SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 6, 1999
CYBEROPTICS CORPORATION
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(Exact name of registrant as specified in its charter)
Minnesota (0-16577) 41-1472057
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(State or other jurisdiction of COMMISSION FILE NO. (I.R.S. Employer
incorporation or organization) Identification No.)
5900 Golden Hills Drive
MINNEAPOLIS, MINNESOTA 55416
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(Address of principal executive offices) (Zip Code)
(612) 542-5000
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On April 6, 1999, CyberOptics Corporation (the "Company") completed
the acquisition of all of the outstanding shares of Kestra Limited, a British
limited liability company organized under the Companies Act 1985 ("Kestra").
Total consideration of $9,040,012, included $7,942,835 paid in cash by the
Company to shareholders of Kestra at closing, $407,882 paid into an escrow to
cover various warranties, and $689,295 paid by delivery to certain shareholders
of Kestra of the Company's guaranteed notes. The Company also repaid certain
indebtedness of Kestra to the 3i Group PLC, one of Kestra's shareholders, and
certain other obligations related to the shares acquired totaling $2,363,627.
The Company intends to continue to operate Kestra as a separate
subsidiary in Great Britain. Kestra is a development-stage company that is
developing new technology for automated optical inspection (AOI) systems. The
Company believes that Kestra is developing a fundamentally new approach to AOI
that has the potential to provide the low rates of false calls, the
user-friendliness and the measurement precision demanded by customers in the
surface mount technology industry. Unlike existing AOI systems which use rigid
pattern-matching algorithms, the products under development by Kestra are based
on statistical appearance modeling: a system that can learn how to recognize any
object. As a result of this approach, the Company believes that the Kestra
system will be easy to program, and that its discrimination should improve as
the system is used. Kestra has not sold any product to date, and plans to
complete its first system during the second half of 1999
Forward looking statements in this Form 8-K with respect to product
introduction dates, the performance of unfinished products, the accounting
treatment of acquired in-process research and development expense, and the
Company's earnings are subject to risks and uncertainties, including risks
related to the ability to continue development efforts of a new subsidiary after
acquisition, risks of code inaccuracies and incompatibilities in software
intensive products, risks of market acceptance, risks related to the SEC's
announced scrutiny of acquired in-process R & D expense, and the general risks
regarding the Company's performance identified in the Company's Annual Report on
Form 10-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial statements of the business acquired.
Financial statements required by this item will be filed by
amendment to this initial report no later than June 21, 1999.
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b) Pro forma financial information.
Pro forma financial information required by this item will be
filed by amendment to this initial report no later than June
21, 1999.
c) Exhibits
Exhibit Number Description
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2.1 Agreement for the sale and purchase of the entire
issued share capital of Kestra Limited
2.2 Tax Deed
2.3 CyberOptics' Press Release dated April 6, 1999
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CYBEROPTICS CORPORATION
/s/ Steven M. Quist
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Steven M. Quist, President
(Principal Executive Officer and
Duly Authorized Officer)
Dated: April 21, 1999
EXHIBIT 2.1
DATED APRIL 1999
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THE SELLERS
AND
VUMAN LIMITED
AND
CYBEROPTICS CORPORATION
AND
3i GROUP PLC
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL OF
KESTRA LIMITED
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DORSEY & WHITNEY
VERITAS HOUSE
125 FINSBURY PAVEMENT
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LONDON EC2A 1NQ
TEL: 0171 588 0800
AGREEMENT FOR SALE AND PURCHASE OF SHARES
DATE APRIL 1999
PARTIES
(1) The several persons listed in Schedule 1 other than 3i Group Plc (the
"SELLERS");
(2) CYBEROPTICS CORPORATION incorporated under the laws of Minnesota the
principal place of business is at 5900 Golden Hills Drive, Minneapolis,
MN, 55416, USA (the "PURCHASER");
(3) VUMAN LIMITED (incorporated under company number 1594344) whose
registered office is situate at Skelton House, Manchester Science Park,
Lloyd Street, Manchester M15 6SH ("Guarantor"); and
(4) 3i GROUP PLC (incorporated under company number 1142830) registered
office 91 Waterloo Road, London SE1 8XF ("3i").
IT IS AGREED AS FOLLOWS:
1 DEFINITIONS
1.1 GENERAL DEFINITIONS
In this agreement, the following definitions apply:
"3i SHARES"
those Shares in the capital of the Company set out opposite 3i
in Schedule 1;
"ACCOUNTS"
the audited balance sheet and profit and loss account of each
of the Company and the Subsidiary as at and for the period
ended on the Accounts Date together with the notes director's
and auditor's reports for that year being Warranted Document
"Sup 37 and 38";
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"ACCOUNTS DATE"
31st July, 1998;
"ACCOUNTING STANDARDS"
the statements of standard accounting practice referred to in
Section 256 of the Companies Act issued by the Accounting
Standards Board Limited or such other body as may prescribed
thereunder prior to the date hereof by the Secretary of State
from time to time including (without limitation) the
statements of standard accounting practice issued by the
Accounting Standards Committee and since adopted by the
Accounting Standards Board Limited and any financial reporting
statements issued prior to the date hereof by the Accounting
Standards Board or such other body as aforesaid;
"ACQUIRED INTELLECTUAL PROPERTY"
the New Grey Modelling software assigned to the Company under
the Software Agreement (and as defined therein);
"AGREED FORM"
in a form agreed by and initialled by or on behalf of the
relevant parties;
"'A' ORDINARY SHARES"
means the 'A' ordinary shares of (pound)1.00 each in the
capital of the Company;
"AUDITORS"
KPMG, Chartered Accountants, St. James Square, Manchester M2
6DS;
"'B' ORDINARY SHARES"
means those "B" Ordinary Shares of (pound)1.00 each in the
capital of the Company;
"BUSINESS"
the development of products (including software) to Inspect
Industrial Assemblies;
"BUSINESS DAY"
a day other than Saturday, Sunday or a public holiday or bank
holiday in England and Wales or the United States of America;
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"BUSINESS REPORTS"
means the Restricted Product Report and the Intellectual
Property Report;
"CLAIM"
a Warranty Claim and/or a Tax Deed Claim;
"CLOSING BALANCE STATEMENT"
means the statement of the net liabilities of the Company and
VDL prepared by the Sellers immediately prior to Completion;
"COMPANIES ACT"
the Companies Act 1985;
"COMPANY"
Kestra Limited, details of which are set out in PART 1 of
SCHEDULE 2;
"COMPLETION"
completion of the sale and purchase of the Shares in
accordance with CLAUSE 6;
"COMPLETION DATE"
the time and date originally set for Completion pursuant to
CLAUSE 6 or if the Completion is deferred pursuant to that
CLAUSE 6 the time and date to which Completion is deferred;
"COMPROMISE AGREEMENT"
means the Compromise Agreement between the Company and John
Tinning dated 6 April 1999;
"CONNECTED PERSON"
a connected person as defined in section 839 of the Taxes Act;
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"CONSIDERATION"
the aggregate amount of US$9,040,012.21 (converted to
(pound)5,628,899.26) being the cash payable by the Purchaser
to the Sellers and 3i for the Shares;
"CONSULTANCY AGREEMENTS"
the consultancy agreements in the Agreed Form to be entered
into at Completion between the Company and each of Dr. Cootes
and Professor Taylor;
"CONTRIBUTION AGREEMENT"
a contribution agreement dated 1 April 1999 and made between
the Warrantors and certain of the Sellers;
"COVENANTORS"
each of Michael Bowes, John Tinning, Christopher Brook Jackson
and MTD;
"DIRECTORS"
the persons listed as directors of the Company at the date of
this agreement in PART 1 of SCHEDULE 2;
"DISCLOSED"
fairly and clearly disclosed to the Purchaser in the
Disclosure Letter and for the purpose of this definition the
expression "FAIRLY AND CLEARLY" means that a matter shall be
disclosed only to the extent that it has been disclosed with
sufficient particularity to enable a purchaser to have a
reasonable understanding of the nature of the matters
disclosed and of the qualifications to the Warranties thereby
made;
"DISCLOSURE LETTER"
a letter of the same date as this Agreement in the Agreed Form
from the Warrantors to the Purchaser qualifying the
Warranties;
"ENVIRONMENT"
all or any of the air, water and land including air within
buildings and other natural or man-made structures above or
below ground;
"ENVIRONMENTAL LAW"
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all statutes, statutory instruments, common law, directly
applicable provisions of treaties, regulations, directives (to
the extent that they have been implemented by legislation) and
other national and local laws (including part IIA of the
Environmental Protection Act 1990); all codes of practice and
guidance notes having mandatory effect and issued by any
supranational, national or local governmental authority; all
judgements, orders, instructions or awards of any court of
competent authority, in each case relating to the Environment
or the health of humans, animals or plants, as the same are in
force at the date of this Agreement but including for the
avoidance of doubt, Part IIA of the Environmental Protection
Act, 1990 as if the same was fully in force at the date
hereof;
"ENVIRONMENTAL PERMITS"
any permits, licenses, consents or other authorisations
required under Environmental Law for the carrying on of each
Group Company's operations and the occupation and use of the
Properties by the Group;
"ENVIRONMENTAL REPORTS"
all surveys, audits, investigations and reports relating to
the Properties and/or the Group's compliance with
Environmental Law and Environmental Permits;
"ESCROW RELEASE DATE"
the first anniversary of Completion;
"FRS"
a Financial Reporting Standard adopted or issued by the
Accounting Standards Board Limited;
"GROUP"
the Company and the Subsidiary;
"GROUP COMPANY"
any company within the Group;
"GROUP INTELLECTUAL PROPERTY"
the New Intellectual Property and the Acquired Intellectual
Property;
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"GUARANTEED LOAN NOTES"
means the guaranteed loan notes (in the agreed terms) for an
aggregate principal amount of (pound)[ ] UK to be issued
by the Purchaser to certain of the Sellers;
"HEALTH AND SAFETY LAWS"
all statutes, statutory instruments, common law, directly
applicable provisions of treaties, regulations, directives (to
the extent that they have been implemented by legislation) and
other national and local laws (including the Health and Safety
at Work etc. Act 1974, the Management of Health Safety and
Welfare Regulations 1992); all codes of practice and guidance
notes having mandatory effect and issued by any supranational,
national or local government authority; all judgements,
orders, instructions or awards of any court or competent
authority, in each case relating to the health and safety of
those working for any Group Company (whether as employees or
otherwise or visiting the Property or being otherwise affected
by any Group Company or its servants or agents) as the same
are in force at the date of this Agreement;
"INITIAL CASH PAYMENT"
means the cash payment of $7,942,835.22 US to be made to the
Sellers on account of the Consideration pursuant to the
provisions of clause 4.1;
"INSPECT INDUSTRIAL ASSEMBLIES"
the examination of an article by means of analysis of energy
reflected from or transmitted through the article (or
examination of an article by substantially similar means)
which article is produced in a factory, workshop or similar
manufacturing facility;
"INTELLECTUAL PROPERTY"
patents, trade marks, rights in design (registered and
unregistered) copyright (including rights in computer
software), business or trade names and all other industrial or
intellectual property or other rights or forms of protection
of a similar nature or having similar effect in any part of
the world and rights in and in relation to them and, where
appropriate, applications for any of them and the right to
apply for any of them;
"INTELLECTUAL PROPERTY REPORT"
means the report on Intellectual Property prepared by the
Sellers Solicitors dated 1 April 1999;
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"INVESTMENT AGREEMENTS"
those investment agreements dated 30th December 1996, 20th May
1998 and 2nd November 1998 made between the Company, 3i and
the Sellers;
"INVESTORS"
a holder of securities listed on a recognised stock exchange
(as defined in section 82(1) of the Income and Corporation
Taxation Act 1988) or of shares allotted under a prospectus
issued pursuant to the Business Expansion Scheme, provided
that such holding does not exceed five (5) per cent of any
class of securities of which the sound holding forms part;
"JOINT ACCOUNT"
the Joint interest bearing US dollar account in the joint
names of the Sellers' Solicitors and the Purchaser's
Solicitors to be dealt with in accordance with CLAUSE 5;
"KEY EMPLOYEE"
any director, officer, executive or senior manager of, or
other Senior Employee responsible for devising new products or
services or having regular access to trade secrets or
confidential information;
"KNOW HOW"
all inventions, designs, techniques and other processes and
information and know-how owned by the Sellers and/or used by
any member of the Group in connection with the Business;
"LEASE"
in relation to the Property the lease under which it is held
and any documents which are supplemental to that lease;
"LICENSED INTELLECTUAL PROPERTY"
University Software and any other Intellectual Property which
is licensed to a Group Company;
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"LTCA"
the Landlord and Tenant (Covenants) Act 1995;
"MANAGEMENT ACCOUNTS"
the management accounts of each of the Company and the
Subsidiary dated 1 September 1998 to 28 February 1999;
"MTD"
Manchester Technology Developments Limited (registered number
3108263) whose registered office is a Skelton House,
Manchester Science Park, Lloyd Street North M15 6SH;
"NEW INTELLECTUAL PROPERTY"
means all Intellectual Property devised or created or acquired
by the Group since 31st December 1996;
"PENSION FUND"
the trustees of the pension fund of Victoria University of
Manchester;
"PROJECT TEAM"
the Purchaser's project team being each of Steve Quist, Mike
Wetle, Scott Larson, Kathy Howard, Pam Lampert, Dave
Fishbaine, Angela Gilchrist, David Judd, Mustofa Kave, and Bob
Ries plus the Purchaser's Solicitors and
PriceWaterhouseCoopers;
"PROPOSED PRODUCTS"
the automated visual inspection system currently being
developed by the Company;
"PROPERTY"
the property listed in SCHEDULE 3;
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"PURCHASER'S GROUP"
the Purchaser and its subsidiaries from time to time
including, after Completion, the Group;
"PURCHASER'S GROUP COMPANY"
any company within the Purchaser's Group;
"PURCHASER'S SOLICITORS"
Messrs. Dorsey & Whitney of Pillsbury Centre South, 220 South
Sixth Street, Minneapolis, MN 55402-1498;
"RELATED PERSONS"
the Sellers other than the Warrantors and the Pension Fund;
"RESTRICTED PERSONS"
those persons who are the Warrantors and/or Vuman;
"RESTRICTED PRODUCTS"
products of a type which up to the Completion Date have been
or are in the process of being designed, produced, marketed
and/or sold or otherwise dealt with in by or on behalf of the
Group in the ordinary course of the Business;
"RESTRICTED PRODUCT REPORT"
means the report in respect of the capabilities of the
restricted products dated 24 March 1999 and prepared by M A
Bowes and C B Jackson;
"RTPA"
the Restrictive Trade Practices Acts 1976 and 1977;
"SELLERS' ACCOUNTANTS"
KPMG, St James Square, Manchester M2 6DS;
"SELLERS' REPRESENTATIVE"
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Messrs. Eversheds Solicitors, Cloth Hall Court, Infirmary
Street, Leeds, LS1 2JB;
"SELLERS' SOLICITORS"
Messrs. Eversheds Solicitors, Cloth Hall Court, Infirmary
Street, Leeds, LS1 2JB;
"SENIOR EMPLOYEE"
an employee whose basic exceeds (pound)25,000;
"SERVICES"
services of a type which within the 24 months up to the
Completion Date have been provided and/or marketed by the
Sellers and/or Group Company in the ordinary course of the
Business carried on by the Company or the Subsidiary;
"SERVICE AGREEMENTS"
the service agreements in the Agreed Form to be entered into
at Completion between the Company and each of M. Bowes, C. B.
Jackson, Andrew Hill, Adrian Ratter, Stuart Solloway and
Andrew Yates;
"SHARES"
1,217,052 Preference Shares of (pound)0.01 each,
62,815 "A" Ordinary Shares of (pound)1.00 each,
52,632 "B" Ordinary Shares of (pound)1.00 each,
and 32,895 Ordinary Shares of (pound)1.00 each
issued in the capital of the Company;
"SHARE OWNERSHIP WARRANTIES"
the warranties contained in paragraph 17 of Schedule 4;
"SOFTWARE AGREEMENT"
the Software Agreement dated 30 December 1996 entered between
(1) Victoria University of Manchester (2) Manchester
Technology Developments Limited (3) Visual Automation Limited
(4) the Company (as amended by a supplemental agreement);
"SSAP"
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a Statement of Standard Accounting Practice issued by the
Accounting Standards Committee and adopted by the Accounting
Standards Board Limited;
"SUBSIDIARY"
the company, details of which are set out in PART 2 of
SCHEDULE 2;
"UNIVERSITY SOFTWARE"
the Software licensed by the Company from the University under
the Software Agreement;
"WARRANTIES"
the warranties made by the Warrantors in CLAUSE 7 in relation
to the statements set out in SCHEDULE 4;
"WARRANTORS"
each of the Covenantors (jointly and severally);
"WARRANTORS REPRESENTATIVE"
Michael Bowes or such other person nomianted by the Warrantors
from time to time in writing to the Purchaser;
"WARRANTY CLAIM"
any claim which would (disregarding the provisions of CLAUSE
8) be capable of being made by the Purchaser against the
Warrantors for breach of any of the Warranties;
"WARRANTED DOCUMENTS"
means the documents referred to in paragraph 2.2 of Part 1 of
Schedule 4.
1.2 TAX DEFINITIONS
"EVENT"
an event as defined in the Tax Deed;
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"FA"
the Finance Act 1996;
"TAX" OR "TAXATION"
tax or taxation as defined in the Tax Deed;
"TAX AUTHORITY"
a tax authority as defined in the Tax Deed;
"TAX DEED"
the tax deed to be entered into the Agreed Form;
"TAX DEED CLAIM"
a claim under the Tax Deed which would(disregarding the
provisions of Clause 8 of this Agreement or Clause 4 of the
Tax Deed) be capable of being made against the Covenantors
under the terms of the Tax Deed;
"TAXES ACT"
the Income and Corporation Taxes Act 1988;
"TGGA"
the Taxation of Chargeable Gains Act 1992;
"VAT"
United Kingdom value added tax;
"VATA"
the Value Added Tax Act 1994.
2 INTERPRETATION
2.1 IN THIS AGREEMENT:
2.1.1 the contents and clause headings are for convenience only and do not
affect its construction;
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2.1.2 words denoting the singular include the plural and vice versa;
2.1.3 words denoting one gender include each gender and all genders.
2.2 In this Agreement, unless otherwise specified or the context otherwise
requires, a reference to:
2.2.1 a person is to be construed to include a reference to any individual,
firm, partnership, company, corporation, association, organisation or
trust (in each case whether or not having a separate legal
personality);
2.2.2 a document, instrument or agreement (including, without limitation,
this agreement) is a reference to any such document, instrument or
agreement as modified, amended, varied, supplemented or novated from
time to time;
2.2.3 a clause or schedule is a reference to a clause of or schedule to this
agreement and a reference to this agreement includes its schedules;
2.2.4 a paragraph is a reference to a paragraph of the schedule in which the
reference appears;
2.2.5 a statutory provision is to be construed as a reference to such
provision as amended, consolidated or re-enacted from time to time and
to any orders, regulations, instruments or other subordinate
legislation (and relevant codes of practice) made under the relevant
statute except to the extent that any amendment, consolidation or
re-enactment coming into force after the date of this agreement would
increase or extend the liability of any party to this agreement to any
other party;
2.2.6 any statement qualified by the expression "to the best of the
knowledge, information and belief of the Warrantors" or "so far as the
Warrantors are aware" or any similar expression shall be deemed to
include an additional statement that it has been made after due and
careful enquiry by each of the Warrantors of each other and of John
Tinning, Christopher Taylor, Philip Ternouth, Gordon Brown, Peter
Schaeffer, Andrew Hill, the Seller's Solicitors and the Seller's
Accountants but no further persons; and
2.2.7 all obligations entered into by two or more persons are joint and
several unless expressly stated to the contrary.
3 SALE AND PURCHASE
3.1 Each of the Sellers and 3i shall sell and the Purchaser shall purchase
the Shares (shown opposite the respective Sellers and 3i's name in
Schedule 1) with effect from Completion.
3.2 Each of the Sellers severally covenants with the Purchaser that:
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3.2.1 the full legal and beneficial interest in his Shares will be
transferred to the Purchaser at Completion on the terms set out in this
Agreement;
3.2.2 his Shares will be sold free from all claims, liens, charges, equities,
encumbrances and adverse rights of any description and together with
all rights attached to them at the date of this agreement or
subsequently becoming attached to them;
3.2.3 he shall (and shall each procure that any necessary third party shall)
at his own expense, do, execute and perform all such further acts,
deeds, documents and things as the Purchaser may reasonably request to
vest all of his shares in the Purchaser and as may be reasonably
requested from time to time in order to implement the provision of this
Agreement.
3.3 Each of the Sellers waive irrevocably (and shall each procure the
waiver of) all restrictions on transfer (including pre-emption rights)
which may exist in relation to their Shares or the shares in any other
Group Company under the articles of association of any Group Company or
otherwise.
3.4 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the Sellers and 3i shall at the same time complete
the sale of all of the Shares but completion of the purchase of some of
the Shares will not affect the rights of the Purchaser with respect to
the purchase of the other Shares.
3.5 3i agrees with the Purchaser that:
3.5.1 the full legal and beneficial interest in the 3i Shares will be
transferred to the Purchaser at Completion on the terms set out in this
Agreement;
3.5.2 the 3i Shares will be sold free from all claims, liens, charges,
equities, encumbrances and adverse rights of any description and
together with all rights attached to them at the date of this
agreement;
3.5.3 3i waives irrevocably all restrictions on transfer (including
pre-emption rights) which may exist in relation to the Shares.
4 CONSIDERATION
4.1 The Consideration for the sale of the Shares shall be the sum of
US$9,040,012.21:
4.2 At Completion the Purchaser shall on account of the Consideration:-
4.2.1 pay the Initial Cash Payment which shall be apportioned between the
Sellers and 3i in the proportions set out opposite their names in
Schedule 1;
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4.2.2 issue to the Sellers the number of Guaranteed Loan Notes set out
opposite the name of the relevant Seller in Schedule 1;
4.2.3 pay the Retention Fund into the Joint Account pursuant to the
provisions of clause 5.
The Initial Cash Payment shall be payable to the Sellers and 3i (as
appropriate) in the amounts set out next to each of their names in
Schedule 1. These sums shall be paid by telegraphic transfer to the
account in the name of the Seller's Solicitors with the National
Westminster Bank Plc, sort code 60-60-05 Eversheds Clients Account No
140/00/08029776, the Sellers' Solicitor's Account (receipt for such
amount being an absolute discharge to the Purchaser of its obligation
to pay such amount).
4.3 The Purchaser shall also subscribe for ordinary shares in the capital
of the Company to the value of UK(pound)1,471,748, with the intention
that the Company use this subscription monies to repay all principal
and interest outstanding to 3i and also pay a dividend to the
preference share holders. The subscription by the Purchaser shall at
all times be condition upon Completion.
5 RETENTION AND ESCROW ACCOUNT
5.1 As security for the Warrantors' obligations under the Warranties and
the Tax Deed, the Sellers hereby agree with the Purchaser that out of
the cash consideration payable pursuant to CLAUSE 4.1 the Purchaser
shall pay in aggregate the sum of US$407,881.80 ("RETENTION FUND") such
Retention Fund representing the aggregate amount of each of the sums
contributed to the Retention Fund by the Sellers as set out opposite
their names in Schedule 1, into a joint interest bearing deposit
account ("JOINT ACCOUNT") with an agreed bank in the United States, (or
elsewhere as the Warrantors and the Purchaser may agree) opened in the
names of the Sellers' Solicitors and the Purchaser's Solicitors.
Pending the opening of such account, the Retention Fund shall be held
by the Seller's Solicitors. The Retention Fund shall be dealt with in
accordance with CLAUSE 5.2.
5.2 The Sellers and the Purchaser hereby irrevocably instruct their
respective Solicitors (and acknowledge that their solicitors may rely
upon and act on such instruction) to make payment out of the Joint
Account:
5.2.1 to the Purchaser of any sums which may be due to it as a result of any
Claim by the Purchaser under or arising out of or in connection with
this Agreement (or pursuant to clause 5.6 below), the Warranties or the
Tax Deed having been Settled in favour of the Purchaser (as defined in
CLAUSE 5.3) within 7 days of such matter having been Settled, together
with interest accrued on the monies so paid to the Purchaser. Any sums
paid pursuant to this clause 5.2.1 shall be made to the Purchasers
Solicitors Trust Account at US Bank National Association, 601 2nd
Avenue South, Minnepolis, MN 55402, ABA Routing Number 091000022;
Account name Dorsey & Whitney Trust Account; Account Number
1602-3010-8765; marked "Ref:
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310473/41:T Martin"; or by such other method as may be agreed between
the parties. If made to the Purchasers Solicitors, and marked as
aforesaid, such payments will be a good and sufficient discharge to the
Sellers who will not be further concerned as to the application of
monies so paid;
5.2.2 (Subject to CLAUSE 5.2.4) on the next Business Day following the Escrow
Release Date to the Sellers' Solicitors at the Sellers' Solicitors
Account or such other account nominated by the Sellers' Solicitors in
writing to the Purchaser on behalf of such of the Sellers as are
entitled thereto the balance if any, standing to the credit of such
Retention Fund together with interest accrued on the monies so paid to
the Sellers' Solicitors;
5.2.3 to the Sellers' Solicitors of any sums being the subject of any Claim
by the Purchaser under or arising out of or in connection with this
Agreement, the Warranties or the Tax Deed which is Settled in favour of
the Warrantors on or after to the Escrow Release Date, together with
interest accrued on such monies;
5.2.4 in the event that the Purchaser makes a claim or claims under or
arising out of or in connection with this Agreement the Warranties or
the Tax Deed and a writ is issued in respect of such claim or claims
("the Notice Date") then any specific amount or amounts claimed under
an issued writ ("the Initial Claim Amount" or "the Final Claim Amount"
if different) shall be retained in the Retention Fund (subject to
clause 5.2.5) until the matter in respect of which the writ was issued
has been Settled PROVIDED THAT in the event that such a writ is issued,
but no statement of claim is filed on or before the date six months
after the Escrow Release Date, then the specific amounts claimed under
the writ issued shall be released to such of the Warrantors as are
entitled thereto in accordance with CLAUSE 5.2.3 but such release of
funds in the Joint Account shall be without prejudice to the
Purchaser's rights against the Warrantors for breach of any of the
Warranties;
5.2.5 If within 21 Business Days of the Notice Date (i) the Warrantors
Representative has given written notice to the Purchaser that the
Initial Claim Amount is not acceptable to the Warrantors (the
"Warrantor Notification Date") and (ii) the Warrantors and the
Purchaser have not agreed a mutually acceptable Initial Claim Amount,
the Purchaser and the Warrantors shall seek a written opinion (the
"Opinion") from a mutually acceptable counsel on the amount which he
considers the Purchaser would be awarded by a competent court in
respect of such claim (the "Final Claim Amount"). The Opinion shall be
binding on the Purchaser and Warrantors, in relation to the
determination of the amount to be retained in the Retention Fund, and
shall be given by the relevant counsel as an expert and not as an
arbitrator. The costs and disbursements of such counsel in preparing
the Opinion shall be borne equally by each of the Warrantors and the
Purchaser. If no agreement can be reached on a mutually acceptable
counsel within 14 Business Days of the Warrantor Notification Date in
accordance with this clause 5.2.5, the matter shall be referred to the
President of the law Society of England and Wales, on the application
of either party, who shall appoint a suitably qualified counsel.
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5.2.6 a Claim shall be regarded as "Settled" if either:
(a) the Warrantors and the Purchaser (or their respective
Solicitors) shall so agree in writing, such written agreement
not to be unduly withheld or delayed following any oral
agreement between the parties; or
(b) a Court has awarded judgement in respect of the claim and
either no right of appeal lies in respect of such judgement or
the parties are debarred whether by passage of time or
otherwise from exercising any such right of appeal or the
parties in whose favour the right of appeal subsists fails to
lodge such appeal within 28 days of such judgement;
5.3 The Warrantors and the Purchaser shall as and when necessary give such
further instructions to their respective Solicitors as may be required
in order to procure compliance with CLAUSE 5.2 hereof;
5.4 Where the Purchaser has a Claim which has been Settled (as defined
above) in its favour then the Purchaser shall be entitled to require
payment of the full sum due to it from the Warrantors, from the
Retention Fund and such payment shall be made in accordance with CLAUSE
5.2.1 without having regard to any individual monetary limitations on
the Warrantors financial liability.
5.5 In the event that the moneys in the Retention Fund are insufficient to
pay in full any moneys due to the Purchaser, the Purchaser shall be
entitled to pursue the Warrantors jointly or severally for the balance
of the moneys due to it.
5.6 In the event that any sum due to the Company from John Tinning pursuant
to Clause 5.2. of the Compromise Agreement remains unpaid 30 days after
the Company has given written notice to John Tinning that such sum is
due, then the Purchaser shall be entitled to discharge John Tinning's
liability to the Company (by making a corresponding payment to the
Company) and recover the amount so paid to the Company out of the
Retention Fund from the monies contributed to the Retention Fund by
John Tinning and Dawn Tinning. For the avoidance of doubt nothing in
this Clause 5.6 shall in anyway increase the total amount of the
liability which John Tinning would have under Clause 5.2 of the
Compromise Agreement.
6 COMPLETION
6.1 TIME AND PLACE OF COMPLETION
Completion shall take place at either the offices of the Purchaser's
Solicitors or the Seller's Solicitors immediately after signing of this
Agreement, where the matters set out in SCHEDULE 5 shall apply.
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6.2 FAILURE TO COMPLY
If the Sellers shall fail fully to comply with any of their obligations
under SCHEDULE 5 on the date fixed for Completion pursuant to CLAUSE
5.1, the Purchaser shall, without prejudice to any other rights or
remedies which it may have, be entitled to:
6.2.1 defer Completion with respect to some or all of the Shares to a date
not more than 28 days after that date (in which case the provisions of
this CLAUSE 6.2 shall also apply to Completion as so deferred); or
6.2.2 rescind this Agreement; or
6.2.3 proceed to Completion so far as is practicable.
7 WARRANTIES
7.1 The Warrantors jointly and severally warrant and represent, to the
Purchaser (for itself and as trustee for each Group Company) in the
terms of the statements set out in SCHEDULE 4 as at the Completion Date
with reference to the facts which then exist.
7.2 3i hereby warrants to the Purchaser in the terms of and the warranties
set out in paragraph 17.4 of Schedule 4.
7.3 The Sellers acknowledge that the Purchaser in entering into this
Agreement has relied on the Warranties and the Purchaser acknowledges
to the Sellers and 3i that no reliance has been placed by it on any
other warranty or representation.
7.4 The Sellers agree with the Purchaser (for itself and as trustee for
each Group Company) (in the absence of fraud) to waive any right or
remedy which the Sellers may have against any Group Company or (save in
respect of the Contribution Agreement) any present or former director,
employee or agent of any Group Company in connection with any
representation, warranty, agreement or statement by any such person in
relation to this Agreement and any other document to be executed in
connection with it.
7.5 Each of the Warranties shall be construed as a separate and independent
provision.
7.6 Save in the event of fraud none of the parties shall be entitled to
rescind the Agreement after Completion.
7.7 Save as otherwise provided in this Agreement, no claim in respect of or
arising out of the Warranties or any other provision of this Agreement
shall be limited or otherwise affected and no amount recoverable in
respect of any breach shall be reduced by any knowledge (actual or
constructive) which the Purchaser has or is deemed to have in relation
to any Group Company.
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7.8 The Purchaser warrants to each of the Sellers and 3i that:
7.8.1 the Purchaser has and has duly exercised all power and authority
necessary for it to enter into and perform its obligations under this
Agreement, to constitute, issue and perform its obligations under or in
respect of the Tax Deed and every other document or obligation to be
entered into or performed by it under or pursuant to this Agreement;
7.8.2 it does not require (or has obtained) the consent of any person to
enter into and perform the matters referred to in the preceding CLAUSE
7.8.1;
7.8.3 it has in all other respects taken all action necessary to authorise
the execution, delivery and performance of this Agreement, the Tax Deed
(subject to completion taking place) by it under or pursuant to this
Agreement and all the same to, or will when executed, constitute
lawful, valid obligations binding upon the Purchaser in accordance with
their respective terms;
7.8.4 the execution, delivery and performance of or compliance with the
provisions of this Agreement and the Tax Deed, will not cause or
constitute any breach or default of or under any constitutional
documents of the Purchaser or of any agreement relating to any
borrowing of any kind or of any security instrument issued or granted
by the Purchaser;
7.9 The liabilities of the Warrantors hereunder shall be limited in
accordance with the provisions of Clause 8;
7.10 The Purchaser confirms to the Warrantors, that having made reasonable
enquiry of the Project Team only, it is not actually aware of any
matter which would at the date of this Agreement give rise to an actual
Claim.
8 WARRANTY LIMITATIONS
8.1 MAXIMUM AMOUNT OF LIABILITY
8.1.1 The aggregate liability of the Warrantors (save in relation to John
Tinning) for all Claims shall be limited to the aggregate consideration
received by such Warrantors (other than MTD) and each of the Related
Persons and MTD (in respect of the sale of its Ordinary Shares only)
pursuant to this Agreement. John Tinning shall only be liable in
relation to a Claim for an amount up to the consideration received by
him and Dawn Tinning as set out opposite their names in Schedule 1.
8.1.2 Where the Trustees of the Pension Fund of Victoria University are
trustees and are selling shares in such capacity, then their respective
aggregate liability in respect of all claims under this Agreement shall
be limited (so far as such liability would otherwise arise in
consequence of the sale of such shares) to the amount of the relevant
trust fund or estate for the time being
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in their hands and available to them to satisfy such liability. The
Trustees shall be discharged from all liability under this Agreement if
any continuing trustee or personal representative appointed in their
place has entered or enters into a direct covenant with the Purchaser
may reasonably require to be bound by an observe and perform the terms
of this Agreement.
8.2 MINIMUM AMOUNT OF LIABILITY
The Warrantors shall not have to make a payment in respect of a Claim
unless the aggregate liability in respect of such Claim (when
aggregated with the Warrantors' liability in respect of all other
Claims made by the Purchaser or which would have been made but for the
provisions of this Clause 8.2) (but excluding related interest and
costs) in respect of all Claims exceeds (pound)50,000, provided that if
such aggregate liability exceeds that amount, then the Warrantors shall
be liable for the whole of the liability and not just the excess of
such aggregate liability above the sum of (pound)50,000.
8.3 TIME LIMITS
No claim shall be made against the Warrantors unless notice in writing
is given to the Sellers' Representative by the Purchaser (giving
reasonable details (having regard to information available to Purchaser
at the time when the notice is given) of the specific matter in respect
of which such Claim is made):-
8.3.1 on or before 31 December 2001 in respect of a Warranty Claim (other
than in respect of a Warranty Claim relating to Taxation); or
8.3.2 on or before the date falling 6 years after the end of the current
accounting period of the Company in respect of a Warranty Claim
relating to Taxation or a Tax Deed Claim and in each case unless legal
proceedings in respect of such Claim are commenced and served upon the
Warrantors within nine months after such written particulars have been
given to the Warrantors;
or if a Claim is contingent, then if later within nine months after
such Claim ceases to be contingent.
8.4 EXCLUSION OF CLAIMS
The Warrantors shall have no liability in respect of any Warranty Claim
to the extent arising from any matter, act, omission or circumstance
Disclosed in the Disclosure Letter or in the documents annexed to it.
For the avoidance of doubt, nothing in the Disclosure Letter shall, or
shall be deemed to, be disclosed against warranty 2.4 of Part 1 of
Schedule 4.
8.5 NON-APPLICABILITY IN THE EVENT OF FRAUD
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The exclusions and limitations set out in this CLAUSE 8 shall not apply
in relation to Claims which are the consequence of fraud, or wilful
concealment by the Sellers.
8.6 None of the limitations set out in this CLAUSE 8 shall apply in respect
of any Claim by the Purchaser for breach of the Share Ownership
Warranties.
8.7 The Warrantors shall have no liability in respect of any Warranty Claim
relating to any matter to the extent that the Accounts or Management
Accounts make a specific provision or reserve for the matter giving
rise to the Warranty Claim.
8.8 Where the same fact or circumstances could give rise to more than one
Warranty Claim or a Tax Deed Claim, the Purchaser shall not be entitled
to recover more than once for the same loss, so that, in calculating
the amount payable for breach of any of the Warranties or in respect of
the Tax Deed account shall be taken of any amount paid under the other
Warranties, or in respect of a Tax Deed Claim in respect of the same
facts or circumstances.
8.9 The Warrantors shall not be liable in respect of any Warranty Claim if
and to the extent that:
(a) such breach or Claim occurs or increases as a result of the
passing of, or changing, after the date of this Agreement, any
legislation with retrospective effect; or
(b) such liability would not have arisen but for a change after
Completion in the Accounting Policies used in the Accounts
PROVIDED THAT this limitation shall not apply where such
change is necessary to conform with UK generally accepted
accounting policies; or
(c) such liability would not have arisen but for the voluntary act
or omission of the Purchaser after Completion which (i) is
outside the ordinary course of trade of the Group as carried
on at Completion (and is not required pursuant to a legally
binding commitment entered into prior to Completion or any
requirement of law); and (ii) which the Purchaser actually
knew or on the basis of the information Disclosed ought
reasonably to have known would rise to a Warranty Claim;
(d) to the extent that it relates to any loss for which the
Purchaser or any Group Company (as the case may be) actually
recovered from an insurer;
(e) which would not have arisen but for anything expressly done or
provided to be done or omitted to be done pursuant to this
Agreement or which is otherwise done or omitted to be done at
the specific written request or with the written consent of
the Purchaser provided that the Purchaser should on the basis
of information Disclosed, have been aware that this would (or
would be likely to) have arisen;
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(f) to the extent that it relates to the Intellectual Property
except only for such Claim as the Purchaser may have in
consequence of any breach by the Warrantors of the Warranty
contained in paragraphs 2.2, 10.3, 11 or 13 of Part 1 of
Schedule 4;
8.10 Notwithstanding the provisions of this Agreement, the Warrantors shall
not be liable in respect of any Warranty Claim arising under the
Warranties at Part 2 of Schedule 4 to this Agreement to the extent
provided in paragraphs 4.1.1 to 4.1.14 inclusive of the Tax Deed.
8.11 In relation to any Warranty Claim, and without prejudice to the
validity of the Warranty Claim, the Purchaser shall allow the
Warrantors and their professional advisers (at the Warrantors' own
cost) to investigate the matter or circumstance alleged to give rise to
the Warranty Claim and the Purchaser shall at the request and cost of
the Warrantors give such assistance as the Warrantors or their
professional advisers may reasonably request for the purposes of such
investigation, including upon reasonable notice and in normal business
hours, access to and copies of any documents or other information in
the possession of the Purchaser and (at reasonable times and upon
reasonable notice) to enable the Sellers and/or their professional
advisers to interview relevant personnel PROVIDED ALWAYS THAT any such
rights of access and/or copying of documentation shall be limited to
information concerning the Warranty Claim and shall not, for the
avoidance of doubt, extend to any access to personnel, information or
documentation the subject of legal or other privilege or which would
otherwise not be subject to the Rules of the Supreme Court in respect
of discovery.
8.12 Any amount recovered by the Purchaser from the Warrantors pursuant to
Claim shall be treated as a reduction in the price received by the
Warrantors for the Shares held by them and/or as a reduction received
in consideration of giving the Warranties or covenants given by them as
the case may be.
8.13 CONTINGENT CLAIMS
The Warrantors shall not be liable for any Claim to the extent that it
relates to a Claim based on a contingency until the contingency has
become actual save that such a Claim, if made as a contingent claim
prior to the expiry date of the relevant time limited contained in
Clause 8.3, shall survive until the earlier of the date upon which the
contingency becomes actual and the seventh anniversary of Completion.
8.14 RECOVERY AGAINST THIRD PARTIES
If the Warrantors have paid to the Purchaser any amount in respect of a
Warranty Claim and the Company or the Purchaser subsequently receives
or recovers from a third party (including an insurer) a sum which is
directly referable to such Warranty Claim, the Purchaser shall, as soon
as reasonably practicable following such recovery, repay to the
Warrantors as have made such payment to the Purchaser the lesser of the
amount received from that Warrantor and the
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amount received from the third party in respect of such Warranty Claim,
in each case less all reasonable costs incurred by the Purchaser in
making such recovery.
8.15 CONDUCT OF WARRANTY CLAIMS
8.15.1 If the Purchaser receives notice of a claim by a third party ("Third
Party Claim") against the Company, the Subsidiary or the Purchaser
which constitutes or which the party obtaining notice of such matter,
fact or circumstance ought reasonably to have known is likely to give
rise to a Warranty Claim on the basis of information Disclosed the
party receiving such notice shall notify the other(s) as soon as
reasonably practicable, and not make any admission of liability,
agreement or compromise in respect of such claim, without consultation
with the other parties and the Purchaser shall, subject to the
indemnity referred to in CLAUSE 8.15.2 below take all such steps as the
Warrantors' Representative may reasonably require to resist, defend or
otherwise compromise such Third Party Claim(including the appointment
of solicitors nominated by the Warrantors) PROVIDED ALWAYS nothing in
this CLAUSE 8.15.1 shall require the Purchaser to take or omit to take
any action which, in the case of a, b or c below, following an opinion
of Counsel (as set forth in this clause), is deemed to be or have (as
appropriate):
(a) frivolous;
(b) vexatious;
(c) on the balance of probabilities has less than a 50% change of
success; or
(d) in the Purchaser's reasonable opinion, would or would be
likely to prejudice or materially interfere with the carrying
on of the business of the Group or prejudice or materially
interfere with the Group or the Purchaser's relationship with
any tax authority;
by reference in (a), (b) or (c) above, to an opinion obtained from a
reputable Counsel of not less than five years standing practicing in
London. In obtaining such opinion the Warrantors Representative and the
Purchaser shall agree upon the identity of the barrister to be
instructed (or in default of agreement to be appointed by the President
of the Bar Council of England and Wales) and shall in addition agree
upon the instructions to be provided.
8.15.2 The Warrantors shall indemnify and keep indemnified the Purchaser
against and in respect of all costs incurred, charges, expenses,
liabilities and damages for which the Purchaser or the relevant member
of the Purchaser's Group becomes liable in respect of any action which
is required to be taken by the Warrantors (or any of them) under CLAUSE
8.15.1.
8.15.3 The Purchaser shall keep the Warrantors' Representative informed of the
progress and the defence of any Third Party Claim and shall consult
with and (subject always to the proviso in CLAUSE 8.15.1 above) shall
take such action as the Warrantors' Representative may reasonably
require in accordance with CLAUSE 8.15.1 above.
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8.16 The Purchaser acknowledges that nothing in this Agreement shall take
away from its common law duty of mitigation.
9 RESTRICTIVE COVENANTS
9.1 RESTRICTIONS
Each of the Restricted Person(s) other than John Tinning severally
undertakes to and covenants with the Purchaser that he will not either
on his own account or jointly with, or as manager, agent, officer or
otherwise on behalf of, any other person, directly or indirectly:
9.1.1 for a period of 24 months from Completion carry on or be engaged or
interested in any business in the United Kingdom, Europe, North
America, Latin America, or the rest of the world which competes with
the Business save that it may hold (alone or when aggregated with the
holdings of any other Connected Person of the Restricted Persons) for
investment up to 5 percent in aggregate of any class of securities
listed or traded on a recognised investment exchange;
9.1.2 (without limiting the generality of CLAUSE 9.1.1) for a period of 24
months from Completion canvass, solicit or approach on behalf of a
business which competes with the Business any person for the purpose of
offering to that person Restricted Products or supply on behalf of a
business which competes with the Business to any person who was:
(a) provided with Restricted Products (including without
limitation Restricted Products provided for alpha or beta
testing or evaluation purposes) by the Company or any other
Group Company at any time during the 24 months up to and
including Completion; and
(b) negotiating with the Company or any other Group Company for
the supply of Restricted Products (including without
limitation Restricted Products provided for alpha or beta
testing or evaluation purposes) at any time during the year up
to and including Completion;
9.1.3 (without Limiting the generality of CLAUSES 9.1.1 and 9.1.2) for a
period of 24 months from Completion solicit or entice away or endeavour
to solicit or entice away from the Company or any other Group Company
any Senior Employee and/or any Key Employee with a view to inducing
that person to leave such employment and to act for another employer
which competes with (or intends to compete with) the Company or any
Group Company;
9.1.4 at any time from Completion use the name "Kestra" or any similar name
or any variation of it which is likely to be confused with it in
connection with any business which competes with the Business;
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9.1.5 at any time after Completion disclose (save to the extent required by
law) or use, for his own benefit or that of any other person, any
confidential information which is in his possession concerning the
business or affairs of the Company or any other Group Company or of any
person having dealings with the Company or any other Group Company.
9.1.6 at any time after Completion use the colour purple in conjunction with
any product which is or could reasonably be construed as being a
colourable imitation of any of Restricted Products.
9.2 REASONABLENESS
The restrictions in CLAUSE 9.1 are considered to be reasonable by the
parties for the legitimate protection of the business and goodwill of
the Company and each Group Company but each of them is distinct and
severable from the others and if at any time one or more of such
restrictions is determined to be unenforceable (whether wholly or to
any extent) the enforceability of the remaining restrictions (or the
same restrictions to any other extent) shall not in any way be affected
or impaired.
9.3 The restrictions in CLAUSE 9.1 are given to the Purchaser for itself
and as trustee for the Company and each other Group Company and each of
the Restricted Persons agrees that he will at the request and cost of
the Purchaser enter into a further agreement with the Company and/or
any relevant Group Company pursuant to which the Restricted Persons
will accept restriction corresponding to the restriction to this
Agreement (or such of them as the Purchaser in its absolute discretion
shall deem appropriate). In exercising any right as trustee for the
Company (or any other Group Company) under this Agreement, the
Purchaser shall be entitled to limit the action it takes to such action
as it may, in its absolute discretion, consider reasonable.
9.4 Each of the Restricted Persons other than John Tinning severally
undertakes with the Purchaser that he will for a period of 30 months
after Completion as soon as practicable refer to the Purchaser all
enquiries which it receives from customers relating to the Business.
10 INFORMATION AND CONFIDENTIALITY
Each of the Sellers severally undertakes to the Purchaser:
10.1 that he will at any time and from time to time after Completion at the
reasonable request of the Purchaser give to the Purchaser on request
all information in his possession concerning the dealings, transactions
or affairs of the Company and each member of the Group and all Know-
How; and
10.2 that he will not at any time after the date hereof take away, or
(directly or indirectly) make use of or disclose or permit to be
disclosed to any person (except as may be necessary to comply with any
statutory obligation or order of any court or statutory tribunal of
competent
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jurisdiction, and only insofar as is strictly required by any such
statutory obligation or order) any of the Know How, or any confidential
information in any way relating to any clients, products, customers,
suppliers, agents or any other persons who have or have had any
dealings with the Group in relation to the Business ("CUSTOMER
INFORMATION") and each Seller shall take all reasonable measures to
ensure that no person make use of or disclose to any other person any
of the Know How or Customer Information unless:
10.2.1 such Know-How or Customer Information has entered the public domain
otherwise than by reason of the act or default of the Seller; or
10.2.2 such Know-How or Customer Information is provided after Completion to
the Sellers or 3i by any third party who is under no obligation of
confidentiality to the Purchaser or any member of the Purchaser's Group
or the Group.
11 GUARANTEE
GUARANTEE BY GUARANTOR
The provisions of Schedule 7 will take effect as if set out herein.
12 ANNOUNCEMENTS
Each of the parties undertakes that it shall not make any announcement
or issue any circular or other publicity relating to the existence or
subject matter of this Agreement without it being approved in writing
by the Purchaser and the Warrantors' Representative as to its consent,
form and manner of publication (such approval not to be unreasonably
withheld or delayed).
13 OTHER PROVISIONS
13.1 COSTS
Each of the parties shall pay its own costs and expenses (including
legal fees and VAT (if any)) incurred by it in connection with the
negotiation, preparation and execution of this Agreement and the
completion of the transactions contemplated by this Agreement.
13.2 POST-COMPLETION
This Agreement shall remain in full force and effect after Completion
in respect of all obligations, agreements, covenants and undertakings
contained in or implied by this agreement which have not been done,
observed or performed at or prior to Completion and in respect of all
warranties, representations and indemnities contained in this
Agreement.
13.3 VARIATION
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No variation of this Agreement shall be effective unless agreed in
writing by or on behalf of each of the parties.
13.4 ENTIRE AGREEMENT
This Agreement and any documents referred to in it contain the entire
Agreement and understanding between the parties in relation to the
matters contemplated by this Agreement and supersede all previous
agreements between the parties in relation to such matters provided
that the provisions of this clause 13.4 and clause 8 shall not exclude
any liability which the Sellers or 3i would otherwise have to the
Purchaser or any right which the Purchaser may have to rescind this
Agreement in respect of any statements made fraudulently by the Sellers
or 3i prior to the execution of this Agreement.
13.5 WAIVERS AND REMEDIES
13.5.1 Save as provided in Clause 8 no failure or delay to exercise, or other
relaxation or indulgence granted in relation to, any power, right or
remedy under this Agreement of any party shall operate as a waiver of
it or impair or prejudice it nor shall any single or partial exercise
or waiver of any power, right or remedy preclude its further exercise
or the exercise of any other power, right or remedy.
13.5.2 All rights of each of the parties contained in this Agreement are in
addition to all rights vested or to be vested in it pursuant to common
law or statute.
13.6 SEVERABILITY
Each of the provisions of this Agreement is distinct and severable from
the others and if at any time one or more of such provisions is or
becomes invalid, unlawful or unenforceable (whether wholly or to any
extent), the validity, lawfulness and enforceability of the remaining
provisions (or the same provision to any other extent) shall not in any
way be affected or impaired.
13.7 SUCCESSORS
This Agreement shall be binding on and enure to the benefit of each
party and its lawful successors and permitted assigns.
13.8 ASSIGNMENT
This Agreement and the rights and obligations set out herein shall not
be assignable in whole or in part save that the Purchaser may assign
any of its rights ("the Rights") to any company associated with the
Purchaser
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PROVIDED THAT:-
13.8.1 before such assignee ceases to be associated with the Purchaser it will
first reassign the Rights to the Purchaser or any other company
associated with the Purchaser and the Rights shall cease to be
enforceable by such assignee with effect from the date it ceases to be
associated with the Purchaser; and
13.8.2 the liability of the Sellers in respect of the Rights which are
assigned shall be no greater than would have been the case had no such
assignment taken place.
13.9 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and which shall together
constitute one and the same Agreement.
14 NOTICES
14.1 Each party may give any notice or other communication under or in
connection with this Agreement by letter or facsimile transmission
addressed to any other party. Any notice which the Purchaser gives to
the Sellers' Representative shall be deemed to have been given to each
Seller. The address for service of each party shall be the address set
out in CLAUSE 14.3 or such other address within the United Kingdom for
service as the addressee may from time to time notify to the other
parties for the purposes of this clause.
14.2 Any such communication will be deemed to be served:
14.2.1 if personally delivered, at the time of delivery and, in proving
service, it shall be sufficient to produce a receipt for the notice
signed by or on behalf of the addressee;
14.2.2 if by letter, at noon on the Business Day after such letter was posted
(or, in the case of airmail, 5 Business Days after such letter was
posted) and, in providing service, it shall be sufficient to prove that
the letter was properly stamped first class (or airmail), addressed and
delivered to the postal authorities; and
14.2.3 if by facsimile transmission the Business Day following the day of
transmission and provided that a copy of the fax is also sent to the
other party by first class pre-paid recorded delivery post (or airmail)
by way of confirmation and, in proving service, it shall be sufficient
to produce a transmission report from the sender's facsimile machine
indicating that the facsimile was sent in its entirety to the
recipient's facsimile number.
14.3 Details of each party for service of notice are as follows:
14.3.1 THE PURCHASER
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c/o THE PURCHASER'S SOLICITORS With copy to:
Name: Dorsey & Whitney Cyberoptics Corporation
Address: Veritas House, 125 Finsbury Address: 5900 Golden Hills Drive
Pavement, Minneapolis, MN 55416, USA
London EC2A 1NQ
Fax No: 0171-588-0555
Tel No: 0171-588-0800 Tel: 001 612 542 5000
Attention: J.R. Byrne/A. Rimmington Attention: S. Quist/M. Wetle
14.3.2 THE SELLERS
c/o THE SELLERS' REPRESENTATIVE With copy to:
Name: Eversheds the Warrantor's Representatives
Address: Cloth Hall Court, Address: Kent House Cottage
Infirmary Street, Harrogate Road
Leeds LS1 2JB North Rigton LS17 0DS
Fax No: 0113 245 6188
Tel No: 0113 243 0391 Tel: 01423 734 771
Attention: John Shinwell (Ref: C.JDS) Attention: Mike Bowes
14.3.3 3i Group Plc
Name: The Regional Director
Address: Carlton House, 18 Albert Square, Manchester, M2 5PE
Fax No: 0161 833 9182
Tel No: 0161 839 3131
15 LAW AND JURISDICTION
15.1 This Agreement, and all disputes or claims arising out of or in
connection with it, shall be governed by and construed in accordance
with English law.
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15.2 The parties irrevocably and unconditionally agree that the High Court
of Justice in England shall have non-exclusive jurisdiction over all
disputes or claims arising out of or in connection with this Agreement.
15.3 The Purchaser agrees that any legal action or proceedings against it
arising out of or in connection with this Agreement, the Tax Deed or
any other document entered into pursuant to the terms of this
Agreement, including any writs, summonses, judgments or other notices
of or in any legal process, shall be sufficiently served upon it if
delivered to either (a) the Purchaser at the address listed on page 1
of this Agreement; or (b) any person for the time being held out as
being a partner within the London office of the Purchaser's Solicitors;
and anything so served shall be deemed to be served immediately the
same is so delivered.
15.4 The Sellers' jointly and severally, and 3i for its own part only, agree
that any legal action or proceedings against them arising out of or in
connection with this Agreement, the Tax Deed or any other document
entered into pursuant to the terms of this Agreement, including any
writs, summonses, judgments or other notices of or in any legal
process, shall be sufficiently served upon it if delivered to either
(a) the Sellers and 3i at the addresses listed on in Schedule 1 to this
Agreement; or (b) in respect of the Sellers only any person for the
time being held out as being a partner within the Leeds office of the
Sellers' Solicitors; and anything so served shall be deemed to be
served immediately the same is so delivered.
IN WITNESS of which this Agreement has been duly signed and delivered on the
date written at the beginning of this Agreement.
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Schedules of names and allocation among selling shareholder, property and
company locations will be submitted supplementally to the Securities & Exchange
Commission upon request
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SCHEDULE 4
PART 1
GENERAL WARRANTIES
16 INTERPRETATION
In Part 1 of this Schedule 4 the following expressions shall have the
following meanings unless inconsistent with the context:
"the Company" Notwithstanding the definition contained in the other
parts of this Agreement, this definition shall be deemed
to include a reference to the Subsidiary (individual
details of which are set out in Schedule 2), as if the
provisions of Part 1 of this Schedule were set out in
full in respect the Subsidiary also.
17 INFORMATION SUPPLIED AND CAPACITY OF VENDORS
17.1 All information contained in Schedules 1, 2 and 3 of this Agreement is
true and accurate.
17.2 The copy documents contained in the bundle of documents labelled and
initialled for the purposes of identification by the Sellers'
Solicitors and the Purchaser's Solicitors (the "WARRANTED DOCUMENTS")
and described in the index to the Warranted Documents annexed to
Disclosure Letter are complete and true copies of the originals.
17.3 Each of the Sellers has full power and authority to enter into and
perform this Agreement and the Tax Deed and all other documents in the
Agreed Form without requiring the consent of any person, and this
Agreement and the Tax Deed and all other documents in the Agreed Form
when executed, will constitute valid and binding obligations on each of
the Sellers in accordance with the respective terms thereof.
17.4 The responses to the Purchaser's due diligence questionnaire annexed to
the Disclosure Letter are true and accurate in all material respects.
18 ACCOUNTS AND RECORDS
18.1 So far as the Warrantors are aware the Company has at all times
properly maintained all books, accounts and records of whatever kind
required by law to be maintained and so far as the Warrantors are aware
such books, accounts and records properly record all matters required
by law to be entered therein and accurately present and reflect all
matters necessary to comply with the provisions of the Companies Act
1985.
18.2 The Accounts:
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18.2.1 complied with the requirements of the Companies Act and other relevant
statutes and generally accepted accounting principles, SSAPs and FRSs,
have been prepared on bases and principles consistent with those used
in the preparation of the audited statutory accounts of the Company for
the 3 financial years immediately preceding that which ended on the
Accounts Date and gave a true and fair view of the state of affairs of
the Company as at the Accounts Date and of its profit and loss and cash
flow, and there has been no change in such policies in any of the
accounting periods;
18.2.2 adequately disclosed all assets and made proper provision or reserve
for all assets and liabilities (whether or not quantified or disputed)
and properly provide for (or disclose by way of note) all contingent
liabilities and capital commitments at the Accounts Date;
18.2.3 made proper provision for depreciation of the fixed assets of the
Company having regard to their original cost and estimated life in
accordance with SSAP 12; and
18.2.4 The Accounts made proper provision or reserve for all bad and doubtful
debts of the Company at the Accounts Date;
18.3 The copy of the Management Accounts annexed to the Disclosure Letter is
a true and complete copy and so far as the Warrantors are aware, the
Management Accounts:
18.3.1 have been prepared on bases and in accordance with practices, policies
and principles consistent with those adopted in preparing the previous
management accounts of the Group in the period from 31 July 1997 to 28
February 1999 ("the Period") and are prepared on a cumulative basis for
the Period; and
18.3.2 have been carefully prepared in good faith and fairly state the assets,
liabilities and state of affairs of the Group for the period since 31
July 1998 to 28 February 1999 and made provision for the payment of
(pound)39,000 on the sale of motor vehicles used by the Group, payable
to Co-Operative Bank pursuant to the terms of leasing arrangements
between the Group and Co-Operative Bank.
19 BUSINESS SINCE THE ACCOUNTS DATE
19.1 Since the Accounts Date:
19.1.1 each Group Company has carried on its business in the ordinary and
usual course both as regards the nature, scope and manner of conducting
the same and so as to maintain the same as a going concern;
19.1.2 each Group Company has paid its creditors within the times agreed with
such creditors and there are no debts outstanding by such Group Company
which have been due for more than six weeks and the Closing Balance
Statement contains a list of all debts outstanding as at the date
immediately prior to the Completion Date;
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19.1.3 no Group Company has acquired, or agreed to acquire, on capital account
any single asset having a value in excess of (pound)5,000 or assets
having an aggregate value in excess of (pound)10,000;
19.1.4 no Group Company has disposed of, or agreed to dispose of, any asset
having a value in excess of (pound)5,000;
19.1.5 no resolution of the shareholders of any Group Company has been passed;
19.1.6 no payment has been made to, or benefit conferred by any Group Company
on any of the Sellers, save as specified in the Disclosure Letter
pursuant to the terms of shareholders' employment or office;
19.1.7 no distribution of capital or income (including for the avoidance of
doubt, any dividend) has been declared, made or paid or agreed or
resolved to be declared, made or paid by any Group Company;
19.1.8 other than pursuant to the terms of this Agreement no loans have been
made or repaid by any Group Company and no loan capital or loan has
been or has become liable to be repaid by any Group Company in whole or
in part;
19.1.9 none of the fixed assets of the Group shown in the Accounts and none
acquired by any Group Company since the Accounts Date have been lost,
materially damaged or destroyed;
19.2 no cash at hand or at bank or other fixed or current asset has been
used to discharge indebtedness of the Group to 3i Group plc.
20 TRADING AND CONTRACTUAL ARRANGEMENTS
20.1 So far as the Warrantors are aware none of the contracts or obligations
entered into by any Group Company is ultra vires the relevant Group
Company or exceeds the powers of the directors to bind the relevant
Group Company and so far as the Warrantors are aware, the relevant
Group Company is not in default under any such contracts or
obligations.
20.2 No Group Company is a party to any contract, transaction, obligation,
commitment or liability which, whether by reason of its nature, term,
scope, price or otherwise is or (so far as the Warrantors are aware)
may be material in relation to its business, profits or assets and
which in any case:
20.2.1 is in any way otherwise than in the ordinary course of the relevant
Group Company's business of an unusual or abnormal nature, or not fully
on an arm's length basis;
20.2.2 is of a long-term nature (that is to say incapable of performance in
accordance with its terms within twelve months after the date on which
it was entered into or undertaken);
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20.2.3 cannot readily be fulfilled or performed by the relevant Group Company
on time without undue or unusual expenditure of money or effort;
20.2.4 involves agency, distributorship, franchising, marketing rights,
information sharing, manufacturing rights, servicing, maintenance;
partnership, joint venture, consortium, or similar arrangements;
20.2.5 commits the relevant Group Company to capital expenditure in excess of
(pound)10,000 in aggregate;
20.2.6 involves warranties, indemnities or representations given in connection
with a sale of shares or a sale of undertaking, or is a guarantee or
indemnity in respect of the obligations of a third party, under which
any liability or contingent liability is outstanding.
20.3 Except pursuant to their terms of employment no sums of whatever nature
are owing by any Group Company to any of the Sellers or any of the
Directors or any person being a Connected Person of any of the Sellers
or the Directors or any of them respectively.
20.4 So far as the Warrantors are aware, no Group Company has been a party
to any transaction to which any of the provisions of sections 320
(substantial property transactions involving Directors, etc.), 322
(liability arising from contravention of section 320), or 330 (general
restrictions on loans, etc. to Directors and persons connected with
them) of the Companies Act may apply.
20.5 None of the Sellers nor any person being a Connected Person in relation
to any Seller has any direct or indirect interest with any business
which has a close trading relationship with that of any Group Company
or which is or is likely to become competitive with the business of any
Group Company.
20.6 There are no outstanding arrangements or understandings (whether
legally binding or not) between any Group Company and any person who is
a shareholder (or the beneficial owner or any interest in the relevant
Group Company or in any company in which the relevant Group Company is
interested) or any person who is a Connected Person of any such person
relating to the management of the relevant Group Company's business, or
the appointment or removal of the Directors, or the ownership or
transfer of ownership, or the letting of any of the assets of the
relevant Group Company, or the provision, supply, purchase or finance
of goods, services or other facilities to, by or from the relevant
Group Company or otherwise howsoever in relation to the Company's
affairs.
20.7 No person is entitled to receive from the Company or any member of the
Group any finders fee, brokerage or commission in connection with the
sale of the Shares to the Purchaser, but to the extent any such person
is entitled to such a fee, brokerage or commission, the Sellers and 3i
shall discharge such liability and hold the Company harmless is in
respect of the same.
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21 ASSETS (OTHER THAN THE PROPERTY)
21.1 The Company was at the Accounts Date the owner with good legal and
beneficial title to all the assets included in the Accounts and now so
owns and has in its possession and under its control all such assets
(save for current assets subsequently disposed of in the ordinary
course of its business) and all assets acquired by it after the
Accounts Date and all such assets are the sole and absolute property of
the Company free from any charge, lien, encumbrance or equity and no
other person has or claims any rights in relation to such assets or any
of them and in particular all such assets are free from any hire
purchase, leasing or rental agreement or agreement for payments on
deferred terms or bill of sale.
21.2 In relation to any assets held by the Company which is the subject of
any hire purchase, conditional sale, chattel leasing or retention of
title agreement or otherwise belonging to a third party, so far as the
Warrantors are aware no event has occurred which entitles or which upon
intervention or notice by any third party may entitle any such third
party to repossess the asset concerned, or terminate the agreement, or
any licence in respect of the same.
21.3 Save in respect of the Subsidiary, the Company is not and has never
been the holder or beneficial owner of nor has it agreed to acquire any
share or loan capital of any other company (whether incorporated in the
United Kingdom or elsewhere).
21.4 The Company is not entitled to the benefit of any debt otherwise than
as the original creditor and is not and has not agreed to become a
party to any factoring or discounting arrangement.
21.5 None of the debts due as at the Accounts Date remain unpaid at the date
of this Agreement nor has any debt which has subsequently become due to
the Company (or any part of any such debt) remained unpaid for more
than two months after the due date for payment or been released or
written off or proved to be irrevocable, nor is any such debt regarded
as irrevocable and so far as the Warrantors are aware all the debts
owing to the Company at Completion will be paid in full in the ordinary
course of business and in any event not later than three months after
Completion.
21.6 The assets owned or used by each Group Company comprise all the assets
used by the relevant Group Company to carry out its business in the
ordinary and usual course of trade.
22 EMPLOYEES AND AGENTS
22.1 Particulars of the identities, date of commencement of employment (or
appointment of office) and terms and conditions of employment or office
(including remuneration confidentiality and non-compete undertakings
and any loan, bonus, commission, share incentives or profit sharing
arrangement) of all the employees and officers of the Company are
Disclosed in the Disclosure Letter.
22.2 The Company is not under any legal or moral liability or obligation to
pay bonuses, pensions, gratuities, superannuation, allowances or the
like to any of its past or present officers or
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employees or their dependents nor is it a party to any arrangement or
promise to make or in the habit of making ex gratia or voluntary
payments by way of bonus, pension, gratuity, superannuation, allowance
or the like to any such persons and there are no schemes or
arrangements for payment of retirement pension or death benefit or
similar schemes or arrangements in operation or contemplated in
relation to the Company.
22.3 No change has been made since the Accounts Date in the terms of
employment of any person employed by the Company at the date of this
Agreement, and the Company is not party to any contract or
understanding to make any such change.
22.4 Save in respect of remuneration and expenses Disclosed in the
Disclosure Letter in respect of the period since 31 July 1998 there are
no amounts owing to any present or former officers or employees of the
Company, and none of them is entitled to accrued holiday pay other than
in respect of the Company's current holiday year.
22.5 No employee has been engaged by the Company on a salary of more than
(pound)25,000 per annum since the Accounts Date and no person employed
by the Company at or since the Accounts Date has ceased, or given or
received notice to cease, to be so employed.
22.6 The Company has maintained suitable records regarding the service of
each of its employees and complied with all agreements for the time
being relating to them.
22.7 Since the Accounts Date and save to the extent (if any) to which
provision or allowance has been made in the Accounts no actual
liability has been incurred by the Company to make any redundancy
payments or any protective awards or to pay damages or compensation for
wrongful or unfair dismissal or for failure to comply with any order
for the reinstatement or re- engagement of any employee and no
gratuitous payment has been made or promised by the Company in
connection with the actual or proposed termination or suspension of
employment or variation of any contract of employment of any present or
former director or employee.
22.8 The Company has not recognized any trade union or association of trade
unions or any other organization of employees in respect of its
employees or any of them.
23 INSURANCE
23.1 Copies of all the Company's insurances are attached to the Disclosure
Letter and so far as the Warranties are aware there are no outstanding
claims or circumstances likely to give rise to a claim thereunder and
(so far as the Warrantors are aware) nothing has been done or omitted
to be done which has made or could make any policy of insurance void or
voidable or whereby the premiums are likely to be increased.
24 FINANCE AND WORKING CAPITAL
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24.1 Full and accurate details of all cash balances, overdrafts loans or
other financial facilities outstanding or available to the Company are
contained in the Closing Balance Statement; and no person who provides
any such facility has given any indication to any of the Warrantors
that it may be withdrawal or its terms altered.
24.2 The details contained in the Disclosure Letter of the credit or debit
balances on all the bank or deposit accounts of the Company were
correct at the date stated in the Disclosure Letter and since such date
there have been no payments out of any such accounts (including,
without limitation, payments to discharge indebtedness of the Group to
3i Group plc) and the balances on such accounts are not now
substantially different from the balances shown in the Disclosure
Letter.
24.3 Save in respect of any sums owing in the ordinary course of the
Business to 3i Group Plc which sums are to be repaid on Completion the
Company has no borrowings.
25 PROPOSED PRODUCTS
25.1 So far as the Warrantors are aware, the Restricted Products (including
without limitation "KESTRA PCB") comply fully with all applicable laws,
regulations or standards in each case in their current form, and such
Restricted Products are not faulty, defective or dangerous or not in
accordance with any representation or contractual term, express or
implied, relating to them.
25.2 The Company has not received any written complaint from any actual or
potential customer undergoing evaluation of the Restricted Products,
nor has the Company issued any credit note for an amount in excess of
(pound)1,000.
25.3 The Business Reports have been prepared with due skill and care and all
factual information contained within them was when given and is at the
Completion Date true and accurate in all material respects (and
supercede all earlier information about the Companies Products which
may be contained in other Warranted Documents). All statements of
opinion contained or referred to in the Business Reports have been
honestly and reasonably made and are fair and reasonable in the
circumstances. None of the Warrantors are aware of any fact or matter
not disclosed with the Business Reports which may render such
information untrue, incorrect or misleading in any material respect.
26 LITIGATION
26.1 Save for proceedings instituted by the Company for collection of monies
owing to it in the ordinary course of business neither the Company nor
any person for whose acts or omissions it may be vicariously liable is
engaged in or subject to any civil, criminal or arbitration proceedings
and, so far as any of the Warrantors are aware, there are no such
proceedings pending or threatened by or against the Company or against
any such person and there are no facts or existing circumstances likely
to give rise to any such proceedings.
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26.2 There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and the Company is not party to any undertaking or
assurance given to a court, tribunal or any other person in connection
with the determination or settlement of any claim or proceedings.
27 INSOLVENCY
27.1 No order has been made or resolution passed or petition presented for
the winding-up of the Company and there is not outstanding:
27.1.1 any order or Petition for the winding-up of the Company;
27.1.2 any appointment of a receiver over the whole or any part of the
undertaking or assets of the Company;
27.1.3 any order or petition for the administration of the Company
27.1.4 any voluntary arrangement between the Company and any of its creditors;
27.1.5 any distress or execution or other process levied in respect of the
Company, which remains undischarged;
27.1.6 any unfulfilled or unsatisfied judgement or court order against the
Company.
27.2 The Company is not deemed unable to pay its debts within the meaning of
section 123 of the Insolvency Act 1986.
28 INTELLECTUAL PROPERTY
28.1 Details of all Registered Group Intellectual Property are set out in
the Disclosure Letter. Each registration of any Group Intellectual
Property is so far as the Warrantors are aware valid and subsisting and
the Warrantors have not received any notice opposing or challenging any
of them by any person. All registration and renewal fees in respect of
such registered Group Intellectual Property have been paid on time and
none are currently due.
28.2 The Group is the sole legal and beneficial owner of all Group
Intellectual Property required for, or used in, developed for use in or
necessary to the conduct of the Business as now conducted or exploited
in, the operation of the Business, free from all liens, charges,
equities and encumbrances.
28.3 All licenses relating to Licenced Intellectual Property to which each
Group Company is a party are in full force and effect and so far as the
Warrantors are aware the Group holds valid licences to use any third
party Intellectual Property required for or used in the Business and
nothing has been done and no event has occurred, by reason of which any
such licenses or
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agreements may prematurely be terminated, and so far as the Warrantors
are aware none of such licenses is liable to be determined (whether
automatically or at the desire of any party thereto) by reason of the
execution or performance of this Agreement. Particulars of all other
written agreements relating to the Licenced Intellectual Property are
set out in the Disclosure Letter.
28.4 The Company has not received any notice from any person that the
operations including without limitation the use of the University
Software carried on by any Group Company infringe any Intellectual
Property of any other person, constitute passing-off, unfair
competition, or breach of confidentiality or give rise to any payment
(or payment obligation) by any Group Company of any royalty, fee, or
other payment of any description whatsoever.
28.5 No Group Company has, in designing, developing or manufacturing any
products, exactly, wholly or substantially (directly or indirectly)
copied or reproduced any products, designs or copyright works (or any
part thereof) in which any third party owns rights.
28.6 No third party is making or (so far as the Warrantors are aware)
threatening, or during the last 3 years has made or threatened, in
relation to any Group Intellectual Property, any infringing use or
exploitation or any claim or challenge. So far as the Warrantors are
aware, no person is doing or threatening any thing, has done any thing,
which constitutes passing-off, unfair competition or breach of
confidentiality actionable by any Group Company.
28.7 The Disclosure Letter sets forth all products marketed or that have
been marketed by the Company within the past two years.
28.8 The Disclosure Letter describes all Group Intellectual Property which
has been licensed to third parties (other than license to end-users in
accordance with a software license in the ordinary course of business).
28.9 All of the Group Intellectual Property Rights will remain the Group
Intellectual Property after the consummation of the transactions
contemplated by this Agreement, without the requirement that any
consent to assignment be obtained or any payment be made.
28.10 The Company has taken such action to protect the Group Intellectual
Property as the Company deems necessary for the Company to use such
rights in its business as currently conducted or currently contemplated
without the payment of royalties or penalties.
28.11 Without limiting the generality of the foregoing all employees,
contract workers, consultants and other agents of the Company have
executed agreements sufficient to vest in the Company ownership or the
right to use the Group Intellectual Property on which they have
performed services in the business of the Company as currently
conducted without the payment of royalties or penalties.
28.12 So far as the Warrantors are aware no third party has acquired any
rights in relation to any of the Group Intellectual Property nor have
they asserted any moral rights (as provided for in
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Sections 77 and 80 of the Copyright, Designs and Patents Act 1988)
against any Group Company.
28.13 The Intellectual Property Report is true and accurate and complete in
all material facts and is not misleading.
28.14 YEAR 2000 COMPLIANCE
28.14.1 All current and past products offered by the Company (including any
predecessor in interest) and all enhancements, upgrades,
customizations, modifications, maintenance and the like are, Year 2000
Compliant.
28.14.2 The Company has not received notice of any claim, action, proceeding or
investigation concerning the Year 2000 Compliance of its products,
services or operations, and there is no basis for any such regulatory
action, investigation or proceeding.
28.14.3 The Warrantors Disclosed true, correct and complete copies of any
customer agreements or other materials in which the Company has
furnished (or could be deemed to have furnished) assurances as to the
Year 2000 Compliance of its products or services, including any
responses to surveys or requests for certification of Year 2000
Compliance and letters of assurance to customers.
28.14.4 So far as the Warrantors are aware, all of the Company's facilities in
all locations (including mechanical systems, lifts, security systems,
fire suppression systems, telecommunications systems, fax machines,
photocopy machines, and equipment) are Year 2000 Compliant whether or
not owned by the Company.
28.14.5 For purposes of this Agreement, "Year 2000 Compliant" shall mean the
capabilities of the relevant item to perform the functions defined in
the British Standards Institute document referenced Disc PD 2000 before
during or after 1 January 2000.
28.14.6 The Warrantors have Disclosed all internal investigations, memoranda,
budget plans, forecasts or reports concerning the Year 2000 Compliance
of the products, services, operations, systems, supplies, and
facilities of the Company and the Company's vendors, to the extent any
shall have been prepared or delivered prior to the date hereof.
29 COMPLIANCE
29.1 So far as the Warrantors are aware all necessary licenses, consents,
permits and authorities (public and private) have been obtained by the
Company to enable the Company to carry on its business effectively in
the places and in the manner in which such business is now carried on
and all such licenses, consents, permits and authorities are valid and
subsisting and none of the Warrantors know of any reason why any of
them should be suspended, cancelled or revoked or should not be renewed
upon the expiry of their existing term.
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29.2 The Company has conducted its business in accordance with all
applicable laws and regulations of the United Kingdom and any relevant
foreign country in which the business is conducted.
29.3 No agreement, practice or arrangement to which the Company is party is
or ought to be or ought to have been registered under, or infringes,
any competition, anti-restrictive trade practice or consumer protection
legislation applicable in the United Kingdom or elsewhere.
29.4 There is not in existence or (so far as the Warrantors are aware)
pending any investigation or enquiry by, or on behalf of, any
governmental or other body in respect of the affairs of the Company.
30 CHARGES
30.1 No debenture, fixed charge, floating charge or other incumbrance over
the assets and undertaking has been created by the Company which is
still subsisting.
31 DIRECTORS AND OFFICERS
The Directors are the only directors of the Company and no person is a
shadow director (within the meaning of section 741 of the Companies
Act) of the Company.
32 CAPITAL OF THE COMPANY
32.1 The authorised and issued share capital of the Company is as set out in
SCHEDULE 2.
32.2 Save as provided in clause 8.1.2 the Sellers are the beneficial owners
and registered holders of the Shares which have been issued in proper
legal term and are fully paid or credited as fully paid.
32.3 There is not now outstanding any loan capital of the Company nor any
agreement, arrangement or option under which any person may now or at
any time hereafter call for the creation, allotment, issue, sale or
transfer of any loan or share capital of the Company or require any
loan or share capital of the Company to be put under option.
32.4 3i is the beneficial owner and registered holder of 62815 A Ordinary
Shares of (pound)1.00 each and 105 3947 Preference Shares of
(pound)0.01 each which are fully paid and it is entitled as beneficial
owner to sell such of the Shares as set out opposite its name in column
2 of Schedule 1 free from all claims, charges, liens, encumbrances,
equities and adverse rights of any description and together with all
rights attached or accruing thereto.
33 EFFECTS OF AGREEMENT
This Agreement will not entitle any person to terminate or avoid any
contract to which the Company is party.
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SCHEDULE 4
PART 2
TAXATION WARRANTIES
1 GENERAL
1.1 Each Group Company has no liability for Tax (whether actual, deferred
or contingent) in respect of any financial period down to and including
the Accounts Date or referable to profits (including income and gains)
made or deemed to have been made on or before the Accounts Date which
has not been provided for or disclosed in the Accounts and each Group
Company has duly paid all Tax which it has become liable to pay.
1.2 Each Group Company has not since the Account Date paid nor is it liable
to pay any interest, penalty, fine or default surcharge in connection
with any Tax nor is any such liability likely to arise. In addition, no
Group Company's affairs have been or (so far as the Warrantors are
aware) are likely to be the subject of any dispute, investigation or
discovery by or with any Tax Authority.
1.3 Each Group Company has within the requisite period properly made all
returns and supplied all notices, accounts and information for the
purposes of Tax required to have been made or supplied to any Tax
Authority and, none of the returns, notices, accounts and information
has been or is the subject of any dispute, investigation or discovery
(other than routine questions and audit visits) by or with any Tax
Authority.
1.4 During the six years preceding the date of this Agreement, no Group
Company has entered into or been a party to any transaction, scheme or
arrangement containing steps inserted for no commercial purpose other
than avoiding Tax.
1.5 During the six years preceding the date of this Agreement, no Group
Company has been a party to any transaction to which any of the
following provisions have been, or could be, applied, other than where
all necessary consents or clearances have been obtained on the basis of
full and accurate disclosure to the relevant Tax Authority and where
the transaction has been carried out in accordance with the terms of
such consent or clearance: sections 703 to 709 (inclusive) of the Taxes
Act (cancellation of tax advantages from certain transactions in
securities); sections 765 to 767 (inclusive) of the Taxes Act
(migration etc. of companies); section 776 of the Taxes Act
(transactions in land: taxation of capital gains); and sections 135 to
139 (inclusive) of the TCGA (company reconstructions and
amalgamations).
1.6 No Group Company has made any election under section 37 of the Capital
Allowances Act 1990 nor has it or could it be taken to have made such
an election under section 37(8)(c) (election for assets to be treated
as short-life assets).
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1.7 No Group Company has incurred any capital expenditure on the provision
of machinery or plant for leasing under chapter V of Part II of the
Capital Allowances Act 1990.
1.8 No Group Company has made any distribution prior to Completion within
the meaning of section 418 of the Taxes Act (and for the purposes of
this Warranty "distribution' includes certain expenses of close
companies).
1.9 No Group Company is or has been a close investment holding company
within the meaning of section 13A of the Taxes Act.
1.10 No Group Company has made any loans or advances within the meaning of
section 419 (as extended by section 422) of the Taxes Act (loans to
participators etc).
1.11 No transfer of value (as defined in section 3 of the Inheritance Tax
Act 1984) has ever been made by any Group Company so that the
provisions of section 94 of the Inheritance Tax Act 1984 (charge on
participators) could not apply.
1.12 During the six years preceding the date of this Agreement, no Group
Company has made nor has it been entitled to make any claim under any
of the following provisions of the TCGA: section 23 (compensation and
insurance proceeds applied to replace or restore asset); section 24(2)
(assets lost or destroyed or whose value becomes negligible); sections
48 and 280 (consideration due after time of disposal); section 247
(roll-over relief on compulsory acquisition of land); sections 152 to
154 (roll-over relief on business assets); and section 161(3)
(appropriation to trading stock).
1.13 No Group Company has disposed of any asset in circumstances such that
section 17 of the TCGA could apply (disposals and acquisitions treated
as made at market value).
1.14 No Group Company is entitled to a capital loss to which sections 18(3)
and (4) of the TCGA is applicable (disposals to a connected person).
1.15 No Group Company has acquired shares on a reorganisation within the
meaning of section 126 of the TCGA to which the second proviso to
section 128(2) of the TCGA could apply (restriction on deductibility of
expenditure where transaction not at arm's length).
1.16 No gain chargeable to corporation tax will accrue to any Group Company
on the disposal of any debt owed to the relevant Group Company not
being a debt on a security.
1.17 No Group Company has acquired benefits under any policy of assurance
which would on disposal give rise to a chargeable gain under section
210 of the TCGA (disposals by a person other than the original
beneficial owner).
1.18 No Group Company has received any assets by way of gift and as
mentioned in section 282 of the TCGA (recovery of tax from donee).
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1.19 No Group Company owns any debts on a security or shares to which
sections 182 and 183 of the TCGA could apply on their disposal and has
not made any such disposal since 15th March 1988.
1.20 No Group Company is deemed to have made a disposal of any assets under
section 186 of the TCGA (assets ceasing to be within the charge to UK
tax) nor has any Group Company made any claim or election under section
187 of the TCGA (postponement of gains relating to foreign trades).
1.21 No Group Company owns any assets which are wasting assets within
section 44 of the TCGA and which do not qualify for capital allowances.
1.22 No Group Company has made any distributions within the meaning of
sections 209 and 210 of the Taxes Act since 5th April 1965 except for
dividends shown in its audited accounts nor is any Group Company bound
to make any such distributions.
1.23 No Group Company has issued any security within the meaning of section
254 the interest or other consideration given in respect of which falls
to be taxed under section 209.
1.24 During the six years preceding the date of this Agreement, no Group
Company has redeemed, repaid or purchased any of its own shares or
agreed to redeem, repay or purchase any of its own shares or converted
or agreed to convert its share capital or capitalised or agreed to
capitalise in the form of redeemable shares or debentures any profits
or reserves of any class or description. In addition, during these six
years no Group Company has been a party to an exempt distribution
within the meaning of sections 213 to 218 (inclusive) of the Taxes Act
within the last 6 years (demergers - exempt distributions).
1.25 No Group Company has issued any share capital to which the provisions
of section 249 of the Taxes Act (stock dividends treated as income)
could apply nor does it own any such share capital (shares carrying the
right to bonus share capital).
1.26 Each Group Company has duly paid and accounted for all sums payable to
the Inland Revenue in respect of income assessable to income tax under
schedule E (including any sums payable in respect of benefits provided
to the relevant Group Company's employees or former employees) under
section 203 of the Taxes Act and all regulations made under it and has
duly paid and accounted for all National Insurance contributions
required of it under the provisions of the Social Security
Contributions and Benefits Act 1992 (as amended) and regulations made
under it.
1.27 Each Group Company has correctly operated a statutory sick pay scheme
in accordance with the provisions of the Social Security and
Contributions and Benefits Act 1992 and the regulations made under it;
a statutory maternity pay scheme in accordance with the provisions of
the relevant UK or European community Legislation.
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1.28 Each Group Company has where necessary complied with the provisions of
section 85 of the Finance Act 1988 (duty to furnish returns where
person acquires shares in a company in certain circumstances).
1.29 No Group Company has declared or paid a dividend.
1.30 Each Group Company is and has at all times been resident in the United
Kingdom for Tax purposes.
1.31 No Group Company has agreed to surrender or claim any amount by way of
group relief under the provisions of sections 402 to 413 (inclusive) of
the Taxes Act (group relief).
1.32 Since the Accounts Date no Group Company has made any payment either
alone or in aggregate with any other payments of a similar nature which
exceed (pound)6,000 which will not be deductible for the purposes of
corporation tax in computing the taxable profits or losses of the
relevant Group Company.
1.33 So far as the Warrantors are aware, there are no circumstances where
any Group Company will be obliged to pay or repay any amount of
consideration for relief surrendered pursuant to an agreement made on
or before Completion.
1.34 There has been no change in the ownership of any Group Company or major
change in the nature or conduct of a trade or business carried on by
any Group Company and no event or series of events which might cause
the disallowances of the carry forward of losses or excess charges
under the provisions of Section 768, 768B or 768C of the Taxes Act.
1.35 So far as the Warrantors are aware, there are no circumstances nor is
it likely that any Group Company will be obliged to pay by way of
reimbursement or indemnity any Tax under a covenant or indemnity
entered into on or before Completion.
2 STAMP DUTY AND STAMP DUTY RESERVE TAX
2.1 All documents in the enforcement of which a Group Company may be
interested have been properly stamped or marked as appropriate that no
stamp duty is payable and the appropriate stamp duty has been paid and
no such documents which are outside the United Kingdom would attract
stamp duty if they were brought into the United Kingdom.
2.2 No Group Company has made any claim for relief from stamp duty under
section 42 of the Finance Act 1930 or section 151 of the Finance Act
1995.
2.3 No Group Company has had transferred to it any chargeable securities
(as defined in section 99 of the Finance Act 1986) in circumstances
which have given rise to or which may give rise to a liability for
stamp duty reserve tax.
3 VALUE ADDED TAX
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3.1 Each Company is a taxable person for the purposes of VAT and has duly
registered with its local Customs and Excise Office.
3.2 Each Group Company has at all times issued correct tax invoices to all
persons properly requiring the same in respect of its taxable supplies
either by way of goods or of services and has likewise requested and
received all appropriate tax invoices from its suppliers and others and
has kept in all material respects, the records and documents required
to complete and verify its quarterly VAT returns and has in all
material respects complied with the VAT legislation and all
regulations, notices, orders, provisions, directions and conditions
relating to VAT.
3.3 No Group Company is in arrears with any payments or returns under
legislation relating to VAT or liable to any abnormal or non-routine
payment of VAT or any forfeiture, penalty, interest or surcharge or to
the operation of any penal, interest or surcharge provisions contained
in such legislation.
3.4 As far as the Warrantors are aware, no Group Company is partially
exempt for the purposes of VAT.
3.5 No Group Company has been required by the Commissioners of HM Customs
and Excise to give security. Since the date of its incorporation no
Group Company has received a surcharge liability notice under section
59 of VATA (default surcharge) or a penalty liability notice under
section 64 of VATA (persistent misdeclaration resulting in
understatements or overclaims).
3.6 There is not nor has there at any time been in force a group or similar
election for Section 43 VATA purposes in relation to any Group Company
and no Group Company has been the subject of an application for group
registration.
3.7 No Group Company is or has agreed to become agent, manager or factor
(for the purposes of section 47 of VATA) of any person who is not
resident in the United Kingdom.
3.8 No Group Company nor any relevant associate of any Group Company
(within the meaning of paragraph 3(7) of schedule 10 to VATA) has made
an election under paragraph 2 of schedule 10 to VATA (election to waive
exemption), in respect of any land in, over or in respect of which any
Group Company has any interest right or licence to occupy.
3.9 No Group Company is bound nor has agreed to become bound by any lease,
tenancy or licence in or over land under the terms of which it is or is
likely to become liable to pay an amount in respect of VAT.
3.10 No Group Company owns any assets which are or could be subject to the
Capital Goods Adjustment Scheme pursuant to part XV Value Added Tax
Regulations 1995 (SI 1995.2518).
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4 GROUP PROVISIONS
4.1 The Group forms a group for the purposes of section 402 of the Taxes
Act and there are no arrangements in existence within the meaning of
section 410 of the Taxes Act which would preclude a Group Company from
being registered as a member of the Group.
4.2 The provisions of sections 413(7) and (8) of the Taxes Act as
supplemented by the provisions of schedule 18 to the Taxes Act do not
apply and the Vendors is not aware of any reason as to why they may
apply (restriction of group relief).
4.3 No Group Company owns any asset which it has acquired from another
company which was at the time a member of the Group and which owned
that asset other than as trading stock within the meaning of section
173 of the TCGA.
4.4 No Group Company has ceased to be a member of a group of companies in
circumstances in which a charge under sections 178 and 179 of the TCGA
has arisen.
4.5 No Group Company has made a claim under section 175 of the TCGA
(replacement of business assets by a member of a group) or sections 247
and 152 to 154 (inclusive) TCGA.
4.6 Copies of all elections made pursuant to section 247 of the Taxes Act
(claim to have dividends and interest paid gross) are set out in the
Disclosure Letter.
4.7 No Group Company has paid any dividend without advance corporation tax
or paid any payment without deduction of income tax in the
circumstances specified in section 247(6) of the Taxes Act.
5 LOAN RELATIONSHIPS
5.1 Each Group Company which is a party to a loan relationship (within the
meaning of section 81 of the FA (meaning of "loan relationship" etc.))
uses, in respect of the loan relationship in its statutory accounts, a
basis of accounting which is or equates to an authorised accounting
method under section 85 of the FA (authorised accounting methods).
5.2 No Group Company has, in respect of a loan relationship within the
meaning of section 81 of the FA (meaning of "loan relationship" etc),
applied:
5.2.1 an authorised accounting method inconsistently or otherwise in a
materially different way in successive accounting periods; or
5.2.2 used a different authorised accounting method for the same or
successive accounting periods;
as provided by section 89 of the FA (inconsistent application of
accounting methods).
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5.3 No Group Company is required to use an authorised accruals basis of
accounting in respect of a creditor relationship by virtue of section
87 of the FA (accounting method where parties have a connection).
5.4 No Group Company has received a payment of interest on which it has
borne income tax by deduction and in relation to which interest a
credit has been brought into account for the purposes of chapter 2 of
the FA (loan relationship) for an accounting period ending more than 2
years before the date of the receipt.
5.5 No Group Company is subject to a restriction as to the amount of the
loss that it may bring into account in respect of a loan relationship
by virtue of paragraph 10 of the schedule 9 to the FA (imported losses
etc).
5.6 No Group Company has acquired or disposed of rights or liabilities in
respect of a loan relationship where the company from which it made the
acquisition, or to which it made the disposal, was a member of the same
group of companies within the meaning of paragraph 12 of schedule 9 to
the FA (continuity of treatment: groups etc).
5.7 No Group Company has been a party to a loan relationship which has an
unallowable purpose within the meaning of paragraph 13 of schedule 9 to
the FA (loan relationships for unallowable purposes).
SCHEDULE 4
PART 3
PROPERTY WARRANTIES
1 The particulars of the Property described in Schedule 3 Part I are true
complete and accurate.
2 Save as Disclosed in the Disclosure Letter the Property is not subject
to any occupation (whether permitted or otherwise) of any third party.
3 There is no mortgage, charge or lien (whether legal or equitable, fixed
or floating) or other right in the nature of security over the
Company's interest in the Property nor any agreement or commitment to
create any of the same.
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4 So far as the Warrantors are aware there is no outstanding agreement
for sale, estate contract, option or right of pre-emption affecting the
Property.
5 No application by the Company for planning permission relating to the
Property awaits determination and no planning decision or deemed
refusal is the subject of any appeal.
6 No notice or requirement materially affecting any Property or to use
has been given or received by the Company and the Warrantors are not
aware of any circumstance which might lead to such a notice or
requirement being given or received.
7 The Property is not affected by any transitional arrangements or appeal
in respect of the uniform business rate.
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SCHEDULE 4
PART 4
ENVIRONMENTAL AND HEALTH AND SAFETY WARRANTIES
1 So far as the Warrantors are aware each Group Company complies in all
material respects with all conditions, limitations, obligations,
prohibitions and requirements contained in or imposed by any
Environmental Law;
2 No Environmental Permits have been obtained and as far as the
Warrantors are aware no Group Company is required to have any
Environmental Permits;
3 No Group Company nor any person for whose acts or omissions it may be
vicariously liable is engaged in or subject to any civil, criminal or
arbitration proceedings pending or threatened by or against any Group
Company or against such person and there are no facts or circumstances
likely to give rise to any such proceedings;
4 The Company has not had any Environmental Reports prepared and so far
as the Warrantors are aware no environmental audits or investigations
have been carried out or commissioned by any Group Company in relation
to the Properties and/or the Group's compliance with Environmental Law;
5 So far as the Warrantors are aware all records and data required to be
maintained by any Group Company under the provisions of any
Environmental Law regarding the operation of the business of the Group
including any processes carried on at or emissions and discharges from
the Properties is complete and accurate in all material respects.
6 So far as the Warrantors are aware, no Group Company has breached any
material provision of Health and Safety Law.
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SCHEDULE 4
PART 5
PENSION WARRANTIES
1 DEFINITIONS
In this Part 5 of this Schedule:-
"1988 Act" means the Income and Corporation Taxes Act 1993;
"1993 Act" means the Pension Schemes Act of 1993;
"1995 Act" means the Pensions Act 1995.
2 NO PENSION SCHEME
2.1 Neither Group Company operates a defined contribution, money purchase
or occupational pension scheme within the meaning of the 1993 Act
and/or the 1995 Act.
2.2 Both of the Group Companies have complied in full with their moral
and/or contractual applications to employees to make contributions
towards pension plans nominated by the employees from time to time.
2.3 There is no unfunded liability on the part of the Company to make
contributions into any pension scheme for the benefit of (i) all
employees generally; or (ii) individual employees (as the case may be).
3 DISPUTES
There are no pending claims for incapacity or ill-health pensions and
there are no current disputes concerning such benefits.
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SCHEDULE 5
COMPLETION REQUIREMENTS
1
1.1 SELLERS' DELIVERY OBLIGATIONS
At completion, the Sellers shall deliver (or procure to be delivered)
to the Purchaser:
1.1.1 duly executed transfers of the Sellers and 3i's Shares to the Purchaser
and/or its nominee(s) together with the definitive share certificates
in respect of such Shares in the names of the relevant transferors;
1.1.2 evidence to the Purchaser's reasonable satisfaction of the authority of
any person executing this Agreement or any document to be executed
pursuant to it on behalf of the Sellers and 3i;
1.1.3 duly executed voting powers of attorney in the Agreed Form in favour of
the Purchaser executed by each of the registered holders of the Shares
and a letter from 3i agreeing to vote the 3i Shares as the Purchaser
directs;
1.1.4 written resignations as officers of each Group Company from G.H. Brown
and D.C. Pratt;
1.1.5 a statement from the Auditors of the Company confirming that they have
no claims against any Group Company for unpaid fees or expenses'
1.1.6 the statutory registers and other books of each Group Company made up
to date, the certificates of incorporation and certificates of
incorporation on change of name, the common seals and copies of the
memorandum and articles of each Group Company;
1.1.7 all original leases relating to the Property;
1.1.8 copies of all bank mandates of each Group Company and statements
showing the balances on all bank accounts of each Group Company at the
close of business on a date no earlier than 2 Business Days before the
Completion Date, together with a reconciliation statement prepared by
the Sellers to show the position at Completion listing all amounts
lodged but not cleared and unpresented cheques which when cleared would
be debited or credited to such accounts and standing orders payable
since the date of the statements;
1.1.9 a letter in the Agreed Form from each of the Sellers and 3i executed as
a deed irrevocably and unconditionally releasing and discharging each
Group Company and each director for the time being of each Group
Company from all obligations, indebtedness or liabilities to each of
the Sellers and 3i including without limitation pursuant to any of the
following:
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(a) Investment Agreement between Kestra Limited, M.A. Bowes, C.B.
Jackson, J. Tinning and 3i Group Plc dated 20 May 1998;
(b) Deed of Guarantee and Indemnity between Visual Developments
Limited to 3i Group Plc dated 20 May 1998;
(c) Investment Agreement between Kestra Limited, the Promoters,
Manchester Technology Developments Limited, Vuman Limited,
Philip Ternouth and others and 3i Group Plc.
(d) Investment Agreement dated 2 December 1998 between M. Bowes
Esq., C.B. Jackson Esq. And others and 3i Group Plc; and
1.1.10 the Tax Deed duly executed as a deed by the Covenantors;
1.1.11 the Service Agreements duly executed by Messrs Dr M Bowes, C B Jackson,
A Hill, S Solloway, A Ratter and A Yates;
1.1.12 the Consultancy Agreements duly executed by Messrs Coote and Taylor;
1.1.13 A memorandum of Satisfaction from 3i in the agreed form;
1.1.14 audited accounts of each Group Company signed by the Board of each
Group Company for the year ended 31st July 1998;
1.1.15 evidence in terms satisfactory to the Purchaser that Co-Operative Bank
has provided written waiver of its right to terminate any leases with
the Company upon change of control;
1.1.16 a Compromise Agreement in the agreed form, duly executed by John
Tinning;
1.1.17 the Supplemental Agreement to the Software Agreement in the agreed
form, duly executed by the Parties thereto.
1.2 SELLERS' PERFORMANCE OBLIGATIONS
At Completion, the Sellers shall:
1.3 procure that a meeting of the directors of the Company shall be held at
which it is resolve to:
(a) approve the transfers of the Shares and (subject to them being
duly stamped) the registration of the Purchaser and/or its
nominee(s) as members in respect of the Shares;
(b) revoke all existing bank mandates and to issue such new
mandates to banks as the Purchaser may require;
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(c) appoint such persons as the Purchaser may nominate as auditors
of the Company with immediate effect;
(d) appoint such persons as the Purchaser may nominate as
directors and secretary of the Company with immediate effect;
(e) change the registered office of the Company to such place as
the Purchaser may nominate;
(f) change the accounting reference date of the Company to such
date as the Purchaser may nominate;
(g) approve and authorise the execution by the Company of the
Service Agreements; and
(i) to call an Extraordinary General Meeting of the Company to
approve the revocation of the existing Articles of Association
of the Company and to approve new Articles of Association in
the form approved by the Purchaser, in substitution therefor
and to change the name of the Company to Cyberoptics Limited.
1.4 procure that, immediately following the meeting of directors and
shareholders referred to in PARAGRAPH 1.2.1, a meeting of the directors
of the Subsidiary is held to give effect to such of the matters
referred to in PARAGRAPH 1.1 and to pass such other resolutions as the
Purchaser may reasonably require including (without limitation) to
adopt new Articles of Association and to change the name of the
Subsidiary to Kestra Limited.
1.5 Procure that the Seller's Solicitors deliver a duly executed Escrow
Instruction Letter.
1.6 PURCHASER'S OBLIGATIONS
Upon completion of all the matters referred to in PARAGRAPHS 1.1 and
1.2, the Purchaser shall:
1.6.1 pay the Initial Consideration and pay the Retention Fund into the Joint
Account details of which are set out in Clause 4.1.4;
1.6.2 deliver to the Sellers' Representative:
(a) the Tax Deed duly executed by the Purchaser;
(b) the Service Agreements duly executed by the Company;
(c) the Consultancy Agreements duly executed by the Company;
(d) produce and deliver an authority (in the form of [a duly held
board meeting of the Purchaser]) confirming that the person
signing this Agreement and all other documentation on its
behalf to affect Completion in duly authorised by the
Purchaser;
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(e) a duly executed Escrow Instruction Letter;
(f) the Loan Note Certificate duly executed;
(g) (signing authority from the Bank providing the guarantee under
the Loan Notes];
1.6.3 pay the Retention Fund into the Joint Account.
SCHEDULE 6
AGREED FORM DOCUMENTS
1. Tax Deed
2. Power of attorney to vote pending registration of the transfer of the
Shares
3. Service Agreements
4. Letter of release from third parties including 3i Group plc of
obligations and indebtedness
5. Completion board minutes of the Company and the Subsidiary
6. Indemnity for lost share certificate
7. Written resignations and releases of directors and secretary (as
appropriate)
8. Consultancy Agreements
9. Closing Balance Statement
10. Business Report
11. Compromise Agreement (John Tinning)
12. Supplemental Agreement to the Software Agreement
13. 3i Memorandum of Satisfaction
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SCHEDULE 7
VUMAN GUARANTEE
1 Guaranteed Obligations
1.1 If MTD fails to comply with any of the provisions of this Agreement on
the due date, following a failure by MTD to comply with demand by the
Purchaser to do so, then the Guarantor guarantees that it shall (on
first demand by the Purchaser)following a failure by MTD to comply with
a demand by the Purchaser to do so, immediately perform and discharge
the obligations of MTD under those provisions.
2 Guarantee Continuing and Additional to Any Other Rights
The guarantee set out in Paragraph 1 (Guaranteed Obligations):
(a) is a continuing guarantee and shall remain in force and effect
until MTD has performed and discharged all of its obligations
under this Agreement; and
(b) is additional to (and not in substitution for) any other
security or guarantee which is or may be held by the Purchaser
from time to time in respect of the obligations of MTD under
this Agreement save that, prior to the Escrow Release Date, no
claim shall be made on the Guarantor until such time as the
funds held in the Joint Account have been exhausted.
3 Liability
The Guarantor's liability under Paragraph 1 (Guaranteed Obligations)
shall not be affected by any concession, time, indulgence or release
granted by the Purchaser to MTD or any other person or by any payment
or other dealing or anything else which would, but for this Paragraph 3
operate to discharge or reduce that liability.
4 Primary Obligor
If anything (including any legal limitation, disability, liquidation or
other incapacity on the part of MTD) or any disclaimer by a liquidator
or trustee in bankruptcy causes any of MTD's obligations under this
Agreement and/or the guarantee set out in Paragraphs 1 (Guaranteed
Obligations) to be or become invalid or unenforceable, then the
Guarantor shall perform and discharge all of MTD's obligations under
this Agreement as if they were the primary obligations of the
Guarantor.
5 No Deduction or Withholding
The Guarantor shall make any payments due from it under this Schedule 7
in full, without any deduction or withholding in respect of any claim
(whether by way of set-off, counterclaim or otherwise) asserted from
time to time by it under this Agreement or in respect of any other
matter or thing.
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6 Postponement of the Guarantor's Ability to Exercise Rights
The Guarantor shall not exercise any rights which it may have against
MTD arising from or otherwise relating to its guarantee under Paragraph
1 (Guaranteed Obligations) or its other obligations under this Schedule
7 unless and until all of the obligations of MTD and the Guarantor
under this Agreement have been performed and discharged.
7 Enforcement
The Purchaser may only claim under the guarantee set out in Paragraph 1
(Guaranteed Obligations) after first making demand of MTD but is not
required to take any action to claim under or enforce any other right,
security or other guarantee which it may hold from time to time in
respect of the other parties' obligations under this Agreement.
8 Obligations Unconditional and Irrevocable
The Guarantor's obligations under this Clause, including its guarantee
under Paragraph 2 (Guaranteed Obligations), are unconditional and
irrevocable, but for the avoidance of doubt cease at such time as the
obligations of MTD under the Agreement cease and shall not give rise to
any greater liability to the Guarantor than the liability where MTD has
under the Agreement.
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EXECUTED and DELIVERED as a DEED )
by ) ........................................
in the presence of
Witness
Signature:
Name:
Address:
Occupation:
63
EXHIBIT 2.2
DATED 1999
-----------------------------------------
MICHAEL BOWES, JOHN TINNING, CHRISTOPHER BROOK JACKSON,
MANCHESTER TECHNOLOGY DEVELOPMENTS LIMITED
and
CYBEROPTICS CORPORATION
<PAGE>
- --------------------------------------------------------------------------------
TAX DEED
- --------------------------------------------------------------------------------
DORSEY & WHITNEY
VERITAS HOUSE
125 FINSBURY PAVEMENT
LONDON EC2A 1NQ
TEL: 0171 588 0800
65
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TAX DEED
DATE 1999
PARTIES
(1) MICHAEL BOWES, JOHN TINNING, CHRISTOPHER BROOK JACKSON, MANCHESTER
TECHNOLOGY DEVELOPMENTS LIMITED details of which are listed in Schedule
1 to the Agreement being together ("the Covenantors"); and
(2) CYBEROPTICS CORPORATION (Incorporated under the laws of Minnesota the
principal place of business is at 5900 Golden Hills Drive, Minneapolis,
MN, 55416 (the "Purchaser").
RECITAL
Pursuant to an agreement of today's date the Purchaser has today completed the
purchase of the whole of the issued share capital of Kestra Limited in reliance,
among other things, on the undertaking of the Covenantors to enter into this
deed and the undertakings and covenants by the Covenantors contained in it.
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
In this deed the following definitions apply:
"ACCOUNTS" the audited balance sheet and profit and
loss account of each of the Company and
the Subsidiaries as at and for the
period ended on the Accounts Date
together with the notes directors and
auditors reports for that year being
annexure Sup. 37 and Sup. 38 to the
Disclosure Letter;
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"ACCOUNTS DATE" 31st July 1998;
"ACCOUNTING PERIOD" an accounting period as defined in
section 12 of the Taxes Act;
"AGREEMENT" the agreement of today's date between
the Covenantors and others and the
Purchaser for the sale and purchase of
the Shares;
"ASSESSMENT" any claim, assessment, notice, demand,
letter, counterclaim or other document
issued or made, or action taken, by or
on behalf of any Tax Authority by virtue
of which the Company or any Subsidiary
has, or is alleged to have, a Liability
to Tax or from which it appears that the
Company or any Subsidiary has, or will
or may have, a Liability to Tax or from
which it is sought to impose upon the
Company or any Subsidiary a Liability to
Tax;
"BUSINESS DAY" a day other than a Saturday, a Sunday or
Public Holidays or bank holidays in
England and Wales;
"COMPANY" Kestra Limited details of which are set
out in part 1 of Schedule 1;
"CLAIM" a claim by the Purchaser against the
Covenantors pursuant to clause 3;
"CLOSING BALANCE STATEMENT" as defined in the Agreement;
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"COMPLETION" completion of the sale and purchase of
the Shares pursuant to the Agreement;
"COMPROMISE AGREEMENT" as defined in the Agreement;
"COVENANTORS the Warrantors Representative as defined
REPRESENTATIVE" in the Agreement
"DEEMED TAX LIABILITY" a deemed Tax liability as defined in
clause 2.3;
"EVENT" any transaction (including entering into
the Agreement or the purchase or sale of
an asset), act (including Completion,
the migration of a company or the
inclusion of a company within a group of
companies for any purpose), omission,
receipt, distribution or failure to make
sufficient distributions to avoid an
apportionment or deemed distribution of
income or any combination of two or more
such occurrences;
"GROUP" the Company and the Subsidiaries;
"GROUP COMPANY" any company within the Group;
"LIABILITY TO TAX" a liability to pay Tax and any amounts
treated as being a liability to Tax
pursuant to clause 2.2;
"RELIEF" any relief, loss, allowance, exemption,
set-off, deduction or credit in respect
of any Tax or any set-off or deduction
in computing income, profits or gains
for the purposes of any Tax;
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"SHARES" 1,217,052 Preference Shares of
(pound)0.01 each, 62,815 "A" Ordinary
Shares of (pound)1.00 each, 52,632 "B"
Ordinary Shares of (pound)1.00 each and
32,895 Ordinary Shares of (pound)1.00
each, in the share capital of the
Company;
"SUBSIDIARIES" the company, details of which are set
out in part 2 of schedule 1;
"TAX" all taxes, duties, levies, imposts,
charges and withholdings of any nature
whatsoever, whether created or imposed
in the United Kingdom or elsewhere and
at whatever time created or imposed
which are collected and administered by
any Tax Authority including, without
limitation,
(a) within the United Kingdom,
income tax, corporation tax,
advance corporation tax,
capital gains tax, value added
tax, customs' duties
(including import duties,
excise duties), insurance
premium tax, the charge under
section 419 of the Taxes Act,
stamp duty, stamp duty reserve
tax, inheritance tax, national
insurance contributions and
any other forms of taxes,
duties, levies, imposts,
charges or withholdings
similar to or supplementing or
replaced by or replacing them
or any of them excluding rates
and water rates; and
(b) outside the United Kingdom,
taxes on gross or net income,
taxes on profits or gains and
taxes on receipts, sales, use,
occupation, franchise, value
added and personal property.
in all cases together with all
incidental or supplemental penalties,
charges, interest, fines and default
surcharges and costs;
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"TAX AUTHORITY" any taxing or other fiscal authority
(whether within or outside the United
Kingdom) competent to impose, administer
or collect any Tax;
"TAXES ACT" the Income and Corporation Taxes Act
1988;
2. INTERPRETATION
2.1 In this deed:
2.1.1 the contents and clause headings are included for convenience only and
do not affect its construction;
2.1.2 words denoting the singular include the plural and vice versa;
2.1.3 words denoting one gender include each and all genders;
2.1.4 a reference to the loss of a Relief or of a right to repayment of Tax
includes a reference to any loss, withdrawal, nullifying or
cancellation of a Relief or of a right to repayment of Tax;
2.1.5 a reference to the utilisation of a Relief or of a right to repayment
of Tax includes a reference to the utilisation or setting off of a
Relief or of a right to repayment of Tax;
2.1.6 a reference to income, profits or gains accrued, or being earned or
received, on or before a particular date or in respect of a particular
period shall include any profits deemed for Tax purposes to have
accrued, or to have been earned or received, on or before that date or
in respect of that period; and
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2.1.7 a reference to income, profits or gains shall include receipts, value
and any other criteria used in establishing the incidence of any Tax or
measure in establishing the amount of any Liability to Tax.
2.2 Subject to clause 2.3 below there shall be treated as an amount equal
to a Liability to Tax which arises as a result of an Event occurring on
or before Completion:
2.2.1 any amount of Relief arising prior to Completion which has been taken
into account in computing, or in obviating the need for, any provision
for Tax or deferred tax in the Accounts or Closing Balance Statement,
or which is shown as an asset in the Accounts or Closing Balance
Statement, which is not available to any Group Company;
2.2.2 all or any part of a right to repayment of Tax which has been treated
as an asset of any Group Company in the Accounts or Closing Balance
Statement or which has been taken into account in computing, or in
obviating the need for, any provision for Tax or deferred tax in the
Accounts or Closing Balance Statement which is not available to any
Group Company;
2.2.3 all or any part of a right to repayment of Tax referred in clause 2.2.2
or which arises as a result of an Event occurring after Completion
which has been set against any liability to make an actual payment of
Tax in circumstances where the Purchaser would (but for such
utilisation or set-off) have been entitled to make a Claim by virtue of
such liability to make an actual payment of Tax;
2.2.4 the amount of any Relief referred to in clause 2.2.1 or which arises as
a result of an Event occurring after Completion which is used to
relieve income, profits or gains in circumstances where (but for such
utilisation) the Purchaser would have been entitled to make a Claim by
virtue of such income, profits or gains;
2.2.5 any amount of consideration for Relief surrendered pursuant to an
agreement to which a Group Company is a party made on or before
Completion which any Group Company is obliged to pay or repay other
than to another Group Company except and to the extent that such
consideration has been treated as a liability of any Group Company in
the Accounts or Closing Balance Statement or has been taken into
account in preparing the Accounts or Closing Balance Statement.
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2.3 In any case falling within clause 2.2 the amount that is to be treated
for the purposes of this deed as a Liability to Tax of a Group Company
("Deemed Tax Liability") shall be determined as follows:
2.3.1 in a case which falls within clause 2.2.1 or clause 2.2.4 where the
relevant Relief consisted of a deduction from or offset against Tax,
the Deemed Tax Liability shall be the amount of that deduction or
offset;
2.3.2 in a case which falls within clause 2.2.1 or clause 2.2.4 where the
relevant Relief consisted of a deduction from or offset against income,
profits or gains, the Deemed Tax Liability shall be:
2.3.2.1 if the Relief is not available, the amount of Tax which would,
on the basis of the rates of tax current at Completion, have
been saved had such Relief been available or
2.3.2.2 if the Relief was the subject of such a utilisation, the
amount of tax which has been saved in consequence of the
utilisation; and
2.3.3 in a case falling within clause 2.2.2 the Deemed Tax Liability shall be
the amount of such repayment of Tax or part of it.
2.3.4 in a case falling within clause 2.2.5 the Deemed Tax Liability shall be
the amount which the relevant Group Company is required to pay.
2.4 In this deed references to an Event occurring on or before any date or
on or before other Events shall be deemed to include any combination of
2 or more Events taking place on or before Completion.
2.5 Words and phrases (if any) which are defined in the Agreement and which
are not expressly defined in this deed shall have the same meaning in
and shall apply to this deed and shall be deemed to be incorporated in
this deed.
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2.6 Words and phrases (if any) neither defined in this deed nor in the
Agreement but which are defined or used in any legislation relating to
Tax and which are relevant in the context shall have the same
respective meanings in this deed as they have in such legislation
(unless the context otherwise requires).
2.7 In this deed, unless otherwise specified or the context otherwise
requires, a reference to:
2.7.1 a person is to be construed to include a reference to any individual,
firm, partnership, company, corporation, association, organisation or
trust (in each case whether or not having a separate legal
personality);
2.7.2 a document, instrument, deed or agreement (including, without
limitation, this deed) is a reference to any such document, instrument,
deed or agreement as modified, amended, varied, supplemented or novated
from time to time;
2.7.3 clause or schedule is a reference to a clause of or schedule to this
deed and a reference to this deed includes its schedule;
2.7.4 a statutory provision is to be construed as a reference to such
provision as amended, consolidated or re-enacted from time to time and
to any orders, regulations, instruments or other subordinate
legislation (and relevant codes of practice) made under the relevant
statute except to the extent that any amendment, consolidation, or
re-enactment coming into force after the date of this deed would
increase or extend the liability of any party to this deed to any other
party.
2.8 In this deed, unless otherwise specified, the rule of construction
known as the 'ejusdem generis rule' shall not apply so that words or
phrases of a generally descriptive nature shall not be given a
restrictive meaning by reason only of the fact that they are preceded
by more specific words or phrases and words of a generally descriptive
nature shall not be given a restrictive meaning by reason only of the
fact that they are followed by specific examples.
3. COVENANT
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3.1 Subject to the following clauses of this deed, the Covenantors jointly
and severally covenant with the Purchaser as follows:
3.1.1 to pay to the Purchaser an amount equal to any Liability to Tax of a
Group Company which arises as a consequence of or by reference to:
3.1.1.1 any Event occurring on or before Completion;
3.1.1.2 any income, profits or gains which accrued, or which were
earned or received, on or before Completion or in respect of a
period ending on or before Completion; or
3.1.1.3 any dividend or other distribution made by a Group Company
before Completion; or
in each case whether or not such Liability to Tax is also chargeable
against or attributable to any other person; and
3.1.2 to pay to the Purchaser within 7 days from written notice by the
Purchaser amounts equal to any reasonable costs and expenses reasonably
incurred by the Purchaser or the Group Company in connection with any
Liability to Tax as referred to in clause 3.1.1 or any Claim or in
taking or defending any successful action pursuant to this deed.
3.2 Each of the covenants contained in clauses 3.1.1.1, 3.1.1.2 and 3.1.1.3
shall be construed as giving rise to separate and independent
obligations and shall not be restricted by the other save that (for the
avoidance of doubt) any payment by the Covenantors in respect of a
liability under one covenant shall discharge any liability under the
other to the extent of such payment and in so far as it arises from the
same subject matter.
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4. LIMITATIONS
4.1 EXCLUSIONS
The Covenantors shall have no liability in respect of any Claim under
clause 3.1.1 and 3.1.2 to the extent that:
4.1.1 the Accounts or the Closing Balance Statement make specific provision
or reserve in respect of such Liability to Tax (not being a provision
or reserve for deferred tax); or
4.1.2 it arises from the passing of, or change in, after the date of the
Agreement, any law, regulation, rule or published practice of any
government, governmental department, agency, regulatory body or Tax
Authority or any judgment delivered after the date of the Agreement
with retrospective effect, or any increase in the rates of Taxation or
any imposition of Taxation not in effect at the date of the Agreement
or any retrospective withdrawal of a change in after the date of the
Agreement any practice or extra-statutory concession previously
published by any Tax Authority; or
4.1.3 such Liability to Tax would not have arisen but for a change after
Completion in accounting policy or practice or to the accounting
reference date of a Group Company save where such change complies with,
or is to comply with, generally accepted accounting practice within the
United Kingdom.
4.1.4 such liability to Tax was discharged on or before Completion at no
expense to the Purchaser; or
4.1.5 payment has already been made in respect of such Liability to Tax at no
expense to the Purchaser; or
4.1.6 such Liability to Tax or other liability would not have arisen but for
a voluntary act, transaction or omission of the Company and/or
Subsidiary after Completion:-
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4.1.6.1 otherwise than pursuant to a legally binding obligation
entered into by the Company and/or subsidiary (as the case may
be) on or before Completion or imposed on the Company and/or
the Subsidiary by any legislation whether coming into force
before, on or after Completion; and
4.1.6.2 which the Purchaser knew or ought reasonably to have known
would give rise to the Liability to Tax; and
4.1.6.3 otherwise than in the ordinary course of business of the
Group; or
4.1.7 such Liability to tax not would have arisen but for the Company and//or
Subsidiary ceasing to carry on any trade or business after Completion
or effecting a major change after Completion in the nature or conduct
of the business as compared to the business carried on by it at
Completion; or
4.1.8 such Liability to Tax would not have arisen but for the failure by the
Company and/or Subsidiary after Completion to make any claim, election,
surrender or disclaimer or to give any notice or consent or to do any
other thing, the making, giving or doing of which was permitted by law
and which was taken into account:-
4.1.8.1 in computing and so reducing any provision for current or
deferred Tax which appears in the Accounts (or eliminating any
provision for current or deferred Tax which, but for such
Relief, would have appeared in the Accounts); or
4.1.8.2 in computing any right to a repayment of Tax which appears in
the Accounts;
and in the case of either 4.1.8.1 or 4.1.8.2 full details of which are
included in the Disclosure Letter or appear on the face of the
Accounts; or
4.1.9 such Liability to Tax would not have arisen but for the withdrawal or
amendment by the Company and/or the Subsidiary after Completion of any
claim, election, surrender, disclaimer, notice or consent made by it
and (where appropriate) agreed with the relevant Tax
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authority prior to Completion in relation to any Relief arising in an
accounting period ending on or before the Accounts Date; or
4.1.10 such Liability to Tax would not have arisen but for any failure or
delay by the Purchaser or the relevant Group Company in paying over to
any Tax Authority any payment previously made the Covenantors under
this Deed; or
4.1.11 such Liability to Tax is a liability of a Group Company to account for
advance corporation tax which such Group Company is entitled to utilise
by way of set off against its overall liability to corporation tax in
respect of the same or any earlier accounting period, or
4.1.12 such Liability to Tax is in respect of the actual earning, receipt or
accrual for any Tax purposes of any income, profit or gain which is not
recognised in the Accounts where such income, profit or gain arises in
relation to the period beginning after the Accounts Date and ending on
the Completion Date; or
4.1.13 a Relief, other than a Relief referred to in clause 2.2 or arising as a
result of any Event occurring after Completion, is available to be used
against the liability in question; or
4.1.14 such Liability to Tax arises from the Payment made by the Company to
John Tinning under Clause 4 of the Compromise Agreement.
4.2 For the avoidance of doubt, the limitations and stipulations contained
in clauses 8.1.1, 8.2, 8.3.2, 8.8 and 8.12 of the Agreement shall apply
mutatis mutandis in respect of any liability or potential liability of
the Covenantors pursuant to the provisions of this Deed.
5. CONDUCT OF CLAIMS
5.1 If the Purchaser becomes aware of any Assessment which does or may give
rise to a Claim the Purchaser shall or shall procure that the relevant
Group Company will:-
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5.1.1 give notice in writing of such Assessment including an estimate of the
amount of the liability to Tax to which the Assessment relates as soon
as reasonably practicable and, in any event within 14 Business Days
after the receipt of such Assessment, to the Covenantors provided that
the giving of such notice shall not be a condition precedent to the
liability of the Covenantors under this deed;
5.1.2 not settle or take any action in relation to the Assessment without
first giving the Covenantors the opportunity to dispute, avoid, resist,
appeal, compromise or contest the Assessment in accordance with
paragraph 5.2 below; and
5.1.3 at the Covenantors request and expense submit a protective Notice of
Appeal against the Assessment to the relevant Tax Authority.
5.2 If the Covenantors shall indemnify the relevant Group Company and the
Purchaser to their reasonable satisfaction against any losses, fines,
penalties, interest, charges, reasonable costs and expenses, the
Purchaser shall and shall procure that the Company shall, subject to
clause 5.3, take such lawful and reasonable action as the Covenantors
shall reasonably require to avoid, dispute, resist, appeal, compromise
or contest such Assessment (the "Covenantor's Action"), including
(subject to clauses 5.3 to 5.8):-
5.2.1 applying to postpone (so far as legally possible) the payment of any
Tax; and
5.2.2 except in the case of an Assessment where any Tax Authority alleges
dishonest or fraudulent conduct on the part of the Covenantors or any
Group Company taking place on or before Completion allowing the
Covenantors to undertake at the Covenantors' own cost and expense, the
conduct of any dispute, appeal, negotiation or other proceedings
relating directly to the Assessment, Provided that:
5.2.2.1 the Covenantors shall keep the Purchaser and/or the relevant
Company fully informed and shall consult with the same in
respect thereof; and
5.2.2.2 no material communication, written or otherwise pertaining to
any dispute, appeal, negotiation or other proceedings relating
to the Assessment shall be sent to a relevant Tax Authority
without first having been submitted to the Purchaser for its
written approval such approval not to be unreasonably withheld
or delayed.
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5.3 Neither the Purchaser nor any Group Company shall be obliged to appeal
against any Assessment if, having given the Covenantor notice of the
receipt of that Assessment, it has not within 10 Business Days received
instructions in writing from the Covenantors in accordance with clause
5.2 to make that appeal.
5.4 Neither the Purchaser nor any Group Company shall be obliged to take
any action or further action under this clause in respect of any
Assessment if it reasonably appears to the Purchaser that either the
Covenantors or the relevant Group Company prior to its being in the
ownership of the Purchaser, have committed acts or omissions which may
constitute fraudulent or negligent conduct.
5.5. Neither the Purchaser nor any Group Company shall be required to take
any action which would or would be likely materially to interfere with
or prejudice the carrying on of the business of the Group or interfere
or prejudice the relationship of the Company and each member of the
Group with its customers and suppliers or with any Tax Authority;
In each case, in the event of any dispute, to be determined by
reference to an opinion obtained from a reputable specialist Tax
Counsel of not less than 7 years' standing, practising in London. In
obtaining such opinion the Covenantors Representative and the Purchaser
shall agree upon the identity of the barrister to be instructed (or in
default of agreement, to be appointed by the President of the Bar
Council of England and Wales) and shall, in addition, agree upon the
instructions to be provided.
5.6 Neither the Purchaser nor any Group Company shall be obliged to take
any action under this clause 5 which involves contesting any Assessment
before any court or other appellate body (excluding the Tax Authority
demanding the Tax in question) unless an opinion has been obtained
pursuant to Clause 5.5 to the effect that an appeal against the
Assessment in question will, on the balance of probabilities, be won
5.7 The Purchaser and any Group Company shall be at liberty without
reference to the Covenantors to acting reasonably admit, compromise,
settle, discharge or otherwise deal with any Assessment after whichever
is the earliest of:
5.7.1 the Purchaser or the relevant Group Company being notified by the
Covenantors that it considers the Assessment should no longer be
resisted;
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5.7.2 the expiry of a period of 10 days following the service of a notice
explaining the consequences of this clause 5.7 by the Purchaser or the
relevant Group Company on the Covenantors requiring the Covenantors to
clarify or explain the terms of any request made under clause 5.2
during which period no such clarification or explanation has been
received by the Purchaser or the relevant Group Company; and
5.7.3 if appropriate, the expiration of any period prescribed by applicable
legislation for the making of an appeal against either the Assessment
or the decision of any court or tribunal in respect of any such
Assessment, as the case may be.
5.8 The Covenantors shall be bound to accept for the purposes of this deed
any admission, compromise, settlement or discharge of any Assessment
and the outcome of any proceedings relating to it made or arrived at in
accordance with the provisions of this clause 5.
6. DUE DATE FOR PAYMENT
6.1 Where the Covenantors become liable to make any payment pursuant to
CLAUSE 3, the due date for the making of that payment shall be:
6.1.1 in a case that involves an actual payment of Tax by a Group Company,
the date that is 3 Business Days immediately before the last date on
which the relevant Group Company would have had to have paid to the
relevant Tax Authority the Tax that has given rise to the Covenantors
liability under this deed in order to avoid incurring a liability to
interest or a charge or penalty in respect of that Liability to Tax
("the payment date") and (unless it is apparent from the correspondence
between the parties) the Purchaser or relevant Group Company shall
notify the Covenantors of the payment date in sufficient time to allow
the Covenantors to make a payment to the Purchaser 3 Business Days
before such payment date; or
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6.1.2 in a case falling within clause 2.2 the date falling 5 Business Days
after the date on which the Covenantors have been notified by the
Purchaser that the auditors for the time being of the Group have
certified, at the request of the Purchaser, that there is liability for
a determinable amount under CLAUSE 2.3.
6.2 If any payment required to be made to the Purchaser or to the
Covenantors under this deed is not made by the due date then, that
payment shall carry interest from (and including) that due date until
(but excluding) the date when the payment is actually made at the rate
of 4 per cent above the base rate from time to time of Barclays Bank
PLC.
7. DEDUCTIONS FROM PAYMENTS
7.1 All sums payable by the Covenantors to the Purchaser under this deed
shall be paid free and clear of all deductions or withholdings
whatsoever, save only as may be required by law.
7.2 If any deduction or withholding in respect of Tax or otherwise is
required by law to be made from any of the sums payable as mentioned in
clause 7.1, the Covenantors shall be obliged to pay to the Purchaser
such greater sum as will, after such deduction or withholding as is
required to be made has been made (taking into account any Relief which
is or will be received by the Purchaser by reason of such deduction or
withholding), leave the Purchaser with the same amount as it would have
been entitled to receive in the absence of any such requirement to make
a deduction or withholding.
7.3 All sums payable by the Covenantors under this deed are to be paid in
the currency or currencies appropriate to the Assessment as a result of
which the liability to make a payment of Tax has arisen.
7.4 The Purchaser may direct the Covenantor to pay to any Group Company any
sums due to the Purchaser under this deed and such payment shall be
treated as a payment to the Purchaser and not a payment to the relevant
Group Company.
7.5 In the event of an assignment by the Purchaser of the terms of this
Deed pursuant to clause 12.4, the Covenantors shall not be required to
pay to any such assignee a greater sum than they would have been
obliged to pay to the Purchaser by virtue of clause 7.2, had such
assignment not taken place.
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8. MITIGATION
Subject to the express provisions of this deed, neither the Purchaser
nor any Group Company shall be under any obligation or duty to mitigate
any loss or take any other action to reduce the Covenantor's liability
under this deed.
9. PURCHASER'S COVENANTS
9.1 The Purchaser covenants with the Covenantors to pay to the Covenantors
an amount equal to any liability to Tax assessed upon the Covenantors
under section 767A or 767AA ICTA in connection with any event,
transaction, omission or occurrence occurring in the accounting period
of the Company current at Completion or in any earlier account period
and arising as a result of the Company failing to discharge such
liability together with any reasonable costs, fees or expenses incurred
by the Covenantors in connection with such liability.
9.2 The Purchaser will be entitled to set off against any amount which it
is liable to pay to the Covenantors under paragraph 9.1 (or any amount
which it is liable to pay under section 767B ICTA 1988 should the
Covenantors have to enforce their entitlement to payment under that
section) any amount which the Covenantors are liable to pay the
Purchaser under this Deed (ignoring for this purpose the financial
limits in clauses 8.1 and 8.2 of the Agreement).
9.3 To the extent that a payment is made by the Purchaser to the
Covenantors pursuant to paragraph 12.1, the Covenantors will not
enforce its entitlement to payment of any amount under section 767B (2)
ICTA 1988.
10. GENERAL
10.1 All payments by the Covenantors under this Deed will be treated as
repayments by the Covenantors of the consideration paid for the Shares
to this Agreement, provided that this paragraph 10.1 will not operate
in any way to limit the liability of the Covenantors under this Deed.
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11. REPAYMENTS
11.1 If at the Covenantors' request and expense, the Auditors determine and
certify that any Group Company has obtained a repayment of Tax where
the Covenantors have made a payment under this Deed in respect of the
same Tax which is the subject of the repayment ("Repayment"), or that
any Tax liability which has resulted in a payment being made by the
Covenantors has given rise to a saving for a Group Company
("Saving"),the Repayment or Saving will be applied as follows:-
11.1.1 first, the amount of the Repayment or Saving will be set off against
any payment then due from the Covenantors under this Deed;
11.1.2 secondly, to the extent that there is an excess, the Purchaser will,
within 10 Business Days pay to the Covenantors the lesser of:-
11.1.2.1 the amount of the excess; and
11.1.2.2 any amount previously paid by the Covenantors under this Deed;
11.1.3 thirdly, to the extent that the excess referred to in paragraph 11.1.2
is not exhausted, the remainder of that excess will be carried forward
and set off against any future liability of the Covenantors under this
Deed;
11.2 The Purchaser will inform the Covenantors as soon as reasonably
practicable after it or any Group Company becomes aware that any Group
Company may obtain a Repayment or Saving.
11.3 The relevant Group Company will so far as is reasonable utilise any
Relief (other than a Relief referred to in clause 2.2 or arising as a
result of an Event occurring after Completion), which gives rise to a
Saving or a Repayment in priority to any other Relief (other than a
Relief referred to in clause 2.2 or arising as a result of an Event
occurring after Completion), as soon as practicable, unless and to the
extent that such utilisation would prejudice the availability of any
other Relief.
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11.4 In determining whether or not a Group Company has obtained a Saving or
Repayment and if so, the amount, the Auditors will act as experts and
not as arbitrators and their determination will (in the absence of
manifest error) be conclusive and binding on the parties.
12. OTHER PROVISIONS
12.1 JOINT AND SEVERAL LIABILITY
All representations, agreements, covenants, indemnities and obligations
made or given or entered into by the Covenantors in this deed are made
or given or entered into jointly and severally by each Covenantor.
The liability of either Covenantor may, in whole or in part, be
released, compounded or compromised or other relaxation or indulgence
may be given by the Purchaser (in its absolute discretion) without in
any way prejudicing or affecting the Purchaser's rights against any
other Covenantor.
12.2 WAIVERS AND REMEDIES
12.2.1 No failure or delay to exercise, or other relaxation or indulgence
granted in relation to, any power, right or remedy under this deed of
either party to it shall operate as a waiver of it or impair or
prejudice it nor shall any single or partial exercise or waiver of any
power, right or remedy preclude its further exercise or the exercise of
any other power, right or remedy.
12.2.2 All rights of the parties contained in this deed are in addition to all
rights vested or to be vested in it pursuant to common law or statute.
12.3 SUCCESSORS
This deed shall be binding on and enure to the benefit of each party
and its lawful successors
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and permitted assigns.
12.4 ASSIGNMENT
The rights, benefits or obligations under this deed shall be assignable
in accordance with clause 13.8 of the Agreement as if references in
that clause to the Agreement were references to this deed.
12.5 COUNTERPARTS AND DELIVERY
12.5.1 This deed may be executed in 2 counterparts, each of which shall be
deemed an original and which shall together constitute one and the same
document.
12.5.2 If this deed is executed in more than one counterpart, it shall be
deemed to be delivered and shall have effect when:
12.5.2.1 each party has signed a counterpart of this deed;
12.5.2.2 each party has handed over such counterpart to the other party
to this deed; and
12.5.2.3 each of the counterparts has been dated.
12.5.3 If this deed is not executed in more than one counterpart, it shall be
deemed to be delivered and has effect when each party has signed it and
it has been dated.
13. CORPORATION TAX RETURNS AND CONDUCT OF TAXATION AFFAIRS
13.1 The Purchaser's agents ("the authorised agents")) will prepare the
corporation tax returns and
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computations of the Group for all accounting periods ending on or after
Completion, to the extent that they have not been prepared before
Completion, and will forward copies to the Covenantors.
13.2 The Purchaser will procure that the Group causes the returns and
computations mentioned in clause 13.1 to be authorised, signed and
submitted to the Group's Inspector of Taxes without amendment or with
such amendments as the Covenantors reasonably request provided that the
Purchaser and the relevant Group Company shall not be obliged to make
any amendment in relation to any return or computation that is not
full, true and accurate in all material respects.
13.3 The Purchaser's authorised agents will prepare all documentation and
deal with all matters (including correspondence) relating to the
corporation tax returns and computations of the Group for all
accounting periods ending on or after Completion and shall keep the
Covenantors fully informed in respect thereof. The Purchaser will not
without the prior written consent of the Covenantors (such consent not
to be unreasonably withheld or delayed) transmit any communication to,
or agree any matter with, the Groups Inspector of Taxes which will
create or increase any Tax liability of the Group for which the
Covenantors may be liable under this Deed.
13.4 The Covenantors will not and the Purchaser will not and will procure
that the Company and the Subsidiary do not, amend or withdraw any such
return or computation as is referred to in clauses 13.1 or 13.2 without
the prior written consent of the Covenantors or the Purchaser, as the
case may be.
13.5 For the avoidance of doubt subject to Clause 4, nothing done by the
Purchaser or a relevant Company pursuant to this Clause 13 shall in any
respect restrict or reduce any rights which the Purchaser may have to
make a claim against the Covenantors.
14. NOTICES
14.1 Each party may give any notice or other communication under or in
connection with this deed by letter or facsimile transmission addressed
to the other party. Any notice which the Purchaser gives to the
Covenantors Representative shall be deemed to have been given to each
Covenantor. The address for service of each party shall be the address
set out in clause 14.3 or such other address within the United Kingdom
for service as the addressee may from time to time notify to the other
party for the purposes of this clause.
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14.2 Any such communication will be deemed to be served:
14.2.1 if personally delivered, at the time of delivery and, in proving
service, it shall be sufficient to produce a receipt for the notice
signed by or on behalf of the addressee;
14.2.2 if by letter, at noon, on the Business Day after such letter was posted
(or, in the case of airmail, 5 Business Days after such letter was
posted) and, in proving service, it shall be sufficient to prove that
the letter was properly stamped first class (or airmail), addressed and
delivered to the postal authorities; and
14.2.3 if by facsimile transmission, at the time and on the day of
transmission, and in proving service, it shall be sufficient to produce
a transmission report from the sender's facsimile machine indicating
that the facsimile was sent in its entirety to the recipient's
facsimile number.
14.3 Details of each party for service of notice are as follows:
Name: The Purchaser c/o The Purchaser's Solicitors Dorsey &
Whitney
Address: Veritas House, 125 Finsbury Pavement, London EC2A 1NQ
Fax No: 0171 588 0555
Tel No: 0171 588 0800
Attention: E Littlefield/J R Byrne
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Name: The Covenantors c/o the Covenantors' Representative
Address: Kent House Cottage, Harrogate Road, North Rigton LS17 0DS
Tel No: 01423 734 771
Attention: M. Bowes
15. LAW AND JURISDICTION
15.1 This deed, and all disputes or claims arising out of or in connection
with it, shall be governed by and construed in accordance with English
law.
15.2 The parties to this deed irrevocably and unconditionally agree that the
High Court of Justice in England shall have non-exclusive jurisdiction
over all disputes or claims arising out of or in connection with this
deed.
15.3 Clauses 15.3 and 15.4 of the Agreement shall apply to this deed mutatis
mutandis.
IN WITNESS of which this deed has been duly signed as a deed and delivered on
the date written at the beginning of this deed.
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Executed and Delivered as a Deed by
CYBEROPTICS CORPORATION
acting by:
Director
Director/Secretary
Witness:
-------------------------------
Signature:
-----------------------------
Name:
----------------------------------
Address:
-------------------------------
- ---------------------------------------
- ---------------------------------------
Occupation:
----------------------------
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Executed and Delivered as a Deed
by MICHAEL BOWES
in the presence of:-
Witness:
-------------------------------
Signature:
-----------------------------
Name:
----------------------------------
Address:
-------------------------------
- ---------------------------------------
- ---------------------------------------
Occupation:
----------------------------
Executed and Delivered as a Deed
by JOHN TINNING
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in the presence of:-
Witness:
-------------------------------
Signature:
-----------------------------
Name:
----------------------------------
Address:
-------------------------------
- ---------------------------------------
- ---------------------------------------
Occupation:
----------------------------
Executed and Delivered as a Deed
by CHRISTOPHER BROOK JACKSON
in the presence of:-
Witness:
-------------------------------
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Signature:
-----------------------------
Name:
----------------------------------
Address:
-------------------------------
- ---------------------------------------
- ---------------------------------------
Occupation:
----------------------------
Executed and Delivered as a Deed by
MANCHESTER TECHNOLOGY
DEVELOPMENTS LIMITED acting by:
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Director
Director/Secretary
Witness:
-------------------------------
Signature:
-----------------------------
Name:
----------------------------------
Address:
-------------------------------
- ---------------------------------------
- ---------------------------------------
Occupation:
----------------------------
93
EXHIBIT 2.3
CYBEROPTICS PURCHASES KESTRA LTD
NEXT-GENERATION SMT INSPECTION TECHNOLOGY ACQUIRED
APRIL 6, 1999 - MINNEAPOLIS, MN - CyberOptics Corporation (Nasdaq National
Market: CYBE) today announced the acquisition of Kestra Ltd, an emerging,
UK-based company that is developing breakthrough technology for automated
optical inspection (AOI) systems.
Steven K Case, chairman, commented: "The formation of market-focused business
units in early 1998 enabled CyberOptics to better understand the changing needs
of SMT assemblers, who are confronted by a growing array of challenges,
including faster production line speeds, cost pressures and circuit
miniaturization. Given the inherent limitations of current AOI technologies in
such areas as high rates of false calls (mistakes) and difficulty in
programming, we have found SMT producers are looking for new inspection
solutions.
"After evaluating potential companies for over a year," Case continued,
"CyberOptics determined that Kestra is developing a fundamentally new approach
to AOI that has the potential to provide the low rates of false calls, the
user-friendliness and the measurement precision demanded by SMT customers.
Through Kestra, we believe CyberOptics is responding to the complex and changing
needs of our customers."
While existing AOI systems use rigid pattern-matching algorithms, the Kestra
concept is based on statistical appearance modelling that can learn for itself
how to recognise any object. As a result of this approach, the Kestra system
under development should be easy to program, and its discrimination should
improve the more the system is used. It will also allow pass/fail decisions to
be made that are not confused by the variability found in real-world production.
Kestra plans to complete its first system during the second half of 1999.
Intended to provide gauge-level measurement with a low rate of false calls, this
system is expected to be of particular interest to high-volume manufacturers.
The Company acquired all of the stock of Kestra and repaid certain indebtedness
for total consideration of approximately $11.5 million in cash. The Company
expects to incur a significant one-time charge in this year's second quarter
related to in-process R&D acquired from Kestra, which will cause the Company to
post a net loss for this period. Operating losses from Kestra during its
development stage and early introduction period will affect the Company's second
half operating results, but in the absence of the Kestra transaction, the
Company expects to be profitable for all of 1999.
CyberOptics is a leading supplier of non-contact process control sensors and
inspection systems that improve the yields and operating efficiencies of
production lines that assemble SMT circuit boards.
For additional information contact:
- -----------------------------------
Steven K Case, Chairman or
Scott Larson
Controller
612/542 5000
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Statements regarding the Company's anticipated performance in 1999 are
forward-looking and therefore involve risks and uncertainties, including but not
limited to, risks related to the current scrutiny by regulatory bodies
(including particularly the SEC) of accounting treatment of in-process R&D, the
Company's dependence on OEM customers, market conditions in the global
electronics industry, the high proportion of the Company's sales which are made
outside the US, the sensitivity of the Company's sales to changing technologies,
and other factors set forth in the Company's filings with the Securities and
Exchange Commission
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