
(c) alter materially, or agree to alter materially, the terms and
conditions of employment (including benefits) of any of its
employees, nor dismiss any of its employees and no Vendor shall
directly or indirectly induce or endeavour to induce any of such
employees to terminate their employment prior to Completion;
(d) dispose of any material assets used or required for the operation
of the Business or enter into any other transaction otherwise
than in the ordinary course of business;
(e) create any Encumbrance over any of its assets or its undertaking
nor, otherwise than in the ordinary course of the Business, give
any guarantees or indemnities in respect of any third party;
18
<PAGE>
(f) institute, settle or agree to settle any legal proceedings
relating to the Business;
(g) grant or modify or agree to terminate any rights or enter into
any agreement relating to Intellectual Property or otherwise
permit any of its rights relating to Intellectual Property to
lapse;
(h) pay any management charge to any Vendor;
(i) incur any liabilities to any Vendor and no Vendor shall incur any
liabilities to the Company or any Subsidiary, other than trading
liabilities incurred in the ordinary course of business; or
(j) enter into or modify any subsisting agreement with any Trade
Union;
provided that the Vendors and the Group shall be entitled to do
any of the things specified in clauses 8.1.8(a)-(j) (inclusive)
with the prior written consent of the Purchaser which consent
shall not be unreasonably withheld.
9. WARRANTIES
9.1 Extent of Warranties
In consideration of the Purchaser agreeing to purchase the Shares on the
terms contained in this Agreement, the Warrantors hereby:
9.1.1 in relation to the Company and each of the Subsidiaries warrant,
represent and undertake to the Purchaser contracting for itself
and for any successor in title to the Shares or to part or all of
the Business in the terms set out in Schedule 6;
9.1.2 in relation to the Company and each of the Subsidiaries warrant,
represent and undertake to the Purchaser contracting as referred
to in clause 9.1.1 that the Warranties will be true and accurate
in all material respects (unless the relevant Warranty is
qualified as to materiality, in which case such Warranty will be
true and accurate in all respects) and not misleading at and
fulfilled down to Completion in all respects as if they had been
made or given at Completion and on the basis that a reference to
the actual time of Completion were substituted for any express or
implied reference to the time of this Agreement;
9.1.3 undertake that (save only as may be necessary to give effect to
this Agreement) they shall not, and shall procure (as far as they
can) that the Company and the Subsidiaries shall not, prior to
Completion, do any act or thing or omit to do any act or thing
the commission or omission of which would constitute a breach of
any of the Warranties if they were given at Completion or which
would make any of the Warranties untrue or inaccurate or
misleading if they were so given on the basis mentioned in clause
9.1.2;
9.1.4 without restricting the rights of the Purchaser or any successor
in title to the Shares or their ability to claim damages on any
basis available to them in the event of any breach or non-
fulfilment of any of the Warranties, undertake to
19
<PAGE>
the Purchaser contracting as aforesaid that the Warrantors will
on demand pay to the Purchaser or such successors:
(a) the full amount of any shortfall or diminution in the value
of any assets of the Company or any of the Subsidiaries or
of the Business and an amount equal to any other loss
suffered or incurred by the Purchaser, the Company, any of
the Subsidiaries or any such successor as a result of or in
relation to any act, matter, thing or circumstance
constituting a breach or non-fulfilment of any of the
Warranties; and
(b) all costs, expenses and disbursements suffered or incurred
by the Purchaser, the Company, any of the Subsidiaries or
any such successor directly or indirectly as a result of or
in relation to any breach or nonfulfilment of any of the
Warranties;
provided that any amount so payable shall be increased so as to
ensure that the net amount received by the Purchaser or any such
successor shall after Taxation be equal to that which would have
been received had the payment and any increased payment not been
subject to Taxation;
9.1.5 further undertake to the Purchaser that upon any of them becoming
aware prior to Completion of the impending or threatened
occurrence or non-occurrence of any matter, event or circumstance
(including any omission to act) which would or might reasonably
be expected to cause or constitute a breach (or which would have
caused or constituted a breach had such event occurred or been
known to any of them prior to the date of this Agreement) of any
of the Warranties or which would or might make any of the
Warranties inaccurate or misleading or which would or might give
rise to a claim under the Indemnities or Tax Deed (whether or not
then executed) they will promptly give written notice of such
event to the Purchaser before Completion with sufficient details
to enable the Purchaser to assess accurately the impact of such
event and if so requested by the Purchaser use their best
endeavours promptly to prevent or remedy the same.
9.2 Obligation to make enquiries
In relation to any matter warranted "so far as the Warrantors are aware",
such Warranty shall be deemed to be given to the best of the knowledge,
information and belief of each of the Warrantors after making due and
careful enquiries and the knowledge, information and belief of any one of
the Warrantors shall be imputed to the remaining Warrantors.
9.3 Investigation by Purchaser
None of the Warranties or the Indemnities or the Tax Deed shall be deemed
in any way modified or discharged by reason of any investigation or inquiry
made or to be made by or on behalf of the Purchaser, and no information
relating to the Company or
20
<PAGE>
to any of the Subsidiaries or the Associated Companies of which the
Purchaser has knowledge (actual or constructive) other than by reason of
its being Disclosed shall prejudice any claim which the Purchaser shall be
entitled to bring or shall operate to reduce any amount recoverable by the
Purchaser under this Agreement. The benefit conferred upon the Purchaser by
the foregoing provisions of this clause 9 shall be deemed to be also
conferred upon the Company and upon each of the Subsidiaries.
9.4 Information supplied by the Company and Subsidiaries
Any information supplied by or on behalf of the Company or on behalf of any
of the Subsidiaries (or by any officer, employee or agent of any of them)
to the Vendors and/or the Warrantors or their advisers in connection with
the Warranties, the Indemnities or the Tax Deed or the information
Disclosed in the Disclosure Documents shall not constitute a warranty,
representation or guarantee as to the accuracy of such information in
favour of the Vendors or the Warrantors and the Vendors and the Warrantors
hereby undertake to the Purchaser to waive any and all claims which they
might otherwise have against the Company or any of the Subsidiaries or
against any officer, employee or agent of any of them in respect of such
claims but so that this shall not preclude any Vendor or Warrantor from
claiming against any other Vendor or Warrantor under any right of
contribution or indemnity to which he may be entitled.
9.5 Separate and independent warranties
Each of the Warranties set out in the separate paragraphs of Schedule 6
shall be separate and independent and save as expressly otherwise provided
shall not be limited by reference to any other such Warranty or by anything
in this Agreement, the Disclosure Documents or the Tax Deed.
9.6 Intentionally omitted.
9.7 Reliance
The Purchaser has entered into this Agreement upon the basis of and in
reliance upon the Warranties and the Indemnities and the representations
and warranties given under clause 9.8.
9.8 Investment Representations
In return for the Purchaser agreeing to issue the Consideration Stock the
Vendors warrant and represent in the terms set out in Schedule 14.
9.9 Pre-Completion material breach
If it is found on or prior to Completion that any of the Warranties and the
representations and warranties given under clause 9.8 is in any material
respect untrue, misleading, incorrect or unfulfilled or if a claim may be
made under the Indemnities or if the Purchaser becomes aware of any
material matter or thing which is inconsistent with the same or that the
Vendors are in material breach of any other term of this Agreement which is
material in the context of this sale, the Purchaser
21
<PAGE>
shall be entitled by notice in writing to the Vendors to rescind this
Agreement at any time prior to Completion but failure to exercise this
right shall not constitute a waiver of any other rights of the Purchaser
arising by reason of any breach of any Warranty and the representations and
warranties given under clause 9.8 and exercise of this right shall be
without prejudice to any other rights and remedies the Purchaser may have
under this Agreement.
10. LIMITATIONS ON WARRANTIES
10.1 The liability of the Warrantors (if any) pursuant to the Warranties shall
be limited in accordance with the following provisions of this Clause
notwithstanding any other provision of this Agreement.
10.1.1 The liability of the Warrantors (if any) under the Warranties
other than the Warranties set out in paragraphs 1.2, 2.1, 2.4.1,
2.4.2, 6.1, 17.1, 17.2, 17.3 and 17.4 of Part 1 of Schedule 6 and
the Warranties set out in Part 2 of Schedule 6 shall cease on the
second anniversary of the Completion Date save as regards any
alleged breach of any of the Warranties in respect of which
notice in writing (containing details of the event or
circumstance giving rise to such breach or claim, the nature
thereof and the estimated total amount of liability therefor)
shall have been served on the Warrantors prior to that date;
10.1.2 The Warrantors shall not be liable for breach of the Warranties
unless the aggregate liability of the Warrantors for all breaches
exceeds (Pounds)100,000;
10.1.3 The liability of the Warrantors for breach of the Warranties
shall not in any event exceed the lesser of (i) US $ 100,000,000
and (ii) the aggregate value of the Consideration Stock,
calculated by reference to the aggregate of the closing prices of
each share of Consideration Stock through NASDAQ on the day on
which it first became eligible for resale in the United States by
the then holder thereof;
10.1.4 The Warrantors shall not be liable for any breach of the
Warranties to the extent that the breach is Disclosed in the
Disclosure Letter.
10.2 The Warrantors shall not be liable for breach of the Warranties or for any
claim thereunder to the extent that such claim arose as a result of a
change in law occurring after Completion.
10.3 Duty to mitigate
For the avoidance of doubt it is hereby specifically agreed that nothing in
the Agreement shall in any way restrict or limit the general obligation of
the Purchaser to mitigate any loss or damage which it may suffer in
consequence of any matter giving rise to a Claim under the Warranties (or
capable of doing so).
10.4 No double recovery
To the extent that the Purchaser has received payment in respect of a Claim
under the Tax Deed, it shall not have a Claim in respect of the same matter
under the
22
<PAGE>
Warranties.
10.5 Insurance
The Warrantors shall not be liable for any Claim to the extent that such
Claim is as a result of a reduction in the level of insurance cover
maintained by the Company after Completion compared with that included in
the Disclosure Documents against Warranty 15.
10.6 Proceedings
Where a Claim under the Warranties has been notified to the Warrantors
within the time periods specified in clause 10.1.1, if proceedings are not
instituted (that is to say issued and served within six months of the
service of the notice in question unless previously satisfied, settled or
withdrawn) the Warrantors shall cease to be liable therefor.
11. INDEMNITIES
11.1 Matters indemnified against
The Vendors undertake to indemnify and keep the Purchaser indemnified
(contracting for itself and as trustee for its officers, directors, agents
and employees and any successor in title to the Shares or to part or all of
the Business) from and against and in respect of all Losses which may be
suffered or incurred by the Purchaser, its officers, directors, agents,
employees or successors in title or the Company or any Subsidiary arising
directly or indirectly out of or in connection with:
11.1.1 any Stamp Duty or other Tax payable by any member of the Group or
the Purchaser in connection with or arising from (i) the
acquisition of the Subsidiaries by the Company provided pursuant
to a reorganisation which occurred during 1999 and (ii) the
assignment or transfer of any Intellectual Property to any member
of the Group;
11.1.2 any failure by any member of the Group to comply with section 130
of the Finance Act 1986;
11.1.3 any failure of any WAP Products to be Year 2000 Compliant;
11.1.4 any accrued but unpaid Employee Benefits on or prior to
Completion which have not been specifically Disclosed against
Warranty 16.1.3 in the Disclosure Letter;
11.1.5 in relation to any Contract of any member of the Group which is
not listed in Warranty 15.5 or of which true and accurate copies
have not been Disclosed in the Disclosure Documents;
11.1.6 any breach of, or non-compliance with, clause 29 (Hive-Down) of
this Agreement.
23
<PAGE>
11.2 Debtors
If the Company or any Subsidiary does not collect in full any debt
warranted under this Agreement as collectable because:
11.2.1 despite its reasonable endeavours it has been unable to do so in
the ordinary course of business within six months of the due
date; or
11.2.2 the debtor has gone into liquidation (within the meaning of
section 247 of the Insolvency Act 1986);
the Vendors will, immediately on demand by the Purchaser, purchase the debt
or the rights in the liquidation arising from the debt from the Company or
Subsidiary (as the case may be) at a price equal to the uncollected amount
which would have been recoverable if the debt had been collectable in full
in accordance with the Warranties.
11.3 Application of clause 10
For the avoidance of doubt, the provisions of clause 10 shall not apply to
this clause 11.
12. PROTECTION OF GOODWILL
12.1 Covenants
As further consideration for the Purchaser agreeing to purchase the Shares
on the terms contained in this Agreement and with the intent of assuring to
the Purchaser the full benefit and value of the goodwill and connections of
the Group and as a constituent part of the sale of the Shares, the Vendors
hereby undertake (binding themselves and each of their Affiliates to the
Purchaser (contracting for itself and on behalf of the Company and of each
of the Subsidiaries and for any successor in title to the Shares or to part
or all of the Business) that (except as directors or employees of the
Company or of any of the Subsidiaries or with the written consent of the
Purchaser) neither they nor their Affiliates shall whether on their own
behalf or with or on behalf of any person and whether directly or
indirectly by any or person or business controlled by them or any Connected
Person:
12.1.1 in the period from Completion to the third anniversary thereof,
carry on or be employed, engaged, concerned, interested or in any
way assist anywhere in the world which may in any way be in
competition with all or part of the Business provided that
nothing in this clause 12.1.1 shall prevent the Vendors nor any
of their Subsidiaries from holding for investment purposes only
any units of an authorised unit trust and/or not more than 1% of
any class of the issued share or loan capital of any company
quoted on a recognised investment exchange (as defined in the
Financial Services Act 1986) and further provided that the
provisions of this clause 12.1.1 shall not prevent any of the
Vendors from carrying on any existing employment or activity
Disclosed to the Purchaser in the Disclosure Letter; provided,
however, that no such Vendor shall actively participate in the
design and technical development of new products for their
employer that directly competes with the Business;
24
<PAGE>
12.1.2 in the period from Completion to the third anniversary thereof,
canvass, solicit or approach or cause to be canvassed, solicited
or approached (in relation to a business which may in any way
compete with all or part of the Business) the custom of any
Customer;
12.1.3 in the period from Completion to the third anniversary thereof,
interfere or seek to interfere or take such steps as may
interfere with supplies to the Company and/or any of the
Subsidiaries from any suppliers who shall have been supplying
goods or services to the Company or to any of the Subsidiaries
for use in connection with the Business at any time during the
period of 24 months prior to the date of Completion;
12.1.4 in the period from Completion to the third anniversary thereof,
offer employment to or employ or offer to conclude any Contract
of services with employees of the Company or of any of the
Subsidiaries or procure or facilitate the making of such an offer
by any person, firm or company or entice or endeavour to entice
any employees of the Company or of any of the Subsidiaries to
terminate their employment with the Company or any of the
Subsidiaries;
12.1.5 at any time after Completion use as a trade or business name or
mark or domain name or carry on a business under a title
containing the word `Apion' or any other word(s) resembling the
same; or
12.1.6 at any time after Completion disclose to any person whatsoever or
use to the detriment of the Company or any Subsidiary or
otherwise make use of, or through any failure to exercise all due
care and diligence cause any unauthorised use of, any
Confidential Information including Know-How relating or belonging
to the Company or to any of the Subsidiaries or in respect of
which the Company or any of the Subsidiaries is bound by an
obligation of confidence to a third party save as required by law
or by any court of competent jurisdiction.
Each undertaking contained in this clause 12.1 shall be read and construed
independently of the other undertakings herein as an entirely separate and
severable undertaking.
12.2 Severability of covenants
Whilst the undertakings in clause 12.1 are considered by the parties to be
reasonable in all the circumstances, if any one or more should for any
reason be held to be invalid but would have been held to be valid if part
of the wording thereof was deleted or the period thereof reduced or the
range of activities or area covered thereby reduced in scope, the said
undertakings shall apply with the minimum modifications necessary to make
them valid and effective.
12.3 Information in the public domain
The restriction contained in clause 12.1.6 shall not extend to any
confidential or secret
25
<PAGE>
information which may come into the public domain otherwise than through
the default of any of the Vendors.
12.4 The restrictions contained in this clause 12 shall not apply to Enterprise
Ireland.
13. INTENTIONALLY OMITTED
14. RTPA
14.1 Ineffectiveness of restriction pending registration
If there is any provision of this Agreement. or of any agreement or
arrangement of which this Agreement forms part, which causes or would cause
this Agreement or that agreement or arrangement to be subject to
registration under RTPA, then that provision shall not take effect until
the day after particulars of this Agreement or of that agreement or
arrangement (as the case may be) have been furnished to the Director
General of Fair Trading pursuant to section 24, RTPA.
14.2 Responsibility for registration
The parties undertake to furnish such particulars as are referred to in
clause 14.1 as soon as is reasonably practicable after Completion and
within the time limits specified in RTPA.
15. ANNOUNCEMENTS
15.1 Restrictions on announcements
No press conference, announcement or other communication concerning
Confidential Information or the transactions referred to in this Agreement,
or in connection with the Group or otherwise relating to the financial
condition or trading or financial prospects of the Group, shall be made or
despatched by the Vendors or their agents, employees or advisers to any
third party without the prior written consent of the Purchaser save as may
be required by any:
15.1.1 law;
15.1.2 existing contractual arrangements; or
15.1.3 any applicable regulatory authority to which the Vendors are
subject where such requirement has the force of law,
provided such communication shall be made only after consultation with the
Purchaser.
15.2 Time limit
The restrictions contained in this clause 15 shall continue to apply after
Completion without limit in time.
15.3 Legal and regulatory requirements
26
<PAGE>
The Purchaser and each of the Vendors undertake to provide all such
information known to him or it or which on reasonable enquiry ought to be
known to him or as may reasonably be required by the Vendors or the
Purchaser in relation to the Group or any member of it for the purpose of
complying with the requirements of law or of any applicable regulatory
authority to which any of the parties is subject where such requirement has
the force of law.
16. IMPLIED COVENANTS FOR TITLE AND FURTHER ASSURANCE
16.1 Implied covenants for title
The Law of Property (Miscellaneous Provisions) Act 1994 (LPMPA) applies to
all dispositions of property made under or pursuant to this Agreement save
that the word "reasonably" shall be deleted from the covenant set out in
section 2(1)(b), LPMPA, and the covenant set out in section 3(1), LPMPA
shall not be qualified by the words "other than any charges, encumbrances
or rights which that person does not and could not reasonably be expected
to know about".
16.2 Further assurance
In addition to clause 16.1, the Vendors shall, from time to time on being
required to do so by the Purchaser, now or at any time in the future, do or
procure the doing of all such acts and/or execute or procure the execution
of all such documents in a form satisfactory to the Purchaser as the
Purchaser may reasonably consider necessary for giving full effect to this
Agreement and securing to the Purchaser the full benefit of the rights,
powers and remedies conferred upon the Purchaser in this Agreement at the
cost and expense of the Vendors. In particular, but without limitation, the
Vendors shall offer all reasonable assistance as the Purchaser requests in
connection with any negotiations with the Industrial Development Board or
Enterprise Ireland.
16.3 Registration
From and after the date of this Agreement, and following Completion, the
Vendors shall (at their own expense) promptly provide all such information,
documentation and other assistance as may reasonably be required by the
Purchaser in connection with any registration or sale of any of its shares
of Common Stock in the United States. The provision of any such information
and documentation shall constitute a continuing representation and warranty
by the Vendors that such information and documentation is true and accurate
and not misleading.
17. ASSIGNMENT
17.1 Limited assignment
No party may assign the benefit of this Agreement whether absolutely or by
way of security except (in the case of the Purchaser only) by way of an
absolute assignment following Completion to an Affiliate of the Purchaser
(and provided that the Purchaser shall not be released from any of its
obligations hereunder) save that a party may assign such benefit absolutely
or by way of security to a person (other than to an Affiliate of the
Purchaser as aforesaid) with the prior consent in writing of the other
27
<PAGE>
parties, such consent not to be unreasonably withheld or delayed and any
purported assignment in contravention of this clause shall be ineffective.
17.2 Successors in title
Subject to clause 17.1, this Agreement shall be binding upon and enure for
the benefit of the personal representatives and permitted assigns and
successors in title of each of the parties and references to the parties
shall be construed accordingly.
18. ENTIRE AGREEMENT: REMEDIES
18.1 Entire agreement
This Agreement together with any documents referred to herein constitutes
the whole and only agreement between the parties relating to the subject
matter hereof and supersedes and extinguishes any prior drafts, previous
agreements, undertakings, representations, warranties and arrangements of
any nature whatsoever, whether or not in writing between the parties, in
connection with the subject matter hereof.
18.2 Remedies
The rights of the Purchaser under this Agreement are independent,
cumulative and without prejudice to all other rights available to it
whether as a matter of common law, statute, custom or otherwise.
18.3 Non-exclusion of fraud
Nothing in this Agreement, the Tax Deed or in any other document referred
to herein shall be read or construed as excluding any liability or remedy
as a result of fraud.
19. WAIVER, VARIATION AND RELEASE
19.1 No waiver by omission, delay or partial exercise
No omission to exercise or delay in exercising on the part of any party to
this Agreement any right, power or remedy provided by law or under this
Agreement shall constitute a waiver of such right, power or remedy or any
other right, power or remedy or impair such right, power or remedy. No
single or partial exercise of any such right, power or remedy shall
preclude or impair any other or further exercise thereof or the exercise of
any other right, power or remedy provided by law or under this Agreement.
19.2 Specific waivers to be in writing
Any waiver of any right, power or remedy under this Agreement must be in
writing and may be given subject to any conditions thought fit by the
grantor. Unless otherwise expressly stated, any waiver shall be effective
only in the instance and only for the purpose for which it is given.
19.3 Variations to be in writing
28
<PAGE>
No variation to this Agreement shall be of any effect unless it is agreed
in writing and signed by or on behalf of each party.
19.4 Non-release of all Vendors or Warrantors
Any liability to the Purchaser under this Agreement or under the Tax Deed
(when executed) may in whole or in part be released, compounded or
compromised or time or indulgence given by the Purchaser in its absolute
discretion as regards any of the Vendors or Warrantors under such liability
without in any way prejudicing or affecting its rights against any other or
others of the Vendors or Warrantors under the same or like liability,
whether joint or several or otherwise.
20. COSTS AND EXPENSES
20.1 Payment of costs
The Purchaser shall make a contribution towards the Vendors' costs and
expenses payable to Broadview International Limited in an amount not to
exceed $1,000,000 and towards the Vendors' other out of pocket costs and
expenses, in an amount not to exceed $1,000,000. The Purchaser shall only
pay any of the foregoing upon delivery of detailed invoices and receipts
substantiating the costs and expenses incurred. Subject thereto and save as
otherwise stated in this Agreement, each party shall pay its own costs and
expenses in relation to the negotiation, preparation, execution and
carrying into effect of this Agreement and other agreements forming part of
the transaction.
20.2 Company and Subsidiaries to pay no costs
For the avoidance of doubt, neither the Company nor any of the Subsidiaries
shall pay any costs or expenses in connection with any investigation of the
affairs of the Group or the negotiation, preparation, execution and
carrying into effect of this Agreement, the Tax Deed and the other
transactions contemplated hereby.
21. PAYMENTS
Save as envisaged in clause 9.6, all payments to be made under this
Agreement and/or the Tax Deed shall be made in full without any set-off or
counterclaim and free from any deduction or withholding save as may be
required by law in which event such deduction or withholding shall not
exceed the minimum amount which it is required by law to deduct or withhold
and the payer will simultaneously pay to the payee such additional amounts
as will result in the receipt by the payee of a net amount equal to the
full amount which would otherwise have been receivable had no such
deduction or withholding been required.
22. NOTICES
22.1 Form of notices
Any communication to be given in connection with the matters contemplated
by this Agreement shall except where expressly provided otherwise be in
writing and shall
29
<PAGE>
either be delivered by hand or facsimile transmission. Delivery by courier
shall be regarded as delivery by hand.
22.2 Address and facsimile
Such communication shall be sent to the address or facsimile number (if
any) of the Vendors as referred to in Schedule 1 of this Agreement or to
such other address or facsimile number as may previously have been
communicated to the Purchaser in accordance with this clause. Each
communication shall be marked for the attention of the relevant person. In
the case of communication to the Purchaser such communications shall be
sent to the address or facsimile number set out below or to such other
address or facsimile number as may have been previously communicated to the
Vendors in accordance with this clause.
Purchaser - facsimile number 001 650 817 1693 For the attention of General
Counsel
22.3 Deemed time of service
A communication shall be deemed to have been served:
22.3.1 if delivered by hand at the address referred to in clause 22.2,
at the time of delivery;
22.3.2 if sent by facsimile to the number referred to in clause 22.2, at
the time of completion of transmission by the sender.
If a communication would otherwise be deemed to have been delivered outside
normal business hours (being 9:30 a.m. to 5:30 p.m. on a Business Day) in
the time zone of the location of the recipient under the preceding
provisions of this clause, it shall be deemed to have been delivered at the
next opening of such business hours in such location.
22.4 Proof of service
In proving service of the communication, it shall be sufficient to show
that delivery by hand was made or that the facsimile was despatched and a
confirmatory transmission report received.
22.5 Change of details
A party may notify the other parties to this Agreement of a change to its
name, relevant person, address or facsimile number for the purposes of
clause 22.1 Provided that such notification shall only be effective on:
22.5.1 the date specified in the notification as the date on which the
change is to take place; or
22.5.2 if no date is specified or the date specified is less than five
clear Business Days after the date on which notice is deemed to
have been served, the date falling five clear Business Days after
notice of any such change is deemed to have
30
<PAGE>
been given.
22.7 Non-applicability to Proceedings
For the avoidance of doubt, the parties agree that the provisions of this
clause 22 shall apply in relation to the service of any writ, summons,
order, judgment or other document relating to or in connection with any
Proceedings. The Vendors hereby appoint Bigger & Strahan, Solicitors, 89
Royal Avenue, Belfast as their agent for service of process. The Purchaser
hereby appoints Phone.com (Europe) Limited, an English Company, as its
agent for service of process at its registered office.
23. DEFAULT INTEREST
23.1 Interest on late payment
If a party which is required to pay any sum under this Agreement fails to
pay any sum payable by it under this Agreement on the due date for payment
(the "defaulting party"), it shall pay interest on such sum for the period
from and including the due date up to the date of actual payment (after as
well as before judgment) in accordance with this clause.
23.2 Amount
The defaulting party shall pay interest at the rate which is the aggregate
of 2% per annum and the base rate from time to time of Barclays Bank plc.
23.3 Basis of payment
Interest under this clause shall accrue from day to day and shall be paid
by the defaulting party payable monthly in arrears.
24. COUNTERPARTS
24.1 Execution in counterparts
This Agreement may be executed in any number of counterparts and by the
parties on different counterparts, but shall not be effective until each
party has executed at least one counterpart.
24.2 One agreement
Each counterpart shall constitute an original of this Agreement but all the
counterparts shall together constitute one and the same agreement.
25. INVALIDITY
Each of the provisions of this Agreement is severable. If any such
provision is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, the legality, validity or enforceability
in that jurisdiction of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
31
<PAGE>
26. AGREEMENT TO CONTINUE IN FULL FORCE AND EFFECT
This Agreement together with the Tax Deed, the Hive-Down Agreements, the
Shared Services Agreement and the Interpoint Licence shall, to the extent
that it remains to be performed, continue in full force and effect
notwithstanding Completion.
27. CONFIDENTIALITY/NO SHOP
27.1 Prohibition on disclosure
Each of the Vendors hereby undertakes with the Purchaser that it shall both
during and after the term of this Agreement preserve the confidentiality
of, and not directly or indirectly reveal, report, publish, disclose or
transfer or use for its own or any other purposes Confidential Information
except:
27.1.1 in the circumstances set out in clause 27.2;
27.1.2 to the extent otherwise expressly permitted by this Agreement; or
27.1.3 with the prior consent in writing of the party to whose affairs
such Confidential Information relates.
27.2 Permitted disclosures
The circumstances referred to in clause 27.1.1 are:
27.2.1 where the Confidential Information, before it is furnished to any
of the Vendors, is in the public domain;
27.2.2 where the Confidential Information, after it is furnished to any
of the Vendors, enters the public domain otherwise than as a
result of (i) a breach by any of the Vendors of its obligations
in this clause 27 or (ii) a breach by the person who disclosed
that Confidential Information of a confidentiality obligation and
any of the Vendors is aware of such breach;
27.2.3 if and to the extent the Vendors make disclosure of the
Confidential Information to any person:
(a) in compliance with any requirement of law;
(b) in response to a requirement of any applicable regulatory
authority to which the Vendors are subject where such requirement
has the force of law;
(c) in order to obtain tax or other clearances or consents from the
Inland Revenue or other relevant taxing or regulatory
authorities; or
(d) to the professional advisers of the Vendors.
provided that any such information disclosable pursuant to paragraphs (a),
(b) or (c) of clause 27.2.3 shall be disclosed only to the extent required
by law and only after consultation with the Purchaser.
32
<PAGE>
27.3 No time limit
The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
27.4 No Shop
Between the date of this Agreement and the date referred to in clause 2.3 (or
any later date as may be agreed between the parties for the purpose of that
clause):
27.4.1 the Vendors will not (and shall procure that the Company will
not), directly or indirectly, through any officer, director,
employee, affiliate or agent or otherwise, take any action to
solicit, initiate, seek, entertain, encourage or support any
inquiry, proposal or offer from, furnish any information to, or
participate in any negotiations with, any third party regarding
any acquisition of the Company, any merger or consolidation with
or involving the Company, or any acquisition of any material
portion of the stock or assets of the Company including the grant
of any licence to any intellectual property of the Company other
than licenses in the ordinary course of business related to the
sale of the Company's products. The Vendors agree that any such
negotiations (other than negotiations with the Purchaser) in
progress as of the date of this Agreement will be suspended
during such period and that neither the Company nor its
shareholders will accept or enter into any agreement, arrangement
or understanding regarding any such third party acquisition
transaction during such period
27.5 If the Company or any of its shareholders, officers, directors, employees,
affiliates or agents receives any proposal for, or inquiry respecting, any
third party acquisition, transaction involving the Company or any request
for nonpublic information in connection with any such proposal or inquiry,
the Company and or the relevant shareholder will immediately notify the
Purchaser, describing in detail the identity of the person making such
proposal or inquiry and the terms and conditions of such proposal or
inquiry.
28. GOVERNING LAW AND JURISDICTION
28.1 English law
This Agreement shall be governed by and construed in accordance with
English law.
28.2 Courts of England and Wales
The parties to this Agreement irrevocably agree that, for the exclusive
benefit of the Purchaser, the courts of England shall have jurisdiction to
settle any dispute which may arise out of or in connection with this
Agreement and that accordingly any Proceedings may be brought in such
courts.
29. HIVE-DOWN
33
<PAGE>
29.1 Notwithstanding anything to the contrary in the Hive-Down Agreements, or
any Contract entered into in connection with the Hive-Down, the assignee
will have assumed all liabilities of whatsoever nature, whether absolute or
contingent, accrued or unaccrued, of any member of the Group relating to:
29.1.1 the Services Business;
29.1.2 any officers, directors, employees or consultants of the Services
Business including without limitation, any health, pension or
other benefits.
29.2 Notwithstanding anything to the contrary in the Hive Down Agreements or
any Contract entered into in connection therewith, the only assets of any
member of the Group which are being conveyed to the assignee upon
completion of the Hive-Down are assets which prior to the date of this
Agreement were used exclusively in the provision of the Services Business.
Following the Completion of the Hive-Down, the Group will continue to own
all assets necessary or desirable for it to conduct the Business.
29.3 Notwithstanding anything to the contrary in the Hive Down Agreements or
any Contract entered into in connection therewith all employees of the
Group who have a right pursuant to TUPE or any other employment legislation
to have their employment transferred to the assignee have been so
transferred and no employees have been transferred who would not
automatically transfer under TUPE (unless in either case, the employee has
agreed thereto).
29.4 Notwithstanding anything to the contrary in the Hive Down Agreements or
any Contract entered into in connection therewith, the Hive Down shall be
completed in compliance with all applicable law in any jurisdiction.
29.5 Notwithstanding anything for the contrary in the Hive Down Agreements or
any Contract entered into in connection therewith:
29.5.1 all taxes incurred by any person in connection with the Hive Down
will be paid by assignee;
29.5.2 all assets will be transferred to assignee on an as is where is
basis with limited title guarantee; and
29.5.3 the Vendors for themselves and on behalf of the assignee
irrevocably disclaim and waive the benefit of any representation,
warranty, indemnity or guarantee given or made at any time,
including after the date of this Agreement or after Completion by
any member of the Group or Purchaser in the Hive Down Agreements
in connection with the Hive-Down or, relating to the assets,
liabilities and employees transferred pursuant to the Hive-Down.
34
<PAGE>
AS WITNESS the hands of the parties or their duly authorised representatives on
the date first appearing at the head of this Agreement.
35
<PAGE>
SCHEDULE 1
The Vendors
(1) (2) (3)
Name, Address Number and class of Entitlement to shares
and Facsimile Number Ordinary shares held
Gilbert Little 2,932 `A' 331,446
1, Southwinds,
Ulverton Road,
Dalkey, Co. Dublin
Laurence Quinn 463 `A' Ordinary 52,340
75, Offington Avenue,
Sutton
Dublin 13.
Joseph Cunningham 463 `A' Ordinary 52,340
8, Parkview,
Castleknock,
Dublin 15.
Enterprise Ireland 977 `A' Ordinary 110,444
Wilton House,
Wilton Place,
Dublin 2.
Mayfair Venture Capital Limited 2,737 `A' Ordinary 309,403
Europort 932
Gibraltar
Fax +350 433 70
Mehran Mirahmadi 610 `A' Ordinary 68,957
45, Shannagary,
Miltown Road,
Miltown,
Dublin 6.
Vincent Daly 1,053 `A' Ordinary 119,036
Ardnacree
Kerrymount Avenue,
Foxrock,
Dublin 18.
David Megan 476 `A' Ordinary 53,809
Eglinton Lodge,
36
<PAGE>
Eglinton Terrace,
Dundrum,
Dublin 14.
Paul Tierney 289 `A' Ordinary 32,670
38, Offington Avenue
Sutton,
Dublin 13.
Denis Murphy 132 `B' Ordinary 16,580
10, Laganvale Court,
Stranmillis,
Belfast
Richard McConnell 132 `B' Ordinary 16,580
21, Rosemount Park,
Ballygowan Road,
Belfast
Michael Curran 131 `B' Ordinary 16,454
72, Teconnaught Road,
Crossgar,
Co. Down.
Liam McQuillan 131 `B' Ordinary 16,454
38, Mount Michael Park,
Four Winds,
Belfast.
37
<PAGE>
SCHEDULE 2
THE PARTICIPANTS
38
<PAGE>
SCHEDULE 3
Directors of the Company and the Subsidiaries
Name of Director Directorships held
- ---------------- ------------------
Gilbert Little The Company, AL, ATL
Laurence Quinn The Company, AL, ATL
Vincent Daly The Company, AL, ATL
Joseph Cunningham The Company, AL, ATL
David Megan AL, ATL
Denis Murphy The Company, AL
Richard McConnell The Company, AL
John McNamara The Company, AL
Michael Murray The Company, AL
39
<PAGE>
SCHEDULE 4
Part 1
Properties
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Description Tenure Registered or Title number and Existing use
of Property unregistered grade of title
(if registered)
<S> <C> <C> <C> <C>
Charles House Leasehold Unregistered N/A Offices
103/111 Donegall
Street, Belfast
Units 5 + 7-19 + 24 Leasehold Unregistered N/A Offices
and Resource
Centre at 2/nd/ floor,
Interpoint Building,
20/24 York Street,
Belfast
Units 4, 20, 21 + 22 Leasehold Unregistered N/A Offices
at 2/nd/ floor,
Interpoint Building,
20/24 York Street
Belfast
Blindgate House Leasehold Unregistered N/A Offices
Bachelors Lane
Drogheda
County Louth
</TABLE>
40
<PAGE>
Part 2
Leases
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Property Date Term Parties Current yearly
rent
<S> <C> <C> <C> <C>
Charles House 8.7.1999 15 years from Merit Investments (Pounds)133,260
103/111 Donegall 9.7.1999 & Properties Ltd plus VAT
Street, Belfast (1) and Apion Ltd (2)
Units 5 + 7-19 + 7/8/1998 5 years from SBFT Ltd (1) and (Pounds)83,672
24 and Resource 1/7/1998 Apion Ltd (2) plus VAT
Centre at 2/nd/
floor,
Interpoint
Building,
20/24 York
Street, Belfast
Units 4, 20, 21 19/4/1999 4 years and 6 SBFT Ltd (1) and (Pounds)15,508
+ 22 at 2/nd/ months from Apion Ltd (2) plus VAT
floor, 1/1/1999
Interpoint
Building, 20-24
York Street,
Belfast
Blindgate House Tenancy at Will (Pounds)4,125 per
Bachelors Lane quarter
Drogheda
County Louth
Floors 1 and 2
</TABLE>
Part 3
Inferior Leases
NONE
41
<PAGE>
SCHEDULE 5
The Subsidiaries
<TABLE>
<CAPTION>
Name and Date of Share capital Authorised Held By Beneficially owned by
number of incorporation Issued
subsidiary
<S> <C> <C> <C> <C>
AL 11/05/95 990,000
The Company The
10,000 Class A Company
issued
ATL 2/1/98 IR(Pounds)100,000 Gilbert Little 1
ord
1000 Ord @ (Pounds)1 issued The
Laurence Quinn Vendors/1/
1 ord
The Company The
Company
998 ord
Balmore 9/9/99 (Pounds)1,000,000 ord @ (Pounds)1 each Paul Tierney
Enterprises
Limited 2 ord issued 1 ord AL
AL
1 ord
Rowarth (Pounds)1,000,000 ord @ (Pounds)1 each Paul Tierney
Limited
2 ord issued 1 ord ATL
ATL
1 ord
Ardros 9/9/99 (Pounds)1,000,000 Paul Tierney
Contractors
Limited Ord @ (Pounds)1 each 1 ord AL
NI36893 2 Ord issued AL
</TABLE>
_________________________
/1/ Other than Denis Murphy, Richard McConnell, Richard Curran and Liam
McQuillan
42
<PAGE>
SCHEDULE 6
The Warranties
(Note that under clause 1.11 references herein to the Company shall be deemed to
include a corresponding reference to the Subsidiaries and each of them severally
and references to the Accounts are to those of the Company or the relevant
Subsidiary, as the case may be.)
In this Schedule:
"Department" means the Department of Economic Development or any successor body
or authority in which the functions of the Department under the Companies Orders
are vested;
"Fair Employment Acts" means the Fair Employment (Northern Ireland) Act 1976 and
the Fair Employment (Northern Ireland) Act 1989;
"Secretary of State" means Secretary of State for Trade and Industry;
"Planning Acts" means the Planning (Northern Ireland) Order 1991 and all
amendments thereof;
Part 1
General Warranties
1. Preliminary
1.1 Information
1.1.1 The facts set out in the recitals and the schedules and all
information contained in the Disclosure Documents and the Diligence
Files are true and accurate and not misleading in any material
respect. Insofar as any such information amounts to a forecast or an
expression of opinion, intention or expectation, such information is
so far as the Warrantors are aware fair and honest but no Warranty
is made as to any future event or future result.
1.1.2 There is no fact or matter which has not been Disclosed in writing
which renders any such information untrue, inaccurate or misleading
or the disclosure of which might reasonably affect the willingness
of a willing purchaser to purchase the Shares on the terms of this
Agreement.
1.1.3 The information Disclosed in writing to the Purchaser or its
representatives or professional advisers of the Purchaser by the
Warrantors and the Directors, officers or other officials of the
Company regarding the current financial and trading position and
status of contractual negotiations of the Company comprises all
information which is material for the reasonable assessment of the
financial and trading prospects of the Company.
43
<PAGE>
1.2 Power to contract
Each Vendor and Covenantor (as defined in the Tax Deed) has full power to
enter into and perform this Agreement and the Tax Deed respectively and
this Agreement constitutes, and the Tax Deed when executed will constitute,
binding obligations on each Vendor or Covenantor (as the case may be) in
accordance with their terms.
2. THE COMPANY
2.1 The particulars of the Company set out in the recitals, Schedule 3 and
Schedule 5 are true and complete.
2.2 Memorandum and articles of association
The copy of the memorandum and articles of association of the Company which
is comprised in the Disclosure Documents is true and complete in all
respects and has embodied in it or annexed to it a copy of every such
resolution and agreement as is referred to in Article 388 (4) Companies
(Northern Ireland) Order 1986 and Article 70 of the Insolvency (Northern
Ireland) Order 1989 (or, in the case of the Irish Companies, section 143(4)
of the Companies Act 1963) and the Company has at all times carried on its
business and affairs in all respects in accordance with its memorandum and
articles of association and all such resolutions and agreements.
2.3 Statutory returns
The Company has complied with the provisions of the Companies Law and all
returns, particulars, resolutions and other documents required to be filed
with or delivered to the Registrar of Companies or to any other authority
whatsoever by the Company have been correctly and properly prepared and so
filed or delivered and all statutory records required to be kept by the
Company have been properly kept and will be so kept until Completion.
2.4 Share capital
2.4.1 The Shares constitute the whole of the issued share capital of the
Company. There is no Encumbrance or any form of agreement (including
conversion rights and rights of pre-emption) on, over or affecting
the Shares or any unissued shares, debentures or other securities of
the Company and there is no agreement or commitment to give or
create any of the foregoing. No claim has been made by any person to
be entitled to any of the foregoing and no person has the right
(exercisable now or in the future and whether contingent or not) to
call for the issue of any share or loan capital of the Company under
any of the foregoing. The Vendors are entitled to sell and transfer,
or procure the sale and transfer of, the Shares to the Purchaser
with full title guarantee as such term is expressed to have effect
pursuant to clause 16 and otherwise on the terms set out in this
Agreement.
2.4.2 The Company has not at any time:
44
<PAGE>
(a) repaid, redeemed or purchased (or agreed to repay, redeem or
purchase) any of its own shares, or otherwise reduced (or agreed to
reduce) its issued share capital or any class of it or capitalised
(or agreed to capitalise) in the form of shares, debentures or other
securities or in paying up any amounts unpaid on any shares,
debentures or other securities, any profits or reserves of any class
or description or passed (or agreed to pass) any resolution to do
so; or
(b) directly or indirectly provided any financial assistance for the
purpose of the acquisition of shares in the Company or any holding
company of the Company or for the purpose of reducing or discharging
any liability incurred in such an acquisition whether pursuant to
(in the case of the NI Companies) Part VI, Chapters VI and VII of
the Companies (Northern Ireland) Order 1986 or otherwise, or (in the
case of the Irish Companies) section 60 of the Companies Act 1963 or
Part XI of the Companies Act 1990.
2.4.3 Balmore Enterprises Limited and Rowarth Limited have no assets or
liabilities of any nature other than (Pounds)2 share capital each and any
executory rights under the Hive-Down Agreements.
2.5 Solvency
The Company has not stopped payment and is not insolvent nor unable to pay
its debts according to Article 103, Insolvency (Northern Ireland) Order
1989, or (in the case of the Irish Companies) section 214 of the Companies
Act 1963. No order has ever been made or petition presented or resolution
passed for the winding up of the Company and no distress, execution or
other process has ever been levied on any of its assets. No administrative
or other receiver has been appointed by any person over the business or
assets of the Company or any part thereof, nor has any order been made or
petition presented for the appointment of an administrator or examiner in
respect of the Company.
3. CONNECTED BUSINESS
3.1 Subsidiaries
The particulars of the Subsidiaries and Associated Companies set out in
Schedule 5 are true and complete and the shares in the Subsidiaries are
held by the Company free from all Encumbrances and with all rights now or
hereafter attaching thereto.
3.2 Connected transactions
The Company:
3.2.1 is not and has not agreed to become the holder or owner of any class
of any shares, debentures or other securities of any other body
corporate (whether incorporated in the United Kingdom or elsewhere)
other than the Subsidiaries and the Associated Companies;
3.2.2 has not agreed to become a subsidiary of any other body corporate or
under the control of any group of bodies corporate or consortium;
45
<PAGE>
3.2.3 is not and has not agreed to become a member of any partnership,
joint venture, consortium or other unincorporated association other
than a recognised trade association or agreement or arrangement for
sharing commissions or other income;
3.2.4 has no branch, place of business or substantial assets outside
Northern Ireland, or (in the case of the Irish Companies) Ireland or
any permanent establishment (as that expression is defined in any
relevant Order in Council made pursuant to section 788, ICTA 1988)
in any country outside the United Kingdom, or (in the case of the
Irish Companies) Ireland; and
3.2.5 save as otherwise Disclosed pursuant to paragraphs 3.2.1 to 3.2.4,
does not have any interest, legal or beneficial, in any shares or
other capital or securities or otherwise howsoever in any other
firm, company, association, venture or legal person or entity.
4. ACCOUNTS
4.1 General
The Accounts:
4.1.1 were prepared in accordance (and comply) with the requirements of
the Companies Law and all other applicable statutes and regulations,
adopting accounting principles and practices generally accepted at
the date hereof in the United Kingdom and Ireland and in compliance
with all applicable SSAPs and FRSs and on a basis consistent with
preceding accounting periods of the Company and with the books of
account of the Company and are true and accurate in all material
respects;
4.1.2 disclose a true and fair view of the assets, liabilities and state
of affairs of the Company at the Balance Sheet Date and of its
profits for the financial year ended on such date;
4.1.3 contain full provision or reserve for bad and doubtful debts and for
depreciation on fixed assets, which provision or reserve was when
made and is now adequate;
4.1.4 contain a note of all capital commitments of the Company at the
Balance Sheet Date, which note was when made and is now adequate,
fair and not misleading;
4.1.5 contain proper and adequate reserves or provision for all Taxation,
including deferred taxation as defined in SSAP 15 (sufficient
provision being made in a deferred taxation account for any
corporation tax on chargeable gains and balancing charges that would
arise on the sale of all fixed assets at the values attributed to
them in the Accounts);
4.1.6 disclose, note or provide as appropriate for all liabilities of the
Company which were known, actual or contingent (including contingent
liabilities to
46
<PAGE>
customers and contingent liabilities for Taxation);
4.1.9 reflect all the fixed and loose plant and machinery, equipment,
furniture, fittings and vehicles used by the Company at the Balance
Sheet Date and (apart from depreciation in the ordinary course of
business) their value is not less than at the Balance Sheet Date and
none has been acquired for any consideration in excess of its net
realisable value at the date of such acquisition or otherwise than
by way of a bargain at arm's length.
4.2 Profits
The profits of the Company for the three years ended on the Balance Sheet
Date or where a Company does not have 3 years Accounts from the date of its
incorporation as shown by the Accounts and by the audited accounts of the
Company for previous periods delivered to the Purchaser and the trend of
profits shown by them have not (except as disclosed in them) been affected
to a material extent by inconsistencies of accounting practices, by the
inclusion of non-recurring items of income or expenditure, by transactions
entered into otherwise than on normal commercial terms or by any other
factors rendering such profits for all or any of such periods exceptionally
high or low.
4.3 Books of account
All accounts, books, ledgers, financial and other necessary records of
whatsoever kind of the Company (including all invoices and other records
required for VAT purposes):
4.3.1 have been fully, properly and accurately maintained, are in the
possession of the Company and contain true and accurate records of
all matters including those required to be entered in them by the
Companies Law and any other Acts or regulations or orders for the
time being in force and no notice or allegation that any of the same
is incorrect or should be rectified has been received;
4.3.2 do not contain or reflect any material inaccuracies or
discrepancies;
4.3.3 give and reflect a true and fair view of the matters which ought to
appear in them and in particular of the financial, contractual and
trading position of the Company and of its plant and machinery,
fixed and current assets and liabilities (actual and contingent),
debtors and creditors; and
4.3.4 contain accurate information in accordance with generally accepted
accounting principles relating to all transactions to which the
Company has been a party and the Accounts do not overstate the value
of any asset or understate any liability of the Company at the
Balance Sheet Date.
5. POST-BALANCE SHEET DATE EVENTS
5.1 Since the Balance Sheet Date, the Company:
5.1.1 has carried on its business in the ordinary and usual course and
without entering into any transaction, assuming any liability or
making any payment
47
<PAGE>
not provided for in the Accounts which is not in the ordinary course
of business and without any interruption or alteration in the
nature, scope or manner of its business and nothing has been done
which would be likely to prejudice the interests of the Purchaser as
a prospective purchaser of the Shares;
5.1.2 has not experienced and nor has there become apparent any material
deterioration in its financial position or turnover or suffered any
diminution of its assets by the wrongful act of any person and the
value of its net assets is not materially less than the value of its
net assets at the Balance Sheet Date and the Company has not had its
business or profitability materially and adversely affected by the
loss of any important Customer or source of supply or by any
abnormal factor not affecting similar businesses to a like extent
and there are no facts which are likely to give rise to any such
effects;
5.1.3 has not acquired or disposed of or agreed to acquire or dispose of
any assets or assumed or incurred or agreed to assume or incur any
material liabilities (actual or contingent) otherwise than in the
ordinary course of business;
5.1.4 has not declared, made or paid any dividend, bonus or other
distribution of capital or income (whether a qualifying distribution
or otherwise) or paid (or agreed to pay) any management charge and
(excluding fluctuations in overdrawn current accounts with bankers)
no loan or loan capital of the Company has been repaid in whole or
in part or has become due or is liable to be declared due by reason
of either service of a notice or lapse of time or otherwise
howsoever;
5.1.5 has not carried out or entered into any transaction and no other
event has occurred in consequence of which (whether alone or
together with any one or more transactions or events occurring
before, on or after the date of this Agreement) any liability of the
Company to Taxation has arising or will arise (or would have arisen
or would or might arise but for the availability of any relief,
allowance, deduction or credit) other than corporation tax on the
actual income (not chargeable gains or deemed income) of the Company
arising from transactions entered into in the ordinary course of
business, income tax under the PAYE system and national insurance
and social security contributions in respect of persons employed by
it since the Balance Sheet Date and VAT in respect of taxable
supplies made by it in the ordinary course of business since the
Balance Sheet Date;
5.1.6 has not made any change to the remuneration, terms of employment,
emoluments or pension benefits of any present or former director,
officer or employee of the Company who on the Balance Sheet Date was
entitled to remuneration in excess of (Pounds)50,000 per annum and
has not appointed or employed any additional director, officer or
employee entitled as aforesaid;
5.1.7 has received payment in full on their due dates of all debts owing
to the Company shown in the Accounts (subject to any provision for
bad and doubtful debts made in the Accounts), has not released any
debts in whole or
48
<PAGE>
in part and has not written off debts in an amount exceeding
(Pounds)50,000 in the aggregate;
5.1.8 has not entered into Contracts involving capital expenditure in an
amount exceeding in the aggregate (Pounds)100,000;
5.1.9 has not become aware that any event has occurred which would
entitle any third party to terminate any Contract or any benefit
enjoyed by it or call in any money before the normal due date
therefor;
5.1.10 has not purchased stocks in quantities or at prices materially
greater than was the practice of the Company prior to the Balance
Sheet Date,
5.1.11 has paid its creditors within the times agreed with such creditors
and does not have any debts outstanding which are overdue for
payment by more than four weeks;
5.1.12 has not borrowed or raised any money or taken any financial
facility (except such short term borrowings from bankers as are
within the amount of any overdraft facility which was available to
the Company at the Balance Sheet Date) or since the Balance Sheet
Date renegotiated or received any notice from any banker that such
banker wishes to renegotiate any overdraft facility available to
the Company at the Balance Sheet Date;
5.1.13 has not made any change to its accounting reference date and no
accounting period of the Company has ended since the Balance Sheet
Date;
5.1.14 has not made a payment or incurred an obligation to make a payment
which will not be deductible in computing trading profits for the
purposes of corporation tax or as a management expense of the
Company; and
5.1.15 (including any class of its members) has not passed any resolution
whether in general meeting or otherwise.
6. TRANSACTIONS WITH THE VENDORS, DIRECTORS AND CONNECTED PERSONS
6.1 Loans and debts
There is not outstanding:
6.1.1 any indebtedness or other liability (actual or contingent) owing by
the Company to any Vendor or any Affiliate of any Vendor or
Director or any Connected Person or owing to the Company by any
Vendor [or any Affiliate of any Vendor] or Director or any
Connected Person; or
6.1.2 any guarantee or security for any such indebtedness or liability as
aforesaid.
6.2 Arrangements with Connected Persons
49
<PAGE>
6.2.1 There is not outstanding, and there has not at any time during the
last six years been outstanding, any agreement, arrangement or
understanding (whether legally enforceable or not) to which the
Company is a party and in which any Vendor, Affiliate of any Vendor,
Director or former director of the Company or any Connected Person
is or has been interested whether directly or indirectly.
6.2.2 The Company is not a party to, nor has its profits or financial
position during the last six years been affected by, any agreement
or arrangement which is not entirely of an arm's length nature.
6.3 Competitive interests
6.3.1 No Vendor, Affiliate of any Vendor, Director, former director of the
Company nor any Connected Person, either individually, collectively
or with any other person or persons, has any estate, right or
interest, directly or indirectly, in any business other than that
now carried on by the Company which is or is likely to be or become
competitive with any aspect of the Business of the Company save as
registered holder or other owner of any class of securities of any
company if such class of securities is listed on any recognised
investment exchange (as defined in the Financial Services Act 1986)
and if such person (together with Connected Persons and Affiliates)
holds or is otherwise interested in less than 5 % of such class of
securities.
6.3.2 The Vendors either individually, collectively or with any other
person or persons are not interested in any way whatsoever in any
Intellectual Property used and not wholly owned by the Company.
6.4 Benefits
6.4.1 No Connected Person or Affiliate of any Vendor, Director or former
director of the Company is entitled to or has claimed entitlement to
any remuneration, compensation or other benefit from the Company.
7. FINANCE
7.1 Borrowings
7.1.1 Full and accurate details of all loan, overdraft and other financial
facilities available to the Company (and the amounts drawn
thereunder as at a date not more than two days before the date of
this Agreement) have been Disclosed and neither the Vendor nor the
Company have done anything whereby they may be prejudiced. The total
amount borrowed by the Company from any source does not exceed any
limitation on its borrowing powers contained in the Articles of
Association of the Company or in any debenture or loan stock trust
deed or instrument or any other document executed by the Company and
the amount borrowed by the Company from each of its bankers does not
exceed the overdraft facility agreed with such banker. The Company
has no
50
<PAGE>
outstanding loan capital (nor has it agreed to create or issue)
any loan capital nor has it factored any of its debts or engaged
in financing of a type which would not require to be shown or
reflected in the Last Accounts.
7.2 Debts owed to the Company
7.2.1 All debts owed to the Company are collectable in the ordinary
course of business and each such debt will realise in full its
face value within three months of its due date for payment. None
of the Company, the Vendors or the Warrantors considers any of
the debts owing to the Company (but which are not yet due) to be
irrecoverable in whole or in part. The Company does not own the
benefit of any debt (whether present or future) other than debts
which have accrued to it in the ordinary course of business. The
debts owing to the Company shown in the Accounts (subject to any
provision for bad or doubtful debts made in the Accounts) were
paid in full on their due dates.
7.3 Bank accounts
7.3.1 Particulars of the balances on all the Company's bank accounts as
at a date not more than two working days before the date of this
Agreement have been Disclosed and the Company does not maintain
any other accounts with any bank or other deposit-taker. Since
the date of such particulars there have been no payments out of
any such bank accounts except for routine payments which have
been Disclosed.
7.3.2 All unpresented cheques drawn by the Company have been Disclosed
and there are no such unpresented cheques drawn otherwise than in
the normal course of business.
7.4 Working capital
7.4.1 Having regard to its existing banking and other facilities, the
Company has sufficient working capital for the purpose of
continuing to carry on its business and for the purposes of
executing, carrying out and fulfilling in accordance with their
terms all orders, projects and contractual obligations which have
been placed with or undertaken by the Company and remain
outstanding.
7.5 Financial facilities
7.5.1 The Warrantors have Disclosed full details and true and correct
copies of all documents relating to all debentures, acceptance
credits, overdrafts, loans or other financial facilities
outstanding or available to the Company and all Encumbrances to
which any asset of the Company is subject. Neither the Warrantors
nor the Company have done anything whereby the continuance of any
such facility or Encumbrance in full force and effect might be
affected or prejudiced.
7.6 Grant
7.6.1 Save as Disclosed, the Company has not applied for or received
any grant,
51
<PAGE>
subsidy or financial assistance of any kind from any Government
Department or agency or any local, national, supranational or
other authority or body.
7.6.2 The Company has not done, or omitted to do, any act or thing
which could result and neither the acquisition of the Shares by
the Purchaser nor the Hire-Down will not result in all or any
part of any or being grant, subsidy or other similar payment made
or due to be made to it becoming repayable forfeited or withheld
in whole or in part.
7.7 Options and guarantees
7.7.1 The Company is not responsible for the indebtedness of any other
person nor party to any option or pre-emption right or any
guarantee, suretyship or any other obligation (whatever called)
to pay, purchase or provide funds (whether by the advance of
money, the purchase of or subscription for shares or other
securities or the purchase of assets or services or otherwise)
for the payment of, or as an indemnity against the consequence of
default in the payment of, any indebtedness of any other person.
7.7.2 No person other than the Company or a Subsidiary has given any
guarantee of or security for any overdraft, loan or loan facility
granted to the Company or any Subsidiary.
7.8 Payment of obligations
7.8.1 There has been no delay by the Company in the payment of any
material obligation due for payment.
THE PROPERTIES
8.1 General
8.1.1 The Properties comprise all the land and premises owned,
controlled, used or occupied by the Company and all the rights or
interests vested in the Company relating to any land and premises
at the date hereof and the particulars set out in Schedule 4 are
true and accurate and not misleading.
8.1.2 Those of the Properties which are occupied or otherwise used by
the Company in connection with their business are occupied or
used by right of ownership or under lease or licence, the terms
of which permit such occupation of use.
8.1.3 Where, in relation to any of the Properties, the Company has
reached an agreement governing its current use or occupation of
the Property or where it has entered into option or pre-emption
agreements (or any similar agreements) in relation to any lands
adjacent to the Properties, details of those have been Disclosed
and the originals of all of the relevant agreements have been
properly stamped and registered and have been furnished to the
legal advisers of the Purchaser for inspection.
52
<PAGE>
8.1.4 The title of the Company to the Properties is free from any
caution, inhibition or notice and no matter exists which is
capable of registration against any of the Properties or
affecting the title to the Properties without the formality of
registration.
8.1.5 Where the title to the Properties or any part thereof is
unregistered, no event has occurred in consequence of which
compulsory registration should have been effected under the
provisions of the Land Registration Act (Northern Ireland) 1970
and he Properties do not lie within the area of compulsory
registration.
8.1.6 The Company has not:
(a) surrendered any lease, licence or tenancy to the landlord without
first satisfying itself that the landlord had good title to
accept such surrender and without receiving from the landlord an
absolute release from all liability arising under such lease,
licence or tenancy;
(b) assigned, or otherwise disposed of, any lease, licence or tenancy
without receiving a full and effective indemnity from the
assignee or transferee in respect of its liability under such
lease, licence or tenancy;
(c) been a guarantor of a tenant's liability under any lease, licence
or tenancy; or
(d) assigned or otherwise disposed of any leasehold property in such
a way that it retains any other residual liability in respect
thereof.
8.1.7 Where the Company is shown as the lessee of any of the
Properties, it is the legal and beneficial owner of the leasehold
title and has Legal and Beneficial Title to the same and is in
sole and undisputed occupation thereof.
8.1.8 The Company has in its possession or unconditionally held to its
order all the documents of title and other documents and papers
necessary to prove title thereto and all such deeds and documents
are properly stamped and registered relating to each of the
Properties.
8.1.9 The Properties, title deeds and documentation relating thereto,
and all fixtures and fittings and plant, equipment and other
chattels on the Properties, are not subject to any Encumbrance or
overriding interest nor is there any person in possession or
occupation of or who has or claims any right of any kind in
respect of any of the Properties adversely to the estate,
interest, right or title therein of the Company;
8.1.10 The Properties are free from any mortgage, debenture, charge,
rent charge, lien or other encumbrance securing the repayment of
monies or any other obligation or liability of the Company or any
other party.
8.1.11 There are no rights, interests, covenants, restrictions,
reservations. licences or easements or any disputes or
outstanding notices (whether given by a landlord, a local
authority or any other person) nor (without prejudice to the
generality
53
<PAGE>
of the foregoing) are there any other matters or things which
adversely affect the proper use and enjoyment of any of the
Properties for the purpose of the business now being carried on
at the Properties by the Company.
8.1.12 There has been no dealing with any of the Properties otherwise
than at arm's length and in particular no dealing at an
undervalue which may give rise to a claim for improper stamping
or setting aside.
8.1.13 None of the Properties is subject to the payment of any outgoings
other than the commercial rates and taxes and all sums due to
date in respect thereof have been paid.
8.1.14 No proposal relating to the rateable value of any of the
Properties has been determined by the Valuation and Community
Charge Tribunal or Land Tribunal (or, in the case of the Irish
Companies, any local or other rating authority) and there is no
subsisting proposal to challenge the rateable value of any of the
Properties.
8.1.15 There are no disputes affecting any of the Properties which would
restrict or terminate the continued possession, occupation or
enjoyment of any of the Properties or with any adjoining or
neighbouring owner in relation to boundaries, easements, rights
or means of access to the Properties.
8.1.16 Each of the Properties:
(a) enjoys access and egress over roads and footpaths which have been
adopted by the appropriate highway authority and are maintainable
at the public expense;
(b) drains foul sewage and surface water to public sewers, is served
by water, electricity, gas and telephone utilities and either the
pipes, sewers, wires, cables, conduits and other conducting media
serving the Properties connect directly to the mains without
passing through land in the occupation or ownership of any third
party or, if they do not, each of the Properties has the benefit
of all necessary easements and rights for the maintenance and use
thereof and such rights are held on terms which do not entitle
any person to terminate or curtail the same; and
(c) has the benefit of all other easements and rights necessary for
its proper use and enjoyment for the purposes of the business now
being carried on at the Properties by the Company and such
easements and rights are held on terms which do not entitle any
person to terminate or curtail the same.
8.1.17 Where the Company or any predecessor in title has sold off or has
agreed to sell off land adjoining or near to any of the
Properties, there were or will be excepted and reserved to the
Company all necessary and appropriate easements and other rights
for the benefit of the Properties.
8.1.18 The Company has not entered into any commitment (whether legally
binding or not) and the Company is not party to any subsisting
agreement with any person or company whereby a fee (including but
not limited to an abort fee)
54
<PAGE>
will be paid to such person or company in respect of the
management, use, development, letting or sale of any of the
Properties.
8.1.19 There are no unpaid charges for the construction or adoption of
any road or sewer or other service serving the Property.
8.2 Planning
8.2.1 In relation to each of the Properties, its existing use is set
out in Part 1 of Schedule 4 ("Existing Use").
8.2.2 To the best of the Company's knowledge after due enquiry the
Properties and all developments thereto and thereon (including
any quarrying activity) comply in all material respects with the
provisions of the Planning Acts, bye laws and Building
Regulations or similar legislation and all permissions, licences
or consents issued thereunder are unconditional or are subject to
conditions which have been satisfied or are subject to continuing
conditions which are not onerous and all of which have been and
are being complied with.
8.2.3 There are no lawfully enforceable restrictions or prohibitions
which restrict or prohibit the Existing Use of any of the
Properties.
8.2.4 The Existing Use of each of the Properties is the permitted use
under the Planning (Northern Ireland) Order 1991 and is not a
temporary or personal use.
8.2.5 The user of each of the Properties is the permitted user under
the Planning Acts and such user is not of a temporary nature.
8.2.6 All development carried out in relation to each of the Properties
has been lawful and all necessary consents and permissions have
been obtained for such development.
8.2.7 The consents and permissions referred to in paragraph 8.2.4 are
valid, subsisting and unimpeachable and are also either
unconditional or subject only to conditions which have been
satisfied so that nothing further remains to be done thereunder.
8.2.8 The Company is not aware of any resolution, proposal, order or
act made or contemplated for the compulsory acquisition of any of
the Properties by the local or any other authority nor any
outstanding order, notice or other requirement of any such
authority that affects the Existing Use of any of the Properties
or involves expenditure in compliance with it nor any other
circumstances which may result in any such order or notice being
made or served or which may otherwise affect any of the
Properties.
8.2.9 No compensation has been received consequent upon a refusal of
any planning permission affecting any of the Properties or the
imposition of any restrictions
55
<PAGE>
in any such planning permission and no such planning permission
is suspended.
8.2.10 None of the buildings or other structures or erections on any of
the Properties have been listed under Article 42, Planning
(Northern Ireland) Order 1991 nor has the relevant local
authority made or resolved to make any noise abatement zone order
under Article 43 of the Pollution Control and Local Government
(Northern Ireland) Order 1978 for any of the areas in which any
of the Properties are included.
8.2.11 None of the Properties is within an area of archaeological
importance nor is any building or erection on any of the
Properties a scheduled monument within the meaning set out in the
Historic Monuments and Archaeological Objects (Northern Ireland)
Order 1995.
8.3 Statutory and Other Obligations
The Company has complied and is complying with all applicable statutory and
local requirements in relation to the Properties occupied by it, the use
thereof, the business carried out thereat and the employment of persons,
plant and equipment therein.
8.4 Leasehold Properties
8.4.1
(a) All leases (which expression includes underleases and tenancy
agreements, contractual licences and other similar agreements)
under which the Company holds or exercises rights in respect of
the Properties are:
(i) valid and in full force;
(ii) reduced to writing and duly executed by both parties, and
have been furnished for inspection by the Purchaser's legal
advisers; and
(iii) duly stamped and registered (where applicable)
(b) The Company has paid all rent and performed and observed in all
material respects all covenants and conditions on the part of the
tenant contained in the leases under which the Properties are
held.
(c) There are no material subsisting breaches or any material non-
performance or observance of any covenant, condition or agreement
contained in any lease under which the Properties are held
whether on the part of the tenant, the landlord or either of
their predecessors in title.
(d) There have been no supplemental agreements entered into or
variations made to any of the Leases, other than those in respect
of which the relevant supplemental agreements or variations have
been furnished to the Purchaser's legal advisers for inspection.
56
<PAGE>
(e) No notices have been served either under the terms of any lease
or any applicable Statute.
8.4.2 Where any of the Properties is leasehold, particulars of each
lease vested in the Company are set out in Part 2 of Schedule 4
and in relation to each such lease:
(a) the landlord and all superior landlords had good title to grant
the lease and any superior leases respectively and all abstracts
and epitomes of all superior titles have been placed with the
title deeds to the Property to which the lease relates;
(b) any consent necessary for the grant of the lease has been
obtained and a copy of the consent is with the title deeds to the
Property to which the lease relates;
(c) where the current annual rent is not the same as the annual rent
originally reserved in the lease, evidence of its agreement or
determination has been placed with the documents of title and no
rent reviews are or should be currently under negotiation or the
subject of a reference to an expert or arbitrator or the courts;
(d) the receipt for the payment of rent which fell due immediately
prior to the date hereof is unqualified;
(e) no notices of breaches of any covenants or conditions contained
in the lease have been given or received on the part of either
the landlord or the Company and the landlord has not refused to
accept rent or made any complaint of breach of covenant;
(f) no alterations, improvements or additions have been made to the
Property to which the lease relates since the grant of the lease
or in respect of all such alterations, improvements or additions
made all necessary consents and approvals have first been
obtained;
(g) (in relation to the NI Companies) Articles 5 to 9 Business
Tenancies (Northern Ireland) Order 1996 have not been excluded;
(h) no surety has been released either expressly or by implication;
(i) its terms are or are equivalent to those which would have been
negotiated at arm's length as between a willing landlord and a
willing tenant at the full market rent at the time of grant and
neither the lease nor any deeds or documents supplemental thereto
or varying the same contain any onerous or unusual covenants or
provisions which are materially adverse to the interests of the
Company; and
(j) VAT is not chargeable on the rent or any other payment to be made
under the lease and no election has been made by the landlord to
waive exemption from VAT in respect of the lease.
8.5 Inferior leases
57
<PAGE>
8.5.1 The Company is in actual occupation of each of the Properties and
no other person is or will be entitled to occupy or use any part
of any of the Properties.
8.5.2 Particulars of each lease, underlease or licence deriving
immediately or otherwise out of the interest of the Company are
set out in Part 3 of Schedule 4 (each such lease, underlease or
licence being referred to as an "Inferior Lease") and in relation
to each such Inferior Lease:
(a) all consents necessary for its creation have been obtained;
(b) in the case of any term exceeding five years, there is provision
(which has been implemented in good time by the Company) for
upward review of rent or licence fee to full market rent or
licence fee once every five years or less and where the current
annual rent or licence fee is not the same as the annual rent or
licence fee originally reserved in the Inferior Lease evidence of
its agreement or determination has been placed with the documents
of title and no reviews of rent or licence fee are or should be
currently under negotiation or are subject of a reference to any
expert or arbitrator or the courts;
(c) no notices of breaches of any covenants or conditions contained
in the Inferior Lease have been given or received by the Company
and the Company has not refused to accept rent or licence fee or
made or had cause to make any complaint to the tenant or licensee
of any breach of covenant and no distress or other legal
proceedings have been instituted by the Company;
(d) its terms are or are equivalent to those which would have been
negotiated at arm's length as between a willing landlord or
licensor and a willing tenant or licensee at the full market rent
or licence fee at the time of grant and no Inferior Lease or any
deeds or documents supplemental thereto contains any unusual
covenants or provisions materially adverse to the interests of
the Company;
(e) in the case of the NI Companies, there are no outstanding notices
under the Business Tenancies (Northern Ireland) Order 1996 and
Articles 5 to 9 of such Order have not been excluded in respect
of the Inferior Lease;
(f) In the case of the Irish Companies, there are no outstanding
notices under the Landlord and Tenant Acts 1967 to 1994 and the
Company is not under any immediate or prospective liability
certain or contingent as a result of any notice served under any
of those Acts to pay compensation in respect of any past or
continuing lease or tenancy of any of the Properties by any
tenant or sub-tenant;
(g) no rent, licence fee or other payment under the Inferior Lease
has been commuted or agreed to be commuted or paid in advance of
the due date for payment;
58
<PAGE>
(h) no improvements have been made which could give rise to a claim
for compensation or which will be disregarded on a rent review or
on fixing a new rent on a renewal of the Inferior Lease;
(i) no surety has been released either expressly or by implication;
(j) no collateral assurances, undertakings or concessions have been
given or made to any party; and
(k) VAT is chargeable on the rent, or licence fee or any other
payment made under it and the Company has elected to waive
exemption from VAT in respect of it.
8.5.3 If any of the Properties is subject to more than one inferior
lease, the inferior leases authorise the Company to recover
proportionally from each of the tenants or licensees under the
inferior leases sums which in aggregate are equal to the whole of
the expenditure incurred by the Company in repairing,
maintaining, redecorating, lighting and cleaning the structure,
exterior, common parts, retained areas and services of the
Properties to which the inferior leases relate and in the
management of such Property, with the intention that the rents or
licence fees payable under the inferior leases are receivable by
the Company clear of all deductions.
8.5.4 No part of any of the Properties which are the subject of an
inferior lease and intended for occupation is vacant.
8.6 Statutory compliance/environmental issues
8.6.1 In the case of the NI Companies, the Company is not in breach of
and has not received notice of and is not aware of any allegation
of breach of the requirements of:
the Shops Act (Northern Ireland) 1946
the Clean Air (Northern Ireland) Order 1981
the Construction (Design and Management) Regulations 1995
the Factories Act (Northern Ireland) 1965
the Office and Shop Premises Act (Northern Ireland) 1966
the Health and Safety at Work (Northern Ireland) Order 1978
the Planning (Northern Ireland) Order 1991
the Water Act (Northern Ireland) 1972
or
the Public Health Acts (Northern Ireland) 1878 to 1962
or other legislation concerning health, safety or environmental matters or
any regulations, orders, notices or directions made under any of such
legislation which in any such case affect any of the Properties or any
property in the vicinity thereof or anything due thereon.
8.6.2 In the case of the Irish Companies, the Company is not in breach
of and has not received notice of and is not aware of any
allegation of breach of the requirements of the Factories Act
1955, Safety in Industry Acts 1955 and
59
<PAGE>
1980, the Office Premises Act 1958, the Mines and Quarries Act
1965, the European Communities Act 1972, the Dangerous Substances
Act 1972-79, the Safety Health and Welfare (Offshore
Installations) Act 1987 or the Safety, Health and Welfare at Work
Act, 1989 or any regulation, direction, notice or order made or
served thereunder issued by the National Authority for
Occupational Safety and Health or any other legislation
concerning health, safety or environmental matters or any
regulations, orders, notices or directions made under any of such
legislation which in any such case affect any of the Properties
or any property in the vicinity thereof or anything due thereon.
8.6.3 Where required, a fire certificate has been issued in respect of
each of the Properties and each of the Properties complies in all
respects with current fire regulations and the current
requirements of the insurers of the Properties.
8.7 Condition and repair
8.7.1 The Company is not aware of any structural or other defects in
respect of the buildings and structures on or comprising any of
the Properties.
8.7.2 So far as the Warrantors are aware, there are no latent or patent
defects in the buildings and structures on or comprising the
Properties and in the construction of the buildings and its
structures on or comprising the Properties or any alterations
thereto none of the following materials were used:
(a) high alumina cement in structural elements;
(b) wood wool slabs in permanent form work to concrete or in
structural elements;
(c) calcium chloride in admixtures for use in reinforced concrete;
(d) asbestos or asbestos containing products as defined in the
Asbestos Regulations 1969 and 1987;
(e) naturally occurring aggregates for use in reinforced concrete
which do not comply with British Standard Specification 882: 1983
and naturally occurring aggregates for use in concrete which do
not comply with the provisions of British Standard Specification
8110: 1985;
(f) urea formaldehyde foam or materials which may release
formaldehyde in quantities which may be hazardous with reference
to the limits set from time to time by the Health and Safety
Executive;
(g) materials which are generally comprised of mineral fibres either
manmade or naturally occurring which have a diameter of 3 microns
or less or which contain fibre not scaled or otherwise stabilised
to ensure that fibre migration is prevented; or
(h) any other materials not in accordance with good design standards
and good building practice at the time of construction of any
such buildings.
60
<PAGE>
9. ENVIRONMENTAL
9.1 In paragraph 9.2 the following words and expressions shall have the
following meanings:
"Enviroment" means the enviroment generally including all of its physical
and ecological aspects including, without limitation, air (including,
without limitation, that within buildlings or natural or man-made
structures above or below ground); water (including, without limitation,
the open sea, coastal orinland waters and ground waters, drains and
sewers); and land, (including, without limitation, the seabed or river bed
under any water as described above, surface land and sub-surace land);
"Environmental Law" means any law relating to the Environment whether
generated under the law of the United Kingdom, the European Community or
arising from any common or customary law or legislation, and any order,
rule, regulation, directive, statutory instrument, bye-law or any
legislative measure under any of them;
"Environmental Licence" means any governmental, statutory, local authority
or other licence, approval, consent, permit or authorisation of whatever
kind relating to Environmental Law.
9.2 To the best of the Company's knowledge after due enquiry the Properties
have been used, and the Business and the Services Business has been
conducted, at all times in compliance with Environmental Law and any
Environmental Licence and the Company has not received any notice from any
local authority or other official agency under any Environmental Law
regarding any damage to the Environment or violation of any Enviromental
Law, whether actual, alleged or potential.
10. OTHER ASSETS
10.1 Title
10.1.1 The Company has Legal and Beneficial Title to all assets of the
Company which are included in the Accounts or have otherwise been
represented as being the property of the Company or which were at
the Balance Sheet Date used or held for the purposes of its
business and (except for assets disposed of or realised by the
Company in the ordinary course of business) the Company retains
such title to all such assets free from any Encumbrance, hire or
hire purchase agreement or leasing agreement or agreement for
payment on deferred terms and all such assets are in the
possession and control of the Company and are sited (in the case
of the NI Companies) within the United Kingdom, or (in the case
of the Irish Companies) Ireland.
10.1.2 The Company has not acquired or agreed to acquire any material
asset on terms that title to such asset does not pass to the
Company until full payment is made.
61
<PAGE>
10.1.3 A copy of the asset register of the Group as of 8 October, 1999
is attached to the Disclosure Letter.
10.2 Encumbrances
The Company has Legal and Beneficial Title to all assets which have been
acquired by the Company since the Balance Sheet Date and the same are in
the possession and control of the Company and none is the subject of any
Encumbrance nor has the Company created or agreed to create any
Encumbrance or entered into any factoring arrangement, hire-purchase,
conditional sale or credit sale agreement which has not been Disclosed
and in respect of any such Encumbrance, arrangement or agreement so
Disclosed there has been no default by the Company in the performance or
observance of any of the provisions thereof.
10.3 Condition of assets
The plant and machinery (including fixed plant and machinery) and all
vehicles and office and other equipment shown in the Accounts or acquired
since the Balance Sheet Date or otherwise used in connection with the
Business which have not been disposed of in the ordinary course of
business:
10.3.1 do not contravene any requirement or restriction having the force
of law;
10.3.2 constitute all of the plant and machinery necessary or desirable
to conduct the Business;
10.4 Rental payments
Rentals payable by the Company under any leasing, hire-purchase or other
similar agreement to which it is a party are set out in the Disclosure
Documents and have not been and are not likely to be increased and all
such rentals are fully deductible by the Company for tax purposes.
11. INSURANCE
11.1 Intentionally omitted.
11.2 Premiums and claims
Particulars of all policies of insurance of the Company now in force have
been Disclosed and such particulars are true and correct and all premiums
due on such policies have been duly paid and all such policies are valid
and in force. So far as the Warrantors are aware there are no
circumstances which might lead to any liability under such insurance
being avoided by the insurers or the premiums being increased. There is
no claim outstanding under any such policies and so far as the Warrantors
are aware there are no circumstances likely to give rise to a claim.
11.3 Criminal Damage
11.3.1 There are no claims outstanding in respect of the Company's assets under
the Criminal
62
<PAGE>
Damage (Compensation) (Northern Ireland) Order 1997 or any other
statutory scheme for the compensation of criminal damage to property and
there are no circumstances which would or might entitle the Company to
make any such claim or which would or might be required to be notified to
any statutory or other body concerned with the administration of any such
scheme.
11.3.2 The Company has maintained all such standards of vigilance and taken all
such precautions and steps for the protection and security of its
property and assets as have been recommended from time to time by the
Northern Ireland Office and the Royal Ulster Constabulary (or any other
competent department of government or law enforcement agency in respect
of assets outside Northern Ireland).
12. LITIGATION
12.1 Litigation and arbitration proceedings
12.1.1 Save as plaintiff in the collection of debts (not exceeding
(Pounds)5,000 in the aggregate) arising in the ordinary course of
business, the Company is not now engaged in any litigation,
arbitration or criminal proceedings, or any other proceedings
before any tribunal, assessor or expert in any jurisdiction, and
there are no lawsuits or arbitration proceedings pending or
threatened by or against the Company or any person for whose acts
or defaults the Company may be vicariously liable.
12.1.2 The Company has not since its incorporation, been involved in any
litigation, arbitration, criminal proceedings or material dispute
with any person who is or was a supplier or Customer of
importance to the Company or the Business, or where such
litigation, arbitration, proceedings or dispute resulted in
adverse publicity or loss of goodwill.
12.1.3 There is no matter or fact in existence which might give rise to
any legal proceedings or arbitration involving the Company
including any which might form the basis of any criminal
prosecution against the Company, nor are there pending, or in
existence any investigations or enquiries by or on behalf of any
governmental or other body in respect of the affairs of the
Company;
12.1.4 No direction has been given to the Company or to any officer of
the Company by any person or body lawfully empowered so to do for
the giving of evidence to, the production of documents before, or
the making of discovery to any governmental or other body or any
authorised officer of such body.
12.2 Injunctions, etc.
No injunction or order for specific performance has been granted against
the Company.
12.3 Orders and judgments
The Company is not subject to any order or judgment given by any court or
governmental agency which is still in force and has not given any
undertaking to any
63
<PAGE>
court or to any third party arising out of any legal proceedings.
13. LICENCES
13.1 General
The Company has all necessary licences (including statutory licences),
permits, consents and authorities (public and private) for the proper and
effective carrying on of the Business and in the manner in which the
Business is now carried on and all such licences, permits, consents and
authorities are valid and subsisting and the Company is not in breach of
any of the terms and conditions thereof and the Warrantors know of no
reason and are not aware of any fact or circumstances which (with or
without the giving of notice or lapse of time) would be likely to give rise
to any reason why any of them should be suspended, cancelled or revoked
whether in connection with the sale to the Purchaser or otherwise and, so
far as the Warrantors are aware, there are no factors that might in any way
prejudice the continuance or renewal of any of those licences, permits,
consents or authorities and the Company is not restricted by contract from
carrying on any activity in any part of the world.
13.2 Financial Services Act 1986
The Company does not carry on, nor does it purport to carry on, nor has it
at any time since 28th April, 1988 carried on, or purported to carry on,
investment business in the United Kingdom within the meaning of section 3,
Financial Services Act 1986 nor has it contravened any provision of such
Act.
13.3 Data Protection Act
13.3.1 The Company has registered or applied to register itself under
the Data Protection Act and all regulations made thereunder in
respect of all registrable personal data held by it, and all due
and requisite fees in respect of such registrations have been
paid.
13.3.2 The details contained in such registrations or applications are
correct, proper and suitable for the purpose(s) for which the
Company holds or uses the personal data which are the subject of
them, and the contents of all such registrations or applications
have been made available to the Purchaser.
13.3.3 All personal data held by the Company has been held in accordance
with the data protection principles and there has been no
unauthorised disclosure of such personal data.
13.3.4 There are no outstanding enforcement, deregistration or transfer
prohibition notices or any other nature of notice under the Data
Protection Act 1998 currently outstanding against the Company,
nor is there any outstanding appeal against such notices. The
Warrantors are not aware of any circumstances which may give rise
to the giving of any such notices to the Company.
13.3.5 There are no unsatisfied requests to the Company made by data
subjects in
64
<PAGE>
respect of personal data held by the Company, nor any outstanding
applications for rectification or erasure of personal data.
13.3.6 There are no outstanding claims for compensation for inaccuracy,
loss or unauthorised disclosure of personal data nor is any
personal data held by the Company inaccurate, nor has the Company
lost or made any unauthorised disclosure of any such data.
13.3.7 Without prejudice to the specific provisions above, the Company
and its employees have complied in all respects with the
requirements of the Data Protection Act.
14. TRADING
14.1 Tenders, etc.
No offer, tender or the like is outstanding which is capable of being
converted into an obligation of the Company by an acceptance or other act
of some other person.
14.2 Delegation of powers
There are in force no powers of attorney given by the Company other than to
the holder of an encumbrance solely to facilitate its enforcement nor any
other authority (express, implied or ostensible) given by the Company to
any person to enter into any Contract or commitment or do anything on its
behalf other than any authority of employees to enter into routine trading
contracts in the normal course of their duties.
14.3 Consequence of acquisition of Shares by Purchaser
Neither the acquisition of the Shares by the Purchaser nor compliance with
the terms of this Agreement nor the Hive-Down will:
14.3.1 (so far as the Warrantors are aware) cause the Company to lose
the benefit of any right or privilege it presently enjoys;
14.3.2 relieve any person of any obligation to the Company (whether
contractual or otherwise) or legally entitle any person to
determine any such obligation or any right or benefit enjoyed by
the Company or to exercise any right whether under an agreement
with or otherwise in respect of the Company;
14.3.3 conflict with or result in the breach of or constitute a default
under any of the terms, conditions or provisions of any agreement
or instrument to which the Company is now a party or any loan to
or mortgage created by the Company or of its memorandum or
articles of association;
14.3.4 result in any present or future indebtedness of the Company
becoming due and payable or capable of being declared due and
payable prior to its stated maturity;
14.3.5 cause any director, officer or senior employee of the Company to
leave
65
<PAGE>
employment; or
14.3.6 conflict with, violate or result in a breach of any law,
regulation, order, decree or writ applicable to the Company, or
entitle any person to receive from the Company any finder's fee,
brokerage or other commission,
14.4 Guarantees and warranties
The Company has not given any guarantee or warranty or made any
representation in respect of articles or trading stock, sold or contracted
to be sold by it, save for any warranty or guarantee implied by law and
(save as aforesaid) has not accepted any liability or obligation to
service, maintain, repair, take back or otherwise do or not do anything in
respect of any articles or stock that would apply after any such article or
stock has been delivered by it.
14.5 Fair trading, etc.
The Company is not and has not been party to or directly or indirectly
concerned in any agreement, arrangement, understanding, decision, activity
or concerted practice (whether or not legally binding) or in the pursuit of
any course of conduct which is:
14.5.1 registrable under the RTPA , notifiable under the Competition Act
1998 or capable of giving rise to an investigation by the
Director General of Fair Trading or a reference to the Monopolies
and Mergers Commission;
14.5.2 in contravention or breach of the EC Treaty, the Fair Trading Act
1973, the Consumer Credit Act 1974, the Resale Prices Act 1976,
the Trade Descriptions Act 1968, the RTPA, the Competition Act
1980, the Consumer Protection Act 1987, the Competition Act 1998
or any regulations, orders, notices or directions made
thereunder;
14.5.3 is otherwise registrable, unenforceable or void or renders the
Company or any of its officers liable to administrative, civil or
criminal proceedings under any anti-trust, trade regulation or
similar legislation in any jurisdiction where the Company carries
on business;
14.5.4 prohibited by section 4(1) of the Competition Acts 1991 and 1996
or which, for the purposes of section 5 of the Competition Acts
1991 and 1996, constitutes an abuse, either solely or jointly
with any other undertaking, of a dominant position in the State
or a substantial part of the State;
14.5.5 in contravention or breach of the EC Treaty, the Restrictive
Practices Act 1972, the Prices Acts 1958 - 1972, the Mergers,
Takeovers and Monopolies (Control) Acts 1978 - 1996, the
Merchandise Marks Acts 1887 to 1970, the Consumer Information Act
1978, Packaged Goods (Quality Control) Act 1980, Dangerous
Substances Acts, 1972 to 1979 Hire Purchase Acts 1946 to 1960,
the Sale of Goods and Supply of Services Act 1980, the Consumer
Credit Act 1995, the European Communities (Unfair Terms in
Consumer Contracts ) Regulations 1995, the European Communities
Acts 1972 to 1998 or any applicable Regulation or Directive of
the European Commission or of
66
<PAGE>
the Council of the European Communities or any regulations,
orders or any applicable Regulation or Directive of the European
Commission or of the Council of the European Communities or any
regulations, orders, notices or directions made thereunder; or
14.5.6 is otherwise registrable, unenforceable or void or renders the
Company or any of its officers liable to administrative, civil or
criminal proceedings under any anti-trust, trade regulation or
similar legislation in any jurisdiction where the Company carries
on business.
14.6 Restrictions on trading
The Company is not and has not been a party to any Contract, understanding
or practice restricting the freedom of the Company to provide and take
goods and services by such means and from and to such persons and into or
from such place as it may from time to time think fit.
14.7 Possession of records
14.7.1 All title deeds and agreements to which the Company is a party
and all other documents owned by, or which ought to be in the
possession of or held unconditionally to the order of, the
Company are in the possession of the Company.
14.7.2 The Company does not have any of its records, systems, controls,
data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means
(including any electronic, mechanical or photographic process
whether computerised or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and
direct control of the Company.
14.8 Business names
The Company does not use on its letterhead, books or vehicles or otherwise
carry on the Business under any name other than its corporate name.
14.9 Unlawful acts
Neither the Company nor any officer has been prosecuted for any criminal,
illegal or unlawful act connected with the Company.
14.10 Sensitive payments
No officer or employee of the Company has made or received any Sensitive
Payment in connection with any Contract or otherwise. For the purposes of
this clause the expression "Sensitive Payments" (whether or not illegal)
shall include (i) commercial bribes, bribes or kickbacks paid to any
person, firm or company including central or local government officials or
employees or (ii) amounts received with an understanding that rebates or
refunds will be made in contravention of the laws of any jurisdiction
either directly or through a third party or (iii) political contributions
or (iv)
67
<PAGE>
payments or commitments (whether made in the form of commissions, payments
or fees for goods received or otherwise) made with the understanding or
under circumstances that would indicate that all or part thereof is to be
paid by the recipient to central or local government officials or as a
commercial bribe influence payment or kickback.
15. CONTRACTS
15.1 Onerous Contracts
There are no long term Contracts (that is Contracts not terminable by the
Company without penalty on six months' notice or less) or onerous or
unusual or abnormal Contracts (that is, Contracts for capital commitments
or Contracts differing from those necessitated by the ordinary course of
business) binding upon the Company, nor is the Company a party to any
Contract which contains any onerous or other provision material for
disclosure to an intending purchaser of the Shares and no expenses or
liabilities of a material amount have been incurred before the date of this
Agreement by the Company otherwise than for the purpose of the Company's
business.
15.2 Material Contracts
All Contracts to which the Company is a party have been Disclosed and the
Company is not a party to or subject to any Contract which:
15.2.1 is incapable of complete performance in accordance with its terms
within six months after the date on which it was entered into or
undertaken;
15.2.2 is likely to result in a loss to the Company on completion of
performance;
15.2.3 cannot readily be fulfilled or performed by the Company on time
and without undue or unusual expenditure of money and effort;
15.2.4 involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or exceptional
nature and not in the ordinary course of business;
15.2.5 requires an aggregate consideration payable by the Company in
excess of (Pounds)25,000;
15.2.6 involves or is likely to involve the supply of goods by or to the
Company the aggregate sales value of which will represent in
excess of 5 % of the turnover of the Company for the year ended
on the Balance Sheet Date;
15.2.7 is a Contract for services (other than Contracts for the supply
of electricity or normal office services);
15.2.8 requires the Company to pay any commission, finder's fee, royalty
or the like;
15.2.9 is in any way otherwise than in the ordinary and proper course of
the Company's business;
68
<PAGE>
15.2.10 contains any "most favoured nation" or similar provision; or
15.2.11 involves or may involve any sharing, licensing, transfer, escrow
of any Intellectual Property.
15.3 Performance of Contracts
15.3.1 The terms of all Contracts of the Company have been complied with
by the Company and by the other parties to the Contracts in all
material respects and there are no circumstances likely to give
rise to a default by the Company or by the other parties under
any such Contract.
15.3.2 All the Contracts of the Company except those between the Company
and its employees may be assigned by the Company without the
consent of any other party.
15.3.3 There are no outstanding claims, separately or in the aggregate,
of material amounts, against the Company on the part of Customers
or other parties in respect of defects in quality or delays in
delivery or completion of Contracts or deficiencies of design or
performance or otherwise relating to liability for goods or
services sold or supplied by the Company and no such claims are
threatened or anticipated and there is no matter or fact in
existence in relation to goods or services currently sold or
supplied by the Company which might give rise to the same.
15.3.4 The Company has no knowledge of the invalidity of or grounds for
rescission, avoidance or repudiation of any agreement or other
transaction to which the Company is a party and has received no
notice of any intention to terminate, repudiate or disclaim any
such agreement or other transaction.
15.4 Agency and distribution agreements
The Company is not a party to any subsisting agency or distributorship
agreement.
15.5 WAP Products
The Disclosure Documents include true and accurate copies of all Contracts
which the Company has ever had for the deployment of WAP Products, the
material terms of which are summarised in Exhibit C. These deployments
consist of 7 Contracts for trials of Apion's WAP gateway ("Lab Trials"), as
follows: LEAF Data Industries; Mercury Personal Communications (One-to-
One); Digitial Mobility Limited; Saraide; Vodafone Ltd; Polska Telefonia
Komorkowa Spolka Z.O.O; and Radio Mobil. Excluding the Lab Trials, the
Company now has, and has only had, signed Contracts for the provision of
WAP Products with Swisscom and Sonera. The terms of such signed Contracts
and all Lab Trials, including any amendments, variations or waivers have
been Disclosed to the Purchaser. There is no Contract with either Vodafone
Limited, or any entity affiliated with these two companies, although a
purchase order has been issued by Eircell in contemplation of a contract.
69
<PAGE>
16. EMPLOYEES
16.1 Particulars of employees
The particulars shown in the schedule of employees comprised in the
Disclosure Documents are true and complete and show in respect of each
Director, officer and employee of the Company his date of birth, the date
on which he commenced continuous employment with the Company for the
purposes of (in relation to Northern Ireland) the Employment Rights
(Northern Ireland) Order 1996, or (in relation to the Republic of Ireland)
the Unfair Dismissals Acts 1977 to 1993, and all remuneration payable and
other benefits provided or which the Company is bound to provide (whether
now or in the future) to each such person and include full particulars of
all remuneration arrangements (particularly profit sharing, incentive and
bonus arrangements to which the Company is a party whether binding or not)
and each Director, officer and employee of the Company is listed therein.
16.2 Service Contracts
There is no Contract of service in force between the Company and any of its
Directors, officers or employees which is not terminable on twelve weeks
notice or less by the Company without giving rise to any claim for damages
compensation or other redress (other than a statutory redundancy payment or
under the unfair dismissals legislation (including, without limitation, the
Employment Rights (Northern Ireland) Order 1996), or (in relation to the
Republic of Ireland) the Unfair Dismissals Act 1977). There are no
consultancy or management services agreements in existence between the
Company and any other person, firm or company, and there are no agreements
or other arrangements (binding or otherwise) between the Company or any
employers' or trade association of which the Company is a member and any
Trade Union. There are no outstanding pay negotiations with any employees
or Trade Unions.
16.3 Benefits
There are no amounts owing to present or former directors, officers or
employees of the Company other than not more than one month's arrears of
remuneration accrued or due or for reimbursement of business expenses
incurred within a period of three months preceding the date of this
Agreement and no moneys or benefits other than in respect of remuneration
or emoluments of employment are payable to or for the benefit of any
present or former director, officer or employee of the Company, nor any
dependant of any present or former director, officer or employee of the
Company.
16.4 Liabilities and payments
Save to the extent (if any) to which provision or allowance has been made
in the Accounts:
16.4.1 no liability has been incurred or is anticipated by the Company
for breach of any Contract of employment or for services or for
severance payments or for redundancy payments or protective
awards or for compensation for unfair
70
<PAGE>
dismissal or for failure to comply with any order for the
reinstatement or reengagement of any employee or for sex, race or
other discrimination or for any other liability accruing from the
termination or variation of any Contract of employment or for
services;
16.4.2 no gratuitous payment has been made or promised by the Company in
connection with the actual or proposed termination, suspension or
variation of any Contract of employment or for services of any
present or former director, officer or any dependant of any
present or former director, officer or employee of the Company;
and
16.4.3 the Company has not made or agreed to make any payment to or
provided or agreed to provide any benefit for any present or
former director, officer or employee of the Company.
16.5 Relevant legislation
16.5.1 The Company has in relation to each of its employees (and so far
as relevant to each of its former employees) complied with:
(a) all obligations imposed on it by all relevant statutes,
regulations and codes of conduct and practice affecting its
employment of any persons and all relevant orders and awards made
thereunder and in particular (in relation to Northern Ireland)
with the Employment Rights (Northern Ireland) Order 1996, the
Equal Pay Act (Northern Ireland) 1970, the Sex Discrimination
(Northern Ireland) Order 1976, the Race Relations (Northern
Ireland) Order 1997, the Fair Employment Acts, the Trade Union
and Labour Relations (Northern Ireland) Order 1995, the Transfer
or Undertakings (Protection of Employment) Regulations 1981 and
Disability Discrimination Act 1995 and all relevant health and
safety legislation and codes of practice, the Minimum Notice and
Terms of Employment Acts 1973 to 1991, the Holidays (Employees)
Acts 1973 and 1991, the Anti-Discrimination (Pay) Act 1974, the
Protection of Young Persons (Employment) Act 1996, the Unfair
Dismissals Acts 1977 to 1993, the Protection of Employment Act
1977, the Employment Equality Act 1977, the European Communities
(Safeguarding of Rights of Employees on Transfer of Undertakings)
Regulations 1980, the Maternity Protection Act 1994, the Payment
of Wages Act 1991, the Safety, Health and Welfare at Work Act
1989 and the Terms of Employment (Information) Act 1994, the
Organisation of Working Time Act 1997, the Adoptive Leave Act
1995, the Transnational Information and Consultation of Employees
Act 1996 and the Parental Leave Act 1998; and has maintained
current, adequate and suitable records regarding the service,
terms and conditions of employment of each of its employees; and
(b) all collective agreements, recognition agreements and customs and
practices for the time being affecting its employees or their
conditions of service.
16.5.2 None of the NI Companies has been served with any improvement
and/or prohibition notices pursuant to the Health and Safety at
Work (Northern
71
<PAGE>
Ireland) Order 1978.
16.5.3 None of the Irish Companies has been served with any improvement
and/or prohibition notices pursuant to the Safety in Industry
Acts 1955 and 1980 and the Safety, Health and Welfare at Work Act
1989.
16.5.4 The Company is not in breach of any of the following Acts nor is
it prosecuted under any of such Acts/Orders:
Children and Young Persons Act 1933
Shops Act (Northern Ireland) 1946
Factories Act (Northern Ireland) 1965
Health and Safety at Work (Northern Ireland) Order 1978.
There is no liability or claim against any of the Irish Companies
outstanding or anticipated by any employee or former employee
under any legislation including without limitation any of the
Acts and regulations referred to clause 16.5.1(a) above
16.5.5 There is no liability or claim against the Company outstanding or
anticipated under the Equal Pay (Northern Ireland) Act 1970, the
Sex Discrimination (Northern Ireland) Order 1976, the Race
Relations (Northern Ireland) Order 1976, the Employment Rights
(Northern Ireland) Order 1996, TUPE, the Social Security and
Housing Benefits Act 1982, the Social Security Contributions and
Benefits Act 1992, Trade Union and Labour Relations (Northern
Ireland) Order 1995 or the Trade Union Reform and Employment
Rights Act 1993.
The Irish Companies are not and has never been liable to make any
payment to any person under the Redundancy Payments Acts 1967 -
1991 or pursuant to the Protection of Employees (Employers
Insolvency) Acts 1984 - 1991.
16.5.6 Within a period of one year preceding the date of this Agreement,
the Company has not given notice of any redundancies to the
Secretary of State or started consultations with any independent
trade union under the provisions of the Trade Union and Labour
Relations (Northern Ireland) Order 1995 or under TUPE nor has the
Company failed to comply with any such obligation under the said
Trade Union and Labour Relations (Northern Ireland) Order 1995.
16.6 Termination of employment
16.6.1 No present director, officer or employee of the Company has given
or received notice terminating his employment except as expressly
contemplated under this Agreement and Completion of this
Agreement will not entitle any employee to terminate his
employment or trigger any entitlement to a severance payment or
liquidated damages.
16.6.2 The Company has complied with all recommendations made by the
Advisory Conciliation and Arbitration Service and with all awards
and declarations made by the Central Arbitration Committee in
respect of its employees.
72
<PAGE>
Each of the Irish Companies has complied with all determinations,
rulings and recommendations made by the Employment Appeals Tribunal,
Labour Court, Rights Commissioner, Equality Officer or any other
agreement reached in the context of industrial relations.
16.7 Share and other schemes
The Company does not have in existence nor is it proposing to introduce,
and none of its directors, officers or employees participate in (whether
or not established by the Company) any employee share trust, share
incentive scheme, share option scheme or profit sharing scheme for the
benefit of all or any of its present or former directors, officers or
employees or the dependants of any of such persons or any scheme
whereunder any present or former director, officer or employee of the
Company is entitled to a commission or remuneration of any other sort
calculated by reference to the whole or part of the turnover, profits or
sales of the Company or any other person, firm or company including any
profit-related pay scheme established under Chapter Ill, Part V, ICTA
1988.
16.8 Disputes and claims
16.8.1 No dispute exists or can reasonably be anticipated between the
Company and a material number or category of its employees or any
Trade Union(s) and so far as the Warrantors are aware there are no
wage or other claims outstanding against the Company by any person
who is now or has been a director, officer or employee of the
Company.
16.8.2 The Company has not had during the last three years any strike,
work stoppages, slowdown or work-to-rule by its employees or lock-
out, nor, so far as the Warrantors are aware, is any anticipated,
which has caused, or is likely to cause, the Company to be
materially incapable of carrying on its business in the normal and
ordinary course.
16.9 Transfer of undertakings
The Company has not been a party to any relevant transfer as defined in
TUPE (or, in the case of the Republic of Ireland, the European Communities
(Safeguarding of Employees' Rights on Transfer of Undertakings) Regulation
1980, nor has the Company failed to comply with any duty to inform and
consult any Trade Union under the said regulations within the period of
one year preceding the date of this Agreement.
16.10 Agreements with Trade Unions
The Company is not a party to any agreement or arrangement with or
commitment to any trade unions or staff association nor to its knowledge
are any of its employees members of any trades union or staff association,
nor has it done any act which might be construed as recognition of a Trade
Union.
16.11 Fair Employment
73
<PAGE>
16.11.1 The Company has registered with the Fair Employment Commission
in accordance with section 23 of the Fair Employment (NI) Act
1989 (in this paragraph the "1989 Act") and/or Article 48 of the
Fair Employment and Treatment (NI) Order 1998 (in this paragraph
the "1998 Order").
16.11.2 The Company has filed appropriate Monitoring Returns with the
Fair Employment Commission and/or Equality Commission within the
prescribed time limits and the Fair Employment Commission and/or
the Equality Commission has not rejected these or required
further information.
16.11.3 The Company has conducted a review of its employment practices
within the last three years in accordance with section 31 of the
1989 Act and/or Article 55 of the 1998 Order.
16.11.4 The Company maintains proper record of employees and applicants
as required by the Fair Employment Acts and Regulations and the
Company has a proper system for ensuring that the information is
not mis-used in any way that contravenes the Fair Employment
Acts.
16.11.5 Neither the Fair Employment Commission nor the Equity Commission
has made any recommendation, direction or notice under sections
32 to 37 (inclusive) of the 1989 Act or Articles 56 to 61
inclusive of the 1998 Order to the Company.
16.11.6 The Company is not in default and is not an unqualified person
as defined in section 38 of the 1989 Act.
16.11.7 The Company has not received notification from the Fair
Employment Commission or elsewhere that any of its suppliers is
an unqualified person as defined by section 38 of the 1989 Act
or Article 62 of the 1998 Order.
16.11.8 The Company has not had any complaint made against it to the
Fair Employment Tribunal or the Equality Commission within the
last three years no questionnaire has been issued in accordance
with the said Fair Employment Acts within the last three years
and there is no case outstanding with the Fair Employment
Tribunal or on appeal from it.
16.12 Intellectual Property Assignment
All past and present directors, officers, employees and consultants have
executed and delivered binding confidentiality and invention assignment
agreements in the form attached to the Disclosure Letter acknowledging
and assigning to the Company all Intellectual Property.
17. PENSION SCHEMES
17.1 General
74
<PAGE>
Particulars of all Pension Schemes have been Disclosed including true and
complete copies of the following in relation to each pension scheme (so
far as applicable):
17.1.1 Trust deeds and rules and all other deeds.
17.1.2 Booklets currently in force and any subsequent announcements to
scheme members.
17.1.3 Details of members, pensioners and deferred pensioners (including
dates of birth, sex, entry and current salary and pensionable
salary and name of employer).
17.1.4 Details of contributions by members and the employer in the last
three years.
17.1.5 Scheme accounts and trustee reports for the last three years.
17.1.6 Evidence of Inland Revenue approval/Revenue Commissioners' exempt
approval.
17.1.7 Contracting-out certificate (if applicable).
17.1.8 Insurance policies and certificates and details of premiums paid.
17.1.9 Details of arrangements for the selection of trustees in
accordance with (in relation to the Republic of Ireland) section
62 of the Pensions Act 1990 including copies of notices to
members.
17.1.10 Any correspondence with the Occupational Pensions Regulatory
Authority or (in relation to the Republic of Ireland) the
Pensions Board in relation to the Pension Scheme.
17.1.11 All letters or agreements for the appointment of professional
advisers, pursuant to Article 47 of the Pensions (Northern
Ireland) Order 1995.
Other than as Disclosed there are no other Pension Schemes for current or
past directors or employees of the Company.
17.2 NI Pension Scheme
17.2.1 AL participates in the Apion Group Pension Scheme, established on
1st October 1997 ("the NI Pension Scheme") and in no other scheme
or arrangement for the provision of retirement benefits, death
benefits or the like for employees in Northern Ireland. No member
of the Group has any obligation to provide, or contribute towards
the provision of, retirement benefits, death benefits and the
like, for employees in Northern Ireland other than under the NI
Pension Scheme.
17.2.2 The NI Pension Scheme has at all times been operated in
accordance with the requirements of all applicable laws,
regulations and requirements (including Article 141 of the EU
Treaty) and with its own terms and with the terms of any
75
<PAGE>
explanatory booklet or announcement issued to members.
17.2.3 The NI Pension Scheme provides only money purchase benefits
within the meaning of Article 181 of the Pension Schemes
(Northern Ireland) Act 1993. All contributions and expenses due
to the NI Pension Scheme have been paid in full when due, and all
contributions received have been promptly and properly invested
in accordance with the terms of the NI Pension Scheme. No
services have been provided to or in respect of the NI Pension
Scheme for which an account or invoice has not been rendered.
17.3 Irish Pension Scheme
17.3.1 ATL participates in the Apion Telecoms Staff Pension Scheme,
established and governed by a Definitive Trust Deed and Rules
dated 6th August 1999 ("the Irish Pension Scheme") and in no
other scheme or arrangement for the provision of retirement
benefits, death benefits or the like for employees in Ireland. No
member of the Group has any obligation to provide, or contribute
towards the provision of, retirement benefits, death benefits and
the like, for employees in Ireland other than under the Irish
Pension Scheme.
17.3.2 The Irish Pension Scheme has at all times been operated in
accordance with the requirements of the Pensions Acts, 1990 and
1996 and with all other applicable laws, regulations and
requirements (including Article 141 of the EU Treaty) and with
its own terms and with the terms of any explanatory booklet or
announcement issued to members.
17.3.3 The Irish Pension Scheme is an exempt approved scheme within the
meaning of Chapter 1 of Part 30 of the Taxes Consolidation Act
1997 and is constituted and has at all times been operated in
accordance with the requirements for such exempt approval.
17.3.4 The Irish Pension Scheme is a defined contribution scheme within
the meaning of the Pensions Act 1990. All contributions and
expenses due to the Irish Pension Scheme have been paid in full
when due, and all contributions received have been promptly and
properly invested in accordance with the terms of the Irish
Pension Scheme. No services have been provided to or in respect
of the Irish Pension Scheme for which an account or invoice has
not been rendered.
17.4 General
17.4.1 Neither Pension Scheme has been the subject of any report of
wrongdoing or irregularities to the relevant regulatory authority
nor, so far as the Warrantors are aware, are there any
circumstances which would justify such a report.
17.4.2 No claim has been threatened or made or litigation commenced
against the trustees or administrator of any Pension Scheme or
against the Company or any other person whom the Company is or
may be liable to indemnify or compensate in respect of any matter
arising out of or in connection with any
76
<PAGE>
Pension Scheme. So far as the Company is aware there are no
circumstances which may give rise to any such claim or
litigation.
18. Intellectual Property
18.1 Ownership and rights
18.1.1 Parts 1 and 2 of Schedule 11 respectively contain particulars of
all Registered Intellectual Property and material Unregistered
Intellectual Property.
18.1.2 The Company is the sole beneficial owner of all Relevant IP.
18.1.3 The Company does not require any further Intellectual Property in
relation to the development, manufacture, marketing or sale of
its products or services or in relation to any of the processes
employed in the Business.
18.2 Enforcement
18.2.1 The Relevant IP is valid and subsisting and none of the
Registered Intellectual Property is the subject of outstanding or
threatened disputes, claims or proceedings for cancellation,
revocation, opposition, interference, rectification or contested
ownership.
18.2.2 Where registration is available, applications for registration of
all Relevant IP are being diligently prosecuted in all key
industrial nations of the world and the Company has received no
adverse opinion whether from any registry concerned or its own
advisers in relation thereto.
18.2.3 All Registered Intellectual Property has been maintained and all
renewal fees have been paid on time.
18.2.4 All Know-How owned, used or exploited by the Company has been
kept secret and confidential and has not been Disclosed to third
parties.
18.2.5 Nothing has been done to diminish or otherwise affect the
reputation of unregistered Trade Marks owned, used or otherwise
exploited by the Company.
18.3 Intellectual Property Agreements
18.3.1 Parts 3 and 4 of Schedule 11 respectively contain particulars of
all Intellectual Property Agreements whereby:
(a) the Company uses or exploits any Intellectual Property belonging
to a third party ("Licences-In"); or
(b) the Company has authorised or otherwise permitted, expressly or
by implication, any use whatsoever of any Intellectual Property,
or granted to any third party any right or interest in respect of
any Intellectual Property
77
<PAGE>
("Licences-Out").
18.3.2 Save as set out in Schedule 11, none of the Relevant IP has been
charged, mortgaged, licensed or otherwise encumbered.
18.3.3 All Intellectual Property Agreements are valid and binding and
none has been the subject of any breach or default by any party
or of any event which with notice or lapse of time or both would
constitute a default.
18.3.4 There are no disputes, claims or proceedings arising out of or
relating to the Intellectual Property Agreements.
18.3.5 All Intellectual Property Agreements have been duly recorded or
registered with the proper authorities whenever a requirement to
do so exists.
18.4 Infringement
18.4.1 The Company has not infringed and does not infringe any
Intellectual Property of a third party as a result of the
Company's use or exploitation of the Relevant IP, nor will such
use or exploitation give rise to any infringement dispute, claims
or proceedings against the Company.
18.4.2 There are not and have not been any disputes, claims or
proceedings threatened or in existence in any court or tribunal
in respect of any of the Relevant IP as such or in respect of any
use or exploitation thereof by the Company.
18.4.3 There has been and is no current or anticipated infringement by
any third party of any Relevant IP.
19. INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS
19.1 Identification and ownership
19.1.1 Part 1 of Schedule 12 contains brief particulars of all material
IT Systems.
19.1.2 Part 2 of Schedule 12 contains brief particulars of all material
IT Contracts.
19.1.3 Save as set out in Part 2 of Schedule 12, all IT Systems and data
are owned by the Company, and are not wholly or partly dependent
on any facilities or services not under the exclusive ownership
and control of the Company.
19.1.4 All the IT Contracts are valid and binding. None of the IT
Contracts has been the subject of any breach or default, or of
any event which (with notice or lapse of time or both) would
constitute a default, or is liable to be terminated or otherwise
adversely affected by the transaction contemplated by this
Agreement.
19.1.5 The Company has in its possession or in its control the source
code of all Software.
78
<PAGE>
19.2 Computer Operation and Maintenance
19.2.1 All material IT Systems are in good working order, function in
accordance with all applicable specifications, and have been and
are being properly and regularly maintained and replaced.
19.2.2 All IT Services are being and have been provided in accordance
with all applicable specifications.
19.2.3 The Company has full and unrestricted access to and use of the IT
Systems, and no third party agreements or consents are required
to enable the Company to continue such access and use following
Completion.
19.2.4 So far as the Warrantors are aware:
(a) it is not necessary or desirable to incur any further expenditure
on the modification, development, expansion or (save in the
normal course of business) replacement of the IT Systems; and
(b) the present capacity of the IT Systems is sufficient in the
normal course of business in order to satisfy the requirements of
the Company with regard to data processing and communications
during the period ending three years from the date hereof.
19.2.5 No part of the IT Systems is or has been infected by any virus or
other extraneously-induced malfunction, and no person has had
unauthorised access to the IT Systems or any data stored thereon.
The Company operates a documented procedure to avoid such
infections and unauthorised access.
19.2.6 All data processed using the IT Systems and/or the IT Services
has been regularly archived in hard copy form. Such hard copies
have been properly stored and catalogued, and are available for
inspection as required by the Company from time to time.
19.2.7 The Company has taken reasonable steps to ensure that its
business can continue in the event of a failure of the IT Systems
(whether due to natural disaster, power failure or otherwise).
19.4 Euro compliance
All IT Systems will operate, and all IT Services will be provided, in all
respects using, recording, converting and accounting for (including
rounding up and down and calculating, accounting for and recording
compensatory payments) monetary or currency values denominated in any
European single currency which may be introduced at any time hereafter in
the same manner as it does for any European currency existing as at the
date of this Agreement and in all respects in accordance with any
applicable legislation, laws, directives, regulations, directions or
rules (including the rules on conversion and rounding set out in the EC
regulation number 1103/97).
79
<PAGE>
20. LEGISLATION
The Company is in compliance in all material respects with, and has not
received notice of and is not aware of any allegation of breach of, the
requirements of any legislation which is applicable to it.
21. YEAR 2000
The operation of the IT Systems, the WAP Products and the provision of
the IT Services will be unaffected by the change in year from 1999 to
2000 or by any related change in the field configurations containing date
information within the IT Systems and the WAP Products ("Year 2000
Compliant"). In particular:
21.1 there will be no error, malfunction or change in the operation,
functionality or performance of the IT Systems, the WAP Products or
the provision of the IT Services;
21.2 no value for current date will cause any interruption in the
operation of the IT Systems, the WAP Products or the provision of
the IT Services;
21.3 all manipulations of time-related data will produce the desired
results for all valid date values within the applicable domain;
21.4 date-based functionality will behave consistently for dates prior
to, during and after the year 2000;
21.5 date elements in interfaces and data storage will permit specifying
the century to eliminate date ambiguity without human intervention,
including leap year calculations; and
21.6 where any date element is represented without a century, the
correct century shall be unambiguous for all manipulations
involving the element and in all interfaces and data storage, the
century in any date shall be specified either explicitly or by
unambiguous algorithms or inferencing rules.
21.7 the Company has conducted and concluded an appropriate Year 2000
readiness review for all of its IT Systems, the WAP Products and IT
Services, including assessment, implementation (including
remediation, upgrading and replacement of the IT Systems, the WAP
Products and IT Services as necessary), validation testing and
contingency planning. With respect to Software obtained from third
parties (licensed Software shareware and freeware) that is
incorporated into IT Systems, the WAP Products and IT Services, the
Company has obtained appropriate confirmations from all providers
of such software that it is Year 2000 Compliant.
22. WAP PRODUCTS
22.1 The WAP Products comply in all respects with all specifications and
descriptions and provide all functionality described in Schedule 13
to this Agreement, all Contracts for the WAP Products and all
operating manuals and
80
<PAGE>
other literature of the Company.
22.2 The Disclosure Letter lists all third party Software incorporated
in the WAP Products. All such Software is duly licensed to the
Company. None of such licences;
22.3.1 are terminable by the licensor on or before 31 January
2001;
22.3.2 are terminable on any change of control of any Group
Company or licensor;
22.3.3 provide for the payment of more than a nominal royalty per
annum; or
22.3.4 restrict the ability of any Group Company to grant sub-
licences to Customers of the WAP Products on such terms as
the Company may in its discretion determine; or
22.3.5 restrict the geographic area in which such Software may be
used or sublicenced.
PART 2
Taxation Warranties
23. Taxation - UNITED KINGDOM
23.1 General
23.1.1 Notices and returns
All notices, returns, computations and registrations of the Company for the
purposes of Taxation have been made punctually on a proper basis and are correct
and none of them is, or is likely to be, the subject of any dispute with any
Taxation Authority.
23.1.2 All information supplied by the Company for the purposes of
Taxation was when supplied and remains complete and accurate in
all material respects.
23.1.3 Payment of Tax due
All Taxation which the Company is liable to pay prior to Completion has been or
will be so paid prior to Completion.
23.1.4 Penalties or interest on Tax
The Company has not within the period of six years ending on the date of this
Agreement
81
<PAGE>
paid or become liable to pay any penalty, fine, surcharge or interest charged by
virtue of the provisions of the TMA or any other Taxation Statute.
23.1.5 Compliance with PAYE, national insurance contribution and Tax
collection obligations
(a) All income tax deductible and payable under the PAYE system
and/or any other Taxation Statute has, so far as is required to
be deducted, been deducted from all payments made or treated as
made by the Company and all amounts due to be paid to the Inland
Revenue prior to the date of this Agreement have been so paid,
including all Tax chargeable on benefits provided for directors,
employees or former employees of the Company or any persons
required to be treated as such.
(b) All deductions and payments required to be made under any
Taxation Statute in respect of national insurance and social
security contributions (including employer's contributions) have
been so made.
(c) All payments by the Company to any person which ought to have
been made under deduction of Tax have been so made and the
Company (if required by law to do so) has accounted to the Inland
Revenue for the Tax so deducted.
(d) Proper records have been maintained in respect of all such
deductions and payments and all applicable regulations have been
complied with.
(e) The Disclosure Documents contain details so far as they affect
the Company of all current dispensations agreed with the Inland
Revenue in relation to PAYE and all notifications given by the
Inland Revenue under section 166, ICTA 1988.
23.1.6 Investigations
The Company has not been subject to any visit, audit,
investigation, discovery or access order by any Taxation
Authority and there are no circumstances existing which make it
likely that a visit, audit, investigation, discovery or access
order will be made.
23.1.7 Residence
The Company is and always has been resident for Taxation purposes
only in the jurisdiction in which it is incorporated.
23.1.8 Tax provision
Full provision or reserve has been made in the Accounts for all
Taxation assessed or liable to be assessed on the Company or for
which it is accountable in respect of income, profits or gains
earned, accrued or received or deemed to be earned, accrued or
received on or before the Balance Sheet Date, including
distributions made down to such date or provided for in the
Accounts and
82
<PAGE>
proper provision has been made in the Accounts for deferred
Taxation in accordance with generally accepted accounting
principles.
23.1.9 Concessions and arrangements
The amount of Taxation chargeable on the Company during any
accounting period ending on or within the six years before the
Balance Sheet Date has not depended on any concessions,
agreements or other formal or informal arrangements with any
Taxation Authority.
23.1.10 Anti-avoidance provisions
The Company has not entered into or been a party to any scheme or
arrangement of which the main purpose, or one of the main
purposes, was the avoidance of or the reduction in or the
deferral of a liability to Taxation.
23.1.11 Section 765, ICTA 1988
The Company has not without the prior consent of the Treasury
carried out or agreed to carry out any transaction under section
765, ICTA 1988 which would be unlawful in the absence of such
consent and has, where relevant, complied with the requirements
of section 765A(2), ICTA 1988 (supply of information on movement
of capital within the EU) and any regulations made or notice
given thereunder.
23.1.12 Transactions requiring clearance or consent
All particulars furnished to any Taxation Authority in connection
with an application for clearance or consent by the Company or on
its behalf or affecting the Company has been made and obtained on
the basis of full and accurate disclosure to the relevant
Taxation Authority of all relevant material facts and
considerations, and any transaction for which clearance or
consent was obtained has been carried into effect only in
accordance with the terms of the relevant clearance or consent.
23.1.13 Calculation of Taxation liability
The Company has sufficient records relating to past events to
permit accurate calculation of the Taxation liability or relief
which would arise upon a disposal or realisation on completion of
each asset owned by the Company at the Balance Sheet Date or
acquired by the Company since that date but before Completion.
23.1.14 Claims and disclaimers
The Company has duly submitted all claims and disclaimers the
making of which has been assumed for the purposes of the
Accounts.
23.1.15 Outstanding claims, elections and appeals
83
<PAGE>
The Disclosure Documents contain full particulars of all matters
relating to Taxation in respect of which the Company is or at
Completion will be entitled:
(a) to make any claim (including a supplementary claim), disclaimer or
election for relief under any Taxation Statute;
(b) to appeal against any assessment or determination relating to
Taxation; to apply for a postponement of Taxation.
23.2 Corporation tax, including corporation tax on chargeable gains
23.2.1 Base values and acquisition costs
If each of the capital assets of the Company was disposed of on
the date hereof for a consideration equal to the book value of
that asset in, or adopted for the purposes of, the Accounts or, in
the case of assets acquired since the Balance Sheet Date, equal to
the consideration given upon its acquisition, no liability to
corporation tax on chargeable gains or balancing charges under the
CAA would arise and for the purpose of determining the liability
to corporation tax on chargeable gains there shall be disregarded
any relief and allowances available to the Company other than
amounts falling to be deducted under section 38, TCGA.
23.2.2 Capital allowances
All expenditure which the Company has incurred or may incur under
any subsisting commitment on the provision of machinery, plant or
buildings has qualified or will qualify (if not deductible as a
trading expense for trade carried on by the Company) for writing-
down allowances or industrial building allowances (as the case may
be) under CAA and where appropriate notices have been given to the
Inland Revenue under section 118, FA 1994.
23.2.3 Leased assets
The Company has not made any claim for capital allowances in
respect of any asset which is leased to or from or hired to or
from the Company and no election affecting the Company has been
made or agreed to be under sections 53 or 55, CAA in respect of
such assets.
23.2.4 Finance leases
The Company is not a lessee under a lease to which the provisions
of Schedule 12 to the FA 1997 apply or could apply.
23.2.5 Short life assets
The Company has not made any election under section 37, CAA nor is
it taken to have made such an election under section 37(8)(c),
CAA.
23.2.6 Long life assets
84
<PAGE>
The Company does not own and has not owned a long life asset (within
the meaning of section 38A, CAA) in respect of which any claim for
capital allowances would be subject to the provisions of section
38E-38G, CAA.
23.2.7 Industrial buildings
None of the assets of the Company expenditure on which has qualified
for a capital allowance under Part I, CAA has at any time been used
otherwise than as an industrial building or structure.
23.2.8 Distributions
(a) No distribution within the meaning of sections 209, 2 10 and 211,
ICTA 1988 has been made (or will be deemed to have been made) by the
Company after 5th April, 1965 except dividends shown in its audited
accounts and the Company is not bound to make any such distribution.
(b) No elections have been made pursuant to section 246A, ICTA 1988 in
respect of any dividends nor has the Company made a distribution to
which the provisions of paragraph 2 of Schedule 7, FA 1997 have
been, or could be, applied.
(c) The Company has not received a dividend in respect of which the
payer has made an election under section 246A, ICTA 1988 nor a
distribution to which the provisions of paragraph 2 of Schedule 7,
FA 1997 have been, or could be, applied.
23.2.9 Repayments of share capital
The Company has not any time after 6/th/ April, 1965 repaid, redeemed or
repurchased or agreed to repay, redeem or repurchase or granted an option under
which it may become liable to purchase any shares of any class of its issued
share capital nor has the Company after that date capitalised or agreed to
capitalise in the form of shares or debentures any profits or reserves of any
class or description or otherwise issued or agreed to issue any share capital
other than for the receipt of new consideration (within the meaning of Part VI,
ICTA 1988) or passed or agreed to pass any resolution to do so.
23.2.10 Demergers
The Company has not been engaged in nor been a party to any of the transactions
set out in sections 213 to 218 inclusive, ICTA 1988 nor has it made or received
a chargeable payment as defined in section 218(1), ICTA 1988.
23.2.11 Issues of securities
No securities (within the meaning of section 254(1), ICTA 1988) issued by the
Company and remaining in issue at the date of this Agreement were issued in such
circumstances that the interest payable thereon falls to be treated as a
distribution under either sections 209(2)(d), 209(2)(da) or 209(2)(e), ICTA
1988, nor has the Company agreed to issue such securities in such circumstances.
85
<PAGE>
23.2.12 Capital distributions
The Company has not received any capital distribution to which the provisions of
section 189, TCGA could apply.
23.2.13 Land sold and leased back
The Company has not entered into any transaction to which the provisions of
section 779 or 780, ICTA 1988 have been or could be applied.
23.2.14 Foreign loan interest
The Company has not since 31/st/ March, 1982 received any foreign loan interest
in respect of which double-taxation relief will or may be restricted under
section 798, ICTA 1988.
23.2.15 Non-deductible payments
No rents, interest, annual payments or other sums of an income nature paid or
payable by the Company or which the Company is under an existing obligation to
pay in the future are or may be wholly or partially disallowable as deductions,
management expenses or charges in computing profits for the purposes of
corporation tax by reason of the provisions of sections 74, 79, 125, 338,
339,779 to 784 inclusive, 787 or 788, ICTA 1988 or any other statutory provision
or otherwise.
23.2.16 Rent payable to connected persons
No rent is or has been payable by the Company to which the provisions of
sections 33A and 33B, ICTA 1988 could have applied prior to their ceasing to
have effect.
23.2.17 No unremittable income or gains
No claim has been made by the Company under sections 584, 585 or 723 ICTA 1988
or under section 279, TCGA.
23.2.18 Payments to directors, officers or employees
The Company has not made or agreed to make any payment to or provided or agreed
to provide any benefit for any Director or former director, officer or employee
of the Company, whether as compensation for loss of office, termination of
employment or otherwise, which is not allowable as a deduction in calculating
the profits of the Company for Taxation purposes whether up to or after the
Balance Sheet Date.
23.2.19 Disallowance of trading losses and advance corporation tax carry
forward
No change of ownership of the Company has taken place in circumstances such that
section 768 (change in ownership of company: disallowance of trading losses) or
section 245, ICTA 1988 (change in ownership of company: calculation and
treatment of advance corporation tax) has or may be applied to deny relief for a
loss or losses incurred by the Company and within the period of three years
ending with the date of this Agreement there has been no major change in the
nature or conduct of any trade or business (as defined in section 768 and
86
<PAGE>
section 245, ICTA 1988) carried on by the Company.
23.2.20 Transfer pricing
The Company is not a party to any transaction or arrangement under which it may
be required to pay for any asset or any services or facilities of any kind an
amount which is in excess of the market value of that asset or those services or
facilities, neither is or was the Company a party to any transaction or
arrangements to which the provisions of section 770A and Schedule 28 AA, ICTA
1988 may apply and nor will the Company receive any payment for an asset or any
services or facilities of any kind that it has supplied or provided or is liable
to supply or provide which is less than the market value of that asset or those
services or facilities.
23.2.21 Transactions not at arm's length
The Company has not disposed of or acquired any asset in circumstances falling
within section 17 or 19, TCGA nor given or agreed to give any consideration to
which section 128(1)(2), TCGA could apply.
23.2.22 Transactions between connected persons
No allowable loss has accrued to the Company to which section 18(3), TCGA will
apply.
23.2.23 Chargeable debts
The Company is not owed a debt, other than a debt on a security, on the disposal
or satisfaction of which a liability to corporation tax on chargeable gains will
arise by reason of section 25 1, TCGA.
23.2.24 Relief for loans to traders and qualifying corporate bonds
No claim for relief has been allowed to the Company pursuant to sections 253 and
254, TCGA in respect of any loan and no chargeable gain has or is likely to
arise pursuant to section 253 (5), (6), (7) or (8) or section 254 (9) or (10),
TCGA.
23.2.25 Chargeable policies
The Company has not acquired benefits under any policy of assurance otherwise
than as the original holder of legal and beneficial title.
23.2.26 Postponement of gains relating to-overseas trade
No claim or election affecting the Company has been made (or assumed to be made)
under sections 140, 140C or 187 TCGA.
23.2.27 Depreciatory transactions
(a) No allowable loss which might accrue on the disposal by the Company
of any share in or security of any company is likely to be reduced
by virtue of the provisions of sections 176 and 177, TCGA.
87
<PAGE>
(b) The Company has not been a party to any scheme or arrangement
whereby the value of an asset has been materially reduced as set out
in sections 30-34, TCGA.
23.2.28 Restriction of straightline growth
No asset owned by the Company is subject to a deemed disposal and re-acquisition
under Schedule 2, TCGA ` so as to restrict the extent to which the gain or loss
over the period of ownership may be apportioned by reference to straightline
growth.
23.2.29 Other claims made by the Company
The Company has made no claim under any of the following:
(a) section 280, TCGA (tax on chargeable gains payable by instalments);
(b) section 24(2), TCGA (assets of negligible value);
(c) section 242(2), TCGA (small part disposals of land); or
(d) section 139, FA 1993 (deferral of unrealised exchange gains).
23.2.30 Gifts
The Company has not received any assets by way of gift as mentioned in section
282, TCGA and the Company has not held, and does not hold, shares in a company
to which section 125, TCGA could apply.
23.2.31 Non-resident companies
(a) There has not accrued or arisen any income, profit or gain in
respect of which the Company may be liable to corporation tax by
virtue of the provisions of section 13, TCGA or Chapter IV of Part
XVII, ICTA 1988.
(b) The Company has not been served with a notice in respect of the
unpaid corporation tax liability of any company pursuant to section
19 1, WGA.
23.2.32 Controlled foreign companies
No notice of the making of a direction under section 747, ICTA 1988 has been
received by the Company and no circumstances exist which would entitle the
Inland Revenue to make such a direction or to apportion any profits of a
controlled foreign company to the Company pursuant to section 752, ICTA 1988.
23.2.33 Agent for non-residents
The Company has not been a party to any transaction or arrangement whereby it is
or may hereafter become liable for Taxation under or by virtue of section 42A,
ICTA 1988 or regulations made thereunder or section 126, FA 1995.
23.2.34 Profit-related pay
88
<PAGE>
No scheme registered under Chapter 111 of Part V, ICTA 1988 applies to the
Company or any of its employees and no application for registration of a scheme
so applying has been made.
23.2.35 Payment from pension funds
The Company has not received a payment out of funds held for the purposes of an
exempt approved scheme in respect of which an amount is recoverable by the
Inland Revenue under section 601, ICTA 1988.
23.2.36 Claims and elections
(a) The Disclosure Documents contain full particulars of all claims
and elections made (or assumed to be made) under sections 23,
152-162 or 165, 175, 247, 248, TCGA insofar as they could affect
the chargeable gain or allowable loss which would arise in the
event of a disposal by the Company of any of its assets, and
indicates which assets (if any) so affected would not on a
disposal give rise to relief under Schedule 4, TCGA.
(b) The Disclosure Documents contain full particulars of elections
made under
(i) Regulation 10 of The Exchange Gains and Losses (Alternative
Method of Calculating of Gain or Loss) Regulations 1994 and
whether or not such elections have been varied
(ii) Regulation 3 or 4 of The Local Currency Elections
Regulations 1994 and such election is still valid.
23.2.37 Loan relationships
(a) all interests, discounts and premiums payable by the Company in
respect of its loan relationships (within the meaning of section
81, FA 1996) are eligible to be brought into account by the
Company as a debit for the purposes of Chapter 11 of Part IV, FA
1996 at the time and to the extent that such debits are
recognised in the statutory accounts of the Company.
(b) The Disclosure Documents contain full particulars of any debtor
relationship (within the meaning of section 103, FA 1996) of the
Company which relates to a relevant discounted security (within
the meaning of paragraph 3 of Schedule 13, FA 1996) to which
paragraph 17 or 18 of Schedule 9, FA 1996 applies.
(c) The Company has not been a party to a loan relationship which had
an unallowable purpose (within the meaning of paragraph 13 of
Schedule 9, FA 1996).
(d) The Disclosure Documents contain full particulars of:
(i) any loan relationships to which the Company is a party to
which paragraph 8 of Schedule 15, FA 1996 has applied or
will apply on the occurrence of a relevant event (within the
meaning of paragraph 8(2) of
89
<PAGE>
Schedule 15, FA 1996);
(ii) the amount of any deemed chargeable gain or deemed allowable
loss that has arisen or will arise on the occurrence of such
relevant event; and
(iii) any election made pursuant to paragraph 9 of Schedule 15, FA
1996.
(e) The Company has not entered into any transaction to which paragraph
11 of Schedule 9, FA 1996 applies.
23.3 Corporation tax - groups of companies
23.3.1 Group relief and consortium relief
The Disclosure Documents contain full particulars of all arrangements and
agreements relating to group relief (as defined by section 402, ICTA 1988) to
which the Company is or has been a party and:
(a) all claims by the Company for group relief were when made and are
now valid and have been or will be allowed by way of relief from
corporation tax;
(b) the Company has not made nor is liable to make any payment under any
arrangement or agreement save in consideration for the surrender of
group relief allowable to the Company by way of relief from
corporation tax;
(c) the Company has received all payments due to it under any
arrangement or agreement for any surrender of group relief made by
it and the payments are not liable to be refunded in whole or in
part;
(d) no such payment exceeds or could exceed the amount permitted by
section 402(6), ICTA 1988; and
(e) no arrangements such as are specified in section 410(1)-(6), ICTA
1988 exist or existed for any period of account in respect of which
a surrender has been made or purports to have been made.
23.3.2 Surrender of advance corporation tax
The Disclosure Documents contain full particulars of all arrangements and
agreements to which the Company is or has been a party relating to the surrender
of advance corporation tax made or received by the Company under section 240,
ICTA 1988 and:
(a) the Company has not paid nor is liable to pay for the benefit of any
advance corporation tax which is or may become incapable of set-off
against the Company's liability to corporation tax;
(b) the Company has received all payments due to it under any
arrangement or agreement for any surrender of advance corporation
tax made by it and the payments are not liable to be refunded in
whole or in part;
90
<PAGE>
(c) no such payment exceeds or could exceed the amount permitted by
section 240(8), ICTA 1988; and
(d) no arrangements such as are specified in section 240(11), ICTA 1988
whereby any person could obtain control of the Company exist or
existed for any period in respect of which a claim under section
240, ICTA 1988 has been made or purports to have been made.
23.3.3 Transfer of Tax refunds
The Disclosure Documents contain full particulars of all arrangements and
agreements relating to the transfer of tax refunds to which the Company is or
has been a party and:
(a) all claims by the Company for the transfer of tax refunds were when
made and are now valid and have been or will be allowed by way of
discharging the liability of the Company to pay any corporation tax;
(b) the Company has not made nor is liable to make any payment under any
arrangement or agreement save in consideration for the transfer of
tax refunds allowable to the Company by way of discharge from
liability to corporation tax and equivalent to the Taxation for
which the Company would have been liable but for the transfer;
(c) the Company has received all payments due to it under any such
arrangement or agreement or transfer of tax refunds made by it and
the payments are not liable to be refunded in whole or in part;
(d) no such payment exceeds or could exceed the amount permitted by
section 102(7), FA 1989; and
(e) no arrangements such as specified in section 410(1)-(6), ICTA 1988
exist or existed for any period in respect of which a claim under
section 102, FA 1989 has been made or purports to have been made.
23.3.4 Acquisitions from group members
No tax has been or may be assessed on the Company pursuant to section 190, TCGA
in respect of any chargeable gain accrued prior to the date of this Agreement
and the Company has not at any time within the period of six years ending with
the date of this Agreement transferred any asset other than trading stock
including any transfer by way of share exchange within section 135, TCGA to any
company which at the time of disposal was a member of the same group as defined
in section 170, TCGA.
23.3.5 Leaving the group
The execution or completion of this Agreement or any other event since the
Balance Sheet Date will not result in any chargeable asset being deemed to have
been disposed of and re-acquired by the Company for Taxation purposes pursuant
to section 178 or 179, TCGA or as a result of any other Event since the Balance
Sheet Date.
91
<PAGE>
23.3.6 Group income
The Disclosure Documents contain full particulars of all elections made by the
Company under section 247, ICTA 1988 and all such elections are now in force and
the Company has not paid any dividend without advance corporation tax or made
any payment without deduction of income tax in the circumstances specified in
section 247(6), ICTA 1988 and no assessment has been made on the Company in
respect of advance corporation tax which ought to have been paid or income tax
which ought to have been deducted.
23.3.7 Capital losses
The Company has no capital losses the set-off of which are or may be restricted
by section 177A and Schedule 7A, TCGA.
23.4 Close companies
23.4.1 Close company status
The Company has at all times been a close company within the meaning of sections
414 and 415, ICTA 1988.
23.4.2 Close investment-holding company status
The Company has not in any accounting period beginning after 31/st/ March, 1989
been a close investment-holding company as defined in section 13A, ICTA 1988.
23.4.3 Distributions
No distribution within section 418, ICTA 1988 has ever been made by the Company.
23.4.4 Loans to participators
Any loans or advances made or agreed to be made by the Company within sections
419 and 420 or 422, ICTA 1988 have been Disclosed and the Company has not
released or written off or agreed to release or write off the whole or any part
of any such loans or advances.
23.5 Inheritance tax
23.5.1 No transfers of value and associated operations
The Company has made no transfers of value within sections 94 and 202, ITA nor
has the Company received a transfer of value such that liability might arise
under section 199, ITA nor has the Company been party to associated operations
in relation to a transfer of value as defined by section 268, ITA.
23.5.2 Inland Revenue charge
There is no unsatisfied liability to inheritance tax attached to or attributable
to the Shares or any asset of the Company and none of them are subject to an
Inland Revenue charge as mentioned in section 237 and 238, ITA.
92
<PAGE>
23.5.3 Power of sale, mortgage or charge
No asset owned by the Company nor the Shares are liable to be subject to any
sale, mortgage or charge by virtue of section 212, ITA.
23.6 VAT
23.6.1 Returns and payments
(a) The Company is a taxable person duly registered for the purposes of
VAT.
(b) The Company has complied with all statutory provisions, rules,
regulations, orders and directions in respect of VAT, has promptly
submitted accurate returns, and the Company maintains full and
accurate VAT records, has never been subject to any interest,
forfeiture, surcharge or penalty nor been given any notice under
sections 59 or 64, VATA nor been given a warning within section
76(2), VATA nor has the Company been required to give security under
paragraph 4 of Schedule 11, VATA.
(c) VAT has been duly paid or provision has been made in the Accounts
for all amounts of VAT for which the Company is liable.
23.6.2 Taxable supplies and input tax credit
All supplies made by the Company are taxable supplies and the Company has not
been and will not be denied full credit for all input tax by reason of the
operation of sections 25 and 26, VATA and regulations made thereunder or for any
other reasons and no VAT paid by the Company is not input tax as defined in
section 24, VATA and regulations made thereunder.
23.6.3 VAT groups
The Company is not and has not been for VAT purposes a member of any group of
companies other than the Group and no act or transaction has been effected in
consequence whereof the Company is or may be held liable for any VAT arising
from supplies made by another company and no direction has been given nor will
be given by H M Customs & Excise under Schedule 9A, VATA as a result of which
the Company would be treated for the purposes of VAT as a member of a group.
23.6.4 Transactions between connected persons
The Company has not been or agreed to be party to any transaction or arrangement
in relation to which a direction has been or could be made under paragraph 1 of
Schedule 6, VATA or to which paragraph 2(3A) of Schedule 10, VATA applied.
23.6.5 Charge to VAT as agent or representative
The Company is not and has not agreed to become liable for VAT by virtue of
sections 47 and 48, VATA.
23.6.6 VAT and Properties
93
<PAGE>
The Company or its relevant associate for the purposes of paragraph 3(7) of
Schedule 10, VATA has exercised the election to waive exemption from VAT
(pursuant to paragraph 2 of Schedule 10, VATA) only in respect of those
Properties listed (as having been the subject of such an election) in the
Disclosure Documents and:
(a) neither the Company nor its relevant associate has any intention
or obligation to exercise such an election in respect of any other
of the Properties;
(b) all things necessary for the election to have effect have been
done and in particular any notification and information required
by paragraph 3(6) of Schedule 10, VATA has been given and any
permission required by paragraph 3(9) of Schedule 10, VATA has
been properly obtained;
(c) a copy of the notification and of any permission obtained from H M
Customs & Excise in connection with the election is included in
the Disclosure Documents;
(d) no election has or will be disapplied or rendered ineffective by
virtue of the application of the provisions of paragraph 2 (3AA)
of Schedule 10, VATA;
(e) in no case has the Company charged VAT, whether on rents or
otherwise, which is not properly chargeable; and
(f) the Company has not agreed to refrain from making an election in
relation to any of the Properties.
23.6.7 Capital goods scheme
The Company does not own and has not at any time within the period of ten years
preceding the date hereof owned any assets which are capital items subject to
the Capital Goods Scheme under Part XV of the VAT Regulations 1995.
23.6.8 Bad debt relief
The Company has not made any claim for bad debt relief under section 36, VATA
and details of any claim it could make have been Disclosed.
23.6.9 Self-billing
The Company has not entered into any self-billing arrangement in respect of
supplies made by any other person nor has it at any time agreed to allow any
such person to make out VAT invoices in respect of supplies made by the Company.
23.7 Stamp duty
23.7.1 Stamp duty
All stampable documents wheresoever executed (other than those which have ceased
to have any legal effect) to which the Company is a party have been duly stamped
or stamped with a particular stamp denoting that no stamp duty is chargeable.
Since the Balance Sheet Date
94
<PAGE>
there have been and are no circumstances or transactions to which the Company is
or has been a party such that a liability to stamp duty or any penalty in
respect of such duty will arise on the Company.
23.7.2 Stamp duty reserve tax
Since the Balance Sheet Date the Company has not incurred any liability to or
been accountable for any stamp duty reserve tax and there has been no agreement
within section 87(1), FA 1986 which could lead to the Company incurring such a
liability or becoming so accountable.
24. TAXATION - IRELAND
24.1 General
24.1.1 Tax Returns and Information: All returns, computations, notices and
items of information which are, or have been, required to be made or
given by the Group for any Tax purpose have been made or given within
the requisite periods and on a proper basis and are up-to-date and
correct, and none of them is, or is likely to be, the subject of any
dispute with the Revenue Commissioners or other Tax authorities.
24.1.2 Payment of Tax Due: All Tax, including amounts required by statute to
be deducted by the Group in respect of payments made by it, which the
Group is liable to pay prior to Completion has been or will be so paid
prior to Completion.
24.1.3 Penalties, Interest and Revenue Offences: The Group has not paid, and
will not become liable to pay, any fine, penalty or interest charged
by virtue of the TCA or any other statutory provision relating to Tax,
and the Group has not committed any act or made any omission which
might constitute an offence under Section 1078 of the TCA.
24.1.4 Agreement with Tax Authorities: The Disclosure Letter sets out full
particulars of any agreement or arrangement between the Group and the
Revenue Commissioners or other Tax authorities pursuant to which the
Group is authorised not to comply with a requirement which, but for
such agreement or arrangement, would be its statutory obligation, and
the Group has not taken any action which has had, or will have, the
result of altering, prejudicing or in any way disturbing any
arrangement or agreement which it has previously had with the Revenue
Commissioners or other Tax authorities.
24.1.5 Transactions since Balance Sheet Date: The Disclosure Letter contains
full and accurate particulars of all transactions effected otherwise
than in the ordinary course of business since the Balance Sheet Date
in respect of which the Group is required to make a specific return to
the relevant Tax authorities and in respect of which the time for
making such return will expire on or after Completion.
24.1.6 Tax Consents and Clearances: No transaction has been effected by the
Group in respect of which any consent or clearance from the Revenue
Commissioners or other Tax authorities was required:
95
<PAGE>
(1) without such consent or clearance having been validly obtained
before the transaction was effected;
(2) otherwise than in accordance with the terms of, and so as to
satisfy any conditions attached to, such consent or clearance; or
(3) otherwise than at a time when, and in circumstances in which,
such consent or clearance was valid and effective and in any case
where such consent or clearance was required, no circumstances
have arisen which might reasonably be expected to cause such
consent or clearance to be or become invalid or to be withdrawn
by the Tax Authority concerned.
24.1.7 Applications since Balance Sheet Date: All particulars furnished to
the Revenue Commissioners or other Tax authorities in connection with
the application for any consent or clearance by the Group made since
the Balance Sheet Date fully and accurately disclosed all facts and
circumstances material to the decision of the Revenue Commissioners or
such other authorities.
24.1.8 Claims under the Deed of Tax Covenant: Without prejudice to any
liability which may arise under the Deed of Tax Covenant, to the best
of the knowledge and belief of the Warrantors after making due and
careful enquiries, there is no liability to Tax in respect of which a
claim could be made under the Deed of Tax in respect of which a claim
could be made under the Deed of Tax Covenant and there are no
circumstances likely to give rise to such a liability.
24.1.9 Liability for Others: The Group is not and will not become liable to
pay, or make reimbursement or indemnity in respect of, any Tax (or
amounts corresponding thereto) in consequence of the failure by any
other person to discharge that Tax within any specified period or
otherwise, where such Tax relates to a profit, income or gain,
transaction, event, omission or circumstances arising, occurring or
deemed to arise or occur (whether wholly or partly) prior to
Completion.
24.1.10 Outstanding Entitlements: The Disclosure Letter includes a correct and
complete list and full particulars with express reference to this
clause 24.1.10. Of all matters relating to Tax in respect of which the
Group (either alone or jointly with any other person) has, or at
Completion will have, an outstanding entitlement:
(1) to make any claim for relief under the TCA or any other statutory
provision relating to Tax;
(2) to make any election for one type of relief, or one basis, system
or method of Tax, as opposed to another;
(3) to make any appeal (including a further appeal) against an
assessment to Tax:
(4) to make any application for the postponement, or payment by
instalment of, Tax; or
96
<PAGE>
(5) to disclaim any allowance or relief
such particulars being reasonably sufficient to enable the Purchaser
to procure that any time limit to such entitlement expiring within six
months after Completion can be met.
24.1.11 Notice of Attachment: No notice of attachment has been served on the
Group under Section 1002 of the TCA.
24.1.12 Deposit Interest Retention Tax: The Group has not received, nor will
it prior to Completion earn, deposit interest subject to retention of
tax under Section 257 of the TCA.
24.1.13 Charges on Book Debts: The Group has not since 27th May, 1986 taken a
fixed charge on the book debts of any company, nor will the Group take
any such fixed charge prior to Completion.
24.1.14 Agency For Non-Residents: The Group has never been nor is it now,
assessable to Tax under Section 1034 or 1034 of the TCA.
24.1.15 Anti-Avoidance Provision: The Group has not received any notice under
Section 811(6) of the TCA or engaged in, or been a party to, a tax
avoidance transaction within the meaning of Section 811(2) of the TCA
or any other transaction or series of transactions or scheme or
arrangement of which main purpose, or one of the main purposes, was or
could be said to be the avoidance or deferral of, of a reduction in
the liability to, Tax.
24.1.16 PAYE and Social Welfare: The Group has properly operated the pay-as-
you-earn and social welfare contribution systems (including levies),
deducting and accounting for tax and maintaining records as required
by law, and the Group has not suffered any PAYE audit by the Revenue
Commissioners since the Balance Sheet Date, nor has it been notified
that any such audit will or is expected to be made.
24.2 Corporation Tax
---------------
24.2.1 Company Residence: No member of the Group is, or has at any stage
since its incorporation been, resident for Tax purposes in a country
other than Ireland.
24.2.2 Foreign Tax: The Disclosure Letter includes a correct and complete
list and full particulars of any liability to Tax in a country other
than Ireland.
24.2.3 Manufacturing Relief:
(1) The Disclosure Letter includes a statement of all distributable
reserves which carry a reduced tax credit.
(2) where relief under Chapter 1 of Part 14 of the TCA has been
claimed by any Group Company, such relief was claimed, and is
being claimed, on a correct and proper basis.
97
<PAGE>
24.2.4 Loss of Relief etc: No relief (whether by way of deduction, reduction,
set-off, exemption, repayment, allowance or otherwise) from, against
or in respect of any Tax has been claimed or given to the Group which
could or might be effectively withdrawn, postponed, restricted or
otherwise lost as a result of any act, omission, event or circumstance
arising or occurring at, or at any time after, Completion, and the
Group has not at any time claimed any relief from Tax under Part 10 of
the TCA.
24.2.5 Carry Forward of Losses: Nothing has been done, and no event or series
of events has occurred or will as a result of any Contract, agreement
or arrangement entered into before Completion occur, which might when
taken together with the entry into or Completion of this Agreement
cause or contribute to the disallowance to any Group Company of the
carry forward of any losses or excess charges on income or surplus
advance corporation tax.
24.2.6 Restriction on Losses ad Charges: The use of losses incurred by, or
charges paid by, any Group Company is not restricted by Section
454,455 or 456 of the TCA.
24.2.7 Capital Losses:
(1) No Group Company has incurred a loss on the disposal or deemed
disposal of an asset (other than trading stock) in relation to
which its ability to set the whole of the loss against any
chargeable gain arising in the same or later accounting period is
or may
(2) No Group Company has made, nor is it entitled to make, a claim
under Section 538 of the TCA.
24.2.8 Capital Allowances: No Group Company has made any claim for capital
allowances in respect of any asset which is leased to or from, or
hired to or from, any Group Company, and since the Balance Sheet Date,
the Group has not done or omitted to do, or agreed to do or permitted
to be done, any act, or suffered any occurrence, as a result of which
any balancing charge has arisen or may arise under Section 274 and
Section 288 of the TCA nor has there been or might there be any
disallowance of excess relief by virtue of Section 403 of the TCA;
24.2.9 Base Value and Costs of Acquisitions:
(1) If each of the assets (other than trading stock) of the Group was
disposed of for a consideration equal to the book value of that
asset shown in or adopted for the purpose of the Accounts, no
liability to corporation tax on chargeable gains or balancing
charges under Section 274 and Section 288 of the TCA not fully
provided for the Accounts would arise.
(2) For the purpose of determining the liability to corporation tax
on chargeable gains, there shall be disregarded any reliefs and
allowances available to the Group other than amounts falling to
be deducted under Chapter 2 of Part 19 of the TCA.
98
<PAGE>
(3) The Group has not since the Balance Sheet Date acquired any asset
(other than trading stock) in circumstances such that Section
584, 585, 586 and 587 of the TCA applied to its acquisition.
24.2.10 Patent Income Exemption: The Disclosure Letter includes a correct and
complete list and full particulars of all dividends paid in the last
six years out of patent income disregarded for the purposes of
corporation tax by virtue of Section 234 of the TCA.
24.2.11 Close Companies: No Group Company has any liability to a surcharge on
any of its income pursuant to Section 440 or 441 of the TCA or will
incur any such liability in respect of any accounting period prior to
Completion, and no Group Company has at any time ceased to carry on
the trade of which, immediately prior to such time, its activities
wholly or mainly consisted. No distributions falling within Section
436 or 437 of the TCA have been made by any Group Company, and no
Group Company has entered into any transaction falling within Section
438 or 439 of the TCA.
24.1.12 Trading Company Status: Each Group Company, at the date of this
Agreement, carries on an activity which is a trade for the purposes of
Tax and has not ceased and will not as a result of any Contract,
agreement or arrangement entered into before Completion cease, to
carry on such activity.
24.2.13 Unremittable Income and Capital Gains: The Group has neither received
nor become entitled to any income which is particular income within
the meaning of Section 1004 of the TCA nor any particular gains to
which Section 1005 of the TCA applies.
24.2.14 Transactions Not at Arm's Length: The Group:
(1) does not own nor has it agreed to acquire any asset, nor has it
received or agreed to receive any services or facilities
(including without limitation the benefit of any licences or
agreement), the consideration for the acquisition or provision of
which was or will be in excess of its market value of otherwise
than on an arm's length basis;
(2) does not own nor has it agreed to dispose of any asset, nor has
it provided or agreed to provide any services or facilities
(including without limitation the benefit of any licences or
agreements), the consideration for the disposal or provision of
which was or will be less than its market value, or otherwise
than on an arm's length basis;
(3) has not disposed of or-acquired any asset in such circumstances
that the provision of Section 547 of the TCA applied or could
apply thereto; and
(4) has not since the Balance Sheet Date appropriated any asset owned
by it to or from trading stock.
24.2.15 Return of Capital etc. No Group Company has since incorporation:
99
<PAGE>
(1) repaid or agreed to repay, or redeemed or agreed to redeem, or
purchased or agreed to purchase, any of their share capital; or
(2) capitalised or agreed to capitalise in the form of debentures or
redeemable shares any profits or reserves of any class or
description.
24.2.16 Payments: No rents, interest, annual payments, emoluments or other
sums of an income nature paid or payable by the Group of which the
Group is under an obligation to pay in the future are, or (under the
law as presently in force) may be, wholly or partially disallowable as
deductions or charges in computing profits for the purpose of
corporation tax by reason of any statutory provisions relating to Tax.
24.2.17 Issue of Securities: No securities (within the meaning of Section
135(8) of the TCA) issued by the Group and remaining in issue at the
date of this Agreement were issued in such circumstances that any
interest or other distribution out of assets in respect thereof falls
to be treated as a distribution under Section 130(2) (d) of the TCA,
nor has the Group agreed to issue securities (within that meaning) in
such circumstances.
24.2.18 Preference Share Dividends: Section 138 of the TCA does not apply to
dividends paid or received by any Group Company.
24.2.19 Depreciatory Transactions: No asset owned by the Group has at any time
since its acquisition by the Group been subjected to a reduction in
value such that any allowable loss arising on its disposal is likely
to be reduced or eliminated or any chargeable gain arising on its
disposal is likely to be increased.
24.2.20 Premiums and Sale and Lease Back of Land: The Group has not entered
into any transaction to which the provisions of Section 98, 99 or 100
of the TCA have been or could be applied.
24.2.21 Pension Schemes: The Group has not since the Balance Sheet Date
received any payment to which Section 782 of the TCA is applicable.
24.2.22 Share Schemes: No Group Company has:
(1) established an approved profit sharing scheme under the
provisions of Chapter 1 of Part 17 of the TCA and the eleventh
schedule to the TCA or are a participating company within the
meaning of the eleventh schedule to the TCA;
(2) issued any eligible shares within the meaning of Section 479 of
the TCA;
(3) got in existence, nor are proposing to introduce, any share
option scheme or profit sharing scheme for all or any directors
or employees of the Group; or
(4) been nor are now, a qualifying research and development company
or a qualifying sponsoring company within the meaning of Chapter
III of Part I
100
<PAGE>
of the Finance Act, 1986.
Group Relief Surrenders of Group Income:
----------------------------------------
(1) The Discloure Letter includes a correct and complete list and
full particulars of all arrangements and agreements relating to
group relief (as described in Chapter 5 of Part 12 of the TCA) to
which any Group Company is or has been a party in the last three
years.
(2) All claims made by any Group Company for group relief were, when
made, valid and have been or will be allowed by way of relief
from corporation tax.
(3) Save as disclosed in the Accounts, no Group Company has since the
Balance Sheet Date made, nor is it liable to make, any payment
under any such arrangement or agreement.
(4) Each Group Company has received any payments due to it under any
such arrangement or agreement for surrender of group relief made
by them.
24.2.24 Group Relief Surrenders of Act:
-------------------------------
(1) The Disclosure Letter includes a correct and complete list and
full particulars of all arrangements and agreements relating to
the surrender of advance corporation tax (as described in Section
166 of the TCA) to which any Group Company is or has been party
in the last three years.
(2) All claims made by each Group Company for the surrender of
advance corporation tax were, when made, valid and have been or
will be allowed by way of relief from corporation tax payable by
the particular Group Company to whom the advance corporation tax
was surrendered.
(3) Save as disclosed in the Accounts, no Group Company has since the
Balance Sheet Date paid, or are liable to pay, any advance
corporation tax which is or may become incapable of set-off
against their liability to corporation tax.
(4) Each Group Company has received all payments due to it under any
such arrangements or agreements for the surrender of advance
corporation tax.
24.2.25 Elections: The Disclosure includes a correct and complete list and
----------
full particulars of all elections made by any Group Company under
Section 165 of the TCA.
24.2.26 Acquisitions from Group Companies: The entry into or Completion of
----------------------------------
this Agreement will not result in any profit or gain being deemed to
accrue to any Group Company for Tax purposes, whether pursuant to
Section 623 of the TCA or otherwise.
24.2.27 Replacement of Business Assets: The Group has not purchased an asset
-------------------------------
subject to a claim made under Section 620 of the TCA, nor has it made
any other claim
101
<PAGE>
which would affect the amount of the chargeable gain or allowable loss
which would, but for such claim, have arisen on a disposal of any of
its assets.
24.2.28 Dealings in Land: The Group has not entered into any transaction as a
-----------------
result of which it could be assessed to Tax under Chapter 1 of Part 22
of the TCA.
24.2.29 Section 453 of the TCA does not apply and has never applied to the
computation of the income of any Group Company for the purposes of
Corporation Tax.
24.3 Value Added Tax ("VAT"):
------------------------
24.3.1 The Disclosure Letter includes a correct and complete list and full
particulars of any claim for bad debt relief which has been or may be
made by the Group under section 10(3)(c) of the Value Added Tax Act,
1972 ("the VAT Act").
24.3.2 Each Group Company is registered for the purpose of VAT, and has been
so registered at all times that it has been required to be registered
by the relevant legislation.
24.3.3 The Group has complied fully with all statutory requirements, orders,
provisions, directions or conditions relating to VAT including (for
the avoidance of doubt) the terms of any agreement reached with the
Revenue Commissioners.
24.3.4 The Group maintains and has at all times maintained complete, correct
and up-to-date records for the purpose of VAT, and has preserved such
records in such form and for such periods as are required by the
relevant legislation.
24.3.5 The Group is not in arrears with any VAT payment or returns, or liable
to any abnormal or non-routine payment or any forfeiture or penalty or
to the operation of any penal provision.
24.3.6 The Group is not, and has not agreed to become, an agent, manager or
factor (for the purposes of section 37 of the VAT Act).
24.3.7 No Group Company has at any time been a member of a group registration
made pursuant to section 8(8) of the VAT Act (other than a group
registration all the other members of which were members of the Group)
nor been served with a notice in writing from the Revenue
Commissioners under that section.
24.3.8 The Group has not, since the Balance Sheet Date, made exempt supplies
such, or of such amount, that it is unable to obtain credit for all
input tax paid or suffered by it.
24.4 Stamp Duty:
----------
24.4.1 All documents to which the Group is a party of which form party of any
of the title of the Group to any asset owned or possessed by it have
been duly stamped and (where appropriate) adjudicated.
24.4.2 Within the two years ending on the date of this Agreement, the Group
has not
102
<PAGE>
made any claim for relief or exemption under section 19 of the Finance
Act, 1952 or section 31 of the Finance Act, 1965 and no such claim
will be made prior to Completion.
24.4.3 The Group has not entered into any agreement with the Revenue
Commissioners pursuant to section 113 of the Finance Act, 1990.
24.5 Capital Duty:
------------
24.5.1 The Group has duly paid all stamp duty, and interest, fines and
penalties thereon, payable in accordance with the provision of section
68 of the Finance Act, 1973, whether or not the due date of payment
has passed
24.5.2 Within the five years ending on the date of this Agreement, the Group
has not made any claim for relief or exemption under section 72 of the
Finance Act, 1973.
24.6 Capital Acquisition Tax:
-----------------------
24.6.1 There is no outstanding charge for unpaid capital acquisition tax over
any asset of the Group or in relating to any shares in the capital of
any Group Companies.
24.6.2 There are not in existence any circumstances whereby any such power as
is mentioned in section 35(8) of the Capital Acquisition Tax Act, 1976
could be exercise in relation to any shares, securities or other
assets of or owned by the Group.
24.6.3 Since the Balance Sheet Date, no taxable gift (as defined by section 6
of the Capital Acquisitions Tax Act, 1976) or taxable inheritance (as
defined by section 12 of the same Act) has been received by any Group
Company, nor has any Group Company been a disponer (as defined by
section 2 of the same Act) for the purposes of capital acquisitions
tax.
103
<PAGE>
SCHEDULE 7
Basis for preparation of the Completion Statement
1. GENERAL REQUIREMENTS
The consolidated Completion Statement of the Group shall represent the
assets and liabilities of the Group after the Hive Down and be prepared on
the basis of UK GAAP as applied by companies carrying on a similar business
to that of the Business, but for the avoidance of doubt:
1.1 sums receivable in respect of debtors shall not be included at sums higher
than the amounts collectible, making appropriate provision for doubtful
debts;
1.2 stocks and work-in-progress shall be valued at the lower of cost and net
realisable value;
1.3 liabilities shall include accruals, provisions and reserves including in
respect of costs of the Hive Down;
1.4 no value shall be attributable to goodwill or any other intangible asset;
1.5 no value shall be attributable to research and development costs;
1.6 immovable property and other fixed assets shall be included at their net
book value as at the Balance Sheet Date (or at cost if purchased after the
Balance Sheet Date) less depreciation on cost at 33% per annum for all
classes of fixed assets;
1.7 full provision shall be made for all Taxation, including Taxation arising
from the Hive Down and including deferred Taxation, but no value shall be
attributable to deferred tax assets on an individual or net basis.
104
<PAGE>
SCHEDULE 10
Completion
Part 1
1. VENDORS' OBLIGATIONS
On Completion, the Vendors shall deliver to the Purchaser:
1.1 evidence reasonably satisfactory to the Purchaser of the fulfilment of the
conditions set out in clause 2.1, including novation of such material
Contracts of the Services Business to the assignee of such business as
Purchaser may require;
1.2 a copy of the minutes of a meeting of the directors of each of the Vendors
that is a body corporate authorising the execution by that Vendor of this
Agreement and the Tax Deed (such copy minutes being certified as correct by
the secretary of that Vendor);
1.3 certificates from each of the banks at which the Company and each of the
Subsidiaries maintains an account of the amount standing to the credit or
debit of all such accounts as at the close of business on the last Business
Day prior to Completion;
1.4 the cash book balances of the Company and each of the Subsidiaries as at
Completion with statements reconciling such cash book balances and the
relevant cheque books with the balances on the bank accounts of the Company
and each of the Subsidiaries as shown by the certificates referred to in
paragraph 1.3;
1.5 the cheque books relating to all the bank accounts of the Company and each
of the Subsidiaries together with confirmation that no cheques have been
written by the Company or any of the Subsidiaries since preparation of the
statements referred to in paragraph 1.4;
1.6 evidence in the agreed terms that all debts and accounts (if any) between
any member of the Group or any Affiliate of any member of the Group (of the
one part) and the Vendors and any Connected Person or Affiliate of any of
the Vendors (of the other part) have been fully paid and settled;
1.7 evidence satisfactory to the Purchaser that all guarantees, indemnities and
warranties given by the Company and the Subsidiaries other than those
Disclosed have been released;
1.8 the Tax Deed duly executed as a deed by the Vendors, duly executed by each
of the parties thereto other than the Purchaser;
1.9 transfers of the Shares duly executed by the registered holders thereof in
favour of the Purchaser or its nominee(s) together with the relevant share
certificates in the names of such registered holders;
105
<PAGE>
1.10 such waivers, consents or other documents (including any power of attorney
under which any document required to be delivered under Part 1 of this
schedule has been executed) in the agreed terms to enable the Purchaser and
its nominee(s) to be registered as the holders of the Shares;
1.11 certificates in respect of all issued shares in the capital of each of the
Subsidiaries and duly executed transfers of all shares in any Subsidiary
held by any nominee or trustee for the Company including ATL or another
subsidiary in favour of such persons as the Purchaser shall direct;
1.12 irrevocable powers of attorney in the agreed terms executed by each of the
holders of the Shares in favour of the Purchaser or its nominee(s) to
enable the beneficiary (pending registration of the transfers of the
Shares) to exercise all voting and other rights attaching to the Shares and
to appoint proxies for this purpose;
1.13 the statutory registers and minute books (properly written up to the time
immediately prior to Completion), the common seal (if any), the certificate
of incorporation and (if applicable) any certificate of incorporation on
change of name of the Company and each of the Subsidiaries;
1.14 the documents of title to the Properties;
1.15 the written resignations in the agreed terms of all the Directors and the
secretary or secretaries of the Company and the Subsidiaries in form
satisfactory to Purchaser from their respective offices, such resignations
to take effect from Completion;
1.16 the written resignation of the auditors of the Company and of each of the
Subsidiaries in the agreed terms to take effect from Completion containing
the statements referred to in section 394(1), CA 85 that they consider
there are no such circumstances as are mentioned in that section and
confirming that they have deposited or shall deposit that statement in
accordance with section 394(2), CA 85 at the respective registered offices
of the Company and each of the Subsidiaries; and
1.17 the resignations in the appropriate form of such of the trustees of the
Irish Pension Scheme as the Purchaser may require.
1.18 signed Apion/Aldiscon (NI) Limited employment agreements for Michael
Curran, Richard McConnell, Liam McQuillan and Denis Murphy;
1.19 employment agreements in the agreed form, duly executed by Denis Murphy,
Richard McConnell and Michael Curran;
1.20 Legal opinions in substantially the form attached as Exhibit B (subject to
customary limitations and exceptions) from Biggar & Strahan and Gore &
Grimes.
1.21 written confirmation from Vendors that none is a a US Person for "check-
the-box" tax election purposes;
1.22 Acknowledgements in a form acceptable to the Purchaser from Sheila Purdy
and Paul McCartney confirming that they have no rights to the issue or
shares in, or other
106
<PAGE>
claims against, the Company or any of the subsidiaries.
1.23 Written confirmation from Prudential and Equitable Life that all
premiums payable under the NI Pension Scheme and the Irish Pension
Scheme prior to completion have been duly paid to them.
1.24 Copies of duly executed assignments of intellectual property in the form
in the the Disclosure Documents of Denis Murphy, Richard McConnell,
Michael Curran and Liam McQuillan;
1.24.1 the assignments of Intellectual Property dated 15 January and 28 March
1999, duly stamped by the relevant taxing authority (or evidence that no
stamping is required).
107
<PAGE>
Part 2
On Completion, the Vendors shall cause a board meeting of the Company and of
each of the Subsidiaries to be held at which:
1. in the case of the Company only, the said transfers of the Shares shall be
passed for registration and registered (subject to the same being duly
stamped, which shall be at the cost of the Purchaser);
2. the resignations referred to in paragraphs 1.15 and 1.16 of Part 1 shall be
tendered and accepted so as to take effect at the close of the meeting;
3. persons nominated by the Purchaser (in the case of directors subject to any
maximum number imposed by the relevant articles of association) shall be
appointed additional directors and appointed secretaries;
4. all existing instructions and authorities to bankers shall be revoked and
shall be replaced with alternative instructions, mandates and authorities in
such form as the Purchaser may require;
5. the registered office shall be changed as directed by the Purchaser
6. the accounting reference date shall be changed as directed by the Purchaser
7. Messrs. KPMG shall be appointed auditors;
8. the Hive-Down will be approved; and
9. in the case of the Subsidiaries only, transfers shall be passed for
registration and registered (subject to the same having been duly stamped at
the cost of the Company) and declarations of trust in a form satisfactory to
the Purchaser shall be executed in respect of all shares in the Subsidiaries
held by any person other than the Company as nominee for the Company or
another Subsidiary.
108
<PAGE>
SCHEDULE 14
INVESTMENT REPRESENTATIONS
Each of the Vendors hereby represents and warrants as follows:
1. Such Vendor is as of the date hereof.
1.1 a natural person whose individual net worth, or joint net worth
together with such person's spouse, exceeds $1,000,000 at the time of
purchase;
1.2 a natural person with individual income in excess of $200,000 in each
of the two most recent years or joint income with such person's spouse
in excess of $300,000 in each such year and with a reasonable
expectation of reaching the same level of income in the current year;
1.3 an employee benefit plan with total assets in excess of $5,000,000
which is established or maintained by a state, political subdivision
or their agencies or instrumentalities;
1.4 an organisation as described in Section 501(C) (3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Consideration Stock, with total assets in excess of $5,000,000;
1.5 a trust with assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Consideration Stock, whose purchase
is directed by a person who has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of an investment in the Consideration Stock; or
1.6 an entity in which all of the equity owners meet one or more of the
above criteria.
2. Such Vendor is acquiring the Consideration Stock for investment purposes
only, solely for such Vendor's own account and not with a view to, or for
resale in connection with, the distribution or other disposition thereof in
violation of any federal or state securities laws;
3. Such Vendor's knowledge and experience in financial and business matters
are such that such Vendor is capable of evaluating the merits and risks of
its investment in the Consideration Stock, and has made its own independent
valuation with respect to the value of the Consideration Stock;
4. Such Vendor understands that the Consideration Stock are a speculative
investment which involves a high degree of risk of loss of the investment
therein, such Vendor's financial situation is such that such Vendor can
afford to bear the economic risk of holding the Consideration Stock
acquired by such Vendor hereunder for an indefinite period of time, has
adequate means for providing for such Vendor' current needs and
contingencies and can afford to suffer the complete loss of the investment
in the Consideration Stock;
5. Such Vendor and Such Vendor's representatives, including such Vendor's
financial, tax, legal and other advisers, have carefully reviewed all
documents furnished to them in
109
<PAGE>
connection with the investment in the Consideration Stock, and understands
and has taken cognisance of all the risk factors related to such
investment, and no representations or warranties have been made to such
Vendor or such Vendor's representatives concerning such investment or the
Company, its prospects or other matters;
6. Such Vendor and such Vendor's representatives have been given the
opportunity to examine all documents and to ask questions of, and to
receive answers from, the Company and its representatives concerning the
terms and conditions of the acquisition of the Consideration Stock and the
business of the Company and to obtain any additional information which such
Vendor or such Vendor's representatives deem necessary to verify the
accuracy of the information that has been provided to such Vendor in order
for such Vendor to evaluate the merits and risk of the investment in the
Consideration Stock;
7. Such Vendor understands that no federal agency (including the Securities
and Exchange Commission), state agency or foreign agency has made or will
make any finding or determination as to the fairness of an investment in
the Consideration Stock (including as to the purchase price); and
8. Such Vendor is not a US Person (as defined in the Securities Act of 1933,
as amended (the "Securities Act").
9. Such Vendor understands that the offer and sale of the Consideration Stock
have not been registered under the Securities Act, by virtue of Section
4(2) of the Securities Act, or under the securities laws of any state of
the United States or of any foreign jurisdiction;
10. Such Vendor understands that no resales of the Consideration Stock may be
effected unless the resale of such Consideration Stock is registered under
the Securities Act or an exemption therefrom is available and all
applicable state and foreign securities laws are complied with;
11. Such Vendor understands that the following restrictive legend shall be
placed on the certificates representing the Consideration Stock acquired by
such Vendor hereunder:
THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES LAWS. SUCH
CONSIDERATION STOCK MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM SAID ACT OR SUCH OTHER LAWS
AND, IF REQUESTED BY THE ISSUER, AN OPINION OF COUNSEL SELECTED BY THE HOLDER
AND REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT
REQUIRED, OR IS EXEMPT FROM SAID ACT OR SUCH OTHER LAWS.
12. Such Vendor understands that a notation shall be made in the appropriate
records of the Company, indicating that the Consideration Stock are subject
to restrictions on transfer and appropriate stop-transfer instructions will
be issued to the securities transfer agent with respect to the
Consideration Stock.
110
<PAGE>
SCHEDULE 15
Escrow
1. Each of the Vendors hereby directs the Purchaser to retain 10 per cent of
the Consideration Stock which it would otherwise be entitled to receive
upon Completion. Such retained shares are referred to in this Schedule 15
as "ESCROW SHARES".
2. Except as otherwise provided below, the Escrow Shares shall be retained by
the Purchaser until the first anniversary of Completion, (the "ESCROW
PERIOD").
3. During the Escrow Period:
3.1 the Purchaser shall not be required to release or deliver any of the
Escrow Shares to the Vendors and shall keep the certificates therefor.
3.2 in relation to any Claim which arises against any of the Vendors
during the Escrow Period and is settled in favour of the Purchaser
either during or after the Escrow Period, each of the Vendors hereby
irrevocably waives their right to receive such number of Escrow
Shares, on a pro rata basis according to the proportion of the
Consideration Stock receivable by each of them as set forth in
Schedule 1, as equals in aggregate the amount paid by the Vendors to
the Purchaser in settlement of such Claim (up to the maximum number of
Escrow Shares). The Purchaser shall calculate the number of shares
which the Vendors irrevocably waive their right to receive upon any
Claim being settled by dividing the aggregate amount payable in
satisfaction of the settled Claim by the price per share at which the
Consideration Stock was issued.
4. After the expiry of the Escrow Period, the Purchaser shall be required to
deliver the Escrow Shares to the Vendors less (a) any Escrow Shares which
the Vendors have irrevocably waived their right to receive under 3.1 above
and (b) any Escrow Shares the rights to which would be required to be
waived if any then outstanding Claim were settled in favour of the
Purchaser which has been adjudged to be a prima facie Claim by an
independent Queens Counsel nominated by the Purchaser and agreed to by the
Warrantors and, in default of agreement, appointed by the President for the
time being of the Bar Council of England and Wales. If, and to the extent
that, any such outstanding Claim is subsequently settled in favour of the
relevant Vendors, the number of Escrow Shares set aside in respect of such
Claim shall be delivered by the Purchasers to the Vendors. If, and to the
extent that, any such Claim is settled in favour of the Purchaser the
Vendors hereby irrevocably waive any right to receive such Escrow Shares.
The number of Escrow Shares to be retained by the Purchaser shall be
determined using the same method as set forth in paragraph 3.2 above.
4. Any Escrow Shares which the Vendors have irrevocably waived their rights to
receive may, at the option of the Purchaser, be cancelled, held in treasury
or reissued to another person and upon such waiver the Consideration shall
be deemed to have been redeemed accordingly.
5. Notwithstanding the above there shall be retained in Escrow Consideration
Stock to the
111
<PAGE>
value of (Pounds)3,000,000 following the expiry of one year from Completion
for release as follows (net of any sum payable under the Tax Indemnity in
respect thereof);
6.1 (Pounds)700,000 upon adjudication of the share transfers in
relation to the acquisition by the Company Company of the share
capital of AL;
6.2 (Pounds)700,000 upon adjudication of the share transfers in
relation to the acquisition by the Company of the share capital
of ATL;
6.3 (Pounds)190,000 upon agreement by the Revenue Commissioners of
any possible attribution of gain to the Company in relation to
the disposal by the Group of the share capital of Rowarth
Limited;
6.4 (Pounds)1,224,000 upon payment of the primary liability by
Balmore Enterprises Limited and agreement of the amount by the
Inland Revenue in respect of secondary liability to UK taxation
in relation to Balmore Enterprises Limited ceasing to be a member
of the Group; and
6.5 (Pounds)204,000 upon payment of the primary liability by Raworth
Limited and agreement of the amount by the relevant Irish taxing
authority in respect of secondary liability to Irish taxation in
relation to Raworth Limited ceasing to be a member of the Group.
The number of Escrow Shares to be retained by the Purchaser shall
be determined using the same method as set forth in paragraph 3.2
above.
112
<PAGE>
SIGNED by GILBERT LITTLE
/s/ Gilbert Little......
SIGNED by LAURENCE QUINN
/s/ Laurence Quinn......
SIGNED by JOSEPH CUNNINGHAM
/s/ Joseph Cunningham
SIGNED for and on behalf of
ENTERPRISE IRELAND by
/s/ Michael O'Boyle.....
SIGNED for and on behalf of ) Director
MAYFAIR VENTURE CAPITAL ) Director/Secretary
LIMITED by )
SIGNED by VINCENT DALY
/s/ Vincent Daly........
SIGNED by DAVID MEGAN
/s/ David Megan.........
SIGNED by PAUL TIERNEY
/s/ Paul Tierney........
113
<PAGE>
SIGNED by DENIS MURPHY
/s/ Denis Murphy........
SIGNED by RICHARD McCONNELL
/s/ Richard McConnell...
SIGNED by MICHAEL CURRAN
/s/ Michael Curran......
SIGNED by LIAM QUILLAN
/s/ Liam Quillan .......
SIGNED by MEHRAN MIRAHMADI
/s/ Mehran Mirahmadi....
SIGNED for and on behalf of
PHONE.COM, INC
/s/ Alain Rossmann......
ALAIN ROSSMANN, Chairman & CEO
114
<PAGE>
EXHIBIT 2.2
THIS AGREEMENT is made on October 1999
BETWEEN:
(1) THE SEVERAL PERSONS whose respective names and addresses are set out in
column (1) of Schedule 1 (the "Vendors"); and
(2) PHONE.COM, INC (a Delaware corporation) whose address is 800 Chesapeake
Drive, Redwood City, California 94063 USA (the "Purchaser").
WHEREAS:
(A) The Purchaser has entered into an agreement, dated 11 October 1999, ("Sale
and Purchase Agreement") with the Vendors to purchase the entire issued
share capital of Apion Telecoms Limited, a company registered in Northern
Ireland with number NI 36497 (the "Company") in reliance (inter alia) upon
the representations, warranties and undertakings in the Sale and Purchase
Agreement for the consideration and otherwise upon and subject to the terms
and conditions of the Sale and Purchase Agreement.
(B) The Vendors and the Purchaser have agreed to enter into this Supplemental
Agreement to supplement and amend the terms and conditions of the Sale and
Purchase Agreement as set out below.
WHEREBY IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Supplemental Agreement defined words and expressions have the
meanings set out in the Sale and Purchase Agreement.
2. SHARES REGISTERED IN NAME OF VENDOR AFTER COMPLETION
2.1 Each of the Vendors hereby declares that for so long as it remains the
registered holder of any of the Shares or any shares of any class of the
Subsidiaries ("Subsidiary Shares"), including without limitation, 2 shares
in ATL held by Laurence Quinn and Gilbert Little on trust for the A
Shareholders of the Company after Completion it will:
(a) hold the Shares and the Subsidiary Shares and their
dividends and other distributions of profits or surplus or other
assets declared, paid or made in respect of them after Completion and
all rights arising out of or in connection with them in trust for the
Purchaser and its successors in title; and
(b) deal with and dispose of the Shares and Subsidiary Shares
and all such dividends, distributions and rights are described in
Clause 2.1(a) as the Purchaser or any such successor may direct.
2.2 (a) Each of the Vendors hereby irrevocably appoints the Purchaser as
its lawful agent and proxy for the purpose of receiving notices of and
attending and
1
<PAGE>
voting at all meetings of the members of the Company from Completion
to the day on which the Purchaser or its nominee is entered in the
register of members of the Company as the holder of the Shares and
Subsidiary Shares.
(b) For such purpose the Vendors hereby authorise:
(i) the Company to send any notices in respect of their
holdings of Shares to the Purchaser; and
(ii) the Purchaser to complete in such manner as it thinks
fit and to return proxy cards, consents to short notice and any
other document required to be signed by him in his capacity as a
member.
2.3 The rights of the Purchaser pursuant to Clauses 2.1 and 2.2 shall
cease on the registration of the Shares and Subsidiary Shares in the
Purchaser's name.
3. SUPPLEMENT TO CLAUSE 11 OF THE SALE AND PURCHASE AGREEMENT
3.1 Clause 11 of the Sale and Purchase Agreement shall be amended by
the insertion of the following Clause 11.1.7:
"11.1.7 any breach of Warranty 2.4 set forth in Schedule 6 of this
Agreement."
4. ACKNOWLEDGEMENT
4.1 The parties acknowledge that no Schedule 2 to the Sale and Purchase
Agreement was ever agreed between the parties and, accordingly, Schedule 2
and all references in the Sale and Purchase Agreement to "Participants", "A
Participants" and "B Participants" shall be of no effect.
5. AMENDMENT TO PARAGRAPH 6 OF SCHEDULE 15 OF THE SALE AND PURCHASE AGREEMENT
5.1 Paragraph 6 of Schedule 15 of the Sale and Purchase Agreement shall be
amended by the deletion of the existing Paragraph 6 and the insertion of
the following new Paragraphs 6:
"6.1 (Pounds)700,000 upon adjudication by the Inland Revenue of the share
transfers in relation to the acquisition by the Company of the share
capital of AL;
6.2 (Pounds)700,000 upon the Revenue Commissioners being satisfied as to
any capital duty payable in relation to the subscription by the
Company for share capital of AL;
6.3 (Pounds)190,000 upon the earliest to occur of: (a) the second
anniversary of the lodgement of the Irish corporation tax return by
the Company for the 99/00 tax year which has not been challenged by
the Revenue Commissioners; (b) 31 December, 2002 provided that by
such date the corporation tax return of the Company for the 99/00
tax year has not been challenged by the Revenue
2
<PAGE>
Commissioners; and (c) agreement by the Revenue Commissioners of any
possible attribution of gain to the Company in relation to the
disposal by the Group of the share capital of Rowarth Limited;
6.4 (Pounds)1,224,000 upon payment of the primary liability by Balmore
Enterprises Limited and the amount of such liabilities being
accepted by the Inland Revenue in accordance with its normal self-
assessment procedures in relation to Balmore Enterprises Limited
ceasing to be a member of the Group; and
6.5 (Pounds)204,000 upon the earliest to occur of: (a) the second
anniversary of the lodgement of the Irish corporation tax return by
the Company for the 99/00 tax year which has not been challenged by
the Revenue Commissioners; (b) 31 December, 2002 provided that by
such date the corporation tax return of the Company for the 99/00
tax year has not been challenged by the Revenue Commissioners; and
(c) payment of the primary liability by Raworth Limited and
agreement of the amount by the relevant Irish taxing authority in
respect of secondary liability to Irish taxation in relation to
Raworth Limited ceasing to be a member of the Group.
The number of Escrow Shares to be retained by the Purchaser shall be
determined using the same method as set forth in paragraph 3.2
above."
6. RELEASE FROM GUARANTEES, INDEMNITIES AND WARRANTIES
6.1 The Vendors warrant that all guarantees, indemnities and warranties
given by the Company and the Subsidiaries other than those Disclosed in the
Disclosure Letter have been released and no sums are owing in respect
thereof.
7. AEPONA PAYE DEDUCTION
7.1 Purchaser is proposing to make awards of shares of common stock of
the Purchaser to employees of Balmore Enterprises Limited and Rowarth
Limited (collectively, "Aepona"). The making of such awards will impose an
obligation for Aepona to operate PAYE and, if appropriate, employees
National Insurance Contributions ("NIC") arising from the grant of such
awards.
7.2 Purchaser hereby undertakes to pay over to Aepona the proceeds of
sale of shares of common stock of Purchaser withheld by Purchaser from such
awards in accordance with the documentation evidencing such awards.
Purchaser shall pay such sums within 30 days of sale by the Purchaser of
such withheld stock. Aepona shall timely notify Purchaser of the amount of
any PAYE and NIC obligations arising in respect of any grant to enable
Purchaser to withhold the appropriate number of shares of common stock from
any awards. The calculation of PAYE and NIC obligations are the sole
responsibility of Aepona.
7.3 Purchaser undertakes to indemnify Aepona against any penalties or
interest incurred by Aepona under relevant PAYE or NIC legislation as a
result of (I) any failure
3
<PAGE>
by Purchaser to notify Aepona of an award of stock to an Aepona employee or
(ii) any failure to pay over funds within the period described in Clause
7.2 above.
8. TAX ELECTION
At the request of the Purchaser and provided that it has no material
adverse effect on the tax position in any jurisdiction of any Vendor, the
Vendors shall agree to, and cooperate with the Purchaser in, the filing of
a 338(h)(10) election under US law in respect of the sale of the shares of
the Company to Purchaser.
9. COUNTERPARTS
9.1 Execution in counterparts
This Supplemental Agreement may be executed in any number of counterparts
and by the parties on different counterparts, but shall not be effective
until each party has executed at least one counterpart.
9.2 One agreement
Each counterpart shall constitute an original of this Supplemental
Agreement but all the counterparts shall together constitute one and the
same agreement.
10. INVALIDITY
Each of the provisions of this Supplemental Agreement is severable. If any
such provision is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, the legality, validity or
enforceability in that jurisdiction of the remaining provisions of this
Supplemental Agreement shall not in any way be affected or impaired
thereby.
11. AGREEMENT TO CONTINUE IN FULL FORCE AND EFFECT
11.1 Except as expressly amended by this Supplemental Agreement, the Sale
and Purchase Agreement shall continue in full force and effect.
11.2 This Supplemental Agreement shall, to the extent that it remains to be
performed, continue in full force and effect notwithstanding Completion.
12. GOVERNING LAW AND JURISDICTION
12.1 English law
This Supplemental Agreement shall be governed by and construed in
accordance with English law.
12.2 Courts of England and Wales
The parties to this Supplemental Agreement irrevocably agree that, for the
exclusive
4
<PAGE>
benefit of the Purchaser, the courts of England shall have jurisdiction to
settle any dispute which may arise out of or in connection with this
Supplemental Agreement and that accordingly any Proceedings may be brought
in such courts.
AS WITNESS the hands of the parties or their duly authorised representations on
the date first appearing at the head of this Supplemental Agreement.
5
<PAGE>
SCHEDULE 1
The Vendors
Names and Addresses
Gilbert Little
1 Southwinds
Ulverton Road
Dalkey
Co. Dublin
Laurence Quinn
75 Offington Avenue
Sutton
Dublin 13
Joseph Cunningham
8 Parkview
Castleknock
Dublin 15
Enterprise Ireland
Wilton House
Wilton Place
Dublin 2
Mayfair Venture Capital Limited
Europort 932
Gibraltar
Mehran Mirahmadi
45 Shannagary
Miltown Road
Miltown
Dublin 6
Vincent Daly
Ardnacree
Kerrymount Avenue
Foxrock
Dublin 18
David Megan
Eglinton Lodge
Eglinton Terrace
Dundrum
Dublin 14
6
<PAGE>
Paul Tierney
38 Offington Avenue
Sutton
Dublin 13
Denis Murphy
10 Laganvale Court
Stranmillis
Belfast
Richard McConnell
21 Rosemount Park
Ballygowan Road
Belfast
Michael Curran
72 Teconnaught Road
Crossgar
Co. Down
Liam McQuillan
38 Mount Michael Park
Four Winds
Belfast
7
<PAGE>
SIGNED by GILBERT LITTLE
..........................................
SIGNED by LAURENCE QUINN
..........................................
SIGNED by JOSEPH CUNNINGHAM
..........................................
SIGNED for and on behalf of
ENTERPRISE IRELAND by
..........................................
SIGNED for and on behalf of ) Director
MAYFAIR VENTURE CAPITAL )
LIMITED by ) Director/Secretary
SIGNED by VINCENT DALY
..........................................
SIGNED by DAVID MEGAN
..........................................
SIGNED by PAUL TIERNEY
..........................................
SIGNED by DENIS MURPHY
..........................................
8
<PAGE>
EXHIBIT 2.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as of
October __, 1999 by and among Phone.com Inc., a Delaware corporation (the
"Company"), and those holders of the Company's Common Stock whose names are set
forth on Exhibit A attached hereto (collectively, the "Shareholders").
RECITALS
--------
WHEREAS, the Company, Phone.com Inc., a Delaware corporation and the
Shareholders have entered into a Sale and Purchase Agreement dated 11 October
1999 (the "Purchase Agreement"), which provides, among other things, for the
acquisition of the issued share capital of Apion Telecoms Group Limited
("Apion") in exchange for the issuance by the Company to the Shareholders of
shares of the Company's Common Stock in consideration of the shares of Apion
sold by the Shareholders to Phone.com Inc.;
WHEREAS, as a condition to the completion under the Purchase Agreement, the
Shareholders desire to obtain and the Company has agreed to grant certain
registration rights to the Shareholders with respect to the Phone.com Inc.
Shares;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
Section 1. Registration Rights.
-------------------
1.1 Definitions. As used in this Agreement:
-----------
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the subsequent declaration or ordering of the effectiveness of such
registration statement.
(b) The term "Registrable Securities" means:
(i) the Phone.com Inc. Shares; and
(ii) any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Phone.com Inc. Shares, excluding in
all cases, however, any Registrable Securities sold by a person in a transaction
in which his or her rights under this Agreement are not assigned;
-1-
<PAGE>
provided, however, that Common Stock or other securities shall only be treated
- -------- -------
as Registrable Securities if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale.
(c) The number of shares of "Registrable Securities then
outstanding" shall mean the number of shares of Common Stock outstanding which
are Registrable Securities, plus the number of shares of Common Stock which are
Registrable Securities issuable pursuant to then exercisable or convertible
securities.
(d) The term "Holder" means any holder of outstanding
Registrable Securities who, subject to the limitations set forth in Section 1.7
below, acquired such Registrable Securities in a transaction or series of
transactions not involving any registered public offering.
(e) The term "Form S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(f) The term "Phone.com Inc. Shares" means 1,189,906 shares of
Phone.com Inc. Common Stock by the Company held by the Shareholders being the
Phone.com Inc. Shares, other than the Escrow Shares (as such term is defined in
the Purchase Agreement) issued to the Shareholders pursuant to the Acquisition
Agreement in consideration for the Acquisition of the Apion Shares, all of which
(excluding the Escrow Shares) are listed against each such Shareholder's name on
Exhibit A.
(g) The term "Senior Registration Rights Agreement" means that
certain Fourth Amended and Restated Investor Rights Agreement effective as of
March 12, 1999 among the Company, the Series A Investors, the Series B
Investors, the Series C Investors, the Series D Investors and the Series E
Investors (as such terms are defined therein), as the same may be amended from
time to time.
1.2 Form S-3 Registration. In case the Company shall, on or after
---------------------
the date on which the Company first becomes eligible to file a Registration
Statement on Form S-3, receive from any Holder or Holders owning in the
aggregate at least thirty percent (30%) of the Registrable Securities a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
-2-
<PAGE>
(b) promptly use its reasonable best efforts to effect such
registration and all such qualifications and compliances as may be reasonably so
requested and as would permit and facilitate the sale and distribution of all or
such portion of such Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified in a written request given within 30 days after receipt of such
written notice from the Company; provided, however, that the Company shall not
be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 1.2:
(i) if Form S-3 is not available for such offering by the
Holders;
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000;
(iii) if the Company, within ten (10) days of the receipt of
the request of the Shareholders gives notice of its bona fide intention to
effect the filing of a registration statement with the Commission within ninety
(90) days of receipt of such request;
(iv) during the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on the date 180 days immediately following the effective date of, any
registration statement pertaining to securities of the Company, provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective;
(v) if the Company shall furnish to the Shareholders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its Shareholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than 120 days after receipt of the request of the Shareholders under this
Section 1.2; provided, however, that the Company shall not utilize this right
more than once in any twelve month period;
(vi) if the Company has, since the date of this Agreement,
already filed one registration statement on Form S-3 either for the Holders
pursuant to this Section 1.2 or for any other holders of Company Securities
pursuant to any other registration rights agreement (provided Section 2.10 of
this Agreement was complied with); or
(vii) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
-3-
<PAGE>
(c) Subject to the foregoing, the Company shall file a
registration statement on Form S-3 covering the Registrable Securities and other
securities so requested to be registered promptly after receipt of the request
or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 1.2, including (without limitation)
all registration, filing, qualification, printer and accounting fees shall be
borne by the Company. The Company shall not be required to pay any underwriters'
or brokers' fees, discounts or commissions relating to the Registrable
Securities, or the fees or expenses of separate counsel to the selling Holders.
1.3 Obligations of the Company. When required under Section 1.2 to
--------------------------
effect the registration of any Registrable Securities, the Company shall, as
soon as reasonably possible:
(a) Prepare and file with the SEC a registration statement on
Form S-3 with respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective, and keep such
registration statement effective for 90 days (extended by the duration of any
period in which the Suspension Right described below is in effect) or such
shorter period during which the Holders complete the distribution described in
the registration statement relating thereto, whichever first occurs.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
Notwithstanding any other provision of this Agreement, the Company shall have
the right at any time to require that all Holders suspend further open market
offers and sales of Registrable Shares whenever, and for so long as, in the
reasonable judgment of the Company after consultation with counsel there is or
may be in existence material undisclosed information or events with respect to
the Company (the "Suspension Right"). In the event the Company exercises the
Suspension Right, such suspension will continue for the period of time
reasonably necessary for disclosure to occur at a time that is not detrimental
to the Company and its stockholders or until such time as the information or
event is no longer material, each as determined in good faith by the Company
after consultation with counsel. The Company will promptly give the Holders
notice of any such suspension and prompt notice of the cessation of
-4-
<PAGE>
such suspension. The Company will use all reasonable efforts to minimize the
length of the suspension.
1.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.5 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder and each person, if any, who controls such Holder
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
state securities law; and the Company will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 1.5(a), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by such Holder or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the 1934 Act,
any other Holder selling securities in such registration statement and any
controlling person of any such other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any Violation, in each
-5-
<PAGE>
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 1.5(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided that in no event shall any indemnity under this subsection
1.5(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.5, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.5, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.5.
(d) If the indemnification provided in this Section 1.5 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
-6-
<PAGE>
(e) The obligations of the Company and Holders under this
Section 1.5 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.6 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(c) make available to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
1.7 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee of all of such Holder's
Registrable Securities provided that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act. Within a
reasonable time after such transfer the Holder shall furnish written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. The foregoing
share limitation shall not apply, however, to transfers by a Holder to any
wholly-owned subsidiary or constituent Holders (if a corporation), partner of
the Holder (if a partnership), or any spouse, son or daughter of the Holder (if
an individual), or to trustees of a trust the beneficiaries of which include the
Holder and any spouse, son or daughter of the Holder, provided that all such
transferees or assignees agree in writing to appoint a single representative as
their attorney in fact for the purpose of receiving any notices and exercising
their rights under this Section 1.
1.8 Termination of Registration Rights. The rights granted under
----------------------------------
this Section 1 shall terminate upon the earlier of (a) two (2) years following
the date of this Agreement, or (b) with respect to any Holder, at such time as
such Holder may be eligible to sell all of such Holder's Registrable Securities
in a three-month period pursuant to Rule 144 (or such successor rule as may be
adopted) or another exemption from the registration requirements of the
Securities Act provided that the Company is then and continues to be in
compliance with the current public information requirements of Rule 144(c) (or
such successor provision as may be adopted).
-7-
<PAGE>
For any offer or sale of any of the Registrable Shares by a
Holder in a transaction that is not exempt under the Securities Act, the Holder,
in addition to complying with any other federal securities laws, shall deliver a
copy of the final prospectus (or amendment of or supplement to such prospectus)
of the Company covering the Registrable Shares in the form furnished to the
Holder by the Company to the purchaser of any of the Registrable Shares on or
before the settlement date for the purchase of such Registrable Shares.
Section 2. Miscellaneous.
-------------
2.1 Assignment. Subject to the provisions of Section 1.7 hereof, the
----------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
2.2 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
2.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California, as applied to agreements made and
performed in California by residents thereof.
2.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
2.5 Notices.
-------
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the respective parties as follows:
To the Company: Phone.com, Inc.
800 Chesapeake Drive,
Redwood City, CA 94063, USA
Attn: The General Counsel
To a Shareholder: At such Shareholder's address as set forth on the
signature pages hereto (or at such other address as is
notified to the Company in writing).
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent
-8-
<PAGE>
by airmail, return receipt requested, reputable overnight courier or by telex or
fax with confirmation of receipt, and shall be deemed to be given or made when
receipt is so confirmed.
(c) Any party may, by written notice to the other, alter its
address or respondent, and such notice shall be considered to have been given
ten (10) days after the airmailing, telexing, telecopying or delivery thereof.
2.6 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
2.7 Amendment and Waiver. Any provision of this Agreement may be
--------------------
amended with the written consent of the Company and the Holders of at least a
majority of the outstanding Registrable Securities. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each Holder of
Registrable Securities, and the Company. In addition, the Company may waive
performance of any obligation owing to it, as to some or all of the Holders of
Registrable Securities, or agree to accept alternatives to such performance,
without obtaining the consent of any holder of Registrable Securities. Each
Shareholder acknowledges that by the operation of Section 2.7 hereof, the
holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate all rights pursuant to this Agreement.
2.8 Rights of Holders. Each Holder of Registrable Securities shall
-----------------
have the absolute right to exercise or refrain from exercising any right or
rights that such Holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such Holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
2.9 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
-9-
<PAGE>
2.10 Other Registrations.
-------------------
(a) Notice of Registration. If at any time or from time to time
----------------------
the Company shall determine to register any shares of its Common Stock for the
account of a security holder or holders, other than (A) a registration relating
to employee benefit or equity incentive plans, (B) a registration relating
solely to a Rule 145 transaction, or (C) a registration on any registration form
that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), except
as set forth in Section 2.10(b) below, and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within twenty (20) days after receipt of such written notice from the Company by
any Holder.
(b) Underwriting. If the registration of which the Company
------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.10(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.10 shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 2.10, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration. In addition, in no
event shall any Registrable Securities be included in a registration if such
inclusion would diminish the shares or other securities to be included by the
stockholders who are parties to the Senior Registration Rights Agreement.
The Company shall so advise all Holders and other holders distributing
their securities through such underwriting, and the number of shares of
Registrable Securities or other securities that may be included in the
registration and underwriting shall be first allocated among those stockholders
who are parties to the Senior Registration Rights Agreement in accordance with
such agreement, and then to the Holders in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the number
of shares allocated to any Holder or holder to the nearest 100 shares.
(c) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 2.10 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
-10-
<PAGE>
2.11 Next Underwritten Public Offering. With respect to the next
---------------------------------
underwritten public offering of Common Stock of the Company pursuant to a
Registration Statement on Form S-1 proposed to be filed by the Company following
the date of this Agreement (the "S-1 Registration") the Company has obtained
waivers from stockholders who are parties to or beneficiaries under the Senior
Registration Rights Agreement to permit the Shareholders to, collectively, have
such of the shares of the Company's Common Stock received by them upon the
closing of the Purchase Agreement as represents fifteen and four tenths percent
(15.4%) of the total number of shares of the Common Stock registered in such S-1
Registration to be included in the S-1 Registration (excluding any shares
issuable pursuant to any overallotment option granted to the underwriters in
such offering) as "firm" shares rather than pursuant to the overallotment option
and, in the event of the exercise of the overallotment option, to participate
rateably in such overallotment. In the event that the S-1 Registration is of
less than four million (4 million shares), the Company undertakes to increase
the percentage of shares registrable in the S-1 Registration by the Holders by
such amount as necessary to enable Paul Tierney to sell all his Phone.com Inc.
Shares. This right shall be personal to Mr Tierney shall not increase the
entitlement of any other Holder to participate in the S-1 Registration. In the
event that the Company proceeds with the S-1 Registration, the Company will
notify the Holders periodically of the status of, and allow them to participate
in, the S-1 Registration to the extent set forth in the preceding sentence pro
rata to their holdings of Registrable Securities; provided that if any Holder
shall participate in such registration, all provisions of Sections 1.3, 1.4,
1.5, 2.5 and 2.10 of this Agreement to the extent applicable shall be in effect
with regard to such registration and each Holder's participation therein. It
shall be a condition of inclusion in the S-1 Registration that each Holder
executes and delivers to the Company all documents and makes such confirmation
reasonably requested by the Company as are applicable to the S-1 Registration.
Nothing in this Section 2.11 shall affect the Company's right to withdraw any
such registration at any time.
2.12 Senior Registration Rights Agreement. Nothing in this
------------------------------------
Agreement shall result in any Shareholder receiving any rights which are
inconsistent with the Senior Registration Rights Agreement. If there is any
conflict between this Agreement and the Senior Registration Rights Agreement,
the provisions of the Senior Registration Rights Agreement shall prevail.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
PHONE.COM INC.
By:__________________________________
Title:_______________________________
SHAREHOLDERS:
GILBERT LITTLE
By:__________________________________
Address: 1 Southwinds
Ulverton Road
Dalkey, Co. Dublin
LAURENCE QUINN
By:__________________________________
Address: 75 Offington Avenue
Sutton
Dublin 13
JOSEPH CUNNINGHAM
By:__________________________________
Address: 8 Parkview
Castleknock
Dublin 15
-12-
<PAGE>
ENTERPRISE IRELAND LIMITED
By:__________________________________
Address: Wilton House
Wilton Place
-13-
<PAGE>
PAUL TIERNEY
By:__________________________________
Address: 38 Offington Avenue
Sutton
Dublin 13
DENIS MURPHY
By:__________________________________
Address: 10 Laganvale Court
Stranmillis
Belfast
RICHARD MCCONNELL
By: _________________________
Address: 21 Rosemount Park
Ballygowan Road
Belfast
MICHAEL CURRAN
By: _________________________
Address: 72 Teconnaught Road
Crossgar
Co. Down
LIAM MCQUILLAN
By: _________________________
Address: 38 Mount Michael Park
Four Winds
Belfast
-14-
<PAGE>
EXHIBIT A
SHAREHOLDERS
NAME SHARES
- ---- ------
Total
-15-
<PAGE>
Exhibit 23.2
CONSENT OF PRICEWATERHOUSECOOPERS
The Board of Directors
Phone.com, Inc.;
We hereby consent to the incorporation by reference in the previously filed
registration statement on Form S-8 (No. 333-81215) of Phone.com, Inc. of our
report dated 26 October 1999 relating to the statement of assets acquired and
liabilities assumed as of March 31, 1999, and the statement of operations and
cash flows for the period from May 1, 1998 (inception) through March 31, 1999 of
the WAP Business of APION, which report appears in the Registration Statement on
Form S-1 (No.333-89879) of Phone.com, Inc.
PricewaterhouseCoopers
2 November 1999
Belfast, United Kingdom
